Document:

Exhibit 99.3

 

TD BANK, N.A.

 

SECURITY AGREEMENT

(Pledged Collateral)

 

June 30, 2008

Boston, Massachusetts

 

The
undersigned has delivered to TD Bank, N.A. (the “Bank”) Certificate
of Deposit No. 8731024878 in the face amount of $546,878.15 issued by the
Bank and belonging to the undersigned (the “Collateral”). The undersigned hereby agrees that
such Collateral is to be held by the Bank as security for all reimbursement
obligations including transaction fees of the undersigned to the Bank pursuant
to the following letters of credit (hereinafter, collectively, the “Obligations”):

 

	
  Letter of Credit No.

  	
   

  	
  Beneficiary

  	
   

  	
  Expiration Date

  	
   

  	
  Amount

  	
   

  
	
  3994770102

  	
   

  	
  Novartis Vaccines and Diagnostic

  	
   

  	
  06/30/2008

  	
   

  	
  $

  	
  200,223.45

  	
   

  
	
  3994770103

  	
   

  	
  Staedler Mars
  GMBH & Co. KG

  	
   

  	
  06/30/2008

  	
   

  	
  $

  	
  37,632.80

  	
   

  
	
  3994770104

  	
   

  	
  Syngere International Ltd.

  	
   

  	
  12/04/2008

  	
   

  	
  $

  	
  8,531.80

  	
   

  
	
  3994770105

  	
   

  	
  Indian Institute of
  Chemical Technology

  	
   

  	
  06/30/2008

  	
   

  	
  $

  	
  10,799.80

  	
   

  
	
  3994770106

  	
   

  	
  Glaxo Smith Kline
  Biologicals

  	
   

  	
  07/31/2008

  	
   

  	
  $

  	
  153,644.20

  	
   

  
	
  3994770107

  	
   

  	
  Dyneon GMBH Rechnungswesen

  	
   

  	
  06/30/2008

  	
   

  	
  $

  	
  38,206.13

  	
   

  

 

Upon
default of any of the Obligations secured hereunder the Bank shall have all of
the rights and remedies of a secured party afforded by the Uniform Commercial
Code as then in effect in Massachusetts or afforded by other applicable law.
The Bank will give the undersigned not less than ten days’ notice in writing,
mailed postage prepaid, to the last address of the undersigned known to it, of
the time and place of any public sale of the Collateral or after which any
private sale or intended disposition is to be made, which notice shall be
deemed reasonable. The undersigned agrees to pay upon default of any of the
Obligations secured hereunder, all costs of collection including costs incurred
in the sale or disposition of the Collateral and reasonable fees of an
attorney.

 

No
delay or omission on the part of the Bank in exercising any right or remedy
shall operate as a waiver thereof any other right or remedy. Waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. All the Bank’s rights and remedies, whether evidenced
hereby or by any other agreement, instrument or paper, shall be cumulative and
may be exercised singularly or concurrently, and nothing herein shall be deemed
to limit in any way any rights the Bank might otherwise have under any other
instrument or by law, including, without limiting the generality thereof, the
right to negotiate any note or other instrument together with any Collateral
specifically described therein.

 

This
Agreement may be transmitted by facsimile machine or by electronic mail in
portable document format (“pdf”) and signatures appearing on faxed instruments
and/or electronic mail instruments shall be treated as original signatures. The
foregoing sentence will not, however, relieve the undersigned from delivering
the original of this Agreement to the Bank.

 

	
   

  	
   

  	
  MICROFLUIDICS
  INTERNATIONAL

  CORPORATION (formerly MFIC Corporation)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Brian E. LeClair

  
	
  Witness

  	
   

  	
  Name:

  	
  Brian E. LeClair

  
	
   

  	
   

  	
  Title:

  	
  Executive V.P. and CFOExhibit 10.5

 

EXPORT-IMPORT
BANK LOAN AND SECURITY AGREEMENT

 

THIS EXPORT-IMPORT BANK LOAN AND SECURITY
AGREEMENT (this “EXIM  Agreement”) dated as of the Effective Date among (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”),
provides the terms on which Bank shall lend to Borrower and Borrower shall
repay Bank.  The parties agree as
follows:

 

1              ACCOUNTING
AND OTHER TERMS

 

(a)           Borrower and Bank are
parties to that certain Loan and Security Agreement dated as of June 30,
2008 as may be amended from time to time (as may be amended, the “Domestic Agreement”), together with related documents
executed in conjunction therewith, as may be amended from time to time (as
amended, the “Domestic Loan Documents”).

 

(b)           Borrower and Bank
desire in this EXIM Agreement to set forth their agreement with respect to a
working capital facility to be guaranteed by the EXIM Bank.

 

(c)           Accounting terms not
defined in this EXIM Agreement shall be construed following GAAP.  Calculations and determinations must be made
following GAAP.  Capitalized terms not
otherwise defined in this EXIM Agreement shall have the meanings set forth in Section 13.  All other terms contained in this EXIM
Agreement, unless otherwise indicated, shall have the meaning provided by the
Code to the extent such terms are defined therein.

 

2              LOAN
AND TERMS OF PAYMENT

 

2.1          Promise to Pay.  Borrower hereby unconditionally promises to
pay Bank the outstanding principal amount of all Credit Extensions and accrued
and unpaid interest thereon as and when due in accordance with this EXIM
Agreement.

 

2.1.1       Revolving Advances.

 

(a)           Availability.  Subject to the terms and conditions of this
EXIM Agreement and to deduction of Reserves, Bank will make EXIM Advances to
Borrower up to the Availability Amount.  Amounts borrowed under the Revolving Line may
be repaid, and prior to the Revolving Line Maturity Date, reborrowed, subject
to the applicable terms and conditions precedent herein.

 

(b)           Termination;
Repayment.  The Revolving Line
terminates on the earlier of (i) the Revolving Line Maturity Date or (ii) the
termination of the Domestic Revolving Line, when the principal amount of all
EXIM Advances, the unpaid interest thereon, and all other Obligations relating
to the Revolving Line shall be immediately due and payable.

 

2.1.2       Letters of Credit Sublimit.

 

(a)           As part of the
Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower’s
account.  Such aggregate amounts utilized
hereunder shall at all times reduce the amount otherwise available for Advances
under the Revolving Line.  The aggregate
face amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve) may not exceed Five Hundred
Thousand Dollars ($500,000) inclusive of the Credit Extensions made pursuant to
Sections 2.1.3 and 2.1.4.  If, on the
Revolving Line Maturity Date, there are any outstanding Letters of Credit, then
on such date Borrower shall either provide replacement letters of credit
acceptable to Bank or provide to Bank cash collateral in an amount equal to one
hundred percent (100%) of the face amount of all such Letters of Credit plus
all interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment), to secure all of the
Obligations relating to said Letters of Credit. 
All Letters of Credit shall be in form and substance acceptable to Bank
in its sole discretion and shall be subject to the terms and conditions of Bank’s
standard 

 

 

Application and Letter of
Credit Agreement (the “Letter of Credit
Application”).  Borrower agrees
to execute any further documentation in connection with the Letters of Credit
as Bank may reasonably request.  Borrower further agrees to be bound by the regulations
and interpretations of the issuer of any Letters of Credit guarantied by Bank
and opened for Borrower’s account or by Bank’s interpretations of any Letter of
Credit issued by Bank for Borrower’s account, and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower’s instructions or
those contained in the Letters of Credit or any modifications, amendments, or
supplements thereto.

 

(b)           The obligation of
Borrower to immediately reimburse Bank for drawings made under Letters of
Credit shall be absolute, unconditional, and irrevocable, and shall be
performed strictly in accordance with the terms of this EXIM Agreement, such
Letters of Credit, and the Letter of Credit Application.

 

(c)           Borrower may request
that Bank issue a Letter of Credit payable in a Foreign Currency.  If a demand for payment is made under any
such Letter of Credit, Bank shall treat such demand as an Advance to Borrower
of the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at the
then-prevailing rate of exchange in San Francisco, California, for sales of the
Foreign Currency for transfer to the country issuing such Foreign Currency.

 

(d)           To guard against
fluctuations in currency exchange rates, upon the issuance of any Letter of
Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an
amount equal to ten percent (10%) of the face amount of such Letter of
Credit.  The amount of the Letter of
Credit Reserve may be adjusted by Bank from time to time to account for
fluctuations in the exchange rate.  The
availability of funds under the Revolving Line shall be reduced by the amount
of such Letter of Credit Reserve for as long as such Letter of Credit remains
outstanding.  Any amounts needed to fully
reimburse Bank will be treated as Advances under the Revolving Line and will
accrue interest at the interest rate applicable to Advances.

 

2.2           Overadvances.  If at any time or for any
reason the sum of (a) the total of all outstanding Advances plus (b) the
face amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserves) and all other
monetary Obligations exceeds the Availability Amount (such sum being an “Overadvance”), Borrower shall immediately pay the amount of
the excess to Bank, without notice or demand. 
Without limiting Borrower’s obligation to repay to Bank the amount of
any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount
of any Overadvance, on demand, at the Default Rate.

 

2.3           Payment of Interest on
the Credit Extensions.

 

(a)           Interest Rate; Advances.  Subject to Section 2.3(b), the principal
amount outstanding under the Revolving Line shall accrue interest at a per
annum rate equal to the Prime Rate plus one percent (1.00%).

 

(b)           Default Rate.  Immediately upon the occurrence and during
the continuance of an Event of Default, Obligations shall bear interest at a
rate per annum which is four percentage points above the rate that is otherwise
applicable thereto (the “Default Rate”).  Payment or acceptance of the increased
interest rate provided in this Section 2.3(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Bank.

 

(c)           Adjustment to
Interest Rate.  Changes to the
interest rate of any Credit Extension based on changes to the Prime Rate shall
be effective on the effective date of any change to the Prime Rate and to the
extent of any such change.

 

(d)           360-Day Year.  Interest shall be computed on the basis of a
360-day year for the actual number of days elapsed.

 

(e)           Debit of Accounts.  Bank may debit any of Borrower’s deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due.  These debits shall not constitute a set-off.

 

(f)            Payment; Interest
Computation; Float Charge.  Interest is
payable monthly on the last Business Day  of each month
through the last day of such month.  In
computing interest on the Obligations, all payments received after 12:00 p.m.
Pacific time on any day shall be deemed received on the next Business Day.  In 

 

2

 

addition, so long as any
principal or interest with respect to any Credit Extension remains outstanding,
Bank shall be entitled to charge Borrower a “float” charge in an amount equal
to three (3) Business Days interest, at the interest rate applicable to
the Credit Extensions, on all payments received by Bank.  The float charge for each month shall be
payable on the last Business Day of each month. 
Bank shall not, however, be
required to credit Borrower’s account for the amount of any item of payment
which is unsatisfactory to Bank in its good faith business judgment, and Bank
may charge Borrower’s Designated Deposit Account for the amount of any item of
payment which is returned to Bank unpaid.

 

2.4           Fees.  Borrower shall pay to Bank:

 

(a)           Letter of Credit Fee.  Bank’s customary fees and expenses for the
issuance or renewal of Letters of Credit, upon the issuance, each anniversary
of the issuance, and the renewal of such Letter of Credit by Bank; and

 

(b)           Bank Expenses.  All Bank Expenses (including reasonable and
documented attorneys’ fees and expenses for documentation and negotiation of
this EXIM Agreement) incurred through and after the Effective Date, when due.

 

2.5           Use of Proceeds.  Borrower will use the proceeds of the EXIM
Advances only for the purposes specified in the EXIM Borrower Agreement.  Borrower will not use the proceeds of the
EXIM Advances for any purpose prohibited by the EXIM Borrower Agreement.

 

2.6           EXIM Guaranty.  To facilitate the financing of Eligible EXIM
Accounts, the EXIM Bank has agreed to guarantee the EXIM Loans made under this
EXIM Agreement, pursuant to a Master Guarantee Agreement, Loan Authorization
Agreement and (to the extent applicable) Delegated Authority Letter Agreement
(collectively, the “EXIM Guaranty”).  If, at any time after the EXIM Guaranty has
been entered into by Bank, for any reason other than due to any action or
inaction of Borrower under the EXIM Guaranty, (a) the EXIM Guaranty shall
cease to be in full force and effect, or (b) if the EXIM Bank declares the
EXIM Guaranty void or revokes any obligations thereunder or denies liability
thereunder, Borrower shall immediately repay all outstanding EXIM Advances
hereunder, and Borrower shall cash collateralize all issued and undrawn letters
of credit issued by Bank, if any.  If, at
any time after the EXIM Guaranty has been entered into by Bank, for any reason
other than as described in the foregoing sentence, (x) the EXIM Guaranty
shall cease to be in full force and effect, or (y) the EXIM Bank declares
the EXIM Guaranty void or revokes any obligations thereunder or denies
liability thereunder, any such event shall constitute an Event of Default under
this EXIM Agreement.  Nothing in any
confidentiality agreement, in this EXIM Agreement or in any other agreement,
shall restrict Bank’s right to make disclosures and provide information to the
EXIM Bank in connection with the EXIM Guaranty.

 

2.7           EXIM Borrower Agreement. 
Borrower shall execute and deliver a Borrower Agreement, in the form
specified by the EXIM Bank (attached hereto as Annex A), in favor of Bank and the EXIM Bank, together with an
amendment thereto approved by the EXIM Bank to conform certain terms of such
Borrower Agreement to the terms of this EXIM Agreement (as amended, the “EXIM Borrower Agreement”). 
When the EXIM Borrower Agreement is entered into by Borrower and the
EXIM Bank and delivered to Bank, this EXIM Agreement shall be subject to all of
the terms and conditions of the EXIM Borrower Agreement, all of which are
hereby incorporated herein by this reference. 
From and after the time Borrower and the EXIM Bank have entered into the
EXIM Borrower Agreement and delivered the same to Bank, Borrower expressly agrees
to perform all of the obligations and comply with all of the affirmative and
negative covenants and all other terms and conditions set forth in the EXIM
Borrower Agreement as though the same were expressly set forth herein.  In the event of any conflict between the
terms of the EXIM Borrower Agreement (if then in effect) and the other terms of
this EXIM Agreement, whichever terms are more restrictive shall apply.  Borrower acknowledges and agrees that it has
received a copy of the Loan Authorization Agreement which is referred to in the
EXIM Borrower Agreement.  If the EXIM
Borrower Agreement is entered into by Borrower and the EXIM Bank and delivered
to Bank, Borrower agrees to be bound by the terms of the Loan Authorization
Agreement, including, without limitation, by any additions or revisions made
prior to its execution on behalf of EXIM Bank. 
Upon the execution of the Loan Authorization Agreement by EXIM Bank and
Bank, it shall become an attachment to the EXIM Borrower Agreement.  Borrower shall reimburse Bank for all fees
and all out of pocket costs and expenses incurred by Bank with respect to the
EXIM Guaranty and the EXIM Borrower Agreement, including without limitation all
facility fees and usage fees, and Bank is authorized to debit any of Borrower’s
deposit accounts with Bank for such fees, costs and expenses when paid by Bank.

 

3

 

3              CONDITIONS OF
LOANS

 

3.1           Conditions Precedent to
Initial EXIM Advance.  Bank’s
obligation to make the initial EXIM Advance is subject to the condition precedent
that Bank shall have received, in form and substance satisfactory to Bank, such
documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate, including, without limitation:

 

(a)         Borrower shall have
delivered duly executed original signatures to the Loan Documents to which it
is a party;

 

(b)           Borrower shall have
delivered the Economic Impact Certification;

 

(c)           Borrower shall have
delivered duly executed original signatures to the completed Borrowing
Resolutions for Borrower;

 

(d)           Borrower shall have
delivered a legal opinion of Borrower’s counsel dated as of the Effective Date
together with the duly executed original signatures thereto;

 

(e)           Borrower shall have
paid the fees and Bank Expenses then due as specified in Section 2.4
hereof.

 

(f)            Bank shall have
completed an initial field exam, the results of which are satisfactory to Bank,
in its sole discretion;

 

(g)           EXIM Bank shall have
approved the EXIM Loan; and

 

(h)           Borrower shall have
delivered all such other documents as Bank reasonably deems necessary or
appropriate.

 

3.2           Conditions Precedent to
all Credit Extensions.  Bank’s
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:

 

(a)           timely receipt of any
export purchase order and an EXIM Borrowing Base Certificate relating to the
request; and

 

(b)           except as otherwise
provided in Section 3.4, timely receipt of an executed Transaction Report;

 

(c)           the representations and
warranties in Section 5 shall be true in all material respects on the date
of the Transaction Report and on the Funding Date of each Credit Extension;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the
Credit Extension.  Each Credit Extension
is Borrower’s representation and warranty on that date that the representations
and warranties in Section 5 remain true in all material respects;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date;

 

(d)           in Bank’s good faith
business judgment, since the date of this EXIM Agreement, there has not been
any material impairment in the general affairs, management, results of
operation, financial condition or the prospect of repayment of the Obligations,
or there has not been any material adverse deviation by Borrower from the most
recent business plan of Borrower presented to and accepted by Bank, subject to
the notice and cure periods herein set forth; and

 

(e)           the EXIM Guaranty shall
be in full force and effect.

 

4

 

3.3          Covenant to Deliver.

 

Borrower
agrees to deliver to Bank each item required to be delivered to Bank under this
EXIM Agreement as a condition to any Credit Extension.  Borrower expressly agrees that a Credit
Extension made prior to the receipt by Bank of any such item shall not
constitute a waiver by Bank of Borrower’s obligation to deliver such item, and
any such Credit Extension in the absence of a required item shall be made in
Bank’s sole discretion.

 

3.4          Procedures for Borrowing.  Subject to the prior satisfaction of all
other applicable conditions to the making of an EXIM Advance set forth in this
EXIM Agreement, to obtain an EXIM Advance (other than Advances under Sections
2.1.2), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the
Funding Date of the EXIM Advance. 
Together with such notification, Borrower must promptly deliver to Bank
by electronic mail or facsimile a completed Transaction Report executed by a
Responsible Officer or his or her designee. 
Bank shall credit EXIM Advances to the Designated Deposit Account.  Bank may make EXIM Advances under this EXIM
Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the EXIM Advances are necessary to meet Obligations
which have become due.  Bank may rely on
any telephone notice given by a person whom Bank believes is a Responsible
Officer or designee.

 

4             CREATION OF
SECURITY INTEREST

 

4.1          Grant of Security
Interest.  Borrower hereby grants
Bank, to secure the payment and performance in full of all of the Obligations,
a continuing security interest in, and pledges to Bank, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof.  Borrower
represents, warrants, and covenants that the security interest granted herein
is and shall at all times continue to be a first priority perfected security
interest in the Collateral (subject only to Permitted Liens that may have
superior priority to Bank’s Lien under this EXIM Agreement).  If Borrower shall acquire a commercial tort
claim, Borrower shall promptly notify Bank in a writing signed by Borrower of
the general details thereof and grant to Bank in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this EXIM
Agreement, with such writing to be in form and substance reasonably
satisfactory to Bank.

 

If this EXIM Agreement is terminated, Bank’s Lien in
the Collateral shall continue until the Obligations (other than inchoate
indemnity obligations) are repaid in full in cash.  Upon payment in full in cash of the
Obligations and at such time as Bank’s obligation to make Credit Extensions has
terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens
in the Collateral and all rights therein shall revert to Borrower.

 

Notwithstanding the foregoing, it is expressly
acknowledged and agreed that the security interest created in this EXIM
Agreement in all of the Collateral (with the exception of Export-Related
Accounts Receivable, Export-Related Inventory and Export-Related General
Intangibles) is subject to and subordinate to the security interest granted to
Bank in the Domestic Agreement and the security interest created in the
Domestic Agreement with respect to such Export-Related Accounts Receivable,
Export-Related Inventory and Export-Related General Intangibles is subject to
and subordinate to the security interest granted to Bank in this EXIM Agreement
with respect to such Export-Related Accounts Receivable, Export-Related
Inventory and any Export-Related General Intangibles.

 

4.2          Authorization to File
Financing Statements.  Borrower
hereby authorizes Bank to file financing statements, without notice to
Borrower, with all appropriate jurisdictions to perfect or protect Bank’s
interest or rights hereunder, including a notice that any disposition of the
Collateral, by either Borrower or any other Person, shall be deemed to violate
the rights of Bank under the Code.  Such
financing statements may indicate the Collateral as “all assets of the Debtor”
or words of similar effect, or as being of an equal or lesser scope, or with
greater detail, all in Bank’s discretion.

 

5              REPRESENTATIONS
AND WARRANTIES

 

Borrower represents and
warrants as follows:

 

5.1          Domestic Loan Documents.  The representations and warranties contained
in the Domestic Loan Documents, which are incorporated into this EXIM Agreement
by reference, are true and correct, and shall survive the termination of
Domestic Agreement.

 

5

 

5.2           EXIM Borrower Agreement.  The representations and warranties contained
in the EXIM Borrower Agreement, which are incorporated by reference into this
EXIM Agreement, are true and correct in all material respects.

 

5.3           Accounts Receivable.

 

(a)           For each
Account with respect to which EXIM Advances are requested, on the date each
EXIM Advance is requested and made, such Account shall meet the Minimum EXIM
Eligibility Requirements set forth in Section 13 below.

 

(b)           All
statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing the Accounts are and shall be true and correct
and all such invoices, instruments and other documents, and all of Borrower’s
Books are genuine and in all respects what they purport to be.  All sales and other transactions underlying
or giving rise to each Account shall comply in all material respects with all
applicable laws and governmental rules and regulations.  Borrower has no knowledge of any actual or
imminent Insolvency Proceeding of any Account Debtor whose accounts are an
Eligible EXIM Account in any EXIM Borrowing Base Certificate.  To Borrower’s knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Accounts are genuine, and all such documents, instruments and agreements are
legally enforceable in accordance with their terms.

 

6               AFFIRMATIVE
COVENANTS

 

Borrower shall do all of
the following:

 

6.1           Domestic Loan Documents.  Borrower shall comply with the terms and
provisions of the Domestic Loan Documents, which terms and provisions are
incorporated into this EXIM Agreement and shall survive the termination of
Domestic Agreement, which shall include, without limitation, compliance with
the financial reporting requirements set forth in the Domestic Agreement and
the financial covenants set forth in the Domestic Agreement.

 

6.2           EXIM Borrower Agreement.  Borrower shall comply with all of the terms
of the EXIM Borrower Agreement, including without limitation, the delivery of
an EXIM Borrowing Base Certificate within fifteen (15) days after the end of
each month any and all notices required pursuant to the EXIM Borrower
Agreement.  In the event of any conflict
or inconsistency between any provision contained in the EXIM Borrower Agreement
with any provision contained in this EXIM Agreement, the more strict provision,
with respect to Borrower, shall control.

 

6.3           Accounts Receivable.

 

(a)           Schedules
and Documents Relating to Accounts.  Borrower shall deliver to Bank transaction
reports and schedules of collections, as provided in Section 6.2 of the
Domestic Agreement, on Bank’s standard forms; provided, however,
that Borrower’s failure to execute and deliver the same shall not affect or
limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall
Bank’s failure to advance or lend against a specific Account affect or limit
Bank’s Lien and other rights therein.  If
requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s
request, originals) of all contracts, orders, invoices, and other similar
documents, and all shipping instructions, delivery receipts, bills of lading,
and other evidence of delivery, for any goods the sale or disposition of which
gave rise to such Accounts.  In addition,
Borrower shall deliver to Bank, on its request, the originals of all
instruments, chattel paper, security agreements, guarantees and other documents
and property evidencing or securing any Accounts, in the same form as received,
with all necessary endorsements, and copies of all credit memos.

 

(b)           Disputes.  Borrower shall promptly notify Bank of all
disputes or claims relating to Accounts. 
Borrower may forgive (completely or partially), compromise, or settle
any Account for less than payment in full, or agree to do any of the foregoing
so long as (i) Borrower does so in good faith, in a commercially
reasonable manner, in the ordinary course of business, in arm’s-length
transactions, and reports the same to Bank in the regular reports provided to
Bank; (ii) no Default or Event of Default has occurred and is continuing;
and (iii) after taking into account all such discounts, settlements and
forgiveness, the total outstanding EXIM Advances will not exceed the lesser of
the Revolving Line or the aggregate EXIM Borrowing Base.

 

6

 

(c)           Collection
of Accounts. 
Borrower shall have the right to collect all Accounts, unless and until
a Default or an Event of Default has occurred and is continuing.  All payments on, and proceeds of, Accounts
shall be deposited directly by the applicable Account Debtor into a lockbox
account, or such other “blocked account” as Bank may specify, pursuant to a
blocked account agreement in form and substance satisfactory to Bank in its
sole discretion.  Whether or not an Event
of Default has occurred and is continuing, Borrower shall hold all payments on,
and proceeds of, Accounts in trust for Bank, and Borrower shall immediately
deliver all such payments and proceeds to Bank in their original form, duly
endorsed, to be applied to the Obligations pursuant to the terms of Section 9.4
hereof.

 

(d)           Returns.  Provided no Event of
Default has occurred and is continuing, if any Account Debtor returns any
Inventory to Borrower, Borrower shall promptly (i) determine the reason
for such return, (ii) issue a credit memorandum to the Account Debtor in
the appropriate amount, and (iii) provide a copy of such credit memorandum
to Bank, upon request from Bank.  In the
event any attempted return occurs after the occurrence and during the continuance
of any Event of Default, Borrower shall hold the returned Inventory in trust
for Bank, and immediately notify Bank of the return of the Inventory.

 

(e)           Verification.  Bank may, from time
to time, verify directly with the respective Account Debtors the validity,
amount and other matters relating to the Accounts, either in the name of
Borrower or Bank or such other name as Bank may choose.

 

(f)            No
Liability. 
Bank shall not be responsible or liable for any shortage or discrepancy
in, damage to, or loss or destruction of, any goods, the sale or other
disposition of which gives rise to an Account, or for any error, act, omission,
or delay of any kind occurring in the settlement, failure to settle, collection
or failure to collect any Account, or for settling any Account in good faith
for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement
giving rise to an Account.  Nothing
herein shall, however, relieve Bank from liability for its own gross negligence
or willful misconduct.

 

6.4          EXIM Insurance.  If required by Bank, Borrower will obtain,
and pay when due all premiums with respect to, and maintain uninterrupted
foreign credit insurance.  In addition,
if requested by Bank, Borrower will execute in favor of Bank an assignment of
proceeds of any insurance policy obtained by Borrower and issued by EXIM Bank
insuring against comprehensive commercial and political risk (the “EXIM Bank Policy”). 
The insurance proceeds from the EXIM Bank Policy assigned or paid to
Bank will be applied to the balance outstanding under this EXIM Agreement.  Borrower will immediately notify Bank and
EXIM Bank in writing upon submission of any claim under the EXIM Bank Policy.

 

6.5          Further Assurances.  Execute any further instruments and take
further action as Bank reasonably requests to perfect or continue Bank’s Lien
in the Collateral or to effect the purposes of this EXIM Agreement.

 

7              NEGATIVE
COVENANTS

 

Borrower shall not do any
of the following without Bank’s prior written consent:

 

7.1          Domestic Loan Documents.  Violate or otherwise fail to comply with any
provisions of the Domestic Loan Documents, which provisions are incorporated
into this EXIM Agreement by reference, and shall survive the termination of
Domestic Agreement.

 

7.2          EXIM Borrower Agreement.  Violate or otherwise fail to comply with any
provision of the EXIM Borrower Agreement, including, without limitation, the
negative covenants set forth therein.

 

7.3          EXIM Guaranty.  Take any action, or permit any action to be
taken, that causes or, with the passage of time, could cause, the EXIM Guaranty
to cease to be in full force and effect.

 

8              EVENTS
OF DEFAULT

 

Any one of the following
shall constitute an event of default (an “Event of Default”)
under this EXIM Agreement:

 

7

 

8.1           Payment Default.  Borrower fails to (a) make any payment
of principal or interest on any Credit Extension on its due date, or (b) pay
any other Obligations within three (3) days after such Obligations are due
and payable (which three (3) day grace period shall not apply to payments
due on the Maturity Date).  During the
cure period, the failure to cure the payment default is not an Event of Default
(but no Credit Extension will be made during the cure period);

 

8.2           Covenant Default.

 

(a) Borrower fails
or neglects to perform any obligation in Sections 6.2, 6.5, 6.7, 6.8, 6.9, 6.12
of the Domestic Agreement (incorporated herein by reference) or violates any
covenant in Section 7; or

 

(b) Borrower fails or neglects to perform, keep,
or observe any other term, provision, condition, covenant or agreement
contained in this EXIM Agreement or any Loan Documents, and as to any default
(other than those specified in this Section 8) under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure the default within ten (10) days after the occurrence thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured
within a reasonable time, then Borrower shall have an additional period (which
shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to cure the default shall
not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period).  Grace periods
provided under this section shall not apply, among other things, to financial
covenants or any other covenants set forth in subsection (a) above;

 

8.3           Insolvency.  (a) Borrower is unable to pay its debts
(including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within forty five (45) days (but
no Credit Extensions shall be made while of any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is dismissed);

 

8.4           Domestic Default.  The
occurrence of an Event of Default under the Domestic Loan Documents.

 

8.5           EXIM Guaranty.  If the EXIM Guaranty ceases for any reason to
be in full force and effect, or if the EXIM Bank declares the EXIM Guaranty
void or revokes any obligations under the EXIM Guaranty.

 

9              BANK’S RIGHTS AND
REMEDIES

 

9.1           Rights and Remedies.  While an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:

 

(a)           declare all Obligations
immediately due and payable (but if an Event of Default described in Section 8.3
occurs all Obligations are immediately due and payable without any action by
Bank);

 

(b)           stop advancing money or
extending credit for Borrower’s benefit under this EXIM Agreement or under any
other agreement between Borrower and Bank;

 

(c)           demand that Borrower (i) deposits
cash with Bank in an amount equal to the aggregate amount of any Letters of
Credit remaining undrawn, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower shall forthwith
deposit and pay such amounts, and (ii) pay in advance all Letter of Credit
fees scheduled to be paid or payable over the remaining term of any Letters of
Credit

 

(d)           settle or adjust
disputes and claims directly with Account Debtors for amounts on terms and in
any order that Bank considers advisable, notify any Person owing Borrower money
of Bank’s security interest in such funds, and verify the amount of such
account;

 

(e)           make any payments and
do any acts it considers necessary or reasonable to protect the Collateral
and/or its security interest in the Collateral. 
Borrower shall assemble the Collateral if Bank requests and make it available
as Bank designates.  Bank may enter
premises where the Collateral is located, take and maintain possession of any
part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of
its premises, without charge, to exercise any of Bank’s rights or remedies;

 

8

 

(f)            apply to the
Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;

 

(g)           ship, reclaim, recover,
store, finish, maintain, repair, prepare for sale, advertise for sale, and sell
the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;

 

(h)           place a “hold” on any
account maintained with Bank and/or deliver a notice of exclusive control, any
entitlement order, or other directions or instructions pursuant to any control
agreement or similar agreements providing control of any Collateral;

 

(i)            demand and receive
possession of Borrower’s Books; and

 

(j)            exercise all rights
and remedies available to Bank under the Loan Documents or at law or equity,
including all remedies provided under the Code (including disposal of the
Collateral pursuant to the terms thereof).

 

9.2           Power of Attorney.  Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse
Borrower’s name on any checks or other forms of payment or security; (b) sign
Borrower’s name on any invoice or bill of lading for any Account or drafts
against Account Debtors; (c) settle and adjust disputes and claims about
the Accounts directly with Account Debtors, for amounts and on terms Bank
determines reasonable; (d) make, settle, and adjust all claims under
Borrower’s insurance policies; (e) pay, contest or settle any Lien,
charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits.  Borrower hereby appoints Bank as its lawful
attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of Bank’s security interest in the Collateral
regardless of whether an Event of Default has occurred until all Obligations
have been satisfied in full and Bank is under no further obligation to make
Credit Extensions hereunder.  Bank’s
foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights
and powers, coupled with an interest, are irrevocable until all Obligations
have been fully repaid and performed and Bank’s obligation to provide Credit
Extensions terminates.

 

9.3           Protective Payments.  If Borrower fails to obtain the insurance
called for by Section 6.4 or fails to pay any premium thereon or fails to
pay any other amount which Borrower is obligated to pay under this EXIM
Agreement or any other Loan Document, Bank may obtain such insurance or make
such payment, and all amounts so paid by Bank are Bank Expenses and immediately
due and payable, bearing interest at the then highest applicable rate, and
secured by the Collateral.  Bank will
make reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time thereafter.  No payments by Bank are deemed an agreement
to make similar payments in the future or Bank’s waiver of any Event of
Default.

 

9.4           Application of Payments
and Proceeds.  Borrower shall have no
right to specify the order or the accounts to which Bank shall allocate or
apply any payments required to be made by Borrower to Bank or otherwise
received by Bank under this EXIM Agreement when any such allocation or
application is not specified elsewhere in this EXIM Agreement.  If an Event of Default has occurred and is
continuing, Bank may apply any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any collection
of Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Bank shall determine in its sole discretion.  Any surplus shall be paid to Borrower or
other Persons legally entitled thereto; Borrower shall remain liable to Bank
for any deficiency.  If Bank, in its good
faith business judgment, directly or indirectly enters into a deferred payment
or other credit transaction with any purchaser at any sale of Collateral, Bank
shall have the option, exercisable at any time, of either reducing the
Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Bank of cash therefor.

 

9.5           Bank’s Liability for
Collateral.  So long as Bank complies
with reasonable banking practices regarding the safekeeping of the Collateral
in the possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to
the Collateral; (c) any diminution in 

 

9

 

the value of the Collateral; or
(d) any act or default of any carrier, warehouseman, bailee, or other
Person.  Borrower bears all risk of loss,
damage or destruction of the Collateral.

 

9.6          No Waiver; Remedies
Cumulative.  Bank’s failure, at any
time or times, to require strict performance by Borrower of any provision of
this EXIM Agreement or any other Loan Document shall not waive, affect, or
diminish any right of Bank thereafter to demand strict performance and
compliance herewith or therewith.  No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is given.  Bank’s rights and remedies under this EXIM
Agreement and the other Loan Documents are cumulative.  Bank has all rights and remedies provided
under the Code, by law, or in equity. 
Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver.  Bank’s delay in exercising any remedy is not
a waiver, election, or acquiescence.

 

9.7          Demand Waiver.  Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of
accounts, documents, instruments, chattel paper, and guarantees held by Bank on
which Borrower is liable.

 

9.8          EXIM Direction. Upon
the occurrence of an Event of Default, EXIM Bank shall have right to (i) direct
Bank to exercise the remedies specified in Section 9.1 hereof and (ii) request
that Bank accelerate the maturity of any other loans to Borrower.

 

9.9          EXIM Notification.  Bank has the right to immediately notify EXIM
Bank in writing if it has knowledge of any of the following events:  (1) any failure to pay any amount due
under this EXIM Agreement; (2) the EXIM Borrowing Base is less than the
sum of the outstanding Credit Extensions; (3) any failure to pay when due
any amount payable to Bank under any Loan Documents owing by Borrower to Bank; (4) the
filing of an action for debtor’s relief by, against or on behalf of Borrower;
or (5) any threatened or pending material litigation against Borrower, or
any material dispute involving Borrower.

 

If Bank sends a
notice to EXIM Bank, Bank has the right to send EXIM Bank a written report on
the status of events covered by the notice every thirty (30) days after the
date of the original notification, until Bank files a claim with EXIM Bank or
the defaults have been cured (but no EXIM Advances may be required during the
cure period unless EXIM Bank gives its written approval).  If directed by EXIM Bank, Bank will have the
right to exercise any rights it may have against the Borrower to demand the
immediate repayment of all amount outstanding under the EXIM Loan Documents.

 

10           NOTICES

 

All notices, consents,
requests, approvals, demands, or other communication by any party to this EXIM
Agreement or any other Loan Document must be in writing and shall be deemed to
have been validly served, given, or delivered: (a) upon the earlier of
actual receipt and three (3) Business Days after deposit in the U.S. mail,
first class, registered or certified mail return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address, facsimile number, or email
address indicated below.  Bank or
Borrower may change its mailing or electronic mail address or facsimile number
by giving the other party written notice thereof in accordance with the terms
of this Section 10.

 

10

 

	
  If to Borrower:

  	
   

  	
  Microfluidics International Corporation

  	
   

  
	
   

  	
   

  	
  30 Ossipee Road

  	
   

  
	
   

  	
   

  	
  Newton, Massachusetts 02464

  	
   

  
	
   

  	
   

  	
  Attn: Brian LeClair, Executive Vice President and
  CFO

  	
   

  
	
   

  	
   

  	
  Fax:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Email:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  McCarter & English, LLP

  	
   

  
	
   

  	
   

  	
  265 Franklin Street

  	
   

  
	
   

  	
   

  	
  Boston, Massachusetts 02110

  	
   

  
	
   

  	
   

  	
  Attn: Jeffrey M. Stoler, Esquire

  	
   

  
	
   

  	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  	
  Email:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If to Bank:

  	
   

  	
  Silicon Valley Bank

  	
   

  
	
   

  	
   

  	
  One Newton Executive Park, Suite 200

  	
   

  
	
   

  	
   

  	
  2221 Washington Street

  	
   

  
	
   

  	
   

  	
  Newton, Massachusetts 02462

  	
   

  
	
   

  	
   

  	
  Attn: Michael Tramack

  	
   

  
	
   

  	
   

  	
  Fax: 617.969.5962

  	
   

  
	
   

  	
   

  	
  Email: mtramack@svb.com

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Riemer &
  Braunstein LLP

  	
   

  
	
   

  	
   

  	
  Three
  Center Plaza

  	
   

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02108

  	
   

  
	
   

  	
   

  	
  Attn:
  Charles W. Stavros, Esquire

  	
   

  
	
   

  	
   

  	
  Fax:
  617-692-3441

  	
   

  
	
   

  	
   

  	
  Email:
  cstavros@riemerlaw.com

  	
   

  
								

 

11           CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER AND JUDICIAL
REFERENCE

 

Massachusetts law governs the Loan Documents without
regard to principles of conflicts of law. 
Borrower and Bank each submit to the exclusive jurisdiction of the State
and Federal courts in Massachusetts; provided, however, that nothing in this
EXIM Agreement shall be deemed to operate to preclude Bank from bringing suit
or taking other legal action in any other jurisdiction to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment
or other court order in favor of Bank. 
Borrower expressly submits and consents in advance to such jurisdiction
in any action or suit commenced in any such court, and Borrower hereby waives
any objection that it may have based upon lack of personal jurisdiction,
improper venue, or forum non conveniens and hereby consents to the granting of
such legal or equitable relief as is deemed appropriate by such court.  Borrower hereby waives personal service of
the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in Section 10 of this EXIM Agreement and that service so made shall be
deemed completed upon the earlier to occur of Borrower’s actual receipt thereof
or three (3) days after deposit in the U.S. mails, proper postage prepaid.

 

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR
ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL
OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER
INTO THIS AGREEMENT.  EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

12           GENERAL PROVISIONS

 

12.1        Successors and Assigns.  This EXIM Agreement binds and is for the
benefit of the successors and permitted assigns of each party.  Borrower may not assign this EXIM Agreement
or any rights or obligations under it without Bank’s prior written consent
(which may be granted or withheld in Bank’s discretion).  Bank has the right, 

 

11

 

without the consent of or notice to Borrower, to sell,
transfer, negotiate, or grant participation in all or any part of, or any
interest in, Bank’s obligations, rights, and benefits under this EXIM Agreement
and the other Loan Documents.

 

12.2        Indemnification.  Borrower agrees to indemnify, defend and hold
Bank and its directors, officers, employees, agents, attorneys, or any other
Person affiliated with or representing Bank (each, an “Indemnified
Person”) harmless against:  (a) all
obligations, demands, claims, and liabilities (collectively, “Claims”) asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or
Bank Expenses incurred, or paid by such Indemnified Person from, following, or
arising from transactions between Bank and Borrower (including reasonable
attorneys’ fees and expenses), except for Claims and/or losses directly caused
by such Indemnified Person’s gross negligence or willful misconduct.

 

12.3        Time of Essence.  Time is of the essence for the performance of
all Obligations in this EXIM Agreement.

 

12.4        Severability of Provisions.  Each provision of this EXIM Agreement is
severable from every other provision in determining the enforceability of any
provision.

 

12.5        Correction of
Loan Documents.  Bank
may correct patent errors and fill in any blanks in this EXIM Agreement and the
other Loan Documents consistent with the agreement of the parties.

 

12.6        Amendments in Writing; Integration.  All amendments to this EXIM Agreement must be
in writing signed by both Bank and Borrower. 
This EXIM Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or
agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this EXIM Agreement and the Loan Documents
merge into this EXIM Agreement and the Loan Documents.

 

12.7        Counterparts.  This EXIM Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, are an original, and all taken together,
constitute one EXIM Agreement.

 

12.8        Survival. 
All covenants, representations and warranties made in this EXIM
Agreement continue in full force until this EXIM Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this EXIM Agreement) have been satisfied.  The obligation of Borrower in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect
to such claim or cause of action shall have run.

 

12.9        Confidentiality.  In handling any confidential information,
Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to
Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use commercially reasonable efforts to obtain such prospective transferee’s
or purchaser’s agreement to the terms of this provision); (c) as required
by law, regulation, subpoena, or other order; (d) to Bank’s regulators or
as otherwise required in connection with Bank’s examination or audit; (e) as
Bank considers appropriate in exercising remedies under the Loan Documents; and
(f) to third-party service providers of Bank so long as such service providers
have executed a confidentiality agreement with Bank with terms no less
restrictive than those contained herein. 
Confidential information does not include information that either: (i) is
in the public domain or in Bank’s possession when disclosed to Bank, or becomes
part of the public domain after disclosure to Bank; or (ii) is disclosed
to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.

 

Bank may use confidential
information for any purpose, including, without limitation, for the development
of client databases, reporting purposes, and market analysis, so long as Bank
does not disclose Borrower’s identity or the identity of any person associated
with Borrower unless otherwise expressly permitted by this EXIM Agreement.  The provisions of the immediately preceding
sentence shall survive the termination of this EXIM Agreement

 

12.10      Right of Set Off.  Borrower 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 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 

 

12

 

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 Obligations.  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.

 

12.11      Borrower Liability. Either Borrower may,
acting singly, request Credit Extensions hereunder.  Each Borrower hereby appoints the other as
agent for the other for all purposes hereunder, including with respect to
requesting Credit Extensions hereunder. 
Each Borrower hereunder shall be jointly and severally obligated to
repay all Credit Extensions made hereunder, regardless of which Borrower
actually receives said Credit Extension, as if each Borrower hereunder directly
received all Credit Extensions. 
Each Borrower waives any suretyship defenses available to it under the
Code or any other applicable law.  Each
Borrower waives any right to require Bank to: (i) proceed against any
Borrower or any other Person; (ii) proceed against or exhaust any
security; or (iii) pursue any other remedy.  Bank may exercise or not exercise any right
or remedy it has against any Borrower or any security it holds (including the
right to foreclose by judicial or non-judicial sale) without affecting any
Borrower’s liability hereunder. 
Notwithstanding any other provision of this EXIM Agreement or any other
Loan Document, each Borrower irrevocably waives all rights that it may have at
law or in equity (including, without limitation, any law subrogating Borrower
to the rights of Bank under this EXIM Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of
the Obligations, for any payment made by Borrower with respect to the Obligations
in connection with this EXIM Agreement, any other Loan Document or otherwise
and all rights that it might have to benefit from, or to participate in, any
security for the Obligations as a result of any payment made by Borrower with
respect to the Obligations in connection with this EXIM Agreement or otherwise
but only until such time as the Bank has been paid in full.  Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section 12.12
shall be null and void.  If any payment
is made to a Borrower in contravention of this Section 12.12, such
Borrower shall hold such payment in trust for Bank and such payment shall be
promptly delivered to Bank for application to the Obligations, whether matured
or unmatured.

 

12.12      EXIM Borrower Agreement; Cross-Collateralization; Cross-Default;
Conflicts.  Both this EXIM Agreement and the EXIM
Borrower Agreement shall continue in full force and effect, and all rights and
remedies under this EXIM Agreement and the EXIM Borrower Agreement are
cumulative.  The term “Obligations” as
used in this EXIM Agreement and in the EXIM Borrower Agreement shall include
without limitation the obligation to pay when due all loans made pursuant to
the EXIM Borrower Agreement (the “EXIM Loans”)
and all interest thereon and the obligation to pay when due all EXIM Advances
made pursuant to the terms of this EXIM Agreement and all interest
thereon.  Without limiting the generality
of the foregoing, the security interest granted herein covering all “Collateral”
as defined in this EXIM Agreement and as defined in the EXIM Borrower Agreement
shall secure all EXIM Loans and all EXIM Advances and all interest thereon, and
all other Obligations.  Any Event of
Default under this EXIM Agreement shall also constitute a default under the
EXIM Borrower Agreement, and any default under the EXIM Borrower Agreement
shall also constitute an Event of Default under this EXIM Agreement.  In the event Bank assigns its rights under
this EXIM Agreement and/or under any note evidencing EXIM Loans and/or its
rights under the EXIM Borrower Agreement and/or under any note evidencing EXIM
Advances, to any third party, including, without limitation, the EXIM Bank,
whether before or after the occurrence of any Event of Default, Bank shall have
the right (but not any obligation), in its sole discretion, to allocate and
apportion Collateral to the EXIM Borrower Agreement and/or note assigned and to
specify the priorities of the respective security interests in such Collateral
between itself and the assignee, all without notice to or consent of the
Borrower.  Should any term of the EXIM
Agreement conflict with any term of the EXIM Borrower Agreement, the more
restrictive term in either agreement shall govern Borrower.

 

13           DEFINITIONS

 

13.1        Definitions.  Except as otherwise defined, terms that are
capitalized in this EXIM Agreement shall have the meaning assigned in the
Domestic Agreement.  As used in this EXIM
Agreement, the following terms have the following meanings:

 

“Account” is any
“account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable
and other sums owing to Borrower.

 

“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term
as may hereafter be made.

 

13

 

“Affiliate” of
any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with
the Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s
managers and members.

 

“Availability Amount”
is (a) the lesser of (i) the Revolving Line or (ii) the EXIM
Borrowing Base minus (b) the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit) plus (c) an
amount equal to the Letter of Credit Reserve.

 

“Bank” is
defined in the preamble hereof.

 

“Bank Expenses”
are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency
Proceedings) or otherwise incurred with respect to Borrower.

 

“Borrower” is
defined in the preamble hereof.

 

“Borrower’s Books”
are all Borrower’s books and records including ledgers, federal and state tax
returns, records regarding Borrower’s assets or liabilities, the Collateral,
business operations or financial condition, and all computer programs or
storage or any equipment containing such information.

 

“Borrowing Resolutions”
is defined in the Domestic Agreement.

 

“Business Day”
is any day that is not a Saturday, Sunday or a day on which Bank is closed.

 
“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of Massachusetts; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth of Massachusetts, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
 
“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A.

 

“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (a) any indebtedness, lease, dividend, letter of credit or
other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse by that Person,
or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement,
interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; but “Contingent Obligation” does not
include endorsements in the ordinary course of business.  The amount of a Contingent Obligation is the
stated or determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not
exceed the maximum of the obligations under any guarantee or other support
arrangement.

 

“Credit Extension”
is any EXIM Advance or any other extension of credit by Bank for Borrower’s
benefit.

 

“Default” means
any event which with notice or passage of time or both, would constitute an
Event of Default.

 

“Default Rate”
is defined in Section 2.3(b).

 

14

 

“Deposit Account”
is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.

 

“Designated Deposit Account”
is the Borrower’s Designated Deposit Account, as such term is defined in the
Domestic Agreement.

 

“Dollars,”  “dollars” and “$” each mean
lawful money of the United States.

 

“Domestic Agreement”
is defined in Section 1.1(a).

 

“Domestic Loan Documents”
is defined in Section 1.1(a).

 

“Domestic Revolving Line”
means the Revolving Line, as such term is defined in the Domestic Agreement.

 

“Effective Date”
is the date Bank executes this EXIM Agreement and as indicated on the signature
page hereof.

 

“Eligible EXIM Accounts” means
Accounts arising in the ordinary course of Borrower’s business from Non-U.S.
Account Debtors and that meet all Borrower’s representations and warranties in Section 5.3,
conform in all respects to the EXIM Borrower Agreement, and which Bank, in its
sole discretion, shall deem eligible for borrowing.  Without limiting the fact that the
determination of which Accounts are eligible for borrowing is a matter of Bank’s
good faith business judgment, the following (the “Minimum EXIM
Eligibility Requirements”) are the minimum requirements for an
Account to be an Eligible EXIM Account. 
The Account must not:

 

(a) be on terms of more than net 60 days from its
invoice date;

 

(b) be outstanding for more than 60 days past its
due date as set forth in the applicable invoice (the “EXIM
Eligibility Period”) unless insured through insurance provided by
the EXIM Bank, in which case a period of 90 days past its due date shall apply;

(c) have credit balances over 90 days past
original invoice due date;

 

(d) be owing from a non-U.S. Account Debtor,
including its Affiliates, whose total obligations to Borrower exceed
twenty-five (25%) of all Accounts owing from non-U.S. Account Debtors, for the
amounts that exceed that percentage, unless Bank approves in writing;

 

(e) represent progress billings, or be due under
a fulfillment or requirements contract with the non-U.S. Account Debtor;

 

(f) be subject to any contingencies (including
Accounts arising from sales on consignment, guaranteed sale or other terms
pursuant to which payment by the non-U.S. Account Debtor may be conditional);

 

(g) be owing from a non-U.S. Account Debtor with
whom Borrower has any dispute (whether or not relating to the particular
Account) but only up to the disputed amount;

 

(h) be owing from a non-U.S. Account Debtor which
is Borrower’s Affiliate, officer, employee, or agent;

 

(i) be owing from a non-U.S. Account Debtor which
is subject to any insolvency or bankruptcy proceeding, or whose financial
condition is not acceptable to Bank, or which, fails or goes out of a material
portion of its business;

 

(j) be owing from a non-U.S. Account Debtor
affiliated with any military organization or arise from the sale or licensing
of goods or provision of services related to the defense industry;

 

(k) be owing from a non-U.S. Account Debtor
located in countries where the EXIM Bank is legally prohibited from doing
business or in which EXIM Bank coverage is not available (as designated by the
EXIM Bank’s most recent Country Limitation Schedule);

 

15

 

(l) be billed in currencies other than in U.S.
Dollars, unless otherwise approved by the EXIM Bank;

 

(m) be backed by letters of credit that are
unacceptable to Bank in its sole discretion;

 

(n) be backed by a letter of credit but where the
goods covered have not yet been shipped or where the services covered have not
yet been provided;

 

(o) be billed and payable outside of the United
States, unless otherwise approved by the EXIM Bank;

 

(p) be owing from a non-U.S. Account Debtor to
whom Borrower is or may be liable for goods purchased from such non-U.S.
Account Debtor or otherwise (but, in such case, the Account will be deemed not
eligible only to the extent of any amounts owed by Borrower to such non-U.S.
Account Debtor);

 

(q) Accounts owing from a non-U.S. Account
Debtor, fifty percent (50%) or more of whose Accounts have not been paid within
sixty (60) days of invoice date;

 

(r) Accounts with respect to which an invoice has
not been sent;

 

(s) Accounts as to which Bank does not have a
valid, perfected first priority lien;

 

(t) Accounts for which the items giving rise to
such Account have not been shipped and delivered to the non-U.S. Account Debtor
or the services giving rise to such Account have not been performed by Borrower
or the Account does not represent a final sale of goods or services;

 

(u) Accounts for which Borrower has made any
agreement with the non-U.S. Account Debtor for any deduction therefrom except
for discounts or allowances made in the ordinary course of business for prompt
payment, all of which discounts or allowances are reflected in the calculation
of the face value of each respective invoice related thereto;

 

(v) Accounts for which any of the items giving
rise to such Accounts have been returned, rejected or repossessed;

 

(w) Accounts arising from items to be used in the
construction, alteration, operation, or maintenance of nuclear power,
enrichment, reprocessing, research or heavy water production facilities;

 

(x)  Accounts which are not Eligible
Export-Related Accounts Receivable; and

 

(y)  Accounts not owned by the Borrower or
subject to any Liens, except for Permitted Liens and the Liens granted to or in
favor of Bank under this EXIM Agreement or any of the other Loan Documents.

 

“Eligible Export-Related Accounts Receivable”
is defined in the EXIM Borrower Agreement.

 

“Eligible EXIM Inventory”
means, at any time, the aggregate of Borrower’s Inventory, which may include raw
materials, works in progress, and finished goods accompanied by a purchase
order, that is intended for export and is not:

 

(a) subject to any Liens, except the Liens
granted to or in favor of Bank under this EXIM Agreement or any of the other
Loan Documents;

 

(b) deemed perishable, obsolete, not sellable,
damaged, or defective by Bank;

 

(c) otherwise deemed unacceptable by Bank, in its
good faith business judgment;

 

(d) located outside of the United States;

 

(e) located at an address that has not been disclosed
in the Perfection Certificate or other location disclosed to Bank pursuant to
this EXIM Agreement;

 

(f) demonstration Inventory or Inventory sold on
consignment;

 

16

 

(g) Inventory used for defense or military
purposes;

 

(h) proprietary software (i.e., software not
intended for resale);

 

(i) Inventory which is returned or unfit for
further processing;

 

(j) Inventory which is destined for shipment to
non-U.S. Account Debtor in a country where the EXIM Bank is legally prohibited
from doing business or in which insurance coverage provided by the EXIM Bank is
not available as designated in the EXIM Bank’s most recent Country Limitation
Schedule;

 

(k) Inventory which has been previously exported
from the United States;

 

(l) Inventory which is to be incorporated into
items whose sale would not result in an Eligible EXIM Account; and

 

(m) Inventory which is to be incorporated into
items destined for shipment to an Account Debtor located in a country in which
EXIM Bank coverage is not available as designated in the EXIM Bank’s most
recent Country Limitation Schedule, unless and only to the extent that such
items are to be sold to an Account Debtor located in such a country on terms of
a letter of credit by a bank acceptable to the EXIM Bank.

 

“Equipment” is
all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.

 

“Event of Default”
is defined in Section 8.

 

“EXIM Advance” or “EXIM
Advances” means an advance (or advances) under the Revolving Line.

 

“EXIM Bank”
means Export-Import Bank of the United States.

 

“EXIM Borrower Agreement” is
defined in Section 2.6.

 

“EXIM Borrowing Base”
is (a) eighty percent (80%) of Eligible EXIM Accounts plus (b) fifty
percent (50%) of the value of Borrower’s Eligible Foreign Inventory (valued at
the lower of cost or wholesale fair market value) (provided, however,
such amount in clause (b) shall not exceed the lesser of (X) Three
Hundred Fifty Thousand Dollars ($350,000) and (Y) sixty percent (60%) of
the sum of clause (a) plus clause (b) plus the
aggregate face amount of all outstanding Letters of Credit)), in each case as
determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided,
however, that Bank may decrease the foregoing amounts and/or percentages
in its good faith business judgment based on events, conditions, contingencies,
or risks which, as determined by Bank, may adversely affect Collateral.

 

“EXIM  Borrowing Base Certificate” is that certain certificate
describing the calculation of the EXIM Borrowing Base, provided to Borrower by
Bank.

 

“EXIM Eligibility Period” is
defined in the defined term “Eligible EXIM Account.”

 

“EXIM Guaranty”
is defined in Section 2.5.

 

“EXIM Loans” is
defined in Section 12.13.

 

“EXIM Note” is a
certain Promissory Note of even date executed by Borrower in connection with
this EXIM Agreement.

 

“Export-Related Accounts
Receivable” is defined in the EXIM Borrower Agreement.

 

“Export-Related General
Intangibles” is defined in the EXIM Borrower Agreement.

 

“Export-Related Inventory”
is defined in the EXIM Borrower Agreement.

 

17

 

“Funding Date”
is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.

 

“GAAP” is
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.

 

“General Intangibles”
is all “general intangibles” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance
and rights to payment of any kind.

 

“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property
or services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures
or similar instruments, (c) capital lease obligations, and (d) Contingent
Obligations.

 

“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

 

“Inventory” is
all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

 

“Letter of Credit”
means a standby letter of credit issued by Bank or another institution based
upon an application, guarantee, indemnity or similar agreement on the part of
Bank as set forth in Section 2.1.2.

 

“Letter of Credit
Application” is defined in Section 2.1.2(a).

 

“Letter of Credit Reserve”
has the meaning set forth in Section 2.1.2(d).

 

“Lien” is
a claim, mortgage, lien, deed of
trust, levy, charge, pledge, security interest or other encumbrance of any
kind, whether voluntarily incurred or arising by operation of law or otherwise
against any property.

 

“Loan Documents”
are, collectively, this EXIM Agreement, the Perfection Certificate, the Domestic
Agreement, the Domestic Loan Documents, the EXIM Borrower Agreement, the EXIM
Guaranty, the EXIM Note, 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 EXIM
Agreement, all as amended, restated, or otherwise modified.

 

“Minimum EXIM Eligibility Requirements”
is defined in the defined term “Eligible EXIM Accounts”.

 

“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
EXIM Agreement, the Domestic Agreement, the other Loan Documents, or otherwise,
including, without limitation, all obligations relating to letters of credit,
cash management services, if any, 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.

 

18

 

“Perfection Certificate”
is defined in Section 5.1.

 

“Permitted Liens”
is defined in the Domestic Agreement.

 

“Person” is any
individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.

 

“Prime Rate” is
the greater of (i) five percent (5.00%) or (ii) Bank’s most recently
announced “prime rate,” even if it is not Bank’s lowest rate.

 

“Reserves” means, as
of any date of determination, such amounts as Bank may from time to time
establish and revise in its good faith business judgment, reducing the amount
of EXIM Advances and other financial accommodations which would otherwise be
available to Borrower (a) to reflect events, conditions, contingencies or
risks which, as determined by Bank in its good faith business judgment, do or
may adversely affect (i) the Collateral or any other property which is
security for the Obligations or its value (including without limitation any
increase in delinquencies of Accounts), (ii) the assets business or
prospects  of Borrower or any guarantor, or (iii) the security
interests and other rights of Bank in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Bank’s
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any guarantor to
Bank is or may have been incomplete, inaccurate or misleading in any material
respect; or (c) in respect of any state of facts which Bank determines in
good faith  constitutes an Event of Default or may, with notice or
passage of time or both, constitute an Event of Default.

 

“Responsible Officer”
is any of the Chief Executive Officer, President, Chief Financial Officer and
Controller of Borrower.

 

“Revolving Line”
is an EXIM Advance or EXIM Advances in an amount equal to One Million Two
Hundred Fifty Thousand Dollars ($1,250,000).

 

“Revolving Line Maturity Date” is
July      ,
2010.

 

“Subsidiary”
means, with respect to any Person, any Person of which more than fifty percent
(50%) of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by such Person or one or more Affiliates of such
Person.

 

“Transaction Report” is the Bank’s
standard transaction reporting package that Bank shall provide to Borrower.

 

“Transfer” is
defined in Section 7.1.

 

[Signature page follows.]

 

19

 

IN WITNESS WHEREOF, the parties
hereto have caused this EXIM Agreement to be executed as a sealed instrument
under the laws of the Commonwealth of Massachusetts as of the 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

  	
   

  
	
   

  
	
   

  
	
  Effective Date: July 2, 2008

  
													

 

[EXIM Loan and Security
Agreement Signature Page]

 

 

EXHIBIT A

 

The Collateral consists
of all of Borrower’s right, title and interest in and to the following personal
property now owned or hereafter acquired by Borrower:

 

(i) all goods, Accounts (including health-care
receivables), Equipment, Inventory, contract rights or rights to payment of
money, leases, license agreements, franchise agreements, General Intangibles,
commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and

 

(ii) all Borrower’s
Books relating to the foregoing, and any and all claims, rights and interests
in any of the above and all substitutions for, additions, attachments,
accessories, accessions and improvements to and replacements, products,
proceeds and insurance proceeds of any or all of the foregoing.

 

1

 

Annex A

 

BORROWER AGREEMENT

 

1

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