Document:

Exhibit
10.3 

 

Microfluidics International Corporation 

30 Ossipee Road 

Newton, MA 02464 

 

December 3, 2008 

 

Global Strategic Partners, LLC 

11755 Wilshire
Blvd., Suite 2000

Los Angeles, CA 90025 

Attn: 
Charles Kim, Acting General Counsel 

 

Re:       Registration Rights Agreement dated as of November 14,
2008 (the “Agreement”), by and between Global Strategic Partners, LLC (the
“Investor”) and Microfluidics International Corporation (the “Company”) 

 

Dear Mr. Kim:

 

Pursuant to Section 7(c) of
the Agreement, the parties hereby agree to amend Section 1(a)(i) of
the Agreement to provide an additional seven (7) calendar days for the
preparation and filing by the Company of the Registration Statement on Form S-3
referenced in such Section 1(a)(i). 
As a result, the Company shall file such Registration Statement on or
before December 11, 2008. 

 

Please have
the Investor sign below to indicate agreement with the foregoing and return a
pdf of the countersigned letter to me at bleclair@mfics.com at your earliest
convenience. 

 

 

Microfluidics
International Corporation 

 

 

	
  By:

  	
  /s/ Brian E. LeClair

  	
   

  
	
   

  	
  Brian E. LeClair,
  Executive Vice President 

  	
   

  

 

 

AGREED TO
AND ACCEPTED: 

 

Global
Strategic Partners, LLC 

 

 

	
  By:

  	
  /s/ Bruce Wendel

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Bruce Wendel

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  EVP 

  	
   

  
					

 

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT is made as of November 14,
2008, by and among Microfluidics International Corporation, a Delaware
corporation (the “Company”), and Global Strategic Partners, LLC, a Delaware
limited liability company (the “Investor”).

 

This Agreement is made pursuant to a certain Debenture and Warrant
Purchase Agreement dated as of the date hereof by and among the Company and
Investor (the “Purchase Agreement”). The execution of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.

 

NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, agree as follows:

 

1.                                       REGISTRATION
STATEMENTS.

 

(a)                                  Shelf
Registration.

 

(i)                                     The
Company shall, on or before the date which is 20 days after the Closing Date,
prepare and file with the Commission under the Securities Act a Registration
Statement on Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Common Shares on Form S-3, in which
case such registration shall be on another appropriate form in accordance with
the Securities Act and the Exchange Act and as consented to by the Investor)
for sale of the Registrable Securities by the Investor on a delayed or
continuous basis under Rule 415 of the Securities Act, and shall use its
best efforts to cause such Registration Statement to be declared effective at
the earliest practicable date, but in no event later than the 120th day after the Closing Date. The Company shall
at its own expense, subject to Section 1(a)(iv), ensure the availability
of a Prospectus meeting the requirements of Section 10(a) of the
Securities Act and shall take any and all other actions necessary in order to
ensure the ability of the holders of all of the Registrable Securities to
effect a resale of their Registrable Securities, for such period as the Company
is obligated to maintain the effectiveness of a Registration Statement pursuant
to Section 1(a)(ii).

 

(ii)                                  The
Company shall use its best efforts to cause any such Registration Statement
described in Section 1(a)(i) to remain effective (or, if required by
applicable law, to cause another Registration Statement with respect to the
Registrable Securities to become and remain effective) until the earliest to
occur of: (i) such time as all the Registrable Securities have been sold
by the Investor; (ii) such time as all the Registrable Securities held by
the Investor could be sold under Rule 144 of the Securities Act during any
90-day period without restriction (including without limitation as to volume by
each holder thereof); and (iii) the date which is two years after the
Effective Date.

 

(iii)                               The
Company shall, at all times during the Registration Period, subject to Section 1(a)(iv),
promptly: (A) file such amendments to the Registration Statement and the
Prospectus, file such documents as may be required to be incorporated by
reference in

 

 

any of such
documents, and take all other actions as may be necessary to ensure to the
holders of Registrable Securities the ability to effect the public resale of
their Registrable Securities (including without limitation taking any actions
necessary to ensure the availability of a Prospectus meeting the requirements
of Section 10(a) of the Securities Act) continuously through the
Registration Period; and (B) provide each holder of Registrable Securities
copies of any documents prepared pursuant to Section 1(a)(iv)(A) promptly
after such preparation.

 

(iv)                              The
Company may suspend the effectiveness of any Registration Statement filed
pursuant to this Section 1(a) if, in its reasonable judgment, (A) maintaining
the effectiveness of such Registration Statement at such time would materially
adversely affect a proposed financing, reorganization or recapitalization of
the Company, or pending negotiations relating to a merger, consolidation,
acquisition or similar transaction involving the Company; or (B) financial
statements meeting the requirements of Regulation S-X are not available at such
time because of any such pending proposal or negotiations; provided, however,
that the right of the Company pursuant to this subsection (iv) to
suspend the effectiveness of the Registration Statement shall not extend for
more than 30 consecutive days for any single suspension event and may not be
exercised more than twice during any period of 12 consecutive months; and
provided, further, that the Company shall give to each holder of Registrable
Securities prior written notice of such suspension.

 

(b)                                 Amendments.
Upon the occurrence of any event that would cause any Registration
Statement (i) to contain a material misstatement or omission or (ii) not
to be effective and usable for resale of Registrable Securities during the
period that such Registration Statement is required to be effective and usable,
the Company shall promptly file an amendment to the Registration Statement, in
the case of clause (i), correcting any such misstatement or omission, and in
the case of either clause (i) or (ii), using its best efforts to cause
such amendment to be declared effective and such Registration Statement to
become usable as soon as practicable thereafter.

 

(c)                                  Representation
and Warranty. The Company represents and warrants to the Investor that (i) the
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein), at the time it is first filed with the SEC, at
the time it is ordered effective by the SEC and at all times during which it is
required to be effective hereunder (and each such amendment and supplement at
the time it is filed with the SEC and at all times during which it is available
for use in connection with the offer and sale of the Registrable Securities)
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (ii) the Prospectus, at the time the
Registration Statement is declared effective by the SEC and at all times,
subject to Section 1(a)(iv) hereof, that the Prospectus is required
by this to be available for use by any Investor and, in accordance with this
Agreement, any Investor is entitled to sell Registrable Securities pursuant to
the Prospectus, shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.

 

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2.                                       REGISTRATION
PROCEDURES.

 

In connection with any Registration Statement and subject to the
provisions of Section 1, the Company shall use its best efforts to effect
such registration to permit the sale of the Registrable Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company shall as expeditiously as possible:

 

(a)                                  prepare
and file with the Commission a Registration Statement relating to the
registration on Form S-3 under the Securities Act, which form shall be
available for the sale of the Registrable Securities being sold in accordance
with the intended method or methods of distribution thereof, and use its best
efforts to cause such Registration Statement to become effective and approved
by such governmental agencies or authorities as may be necessary to enable the
selling holders to consummate the disposition of such Registrable Securities;

 

(b)                                 prepare
and file with the Commission such amendments and supplements to such
Registration Statement and the Prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement;

 

(c)                                  advise
the holders of the Registrable Securities promptly (and in any event within one
Business Day, by e-mail, fax or other type of communication) and, if requested
by such Persons, confirm such advice in writing:

 

(i)                                     when
the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to the Registration Statement or any
post-effective amendment thereto, when the same has become effective;

 

(ii)                                  of
the existence of any fact and the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document incorporated
by reference therein untrue, or that requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to make the
statements therein not misleading; and

 

(iii)                               of
the issuance by the Commission of any stop order or other order suspending the
effectiveness of the Registration Statement, or any order issued by any state
securities commission or other regulatory authority suspending the
qualification or exemption from qualification of such Registrable Securities
under state securities or “blue sky” laws. If at any time the Company shall
receive any such stop order suspending the effectiveness of the Registration
Statement, or any such order from a state securities commission or other regulatory
authority, the Company shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.

 

(d)                                 deliver
to each holder of the Registrable Securities, without charge, as many copies of
the Prospectus and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus and any
amendment or supplement thereto by each of the holders of the Registrable
Securities in connection with the

 

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offering and
the sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;

 

(e)                                  prior
to any public offering of Registrable Securities, cooperate with the holders of
the Registrable Securities and their respective counsel in connection with the
registration and qualification of the Registrable Securities under the
securities or “blue sky” laws of such jurisdictions as the holders of the
Registrable Securities may reasonably request and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the Registration Statement;

 

(f)                                    use
its best efforts to cause the Registrable Securities covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;

 

(g)                                 if
any fact or event contemplated by clause (c)(ii) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of Registrable Securities, the Prospectus will not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;

 

(h)                                 make
available for inspection during normal business hours by a representative of
the holders of the Registrable Securities, and any attorney, accountant or
other professional retained by such holders, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company’s officers, directors and employees to supply all information
reasonably requested by any such holder, attorney, accountant or other
professional in connection with such Registration Statement subsequent to the
filing thereof and prior to its effectiveness, except that the aforementioned
advisors may be required to sign a confidentiality agreement containing
customary terms and exceptions;

 

(i)                                     otherwise
use its best efforts to comply with all applicable rules and regulations
of the Commission;

 

(j)                                     use
its best efforts to cause all Registrable Securities to be listed on each
securities exchange or market, if any, on which equity securities issued by the
Company are then listed; and

 

(k)                                  use
its best efforts to take all other steps necessary to effect the registration
of the Registrable Securities contemplated hereby.

 

It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the Registrable
Securities of the Investor that the Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect the registration of such Registrable

 

4

 

Securities and
shall execute such documents in connection with such registration as the
Company may reasonably request.

 

Each holder of the Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 2(c)(ii), or notice
of a stop order or suspension described in Section 2(c)(iii), such holder
shall forthwith discontinue disposition of Registrable Securities and cease to
use the Prospectus in use under such Registration Statement. The Company shall,
as promptly as practicable, provide each holder with copies of the supplemented
or amended Prospectus contemplated by Section 2(g), or advise the holders
in writing that the use of the Prospectus may be resumed, and promptly provide
each holder with copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus. If so directed by the Company,
each such holder shall deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies then in such holder’s possession, of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.

 

3.                                       REGISTRATION
EXPENSES. All expenses incident to the Company’s performance of or
compliance with this Agreement shall be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation:

 

(a)                                  all
registration and filing fees and expenses;

 

(b)                                 fees
and expenses of compliance with federal securities and state “blue sky” or
securities laws;

 

(c)                                  expenses
of printing (including printing certificates for the Registrable Securities and
Prospectuses), messenger and delivery services and telephone;

 

(d)                                 all
application and filing fees in connection with listing the Registrable
Securities on a national securities exchange or automated quotation system
pursuant to the requirements hereof;

 

(e)                                  all
fees and disbursements of counsel of the Company and independent certified
public accountants of the Company (including the expenses of any special audit
and “cold comfort” letters required by or incident to such performance);

 

(f)                                    the
reasonable fees and disbursements of one counsel for the holders; and

 

(g)                                 any
reasonable out-of-pocket expenses of the holders of the Registrable Securities
(or the agents who manage their accounts); provided, however, that the Investor  shall be responsible for paying the
underwriting commissions or brokerage fees, and taxes of any kind (including,
without limitation, transfer taxes) applicable to any disposition, sale or
transfer of the Registrable Securities and provided further that the Company
shall not be responsible for any legal, accounting or other expenses incurred
by the Investor in connection with the Registration Statement.

 

5

 

The Company shall, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, rating
agency fees and the fees and expenses of any Person, including special experts,
retained by the Company.

 

In addition, notwithstanding anything to the
contrary contained herein, the Company shall pay all of the Investor’s costs
and expenses (including reasonable legal fees) incurred in connection with the
enforcement of the rights of the Investor hereunder.

 

4.                                       INDEMNIFICATION.

 

(a)                                  The
Company agrees to indemnify and hold harmless each holder of the Registrable
Securities and each Person, if any, who controls such holder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and expenses
(including, without limiting the foregoing but subject to Section 4(c),the
reasonable legal and other expenses incurred in connection with any action, suit
or proceeding or any claim asserted) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by an untrue statement or
omission contained in information relating to such holder, furnished to the Company
in writing by such holder expressly for use therein.

 

(b)                                 As
a condition to the inclusion of its Registrable Securities in any Registration
Statement pursuant to this Agreement, each holder thereof shall furnish to the
Company in writing, promptly after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with
any Registration Statement, Prospectus or preliminary prospectus (including
such completed and executed questionnaires as the Company may reasonably
request) and agrees to indemnify and hold harmless, severally and not jointly,
the Company and its directors, its officers who sign such Registration
Statement, and any Person controlling the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent
as the indemnity from the Company to each holder and Persons controlling such
holder, but only to the extent of losses, claims, damages, liabilities or
expenses caused by an untrue statement or an omission contained in information
relating to such holder furnished in writing by such holder expressly for use
in such Registration Statement or the Prospectus or any preliminary prospectus
included therein, and of which none of the Company, its directors, officers or
Affiliates has any actual or constructive knowledge independent of such holder;
provided, however, that such holder of Registrable Securities shall not be
liable in any such case to the extent that the holder has furnished in writing
to the Company prior to the filing of any such Registration Statement,
Prospectus or preliminary prospectus information expressly for use in such
Registration Statement, Prospectus or preliminary prospectus which corrected or
made not misleading information previously furnished to the Company, and the
Company failed to include such information therein. In case any action

 

6

 

shall be brought against the Company, any of its directors, any such
officer, or any such controlling Person based on the Registration Statement,
the Prospectus or any preliminary prospectus and in respect of which indemnity
may be sought against one or more of the holders, such holders shall have the
rights and duties given to the Company by Section 4(c) (except that if the
Company as provided in Section 4(c) shall have assumed the defense thereof
such holders shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of
such counsel shall be at such holder’s expense unless the conditions in clauses
(i), (ii) or (iii) of Section 4(c) shall apply) and the Company and its
directors, any such officers, and any such controlling Person shall have the
rights and duties given to the holders by Section 4(c). In no event shall
the aggregate liability of any selling holder hereunder, together with any
liability for contribution under Section 4(d), be greater than the net proceeds
(i.e., proceeds net of underwriting discounts, fees, commissions and any other
expenses payable by such selling holder) received by such holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.

 

(c)                                  In case any action or
proceeding (including any governmental or regulatory investigation or
proceeding) shall be brought against any current or former holder of the
Registrable Securities or any Person controlling such holder, with respect to
which indemnity may be sought against the Company pursuant to
Section 4(a), such holder or such Person controlling such holder shall
promptly notify the Company in writing and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
holder and payment of all fees and expenses relating thereto. Such holder and
such Persons controlling such holder shall have the right to employ separate
counsel in any such action or proceeding and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such holder’s
expense unless (i) the employment of such counsel has been specifically
authorized in writing by the Company, (ii) the Company has not assumed the
defense and employed counsel reasonably satisfactory to such holder within 15
days after notice of any such action or proceeding, or (iii) the named parties
to any such action or proceeding(including any impleaded parties) include both
such holder or any Person controlling such holder and the Company and such
holder or any Person controlling such holder shall have been advised by such
counsel that there may be one or more legal defenses available to such holder
or Person controlling such holder that are different from or additional to
those available to the Company and, in the reasonable opinion of counsel to
such holder or Person controlling such holder, could not be asserted by the
Company’s counsel without creating a conflict of interest (in which case the
Company shall not have the right to assume the defense of such action or
proceeding on behalf of such holder or controlling Person, it being understood,
however, that the Company shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to all local counsel which is necessary, in the good faith opinion of
both counsel for the indemnifying party and counsel for the indemnified party
in order to adequately represent the indemnified parties) for all such holders
and controlling Persons, which firm shall be designated in writing by the holders
of a majority of the Registrable Securities currently or formerly held by such
holders and that all such fees and expenses shall be promptly reimbursed as
they are incurred upon written request and presentation of invoices). The
Company shall not be liable for any settlement of any such action effected
without the written consent of the Company (which 

 

7

 

consent shall
not be unreasonably withheld or delayed), but if settled with the written
consent of the Company or if there is a final judgment for the plaintiff, the
Company agrees to indemnify and hold harmless such holder and all Persons
controlling such holder from and against any loss or liability by reason of
such settlement or judgment. The Company shall not, without the prior written
consent of the holder, effect any settlement of any pending or threatened
proceeding in respect of which any holder or any Person controlling such holder
is a party (or a potential party) and indemnity has been sought hereunder by
such holder or any Person controlling such holder unless such settlement
includes an unconditional release of such holder or such controlling Person
from all liability on claims that are the subject matter of such proceeding.

 

(d)                                 If the indemnification
provided for in this Section 4 is unavailable to an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and such holders on
the other hand in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and such holders on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Company on the one hand or by such holders on the other hand
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.

 

(e)                                  The Company and the
holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 4 were determined by a
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in subsection (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in subsection (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding any other provision of this Agreement, no holder of
the Registrable Securities shall be required to contribute an amount greater
than the net proceeds received by such holder with respect to the sale of
Registrable Securities giving rise to any indemnification or contribution
obligation under this Section 4. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.

 

5.                                       RULE 144.
The Company agrees with each holder of Registrable Securities to:

 

8

 

(a)                                  comply with the
requirements of Rule 144(c) under the Securities Act with respect to current
public information about the Company;

 

(b)                                 use its best efforts
to file with the Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act (at any
time it is subject to such reporting requirements); and

 

(c)                                  furnish to any holder
of Registrable Securities upon request (i) a written statement by the Company
as to its compliance with the requirements of said Rule 144(c) and the
reporting requirements of the Securities Act and the Exchange Act (at any time
it is subject to such reporting requirements), (ii) a copy of the most recent
annual or quarterly report of the Company, and (iii) such other reports and
documents of the Company as such holder may reasonably request to avail itself
of any similar rule or regulation of the Commission allowing it to sell any
such securities without registration.

 

6.                                       DEFINITIONS.

 

(a)                                  Definitions. Unless
the context otherwise requires, the terms hereinafter set forth when used
herein shall have the following meanings and the following definitions shall be
equally applicable to both the singular and plural forms of any of the terms
herein defined.

 

“Affiliate”
means, as to any Person, a Person which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, the first Person. The term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting stock, through an
investment advisory or other fiduciary arrangement, by contract or otherwise,
and the term “controlled” shall have a correlative meaning.

 

“Agreement”
means this Registration Rights Agreement and all Schedules hereto.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which
banks in Boston are required by law to close or are customarily closed.

 

“Closing
Date” means the “Closing Date” under the Purchase Agreement.

 

“Commission”
means the Securities and Exchange Commission as from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this
Agreement such Commission is not existing and performing the duties now
assigned to it under the Exchange Act, then the Person performing such duties
at such time.

 

“Common
Stock” means any stock of any class of the Company which has no preference
in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which is
not subject to redemption by the Company.

 

“Company”
has the meaning assigned in the first paragraph of this Agreement.

 

9

 

“Effective
Date” means the date the Registration Statement is declared effective by
the Commission.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Investor”
has the meaning assigned in the first paragraph of this Agreement, and includes
any of its successors or permitted assignees of any of their rights hereunder
that hold Registrable Securities.

 

 “Person” means any natural person,
corporation, partnership, limited liability company, trust or unincorporated
organization, incorporated government, government agency or political
subdivision thereof.

 

“Prospectus”
means the prospectus included in a Registration Statement, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

 

“Registrable
Securities” means (a) all shares of Common Stock issuable upon the
conversion of the Debenture and Warrant (as both of such terms are defined in
the Purchase Agreement) and (b) any shares of capital stock issued or issuable,
from time to time, upon any reclassification, share combination, share
subdivision, stock split, share dividend, merger, consolidation or similar
transaction or event or otherwise as a distribution on, in exchange for or with
respect to any of the foregoing, in each case held at the relevant time by an
Investor. As to any particular securities, such securities will cease to be
Registrable Securities when (i) they have been transferred in a public offering
registered under the Securities Act, (ii) they have been transferred in a sale
made through a broker, dealer or market-maker pursuant to Rule 144 under the
Securities Act or (iii) the holder thereof is able to sell all of such
securities under Rule 144 under the Securities Act during any 90-day period
without restriction (including without limitation, as to volume by the holder
thereof).

 

“Registration
Period” means the period from and after the Effective Date until the time
determined by Section 1(a)(ii) hereof.

 

“Registration
Statement” means any registration statement of the Company relating to the
registration for resale of Registrable Securities, including any registration
statement filed pursuant to the provisions of this Agreement, including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

7.                                       MISCELLANEOUS.

 

(a)                                  Remedies. Each
holder of the Registrable Securities, in addition to being entitled to exercise
all rights provided herein, and granted by law, including recovery of damages,
shall be entitled to specific performance of its rights under this Agreement. The

 

10

 

Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

 

(b)                                 No Inconsistent
Agreements. The Company shall not, on or after the date of this Agreement,
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to such holders of the Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company’s securities
under any other agreements.

 

(c)                                  Amendments and
Waivers. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given without the written
consent of the Company and the Investor.

 

(d)                                 Notices. Except
as may be otherwise provided herein, all notices, requests, waivers and other
communications made pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the
other party; (b) when sent by facsimile to the number set forth below if
sent between 8:00 a.m. and 5:00 p.m. recipient’s local time on a business day,
or on the next business day if sent by facsimile to the number set forth below
if sent other than between 8:00 a.m. and 5:00 p.m. recipient’s local time on a
business day; (c) three business days after deposit in the U.S. mail with
first class or certified mail receipt requested postage prepaid and addressed to
the other party at the address set forth below; or (d) the next business
day after deposit with a national overnight delivery service, postage prepaid,
addressed to the parties as set forth below with next business day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery service provider. Each person making a communication
hereunder by facsimile shall promptly confirm by telephone to the person to
whom such communication was addressed each communication made by it by
facsimile pursuant hereto but the absence of such confirmation shall not affect
the validity of any such communication. A party may change or supplement the
addresses given above, or designate additional addresses, for purposes of this
Section 7(d) by giving the other party written notice of the new address
in the manner set forth above.

 

(e)                                  Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of the Company and the Investor. The
rights and obligations of the Investor under this Agreement shall be
automatically assigned by the Investor to any transferee of all or any portion
of the Investor’s Registrable Securities who is a Permitted Transferee (as
defined below); provided, however, that within a reasonable time after the
transfer, (i) the Company is provided notice of the transfer including the name
and address of the transferee and the number of Registrable Securities
transferred; and (ii) that such transferee agrees in writing to be bound by the
terms of this Agreement. (For purposes of this “Agreement, a “Permitted
Transferee” shall mean any Person who (a) is an “accredited investor,” as that
term is defined in Rule 501(a) of Regulation D and (b) is a transferee of the
Registrable Securities as 

 

11

 

permitted
under the securities laws of the United States). Upon any transfer permitted by
this Section 8(e), the Company shall be obligated to such transferee to perform
all of its covenants under this Agreement as if such transferee were an
Investor.

 

(f)                                    Counterparts.
This Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

 

(g)                                 Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of laws thereof.

 

(h)                                 Severability. Should
any part of this Agreement for any reason be declared invalid, such decision
shall not affect the validity of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with
the invalid portion thereof eliminated and it is hereby declared the intention
of the parties hereto that they would have executed the remaining portion of
this Agreement without including therein any such part, parts, or portion which
may, for any reason, be hereafter declared invalid.

 

(i)                                     Captions. The
descriptive headings of the various Sections or parts of this Agreement are for
convenience only and shall not affect the meaning or construction of any of the
provisions hereof.

 

(j)                                     Waiver of Jury
Trial. EACH OF THE COMPANY AND THE INVESTOR WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM
ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

(k)                                  Entire Agreement.
This Agreement and the documents referred to herein constitute the entire
agreement among the parties with respect to the subject matter hereof and no party
shall be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein.

 

[Remainder of this page intentionally left
blank]

 

12

 

IN WITNESS
WHEREOF, each of the parties hereto has executed this Agreement, or caused this
Agreement to be duly executed on its behalf, as of the date first written.

 

 

	
   

  	
  Microfluidics International Corporation,
  

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian E. LeClair

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian E. LeClair

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Exec. VP & CFO

  

 

 

S-1

 

	
   

  	
  Global Strategic Partners, LLC,
  a 

  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce Wendel

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Bruce Wendel

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Authorized Person

  

 

S-2Exhibit 10.4

 

EXECUTION VERSION

 

SECURITY AGREEMENT

 

THIS
SECURITY AGREEMENT (this “Agreement”), dated as of November 14,
2008, is made between MICROFLUIDICS INTERNATIONAL CORPORATION, a Delaware
corporation (“Debtor”), and GLOBAL STRATEGIC PARTNERS, LLC, a Delaware
limited liability company (“Secured Party”).

 

Debtor
and Secured Party hereby agree as follows:

 

SECTION 1     Definitions; Interpretation.

 

(a)   All capitalized terms used in this Agreement
and not otherwise defined herein shall have the meanings assigned to them in
the Debenture and Warrant Purchase Agreement or in the Debenture, as the
context may require.

 

(b)   As used in this Agreement, the following
terms shall have the following meanings:

 

“Collateral”
has the meaning set forth in Section 2.

 

“Debenture”
means that certain Convertible Debenture in the aggregate principal amount of
$5,000,000, dated as of November 14, 2008 and made by Debtor in favor of
Secured Party, as amended, modified, renewed, extended or replaced from time to
time.

 

“Debenture
and Warrant Purchase Agreement” means that certain Debenture and Warrant
Purchase Agreement, of even date herewith, between Debtor and Secured Party, as
amended, modified, renewed, extended or replaced from time to time.

 

“Documents”
means this Agreement, the Debenture and Warrant Purchase Agreement, the
Debenture, the Warrant and all other certificates, documents, agreements and
instruments delivered to Secured Party under the foregoing agreements or in
connection with the Obligations.

 

“Event
of Default” has the meaning set forth in Section 7.

 

“Guarantor
Security Agreement” means that certain Guarantor Security Agreement, of
near or even date herewith, between Microfluidics Corporation, a Delaware
corporation, and Secured Party.

 

“Lien”
means any mortgage, deed of trust, pledge, security interest, assignment,
deposit arrangement, charge or encumbrance, lien, or other type of preferential
arrangement.

 

“Obligations”
means the indebtedness, liabilities and other obligations of Debtor to Secured
Party under or in connection with this Agreement, the Debenture and Warrant
Purchase Agreement, the Debenture and the other Documents, including, without
limitation, all unpaid principal of the Debenture, all interest accrued
thereon, all fees and all other amounts 

 

 

payable by Debtor to Secured Party thereunder or in
connection with any Document, whether now existing or hereafter arising, and
whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and including interest that accrues
after the commencement by or against Debtor of any bankruptcy or insolvency
proceeding naming such Person as the debtor in such proceeding.

 

“Partnership
and LLC Collateral” has the meaning set forth in Section 5.

 

“Permitted
Lien” has the meaning set forth in the Debenture and Warrant Purchase
Agreement.

 

“Person”
means an individual, corporation, partnership, joint venture, trust,
unincorporated organization, governmental agency or authority, or any other
entity of whatever nature.

 

“Pledged
Collateral” means Debtor’s (i) investment property and (ii) Partnership
and LLC Collateral, including any ownership interests in any subsidiaries of
Debtor.

 

“Pledged
Collateral Agreements” means any shareholders agreement, operating
agreement, partnership agreement, voting trust, proxy agreement or other
agreement or understanding with respect to any Pledged Collateral.

 

 “UCC” means the Uniform Commercial Code
as the same may, from time to time, be in effect in the State of New York.

 

“Warrant”
means that certain Common Stock Purchase Warrant, dated as of November 14,
2008, executed by Debtor in favor of Secured Party, as amended, modified,
renewed, extended or replaced from time to time.

 

(c)   Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned
to them in the UCC.

 

(d)   In this Agreement, (i) the meaning of
defined terms shall be equally applicable to both the singular and plural forms
of the terms defined; and (ii) the captions and headings are for
convenience of reference only and shall not affect the construction of this
Agreement.

 

SECTION 2     Security Interest.  As security for the payment and performance
of the Obligations, Debtor hereby grants to Secured Party a security interest
in all of Debtor’s right, title and interest in, to and under all of its
personal property, wherever located and whether now existing or owned or
hereafter acquired or arising, including all accounts, chattel paper,
commercial tort claims, deposit accounts, documents, equipment (including all
fixtures), general intangibles, instruments, inventory, investment property,
letter-of-credit rights, other goods, money and all products, proceeds and
supporting obligations of any and all of the foregoing (collectively, the “Collateral”).  This Agreement shall create a continuing
security interest in the Collateral which shall remain in effect until
terminated in accordance with Section 18 hereof.  Anything herein to the contrary
notwithstanding, in no event shall the Collateral include, and Debtor shall not
be deemed to have granted a security interest in, any of Debtor’s right, title
or 

 

2

 

interest
in any of the outstanding voting capital stock or other ownership interests of
a Controlled Foreign Corporation (as defined below) in excess of 65% of the
voting power of all classes of capital stock or other ownership interests of
such Controlled Foreign Corporation entitled to vote; provided that (A) immediately
upon the amendment of the Internal Revenue Code to allow the pledge of a
greater percentage of the voting power of capital stock or other ownership
interests in a Controlled Foreign Corporation without adverse tax consequences,
the Collateral shall include, and Debtor shall be deemed to have granted a
security interest in, such greater percentage of capital stock or other
ownership interests of each Controlled Foreign Corporation; and (B) if no
adverse tax consequences to Debtor shall arise or exist in connection with the
pledge of any Controlled Foreign Corporation, the Collateral shall include, and
Debtor shall be deemed to have granted a security interest in, such Controlled
Foreign Corporation.  As used herein, “Controlled
Foreign Corporation” shall mean a “controlled foreign corporation” as
defined in the Internal Revenue Code.

 

SECTION 3     Financing Statements and other Action.

 

(a)   Debtor hereby authorizes Secured Party to
file at any time and from time to time any financing statements describing the
Collateral, and Debtor shall execute and deliver to Secured Party, and Debtor
hereby authorizes Secured Party to file (with or without Debtor’s signature),
at any time and from time to time, all amendments to financing statements,
assignments, continuation financing statements, termination statements, account
control agreements, and other documents and instruments, in form reasonably
satisfactory to Secured Party, as Secured Party may reasonably request, to
perfect and continue perfected, maintain the priority of or provide notice of
the security interest of Secured Party in the Collateral and to accomplish the
purposes of this Agreement.  Without
limiting the generality of the foregoing, Debtor ratifies and authorizes the filing
by Secured Party of any financing statements filed prior to the date hereof.

 

(b)   Debtor will join with Secured Party in
notifying any third party who has possession of any Collateral of Secured Party’s
security interest therein and in obtaining an acknowledgment from the third
party that it is holding the Collateral for the benefit of Secured Party.

 

(c)   Within 30 days after the date hereof (or such
later date as shall be consented to by Secured Party), Debtor shall cause (i) any
depository institution at which Debtor maintains any deposit account to execute
a deposit account control agreement, in form and substance reasonably
satisfactory to Secured Party, establishing Secured Party’s “control” over such
depository account for purposes of UCC Article 9 and (ii) any
securities intermediary or other Person with which Debtor maintains any
securities account containing any investment property of Debtor to execute a
securities account control agreement, in form and substance reasonably
satisfactory to Secured Party, establishing Secured Party’s “control” over such
securities account for purposes of UCC Article 9.

 

(d)   Upon request of Secured Party, Debtor (i) shall
cause certificates to be issued in respect of any uncertificated Pledged
Collateral, (ii) shall exchange certificated Pledged Collateral for
certificates of larger or smaller denominations, and (iii) shall cause any
securities 

 

3

 

intermediaries
to show on their books that Secured Party is the entitlement holder with
respect to any Pledged Collateral.

 

(e)   Debtor will not create any chattel paper
without placing a legend on the chattel paper acceptable to Secured Party
indicating that Secured Party has a security interest in the chattel paper.

 

SECTION 4     Representations and Warranties.  Debtor represents and warrants to Secured
Party that:

 

(a)   Debtor is duly organized, validly existing
and in good standing under the law of the jurisdiction of its organization and
has all requisite power and authority to execute, deliver and perform its obligations
under the Documents.

 

(b)   The execution, delivery and performance by
Debtor of the Documents have been duly authorized by all necessary action of
Debtor, and the Documents constitute the legal, valid and binding obligations
of Debtor, enforceable against Debtor in accordance with their respective
terms.

 

(c)   No authorization, consent, approval, license,
exemption of, or filing or registration with, any governmental authority or
agency, or approval or consent of any other Person, is required for the due
execution, delivery or performance by Debtor of the Documents, except for any
filings necessary to perfect any Liens on any Collateral.

 

(d)   Debtor’s chief executive office and principal
place of business (as of the date of this Agreement) is located at the address
set forth in Schedule 1; Debtor’s jurisdiction of organization and
organizational identification number are set forth in Schedule 1;
Debtor’s exact legal name is as set forth in the first paragraph of this
Agreement; and all other locations where Debtor conducts business or Collateral
is kept (as of the date of this Agreement) are set forth in Schedule 2.

 

(e)   Debtor has rights in or the power to transfer
the Collateral, and Debtor is the sole and complete owner of the Collateral,
free from any Lien other than Permitted Liens.

 

(f)    All of Debtor’s U.S. and foreign patents and
patent applications, copyrights (whether or not registered), applications for
copyright, trademarks, service marks, trade names and domain names (whether
registered or unregistered), and applications for registration of such
trademarks, service marks, trade names and domain names, are set forth in Schedule
2.

 

(g)   No control agreements exist with respect to
any Collateral other than control agreements in favor of Secured Party.

 

(h)   The names and addresses of all financial
institutions and other Persons at which Debtor maintains its deposit and
securities accounts, and the account numbers and account names of such
accounts, are set forth in Schedule 1.

 

(i)    Schedule 3 lists Debtor’s ownership
interests in each of its subsidiaries as of the date hereof.

 

4

 

(j)    Debtor is and will be the legal record and
beneficial owner of all Pledged Collateral, and has and will have good and marketable
title thereto, subject to the Lien of Secured Party therein.

 

(k)   Except as disclosed in writing to Secured
Party, there are no Pledged Collateral Agreements which affect or relate
to the voting or giving of written consents with respect to any of the Pledged
Collateral.  Each Pledged Collateral
Agreement contains the entire agreement between the parties thereto with
respect to the subject matter thereof, has not been amended or modified, and is
in full force and effect in accordance with its terms.  To the best knowledge of Debtor, there exists
no material violation or material default under any Pledged Collateral
Agreement by Debtor or the other parties thereto.  Debtor has not knowingly waived or released
any of its material rights under or otherwise consented to a material departure
from the terms and provisions of any Pledged Collateral Agreement.

 

(l)    (m)  Debtor
is an “operating company” in that (i) it primarily engages, wholly or
substantially in the production or sale, or the research or development, of a
product or service other than the investment of capital, (ii) it is not an
individual or sole proprietorship, (iii) it is not an entity with no
specific business plan or purpose and its business plan is not to engage in a
merger or acquisition with an unidentified company or companies or other entity
or person, and (iv) it intends to use the proceeds from the Debenture
issued by and purchased from it solely for the operation of Debtor’s business
and uses other than personal, family, or household purposes.  Debtor’s board of directors, in the exercise
of its fiduciary duties, has approved the Debenture and the transactions
contemplated by the Documents based upon a reasonable belief that the Debenture
is appropriate for Debtor after reasonable inquiry concerning Debtor’s
financing objectives and financial situation. .

 

(m)          Debtor has no commercial tort claims
except as set forth in Schedule 1.

 

SECTION 5     Covenants.  So long as any of the Obligations remain
unsatisfied, Debtor agrees that:

 

(a)   Debtor shall appear in and defend any action,
suit or proceeding which may affect to a material extent its title to, or right
or interest in, or Secured Party’s right or interest in, the Collateral, and
shall do and perform all reasonable acts that may be necessary and appropriate
to maintain, preserve and protect the Collateral.

 

(b)   Debtor shall comply in all material respects
with all laws, regulations and ordinances, and all policies of insurance,
relating in a material way to the possession, operation, maintenance and
control of the Collateral.

 

(c)   Debtor shall give prompt written notice to
Secured Party (and in any event not later than 30 days following any change
described below in this subsection) of:  (i) any
change in the location of Debtor’s chief executive office or principal place of
business; (ii) any change in the locations set forth in Schedule 1;
(iii) any change in its name; (iv) any
changes in its identity or structure in any manner which might make any
financing statement filed hereunder incorrect or misleading; (v) any
change in its registration as an organization (or any new such registration);
or (vi) any change in its jurisdiction of organization; provided
that Debtor shall not 

 

5

 

locate any
Collateral outside of the United States nor shall Debtor change its
jurisdiction of organization to a jurisdiction outside of the United States.

 

(d)   Debtor shall carry and maintain in full force
and effect, at its own expense and with financially sound and reputable
insurance companies, insurance with respect to the Collateral in such amounts,
with such deductibles and covering such risks as is customarily carried by
companies engaged in the same or similar businesses and owning similar
properties in the localities where Debtor operates.  Within 30 days after the date hereof (or such
later date as shall be consented to by Secured Party), Debtor shall cause such
insurance on the Collateral to name Secured Party as additional insured and as
loss payee and Debtor shall furnish Secured Party from time to time with full
information as to the insurance carried by it and, if so requested, copies of
all such insurance policies.  Debtor
shall also furnish to Secured Party from time to time upon the request of Secured
Party a certificate of Debtor’s insurance broker or other insurance
specialist stating that all premiums then due on the policies relating to
insurance on the Collateral have been paid and that such policies are in full
force and effect.  All insurance policies
required under this subsection (d) shall provide that they shall not
be terminated or cancelled nor shall any such policy be materially changed
without at least 20 days’ prior written notice to Debtor and Secured
Party.  Receipt of notice of termination
or cancellation of any such insurance policies or reduction of coverages or
amounts thereunder shall entitle Secured Party to renew any such policies,
cause the coverages and amounts thereof to be maintained at levels required
pursuant to the first sentence of this subsection (d) or otherwise to
obtain similar insurance in place of such policies, in each case at the expense
of Debtor.

 

(e)   All insurance policies shall provide that any
losses payable thereunder be payable directly to Secured Party unless written
authority to the contrary is obtained. In the event that Debtor shall receive
any proceeds of any insurance (other than in respect of third party liability
insurance) it shall immediately cause such proceeds to be paid over to Secured
Party.  If the Collateral shall be
materially damaged or destroyed, in whole or in part, by fire or other
casualty, Debtor shall give prompt notice thereof to Secured Party.  Additionally, Debtor shall in any event
promptly give Secured Party notice of all reports made to insurance companies
in respect of any claim in excess of $100,000. 
No settlement on account of any loss covered by insurance shall be made
for less than insured value without the consent of Secured Party.  Provided that no Event of Default then exists,
Secured Party shall apply all or any portion of such insurance proceeds to
Debtor to be applied to the replacement and/or restoration of damaged or
destroyed property, equipment, inventory, etc.

 

(f)    Debtor shall keep the Collateral free of all
Liens except Permitted Liens.

 

(g)   Debtor shall pay and discharge all taxes,
fees, assessments and governmental charges or levies imposed upon it with
respect to the Collateral prior to the date on which penalties attach thereto,
except to the extent such taxes, fees, assessments or governmental charges or
levies are being contested in good faith by appropriate proceedings.

 

(h)   Debtor shall maintain and preserve its legal
existence, its rights to transact business and all other rights, franchises and
privileges necessary or desirable in the normal course of its business and
operations and the ownership of the Collateral, except in connection 

 

6

 

with any
transactions expressly permitted by the Debenture and Warrant Purchase
Agreement, the Debenture or any other Document.

 

(i)    If and when Debtor shall obtain rights to
any new patents, trademarks, service marks, trade names, domain names or
copyrights, or otherwise acquire or become entitled to the benefit of, or apply
for registration of, any of the foregoing, Debtor (i) shall promptly
notify Secured Party thereof and (ii) hereby authorizes Secured Party to
modify, amend, or supplement Schedule 2 and from time to time to
include any of the foregoing and make all necessary or appropriate filings with
respect thereto.

 

(j)    Without limiting the generality of
subsection (i), Debtor shall not register with the U.S. Copyright Office any
unregistered copyrights (whether in existence on the date hereof or thereafter
acquired, arising, or developed) unless Debtor provides Secured Party with
written notice of its intent to register such copyrights not less than 30 days
prior to the date of the proposed registration.

 

(k)   Debtor will use commercially reasonable
efforts to obtain, within 30 days after the date hereof (or such later date as
shall be consented to by Secured Party), from each Person from whom Debtor
leases any premises, and from each other Person at whose premises any
Collateral is at any time present (including any bailee, warehouseman or
similar Person), any such collateral access, subordination, landlord waiver,
bailment, consent and estoppel agreements as Secured Party may require, in form
typically executed in Massachusetts by landlords.

 

(l)    Debtor shall comply with all of its
obligations under any Pledged Collateral Agreements to which it is a party and
shall enforce all of its rights thereunder. (ii) Debtor will take all
actions necessary to cause each Pledged Collateral Agreement relating to
Collateral consisting of any and all limited, limited liability and general
partnership interests and limited liability company interests of any type or
nature (“Partnership and LLC Collateral”) to provide specifically at all
times that: (A) the Partnership and LLC Collateral shall be securities and
shall be governed by Article 8 of the applicable Uniform Commercial Code; (B) each
certificate of membership or partnership representing the Partnership and LLC
Collateral shall bear a legend to the effect that such membership interest or
partnership interest is a security and is governed by Article 8 of the
applicable Uniform Commercial Code; and (C) no consent of any member,
manager, partner or other Person shall be a condition to the admission as a
member or partner of any transferee that acquires ownership of the Partnership
and LLC Collateral as a result of the exercise by Secured Party of any remedy
hereunder or under applicable law. (iii) Debtor shall not vote to enable
or take any other action to amend or terminate, or waive compliance with
any of the terms of, any Pledged Collateral Agreement, certificate or articles
of incorporation, bylaws or other organizational documents, or otherwise cast
any vote or grant or give any consent, waiver or ratification in respect of the
Pledged Collateral, in any way that materially changes the rights of Debtor
with respect to any Pledged Collateral in a manner adverse to the Secured Party
or that adversely affects the validity, perfection or priority of Secured Party’s
security interest therein.

 

(m)  In the event that Debtor acquires rights in
any subsidiary after the date hereof, it shall deliver to Secured Party a
completed supplement to Schedule 3, reflecting such new subsidiary.  Notwithstanding the foregoing, it is
understood and agreed that the security interest 

 

7

 

of
Secured Party shall attach to any such subsidiary immediately upon Debtor’s
acquisition of rights therein and shall not be affected by the failure of
Debtor to deliver any such supplement to Schedule 3.

 

(n)   Debtor shall give Secured Party immediate
notice if Debtor shall at any time hold or acquire any commercial tort claim.

 

SECTION 6     Rights of Secured Party; Authorization;
Appointment.

 

(a)   At the request of Secured Party, upon the
occurrence and during the continuance of any Event of Default, all remittances
received by Debtor in respect of its accounts and other rights to payment shall
be held in trust for Secured Party and, in accordance with Secured Party’s
instructions, remitted to Secured Party or deposited to an account of Secured
Party in the form received (with any necessary endorsements or instruments of
assignment or transfer).

 

(b)   At the request of Secured Party, upon the
occurrence and during the continuance of any Event of Default, Secured Party
shall be entitled to receive all distributions and payments of any nature with
respect to any Pledged Collateral or instrument Collateral, and all such
distributions or payments received by Debtor shall be held in trust for Secured
Party and, in accordance with Secured Party’s instructions, remitted to Secured
Party or deposited to an account designated by Secured Party in the form
received (with any necessary endorsements or instruments of assignment or
transfer).  Further, upon the occurrence
and during the continuance of any Event of Default any such distributions and
payments with respect to any Pledged Collateral held in any securities account
shall be held and retained in such securities account, in each case as part of
the Collateral hereunder, and Secured Party shall have the right, following
prior written notice to the Debtor, to vote and to give consents, ratifications
and waivers with respect to any Pledged Collateral and instruments, and to
exercise all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining thereto, as if Secured Party were the absolute
owner thereof; provided that Secured Party shall have no duty to
exercise any of the foregoing rights afforded to it and shall not be
responsible to the Debtor or any other Person for any failure to do so or delay
in doing so.

 

(c)   Secured Party shall have the right to, in the
name of Debtor, or in the name of Secured Party or otherwise, upon notice to
but without the requirement of assent by Debtor, and Debtor hereby constitutes
and appoints Secured Party (and any of Secured Party’s officers, employees or
agents designated by Secured Party) as Debtor’s true and lawful
attorney-in-fact, with full power and authority to: (i) sign
and file any of the financing statements and other documents and instruments
which must be executed or filed to perfect or continue perfected, maintain the
priority of or provide notice of Secured Party’s security interest in the
Collateral; (ii) assert, adjust, sue for,
compromise or release any claims under any policies of insurance; (iii) give
notices of control, default or exclusivity (or similar notices) under any
account control agreement or similar agreement with respect to exercising control
over deposit accounts or securities accounts; and (iv) execute
any and all such other documents and instruments, and do any and all acts and
things for and on behalf of Debtor, which Secured Party may deem reasonably
necessary or advisable to maintain, protect, realize upon and preserve the
Collateral and Secured Party’s security interest therein and to accomplish the
purposes of this Agreement.  

 

8

 

Secured
Party agrees that, except upon and during the continuance of an Event of
Default, it shall not exercise the power of attorney, or any rights granted to
Secured Party, pursuant to clauses (ii), (iii) and (iv).  The foregoing power of attorney is coupled
with an interest and irrevocable so long as the Obligations have not been paid
and performed in full.  Debtor hereby
ratifies, to the extent permitted by law, all that Secured Party shall lawfully
and in good faith do or cause to be done by virtue of and in compliance with
this Section 6.

 

SECTION 7     Events of Default.  Any of the following events which shall occur
and be continuing shall constitute an “Event of Default”:

 

(a)   An “Event of Default” (as defined in the
Debenture) shall have occurred under the Debenture or an “Event of Default” (as
defined in the Guarantor Security Agreement) shall have occurred under the
Guarantor Security Agreement.

 

(b)   Any representation or warranty by Debtor
under or in connection with this Agreement shall prove to have been incorrect
in any material respect when made or deemed made.

 

(c)   Debtor shall fail to perform or observe in
any material respect any other term, covenant or agreement contained in this
Agreement on its part to be performed or observed and any such failure shall
remain unremedied for a period of 15 days after the earlier of (i) the
date on which Debtor obtains knowledge of such failure and (ii) the date
on which Secured Party notifies Debtor of such failure in accordance with the
notice provisions set forth herein.

 

(d)   Debtor shall admit in writing its inability
to, or shall fail generally or be generally unable to, pay its debts (including
its payrolls) as such debts become due, or shall make a general assignment for
the benefit of creditors; or Debtor shall file a voluntary petition in
bankruptcy or a petition or answer seeking reorganization, to effect a plan or
other arrangement with creditors or any other relief under the Bankruptcy
Reform Act of 1978, as amended or recodified from time to time (the “Bankruptcy
Code”) or under any other state or federal law relating to bankruptcy or
reorganization granting relief to debtors, whether now or hereafter in effect,
or shall file an answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition filed against Debtor pursuant
to the Bankruptcy Code or any such other state or federal law; or Debtor shall
be adjudicated a bankrupt, or shall apply for or consent to the appointment of
any custodian, receiver or trustee for all or any substantial part of Debtor’s
property, or shall take any action to authorize any of the actions set forth
above in this paragraph; or an involuntary petition seeking any of the relief
specified in this paragraph shall be filed against Debtor; or any order for
relief shall be entered against Debtor in any involuntary proceeding under the
Bankruptcy Code or any such other state or federal law referred to in
this subsection (d).

 

(e)   Debtor shall (i) liquidate, wind up or
dissolve (or suffer any liquidation, wind-up or dissolution), except to the extent
expressly permitted by the Documents, (ii) suspend its operations other
than in the ordinary course of business, or (iii) take any action to
authorize any of the actions or events set forth above in this
subsection (e).

 

(f)    Any material impairment in the priority of
Secured Party’s Lien hereunder.

 

9

 

(g)   Any levy upon, seizure or attachment of any
of the Collateral which shall not have been rescinded or withdrawn.

 

(h)   Any loss, theft or substantial damage to, or
destruction of, any material portion of the Collateral (unless within 10 days
after the occurrence of any such event, Debtor furnishes to Secured Party
evidence satisfactory to Secured Party that the amount of any such loss, theft,
damage to or destruction of the Collateral is fully insured under policies
naming Secured Party as an additional named insured or loss payee).

 

SECTION 8     Remedies.

 

(a)   Upon the occurrence and during the
continuance of any Event of Default, Secured Party may declare any of the
Obligations to be immediately due and payable and shall have, in addition to
all other rights and remedies granted to it in this Agreement, the Debenture,
the Debenture and Warrant Purchase Agreement or any other Document, all rights
and remedies of a secured party under the UCC and other applicable laws.  Without limiting the generality of the
foregoing, (i) Secured Party may peaceably and without notice enter any
premises of Debtor, take possession of any the Collateral, remove or dispose of
all or part of the Collateral on any premises of such Debtor or elsewhere, or,
in the case of equipment, render it nonfunctional, and otherwise collect,
receive, appropriate and realize upon all or any part of the Collateral, and
demand, give receipt for, settle, renew, extend, exchange, compromise, adjust,
or sue for all or any part of the Collateral, as Secured Party may determine; (ii) Secured
Party may require any Debtor to assemble all or any part of the Collateral and
make it available to Secured Party at any place and time designated by Secured
Party; (iii) Secured Party may secure the appointment of a receiver of the
Collateral or any part thereof (to the extent and in the manner provided by
applicable law); (iv) Secured Party may sell, resell, lease, use, assign,
license, sublicense, transfer or otherwise dispose of any or all of the
Collateral in its then condition or following any commercially reasonable
preparation or processing (utilizing in connection therewith any of Debtor’s
assets, without charge or liability to Secured Party therefor) at public or
private sale, by one or more contracts, in one or more parcels, at the same or
different times, for cash or credit, or for future delivery without assumption
of any credit risk, all as Secured Party deems advisable; provided, however,
that Debtor shall be credited with the net proceeds of sale only when such
proceeds are finally collected by Secured Party.  Debtor recognizes that Secured Party may be
unable to make a public sale of any or all of the Pledged Collateral, by reason
of prohibitions contained in applicable securities laws or otherwise, and
expressly agrees that a private sale to a restricted group of purchasers for
investment and not with a view to any distribution thereof shall be considered a
commercially reasonable sale.  Secured
Party shall have the right upon any such public sale, and, to the extent
permitted by law, upon any such private sale, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption, which
right or equity of redemption Debtor hereby releases, to the extent permitted
by law.  Secured Party shall give Debtor
such notice of any private or public sales as may be required by the UCC or
other applicable law.

 

(b)   For the purpose of enabling Secured Party to
exercise its rights and remedies under this Section 8 or otherwise
in connection with this Agreement, Debtor hereby grants to Secured Party an
irrevocable, non-exclusive and assignable license (exercisable without payment

 

10

 

or royalty or other
compensation to Debtor) to use, license or sublicense any intellectual property
Collateral.

 

(c)   Secured Party shall not have any obligation
to clean up or otherwise prepare the Collateral for sale.  Secured Party has no obligation to attempt to
satisfy the Obligations by collecting them from any other Person liable for
them, and Secured Party may release, modify or waive any Collateral provided by
any other Person to secure any of the Obligations, all without affecting
Secured Party’s rights against Debtor. 
Debtor waives any right it may have to require Secured Party to pursue
any third Person for any of the Obligations. 
Secured Party may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and compliance
will not be considered adversely to affect the commercial reasonableness of any
sale of the Collateral.  Secured Party
may sell the Collateral without giving any warranties as to the Collateral.  Secured Party may specifically disclaim any
warranties of title or the like.  This
procedure will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral. 
If Secured Party sells any of the Collateral upon credit, Debtor will be
credited only with payments actually made by the purchaser, received by Secured
Party and applied to the indebtedness of the purchaser.  In the event the purchaser fails to pay for
the Collateral, Secured Party may resell the Collateral and Debtor shall be
credited with the proceeds of the sale.

 

(d)   To the extent Debtor uses the proceeds of any
of the Obligations to purchase Collateral, Debtor’s repayment of the
Obligations shall apply on a “first-in, first-out” basis so that the portion of
the Obligations used to purchase a particular item of Collateral shall be paid
in the chronological order the Debtor purchased the Collateral.

 

(e)   The cash proceeds actually received from the
sale or other disposition or collection of Collateral, and any other amounts
received in respect of the Collateral the application of which is not otherwise
provided for herein, shall be applied first, to the payment of the
reasonable costs and expenses of Secured Party in exercising or enforcing its
rights hereunder and in collecting or attempting to collect any of the
Collateral, and to the payment of all other amounts payable to Secured Party
pursuant to Section 12 hereof; and second, to the payment of
the Obligations.  Any surplus thereof
which exists after payment and performance in full of the Obligations shall be
promptly paid over to Debtor or otherwise disposed of in accordance with the
UCC or other applicable law.  Debtor
shall remain liable to Secured Party for any deficiency which exists after any sale
or other disposition or collection of Collateral.

 

SECTION 9     Certain Waivers.  Debtor waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling of the Collateral or other collateral or security for the
Obligations; (ii) any right to require Secured Party (A) to proceed
against any Person, (B) to exhaust any other collateral or security for
any of the Obligations, (C) to pursue any remedy in Secured Party’s power,
or (D) to make or give any presentments, demands for performance, notices
of nonperformance, protests, notices of protests or notices of dishonor in
connection with any of the Collateral; and (iii) all claims, damages, and
demands against Secured Party arising out of the repossession, retention, sale
or application of the proceeds of any sale of the Collateral.

 

11

 

SECTION 10   Notices.  All notices or other communications hereunder
shall be in writing (including by facsimile transmission or by email) and
mailed (by certified or registered mail), sent or delivered to the respective
parties hereto at or to their respective addresses or email addresses set forth
below their names on the signature pages hereof (or, in the case of
Secured Party, to the address or email address set forth on Schedule 4
hereto), or at or to such other address or email address as shall be designated
by any party in a written notice to the other parties hereto.  All such notices and communications shall be
effective (i) if delivered by hand, sent by certified or registered mail
or sent by an overnight courier service, when received; and (ii) if sent
by electronic mail, when sent. 
Electronic mail may be used only for routine communications, such as
distribution of informational documents or documents for execution by the
parties thereto, and may not be used for any other purpose, including for
purposes of delivering any notice of the occurrence of an Event of Default.

 

SECTION 11   No Waiver; Cumulative Remedies.  No failure on the part of Secured Party to
exercise, and no delay in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights and remedies under
this Agreement are cumulative and not exclusive of any rights, remedies, powers
and privileges that may otherwise be available to Secured Party.

 

SECTION 12   Costs and Expenses; Indemnification.

 

(a)   Debtor agrees to pay on demand: (i) all
reasonable title, appraisal, survey, audit, consulting, search, recording,
filing and similar costs, fees and expenses incurred or sustained by Secured
Party in connection with this Agreement or the Collateral (exclusive of
attorneys fees); and (ii) all costs and expenses of Secured Party, and the
fees and disbursements of counsel, in connection with the enforcement or
attempted enforcement of, and preservation of any rights or interests under,
this Agreement, including in any out-of-court workout or other refinancing or
restructuring or in any bankruptcy case, and the protection, sale or collection
of, or other realization upon, any of the Collateral, including all expenses of
taking, collecting, holding, sorting, handling, preparing for sale, selling, or
the like, and other such expenses of sales and collections of Collateral.

 

(b)   Debtor hereby agrees to indemnify Secured
Party, any affiliate thereof, and their respective directors, officers,
employees, agents, counsel and other advisors (each an “Indemnified Person”)
against, and hold each of them harmless from, any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
the reasonable fees and disbursements of counsel to an Indemnified Person,
which may be imposed on or incurred by any Indemnified Person, or asserted
against any Indemnified Person by any third party or by Debtor, in any way
relating to or arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder, the transactions contemplated hereby or
the Collateral, or (ii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by
Debtor (the “Indemnified Liabilities”); 

 

12

 

provided that Debtor shall not be liable to
any Indemnified Person for any portion of such Indemnified Liabilities to the
extent they are found by a final decision of a court of competent jurisdiction
to have resulted from such Indemnified Person’s gross negligence or willful
misconduct.  If and to the extent that
the foregoing indemnification is for any reason held unenforceable, Debtor
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.

 

(c)   Any amounts payable to Secured Party under
this Section 12 or otherwise under this Agreement if not paid upon
demand shall bear interest from the date of such demand until paid in full, at
the default rate of interest set forth in the Documents.

 

SECTION 13   Binding Effect.  This Agreement shall be binding upon, inure
to the benefit of and be enforceable by Debtor, Secured Party and their
respective successors and assigns and shall bind any Person who becomes bound
as a debtor to this Agreement.

 

SECTION 14   Governing Law; Submission to Jurisdiction;
Waiver of Right to Jury Trial; Forum Non Conveniens; Etc.

 

(a)           Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK APPLICABLE TO INSTRUMENTS
MADE AND TO BE PERFORMED WHOLLY WITHIN THAT STATE, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR PERFECTION OF THE
SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN RESPECT OF ANY
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN NEW YORK.

 

(b)           Submission to Jurisdiction.  EACH OF DEBTOR AND SECURED PARTY AGREES THAT
ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT MAY BE
INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE,
LOCATED IN NEW YORK.  EACH OF DEBTOR AND
SECURED PARTY CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS
PERSON BY ANY SUCH COURT HAVING JURISDICTION OVER THE SUBJECT MATTER HEREOF,
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO SUCH PERSON AT
ITS ADDRESS SET FORTH BELOW.

 

(c)           Waiver of Right to Jury Trial;
Forum Non Conveniens; Etc.  IN ANY
ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT, EACH
OF DEBTOR AND SECURED PARTY WAIVES TRIAL BY JURY, AND DEBTOR ALSO WAIVES (I) ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE AND (II) ANY CLAIM FOR
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.

 

SECTION 15   Entire Agreement; Amendment.  This Agreement, together with the other
Documents, contains the entire agreement of the parties with respect to the
subject matter hereof and shall not be amended except by the written agreement
of the parties.

 

13

 

SECTION 16   Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. 
If, however, any provision of this Agreement shall be prohibited by or
invalid under any such law or regulation in any jurisdiction, it shall, as to
such jurisdiction, be deemed modified to conform to the minimum requirements of
such law or regulation, or, if for any reason it is not deemed so modified, it
shall be ineffective and invalid only to the extent of such prohibition or
invalidity without affecting the remaining provisions of this Agreement, or the
validity or effectiveness of such provision in any other jurisdiction.

 

SECTION 17   Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.

 

SECTION 18   Termination.  Upon payment and performance in full of all
Obligations, the security interest created under this Agreement shall terminate
and Secured Party shall promptly execute and deliver to Debtor such documents
and instruments reasonably requested by Debtor as shall be necessary to
evidence termination of all security interests given by Debtor to Secured Party
hereunder

 

SECTION 19   Assignment.  This Agreement shall be binding on the
respective successors, and inure to the benefit of the respective permitted
assigns, of the parties hereto; provided, however, that neither
party shall assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party, except
in connection with an assignment to (a) its Affiliates or (ii) an
entity that is the successor to substantially all of the business or assets of
the assigning party relating to the performance of this Agreement.

 

[remainder
of page intentionally left blank]

 

14

 

IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement, as of the date first above
written.

 

 

	
   

  	
  DEBTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MICROFLUIDICS INTERNATIONAL 

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian E. LeClair

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian E. LeClair

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Exec. VP & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Microfluidics
  International Corporation

  
	
   

  	
  30 Ossipee Street

  
	
   

  	
  Newton, MA 02464-9101

  
	
   

  	
  Attn:

  	
  EVP, CFO and Treasurer

  
	
   

  	
  Tel:

  	
  (617) 969-5452

  
	
   

  	
  Email:

  	
  bleclair@mfics.com

  
						

 

 

	
   

  	
  SECURED PARTY:

  
	
   

  	
   

  
	
   

  	
  GLOBAL STRATEGIC PARTNERS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Bruce Wendel

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Authorized Person

  

 

Signature Page 2 to Security Agreement

 

 

SCHEDULE 1

TO THE SECURITY AGREEMENT

 

1.                                      Jurisdiction
of Organization and Organizational Identification Number

 

Delaware

DE 2008386

 

2.                                      Chief
Executive Office and Principal Place of Business

 

30 Ossipee Street

Newton, MA 02464-9101

 

3.                                      Other
locations where Debtor conducts business or Collateral is kept

 

17971 Sky Park Circle, Bldg. 33, Suite B,
Irvine, CA 92614

 

Edisonstr. 15

68623 Lampertheim, Germany

 

4.                                      Deposit
Accounts and Security Accounts

 

	
  Bank Name

  	
   

  	
  Description

  	
   

  	
  Account Number

  
	
  Silicon Valley Bank

  	
   

  	
  Payroll

  	
   

  	
   

  
	
  Silicon Valley Bank

  	
   

  	
  Operating

  	
   

  	
   

  
	
  Silicon Valley Bank

  	
   

  	
  EXIM Cash Collateral
  (collection applied toward line of credit)

  	
   

  	
   

  
	
  Silicon Valley Bank

  	
   

  	
  Domestic Cash
  Collateral (collection applied toward line of credit)

  	
   

  	
   

  
	
  Silicon Valley Bank

  	
   

  	
  Controlled Disbursement

  	
   

  	
   

  
	
  TD Banknorth

  	
   

  	
  Controlled Disbursement

  	
   

  	
   

  
	
  TD Banknorth

  	
   

  	
  CD (held as Bank
  guarantee for specific sales agreement)

  	
   

  	
   

  
	
  TD Banknorth

  	
   

  	
  CD (held as Bank
  guarantee for specific sales agreement)

  	
   

  	
   

  
	
  TD Banknorth

  	
   

  	
  Operating

  	
   

  	
   

  
	
  TD Banknorth

  	
   

  	
  Payroll

  	
   

  	
   

  
	
  TD Banknorth

  	
   

  	
  Employee Cafeteria Plan
  Fund

  	
   

  	
   

  
	
  TD Banknorth

  	
   

  	
  Credit Card
  Transactions

  	
   

  	
   

  
	
  Bank of America

  	
   

  	
  Operating

  	
   

  	
   

  
	
  Deutsche Bank

  	
   

  	
  Operating/Foreign
  Currency (EURO)

  	
   

  	
   

  

 

Schedule 1-1

 

5.                                      Commercial
Tort Claims

 

None.

 

Schedule 1-2

 

SCHEDULE 2

TO THE SECURITY AGREEMENT

 

1.             Patents
and Patent Applications.

 

	
  PATENTS
   & PATENT APPLICATIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  U.S.
  Patent No.

  	
   

  	
  :
  6,159,442

  
	
   

  	
   

  	
  Date of Patent

  	
   

  	
  : December 12,
  2000

  
	
   

  	
   

  	
  Inventor(s)

  	
   

  	
  :
  Jeffrey Thumm, Michael Lento, Jerome Higgins, David King, David Ginter, and
  Laurent Kieken

  
	
   

  	
   

  	
  Assigned to

  	
   

  	
  : MFIC Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Use of
  Multiple Stream High Pressure Mixer/Reactor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  U.S.
  Patent No.

  	
   

  	
  :
  6,221,332 B1

  
	
   

  	
   

  	
  Date of Patent

  	
   

  	
  : April 24, 2001

  
	
   

  	
   

  	
  Inventor(s)

  	
   

  	
  : Jeffrey Thumm, Michael
  Lento, Jerome Higgins

  
	
   

  	
   

  	
  Assigned to

  	
   

  	
  : Microfluidics
  International Corporation (MFIC)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Multiple
  Stream High Pressure Mixer/Reactor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  European
  Patent No.

  	
   

  	
  : EP 1
  011 856 B1

  
	
   

  	
   

  	
  Date of Patent

  	
   

  	
  : September 4,
  2003

  
	
   

  	
   

  	
  Inventor(s)

  	
   

  	
  :
  Jeffrey Thumm, Michael Lento, Jerome Higgins, King, David Ginter, Mark and
  Kieken, Laurent

  
	
   

  	
   

  	
  Assigned to

  	
   

  	
  : Microfluidics
  International Corporation / Catalytica Advanced Technologies, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Multiple
  Stream High Pressure Mixer/Reactor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Canadian
  Patent Appln. No.

  	
   

  	
  :
  2,229,284

  
	
   

  	
   

  	
  Date of Patent Appln.

  	
   

  	
  : August 5, 1998

  
	
   

  	
   

  	
  Inventor(s)

  	
   

  	
  :
  Jeffrey Thumm, Michael Lento, Jerome Higgins, King, David Ginter, Mark and
  Kieken, Laurent

  
	
   

  	
   

  	
  Assigned to

  	
   

  	
  : Microfluidics
  International Corporation / Catalytica Advanced Technologies, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Multiple
  Stream High Pressure Mixer/Reactor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  U.S.
  Patent Appln. No.

  	
   

  	
  :
  12/108,245

  
	
   

  	
   

  	
  Date of Patent Appln.

  	
   

  	
  : April 23, 2008

  
	
   

  	
   

  	
  Inventor(s)

  	
   

  	
  : Thomai Panagiotou,
  Steven Mesite and Robert J. Fisher

  
	
   

  	
   

  	
  Assigned to

  	
   

  	
  : MFIC Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Apparatus
  And Methods For Nanoparticle Generation and Process Intensification of
  Transport and Reaction Systems

  
						

 

Schedule 2-1

 

2.             Copyrights
and Copyright Applications.

 

None.

 

Schedule 2-2

 

3.             Trademarks,
Service Marks and Trade Names and Trademark, Service Mark and Trade Name
Applications.

 

TRADEMARKS
/ COPYRIGHTS/ WEBSITES-DOMAIN NAMES/Internet Brands

 

TRADEMARKS
AND TRADEMARK APPLICATIONS

 

	
  Trademark

  	
   

  	
  Status

  	
   

  	
  Registration
  #

  	
   

  	
  Date
  Filed

  	
   

  	
  Date/Reg.

  	
   

  	
  Owner

  	
   

  
	
  BECAUSE
  THE 

  STAKES COULDN’T 

  BE HIGHER

  	
   

  	
  Application 

  filed

  	
   

  	
  S/N 77567749

  	
   

  	
  09/11/08

  	
   

  	
   

  	
   

  	
  Microfluidics
  International Corporation

  	
   

  
	
  INNOVATE
  WITH 

  US

  	
   

  	
  Application 

  filed

  	
   

  	
  S/N 77540208

  	
   

  	
  08/06/08

  	
   

  	
   

  	
   

  	
  Microfluidics
  International Corporation

  	
   

  

 

WEBSITES

 

http://www.mficcorp.com/

and
related pages

 

http://www.microfluidicscorp.com/

and
related pages

 

http://www.mixerequipment.com/

and
related pages

 

URLs &
Domain Names

 

www.mficcorp.com

 

www.microfluidicscorp.com

www.mixerequipment.com

www.microfluidizer.us

www.microfluidicscorp.com.tw

www.microfluidicscorp.tw

www.microfluidizer.com.tw

www.microfluidizer.net.tw

www.mfics.com.tw

www.mfics.tw

www.microfluidicscorp.hk

   
www.microfluidizer.hk

www.mfics.hk

www.mfics.cn

www.mfics.com.cn

www.microfluidicscorp.org.cn

www.microfluidizer.org.cn

www.mfics.org.cn

www.microfluidicscorp.net.cn

www.microfluidizer.net.cn

www.mfics.net.cn

www.microfluidicscorp.asia

www.microfluidizer.asia

 

Schedule 2-3

 

www.mfics.com.asia

www.mficcorp.com

www.microfluidicscorp.com

www.microfluidizer.us

www.mixerequipment.com

www.submicronparticles.com

www.tinyparticles.com

www.disruptcells.com

www.particlereduction.com

www.microfluidicsnanoemulsions.com

www.microfluidicsnanodispersions.com

www.microfluidicsnanoparticles.com

www.microfluidizer.net

 

Internet
Brand Names

Microfluidicscorp

Mfics

Microfluidizer

 

Schedule 2-4

 

SCHEDULE 3

TO THE SECURITY AGREEMENT

 

SUBSIDIARIES

 

1.             Interests in each limited liability
company that is a subsidiary of Debtor as follows:

 

	
  Subsidiary

  	
   

  	
  Number of Units

  	
   

  	
  Date of Issuance of Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2.             Interests in each general partnership, limited
partnership, limited liability partnership or other partnership that is a
subsidiary of Debtor as follows:

 

	
  Subsidiary

  	
   

  	
  Type of

  Partnership Interest

  (e.g., general,

  limited)

  	
   

  	
  Date of Issuance 

  or Formation

  	
   

  	
  Number of Units or

  Other Ownership

  Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

3.             Capital stock of each corporate
subsidiary of Debtor, and the stock certificates with respect thereto, as
follows:

 

	
  Subsidiary

  	
   

  	
  Certificate No.

  	
   

  	
  Certificate Date

  	
   

  	
  No. and Class

  of Shares

  	
   

  
	
  Microfluidics
  Corporation

  	
   

  	
  1A

  	
   

  	
  November 14,
  2008

  	
   

  	
  500 shares of
  common

  stock ($.01 par value)

  	
   

  

 

Schedule 3-1

 

SCHEDULE 4

 

Global Strategic
Partners, LLC

11755 Wilshire Blvd., Suite 2000

Los Angeles, CA 90025

Attn:  Charles Kim

Tel:  (310) 405-7431

Fax:  (310) 998-8553

Email:  ckim@abraxisbio.com

 

Schedule 4-1

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