Document:

Exhibit
10.2

 

	
  CAW/12-19-05

  	
  MELF #24-9-645

  	
   

  

 

MACHINERY AND EQUIPMENT
LOAN FUND

 

NOTE

 

Dated: December 21, 2005,
and effective as of December 21, 2005 (the “Effective Date”)

 

At:       Langhorne, Pennsylvania

 

$500,000

 

Maker: POWER MEDICAL
INTERVENTIONS, INC., a corporation organized and existing under the laws of
Delaware (the “Maker”);

 

Payee: COMMONWEALTH OF
PENNSYLVANIA acting through the DEPARTMENT OF COMMUNITY AND ECONOMIC
DEVELOPMENT (the “Department”)

 

THIS NOTE IS EXECUTED AND DELIVERED
PURSUANT TO A LOAN AGREEMENT BETWEEN THE DEPARTMENT AND THE MAKER (THE “LOAN
AGREEMENT”), AND IS SUBJECT TO ALL THE TERMS AND CONDITIONS THEREOF, INCLUDING
PROVISIONS FOR PREPAYMENT AND THE ACCELERATION OF THE MATURITY HEREOF UNDER
CERTAIN CIRCUMSTANCES. THIS NOTE IS ENTITLED TO THE SECURITY PROVIDED FOR IN
THE LOAN AGREEMENT. PURSUANT TO THE LOAN AGREEMENT AND SIMULTANEOUSLY WITH THE
EXECUTION OF THIS NOTE, THE MAKER HAS EXECUTED AND DELIVERED TO THE DEPARTMENT
A SECURITY AGREEMENT EFFECTIVE AS OF THE EFFECTIVE DATE SECURING THIS NOTE (THE
“SECURITY AGREEMENT”) GRANTING THE DEPARTMENT A LIEN ON CERTAIN EQUIPMENT, AS
MORE FULLY DESCRIBED ON EXHIBIT A OF THE SECURITY AGREEMENT (THE “EQUIPMENT”).

 

FOR VALUE RECEIVED, the
Maker does hereby irrevocably promise to pay, without defalcation, to the order
of the Department, as directed by the Department, in lawful money of the United
States of America, at the latter’s principal office in Harrisburg,
Pennsylvania, or at such other places as the Department may designate, the sum of
(i) the principal sum of Five Hundred Thousand Dollars ($500,000), or so much
thereof as shall be disbursed to the Maker pursuant to the terms of the Loan
Agreement, together with interest as set forth below, and (ii) upon demand by
the Department, all other amounts payable hereunder (including, without
limitation, any late charge hereunder) or under the Loan Agreement or Security
Agreement.

 

1

 

PAYMENT
AND INTEREST RATE TERMS:

 

Beginning on February 1, 2006 and continuing thereafter
on the first day of each succeeding month, the Maker shall make level monthly
payments of interest at the rate of 2.75% per annum on the outstanding
principal balance calculated on the basis of a 360 day year (or such greater rate
as provided hereunder upon the declaration of an Event of Default) and
principal in an amount calculated to fully amortize the Loan in eighty-four
(84) installments, with a final installment due on or before the date stated
below. Interest on the outstanding principal balance will accrue from and
including the date of this Note and such interest as accrues through December
31, 2005 shall be due and payable on the first day of February, 2006 in
addition to the first monthly installment of principal and interest.

 

The entire outstanding
balance of principal and all interest and other sums due hereunder or under the
Security Agreement given to secure this Note, shall be due and payable on or
before January 1, 2013.

 

Payments received shall
be applied in the following order: (i) to any expenditures by the Department
for which Maker may be required to reimburse the Department under the Loan
Agreement or the Security Documents; (ii) to any late charges hereunder; (iii)
to interest on the unpaid principal; and (iv) to principal.

 

In the event any amount
due hereunder shall not be paid within thirty (30) days after the due date, the
Maker agrees to pay, in addition to interest accruing on such amount hereunder,
a late charge of twelve and one-half percent (12-1/2%) per annum of any such
overdue amount to compensate the Department for damages suffered because of the
Maker’s failure to make prompt payments, computed daily from the due date to
the date payment is received.

 

ADDITIONAL COVENANTS OF THE MAKER:

 

THE MAKER HEREBY
COVENANTS AND AGREES AS FOLLOWS:

 

1.                          All the
terms, covenants, conditions and provisions of the Security Documents, the Loan
Agreement are incorporated herein by reference and are made a part hereof.

 

2.                          An event
of default hereunder (an “Event of Default”) shall be the occurrence of any
Event of Default as defined in the Loan Agreement.

 

3.                          Upon the
occurrence of an Event of Default other than an Event of Default deriving
exclusively from a breach of Section 6.07, “Number of Jobs,” of the Loan Agreement
(a “Job Creation Default”), pertaining to job creation or retention, the
Department may, in its discretion: (i) declare the whole unpaid balance of the
principal indebtedness, together with all interest thereon and all other sums
due hereunder, due and payable immediately without notice to the Maker; and
(ii) increase the rate of interest under this Note to a rate not to exceed the
greater of twelve and one-half percent (12 (1)/2%)
per annum or the prime interest rate plus two percent (2%) per annum. For
purposes of this Note, the prime interest rate shall be the rate of interest
per annum specified as Prime Rate in the Wall Street Journal under the table
entitled “Money Rates.”

 

2

 

The increased rate of interest shall apply retroactively to the first
date of the event or conduct giving rise to the declaration of the Event of
Default and continue until such Event of Default is cured, and all additional
unpaid interest that accrues from the first date of the event or conduct giving
rise to the declaration of the Event of Default shall be immediately due and
payable.

 

4.                          Upon the
occurrence of a Job Creation Default, the Department shall have the right to
increase the rate of interest under this Note up to the prime interest rate
plus two percent (2%) per annum unless the penalty is waived by the Secretary
of the Department because such noncompliance is due to circumstances beyond the
control of the Borrower. The increased rate of interest shall be effective as
set forth in a written notice from the Department to the Maker and continue
prospectively until the Note is paid in full.

 

5.                         THE
FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR AN ATTORNEY TO
CONFESS JUDGMENT AGAINST THE MAKER. EXCEPT AS SPECIFICALLY PROVIDED HEREIN, IN
GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE MAKER, THE
MAKER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF
THE SEPARATE COUNSEL OF THE MAKER, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS
THE MAKER HAVE OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER
THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH
OF PENNSYLVANIA.

 

IF THERE
EXISTS AN EVENT OF DEFAULT AS DEFINED IN THIS NOTE WHICH REMAINS UNCURED THIRTY
(30) DAYS AFTER WRITTEN NOTICE THEREOF IS GIVEN BY THE DEPARTMENT TO THE MAKER
(OF WHICH AN AFFIDAVIT ON BEHALF OF THE DEPARTMENT SHALL BE SUFFICIENT
EVIDENCE), THEN THE MAKER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY
ATTORNEY OF ANY COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA, OR
ELSEWHERE, TO APPEAR FOR AND TO ENTER AND CONFESS JUDGMENT AGAINST IT, AT ANY
TIME OR TIMES AND AS OF ANY TERM, FOR THE PRINCIPAL SUM ABOVE MENTIONED, WITH
OR WITHOUT DECLARATION, WITH INTEREST AND COSTS OF SUIT, WITHOUT STAY OF
EXECUTION, AND WITH REASONABLE ATTORNEY’S FEES. THE MAKER AGREES THAT ANY OF
ITS PROPERTY MAY BE LEVIED UPON TO COLLECT SAID JUDGMENT AND MAY BE SOLD UPON A
WRIT OF EXECUTION, AND HEREBY WAIVES AND RELEASES ALL LAWS, NOW OR HEREAFTER IN
FORCE, RELATING TO EXEMPTION, APPRAISEMENT OR STAY OF EXECUTION. THE AUTHORITY
HEREBY GRANTED TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY EXERCISE
THEREOF, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL THE MAKER
HAS PAID ALL SUMS REQUIRED TO BE PAID BY THE MAKER UNDER THIS NOTE, THE LOAN
AGREEMENT AND THE SECURITY AGREEMENT AND HAS PERFORMED ALL OF THE OTHER
PROVISIONS HEREOF OR THEREOF TO BE PERFORMED BY THE MAKER.

 

3

 

THE
DEPARTMENT MAY CONFESS ONE OR MORE JUDGMENTS AGAINST THE MAKER IN THE SAME OR
DIFFERENT JURISDICTIONS FOR ALL OR ANY PART OF THE AMOUNT OWING HEREUNDER,
WITHOUT REGARD TO WHETHER JUDGMENT HAS THERETOFORE BEEN CONFESSED ON MORE THAN
ONE OCCASION FOR THE SAME AMOUNT OR AGAINST ANOTHER PARTY. IN THE EVENT ANY
JUDGMENT CONFESSED HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON
THE MAKER’S BEHALF FOR ANY REASON, THE DEPARTMENT IS HEREBY AUTHORIZED AND
EMPOWERED TO AGAIN APPEAR FOR AND CONFESS JUDGMENT AGAINST THE MAKER FOR ANY
PART OR ALL OF THE AMOUNTS OWING HEREUNDER, AS PROVIDED FOR HEREIN, IF DOING SO
WILL CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR PROCEEDINGS.

 

IF THE
MAKER WISHES TO CHALLENGE ANY JUDGMENT CONFESSED PURSUANT TO THIS PARAGRAPH, IT
SHALL DO SO ONLY BY FILING A PETITION TO OPEN THE JUDGMENT PURSUANT TO
PENNSYLVANIA RULES OF CIVIL PROCEDURE RULE 2959, AS IN EFFECT FROM TIME TO
TIME, (“RULE 2959”) AND SHALL NOT OTHERWISE INTERFERE (BY FILING ANY CIVIL
ACTION, BILL IN EQUITY, OR OTHERWISE) WITH THE OPERATION OF THE JUDGMENT
GRANTED PURSUANT TO THIS SECTION. THE MAKER EXPRESSLY ACKNOWLEDGES THAT THE
PROCEDURE AVAILABLE TO IT THROUGH RULE 2959 WILL PROVIDE IT WITH A FULL AND
FAIR OPPORTUNITY TO BE HEARD AS TO ANY REASON WHY JUDGMENT SHOULD NOT BE ENTERED
AGAINST IT.

 

THE
MAKER ACKNOWLEDGES THAT IT UNDERSTANDS THE MEANING AND EFFECT OF THE CONFESSION
CONTAINED IN THE FOREGOING PARAGRAPH. SPECIFICALLY, THE MAKER UNDERSTANDS AMONG
OTHER THINGS THAT (1) IT IS RELINQUISHING THE RIGHT TO HAVE NOTICE EXCEPT AS PROVIDED
HEREIN, AN OPPORTUNITY TO BE HEARD AND THE RIGHT TO HAVE THE BURDEN OF PROOF OF
DEFAULT REST ON THE DEPARTMENT PRIOR TO THE ENTRY OF JUDGMENT, (2) THE ENTRY OF
JUDGMENT MAY RESULT IN A LIEN ON ITS PROPERTY, (3) IT WILL BEAR THE BURDEN AND
EXPENSE OF ATTACKING THE JUDGMENT AND CHALLENGING EXECUTION ON THE LIEN AND
SALE OF PROPERTY COVERED THEREBY, AND (4) ENOUGH OF ITS PROPERTY MAY BE TAKEN
TO PAY THE PRINCIPAL AMOUNT, INTEREST, COSTS AND ATTORNEY’S FEES.

 

6.                          Prepayments
of the entire principal indebtedness may be made at any time, without premium
or penalty.

 

7.                          All of
the covenants herein contained shall accrue to the benefit of the successors
and assigns, voluntary or involuntary, of the Department.

 

4

 

8.                          Demand,
grace, presentment for payment, protest, notice of dishonor or nonpayment and
notice of the exercise of any option hereunder are hereby waived by the Maker
and all endorsers hereof.

 

9.                          The
remedies provided in this Note, the Loan Agreement the Security Agreement, or
otherwise available to the Department for the enforcement of the payments
hereunder and performance of the covenants, conditions, and agreements, matters
and things herein and therein contained are cumulative and concurrent and may
be pursued singly or successively or together at the sole discretion of the
Department, and may be exercised from time to time as often as occasion
therefor shall occur until the Department has been paid all sums due in full.

 

10.                    The terms and
provisions of this Note are severable. In the event of the unenforceability or
invalidity of any one or more of the terms, covenants, conditions or provisions
of this Note under federal, state or other applicable law, such
unenforceability or invalidity shall not render any other term, covenant,
condition or provision hereunder unenforceable or invalid. In the event my
waiver by the Maker hereunder is prohibited by law, including but not limited
to the waiver of exemption from execution, such waiver shall be and be deemed
to be deleted herefrom.

 

11.                    Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Loan Agreement.

 

IN WITNESS WHEREOF,
intending to be legally bound hereby, the Maker has caused this Note to be duly
executed, the day and year first above written.

 

 

	
  ATTEST:

  	
   

  	
  POWER MEDICAL INTERVENTIONS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Elizabeth McLoughlin

  	
   

  	
  By:

  	
  /s/ Michael P. Whitman

  	
   

  
	
  Elizabeth McLoughlin, Secretary

  	
   

  	
  Michael P. Whitman, Chief Executive 

  Officer and Treasurer

  
						

 

5Exhibit
10.3

 

	
  CAW/12-20-05

  	
  MELF #24-9-645

  	
   

  

 

MACHINERY AND EQUIPMENT
LOAN FUND

 

SECURITY AGREEMENT

 

THIS AGREEMENT made this
21 day of December, 2005, effective as of December 21, 2005, (the “Effective
Date”) between POWER MEDICAL INTERVENTIONS, INC., a corporation organized and
existing under the laws of Delaware and having its principal offices at 2021
Cabot Boulevard West, Langhorne, Pennsylvania 19047 (the “Debtor”) and the
COMMONWEALTH OF PENNSYLVANIA, acting through the DEPARTMENT OF COMMUNITY AND
ECONOMIC DEVELOPMENT with an office at 400 North Street, 4th Floor,
Harrisburg, Pennsylvania 17120 (the “Department”).

 

RECITALS

 

A.                      The
Department and the Debtor have entered into a Loan Agreement effective as of
the Effective Date (the “Loan Agreement”). Under the Loan Agreement, the
Department has agreed to lend the Debtor the principal sum of Five Hundred
Thousand Dollars ($500,000) (the “Loan”) upon the terms and subject to the
conditions of the Loan Agreement.

 

B.                        As
evidence of its obligation to repay the Loan, the Debtor has signed a Note
effective as of the Effective Date (the “Note”) which the Debtor has delivered
to the Department. The Note describes the interest rate and the payment terms
of the Loan. Unless otherwise defined herein, capitalized terms which are used
herein shall have the meanings ascribed to them in the Loan Agreement.

 

NOW THEREFORE, in
consideration of the Loan and intending to be legally bound, the Debtor hereby
grants, covenants and agrees with the Department as follows:

 

1

 

GRANTING CLAUSE

 

The Debtor grants to the
Department a security interest in the machinery and equipment listed on Exhibit
“A” hereto and all parts, replacements and/or substitutions, accessions,
equipment, tools and operating manuals and any proceeds thereof and all
insurance proceeds therefrom (the “Collateral”).

 

This Security Agreement
secures payment and performance by the Debtor to the Department of the Debtor’s
obligations under the Loan Agreement and any other present or future
obligations of the Debtor to the Department. Capitalized terms used in this
Security Agreement will have the meanings defined in the Loan Agreement.

 

LOCATION AND USE OF COLLATERAL

 

Except for the Permitted
Lien, Debtor has good, marketable and unencumbered title to the Collateral
which it has acquired. Except for the Permitted Lien, Debtor will have good,
marketable and unencumbered title to the Collateral which Debtor will acquire
in the future. Debtor covenants that the Collateral will be used primarily for
Debtor’s business. The Collateral is or will be located at the property
commonly known as 2021 Cabot Boulevard West, in Langhome, Bucks County,
Pennsylvania (the “Property”). Debtor will not permit any of the Collateral to
be removed from the Property without the prior written consent of the
Department

 

The Collateral may be
attached to the Property in such a manner as to become a fixture and in that
case the security interest created by this Security Agreement and the security
interest and liens granted hereunder will attach to the fixtures. The Debtor is
the lessee of the Property as evidenced by a copy of a Lease furnished to and
reviewed by the Department. If requested by the Department, Debtor will furnish
a written disclaimer of any interest in the Collateral by any lessor of the
Property.

 

The proceeds of the
obligation secured hereby will be used to purchase and/or defray the cost of
purchasing the Collateral and the security interest will create, upon filing of
financing statements in the required offices, a perfected first lien upon the
Collateral.

 

2

 

DEBTOR’S DUTIES

 

1.                          Except
for the Permitted Lien, Debtor will not permit any lien or security interest to
attach to the Collateral nor permit the Collateral to be levied upon, attached
or seized, nor permit the Collateral to become an accession to other goods.
Debtor will defend the Collateral against the claims and demands of all persons
except the Department. Debtor will not lease or dispose of the Collateral
without the prior written consent of the Department. Debtor will notify the
Department at least 10 days in advance of its intention to acquire any
Collateral to be acquired after the Effective Date, and the location of the newly
acquired Collateral.

 

2.                          Debtor
agrees to comply with any governmental regulations or statutes which apply to
the Collateral and will not commit nor permit any act of waste or injury to the
Collateral nor use or permit use of the Collateral in any unlawful manner.
Debtor will keep the Collateral in good repair, normal wear and tear excepted.
Upon reasonable notice to the Debtor, the Department may inspect the Collateral
at reasonable times and intervals and may for this purpose enter the Property.

 

3.                          The
Debtor shall comply with the following insurance requirements:

 

(a)                      The Debtor
shall provide, or cause to be provided, to the Department, a certificate of the
following insurance policies:

 

(i)                         Property
Coverage. The Debtor shall keep, or cause to be kept, the Collateral
insured for the benefit of the Department under an all-risk hazard insurance
policy covering physical loss or damage including fire and extended coverage,
collapse, liquid damage, flood (to the extent required below), earthquake and comprehensive
boiler/machinery coverage (if applicable), written on a replacement cost basis
in an amount not less than the full insurable value of the Collateral, as
determined, upon request of the Department, not more than once annually by an
appraiser or rating bureau satisfactory to the Department. The Department shall
be listed as a loss payee on the policy in a standard clause with the
understanding that any obligation imposed upon Debtor (including without
limitation, the liability to pay premiums) shall be the sole obligation of
Debtor and not that of the Department. All coverage shall be written with a
valid agreed

 

3

 

amount endorsement and in
a sufficient amount to prevent any coinsurance penalty.

 

(ii)                      General
Liability Coverage. The Debtor shall maintain, or cause to be maintained,
general liability insurance, in an amount not less than $1,000,000, which
policy shall include coverage of all buildings and improvements now or
hereafter erected upon the Premises.

 

(iii)                   Worker’s
Compensation Insurance. While this Security Agreement is in effect, the
Debtor shall also maintain, or cause to be maintained, worker’s compensation
insurance (containing a stop gap endorsement) in amounts satisfactory to the
Department.

 

(b)                     With respect
to all insurance maintained pursuant to this Section 3, such policies shall be
endorsed to provide that:

 

(i)                         the
insurers thereunder waive all rights of subrogation against the Department, any
right of set-off and counterclaim and any other right to deduction whether by
attachment or otherwise;

 

(ii)                      such
insurance is primary without right of contribution of any other insurance
carried by or on behalf of the Department; and

 

(iii)                   if such
insurance is cancelled by the insurer for any reason whatsoever (including
without limitation, nonpayment of premium) or any substantial change is made in
the coverage that affects the interests of the Department, such cancellation or
substantial change is not to be effective as to the Department until thirty
(30) days after receipt by the Department of notice sent to the Department as
specified in the Loan Agreement.

 

(c)                      The
Department shall receive copies of all of said certificates upon the execution
of this Security Agreement and upon each renewal, expansion or modification
thereof, together with a current Acord 27 Evidence of Property Insurance
Certificate.

 

(d)                     All insurance
policies described in this Section 3 shall be written by insurance companies
licensed to do business within the Commonwealth of Pennsylvania and
satisfactory to the Department.

 

4

 

(e)                      Each year
until the Loan is paid in full, (i) the Debtor shall pay, or cause to be
prepaid, the premiums for such year of all such insurance, when due and on such
terms as shall be negotiated with the insurance companies, before such
insurance lapses; and (ii) the Debtor shall deliver to the Department, or cause
to be delivered, at least thirty (30) days before such premiums are due,
evidence of payment of such premiums together with certificates of such
insurance and copies of a current Acord Evidence of Property Insurance
Certificate.

 

(f)                        Any
modification by the Debtor of any of the above-listed insurance policies must
be approved by the Department in writing prior to the effective date of such
modification. The Debtor must inform the Department of any modification of any
of the above-listed insurance policies by the insurance carrier within fifteen
(15) days of receipt of the notice by the insurance carrier

 

(g)                     The Debtor
shall cause each insurer or broker to advise the Department promptly in writing
of any default in the payment of any premiums or any other act or omission on
the part of Debtor or any contractor of Debtor which might invalidate or render
unenforceable, in whole or part, any insurance provided hereunder. The
Department, at its sole option, may obtain such insurance if not provided by
Debtor, and in such event, Debtor shall reimburse the Department upon demand
for the cost thereof, together with interest from the date of payment of the
premiums by the Department to the date on which Debtor repays such premiums, at
the rate set forth in Section 7 hereof. Upon the occurrence and continuance of
an Event of Default, all proceeds payable from any property and casualty
insurance policy described above which are payable to the Department shall be
paid to the Department, without the consent of Debtor.

 

(h)                     The Debtor
expressly consents and agrees to the following:

 

(i)                         The
Department may settle all claims under all such policies except worker’s
compensation and may demand, receive and receipt for all moneys becoming
payable thereunder. The proceeds under any policy shall be paid by the insurer
to the named insured and the Department as their interests may appear, and the
Department in its discretion may apply the amount so collected toward the
payment of the Indebtedness or toward the alteration, reconstruction, repair or

 

5

 

restoration of the
Collateral or any portion thereof. The Department agrees, so long as no Event
of Default has been declared and is contintuing, to apply the proceeds under
any policy towards the alteration, reconstruction, repair or restoration of the
Collateral or any portion thereof.

 

(ii)                      With respect
to all insurance maintained pursuant to this Section 3, the interests of the
Department are not invalidated by any action or inaction of Debtor or any other
natural or artificial person and the Department is insured regardless of any
breach or violation by Debtor or any other person of any warranties,
declarations or conditions contained in such policies.

 

4.                          Debtor
will pay all taxes or governmental charges levied against the Collateral or its
use before the taxes or governmental charges become delinquent and will provide
the Department with evidence of payment upon request.

 

5.                          Debtor
agrees that the Department may at any time and from time to time, file
financing statements, continuation statements and amendments thereto
(collectively, the “Financing Statements”) and that the Financing Statements
may describe the Collateral in particular or in generic terms. Debtor further
agrees that the Financing Statements may contain any information (including but
not limited to whether the Debtor is an organization, the type of organization
and the organization identification number issued to the Debtor) required by
the Uniform Commercial Code as codified at 13 Pa.C.S.A§ 9101, et seq. (the “UCC”)
to be deemed sufficient and/or acceptable by any filing office (as defined in
the UCC). The Debtor agrees to furnish any such information to the Department
promptly upon request. Any such Financing Statements may be signed by the
Department on behalf of the Debtor or may be filed by the Department without
the Debtor’s signature and may be filed at any time in any jurisdiction whether
or not Revised Article 9 of the UCC is then in effect in that jurisdiction to
perfect or continue the Department’s security interest in the Collateral.
Debtor will do other acts considered by the Department to be appropriate to
secure, maintain, perfect or protect and continue the Department’s security
interest in the Collateral and will pay all costs and expenses (including
reasonable fees and expenses of counsel and filing fees) related to the
preparation and filing of any financing statements, continuation statements or
other documents related to the protection of the Department’s security interest
in the Collateral.

 

6

 

6.                          Debtor
shall not change its name without notice to the Department.

 

7.                          At its
option, and without any obligation to do so, the Department may pay any taxes,
assessments, liens, security interest or other encumbrances at any time placed
against the Collateral, and may pay for insurance, repair and preservation of
the Collateral and any necessary expenses, including reasonable attorney fees,
to protect the priorities of the Department’s interests in the Collateral and
in exercising its rights and remedies on default. All such sums so paid or
advanced by the Department shall immediately and without demand be secured
hereby and be repaid by the Debtor to the Department, together with interest
thereon at the rate of fifteen percent (15%) per annum, and shall be added to
the principal of the indebtedness and be secured by this Security Agreement.
The production of a receipt by the Department shall be conclusive proof of a
payment or advance authorized hereby, and the amount and validity thereof.

 

8.                          Debtor agrees
to indemnify and save harmless the Department from any loss, or damage caused
by the Collateral or its use and to immediately give written notice to the
Department of any loss or damage to, or loss of possession of, the Collateral,
occasioned by any cause whatsoever.

 

9.                          If the
Collateral should deteriorate in market or actual value, Debtor shall promptly
after demand reduce the debt to the Department to the extent specified by it,
or increase the Collateral in sufficient amounts to fully collateralize the
Department.

 

EVENTS OF DEFAULT

 

An event of default
hereunder (an “Event of Default”) shall be the occurrence of any Event of
Default as defined in the Loan Agreement.

 

REMEDIES ON DEFAULT

 

Upon the occurrence of an
Event of Default, in addition to the remedies provided in the Loan Agreement
and the other Loan Documents, the Department will have the immediate right to
pursue any or all of the of the remedies available to a secured party under the
Pennsylvania Uniform Commercial Code. In furtherance of those remedies, the
Department may require

 

7

 

Debtor to assemble all or any part of the Collateral and make it
available to the Department at any place designated in a notice sent to Debtor.
The Debtor agrees that the Department’s place of business shown on this
Security Agreement is a place reasonably convenient to it to assemble the
Collateral. The Debtor agrees that a notice sent to it by first class mail
thirty days before the time of any public sale or the time after which any
private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition.

 

MISCELLANEOUS

 

Time is of the Essence in
the interpretation of this Security Agreement.

 

No failure or delay of
the Department in exercising any right or remedy shall be a waiver thereof. No
single or partial exercise by the Department of any right or remedy hereunder
will preclude any other or future exercise of any other right or remedy. Any
notice required to be given hereunder shall be given by following the procedure
outlined in Section 8.14 of the Loan Agreement. This Security Agreement shall
be interpreted in accordance with the laws of the Commonwealth of Pennsylvania
including its statutes of limitation but without regard to its rules regarding
conflicts of laws. The venue of any action brought upon this agreement, shall
be Dauphin County or the county wherein the Project is located. All the terms
of the Security Agreement will inure to the benefit of and bind the successors
and assignees of the parties. This Security Agreement may be amended in writing
only. Such amendment must be executed by any party against whom enforcement of
any waiver, modification or discharge is sought. The recitals set forth herein
constitute a material part of this agreement and are expressly incorporated
herein.

 

8

 

IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of this 21 day of December,
2005.

 

 

	
  ATTEST:

  	
   

  	
  POWER MEDICAL INTERVENTIONS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Elizabeth McLoughlin

  	
   

  	
  By:

  	
  /s/ Michael P. Whitman

  	
   

  	
   

  	
   

  
	
  Elizabeth McLoughlin, Secretary

  	
   

  	
   

  	
  Michael P. Whitman, Chief Executive

  Officer and Treasurer

  	
   

  	
   

  
							

 

9

 

EXHIBIT “A”

 

The “Collateral”
– the machinery, equipment and other tangible personal properly listed below,
and all parts, replacements and/or substitutions, additions and accessions, any
equipment in which the equipment listed below has been incorporated into, tools
and operating manuals thereto, any proceeds of sale or disposition thereof and
any proceeds of insurance thereon or condemnation thereof.

 

	
  Cartridge, Blue Mold

  	
   

  	
  Medtech

  	
   

  	
   

  
	
  Cartridge, Green Mold

  	
   

  	
  Medtech

  	
   

  	
   

  
	
  Anvil Tool

  	
   

  	
  Precision Metal
  Products Inc.

  	
   

  	
   

  
	
  Inducer Sleeve/Ring Tool

  	
   

  	
  Dielectrics

  	
   

  	
   

  
	
  Mold for Staple Retainer

  	
   

  	
  Quickparts

  	
   

  	
   

  
	
  Pusher Insertion Tool

  	
   

  	
  MedTech Automation

  	
   

  	
   

  
	
  Amsco Eagle Scries Sterilizer

  	
   

  	
  Medical Resource USA

  	
   

  	
   

  
	
  Crimp Press

  	
   

  	
  Eastern Tool

  	
   

  	
   

  
	
  Overhead cabinets, work stations

  	
   

  	
  Corporate Interiors

  	
   

  	
   

  
	
  Plastic Injection Mold, Staple Housing

  	
   

  	
  Scan Tool

  	
   

  	
   

  
	
  Pusher Finger Single Cavity

  	
   

  	
  Scan Tool

  	
   

  	
   

  
	
  21mm Pusher Fingers To

  	
   

  	
  Seitz Corporation

  	
   

  	
   

  
	
  Cleanroom Workstations and Tables

  	
   

  	
  J&J Material
  Handling Systems

  	
   

  	
   

  
	
  Laboratory Heat Sealer

  	
   

  	
  Sencorp

  	
   

  	
  12AS002

  
	
  Pusher finger Tool, 06-01924

  	
   

  	
  Seitz Corporation

  	
   

  	
   

  
	
  Qdrive Tool, 06-01916

  	
   

  	
  Seitz Corporation

  	
   

  	
   

  
	
  Telephone System

  	
   

  	
  Eastcomm

  	
   

  	
   

  
	
  Telephone System

  	
   

  	
  Thompson Telephone

  	
   

  	
   

  
	
  Tool, 06-01861-001 Plate

  	
   

  	
  EPC Incorporated

  	
   

  	
   

  
	
  Tool, 06-01864-001 Ring

  	
   

  	
  EPC Incorporated

  	
   

  	
   

  
	
  Tool, 06-01869-001 Tube

  	
   

  	
  EPC Incorporated

  	
   

  	
   

  
	
  Tool, 06-01914

  	
   

  	
  Coining Technologies

  	
   

  	
   

  
	
  Tool, 09-01910

  	
   

  	
  EPC Incoporated

  	
   

  	
   

  
	
  Vertical Lift Module

  	
   

  	
  V&H Material
  Handling

  	
   

  	
   

  
	
  Vertical Lift Module

  	
   

  	
  V&H Material
  Handling

  	
   

  	
   

  
	
  Single Cavity End Cap Mold

  	
   

  	
  Scan Tool

  	
   

  	
   

  
	
  Alloyd Model Aerg02 Plus Blister Sealing Machine

  	
   

  	
  Alloyd Co. Inc.

  	
   

  	
   

  
	
  CNC Video Inspection System

  	
   

  	
  Dengel Associates

  	
   

  	
  VG051501

  
	
  Housing Quick Connect Tool

  	
   

  	
  Seitz Corporation

  	
   

  	
   

  
	
  Lathe

  	
   

  	
  Action Machinery

  	
   

  	
  IILVH-11256-T

  
	
  Milling Machine

  	
   

  	
  Action Machinery

  	
   

  	
  233617

  
	
  Molded Hard Plastic Tote

  	
   

  	
  V&H Material
  Handling

  	
   

  	
   

  
	
  One Cavity Knife Pad Tool

  	
   

  	
  Seitz Corporation

  	
   

  	
   

  
	
  Pressure Monitoring System

  	
   

  	
  Amega Scientific Corp.

  	
   

  	
   

  
	
  Retainer Mold

  	
   

  	
  Moldamatic

  	
   

  	
   

  
	
  Rotomat Filing System

  	
   

  	
  J&J Material Handling
  Systems

  	
   

  	
   

  
	
  Single Cavity Handle Mold

  	
   

  	
  Scan Tool

  	
   

  	
   

  
	
  Spur Gear Clamp Tool

  	
   

  	
  Seitz Corporation

  	
   

  	
   

  
	
  Telephone Additional Equip.

  	
   

  	
  Thompson Telephone

  	
   

  	
   

  
	
  Crimp Die Press

  	
   

  	
  Eastern Tool

  	
   

  	
   

  
	
  NIKON Measuring System MM-40

  	
   

  	
  BDS Technologies

  	
   

  	
   

  
	
  Remstar Vertical Carusel

  	
   

  	
  V&H Material
  Handling

  	
   

  	
   

  
	
  Rousseau Workstations w/ESD Tops

  	
   

  	
  J&J Material
  Handling Systems

  	
   

  	
   

  
	
  Telephone Additional Equip.

  	
   

  	
  Thompson Telephone

  	
   

  	
   

  

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]