Exhibit 10.1


 


 


 


AMENDMENT
TO NOTES AND REGISTRATION RIGHTS AGREEMENT


 


 


This Amendment to Notes and
Registration Rights Agreement (this “Agreement”)
is made and entered into as of January 28, 2008, by and among Power
Medical Interventions, Inc., a Delaware corporation (the “Company”), and the investors
signatory hereto (each a “Holder” and
collectively, the “Holders”).


 


WHEREAS, the Holders are
registered holders of 7% Senior Secured Convertible Promissory Notes of the
Company dated March 30, 2007 (the “Notes”);


 


 WHEREAS, the Company and the Holders are
parties to that certain Registration Rights Agreement dated March 30, 2007
(the “Original Agreement”) (capitalized
terms used and not otherwise defined herein shall have the meanings set forth
in the Original Agreement);


 


 WHEREAS, the U.S. Securities
and Exchange Commission has adopted amendments to Rule 144 under the
Securities Act, to be effective on and after February 15, 2008 (the “Rule 144 Amendments”), which
amendments will facilitate the resale of the Underlying Shares;


 


WHEREAS, Rule 144, as
amended by the Rule 144 Amendments, will become available to the Holders
on February 15, 2008, and on or after March 30, 2008 all Underlying
Shares held by any Holder who is not, and has not within the preceding three
months been, an affiliate of the Company will cease to be Registrable
Securities, by reason of the fact that they may be resold without volume limits
or other conditions pursuant to Rule 144;


 


WHEREAS, the holders of
approximately 12,800,000 shares of Common Stock issued or issuable pursuant to
the exercise of outstanding warrants of the Company have piggyback rights
entitling them to include such shares in any Registration Statement filed by
the Company pursuant to the Original Agreement, and as a result, the filing of
such a Registration Statement could have an adverse effect on the market price
of the Company’s Common Stock and on the ability of the Holders to resell their
Underlying Shares; and


 


WHEREAS, in light of the
foregoing, the Company and the Holders desire to amend the Notes and the
Original Agreement, on the terms and conditions hereinafter set forth;


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the
Company and each of the Holders hereby agree as follows:


 


                                                1.                                       Section 2(a) of
the Original Agreement is hereby amended by the addition, as the final sentence
thereof, of the following:


 


Further, notwithstanding anything to the contrary contained herein, the
Filing Date by which the Company must file the Registration Statement will be
extended until March 30, 2008, and any requirement to file a Registration
Statement pursuant to this Agreement will expire and be of no further force or
effect on March 30, 2008; provided, in each case, that each of the
following conditions (the “Filing Extension
Conditions”) has been met:


 


 


 

















 


 


(x)                                   at all times
between the Qualified IPO Closing Date and March 30, 2008, the current
public information requirement of Rule 144(c) (the “Current Public Information Requirement”)
has been satisfied by the Company; and


 


(y)                                 on or before February 1,
2008, the Company has furnished to its transfer agent a blanket opinion of
Foley Hoag LLP, counsel to the Company, in substantially the form attached as Exhibit A
hereto, to the effect that on or after February 15, 2008, the Holders will
be eligible to freely transfer any certificate representing Underlying Shares;
and


 


(z)                                   in the event
that any Holder shall have, at any time on or after February 15, 2008,
surrendered to the Company an original Note, duly endorsed or assigned to the
Company or in blank, accompanied by a notice of conversion with respect to any
Note in the form attached as Exhibit B and otherwise in compliance
with the requirements of Section 7 of the applicable Note (a “Conforming Conversion Notice”), the
Company shall have promptly caused its transfer agent to issue to such Holder a
certificate representing the Underlying Shares issuable upon such conversion
without any restrictive legend.


 


2.                                       The Company
further affirmatively covenants and agrees that, anything to the contrary in
the Original Agreement or any Note notwithstanding, if any Holder shall, at any
time on or after February 15, 2008, surrender to the Company an Original
Note, duly endorsed or assigned to the Company or in blank, accompanied by a
Conforming Conversion Notice (as defined above), the Company shall promptly
cause its transfer agent to issue to such Holder a certificate representing the
Underlying Shares issuable upon such conversion without any restrictive legend.


 


3.                                       To induce the
Company to enter into this Agreement and make the foregoing covenant, each
Holder hereby represents and warrants to the Company that at such time as such
Holder surrenders any Note for conversion or requests that the restrictive
legend be removed from any certificate representing any Underlying Shares, such
Holder will not be, and will not during the preceding three months have been,
an “Affiliate” of the Company, as such term is defined in the Notes.


 


4.                                       Section 2(b)(i) of
the Original Agreement, relating to the definition of a Registration
Default,  is hereby amended to read in
its entirety as follows:


 


(i)                                     the Registration
Statement is not filed with the Commission on or before the Filing Date, as
extended pursuant to the last sentence of Section 2(a) above, or
either of the Filing Extension Conditions is not met at any time after February 1,
2008 and prior to March 30, 2008;


 


5.                                       Section 6
of the Original Agreement is hereby amended by addition, as the final
subsection thereof, of the following:


 


(p)                                 Termination. Provided that
each of the Filing Extension Conditions has been met at all times prior to March 30,
2008, this Agreement will expire and be of no 


 


 


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further
force and effect on March 30, 2008; provided further, that if any
Registration Default (as amended hereby) shall have occurred prior to such
date, this Agreement shall not expire and shall remain in force, and each
Holder shall be entitled to any remedy provided for herein by reason of such
Registration Default.


 


6.                                       Section 2(b) of
each Note is hereby amended so as to read in its entirety as follows:


 


                                                (b)                                 Terminal Value
Payment.  The terminal value of this
Note that (i) will be due upon redemption or conversion, (ii) will be
considered part of the Conversion Amount for purposes of determining the
Conversion Rate or (iii) will be due upon Maturity or acceleration as part
of the Principal Amount, in each case and as the case may be, as set forth in
this Note (the “Terminal Value Payment”) will
equal, at any date of determination, the amount equal to 7% per annum of the
then applicable Principal from the Closing Date to:


 


(x)  the first Conversion Event (which the parties
acknowledge and agree occurred on October 31, 2007), or


 


(y)  if a Registration Default (as amended hereby) has
occurred on or before March 30, 2008 and no Registration Statement has
been declared effective by April 29, 2008, upon the earlier to occur of
the conversion of this Note or its Maturity.


 


Notwithstanding the foregoing, in the event the Company redeems or
repurchases Notes pursuant to Section 6 or Section 8 between the date
of the Conversion Event and March 30, 2008, then the Terminal Value
Payment shall equal the accreted value up until such redemption or repurchase,
regardless of whether or not a Registration Default has occurred or the
Registration Statement is ever declared effective.


 


7.                                       Section 6(a) of  each Note is hereby amended so as to read in
its entirety as follows:


 


(a)                                  the declaration
of effectiveness of a registration statement filed with the U.S. Securities and
Exchange Commission (the “Commission”)
for the resale of the Underlying Shares; provided, that this condition
shall be deemed to be satisfied if on or after March 30, 2008, the
Registration Rights Agreement, as amended, shall expire in accordance with its
terms;


 


                                                8.                                       Except as
expressly amended hereby, the Original Agreement and each Note shall remain in
full force and be given effect in accordance with its terms. Without limiting
the generality of the foregoing, in the event of any Registration Default,
including any Registration Default arising by reason of the Filing Extension
Conditions not having been met, the Holders shall be entitled to all the
remedies provided in the Original Agreement.


 


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left blank, signature pages to follow]


 


 


 


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IN WITNESS WHEREOF, the
parties have executed this Amendment to Notes and Registration Rights Agreement
as of the date first written above.


 


 


 


	
   

  	
  POWER MEDICAL INTERVENTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/John P. Gandolfo

  
	
   

  	
  Name:

  	
  John P. Gandolfo

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  



 


 


 


 


 


 


Signature Page to Amendment to Notes and
Registration Rights Agreement


 


 


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