Document:

Exhibit 10.5

 

NEITHER THIS CONVERTIBLE
DEBENTURE, NOR THE SHARES ISSUABLE UPON CONVERSIONS HEREOF, HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) AND ACCORDINGLY MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION ACCEPTABLE TO THE COMPANY.

 

CONVERTIBLE
DEBENTURE

 

	
  $5,000,000.00

  	
  November 14,
  2008

  

 

FOR VALUE
RECEIVED, the undersigned, Microfluidics International
Corporation, a corporation duly formed under the laws of the State
of Delaware (the “Issuer”), hereby unconditionally promises to pay to the order
of Global Strategic Partners, LLC (the “Holder”),
in lawful money of the United States of America and in immediately available
funds, the principal sum of FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00) on
the Maturity Date (as hereinafter defined), together with interest thereon
calculated and payable as provided below. 
This Debenture is being issued pursuant to the terms of the Debenture
and Warrant Purchase Agreement dated as of November 14, 2008 (the “Agreement”).

 

1.             Interest
on the outstanding principal amount of this Convertible Debenture (this “Debenture”)
shall be computed on the basis of twelve 30-day months in a 360-day year and
shall be payable quarterly in arrears. 
The principal of this Debenture shall bear interest at the rate of nine
percent (9%) per annum, or if less, at the highest rate permitted by applicable
law.  All accrued but unpaid interest on
the principal amount of this Debenture shall be due and payable in cash on the
first business day of each calendar quarter (each an “Interest Payment Date”).

 

2.             The
outstanding principal amount of this Debenture and all accrued and unpaid
interest thereon shall be due and payable on (i) November 14, 2015 or
(ii) the acceleration of the maturity of this Debenture by the Holder upon
the occurrence of an Even of Default (as defined below) (such earlier date, the
“Maturity Date”).

 

3.             On
the Maturity Date, any Interest Payment Date prior thereto or a Change of
Control Event (as defined below), at the written election of the Holder and
upon three (3) business days’ notice to the Issuer, all or any portion of
the outstanding principal amount of this Debenture may be converted (the “Conversion”)
into that number of shares of the Issuer’s common stock, par value $.01 per
share (the “Common Stock”) equal to the quotient of:  (i) the outstanding principal amount of
this Debenture, divided by (ii) $1.25 (the “Conversion Price”), rounded to
the nearest share.  Upon the Conversion,
all or any portion of the accrued and unpaid interest on the outstanding
principal of this Debenture to be converted as provided herein shall become
immediately due and payable which amount may be payable in the form of such

 

 

securities in accordance with the formula set forth above.  The Issuer shall use its best efforts to
amend its Certificate of Incorporation at its next Annual Meeting of the
Stockholders, which meeting shall be held no later than June 30, 2009, to
increase its duly authorized shares of Common Stock by such number as would be
required for the Issuer to fulfill its obligations in full upon conversion of
this Debenture and the exercise of the Warrant (as such term is defined in the
Agreement).  The Holder shall not have
any voting rights or other rights as a shareholder of the Issuer under this
Debenture prior to the Conversion.

 

4.             At
any time that this Debenture is outstanding, the Issuer agrees to use its best
efforts to cause the election to its Board of Directors of at least one person
designated by the Holder, and such additional persons designated by the Holder
as may be necessary to cause the Holder’s representation on the Board of
Directors of the Issuer to be proportional to the Holder’s stockholdings in the
Issuer.  As an illustration, and without
limiting the application of the foregoing provision, if the Issuer has a five
person Board of Directors the Issuer shall be entitled to have its designee
elected to the Board of Directors until such time as this Debenture has been
retired in full; and, at such time as the Holder acquires 40% or more of the
Common Stock of the Issuer, the Issuer agrees to use its best efforts to cause
the election of a second (2nd) designee of the Holder to the Issuer’s Board of
Directors.

 

5.             Immediately
following the date hereof the Issuer shall exercise its best efforts to cause
all of the shares of Common Stock issuable upon Conversion hereof to be
registered with the Securities and Exchange Commission.

 

6.             Notwithstanding
anything in this Debenture to the contrary, should an Event of Default, as such
term is defined herein, occur and be continuing, interest on the outstanding
principal amount of this Debenture and unpaid interest shall be increased by
two percent (2%) per annum, or if less, at the highest rate permitted by
applicable law. and the outstanding balance of the principal amount, including
unpaid interest, shall continue to accrue interest from the date of such Event of
Default at such interest rate until such Event of Default is cured or
waived.  For purposes of this Debenture,
each of the following events shall constitute an Event of Default:

 

(i)            The Issuer shall
default in the payment of principal of or interest on this Debenture after the
same becomes due and payable, whether at the Maturity Date or at a date fixed
for the payment of any installment or prepayment thereof or otherwise, and such
default shall remain uncured for five (5) business days after notice thereof
to Issuer;

 

(ii)           default shall occur in
the observance or performance of any covenant, obligation or agreement of the
Issuer under this Debenture, the Agreement, the Security Agreement (as that
term is defined in the Agreement) or any other agreement pursuant to which the
Issuer or any other person provides a guaranty or a lien on its assets in favor
of the Holder and such default shall continue uncured for a period of fifteen
(15) days after the Issuer knew or should have known, exercising reasonable diligence,
of the event or circumstances giving rise to such default;

 

(iii)          any representation,
warranty or certification made by the Issuer herein or in the Agreement or the
Security Agreement in any certificate, report, document, agreement or
instrument delivered pursuant to any provision hereof or thereof shall prove to
have been false or

 

2

 

incorrect in any material, respect on the date or dates as of which
made (any such falsity being a “Representation Default”) and, to the extent the
event or circumstances giving rise to such Representation Default is amenable
to being cured such that the Representation Default would no longer exist, such
Representation Default shall continue uncured for a period of fifteen (15) days
after the Issuer knew or should have known, exercising reasonable diligence, of
the event or circumstances giving rise to such Representation Default;

 

(iv)          the Issuer shall (A) apply
for or consent to the appointment of a receiver, trustee, custodian or
liquidator of itself or any part of its property, (B) become subject to
the appointment of a receiver, trustee, custodian or liquidator for itself or
any part of its property if such appointment is not terminated or dismissed
within thirty (30) days, (C) make an assignment for the benefit of
creditors, (D) fail generally, or admit in writing to its inability, to
pay its debts as they become due, (E) institute any proceedings under the
United States Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law affecting the
rights of creditors generally, or file a petition or answer seeking
reorganization or an arrangement with creditors to take advantage of any
insolvency law, or file an answer admitting the material allegations of a
bankruptcy, reorganization or insolvency petition filed against it, or (F) become
subject to any involuntary proceedings under the United States Bankruptcy Code
or any other federal or state bankruptcy, reorganization, receivership,
insolvency or other similar law affecting the rights of creditors generally, or
have an order for relief entered against it in any proceeding under the United
States Bankruptcy Code;

 

(v)           the Issuer shall not have amended its Certificate of
Incorporation on or before June 30, 2009 to increase its duly authorized
shares of Common Stock by such number as would
be required for the Issuer to fulfill its obligations in full under this
Debenture and the Warrant issuable under the Agreement; or

 

(vi)          Any of the following
occurs (each a “Change of Control Event”): 
(A) a sale, lease or other disposition of all or substantially all
of the assets of Issuer; (B) a merger, consolidation, reorganization, sale
of shares by Issuer or share exchange or sale of shares by the stockholders of
Issuer, or other similar transaction or series of related transactions, which
results in Issuer’s stockholders immediately prior to such transaction holding
less than fifty percent (50%) of the voting power of the outstanding securities
of the surviving, continuing or purchasing entity (other than by Holder’s
exercise of the Warrant); or (C) the direct or indirect acquisition by any
person or related group of persons (other than the Holder or an acquisition
from or by the Issuer or by a Issuer-sponsored employee benefit plan or by a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Issuer) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated pursuant to the Securities Exchange Act of 1934, as
amended) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Issuer’s outstanding securities.

 

7.             Notwithstanding
anything in this Debenture to the contrary, in case an Event of Default shall
occur, payment of this Debenture shall be accelerated and the entire unpaid
principal amount of this Debenture, and all accrued and unpaid interest
thereon, shall become immediately due and payable in full.  Upon the occurrence of an actual or deemed
entry of an order for relief with respect to the Issuer under the United States
Bankruptcy Code, then all

 

3

 

indebtedness under this Debenture shall automatically be due
immediately without notice of any kind. 
Holder shall also have any other rights which Holder may have been
afforded under any contract or agreement at any time and any other rights which
Holder may have pursuant to applicable law. 
Holder may exercise any and all of its remedies under the Security
Agreement contemporaneously or separately from the exercise of any other
remedies hereunder or under applicable law.

 

8.             Payment
of the principal and interest on this Debenture shall be made in money of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts, by wire transfer in immediately available
funds to such account as the Holder shall from time to time have designated to
the Issuer in writing, or, if requested by the Holder, by certified or back
cashier’s check payable to the Holder, mailed to the Holder at the address set
forth herein, or such other address as shall be designated in writing by the
Holder to the Issuer.

 

9.             Any
and all payments made by the Issuer in respect of this Debenture shall be
applied first to payment of the fees and charges due under this Debenture,
second to payment of accrued and unpaid interest, and then to payment of the
outstanding principal amount of this Debenture.

 

10.           All
calculations and applications of amounts due on any date, whether by
acceleration or otherwise, shall be made by the Holder, and the Issuer agrees
that all such calculations and applications shall be conclusive and binding
absent manifest error.

 

11.           The
Issuer may, at its option, upon thirty (30) days’ advance written notice to the
Holder, prepay all of the principal balance of this Debenture, without penalty
or premium, together with accrued and unpaid interest through the date of
prepayment.  Any prepayment must occur on
a regularly scheduled Interest Payment Date. 
The Issuer’s right to prepay this Debenture is subject to the right of
the Holder to convert this Debenture as contemplated herein.

 

12.           This
Debenture is secured by all assets, property rights and interests of the Issuer
and shall be senior to all other indebtedness of the Issuer, except for certain
bank guarantees up to an aggregate amount of one million dollars ($1,000,000),
as required by certain customers of the Issuer in accordance with the Security
Agreement.

 

13.           The
Issuer hereby waives presentment, notice of dishonor, protest and notice of
protest, and any or all other notices or demands in connection with the
delivery, acceptance, performance, default, endorsement or guarantee of this
Debenture.

 

14.           In
case any principal of or interest on this Debenture is not paid when due, or
any other Event of Default shall occur, the Issuer shall be liable for, and
agrees to pay, in addition to principal and interest hereunder, all costs of
enforcement and collection of this Debenture incurred by the Holder, including,
without limitation, reasonable attorney’s fees, disbursements and court
costs.  In addition, if an Event of
Default shall occur, the Issuer shall pay all reasonable attorney’s fees and
disbursements incurred by the Holder in obtaining advice as to its rights and
remedies in connection with such default.

 

4

 

15.           All
communications under this Debenture shall be in writing and shall be personally
delivered or sent prepaid by first class registered or certified mail with
return receipt requested, or by recognized overnight delivery service to the
respective addresses set forth below (or such other addresses as may be
furnished in writing by the Holder and the Issuer).

 

(a) 
To the Issuer:

 

Microfluidics
International Corporation

30 Ossipee Street

Newton,
Massachusetts   02464-9101

            Attention:  President

 

(b)  To the Holder:

 

at such address set forth
on Schedule I hereto

 

16.           Subject
to applicable securities laws, this Debenture and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the parties hereto; provided, however, that neither
party may assign or transfer its rights or obligations hereunder without the prior written consent of
the other party except to (i) 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.

 

17.           This
Debenture may be modified or amended or the provisions hereof waived only with
the written consent of the Holder and the Issuer.

 

18.           This
Debenture shall be governed by and construed in accordance with the laws of the
State of Delaware applicable to instruments made and to be performed wholly
within that state.  If any provision of
this Debenture is held to be illegal or unenforceable for any reason
whatsoever, such illegality or unenforceability shall not affect the validity
of any other provision of this Debenture.

 

19.           EACH
OF THE ISSUER AND THE HOLDER AGREES THAT ANY ACTION, SUIT OR PROCEEDING IN
RESPECT OF OR ARISING OUT OF THIS DEBENTURE MAY BE INITIATED AND
PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN
THE COMMONWEALTH OF MASSACHUSETTS.  EACH
OF THE ISSUER AND THE HOLDER CONSENTS TO AND SUBMITS TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER, 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 THE
HOLDER AT ITS ADDRESS SET FORTH ABOVE, AND TO THE ISSUER AT ITS ADDRESS SET
FORTH BELOW OR TO ANY OTHER ADDRESS AS MAY APPEAR IN THE HOLDER’S RECORDS
AS THE ADDRESS OF THE ISSUER.

 

5

 

IN ANY ACTION,
SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS DEBENTURE, EACH OF THE
HOLDER AND THE ISSUER WAIVES TRIAL BY JURY, AND THE ISSUER ALSO WAIVES (I) ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE AND (II) ANY CLAIM FOR
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.

 

6

 

IN WITNESS
WHEREOF, the Issuer has caused this Debenture to be duly executed and
delivered.

 

	
   

  	
  Microfluidics
  International Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Michael C.
  Ferrara

  
	
   

  	
   

  	
   Michael C.
  Ferrara, President and Chief Executive Officer

  

 

7

 

Schedule
I

 

Address for Notice Purposes:

 

Global
Strategic Partners, LLC

11755
Wilshire Blvd., Suite 2000

Los
Angeles, CA 90025

Attention:
Charles Kim

Telephone:
310-405-7431

Facsimile:
310-998-8553

ckim@abraxisbio.com

 

S-1Exhibit 10.6

 

NEITHER THIS WARRANT, NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF,
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND ACCORDINGLY MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION ACCEPTABLE TO
THE COMPANY.

 

COMMON STOCK PURCHASE WARRANT

 

Warrant to
Purchase Shares of Common Stock of

 

Microfluidics International
Corporation

 

This COMMON STOCK
PURCHASE WARRANT (this “Warrant”) certifies that, for value received, Global Strategic Partners, LLC (“GSP”) is entitled to
purchase from Microfluidics International Corporation,
a Delaware corporation (the “Company”), that number of shares (the “Warrant
Shares”) of the Company’s common stock, par value $.01 per share (the “Common
Stock”) that, when combined with the Common Stock issuable upon the conversion
of the entire principal balance of the Debenture (as defined below),
constitutes a total of up to fifty percent (50%) of the total number shares of
the Company’s Common Stock then outstanding on a fully diluted basis, all upon
the terms and subject to the limitations hereinafter set forth.  This Warrant has been issued
contemporaneously with the sale by the Company to GSP of the Company’s 9%
Convertible Debenture (the “Debenture”) in the principal amount of Five Million
Dollars ($5,000,000).

 

1.             Exercise of
Warrant.  This Warrant shall be
exercisable in two tranches hereinafter referred to as the “Tranche One
Exercise” and the “Tranche Two Exercise”.

 

(a)           Tranche One Exercise.  The aggregate number of Warrant Shares that
may be purchased pursuant to one or more Tranche One Exercises of this Warrant
(the “Tranche One Maximum”) shall be that number of whole shares of the Common
Stock calculated to equal (or exceed by no more than one whole share):  (a) forty percent (40%) of the total
number of shares of the Company’s Common Stock then outstanding on a fully
diluted basis, minus (b) that number of shares of the Company’s Common
Stock that GSP is or was entitled to acquire (or has theretofore acquired) upon
exercise of the conversion privilege of the Debenture.  Notwithstanding the previous sentence, if all
or any portion of the principal amount of the Debenture has been prepaid by the
Company prior to the third anniversary of the date of the Debenture, then the
Tranche One Maximum shall also include a number of shares of the Company’s
Common Stock equal

 

1

 

to (x) the amount of the Debenture’s
principal amount that was so repaid by the third anniversary of the date of the
Debenture divided by (y) 1.25 (the “Prepayment Shares”).

 

Tranche One Exercises of this Warrant may be
made at any time, and from time to time, on or before 5:00 P.M. EST on the
Termination Date (as defined below) by the tender to the Company of:  (i) a Tranche One Notice of Exercise
form annexed hereto as Exhibit A duly executed and (ii) receipt
by the Company of the Tranche One Exercise Price (as hereinafter defined) of
the Warrant Shares thereby purchased in immediately available funds.

 

The Tranche One Exercise Price shall be two
dollars ($2.00) per share, subject to adjustment as described in Sections 8 and
9 hereof.

 

(b)           Tranche Two Exercise.  The aggregate number of Warrant Shares that
may be purchased pursuant to one or more Tranche Two Exercises of this Warrant
(the “Tranche Two Maximum”) shall be that number of whole shares of the Common
Stock calculated to at least equal (or exceed by no more than one whole
share):  (a) fifty percent (50%) of
the total number of shares of the Company’s Common Stock then outstanding on a
fully diluted basis, minus (b) the total number of shares of the Company’s
Common Stock that GSP is or was entitled to acquire (or has theretofore
acquired) upon: (i) exercise of the conversion privilege of the Debenture,
and (ii) the Tranche One Exercise, plus (c) the Prepayment
Shares.  No Tranche Two Exercise may be
made unless and until the full number of shares exercisable pursuant to Tranche
One Exercises have been purchased.

 

Tranche Two Exercises of this Warrant may be
made at any time, and from time to time, on or before 5:00 P.M. EST on the
Termination Date (as defined below) by the tender to the Company of:  (i) a Tranche Two Notice of Exercise
form annexed hereto as Exhibit B duly executed and (ii) receipt
by the Company of the Tranche Two Exercise Price (as hereinafter defined) of
the Warrant Shares thereby purchased in immediately available funds.

 

The Tranche Two Exercise Price shall be three
dollars ($3.00) per share, subject to adjustment as described in Sections 8 and
9 hereof.

 

(c)           Termination Date.  Subject to the other conditions stated
herein, this Warrant shall expire and be of no further force or effect on the
earlier to occur of:  (i) the
seventh (7th)
anniversary of the date hereof, (ii) the third (3rd) anniversary of the date hereof in the
event that the Company has retired the Debenture on or before said third (3rd) anniversary, or (iii) such
time as GSP has acquired fifty percent (50%) of the total number of shares of
the Company’s Common Stock then outstanding on a fully diluted basis.

 

(d)           Payment for Shares.  The aggregate purchase price for Warrant
Shares being purchased hereunder may be paid either (i) by cash or wire
transfer of immediately available funds, (ii) by surrender of a number of
Warrant Shares which have a fair market value equal to the aggregate purchase
price of the Warrant Shares being purchased (“Net 

 

2

 

Issuance”) as determined herein, or (iii) any
combination of the foregoing.  If GSP
elects the Net Issuance method of payment, the Company shall issue to GSP upon
exercise a number of shares of Warrant Shares determined in accordance with the
following formula (to the extent that GSP is exercising this Warrant with
respect to Warrant Shares received in connection with both Tranche One and
Tranche Two, the following formula shall be applied separately with respect to
each Tranche):

 

	
   

  	
  X= 

  	
  Y(A-B)

  	
   

  
	
   

  	
  A

  	
   

  

 

where:    X =          the
number of Warrant Shares to be issued to GSP;

 

Y =                              the
number of Warrant Shares with respect to which GSP is exercising its purchase
rights under this Warrant;

 

A =                            the
fair market value of one (1) share of the Warrant Shares on the date of
exercise; and

 

B =                              the
applicable Tranche exercise price.

 

No fractional shares arising out of the above
formula for determining the number of shares to be issued to GSP shall be
issued, and the Company shall in lieu thereof make payment to GSP of cash in
the amount of such fraction multiplied by the fair market value of one (1) share
of the Warrant Shares on the date of exercise. 
For purposes of the above calculation, the fair market value of one (1) share
of the Warrant Shares shall mean (a) if the Common Stock is then traded on
a securities exchange, the average of the closing prices of such Common Stock
on such exchange over the thirty (30) calendar day period (or portion thereof)
ending three (3) days prior to the date of exercise, multiplied by the
number of shares of Common Stock into which each share of the Warrant Shares is
then convertible, (b) if the Common Stock is then regularly traded
over-the-counter, the average of the closing sale prices or secondarily the
closing bid of such Common Stock over the thirty (30) calendar day period (or
portion thereof) ending three (3) days prior to the date of exercise,
multiplied by the number of shares of Common Stock into which each share of the
Warrant Shares is then convertible, or (c) if there is no active public
market for the Common Stock, the fair market value of one share of the Warrant
Shares as determined in good faith by GSP and the Company.

 

(e)           Issuance of Certificates.  Upon completing any Tranche One Exercise or
any Tranche Two Exercise, GSP shall be entitled to receive a certificate for
the number of Warrant Shares so purchased within three (3) trading days
after the date on which this Warrant shall have been exercised as aforesaid.

 

3

 

2.             Fractional Shares.  This Warrant shall b exercisable for whole
numbers of Warrant Shares, and no fractional shares shall be issued upon the
exercise of this Warrant.

 

3.             Closing of Books.  The Company will not close its stockholder
books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.

 

4.             Rights as
Shareholder.  This Warrant does not
entitle GSP to any voting rights or other rights as a shareholder of the
Company prior to an effective exercise.

 

5.             Loss, Theft,
Destruction or Mutilation of Warrant. 
The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate relating to the Warrant Shares, and in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor in lieu of such Warrant or stock
certificate.

 

6.             Authorization of
Shares.  The Company covenants that
all Warrant Shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).  To
the extent that the Company does not at any time have the number of shares of
its Common Stock authorized for issuance sufficient to satisfy the number of
Warrant Shares exercisable hereunder, the Company shall use its best efforts to
amend its Certificate of Incorporation at its next Annual Meeting of the
Stockholders, which meeting shall be held no later than June 30, 2009, to
increase its duly authorized shares of Common Stock by such number as would be sufficient to permit GSP to
exercise this Warrant in full and exercise its conversion rights in the
Debenture.

 

7.             Saturdays,
Sundays, Holidays, etc.  If the
Termination Date, or any other date for the taking of any action or the
expiration of any right granted herein shall be a Saturday, Sunday or a legal
holiday, then such action may be taken or such right may be exercised on the
next succeeding day not a Saturday, Sunday or legal holiday (a “Business Day”).

 

8.             Adjustments of
Exercise Price and Number/Kind of Warrant Shares.  The number and kind of securities purchasable
upon exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following.  In case the Company shall:  (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue
any shares of its capital stock in a reclassification of the Common Stock, then
the number and kind of securities purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that GSP shall be entitled to
receive the number and kind of securities of the Company (the “Adjusted Warrant
Shares”) which it would have owned or have been entitled to receive had this
Warrant been exercised in advance thereof. 
Upon each such adjustment, GSP shall thereafter be entitled to 

 

4

 

purchase the number of Adjusted
Warrant Shares at the Tranche One Exercise Price or the Tranche Two Exercise
Price per Adjusted Warrant Share obtained by multiplying such exercise price in
effect immediately prior to such adjustment by the number of Warrant Shares
purchasable pursuant hereto immediately prior to such adjustment and dividing
by the number of Adjusted Warrant Shares resulting from such adjustment.  An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.

 

9.             Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets.  In case the Company shall reorganize its
capital, reclassify its capital stock, consolidate or merge with or into
another corporation (where the Company is not the surviving corporation or
where there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or substantially
all its property, assets or business to another corporation and, pursuant to
the terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of
any nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor or acquiring
corporation (“Other Property”), are to be
received by or distributed to the holders of Common Stock of the Company, then
GSP shall have the right thereafter to receive, at the option of GSP, upon
exercise of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a GSP of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event.  In case
of any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Warrant to be performed and observed
by the Company and all the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined in good faith by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of Warrant Shares for which this Warrant is exercisable which shall
be as nearly equivalent as practicable to the adjustments provided for in this Section 9.  For purposes of this Section 9, “common
stock of the successor or acquiring corporation” shall include stock of such
corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for any
such stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe
for or purchase any such stock.  The
foregoing provisions of this Section 9 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.

 

10.           Notice of Adjustment.  Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted pursuant to Sections 8 or 9
herein, the Company shall give notice thereof to GSP, which notice shall state
the number of Warrant Shares (and other securities or property) purchasable
upon the exercise of this Warrant and the Exercise Price of such Warrant Shares
(and other securities or property) after such adjustment, setting forth a brief
statement of the facts 

 

5

 

requiring such adjustment and
setting forth the computation by which such adjustment was made.

 

11.           Notice of Corporate
Action.  If at any time:

 

(a)           the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, or any right to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or

 

(b)           there shall be any capital reorganization of
the Company, any reclassification or recapitalization of the capital stock of
the Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another corporation, or

 

(c)           there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;

 

then, in any one or more of such cases (but not in such cases if the
rights of GSP or holders of Common Stock will not be materially affected
thereby, as for example in the case of a merger to effect a change of
domicile), the Company shall give to GSP (i) at least 20 days’ prior
written notice of the date on which a record date shall be selected for such
dividend, distribution or right or for determining rights to vote in respect of
any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, liquidation or winding up, and (ii) in the case of
any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 20 days’
prior written notice of the date when the same shall take place.  Such notice in accordance with the foregoing
clause also shall specify:  (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares or Adjusted Warrant Shares for
securities or other property deliverable upon such disposition, dissolution,
liquidation or winding up.  Each such
written notice shall be sufficiently given if addressed to GSP at the last
address of GSP appearing on the books of the Company and delivered in
accordance with Section 12(c).

 

12.           Miscellaneous.

 

(a)           Jurisdiction.  This Warrant shall constitute a contract
under the laws of the State of Delaware without regard to its conflict of law,
principles or rules.

 

(b)           Nonwaiver and Expenses.  No course of dealing or any delay or failure
to exercise any right hereunder on the part of GSP shall operate as a waiver of
such right or otherwise prejudice GSP’s rights, powers or remedies,
notwithstanding all rights 

 

6

 

hereunder
terminate on the Termination Date.  If
the Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to GSP, the Company shall pay to
GSP such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by GSP in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

 

(c)           Notices.  Any notice, request or other document
required or permitted to be given or delivered by one party to the other shall
be delivered in accordance with the notice provisions of the Debenture.

 

(d)           Limitation of Liability.  No provision hereof, in the absence of any
affirmative action by GSP to exercise this Warrant or purchase Warrant Shares,
and no enumeration herein of the rights or privileges of GSP, shall give rise
to any liability of GSP for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

 

(e)           Remedies.  GSP, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant.  The 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 Warrant and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.

 

(f)            Successors and Assigns.  Subject
to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the parties hereto; provided, however, that neither party may
assign or transfer its rights or obligations hereunder without the prior
written consent of the other party except to (i) 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.

 

(g)           Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and GSP.

 

(h)           Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

 

(i)            Headings; Dollar Figures.  The headings used in this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.  All figures expressed
in dollars shall be deemed to refer to U.S. dollars.

 

7

 

IN WITNESS
WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.

 

Dated:  November 14, 2008

 

	
   

  	
  MICROFLUIDICS INTERNATIONAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Michael C. Ferrara

  
	
   

  	
   

  	
  Michael C. Ferrara, President and Chief Executive Officer

  

 

8

 

Exhibit A

 

TRANCHE
ONE NOTICE OF EXERCISE

 

To:          Microfluidics International Corporation

 

(1)           The undersigned hereby
elects to exercise to purchase Warrant Shares of Microfluidics International
Corporation issuable pursuant to the Tranche One Exercise provisions of that
certain Common Stock Purchase Warrant to which this notice was attached and
tenders herewith payment of the exercise price, together with all applicable
transfer taxes if any, therefor.

 

(2)           The number of Warrant
Shares to be purchased pursuant to this Notice shall be
                      .  The purchase price for said Warrant Shares
shall be equal to such number of Warrant Shares multiplied by $2.00 per Warrant
Share (subject to adjustment to such price per Warrant Share as provided in
Sections 8 or 9 of the Common Stock Purchase Warrant).  The Purchase Price has been paid, in immediately
available funds, to the Company contemporaneously with the delivery of this
Notice.

 

(3)           Please deliver the
certificate for the Warrant Shares to the following:

 

 

	
   

  	
  GLOBAL STRATEGIC PARTNERS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
					

 

 

Exhibit B

 

TRANCHE
TWO NOTICE OF EXERCISE

 

To:          Microfluidics International Corporation

 

(1)           The undersigned hereby
elects to exercise to purchase Warrant Shares of Microfluidics International
Corporation issuable pursuant to the Tranche Two Exercise provisions of that
certain Common Stock Purchase Warrant to which this notice was attached and
tenders herewith payment of the exercise price, together with all applicable
transfer taxes if any, therefor.

 

(2)           The number of Warrant
Shares to be purchased pursuant to this Notice shall be
                      .  The purchase price for said Warrant Shares
shall be equal to such number of Warrant Shares multiplied by $3.00 per Warrant
Share (subject to adjustment to such price per Warrant Share as provided in
Sections 8 or 9 of the Common Stock Purchase Warrant).  The Purchase Price has been paid, in
immediately available funds, to the Company contemporaneously with the delivery
of this Notice.

 

(3)           Please deliver the
certificate for the Warrant Shares to the following:

 

 

	
   

  	
  GLOBAL STRATEGIC PARTNERS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

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