MFIC CORP
EXHIBIT 10.54
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<TYPE>EX-10.54
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<FILENAME>a2106469zex-10_54.htm
<DESCRIPTION>EXHIBIT 10.54
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<P ALIGN="RIGHT"><FONT SIZE=2><A
NAME="mc1490_exhibit_10.54"> </A>
<A NAME="toc_mc1490_1"> </A>
<BR></FONT><FONT SIZE=2><B>Exhibit 10.54    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="mc1490_third_amendment_to_revo__mc102446"> </A>
<A NAME="toc_mc1490_2"> </A>
<BR></FONT><FONT SIZE=2><B>THIRD AMENDMENT TO REVOLVING CREDIT AND<BR>  TERM LOAN AGREEMENT    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Third Amendment to Revolving Credit and Term Loan Agreement (the "Amendment") is made as of the 19th day of February, 2003 by and among </FONT></P>

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<P><FONT SIZE=2>MFIC
Corporation (the "Borrower"), a Delaware corporation with its principal executive offices at 30&nbsp;Ossipee Road, Newton, Massachusetts 02464; and </FONT></P>


<P><FONT SIZE=2>PNC
Bank, National Association, a national banking association (the "Lender") with a place of business at 70&nbsp;East 55th Street, 14th Floor, New York, New York 10022; </FONT></P>

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<P><FONT SIZE=2>in
consideration of the mutual covenants herein contained and benefits to be derived herefrom. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>WITNESSETH:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Borrower and National Bank of Canada ("NBC") entered into a certain Revolving Credit and Term Loan Agreement dated as of February&nbsp;28, 2000 (as
amended in effect, the "Loan Agreement"); and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
NBC has assigned all of its right, title and interest in and to the Loan Agreement and the documents, instruments and agreements executed and delivered in connection therewith
to the Lender; and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Borrower has requested that the Lender modify and amend certain provisions of the Loan Agreement; and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Lender has agreed to modify and amend certain provisions of the Loan Agreement on the terms and conditions set forth herein. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, it is hereby agreed as follows: </FONT></P>

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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD><FONT SIZE=2><U>Definitions.</U>
<BR><BR></FONT>
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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>All
capitalized terms used herein and not otherwise defined shall have the same meanings herein as in the Loan Agreement.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>Section
1 of the Loan Agreement is hereby amended by either amending or inserting the following definition therein: </FONT></DD></DL>
</DD></DL>
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<P><FONT SIZE=2>"<U>Maturity
Date</U>". February&nbsp;28, 2004 or such earlier date on which the Loans shall become due and payable pursuant to the terms hereof. </FONT></P>

<P><FONT SIZE=2>"<U>Monthly
Monitoring Fee</U>". The fee payable to Lender for monthly monitoring of the Loans as provided for in subsection&nbsp;(c) of Section&nbsp;6.9
<U>Inspection of Properties and Books</U>. </FONT></P>

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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>2</FONT></DT><DD><FONT SIZE=2>Subsection
(a) of Section 3.2 <U>Funds for Payments</U> is deemed amended to delete the address "One&nbsp;Federal Street, Boston, Massachusetts 02110" and
substitute therefor "Two&nbsp;Tower Center, East&nbsp;Brunswick, New Jersey 08816, Attention: PNC Business Credit."
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>3.</FONT></DT><DD><FONT SIZE=2>Section
6.9 <U>Inspection of Properties and Books</U> is deemed amended as follows:
<BR><BR></FONT>
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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>Subsection
(b) is amended to delete the references to "$550.00 per day" and "$15,000 in any calendar year" and substitute therefor "$750.00 per day" and "$25,000 in any calendar year"
respectively.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>A
new subsection (c) is deemed added to provide that in addition to the examinations described in (b)&nbsp;above, Lender shall continue to monitor the Loans on a monthly basis for
which it shall be paid Monthly Monitoring Fee, in the amount of $1,000,00&nbsp;per month </FONT></DD></DL>
</DD></DL>
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<P><FONT SIZE=2>until
increased or decreased, such payment to commence to be due and payable commencing in the first full month following the date of this Amendment. </FONT></P>

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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>4.</FONT></DT><DD><FONT SIZE=2>Subsection
(g) of Section 7.1 <U>Restrictions on Indebtedness</U> is deemed amended to delete the figure "$200,000.00" and substitute therefor "$250,000.00."
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>5.</FONT></DT><DD><FONT SIZE=2>Section
8.1 <U>Consolidated Tangible Net Worth</U> is deemed amended to add to the existing grid the following: </FONT></DD></DL>
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<TD WIDTH="48%"><FONT SIZE=2>12/31/03 and thereafter</FONT></TD>
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<TD WIDTH="48%"><FONT SIZE=2>The required Consolidated Tangible Net Worth for the Previous quarter plus the Applicable Profit Margin plus Subordinated Debt</FONT></TD>
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<P><FONT SIZE=2>The
Borrower and Lender acknowledge and agree that the foregoing covenant shall be calculated exclusive of the Impairment Charge for the fiscal quarter in which the Borrower recognized the Impairment
Charge. </FONT></P>

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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>6.</FONT></DT><DD><FONT SIZE=2>Section
8.3 <U>Consolidated Pre-Tax Income</U> is deemed amended to add to the existing grid the following: </FONT></DD></DL>
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<TD WIDTH="48%"><FONT SIZE=2>12/31/03</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="48%"><FONT SIZE=2>$500,000</FONT></TD>
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<P><FONT SIZE=2>The
Borrower and Lender acknowledge and agree that the foregoing covenant shall be calculated exclusive of the Impairment Charge for the fiscal quarter in which the Borrower recognized the Impairment
Charge. </FONT></P>

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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>7.</FONT></DT><DD><FONT SIZE=2>Section
8.4 <U>Minimum Debt Service</U> is deemed amended to add to the existing grid the following: </FONT></DD></DL>
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<TD WIDTH="48%" VALIGN="TOP"><FONT SIZE=2>12/31/02 and thereafter, quarterly</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="48%" VALIGN="TOP"><FONT SIZE=2>1.5:1.0</FONT></TD>
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<P><FONT SIZE=2>The
Borrower and Lender acknowledge and agree that the foregoing covenant shall be calculated exclusive of the Impairment Charge for the fiscal quarter in which the Borrower recognized the Impairment
Charge. </FONT></P>

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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>8.</FONT></DT><DD><FONT SIZE=2>Section
9.1 <U>No Material Adverse Change</U> is deemed amended to delete the reference to the years "1999" and "1998" and substitute therefor the years "2002"
and "2001" respectively.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>9.</FONT></DT><DD><FONT SIZE=2>Subsection
(b) of Section 17 <U>Notices, Etc.</U> is deemed to delete the reference to "One&nbsp;Federal Street, Boston, Massachusetts 02210,
Attention:&nbsp;Mr.&nbsp;A. Keith Boyles, Vice President and Manager (Telecopier:&nbsp;617-350-7677)" and substitute therefor "55&nbsp;East 70th Street, New York, N.Y. 10022,
Attention:&nbsp;T.C. Wilde, Assistant Vice President (Telecopier:&nbsp;646-487-0324)."
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>10.</FONT></DT><DD><FONT SIZE=2><U>Conditions
to Effectiveness</U>. This Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the
satisfaction of the Lender:
<BR><BR></FONT>
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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>This
Amendment shall have been duly executed and delivered by the respective parties hereto and, shall be in full force and effect and shall be in form and substance satisfactory to
the Lender.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>All
action on the part of the Borrower necessary for the valid execution, delivery and performance by the Borrower of this Amendment shall have been duly and effectively taken and
evidence thereof satisfactory to the Lender shall have been provided to the Lender. The Lender shall have received from the Borrower true copies of the resolutions adopted by its board of directors
authorizing the transactions described herein, certified by the Borrower's secretary to be true and complete.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>The
Borrower shall have paid an amendment fee to the Lender in the amount of Ten Thousand Three Hundred Eighty Four and 35/100 Dollars ($10,384.35). </FONT></DD></DL>
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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>The
Borrower shall have paid to the Lender all fees and expenses then due and owing pursuant to the Agreement, including, without limitation, the Lenders' attorneys' fees and
expenses.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2>No
Default or Event of Default shall have occurred and be continuing.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2>The
Borrower shall have provided such additional instruments and documents to the Lender as the Lender and the Lender's counsel may have reasonably requested. </FONT></DD></DL>
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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>11.</FONT></DT><DD><FONT SIZE=2><U>Ratification
of Loan Documents</U>. Except as provided herein, all terms and conditions of the Loan Agreement and the other Loan Documents remain in full
force and effect. The Borrower hereby ratifies, confirms, and reaffirms all representations, warranties, and covenants contained therein and acknowledges and agrees that the Liabilities, are and
continue to be secured by the Collateral. The Borrower further acknowledges and agrees that Borrower does not have any offsets, defenses, or counterclaims against the Lender thereunder, and to the
extent that any such offsets, defenses, or counterclaims may exist, the Borrower hereby waives and releases the Lender therefrom.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>12.</FONT></DT><DD><FONT SIZE=2><U>Miscellaneous</U>.
<BR><BR></FONT>
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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>This
Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which
together shall constitute on instrument.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>This
Amendment expresses the entire understanding of the parties with respect to the transactions comtemplated hereby. No prior negotiations or discussions shall limit, modify, or
otherwise affect the provisions hereof. </FONT></DD></DL>
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<P><FONT SIZE=2>IN
WITNESS WHEREOF, the undersigned have hereunto executed this Amendment as a sealed instrument as of the date first above written. </FONT></P>

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<TD COLSPAN=2><FONT SIZE=2>MFIC CORPORATION</FONT></TD>
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<TD WIDTH="39%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><BR><FONT SIZE=2>By:</FONT></TD>
<TD WIDTH="54%" ALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>IRIWIN J. GRUVERMAN</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Iriwin J. Gruverman<BR></FONT> <FONT SIZE=2><I>CEO</I></FONT></TD>
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<TD WIDTH="39%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><BR><FONT SIZE=2>PNC BANK, NATIONAL ASSOCIATION</FONT></TD>
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&nbsp;</FONT></TD>
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<TD WIDTH="4%"><BR><FONT SIZE=2>By:</FONT></TD>
<TD WIDTH="54%" ALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>TARA-CLARK WILDE</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Tara-Clark Wilde<BR></FONT> <FONT SIZE=2><I>AVP</I></FONT></TD>
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<FONT SIZE=2><A HREF="#toc_mc1490_1">Exhibit 10.54</A></FONT><BR>
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<FONT SIZE=2><A HREF="#toc_mc1490_2">THIRD AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT</A></FONT><BR>

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