Document:

<PAGE>

                                                                    Exhibit 10.4

NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE U.S. 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 THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

THIS WARRANT IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THIS
WARRANT.

                                                                           No. 1

                                    WARRANT
                              Dated July 9, 2001
                              ("Effective Date")

      to Purchase up to an Aggregate of 22,220,113 Shares of Common Stock
                            (Subject to Adjustment)

                           at U.S. $.0575 per share

                     VOID AFTER 10:00 a.m. (Eastern Time)

                                on July 9, 2008

     THIS IS TO CERTIFY that the I. Reich Family Limited Partnership, a Delaware
limited partnership, ("Holder"), or its Permitted Assigns (as defined in Section
10 of this Warrant), is entitled to purchase, subject to the provisions of this
Warrant ("Warrant"), from SpectruMedix Corporation, a Delaware corporation (the
"Company"), in accordance with the provisions set forth below, an aggregate of
up to 22,220,113 (subject to adjustment) (as adjusted, the "Warrant Number")
fully paid and nonassessable shares (as subject to adjustment hereunder, the
"Shares") of the common stock, par value $.00115 per share (the "Common Stock"),
of the Company, at a price of $.0575 per share (as subject to adjustment
hereunder, the "Exercise Price"). The amount and kind of securities purchasable
pursuant to the rights granted hereunder and the Exercise Price for such
securities are subject to adjustment pursuant to the further provisions of this
Warrant.

1.   EXERCISE OF WARRANT

     1.1  Subject to the provisions hereof, Warrants may be exercised in whole
          or in part at any time or from time to time on or after the date
          hereof (the "Exercise Date") and until July 9, 2008 (the "Expiration
          Date").

                                    Page 1
<PAGE>

     1.2  This Warrant shall be exercised by presentation and surrender hereof
          to the Company at the principal office of the Company accompanied by

          (a)  a written notice of exercise in the form attached as Exhibit A
                                                                    ---------
               hereto ("Election to Purchase"); and

          (b)  payment to the Company, for the account of the Company, of the
               Exercise Price for the number of Shares specified in such notice.

          The Exercise Price for the number of Shares specified in the notice
          shall be payable in immediately available good funds, at the option of
          the Holder, in U.S. dollars, provided, however, that in lieu of making
                                       --------  -------
          cash payment of the Exercise Price to the Company, the Holder may
          tender all or any unpaid portion of that certain Secured Note dated
          July 9, 2001 issued by the Company to the Holder, and shall treat
          indebtedness so tendered as the equivalent of cash payment, at the
          rate of $2 of cash payment for each $1 in principal amount of Secured
          Note which is so tendered. The Exercise Price shall be subject to
          adjustment pursuant to Section 4 hereof.

          (c)  In lieu of delivering the Exercise Price as set forth in Section
                                                                        -------
               1.2(b), the Holder may instruct the Company in writing ("Notice
               ------
               of Conversion") to deliver to the Holder (without payment by the
               Holder of any Exercise Price) that number of shares of Common
               Stock equal to the quotient obtained by dividing:

               (i)  the value of this Warrant at the time the conversion right
          is exercised (determined by subtracting the aggregate Exercise Price
          in effect immediately prior to the exercise of the conversion right
          from the aggregate Current Market Price of the shares of Common Stock
          issuable upon exercise of this Warrant immediately prior to the
          exercise of the conversion right) by

               (ii) the Current Market Price of one share of Common Stock
          immediately prior to the exercise of the conversion right.

          (d)  For purposes hereof, "Current Market Price" shall mean: the
               average of the closing prices of any security's sales on all
               securities exchanges on which such security may at the time be
               listed, or, if there have been no sales on any such exchange on
               any day, the average of the highest bid and lowest asked prices
               on all such exchanges at the end of such day, or, if on any day
               such security is not so listed, the average of the representative
               bid and asked prices quoted on the Nasdaq National Market
               ("NASDAQ") as of 4:00 P.M., New York time, or, if on any day such
               security is not quoted on NASDAQ, the average of the highest bid
               and lowest asked prices on such day in the domestic over-the-
               counter market as reported by the National Quotation Bureau,
               Incorporated, or any similar successor organization, in each such
               case averaged over a period of twenty-one (21) days consisting of
               the day as of which the Current Market Price is being

                                    Page 2
<PAGE>

               determined and the twenty (20) consecutive business days prior to
               such day. If at any time such security is not listed on any
               securities exchange or quoted on NASDAQ or the over-the counter
               market, the "Market Price" shall be the fair value thereof
               determined by the Board of Directors of the Corporation.

     1.3  Upon such presentation and surrender, the Company shall issue promptly
          to the Holder the Shares to which the Holder is entitled hereunder.
          The number of Shares purchasable upon the exercise of this Warrant
          shall be subject to adjustment pursuant to Section 4 hereof.

     1.4  If this Warrant should be exercised in part only, the Company shall,
          upon surrender of this Warrant for cancellation, execute and deliver a
          new Warrant evidencing the rights of the Holder to purchase the
          balance of the Shares purchasable hereunder. Upon receipt by the
          Company of this Warrant, in proper form for exercise, the Holder shall
          be deemed to be the holder of record of the Shares issuable upon such
          exercise, notwithstanding that the share transfer books of the Company
          shall then be closed or that certificates representing such Shares
          shall not then be actually delivered to the Holder. No fractions of
          Shares shall be issued in connection with the exercise of this
          Warrant, but in lieu of such fractional shares the Company shall round
          down the number of Shares issued to the nearest whole number.

     1.5  Mandatory Exercise.  In the event that the Company effects a public
          ------------------
          offering of its equity securities in which the gross proceeds to the
          Company (before deduction for underwriters' fees and commissions, blue
          sky expenses, the fees and expenses of accountants and attorneys or
          other related transaction expenses) exceed $20,000,000, then the
          Holder shall, upon written notice from the Company, exercise this
          Warrant for such number of shares of Common Stock subject hereto as
          the Company may specify in such notice.

2.   RESERVATION OF SHARES: PRESERVATION OF RIGHTS

     The Company hereby agrees that at all times it will maintain and reserve
     such number of authorized but unissued Shares so that this Warrant may be
     exercised without additional authorization of shares of Common Stock after
     giving effect to all other options, warrants, convertible securities and
     other rights to acquire shares of Common Stock of the Company.  All Shares
     issuable pursuant to the terms hereof, when issued upon exercise of this
     Warrant in accordance with the terms hereof shall be duly and validly
     issued and fully paid and nonassessable, not subject to preemptive rights
     and shall be free and clear of all liens, encumbrances, equities and
     claims.  The Company further agrees that it will not, by charter amendment
     or through reorganization, consolidation, merger, dissolution or sale of
     assets, or by any other voluntary act, avoid or seek to avoid the
     observance or performance of any of the covenants, stipulations or
     conditions to be observed or performed hereunder by the Company.

                                    Page 3
<PAGE>

3.   EXCHANGE OR LOSS OF WARRANT

     This Warrant is exchangeable, upon presentation and surrender hereof at the
     principal office of the Company, only in connection with a partial exercise
     hereof. Upon receipt by the Company of evidence reasonably satisfactory to
     it of the loss, theft, destruction or mutilation of this Warrant, and (in
     the case of loss, theft or destruction) of reasonably satisfactory
     indemnification, and upon surrender and cancellation of this Warrant, if
     mutilated, the Company will execute and deliver a new Warrant of like
     terms, tenor and date.

4.   ADJUSTMENT

     The number of Shares purchasable upon the exercise of this Warrant and the
     Exercise Price shall be subject to adjustment from time to time or upon
     exercise as provided in this Section 4.

     4.1  If, during the term of this Warrant, the Company shall distribute a
          stock dividend or shares of capital stock to the holders of shares of
          Common Stock, the number of Shares purchasable upon exercise of this
          Warrant shall be increased by multiplying such number of Shares to be
          purchased under this Warrant by a fraction of which the denominator
          shall be the number of shares of Common Stock outstanding at the close
          of business on the date fixed for the determination of stockholders
          entitled to receive such dividend or distribution (the "Original
          Outstanding Shares") and the numerator shall be (i) the Original
          Outstanding Shares plus (ii) the total number of such shares of Common
                             ----
          Stock being issued or distributed. Such increase will become effective
          immediately after the opening of business on the date fixed for such
          determination, and upon the happening of such an event the Exercise
          Price shall be adjusted appropriately as described herein. For
          purposes of this Section 4.1, the number of shares of Common Stock at
          any time outstanding shall not include shares held in the treasury of
          the Company. The Exercise Price shall be multiplied by a fraction of
          which the numerator shall be the Original Outstanding Shares and the
          denominator shall be the sum of (i) the Original Outstanding Shares
          plus (ii) the total number of shares of Common Stock being issued or
          ----
          distributed.

     4.2  If, during the term of this Warrant, the outstanding shares of Common
          Stock shall be subdivided into a greater number of shares, the number
          of Shares purchasable upon exercise of this Warrant at the opening of
          business on the day following the day upon which such subdivision
          becomes effective shall be proportionately increased and the Exercise
          Price shall be proportionately decreased, as appropriate, and,
          conversely, if the outstanding shares of Common Stock shall each be
          combined into a smaller number of shares, the number of Shares
          purchasable upon exercise of this Warrant at the opening of business
          on the day following the day upon which such combination becomes
          effective shall be proportionately decreased and the Exercise Price
          shall be proportionately increased, as appropriate.

                                    Page 4
<PAGE>

     4.3  Reorganization, Reclassification, Merger, Consolidation or Disposition
          ----------------------------------------------------------------------
          of Assets
          ---------

          (a)  In case the Company shall reorganize its capital, reclassify its
               capital stock, consolidate or merge with or into another
               corporation or sell, transfer or otherwise dispose of all or
               substantially all of its property, assets or business to another
               corporation and pursuant to the terms of such reorganization,
               reclassification, merger, consolidation or disposition of assets,
               (i) shares of capital stock of the successor or acquiring
               corporation or of the Company (if it is the surviving
               corporation) or (ii) 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 capital stock of the successor or acquiring
               corporation ("Other Property") are to be received by or
               distributed to the holders of shares of Common Stock of the
               Company who are holders immediately prior to such transaction,
               then suitable lawful and enforceable provisions shall be made as
               part of such transaction whereby the Holder shall have the right
               thereafter to receive, upon exercise of this Warrant, the number
               of shares of capital stock of the successor or acquiring
               corporation or of the Company, if it is the surviving corporation
               Other Property receivable upon or as a result of such
               reorganization, reclassification, merger, consolidation or
               disposition of assets by a holder of the number of Shares for
               which this Warrant is exercisable immediately prior to such
               event.

          (b)  In case of any such reorganization, reclassification, merger,
               consolidation or disposition of assets, the successor or
               acquiring corporation 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 by resolution of the Board of Directors of the
               Company) in order to provide for adjustments of shares of the
               Shares for which this Warrant is exercisable, which modifications
               shall be as nearly equivalent as practicable to the adjustments
               provided for in this Section 4. The Company shall not consummate
               or agree to consummate any such reorganization, reclassification,
               merger, consolidation or disposition unless the successor or
               acquiring person shall have duly executed a written instrument
               providing for the express assumption referred to in the first
               sentence of this Section 4.6(b).

          (c)  The provisions of this Section 4.6 shall similarly apply to
               successive reorganizations, reclassifications, mergers,
               consolidations or disposition of assets.

                                    Page 5
<PAGE>

     4.4  Fractional Shares
          -----------------

          The Company shall not be required to issue fractional Shares on the
          exercise of Warrants. If any fraction of a Share would, except for the
          provisions of this Section 4.8, be issuable on the exercise of this
          Warrant (or specified portion thereof), the Company shall pay an
          amount in cash equal to the fair market value (as determined in good
          faith by the Board of Directors and described in a resolution of the
          Board of Directors) for one Share on the business day immediately
          preceding the date the Warrant is exercised, multiplied by such
          fraction, computed to the nearest whole cent.

5.   NOTICE OF CERTAIN EVENTS

     The holder of this Warrant shall be entitled to the same rights to receive
     notices of corporate actions as any holder of shares of Common Stock as
     provided in the Company's Articles of Incorporation, as amended, or
     otherwise. Notwithstanding, in case at any time:

     5.1  There shall be any merger of the Company with, or any statutory
          exchange of the Company's securities with the securities of, or sale
          of all or substantially all of its assets to, another corporation; or

     5.2  There shall be a voluntary or involuntary dissolution, liquidation or
          winding up of the Company;

     then, in any one or more of such cases, the Company shall give written
     notice, by first class mail, postage prepaid, addressed to the Holder at
     the address of the Holder as shown on the books of the Company, of the date
     on which such merger, exchange, sale, dissolution, liquidation or winding
     up shall take place, as the case may be. Such notice shall also specify the
     date as of which the holders of Shares of record shall be entitled to
     exchange their Shares for securities or other property deliverable upon
     such merger, exchange, sale, dissolution, liquidation or winding up, as the
     case may be. Such written notice shall be given at least thirty (30) days
     prior to the action in question.

6.   NOTICE OF ADJUSTMENTS

     Whenever the number of Shares for which this Warrant is exercisable or the
     Exercise Price is adjusted as provided in Section 4 hereof, the Company
     shall promptly compute such adjustment and mail to the Holder at the last
     address provided to the Company in writing a certificate, signed by the
     principal financial officer of the Company, setting forth the number of
     Shares for which this Warrant is exercisable and the Exercise Price as a
     result of such adjustment, a brief statement of the facts requiring such
     adjustment and the detailed computation thereof and when such adjustment
     has or will become effective.

7.   RIGHTS OF THE HOLDER

     7.1  Without limiting the foregoing or any remedies available to the
          Holder, the Holder will be entitled to specific performance of the
          obligations hereunder, and

                                    Page 6
<PAGE>

          injunctive relief against actual or threatened violations of the
          obligations of any person subject to this Warrant.

     7.2  This Warrant shall not entitle the Holder to any voting rights or
          other rights as a shareholder of the Company whatsoever, except the
          rights expressed herein and no dividend or interest shall be payable
          or accrue in respect of this Warrant.

8.   NOTICE GENERALLY

     Any notice, demand, request, consent, approval, declaration, delivery or
     communication hereunder to be made pursuant to the provisions of this
     Warrant shall be sufficiently given or made if in writing and shall be
     deemed to have been validly served, given or delivered (a) when sent after
     receipt of confirmation or answer back if sent by telex or telecopy or
     other similar facsimile transmission, (b) two (2) business days after
     deposit with a reputable international two (2) day courier with all charges
     prepaid or (c) when delivered if hand-delivered by messenger, all of which
     shall be properly addressed to the party to be notified and sent to the
     address or number indicated, to the Holder, or the holder of Shares at its
     last known address appearing on the books of the Company maintained for
     such purpose, and to the Company at:

                           SPECTRUMEDIX CORPORATION
                           2121 Old Gatesburg Road
                           State College, Pennsylvania 16803
                           Attention:  Chief Executive Officer

     or at such other address as may be submitted by notice given as herein
     provided. The giving of any notice required hereunder may be waived in
     writing by the party entitled to receive such notice.

9.   GOVERNING LAW

     THIS WARRANT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE
     GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
     YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW
     YORK.

10.  SUCCESSORS AND ASSIGNS

     The terms and provisions of this Warrant shall inure to the benefit of, and
     be binding upon, the Company and the Holder hereof and its respective
     successors and permitted assigns (provided that the Company's obligation to
     a transferee of this Warrant arises only if such transfer is made in
     accordance with the terms of this Warrant).

11.  LEGENDS

     Each certificate evidencing any Shares issued upon exercise of this Warrant
     shall bear a legend in substantially the following form:

                                    Page 7
<PAGE>

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
          SECURITIES COMMISSION OF ANY STATE 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
          THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
          APPLICABLE STATE SECURITIES LAWS.

     If any Shares are (i) freely tradable pursuant to Rule 144(k) of the
     Securities Act or (ii) sold pursuant to an effective registration statement
     under the Securities Act, the Company shall, upon written request of the
     Holder thereof, issue to such Holder a new certificate evidencing such
     Shares without the legend required by this Section 14 endorsed thereon.

12.  AMENDMENTS AND WAIVERS

     Any waiver or amendment of any term of this Warrant shall be in a writing
     signed by both the Company and the Holder and shall be binding upon any
     subsequent holder of this Warrant.

     DATED:  July 9, 2001           SPECTRUMEDIX CORPORATION

                                    By: /s/ Stephen Wertheimer
                                       ----------------------------------
                                    Name: Stephen Wertheimer
                                    Title: Secretary & Vice President

                                    Page 8
<PAGE>

                                   EXHIBIT A

                         FORM OF ELECTION TO PURCHASE

TO:  SpectruMedix Corporation (the "Company")

     Attention: Corporate Secretary

     1.   The undersigned hereby elects to purchase __________ Shares of the
Company pursuant to the terms of the attached Warrant.

     2.   The undersigned elects to exercise the attached Warrant by means of a
cash payment, and tenders herewith payment in full for the purchase price of the
shares being purchased, together with all applicable transfer taxes, if any,
other than stamp or documentary taxes.

     3.   Please issue a certificate or certificates representing said Shares in
the name of the undersigned or in such other name as is specified below:

                    _________________________
                             (Name)

                    _________________________

                    _________________________
                            (Address)

                                        _________________________
                                               (Signature)
                                        Title:___________________

__________________________
          (Date)

                                    Page 9
<PAGE>

                                   EXHIBIT B

                              FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, _______________________  hereby sells, assigns, and
transfers to each assignee set forth below all of the rights of the undersigned
in and to the number of Warrants (as defined in and evidenced by the foregoing
Warrant) set opposite the name of such assignee below and the shares of Common
Stock issuable upon exercise of said Warrants:

Name of Assignee              Address              Number of Warrants
----------------              -------              ------------------

     If the total of said Warrants shall not be all the Warrants evidenced by
the foregoing Warrant, the undersigned requests that a New Warrant evidencing
the Warrants not so assigned be issued in the name of and delivered to the
undersigned.

Dated:______________________      Name of Holder:

                                  (Print)_________________________

                                  By:_____________________________
                                  Title:__________________________

                                    Page 10<PAGE>

                                                                    EXHIBIT 10.5

                              SECURITY AGREEMENT

     This SECURITY AGREEMENT is made as of July 9, 2001, between SPECTRUMEDIX
CORPORATION, a Delaware corporation (the "Company") and the I. REICH FAMILY
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Secured Party").

     Reference is made to the Secured Promissory Note dated as of July 9, 2001
(as amended, supplemented or otherwise modified from time to time, the "Note"),
executed by the Company in favor of the Secured Party.

     The Secured Party has agreed to make a loan in the aggregate principal
amount of six hundred thousand dollars ($600,000) to the Company pursuant to and
upon the terms and subject to the conditions specified in the Note (the "Loan").
The obligations of the Secured Party to make the Loan is conditioned upon, among
other things, the execution and delivery by the Company of an agreement in the
form hereof to secure (a) the due and punctual payment by the Company of (i) the
principal of and interest on the Loan, when and as due, whether at maturity, by
acceleration, upon prepayment or otherwise, and (ii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise, of the Company to the Secured
Party under the Note, and (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Company under or pursuant to the
Note (all the monetary and other obligations referred to in the preceding
clauses (a) and (b) being referred to collectively as the "Obligations").

     Accordingly, the Company and the Secured Party hereby agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

     SECTION 1.1. Definition of Terms Used Herein.  Unless the context otherwise
                  -------------------------------
requires, all capitalized terms used but not defined herein shall have the
meanings set forth in the Note.  Capitalized terms used herein without
definition herein or in the Note shall have the meanings given in the UCC.

     SECTION 1.2. Definition of Certain Terms Used Herein.  As used herein, the
                  ---------------------------------------
following terms shall have the following meanings:

     "Accounts" shall mean any and all right, title and interest of the Company
to payment for goods and services sold or leased, including any such right
evidenced by chattel paper, whether due or to become due, whether or not it has
been earned by performance, and whether now or hereafter acquired or arising in
the future.

     "Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
<PAGE>

     "Collateral" shall mean all (a) Accounts Receivable, (b) General
Intangibles, (c) Inventory, (d) cash and cash accounts and (e) Proceeds;
provided that the Collateral shall not include Excluded Property.

     "Default" means any event or circumstance which, but for the giving of
notice or lapse of time or both, would constitute an Event of Default.

     "Documents" shall mean all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral.

     "Excluded Property" shall mean any Intellectual Property of the Company
which contains provisions prohibiting the grant of a security interest therein
or otherwise restricting the transfer or assignment thereof without the consent
of other persons.  The Secured Party acknowledges and agrees that the ISURF
License prohibits the grant of a security interest in any patents licensed
thereby.

     "General Intangibles" shall mean all Intellectual Property of the Company
except for their Excluded Property.

     "Intellectual Property" shall mean all United States intellectual and
similar property of the Company of every kind and nature now owned or hereafter
acquired by the Company, including inventions, designs, Patents, Licenses, trade
secrets, confidential or proprietary technical and business information, know-
how, show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing.

     "Inventory" shall mean all goods of the Company, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
the Company under contracts of service, or consumed in the Company's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of the Company.

     "ISURF License" shall mean that certain License Agreement dated as of June
24, 1997 between SpectruMedix Corporation and Iowa State University Research
Foundation, Inc., as amended.

     "License" shall mean any Patent License or other license or sublicense to
which the Company is a party.

     "Note" shall have the meaning assigned to such term in the preliminary
statement of this Agreement.

     "Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

                                       2
<PAGE>

     "Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use, sell, offer for
sale, or import any invention on which a Patent, now or hereafter owned by the
Company or which the Company otherwise has the right to license, is in
existence, or granting to the Company any right to make, use, sell, offer for
sale, or import any invention on which a Patent, now or hereafter owned by any
third party, is in existence, and all rights of the Company under any such
agreement.

     "Patents" shall mean all of the following now owned or hereafter acquired
by the Company: (a) all letters patent of the United States, all registrations
and recordings thereof, and all applications for letters patent of the United
States, including registrations, recordings and pending applications in the
United States Patent and Trademark Office, including those listed on Schedule
II, and (b) all reissues, continuations, divisions, continuations-in-part,
provisionals, substitutes, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use, sell, offer for
sale and/or import the inventions disclosed or claimed therein.  Patents shall
include without limitation (i) all inventions and improvements described or
claimed therein, (ii) the right to sue or otherwise recover for any
infringements or misappropriations thereof, and (iii) all income, royalties,
damages and other payments now and hereinafter due and/or payable with respect
thereto (including, without limitation, payments under all Patent Licenses
entered into in connection therewith, and damages and payments for past and
future infringements thereof).

     "Proceeds" shall mean any consideration received from the sale, exchange,
license, lease or other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include (a) any claim of the Company against any third
party for (and the right to sue and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past, present
or future infringement of any Patent now or hereafter owned by the Company, or
licensed under a Patent License, and (ii) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.

     "Secured Party" shall mean the Secured Party and its successors and
assigns.

     "Security Interest" shall have the meaning assigned to such term in Section
2.1.

     "UCC" shall mean the Uniform Commercial Code in effect in the State of New
York, as the same may be amended, modified or supplemented from time to time.

                                  ARTICLE II

                               SECURITY INTEREST

     As security for the payment or performance, as the case may be, in full of
the Obligations, the Company hereby bargains, sells, conveys, assigns, sets
over, mortgages, pledges, hypothecates and transfers to the Secured Party, its
successors and assigns, for the benefit of the Secured Party, and hereby grants
to the Secured Party, its successors and assigns,

                                       3
<PAGE>

for the benefit of the Secured Party, a security interest in, all of the
Company's right, title and interest in, to and under the Collateral (the
"Security Interest"). Without limiting the foregoing, the Secured Party is
hereby authorized to file one or more financing statements (including fixture
filings), continuation statements, filings with the United States Patent and
Trademark Office or United States Copyright Office (or any successor office or
central registry) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by the
Company, without the signature of the Company, and naming the Company (to the
extent permitted by law and solely upon the occurrence and during the
continuance of an Event of Default) or the Company as debtors and the Secured
Party as secured party.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to the Secured Party that:

     SECTION 3.1. Title and Authority.  The Company has (or in the case of
                  -------------------
after-acquired property, will have) good and valid rights in the Collateral with
respect to which it has granted a Security Interest hereunder and has full
corporate power and authority to grant to the Secured Party the Security
Interest in such Collateral pursuant hereto and to execute, deliver and perform
its obligations in accordance with the terms of this Agreement, without the
consent or approval of any other person other than (i) any consent or approval
which has been obtained and (ii) any consent or approval the failure of which to
obtain could not reasonably be expected to impair or adversely affect the
Security Interests intended to be granted hereunder.

     SECTION 3.2. Filings.
                  -------

     (a) Fully executed Uniform Commercial Code financing statements or other
appropriate filings, recordings or registrations containing a description of the
Collateral have been delivered to the Secured Party for filing in each
appropriate office, which are all the filings, recordings and registrations
(other than filings required to be made in the United States Patent and
Trademark Office in order to perfect the Security Interest in Collateral
consisting of United States Patents) that are necessary to publish notice of and
protect the validity of and to establish a legal, valid and perfected security
interest in favor of the Secured Party in respect of all Collateral in which the
Security Interest may be perfected by filing, recording or registration in the
United States, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.

     (b) The Company represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents, have
been delivered to the Secured Party for recording by the United States Patent
and Trademark Office to protect the validity of and to establish a legal, valid
and perfected security interest in favor of the Secured Party in respect of all
Collateral consisting of Patents in which a security interest may be perfected
by filing, recording or registration in the United States, and no further or
subsequent filing, refiling, recording,

                                       4
<PAGE>

rerecording, registration or reregistration in the United States is necessary
(other than such actions as are necessary to perfect the Security Interest with
respect to any Collateral consisting of Patents acquired or developed after the
date hereof).

     SECTION 3.3. Validity of Security Interest.  The Security Interest
                  -----------------------------
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.2 above, a perfected first priority security
interest in all Collateral in which a security interest may be perfected by
filing, recording or registering a financing statement in the United States and
its territories and possessions pursuant to the Uniform Commercial Code and (c)
a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office.

     SECTION 3.4. Absence of Other Liens. The Collateral is owned by the Company
                  ----------------------
 free and clear of any Lien.

                                  ARTICLE IV

                                   COVENANTS

     SECTION 4.1. Change of Name; Location of Collateral; Records; Place of
                  ---------------------------------------------------------
Business.
--------

     (a) The Company agrees promptly to notify the Secured Party in writing of
any change (i) in its corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (ii) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located (including
the establishment of any such new office or facility), (iii) in its identity or
corporate structure or (iv) in its Federal Taxpayer Identification Number.

     SECTION 4.2. The Company agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the Collateral owned by it as
is consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which the Company is engaged.

     SECTION 4.3. Protection of Security.  The Company shall, at its own cost
                  ----------------------
and expense, take any and all commercially reasonable actions necessary to
defend title to the Collateral against all persons and to defend the Security
Interest of the Secured Party in the Collateral.

     SECTION 4.4. Further Assurances.  The Company agrees, at its own expense,
                  ------------------
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Secured Party may
from time to time reasonably request to assure, preserve, protect and perfect
the Security Interest and the rights and remedies created hereby, or including
the payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements or other documents in connection herewith or
therewith.

                                       5
<PAGE>

     SECTION 4.5. Use and Disposition of Collateral.  The Company shall not make
                  ---------------------------------
or permit to be made an assignment, pledge or hypothecation of the Collateral
nor shall it grant any other Lien in respect of the Collateral.  The Company
shall not make or permit to be made any transfer of the Collateral and the
Company shall remain at all times in possession of the Collateral owned by it,
except that (a) Inventory and Accounts Receivable may be sold in the ordinary
course of business, (b) Intellectual Property may be licensed in the ordinary
course of business and (c) unless and until the Secured Party shall notify the
Company that an Event of Default shall have occurred and be continuing, the
Company may use and dispose of the Collateral in any lawful manner not
inconsistent with the provisions of this Agreement.

     SECTION 4.6. Covenants Regarding Patent Collateral.
                  -------------------------------------

     (a) The Company agrees that it will not, nor will it knowingly permit any
of its licensees to, do any act, or omit to do any act, whereby any Patent which
is material to the conduct of the Company's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws
consistent with the Company's current and past practices and in accordance with
such commercially prudent and standard practices used in industries that are the
same as or similar to those in which the Company is engaged.

     (b) The Company shall notify the Secured Party immediately if it knows or
has reason to know that any Patent material to the conduct of its business may
become abandoned, lost or dedicated to the public (including the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office) regarding the Company's ownership of any Patent,
its right to register the same, or to keep and maintain the same.

     (c) The Company agrees to execute an agreement, in substantially the form
set forth in Annex 1 hereto (an "Intellectual Property Security Agreement"), for
             -------
recording the security interest granted hereunder to the Secured Party in such
Intellectual Property Collateral with the U.S. Patent and Trademark Office, and
any other governmental authorities necessary to perfect the security interest
hereunder in such Intellectual Property Collateral.

                                   ARTICLE V

                                    REMEDIES

     SECTION 5.1. Remedies upon Default.  Upon the occurrence and during the
                  ---------------------
continuance of an Event of Default, the Company agrees to deliver each item of
Collateral to the Secured Party on demand, and it is agreed that the Secured
Party shall have the right to take any of or all the following actions at the
same or different times (except as otherwise provided below):  (a) with respect
to any Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of or
all such Collateral by the Company to the Secured Party, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Secured

                                       6
<PAGE>

Party shall determine (other than in violation of any then-existing licensing
arrangements to the extent that waivers cannot be obtained), and (b) to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code as in
effect in any relevant jurisdictions or other applicable law.

     The Secured Party shall give the Company 10 days' written notice of the
Secured Party's intention to make any sale of Collateral.  Such notice, in the
case of a public sale, shall state the time and place for such sale.  Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Secured Party may fix and state in the notice
(if any) of such sale.  At any such sale, the Collateral, or portion thereof, to
be sold may be sold in one lot as an entirety or in separate parcels, as the
Secured Party may (in its sole and absolute discretion) determine.  The Secured
Party shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given.  The Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.  For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Secured Party shall be free to carry out such sale pursuant to such
agreement and the Company shall not be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact that after the
Secured Party shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full.  As an alternative to
exercising the power of sale herein conferred upon it, the Secured Party may
proceed by a suit or suits at law or in equity to foreclose this Agreement and
to sell the Collateral or any portion thereof pursuant to a judgment or decree
of a court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.

     SECTION 5.2. Application of Proceeds.  The Secured Party shall apply the
                  -----------------------
proceeds of any collection or sale of the Collateral, as well as any Collateral
consisting of cash, as follows:

     FIRST, to the payment of all reasonable costs and expenses incurred by the
Secured Party whether hereunder or under the Note in connection with such
collection or sale or otherwise in connection with this Agreement or any of the
Obligations, including all court costs and the fees and expenses of its agents
and legal counsel, the repayment of all advances made by the Secured Party
hereunder or under the Note on behalf of the Company and any other costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder or under the Note;

     SECOND, to the payment in full of the Obligations; and

     THIRD, to the Company, its successors or assigns, or as a court of
competent jurisdiction may otherwise direct.

     SECTION 5.3. Grant of License to Use Intellectual Property.  For the
                  ---------------------------------------------
purpose of enabling the Secured Party to exercise rights and remedies under this
Article at such time as the Secured Party shall be lawfully entitled to exercise
such rights and remedies, to the extent

                                       7
<PAGE>

permitted to do so (and the Company shall make all commercially reasonable
efforts to obtain the consent to license all Intellectual Property referred to
below to the Secured Party pursuant to this Section 5.3) the Company hereby
grants to the Secured Party a non-exclusive license (such license to be
exercisable without payment of royalty or other compensation to the Company, and
to be irrevocable until such time as all the Obligations shall have been paid in
full) to use, license or sub-license any of the Collateral consisting of
Intellectual Property now owned or hereafter acquired by the Company, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof, provided that any such use shall not diminish the goodwill associated
with and symbolized by the Intellectual Property. The use of such license by the
Secured Party shall be exercised, at the option of the Secured Party solely upon
the occurrence and during the continuation of an Event of Default and in
accordance with Section 5.1; provided that any license, sub-license or other
transaction entered into by the Secured Party in accordance herewith shall be
binding upon the Company notwithstanding any subsequent cure of an Event of
Default.

                                  ARTICLE VI

                                 MISCELLANEOUS

     SECTION 6.1. Notices.  All communications and notices hereunder shall
                  -------
(except as otherwise expressly permitted herein) be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

     (a) if to the Company, to it at 2214 Old Gatesburg Road, State College,
Pennsylvania 16803, Attention Chief Executive Officer (Fax: (814) 867-4513); and

     (b) if to the Secured Party, to it at the I. Reich Family Limited
Partnership, 162 West 94/th/ Street, New York, New York 10025, (Fax: (707) 215-
7394).

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 6.1 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 6.1.

     SECTION 6.2. Binding Effect.  This Agreement shall become effective as to
                  --------------
the Company when a counterpart hereof executed on behalf of the Company shall
have been delivered to the Secured Party and a counterpart hereof shall have
been executed on behalf of the Secured Party, and thereafter shall be binding
upon the Company and the Secured Party and their respective successors and
assigns, and shall inure to the benefit of the Company and the Secured Party and
their respective successors and assigns, except that the Company shall not have
the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the Note.

                                       8
<PAGE>

     SECTION 6.3. Successors and Assigns.  Whenever in this Agreement any of the
                  ----------------------
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Company or the Secured Party that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.

     SECTION 6.4. GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN
                  -------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     SECTION 6.5. Waivers; Amendment.
                  ------------------

     (a) No failure or delay of the Secured Party in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Secured Party hereunder and under the Note are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or of the Note or consent to any
departure by the Company therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.

     (b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Secured Party and the Company.

     SECTION 6.6. WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
                  --------------------
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.6.

     SECTION 6.7. Severability.  In the event any one or more of the provisions
                  ------------
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction).  The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal

                                       9
<PAGE>

or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

     SECTION 6.8.    Counterparts.  This Agreement may be executed in two or
                     ------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract and shall become effective
as provided in Section 6.2. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.

     SECTION 6.9.    Headings.  Article and Section headings used herein are for
                     --------
the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

     SECTION 6.10.   Jurisdiction; Consent to Service of Process.
                     -------------------------------------------

     (a)  The Company hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York, New York,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the Note, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court.

     (b)  The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the Note in any New York State
or Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

     SECTION 6.11.  Termination.  This Agreement and the Security Interest shall
                    -----------
terminate when all the Obligations have been indefeasibly paid in full in cash,
at which time the Secured Party shall promptly execute and deliver to the
Company, at the Company's expense, all Uniform Commercial Code termination
statements and other release documents which the Company shall reasonably
request to evidence such termination.  Any execution and delivery of termination
statements or documents pursuant to this Section 6.11 shall be without recourse
to or warranty by the Secured Party.

                                       10
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                                    SPECTRUMEDIX CORPORATION

                                    By: /s/ Stephen Wertheimer
                                       ---------------------------------
                                         Name:  Stephen Wertheimer
                                         Title: Vice President

                                    I. REICH FAMILY LIMITED PARTNERSHIP

                                    By: I. REICH FAMILY CORPORATION
                                    Its:  General Partner

                                    By: /s/ Ilan Reich
                                       ---------------------------------
                                         Name:  Ilan Reich
                                         Title: President

                                       11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}]]