Preview | Security Agreement |

This Security Agreement, dated as of March 30, 2007, by and among Power Medical Interventions, Inc., a Delaware corporation (the ?Company? or the ?Grantor?), in favor of The Bank of New York, a New York banking corporation (?BONY? or the ?Collateral Agent?), as collateral agent for the ratable benefit of the holders (the ?Holders?) of the Company?s 7% Convertible Senior Secured Notes due 2010 (including the PIK Notes (as defined in the Purchase Agreement), and in all cases, as amended, restated, supplemented, substituted, replaced or exchanged from time to time, the ?Notes?) under the Securities Purchase Agreement, dated as of March 30, 2007 (as amended, modified, supplemented and/or restated from time to time, the ?Purchase Agreement?), by and among the Company and the Holders.

WHEREAS, pursuant to the Purchase Agreement, the Holders are purchasing the Notes in the aggregate principal amount of up to $25,000,000, upon the terms and subject to the conditions set forth therein.

WHEREAS, it is a condition precedent to the obligation of the Holders to purchase the Notes from the Company under the Purchase Agreement that the Grantor shall have executed and delivered this Agreement to the Collateral Agent. The Holders are relying on this Agreement in their decision to purchase Notes under the Purchase Agreement and would not enter into the Purchase Agreement without the execution and delivery of this Agreement by the Company.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, and to induce the Holders to enter into the Purchase Agreement and to induce the Holders to purchase the Notes from the Company thereunder, the Grantor hereby agrees with the Collateral Agent, as follows:

(a) The following terms when used in this Agreement shall have the meanings assigned to them in the UCC (as defined in Section 2(kk) below) as in effect from time to time: ?Account,? ?Certificated Security,? ?Chattel Paper,? ?Commercial Tort Claim,? ?Deposit Account,? ?Documents,? ?Electronic Chattel Paper,? ?Equipment,? ?Fixture,? ?General Intangible,? ?Goods,? ?Instrument,? ?Inventory,? ?Investment Property,? ?Issuer,? ?Letter of Credit Rights,? ?Proceeds,? ?Record,? ?Securities Intermediary,? ?Securities Account,? ?Supporting Obligation,? ?Tangible Chattel Paper,? and ?Uncertificated Security.?

(b) Terms defined in the UCC and not otherwise defined herein or in the Purchase Agreement shall have the meaning assigned in the UCC as in effect from time to time.

2. Definitions. The following terms when used in this Agreement shall have the meanings assigned to them below:

(a) ?Agreement? means this Security Agreement, as amended, restated, supplemented or otherwise modified from time to time.

(b) ?Applicable Law? means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Grantor, as the case may be.

(c) ?Assignment of Claims Act? means the Assignment of Claims Act of 1940 (41 U.S.C. Section 15, 31 U.S.C. Section 3737, and 31 U.S.C. Section 3727), including all amendments thereto and regulations promulgated thereunder.

(d) ?Collateral? has the meaning assigned thereto in Section 3(a).

(e) ?Collateral Account? means any collateral account established by the Collateral Agent as provided in Section 8(b).

(f) ?Collateral Agent? has the meaning assigned thereto in the preamble of this Agreement.

(g) ?Collateral Documents? means this Agreement and the other agreements, documents, or instruments, including any financing statements, and any amendments or supplements thereto, creating, perfecting, or evidencing any Liens securing the Notes and any other Obligation under the Collateral Documents.

(h) ?Contract? means any lease, agreement or contract to which Grantor is now or hereafter a party.

(i) ?Control? means the manner in which ?control? is achieved under the UCC with respect to any Collateral for which the UCC specifies a method of achieving ?control.?

(j) ?Controlled Depository? has the meaning assigned thereto in Section 7(f).

(k) ?Copyrights? means collectively, all of the following of the Grantor: (i) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations and copyright applications anywhere in the world, (ii) all reissues, extensions, continuations (in whole or in part) and renewals of any of the foregoing, (iii) all income, royalties, damages and payments now or hereafter due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation, damages or payments for past or future infringements of any of the foregoing, (iv) the right to sue for past, present and future infringements of any of the foregoing, and (v) all rights corresponding to any of the foregoing throughout the world.

(l) ?Copyright Licenses? means any agreement now or hereafter in effect granting any right to any third party under any Copyright now or hereafter owned by the Grantor or which the Grantor otherwise has the right to license, or granting any right to the Grantor under any property of the type described in the definition of Copyright herein now or hereafter owned by any third party, and all rights of the Grantor under any such agreement.

(m) ?Effective Endorsement and Assignment? means, with respect to any specific type of Collateral, all such endorsements, assignments and other instruments of transfer reasonably

requested by the Collateral Agent with respect to the Security Interest granted in such Collateral, and in each case, in form and substance satisfactory to the Collateral Agent.

(n) ?Escrow Deposit? shall have the meaning set forth in the Notes.

(o) ?Event of Default? shall have the meaning set forth in the Notes.

(p) ?Government Contract? means a contract between the Grantor and an agency, department or instrumentality of the United States or any state, municipal or local Governmental Authority located in the United States or all obligations of any such Governmental Authority arising under any Account now or hereafter owing by any such Governmental Authority, as account debtor, to the Grantor.

(q) ?Governmental Authority? means any federal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

(r) ?Grantor? has the meaning set forth in the preamble of this Agreement.

(s) ?Intellectual Property? means collectively, all of the following of the Grantor: (i) all systems software, applications software and internet rights, including, without limitation, screen displays and formats, internet domain names, web sites (including web links), program structures, sequence and organization, all documentation for such software, including, without limitation, user manuals, flowcharts, programmer?s notes, functional specifications, and operations manuals, all formulas, processes, ideas and know-how embodied in any of the foregoing, and all program materials, flowcharts, notes and outlines created in connection with any of the foregoing, whether or not patentable or copyrightable, (ii) concepts, discoveries, improvements and ideas, (iii) any useful information relating to the items described in clause (i) or (ii), including know-how, technology, engineering drawings, reports, design information, trade secrets, practices, laboratory notebooks, specifications, test procedures, maintenance manuals, research, development, manufacturing, marketing, merchandising, selling, purchasing and accounting, (iv) Patents and Patent Licenses, Copyrights and Copyright Licenses, Trademarks and Trademark Licenses, and (v) other licenses to use any of the items described in the foregoing clauses (i), (ii), (iii) and (iv) or any other similar items of the Grantor necessary for the conduct of its business.

(t) ?Issuer? means any issuer of any Investment Property (including, without limitation, any Issuer as defined in the UCC).

(u) ?Majority in Interest? means with respect to the Holders, a majority in principal amount of the then outstanding Notes.

(v) ?Material Adverse Effect? means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company, its Subsidiaries, taken as a whole, or on the transactions contemplated hereby or in the other Transaction Documents (as defined in the Purchase Agreement), or on the authority or ability of the Company to perform its obligations under the Transaction Documents.

(w) ?MELF Loan? means the machinery and equipment loan in the original principal amount of $500,000 pursuant to that certain Term Machinery and Equipment Loan Agreement, dated December 21, 2005 by and between the Company and the Pennsylvania Department of Community and Economic Development Machinery and Equipment Loan Fund.

(x) ?Obligations? means the collective reference to all indebtedness and other liabilities and obligations of every kind and description owed by the Grantor to the Holders from time to time under or pursuant to this Agreement, the Notes, the Registration Rights Agreement and/or the Purchase Agreement and all instruments and other documents delivered pursuant to or in connection therewith, in each case as may be modified, amended, amended and restated or replaced, however evidenced, created or incurred, fixed or contingent, now or hereafter existing, due or to become due, including any interest or other amount which accrues during the pendency of any case under the United States Bankruptcy Code or any similar statute (regardless of whether or not enforceable in such proceeding).

(y) ?Partnership/LLC Interests? means, with respect to the Grantor, the entire partnership, membership interest or limited liability company interest, as applicable, of the Grantor in each partnership, limited partnership or limited liability company owned thereby, including, without limitation, the Grantor?s capital account, its interest as a partner or member, as applicable, in the net cash flow, net profit and net loss, and items of income, gain, loss, deduction and credit of any such partnership, limited partnership or limited liability company, as applicable, the Grantor?s interest in all distributions made or to be made by any such partnership, limited partnership or limited liability company, as applicable, to the Grantor and all of the other economic rights, titles and interests of the Grantor as a partner or member, as applicable, of any such partnership, limited partnership or limited liability company, as applicable, whether set forth in the partnership agreement or membership agreement, as applicable, of such partnership, limited partnership or limited liability company, as applicable, by separate agreement or otherwise.

(z) ?Patents? means collectively, all of the following of the Grantor: (i) all patents, rights and interests in patents, patentable inventions and patent applications, recordings and registrations anywhere in the world, (ii) all reissues, extensions, divisions, substitutions, continuations (in whole or in part) and renewals of any of the foregoing, (iii) all income, royalties, damages or payments now or hereafter due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation, damages or payments for past or future infringements of any of the foregoing, (iv) the right to sue for past, present and future infringements of any of the foregoing, and (v) all rights corresponding to any of the foregoing throughout the world, in each case whether now owned or existing or hereafter acquired or arising.

(aa) ?Patent License? means all agreements now or hereafter in existence, whether written or oral, providing for the grant by or to the Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent.

(bb) ?Perfection Certificate? means the perfection certificate dated as of the date hereof, substantially in the form of Exhibit A attached hereto, and duly certified by an officer, partner, manager or member, as applicable, of the Grantor.

End of Preview

Home Intelligence Services Subscriptions News About Us