8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 30, 2008

Power3Medical Products, Inc.

(Exact name of registrant as specified in its charter)

New York	000-24921	65-0565144
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

3400 Research Forest Drive, Suite B2-3

The Woodlands, Texas  77381

(Address of principal executive offices and zip code)

(281) 466-1600

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On June 30, 2008, Power3Medical Products, Inc. (“the Company” or “Power3”) executed a convertible debenture (the “Debenture”) in the principal amount of $200,000 payable to Able Income Fund, LLC (“the Holder”). Pursuant to the Debenture, the Company promises to pay to the Holder $200,000 in cash on December 30, 2008. The Debenture bears interest at the rate of 15% per annum until the maturity date. After the maturity date, the default rate of interest becomes 1% per month or the highest rate allowed by law, whichever is lower, until the date the debenture amount is actually paid. The Debenture is convertible at a thirty percent discount to market.

Payment of the Debenture is secured by a personal guarantee from Steven B. Rash, the Company’s Chairman and CEO. In addition, Mr. Rash executed a Stock Pledge Agreement, as security for the Debenture. Further, as part of the consideration provided to the Holder for the Debenture, the Holder also received a warrant for the purchase of up to 3,500,000 shares of the Company’s common stock at an exercise price of $.06 per share. The warrants are exercisable, in whole or in part, any time from and after the date of issuance of the warrant.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On June 30, 2008, the Company became obligated on a convertible debenture in the principal amount of $200,000. Please refer to Item 1.01 above for further information.

Item 9.01 Financial Statements and Exhibits

a)   Financial statements.

Not applicable.

(b)   Pro forma financial information.

Not applicable.

(c)   Exhibits.

Exhibit Number	Description
10.1	Form of Convertible Debenture dated June 30, 2008 by and between Power3Medical Products, Inc. and Able Income Fund LLC.
10.2	Form of Guaranty dated June 30, 2008 by and between Power3Medical Products, Inc. and Able Income Fund LLC.
10.3	Form of Pledge Agreement dated June 30, 2008 by and between Power3Medical Products, Inc. and Able Income Fund LLC.
10.4	Form of Warrant dated June 30, 2008 by and between Power3Medical Products, Inc. and Able Income Fund LLC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Power3 Medical Products, Inc.
By:	/s/ Steven B. Rash
	Steven B. Rash
	Chairman and CEO

Date: July 18, 2008

EX-10.1

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

No._________ US $200,000

POWER3 MEDICAL PRODUCTS, INC.

15% CONVERTIBLE DEBENTURE SERIES

DUE DECEMBER 30, 2008

FOR VALUE RECEIVED, POWER3 MEDICAL PRODUCTS, INC., a corporation organized and existing under the laws of the State of New York (the "Company"), promises to pay to ___________________, the registered holder hereof (the "Holder"), the principal sum of Two Hundred Thousand and 00/100 Dollars (US $200,000) on December 30, 2008 (the “Maturity Date”) and to pay interest on the principal sum outstanding on a monthly basis, with the first payment payable 30 days after the closing, at the rate of 15% per annum, accruing from June 30, 2008, the date of initial issuance of this Debenture (the “Issue Date”), on the date (each, an “Interest Payment Date”) which is the earlier of (i) the next Conversion Date (as defined below), or (ii) the Maturity Date, as the case may be. Interest shall accrue monthly (pro-rated on a daily basis for any period longer or shorter than a month) from the later of the Issue Date or the previous Interest Payment Date and shall be payable, subject to the other provisions of this Debenture, in cash or in Common Stock. If not paid in full on an Interest Payment Date, interest shall be fully cumulative and shall accrue on a daily basis, based on a 365-day year, monthly or until paid, whichever is earlier. Additional provisions regarding the payment of interest are provided in Section 4(D) below (the terms of which shall govern as if this sentence were not included in this Debenture).

This Debenture is subject to the following additional provisions:

1.The Debentures will initially be issued in denominations determined by the Company, but are exchangeable for an equal aggregate principal amount of Debentures of different denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

2.The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith.

3.This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Act"), and other applicable state and foreign securities laws and the terms of the Securities Purchase Agreement. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation that is sufficient to evidence that such proposed transfer complies with the Act and other applicable state and foreign securities laws and the terms of the Securities Purchase Agreement. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

4.A. (i) At any time on or after the Issue Date and prior to the time this Debenture is paid in full in accordance with its terms (including, without limitation, after the occurrence of an Event of Default, as defined below, or, if the Debenture is not fully paid or converted after the Maturity Date), the Holder of this Debenture is entitled, at its option, subject to the following provisions of this Section 4, to convert this Debenture at any time into shares of Common Stock, $0.001 par value ("Common Stock"), of the Company at the Conversion Price (as defined below). Any such conversion is referred to as a “Conversion.”

(ii) On the Maturity Date the Company shall pay the principal and accrued interest (through the actual date of payment) of any portion of this Debenture which is then outstanding.

(iii) For purposes of this Debenture, the following terms shall have the meanings indicated below:

“Conversion Price” means the (i) the VWAP for the three (3) Regular Trading Days (which need not be consecutive) selected by the Holder from the 20 Trading Days ending on the Trading Day immediately before the relevant Conversion Date, multiplied by (ii) seventy percent (70%).

“Regular Trading Day,” “Reporting Service,” “Trading Day,” and “VWAP” have the meanings ascribed to them in the Securities Purchase Agreement.

“Conversion Date” means the date on which the Holder faxes or otherwise delivers a Notice of Conversion to the Company so that it is received by the Company on or before such specified date.

“Conversion Shares” has the meaning ascribed to in Section 4(H) hereof.

B.A Conversion shall be effectuated by the Holder by faxing a notice of conversion (“Notice of Conversion”) to the Company as provided in this paragraph. The Notice of Conversion shall be executed by the Holder of this Debenture and shall evidence such Holder's intention to convert this Debenture or a specified portion hereof in the form annexed hereto as Exhibit A. Delivery of the Notice of Conversion shall be accepted by the Company by hand, mail or courier delivery at the address specified in said Exhibit A or at the facsimile number specified in said Exhibit A (each of such address or facsimile number may be changed by notice given to the Holder in the manner provided in the Securities Purchase Agreement). If so indicated on the first page of this Debenture, a portion of the purchase price for this Debenture was represented by the Specific Purchase Note. If the Specific Purchase Note was issued, and it is subsequently paid or otherwise satisfied in full, the Company will promptly acknowledge such payment or satisfaction in writing (but the absence of such acknowledgment shall not affect the Holder’s rights hereunder). Notwithstanding the foregoing, if the Specific Purchase Note was issued on the Issue Date, this Debenture may be converted by way of a Conversion only after such Specific Purchase Note has been paid or otherwise satisfied in full.

C.Notwithstanding any other provision hereof or of any of the other Transaction Agreements, in no event (except (i) as specifically provided herein as an exception to this provision, or (ii) while there is outstanding a tender offer for any or all of the shares of the Company’s Common Stock) shall the Holder be entitled to convert any portion of this Debenture, or shall the Company have the obligation to convert such Debenture (and the Company shall not have the right to pay interest hereon in shares of Common Stock) to the extent that, after such conversion or issuance of stock in payment of interest, the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Debentures or other convertible securities or of the unexercised portion of warrants or other rights to purchase Common Stock), and (2) the number of shares of Common Stock issuable upon the conversion of the Debentures with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock (after taking into account the shares to be issued to the Holder upon such conversion). For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, except as otherwise provided in clause (1) of such sentence. Nothing herein shall preclude the Holder from disposing of a sufficient number of other shares of Common Stock beneficially owned by the Holder so as to thereafter permit the continued conversion of this Debenture.

D.(i) Subject to the terms of Section 4(C) and to the other terms of this Section 4(D),

(x) interest on the principal amount of this Debenture converted pursuant to a Notice of Conversion, and

(y) any other amounts due to the Holder with respect to this Debenture or pursuant to any other provision of any of the Transaction Agreements, including but not necessarily limited to, Administrative Costs (collectively, “Other Costs”),

shall be due and payable, at the option of the Holder, in cash or in shares of Common Stock on the Interest Payment Date.

(ii) If the interest payable in connection with a Conversion or if Other Costs are to be paid in cash, the Company shall make such payment within three (3) Trading Days after the Interest Payment Date (for interest) or of the demand for such Other Costs by the Holder, as the case may be.

(iii) If interest or Other Costs are to be paid in Common Stock, the number of shares of Common Stock to be received shall be determined by dividing the dollar amount of the interest by the Conversion Price in effect on the relevant Interest Payment Date or on the date of demand for such Other Costs by the Holder, as the case may be. For such purposes, the date of a demand for Other Costs by the Holder shall be treated (with respect to the amount of such Other Costs) as an Interest Payment Date.

E.The Company shall have the right to prepay, at any time, any or all of the outstanding principal and interest due pursuant to this Debenture, without the prior written consent of the Holder.

F.(i) The following provisions apply to the issuances of Common Stock in payment of the amounts due under this Debenture, whether as principal or interest, as provided in the preceding provisions of this Section 4.

(ii) No fractional shares of Common Stock or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.

(iii) All shares issuable with respect to a Conversion Date or Interest Payments Date shall be deemed “Conversion Shares” for all purposes of this Debenture and the other Transaction Agreements. Certificates representing the relevant Conversion Shares (“Conversion Certificates”) will be delivered to the Holder at the address specified in the relevant Notice of Conversion or demand for payment of Other Costs (and if none, the Holder’s the Holder’s address for notices as contemplated by the Securities Purchase Agreement, which address the Holder may change from time to time in the manner provided therein), via express courier, by electronic transfer or otherwise, within three (3) Trading Days (such third Trading Day, the “Delivery Date”) after the relevant Conversion Date. The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the relevant provisions of this Debenture on the Conversion Date or Interest Payment Date, as the case may be.

G.Except as may specified in a specific provision of this Debenture, any payments under this Debenture shall be applied in the following order of priority: (i) first to Other Costs, (ii) then to accrued but unpaid interest; and (iii) then, to principal in the inverse order of maturity.

5. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or where contemplated herein in shares of its Common Stock, as applicable, as herein prescribed. This Debenture and all other Debentures now or hereafter issued of similar terms are direct obligations of the Company.

6.A. Each Pledgor (as defined in the Pledge Agreement) is personally guarantying to the Holder the timely and full fulfillment of all of the obligations of the Company under this Debenture on the terms provided above and in the Guarantee, which has been executed by such Pledgor in favor of, and delivered to, the Holder.

B.The obligations of the Company under this Debenture and of each respective Pledgor under the Guarantee executed and delivered by such Pledgor are secured under the terms of the Pledge Agreement, to which the Holder and the Pledgor are parties (the "Pledge Agreement"), the terms of which are incorporated herein by reference, by a pledge from each respective Pledgor of the number of shares of the Company's Common Stock identified opposite such Pledgor’s name, of which shares the relevant Pledgor is the record and beneficial owner. If the Holder forecloses on any of the Pledged Shares, the obligations of the Company will be reduced only to the extent of the proceeds actually realized from such foreclosure, in the priority specified in Section 4(G) hereof.

7.Except as provided in Sections 5 and 6 above or in a separate instrument signed by the party to be charged therewith, no recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof (including, but not limited to, a claim for Other Costs), against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

8.All payments contemplated hereby to be made “in cash” shall be made in immediately available good funds of United States of America currency by wire transfer to an account designated in writing by the Holder to the Company (which account may be changed by notice similarly given). All payments of cash and each delivery of shares of Common Stock issuable to the Holder as contemplated hereby shall be made to the Holder at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time; except that the Holder can designate, by notice to the Company, a different delivery address for any one or more specific payments or deliveries.

9.If, for as long as this Debenture remains outstanding, the Company enters into a merger (other than where the Company is the surviving entity) or consolidation with another corporation or other entity or a sale or transfer of all or substantially all of the assets of the Company to another person (collectively, a "Sale"), the Company will require, in the agreements reflecting such transaction, that the surviving entity expressly assume the obligations of the Company hereunder. Notwithstanding the foregoing, if the Company enters into a Sale and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a condition of such Sale, the Company and any such successor, purchaser or transferee will agree that the Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable. In the event of any such proposed Sale, (i) the Holder hereof shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice of such Sale from the Company, except that Section 4(C) shall not apply to such conversion.

10.If, at any time while any portion of this Debenture remains outstanding, the Company spins off or otherwise divests itself of a part of its business or operations or disposes of all or of a part of its assets in a transaction (the “Spin Off”) in which the Company, in addition to or in lieu of any other compensation received and retained by the Company for such business, operations or assets, causes securities of another entity (the “Spin Off Securities”) to be issued to security holders of the Company, the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder’s Debentures outstanding on the record date (the “Record Date”) for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (the “Outstanding Debentures”) been converted as of the close of business on the Trading Day immediately before the Record Date (the “Reserved Spin Off Shares”), and (ii) to be issued to the Holder on the conversion of all or any of the Outstanding Debentures, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the numerator is the principal amount of the Outstanding Debentures then being converted, and (II) the denominator is the principal amount of the Outstanding Debentures.

11.If, at any time while any portion of this Debenture remains outstanding, the Company effectuates a stock split or reverse stock split of its Common Stock or issues a dividend on its Common Stock consisting of shares of Common Stock, the prices used in determining the Conversion Price from dates prior to such action or and any other fixed amounts calculated as contemplated hereby or by any of the other Transaction Agreements shall be equitably adjusted to reflect such action.

12.The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities.

13.A.This Debenture shall be governed by and construed in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.

B.In the event of any litigation or dispute arising from this Debenture or any of the other Transaction Agreements, the parties agrees that the party which is awarded the most money shall be deemed the prevailing party for all purposes and such prevailing party shall be entitled to an additional award from the other party for the full amount of the attorneys’ fees and expenses paid or payable by such prevailing party in connection with the litigation and/or dispute, without reduction or apportionment based upon the individual claims or defenses giving rise to such fees and expenses. Nothing in this Section 13(B) shall restrict or impair a court’s power to award fees and expenses to any party for frivolous or bad faith pleading by the other party.

C.JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out of or in connection with this Debenture.

14.A.The term "Event of Default" means the occurrence of any one or more of the following events:

i. The Company shall default in the payment of principal or interest on this Debenture when due and such default shall continue for a period of ten (10) Trading Days; or

ii. There is a Cancellation Date; or

iii. Any of the representations or warranties made by the Company herein, or any of the other Transaction Agreements or in any certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture shall be false or misleading in any material respect at the time made; or

iv. The Company shall fail to perform or observe, in any material respect, any covenant, term, provision, condition, agreement or obligation of the Company under any of the Transaction Agreements and such failure, if capable of being cured, shall continue uncured for a period of ten (10) Trading Days after the Holder gives the Company written notice thereof;

v. The Company shall fail to maintain its status as a reporting company under the federal securities laws; or

vi. The Company shall fail to timely file all reports required to be filed by it with the SEC pursuant to Section 12 or 15(d) of the 1934 Act, or otherwise required by the 1934 Act; or

vii. The Company shall have its Common Stock suspended from trading on the Principal Trading Market for in excess of ive (5) Trading Days or the Company’s Common Stock is delisted from trading on the Principal Trading Market; or

viii. The Company or any of its Subsidiaries shall (x) admit in writing its inability to pay its debts generally as they mature; (y) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (z) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or

ix. A trustee, liquidator or receiver shall be appointed for the Company or any of it Subsidiaries or for a substantial part of such entitiy’s property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

x. Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company or any of its Subsidiaries and shall not be dismissed within sixty (60) days thereafter; or

xi. Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company or any of its Subsidiaries and, if instituted against the Company or any such Subsidiary, shall not be dismissed within sixty (60) days after such institution or the Company or such Subsidiary shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or

xii. Any money judgment, writ or warrant of attachment, or similar process in excess of Two Hundred Thousand Dollars ($200,000) in the aggregate shall be entered or filed against the Company or any of it Subsidiaries or any of such entity’s properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of five (5) Trading Days; or

xiii. The Company or any of its Subsidiaries is, by the end of any relevant grace period, in default in the payment of principal or interest as and when due and payable under any one or more debt obligations of the Company and its Subsidiaries (or any combination thereof) such that the aggregate amount of such defaults is in excess of Two Hundred Thousand Dollars ($200,000); or

xiv. The average trading value over any consecutive ten (10) trading days shall be less than $7,000 per trading day; or

xv. It becomes unlawful for the Company to perform its outstanding obligations under this Debenture or any other Debenture issued pursuant to the Securities Purchase Agreement; or

B.If an Event of Default shall have occurred and is continuing, then,

(i) unless and until such Event of Default shall have been cured or waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default), at the option of the Holder and in the Holder’s sole discretion, but without further notice from the Holder, the unpaid amount of this Debenture, computed as of such date, will bear interest at the rate (the “Default Rate”) equal to one percent (1%) per month or the highest rate allowed by law, whichever is lower, from the date of the Event of Default to until and including the date actually paid; and any partial payments shall be applied as provided in Section 5 hereof; and

(ii) at any time thereafter, and in each and every such case, unless such Event of Default shall have been cured or waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default), at the option of the Holder and in the Holder's sole discretion, the Holder may elect to redeem all or part of the Unconverted Debenture (as defined below) on the terms provided in Section 15 hereof.

15. A.The Company acknowledges that if there is an Event of Default, the Holder may require the Company to immediately redeem all or any part of the outstanding portion of this Debenture for an amount equal to the Redemption Amount (as defined below). The Redemption Amount shall be paid in cash by the Company to the Holder. As of the Redemption Due Date or, if earlier, the Redemption Payment Date (as those terms are defined below), the Redemption Amount shall be deemed applied, if so elected by the Holder, to any outstanding balance due on the Specific Purchase Note and then to any outstanding balance on any Purchase Note issued by the Holder, as designated by the Holder. Any portion of the Redemption Amount which is not so applied shall be paid in cash to the Holder and shall be applied in the priority provided in Section 4(I) hereof.

B.For purposes of this Debenture, the following terms shall have the meanings indicated below:

“Unconverted Debenture” means the principal amount of this Debenture which has not been converted as of the relevant date.

“Redemption Payment Date” means the date on which the Company actually pays the Redemption Amount.

“Redemption Amount” means the amount equal to the sum of (i) the Applicable Redemption Percentage of the principal of an Unconverted Debenture which is being redeemed, plus (ii) any accrued but unpaid interest thereon through and including the Redemption Payment Date, plus (iii) all Other Costs.

“Applicable Redemption Percentage” means one hundred ten percent (110%), unless the Event of Default is one specified under Section 14(A)(viii) or (ix), in which event it means one hundred fifty percent (150%).

C.The Holder of an Unconverted Debenture may elect to redeem a portion of such Unconverted Debenture without electing to redeem the balance of the Unconverted Debenture; provided, however, that if the Holder gives a Redemption Notice (as defined below) without specifying the amount of the Unconverted Debenture being redeemed, such Redemption Notice shall be deemed to refer to the full principal amount of the Unconverted Debenture. The Holder’s option to redeem all or part of the Unconverted Debenture shall be exercised by the Holder giving written notice of the exercise of this provision by the Holder (a “Redemption Notice”) at any time after a relevant Event of Default has occurred but before such Event of Default is cured. The Redemption Notice shall specify (a) the date (the “Redemption Due Date”) on which the Redemption Amount shall be paid, which date shall be at least five (5) Trading Days after the date (a “Redemption Notice Date”) on which the Holder Redemption Notice is given, and (b) the wire instructions for the account to which the Redemption Amount is to be paid; provided, however, that the Company shall have the right to accelerate the date of such payment.

D.If all of the Unconverted Debentures are being redeemed pursuant to this Section 5, then, upon payment in full of the Redemption Amount for all of the Unconverted Debentures in accordance with the provisions of this Section 5, the Holder shall deliver the Debenture to the Company marked “paid in full”.

E.If the Redemption Amount is not timely paid by the Company, the Redemption Amount shall accrue interest at the Default Rate and the Holder may declare the Redemption Amount, together with such interest, due under this Debenture immediately due and payable, without presentment, demand, protest or notice of any kinds, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law, including, but not necessarily limited to, the equitable remedy of specific performance and injunctive relief.

16.Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof.

17.Any notice required or permitted hereunder shall be given in manner provided in the Section headed "NOTICES" in the Securities Purchase Agreement, the terms of which are incorporated herein by reference.

18.The Company may prepay the entire principal, along with any accrued interest, due under this note at any time without penalty.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.

Dated: _________________, 20___

POWER3 MEDICAL PRODUCTS, INC.

By:_______________________________________

__________________________________________

(Print Name)

_________________________________________

(Title)

EXHIBIT A

POWER3 MEDICAL PRODUCTS, INC.

NOTICE OF CONVERSION

OF

15% CONVERTIBLE DEBENTURE

DUE JANUARY 1, 2009

(To be Executed by the Registered Holder in Order to Convert the Debenture)

TO:	POWER3 MEDICAL PRODUCTS, INC.	VIA FAX: (281) 466-1481
	3400 Research Forest Drive, Suite B2-3
	The Woodlands, TX 77381
	Attn: President

FROM: _________________________________________________________ (“Holder”)

DATE: _______________________________________________ (the “Conversion Date”)

RE: Conversion of $_________________ principal amount (the “Converted Debenture”) of the 15% Convertible Debenture Due January 1, 2009, (the “Debenture”) of POWER3 MEDICAL PRODUCTS, INC. (the “Company”) into ______________________ shares (the “Principal Conversion Shares”) of Common Stock (defined below)

Note: Either the purchase price for this Debenture was paid for in full on or prior to the Issue Date or the Specific Purchase Note for this Debenture has been paid or otherwise satisfied in full prior to the issuance of this Notice of Conversion.

The captioned Holder hereby gives notice to the Company, pursuant to the Debenture of POWER3 MEDICAL PRODUCTS, INC. that the Holder elects to convert the Converted Debenture into fully paid and non-assessable shares of Common Stock, $0.001 par value (the “Common Stock”), of the Company as of the Conversion Date specified above. Said conversion shall be based on Conversion Price of $________________.¹

______________________

¹As defined in the Debenture,

“Conversion Price” means the (i) the VWAP for the three (3) Regular Trading Days (which need not be consecutive) selected by the Holder from the twenty (20) Trading Days ending on the Trading Day immediately before the relevant Conversion Date, multiplied by (ii) seventy percent (70%).

1

As contemplated by the Debenture, the Company should also pay all accrued but unpaid interest on the Converted Debenture to the Holder. The Holder elects that such accrued but unpaid interest should be paid

࿇in ______________ shares of Common Stock (“Interest Conversion Shares”), representing such interest amount converted at the Conversion Price indicated above, which Interest Conversion Shares should be delivered together with the Principal Conversion Shares, or

࿇ in cash, which should be paid as provided in the Debenture by wire transfer as follows²:

___________________________________

___________________________________

___________________________________

Based on this Conversion Price, the number of Principal Conversion Shares plus Interest Conversion Shares (collectively, “Conversion Shares”) indicated above should be issued in the following name(s):

Name and Record Address	Conversion Shares
_______________________________	_______________
_______________________________	_______________
_______________________________	_______________

It is the intention of the Holder to comply with the provisions of Section 4(C) of the Debenture regarding certain limits on the Holder's right to convert thereunder. The Holder believe this conversion complies with the provisions of said Section 4(C). Nonetheless, to the extent that, pursuant to the conversion effected hereby, the Holder would have more shares than permitted under said Section, this notice should be amended and revised, ab initio, to refer to the conversion which would result in the issuance of shares consistent with such provision. Any conversion above such amount is hereby deemed void and revoked.

The Worksheet attached to this Notice of Conversion lists the 3 Regular Trading Days used in determining the Conversion Price.

²Information should include the following:

All Wires:

(1) Bank Name

(2) Bank Address (including street, city, state)

(3) ABA or Wire Routing No.

(4) Account Name

(5) Account Number

If Wire is going to International (Non-US) Bank, all of the above plus:

(6) SWIFT Number

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As contemplated by the Debenture, this Notice of Conversion is being sent by facsimile to the telecopier number and officer indicated above.

If this Notice of Conversion represents the full conversion of the outstanding balance of the Converted Debenture, the Holder either (1) has previously surrendered the Converted Debenture to the Company or (2) will surrender (or cause to be surrendered) the Converted Debenture to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or facsimile transmission of this Notice of Conversion.

The certificates representing the Conversion Shares should be transmitted by the Company to the Holder

࿇via express courier, or

࿇by electronic transfer

within the time contemplated by the Debenture after receipt of this Notice of Conversion (by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

_____________________________________

(Print name of Holder)

By: __________________________________

(Signature of Authorized Person)

______________________________________

(Printed Name and Title)

CONVERSION PRICE WORKSHEET

The following information was used in determining the Conversion Price referred to in this Notice of Conversion.

1. Conversion Date:___________________, 20__

2. The Holder selected the following three (3) Regular Trading Days (which need not be consecutive) out of the 20 Trading Days ending on the Trading Day before the Conversion Date:

(1)	/ /
(2)	/ /
(3)	/ /

3. The VWAP for Regular Trading Days of the 3 Regular Trading Days specified above was $_____.

4. 75% of amount specified in item 3 above is $_____ (= the Conversion Price).

EX-10.2

GUARANTY

GUARANTY dated as of June 30, 2008 ("Guaranty") made by Steven B. Rash, an individual residing at,10 Spiceberry Place, The Woodlands, TX 77382 (“Guarantor”) in favor of _____________________ ("Lender").

WITNESSETH

WHEREAS, Power 3 Medical Products, Inc., a New York corporation (the “Borrower”), and the Lender are parties to a Debenture, dated as of June 30, 2008 (such agreement, as amended, restated, supplemented or otherwise modified from time to time, being hereinafter referred to as the “Debenture”);

WHEREAS, pursuant to the Debenture, the Guarantor is required to execute and deliver to the Lender a guaranty guaranteeing the Debenture and all other obligations under the Debenture and the other Loan Documents; and

WHEREAS, the Guarantor has determined that (i) it will derive substantial benefit and advantage from the loan and other financial accommodations made available to the Borrower under the Debenture and the other Loan Documents and (ii) its execution, delivery and performance of this Guaranty directly benefit, and are within the best interests of, the Guarantor;

NOW, THEREFORE, in consideration of $1,000, paid by the Borrower to the Guarantor, receipt of which is hereby acknowledged, the premises, the agreements herein and in order to induce the Lender to make and maintain the Loan pursuant to the Debenture, the Guarantor hereby agrees with the Lender, as follows:

Section 1.Definitions. Reference is hereby made to the Debenture for a statement of the terms thereof. All terms used in this Guaranty which are defined in the Debenture and not otherwise defined herein shall have the same meanings herein as set forth therein. As used in this Guaranty, the following terms have the following meanings (terms defined in the singular to have the same meaning when used in the plural and vice versa):

“Borrower” has the meaning specified in the preamble above.

“Guaranty” means this Guaranty.

“Guaranty Documents” means the Loan Documents and any document or agreement evidencing, related to or delivered in connection with any or all of the Guaranteed Obligations.

“Guaranteed Obligations” means any and all present and future liabilities and obligations of Borrower and Grantor to Lender incurred by Borrower and Grantor under the Loan Documents, and whether due or to become due, secured or unsecured, absolute or contingent, joint or several, direct or indirect, acquired outright, conditionally or as collateral security by Lender from another, liquidated or unliquidated, arising by operation of law or otherwise, together with all fees and expenses incurred in collecting any or all of the items specified in this definition or enforcing any rights under any of the Guaranty Documents, including all fees and expenses of Lender’s counsel and of any experts and agents which may be paid or incurred by Lender in collecting any such items or enforcing any such rights.

Section 2.Rules of Interpretation. When used in this Guaranty: (1) “or” is not exclusive, (2) a reference to a law includes any amendment or modification to such law, and (3) a reference to an agreement, instrument or document includes any amendment or modification of such agreement, instrument or document.

Section 3.Guaranty. Guarantor hereby guarantees to Lender and its successors, endorsees, transferees and assigns the prompt and complete payment, as and when due and payable (whether at stated maturity or by required prepayment, acceleration, demand or otherwise), of all of the Guaranteed Obligations now existing or hereafter incurred will be paid strictly in accordance with their terms.

Section 4.Limitation of Liability. The obligation of Guarantor under this Guaranty shall be limited to an aggregate amount equal to the largest amount that would not render the obligation of Guarantor under this Guaranty subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any applicable state law.

Section 5.Type of Guaranty. This Guaranty is absolute and unconditional and as such is not subject to any conditions and Guarantor is fully liable to perform all of its duties and obligations under this Guaranty as of the date of execution of this Guaranty. This Guaranty is a continuing guaranty and applies to all future Guaranteed Obligations. In addition, this Guaranty shall remain in full force and effect even if at any time there are no outstanding Guaranteed Obligations. This Guaranty is a guaranty of payment and not of collection. The obligations and liabilities of Guarantor under this Guaranty shall not be conditioned or contingent upon the pursuit by Lender of any right or remedy against Borrower, Grantor or any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations, or against any assets securing the payment of the Guaranteed Obligations or guarantee for such Guaranteed Obligations or right of setoff with respect to such Guaranteed Obligations. This Guaranty is irrevocable and as such cannot be cancelled, terminated or revoked by Guarantor.

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Section 6.Reinstatement of Guaranty. This Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment, or any part thereof, of any of the Guaranteed Obligations are rescinded or must otherwise be returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower, Grantor or otherwise, all as though such payment had not been made.

Guarantor hereby consents that, without the necessity of any reservation of rights against Guarantor and without notice to or further assent by Guarantor, any demand for payment of any of the Guaranteed Obligations made by Lender may be rescinded by Lender and any of such Guaranteed Obligations continued after such rescission.

Section 7.Security Interest. To secure the payment of the obligations of Guarantor under this Guaranty, Guarantor has executed a Pledge Agreement in favor of, and grants Lender a pledge and security interest in the Pledged Shares listed in Schedule 1 to the Pledge Agreement.

Section 8.Waiver of Notices. Guarantor hereby waives any and all notices including (1) notice of or proof of reliance by Lender upon this Guaranty or acceptance of this Guaranty, (2) notice of the incurrence of any Guaranteed Obligations or the renewal, extension or accrual of any such Guaranteed Obligations, (3) notice of any actions taken by Lender, Borrower, Grantor or any other person under any Guaranty Document, and (4) notices of nonpayment or nonperformance, protest, notices of protest and notices of dishonor.

Section 9.Waiver of Defenses. Guarantor hereby waives any and all defenses to the performance by Guarantor of its duties and obligations under this Guaranty, including any defense based on any of the following:

(1)any failure of Lender to disclose to Guarantor any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any party obligated to make payment on any and all Guaranteed Obligations, whether as principal or guarantor, now or hereafter known to Lender,

(2)any defense to the payment of any or all the Guaranteed Obligations, including lack of validity or enforceability of any of the Guaranteed Obligations or any Guaranty Documents,

(3)any change in the time, manner or place of payment of, or in any other term in respect of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or consent to any departure from any Guaranty Document,

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(4)any exchange or release of, or non-perfection of any security interest on or in any assets securing the payment of the Guaranteed Obligations,

(5)any failure to execute any other guaranty for all or any part of the Guaranteed Obligations, or any release or amendment or waiver of, or consent to any departure from, any other guaranty for any or all of the Guaranteed Obligations,

(6) any subordination of any or all of the Guaranteed Obligations,

(7) any act or omission of Lender in connection with the enforcement of, or the exercise of rights and remedies, including any election of, or the order of exercising any, remedies, with respect to (a) the Guaranteed Obligations, (b) any other guarantor of the Guaranteed Obligations, or (c) any assets securing the payment of the Guaranteed Obligations,

(8)any manner of application of any funds received by Lender to Guaranteed Obligations or any other obligations owed to Lender, whether from the sale or disposition of any assets securing the Guaranteed Obligations, from another guarantor of the Guaranteed Obligations or otherwise, and

(9)any failure to give or provide any notices, demands or protests, including those specified under Section 8 herein, entitled “Waiver of Notices”.

Section 10.Subrogation. Guarantor may not exercise any rights which Guarantor may acquire by way of subrogation or contribution, whether acquired by any payment made under this Guaranty, by any setoff or application of funds of Borrower, by Lender or otherwise, until (1) the payment in full of the Guaranteed Obligations (after Lender no longer has any obligation or arrangement to provide credit to Borrower, including under or pursuant to a line of credit), and (2) the payment of all fees and expenses to be paid by Guarantor pursuant to this Guaranty. If any amount shall be paid to Guarantor on account of such subrogation or contribution rights at any time when all of the Guaranteed Obligations and all such other expenses shall not have been paid in full (after Lender no longer has any obligation or arrangement to provide credit to Borrower, including under or pursuant to a line of credit), such amount shall be held in trust for the benefit of Lender, shall be segregated from the other funds of Guarantor and shall forthwith be paid over to Lender to be credited and applied in whole or in part by Lender against the Guaranteed Obligations, whether matured or unmatured, and all such other fees and expenses in accordance with the terms of the Guaranty Documents.

Section 11.Representations. At the time of execution of this Guaranty and each time Lender provides credit as Debentured above, Guarantor represents and warrants to Lender as follows:

4

(1)Name. The exact legal name of the Guarantor is the name specified in the preamble to this Guaranty. The Guarantor has not been known by any other name during the five (5) years prior to the date of the Guaranty.

(2)Location. The principal residence of the Guarantor is 10 Spiceberry Place, The Woodlands, TX 77382.

(3)No Contravention. The execution, delivery and performance by Guarantor of this Guaranty do not and will not (a) violate any provision of any law, order, writ, judgment, injunction, decree, determination, or award presently in effect applicable to Guarantor, (b) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease, or instrument to which Guarantor is a party or by which Guarantor or its properties may be bound or affected, or (c) result in, or require, the creation or imposition of any lien upon or with respect to any of the properties now owned or hereafter acquired by Guarantor.

(4)Governmental Authority. No authorization, approval or other action by, and no notice to or filing with, any governmental authority is required for the due execution, delivery and performance by Guarantor of this Guaranty.

(5)Legally Enforceable Guaranty. This Guaranty is the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except to the extent that such enforcement may be limited by (a) applicable bankruptcy, insolvency, and other similar laws affecting creditors' rights generally, or (b) general equitable principles, regardless of whether the issue of enforceability is considered in a proceeding in equity or at law.

Section 12.Remedies. Lender shall not, by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies under this Guaranty or otherwise. A waiver by Lender of any right or remedy hereunder on any one occasion, shall not be construed as a ban or waiver of any such right or remedy which Lender would have had on any future occasion, nor shall Lender be liable for exercising or failing to exercise any such right or remedy. The rights and remedies of Lender under this Guaranty are cumulative and, as such, are in addition to any other rights and remedies available to Lender under law or any other agreements.

Section 13.Appointment as Attorney-in-Fact. Guarantor hereby appoints Lender as the attorney-in-fact for Guarantor, with full authority in the place and stead of Guarantor and in the name of Guarantor or otherwise, to exercise all rights and remedies granted to Lender under this Guaranty and to take any action and to execute any instrument which Lender may deem necessary or advisable to accomplish the purposes of this Guaranty.

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Section 14.Indemnity and Expenses. Guarantor hereby indemnifies Lender from and against any and all claims, losses, damages and liabilities growing out of or resulting from this Guaranty (including, without limitation, enforcement of this Guaranty), except claims, losses, damages or liabilities resulting from Lender's gross negligence and willful misconduct.

Guarantor will upon demand pay to Lender the amount of any and all expenses, including the fees and expenses of its counsel and of any experts and agents, which Lender may incur in connection with (1) any amendment to this Guaranty, (2) the administration of this Guaranty, (3) the exercise or enforcement of any of the rights of Lender under this Guaranty, or (4) the failure by Guarantor to perform or observe any of the provisions of this Guaranty.

Section 15.Amendments. No amendment or waiver of any provision of this Guaranty, nor consent to any departure by Guarantor from this Guaranty, shall in any event be effective unless the same shall be in writing and signed by Guarantor and Lender, and then such amendment or waiver shall be effective only in the specific instance and for the specific purpose for which given.

Section 16.Addresses for Notices. All notices and other communications provided for under this Guaranty shall be in writing and, mailed or delivered by messenger or overnight delivery service, addressed, in the case of Guarantor at its address specified below its signature, and in the case of Lender at the address specified below, or as to any such party at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section.

If to Lender:

Attention:

With copies to:

If to Guarantor:

Steven B. Rash

c/o Power3 Medical Products, Inc.

3400 Research Forest Drive

The Woodlands, Texas 77381

Fax No.: 281-466-1481

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With copies to:

Sichenzia Ross Friedman Ference LLP

Attn: Darrin M. Ocasio

61 Broadway, 32^nd Fl.

New York, New York 10006

Fax No.: 212-981-6774

All such notices and other communications shall, when mailed, be effective three (3) days after being placed in the mails, or when delivered to a messenger or overnight delivery service, be effective one (1) day after being delivered to the messenger or overnight delivery service, in each case, addressed as specified above.

Section 17.Assignment and Transfer of Obligations. This Guaranty will bind the estate of Guarantor as to Guaranteed Obligations created or incurred both before and after the death or incapacity of Guarantor, whether or not Lender receives notice of such death or incapacity. This Guaranty shall inure to the benefit of Lender and its successors, transferees and assigns. Guarantor may not transfer or assign its obligations under this Guaranty. Lender may assign or otherwise transfer all or a portion of its rights or obligations with respect to the Guaranteed Obligations to any other party, and such other party shall then become vested with all the benefits in respect of such transferred Guaranteed Obligations granted to Lender in this Guaranty or otherwise. Guarantor agrees that Lender can provide information regarding Guarantor to any prospective or actual successor, transferee or assign.

Section 18.Setoff. Guarantor agrees that, in addition to, and without limiting, any right of setoff, Lender’s lien or counterclaim Lender may otherwise have, Lender shall be entitled, at its option, to offset balances (general or special, time or demand, provisional or final) held by it for the account of Guarantor, at any of the offices of Lender, in Dollars or any other currency, against any amount payable by Guarantor to Lender under this Guaranty which is not paid when demanded (regardless of whether such balances are then due to Guarantor), in which case Lender shall promptly notify Guarantor, provided that Lender’s failure to give such notice shall not affect the validity of such offset.

Section 19.Submission to Jurisdiction. Guarantor hereby irrevocably submits to the jurisdiction of any federal or state court sitting in New York County in the State of New York over any action or proceeding arising out of or related to this Guaranty and agrees with Lender that personal jurisdiction over Guarantor rests with such courts for purposes of any action on or related to this Guaranty. Guarantor hereby waives personal service by manual delivery and agrees that service of process may be made by prepaid certified mail directed to Guarantor at the address of Guarantor for notices under this Guaranty or at such other address as may be designated in writing by Guarantor to Lender, and that upon mailing of such process such service will be effective as if Guarantor was personally served. Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any manner provided by law. Guarantor further waives any objection to venue in any such action or proceeding on the basis of inconvenient forum. Guarantor agrees that any action on or proceeding brought against Lender shall only be brought in such courts.

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Section 20.Governing Law. This Guaranty shall be governed by and construed in accordance with the laws of the State of New York without regard to its principles of conflicts of law.

Section 21.Subordination. Once a demand for payment is made on the Guarantor under this Guaranty Guarantor will not (1) make any demand for payment of, or take any action to accelerate, any obligation owed to Guarantor by Borrower, (2) seek to collect payment of, or enforce any right or remedies against Borrower, any of the obligations owed to Guarantor by Borrower or any guarantees, credit supports, collateral or other security related to or supporting any of such obligations, or (3) commence, or join with any other creditor in commencing, any bankruptcy or similar proceeding against Borrower. Guarantor also agrees that the payment of all obligations of Borrower to Guarantor shall be subordinate and junior in time and right of payment in accordance with the terms of this Section to the prior payment in full (in cash) of the Guaranteed Obligations. In furtherance of such subordination, (1) to the extent possible, Guarantor will not take or receive from Borrower any payments, in cash or any other property, by setoff or any other means, of any or all of the obligations owed to Guarantor by Borrower, or purchase, redeem, or otherwise acquire any of such obligations, or change the terms or provisions of any such obligations and (2) if for any reason and under any circumstance Guarantor receives a payment on such obligation, whether in a bankruptcy or similar proceeding or otherwise, all such payments or distributions upon or with respect to such obligations shall be received in trust for the benefit of Lender, shall be segregated from other funds and property held by Guarantor and shall be forthwith paid over to Lender in the same form as so received (with any necessary endorsement) to be applied (in the case of cash) to, or held as collateral (in the case of securities or other non-cash property) for, the payment or prepayment of the Guaranteed Obligations. Guarantor agrees that any subrogation rights Guarantor may acquire as a result of a payment under this Section may not be exercised until (1) the payment in full of the Guaranteed Obligations (after Lender no longer has any obligation or arrangement to provide credit to Borrower, including under or pursuant to a line of credit), and (2) the payment of all fees and expenses to be paid by Guarantor pursuant to this Guaranty.

Section 22.Miscellaneous. This Guaranty is in addition to and not in limitation of any other rights and remedies Lender may have by virtue of any other instrument or agreement previously, contemporaneously or hereafter executed by Guarantor or any other party or by law or otherwise. If any provision of this Guaranty is contrary to applicable law, such provision shall be deemed ineffective without invalidating the remaining provisions of this Guaranty. Titles in this Guaranty are for convenience of reference only and shall not affect the interpretation or construction of this Guaranty. This Guaranty constitutes the entire agreement between Guarantor and Lender with respect to the matters covered by this Guaranty and supercedes all written or oral agreements with respect to such matters.

Section 23.WAIVER OF JURY TRIAL. GUARANTOR EXPRESSLY WAIVES ANY AND EVERY RIGHT TO A TRIAL BY JURY IN ANY ACTION ON OR RELATED TO THIS GUARANTY.

IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty as of the date of this Guaranty.

___________________________________

Steven B. Rash

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EX-10.3

STOCK PLEDGE AGREEMENT

STOCK PLEDGE AGREEMENT ("Agreement") entered into as of the 30^th day of June 2008 by and among ___________________________ (the “Secured Party”), and those persons identified on the signature page hereof (each a “Pledgor”).

RECITALS

A.Pledgor has agreed to pledge certain shares as security for: (i) the performance by Power3Medical Products, Inc. A New York corporation of its obligations under its Series 2006 Debenture in an aggregate face amount of Two Hundred Thousand and 00/100 Dollars ($200,000.00) payable to the Secured Party (the “Debenture”) and (ii) the performance by Pledgor of its Guaranty delivered to Secured Party of even date herewith. Capitalized terms in this Agreement which are not identified herein will have the meanings given such terms in the Debenture.

B.The Secured Party is willing to accept the Debenture from the Company only upon receiving Pledgor’s Guaranty and pledge of certain stock as set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises, the mutual covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Grant of Security Interest. Pledgor hereby pledges to the Secured Party as collateral and security for the Secured Obligations (as defined in paragraph 2) the securities initially set forth on the attached Schedule 1 of this Agreement, (the “Pledged Shares”). Unless otherwise set forth on Schedule 1 of this Agreement, Pledgor is the beneficial and record owner of the Pledged Shares set forth opposite such Pledgor’s name on such Schedule. Such Pledged Shares, together with any additions, replacements, accessions substitutes therefor, or proceeds thereof, are hereinafter referred to collectively as the “Collateral.”Market Value means the average closing bid price for the ten trading days prior to the date on which the Collateral is valued for purposes of this Section 1.

2.Secured Obligations. During the term hereof, the Collateral shall secure the following:

a.The performance by the Company of its obligations, covenants, and agreements under the Debenture.

b. The performance by the Pledgor of its obligations, covenants, and agreements under the Guaranty.

The obligations, covenants and agreements described in clause (a) and (b) are the “Secured Obligations.”

3.Perfection of Security Interests. (a) Upon execution of this Agreement by each Pledgor, such Pledgor shall deliver the Pledge Shares, together with Stock Powers (with Medallion Guarantees annexed).

(b)The Company and each Pledgor will, at its expense, cause to be searched the public records with respect to the Collateral and will execute, deliver, file and record (in such manner and form as each Secured Party may require), or permit each Secured Party to file and record, as its attorney in fact, any financing statements, any carbon, photographic or other reproduction of a financing statement or this Agreement (which shall be sufficient as a financing statement hereunder), any specific assignments or other paper that may be reasonably necessary or desirable, or that such Secured Party may request, in order to create, preserve, perfect or validate any Security Interest or to enable such Secured Party to exercise and enforce its rights hereunder with respect to any of the Collateral. The Company and each of the Pledgor hereby appoints each Secured Party as the Company's or such Pledgor’s attorney-in-fact to execute in the name and behalf of the Company or such Pledgor, as the case may be, such additional financing statements as such Secured Party may request.

4.Assignment. In connection with the transfer of the Debenture in accordance with their terms, a Secured Party may assign or transfer the whole or any part of its security interest granted hereunder, and may transfer as collateral security the whole or any part of Secured Party's security interest in the Collateral. Any transferee of the Collateral shall be vested with all of the rights and powers of Secured Party hereunder with respect to the Collateral.

5.Pledgor’s Warranty. (A) Title. Pledgor represents and warrants hereby to the Secured Party as follows with respect to the Pledged Shares set forth opposite such Pledgor’s name on Schedule 1 to this Agreement:

(i) that the Collateral is free and clear of any encumbrances of every nature whatsoever, and such Pledgor is the sole owner of the Pledged Shares;

(ii) Such Pledgor further agree not to grant or create, any security interest, claim, lien, pledge or other encumbrance with respect to such Collateral or attempt to sell, transfer or otherwise dispose of the Collateral, until the Secured Obligations have been paid in full or this Agreement terminates; and

(iii)this Agreement constitutes a legal, valid and binding obligation of such Pledgor enforceable in accordance with its terms (except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws, now or hereafter in effect),

B.Other: (i) Pledgor has made necessary inquiries of the Company and believes that the Company fully intends to fulfill and has the capability of fulfilling the Secured Obligations to be performed by the Company in accordance with the terms of the Debentures.

(ii)The Pledgor is not acting, and has not agreed to act, in any plan to sell or dispose of any Shares in a manner intended to circumvent the registration requirements of the Securities Act of 1933, as amended, or any applicable state law.

(iii)Pledgor has been advised by counsel of the elements of a bona-fide pledge for purposes of Rule 144(d)(3)(iv) under the Securities Act of 1933, as amended, including the relevant SEC interpretations and affirm the pledge of shares by each of the undersigned pursuant to this Pledge Agreement will constitute a bona-fide pledge of such shares for purposes of such Rule.

6.Collection of Dividends and Interest. During the term of this Agreement and so long as Pledgor is not in default under the Debentures, Pledgor is authorized to collect all dividends, distributions, interest payments, and other amounts that may be, or may become, due on any of the Collateral.

7.Voting Rights. During the term of this Agreement and until such time as this Agreement has terminated or Secured Party has exercised its rights under this Agreement to foreclose its security interest in the Collateral, Pledgor shall have the right to exercise any voting rights evidenced by, or relating to, the Collateral.

8.Warrants and Options. In the event that, during the term of this Agreement, subscription, spin-off, warrants, dividends, or any other rights or option shall be issued in connection with the Collateral, such warrants, dividends, rights and options shall be immediately delivered to Secured Party to be held under the terms hereof in the same manner as the Collateral.

9.Preservation of the Value of the Collateral. Pledgor shall pay all taxes, charges, and assessments against the Collateral and do all acts necessary to preserve and maintain the value thereof.

10.Secured Party as Pledgor's Attorney-in-Fact.

(a)Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time at Secured Party's discretion, to take any action and to execute any instrument that Secured Party may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including: (i) upon the occurrence and during the continuance of an Event of Default, to receive, indorse, and collect all instruments made payable to Pledgor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof to the extent permitted hereunder and to give full discharge for the same and to execute and file governmental notifications and reporting forms; (ii) to arrange for the transfer of the Collateral on the books of any of the Company or any other Person to the name of Secured Party or to the name of Secured Party's nominee.

(b)In addition to the designation of Secured Party as Pledgor's attorney-in-fact in subsection (a), Pledgor hereby irrevocably appoints Secured Party as Pledgor's agent and attorney-in-fact to make, execute and deliver any and all documents and writings which may be necessary or appropriate for approval of, or be required by, any regulatory authority located in any city, county, state or country where Pledgor or any of the Company engage in business, in order to transfer or to more effectively transfer any of the Pledged Interests or otherwise enforce Secured Party's rights hereunder.

11.Remedies upon Default.

Upon the occurrence and during the continuance of an Event of Default under the Debenture and/or the Guaranty “Event of Default”):

(a)Secured Party may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Code (irrespective of whether the Code applies to the affected items of Collateral), and Secured Party may also without notice (except as specified below) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of Secured Party's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Secured Party may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Collateral. To the maximum extent permitted by applicable law, Secured Party may be the purchaser of any or all of the Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply all or any part of the Secured Obligations as a credit on account of the purchase price of any Collateral payable at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay, or appraisal that it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) calendar days notice to Pledgor of the time and place of any public sale or the time after which a private sale is to be made shall constitute reasonable notification. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. To the maximum extent permitted by law, Pledgor hereby waives any claims against Secured Party arising because the price at which any Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale, even if Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree.

(b)Pledgor hereby agrees that any sale or other disposition of the Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies, or other financial institutions in the city and state where Secured Party is located in disposing of property similar to the Collateral shall be deemed to be commercially reasonable.

(c)Pledgor hereby acknowledges that the sale by Secured Party of any Collateral pursuant to the terms hereof in compliance with the Securities Act of 1933 as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect (the "Securities Act"), as well as applicable "Blue Sky" or other state securities laws, may require strict limitations as to the manner in which Secured Party or any subsequent transferee of the Collateral may dispose thereof. Pledgor acknowledges and agrees that in order to protect Secured Party's interest it may be necessary to sell the Collateral at a price less than the maximum price attainable if a sale were delayed or were made in another manner, such as a public offering under the Securities Act. Pledgor has no objection to sale in such a manner and agrees that Secured Party shall have no obligation to obtain the maximum possible price for the Collateral. Without limiting the generality of the foregoing, Pledgor agrees that, upon the occurrence and during the continuation of an Event of Default, Secured Party may, subject to applicable law, from time to time attempt to sell all or any part of the Collateral by a private placement, restricting the bidders and prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution. In so doing, Secured Party may solicit offers to buy the Collateral or any part thereof for cash, from a limited number of investors reasonably believed by Secured Party to be institutional investors or other accredited investors who might be interested in purchasing the Collateral. If Secured Party shall solicit such offers, then the acceptance by Secured Party of one of the offers shall be deemed to be a commercially reasonable method of disposition of the Collateral.

(d)If Secured Party shall determine to exercise its right to sell all or any portion of the Collateral pursuant to this Section, Pledgor agrees that, upon request of Secured Party, Pledgor will, at its own expense:

(i)execute and deliver, or cause the officers and directors of the Company to execute and deliver, to any person, entity or governmental authority as Secured Party may choose, any and all documents and writings which, in Secured Party's reasonable judgment, may be necessary or appropriate for approval, or be required by, any regulatory authority located in any city, county, state or country where Pledgor or the Company engage in business, in order to transfer or to more effectively transfer the Pledged Interests or otherwise enforce Secured Party's rights hereunder; and

(ii)do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law; and

(iii) cause the Company to timely file all periodic reports required to be filed by the Company under the Securities Exchange Act of 1934.

Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section may be specifically enforced.

(e)PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME SECURED PARTY DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS SECTION 11, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

12. (a)Term of Agreement. This Agreement shall continue in full force and effect until the earlier of the payment in full of the Debenture. If the Debenture is paid in full, the security interests in the relevant Collateral shall be deemed released, and any portion of the Collateral not transferred to or sold by any one or more Secured Parties shall be returned to the Pledgor (and for such purpose, delivery to Darrin Ocasio, Esq., of Sichenzia Ross Friedman Ference LLP of New York, NY shall deemed to comply with such return requirement). Upon termination of this Pledge Agreement, the relevant Collateral shall be returned within five (5) Trading Days to Debtor or to the Pledgor, as contemplated above.

(b) Application of Proceeds. Upon the occurrence and during the continuance of an Event of Default, any cash held by Secured Party as Collateral and all cash Proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral pursuant to the exercise by Secured Party of its remedies as a secured creditor as provided in Section 9 shall be applied from time to time by the Secured Part as provided in the Debenture.

13.Indemnity and Expenses.

Pledgor agrees:

(a)To indemnify and hold harmless Secured Party and each of its directors, officers, employees, agents and affiliates from and against any and all claims, damages, demands, losses, obligations, judgments and liabilities (including, without limitation, reasonable attorneys' fees and expenses) in any way arising out of or in connection with this Agreement or the Secured Obligations, except to the extent the same shall arise as a result of the gross negligence or willful misconduct of the party seeking to be indemnified; and

(b)To pay and reimburse Secured Party upon demand for all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) that Secured Party may incur in connection with (i) the custody, use or preservation of, or the sale of, collection from or other realization upon, any of the Collateral, including the reasonable expenses of re-taking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, (ii) the exercise or enforcement of any rights or remedies granted hereunder, under the Debenture or otherwise available to it (whether at law, in equity or otherwise), or (iii) the failure by Pledgor to perform or observe any of the provisions hereof. The provisions of this Section shall survive the execution and delivery of this Agreement, the repayment of any of the Secured Obligations, the termination of the commitments of Secured Party under the Debenture and the termination of this Agreement.

14.Duties of Secured Party.

The powers conferred on Secured Party hereunder are solely to protect its interests in the Collateral and shall not impose on it any duty to exercise such powers. Except as provided in Section 9-207 of the Code, Secured Party shall have no duty with respect to the Collateral or any responsibility for taking any necessary steps to preserve rights against any Persons with respect to any Collateral.

15.Choice of Law and Venue; Submission to Jurisdiction; Service of Process.

(a)THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF). THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK OR, AT THE SOLE OPTION OF SECURED PARTY, IN ANY OTHER COURT IN WHICH SECURED PARTY SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY.

(b)PLEDGOR HEREBY SUBMITS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.

(c)PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, OR OTHER PROCESS ISSUED IN ANY ACTION OR PROCEEDING AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT, OR OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO PLEDGOR AT ITS ADDRESS FOR NOTICES IN ACCORDANCE WITH THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF PLEDGOR'S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

(d)NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF SECURED PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY SECURED PARTY OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

16.Amendments; etc.

No amendment or waiver of any provision of this Agreement nor consent to any departure by Pledgor herefrom shall in any event be effective unless the same shall be in writing and signed by Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of Secured Party to exercise, and no delay in exercising any right under this Agreement, any other Credit Document, or otherwise with respect to any of the Secured Obligations, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement, any other Credit Document, or otherwise with respect to any of the Secured Obligations preclude any other or further exercise thereof or the exercise of any other right. The remedies provided for in this Agreement or otherwise with respect to any of the Secured Obligations are cumulative and not exclusive of any remedies provided by law.

17.Notices.

Unless otherwise specifically provided herein, all notices shall be in writing addressed to the respective party as set forth below: and may be personally served, faxed, telecopied or sent by overnight courier service or United States mail:

If to Pledgor:

Steven B. Rash

c/o Power3 Medical Products, Inc.

3400 Research Forest Drive

The Woodlands, Texas 77381

Fax No.: 281-466-1481

with a copy to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32^nd Fl.

New York, NY 10006

Fax No.:212-930-9725

Attn:Darrin M. Ocasio, Esq.

If to Secured Party:

Fax No.:

with a copy to:

Fax No.:

Any notice given pursuant to this section shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered by fax, on the date of transmission if transmitted on a Business Day before 4:00 p.m. at the place of receipt or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, two (2) days after delivery to such courier properly addressed; or (d) if by United States mail, four (4) Business Days after depositing in the United States mail, with postage prepaid and properly addressed. Any party hereto may change the address or fax number at which it is to receive notices hereunder by notice to the other party in writing in the foregoing manner.

18.Continuing Security Interest.

This Agreement shall create a continuing security interest in the Collateral and shall: (a) remain in full force and effect until the indefeasible payment in full of the Secured Obligations, including the cash collateralization, expiration, or cancellation of all Secured Obligations, if any, consisting of letters of credit, and the full and final termination of any commitment to extend any financial accommodations under the Credit Agreement; (b) be binding upon Pledgor and its successors and assigns; and (c) inure to the benefit of Secured Party and its successors, transferees, and assigns. Upon the indefeasible payment in full of the Secured Obligations, including the cash collateralization, expiration, or cancellation of all Secured Obligations, if any, consisting of letters of credit, and the full and final termination of any commitment to extend any financial accommodations under the Credit Agreement, the security interests granted herein shall automatically terminate and all rights to the Collateral shall revert to Pledgor. Upon any such termination, Secured Party will, at Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination. Such documents shall be prepared by Pledgor and shall be in form and substance reasonably satisfactory to Secured Party.

19.Security Interest Absolute.

To the maximum extent permitted by law, all rights of Secured Party, all security interests hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional irrespective of:

(a)any lack of validity or enforceability of any of the Secured Obligations or any other agreement or instrument relating thereto, including any of the Credit Documents;

(b)any change in the time, manner, or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any of the Credit Documents, or any other agreement or instrument relating thereto;

(c)any exchange, release, or non-perfection of any other collateral, or any release or amendment or waiver of or consent to departure from any guaranty for all or any of the Secured Obligations; or

(d)any other circumstances that might otherwise constitute a defense available to, or a discharge of, Pledgor.

20.Headings.

Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement or be given any substantive effect.

21.Severability.

In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

22.Counterparts; Telefacsimile Execution.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, or binding effect hereof.

23.Waiver of Marshaling.

Each of Pledgor and Secured Party acknowledges and agrees that in exercising any rights under or with respect to the Collateral: (a) Secured Party is under no obligation to marshal any Collateral; (b) may, in its absolute discretion, realize upon the Collateral in any order and in any manner it so elects; and (c) may, in its absolute discretion, apply the proceeds of any or all of the Collateral to the Secured Obligations in any order and in any manner it so elects. Pledgor and Secured Party waive any right to require the marshaling of any of the Collateral.

24.Waiver of Jury Trial.

PLEDGOR AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. PLEDGOR AND SECURED PARTY REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to be duly executed and delivered by their officers thereunto duly authorized as of the date first written above.

STEVEN B. RASH

By: ________________________________

____________________________________

____________________________

By: ________________________________

Title: ______________________________

Schedule 1

1. The Numbers of the stock certificates evidencing 14,048,369 shares of common stock of Power3Medical Products, Inc., which are pledged pursuant to the Stock Pledge Agreement, dated July 1, 2009, are as follows:

Name of Shareholder	Certificate #	# of Shares
Steven B. Rash	15551	11,225,869
Steven B. Rash	201	1,500,000
Steven B. Rash	15339	1,000,000
Steven B. Rash	15342	322,500

____________________________

STEVEN B. RASH

ACKNOWLEDGMENT

STATE OF ______________:

ss:

COUNTY OF ____________:

BE IT REMEMBERED that on this ___ day of ______, 2008, before me, the subscriber, personally appeared Steven B. Rash who, being by me duly sworn on his oath, deposed and made proof to my satisfaction that the information and statements set forth above are true and correct as of this date.

____________________________________

Notary Public, State of

Schedule 2

Pledgor Information:

For Pledgor That Is a Registered Organization

Jurisdiction of Organization: ______________________________________________________

Type of Organization: ___________________________________________________________

Organizational ID Number (if any): ________________________________________________

For Pledgor That Is An Individual: Steven B. Rash

Address of Principal Residence: See Notice section

For Pledgor That Is Neither a Registered Organization nor an Individual:

Type of Organization: ___________________________________________________________

EX-10.4

FORM OF WARRANT

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

POWER3 MEDICAL PRODUCTS, INC.

COMMON STOCK PURCHASE WARRANT

1.Issuance. In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by POWER3 MEDICAL PRODUCTS, INC., a New York corporation (the “Company”), _____________________________ or registered assigns (the “Holder”) is hereby granted the right to purchase at any time, on or after the Issue Date (as defined below) until 5:00 P.M., Central Time, on the Expiration Date (as defined below), Three Million Five Hundred Thousand (3,500,000) fully paid and nonassessable shares of the Company’s Common Stock, $0.001 par value per share (the “Common Stock”), at an initial exercise price per share (the “Exercise Price”) of $____ per share, subject to further adjustment as set forth herein. This Warrant was originally issued to the Holder or the Holder’s predecessor in interest on _____________, 2008 (the “Issue Date”).

2.Exercise of Warrants.

2.1General.

(a) This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date. Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by facsimile transmission as provided in Section 8 hereof) a completed and duly executed Notice of Exercise (substantially in the form attached to this Warrant Certificate) as provided in the Notice of Exercise. The date such Notice of Exercise is faxed to the Company shall be the “Exercise Date,” provided that, if such exercise represents the full exercise of the outstanding balance of the Warrant, the Holder of this Warrant tenders this Warrant Certificate to the Company within five (5) Trading Days thereafter. The Notice of Exercise shall be executed by the Holder of this Warrant and shall indicate (i) the number of shares then being purchased pursuant to such exercise and (ii) if applicable (as provided below), whether the exercise is a cashless exercise.

(b) The provisions of this Section 2.1(b) shall only be applicable (i) prior to the Automatic Conversion Date (as defined below), if, and only if, for any reason on the Exercise Date, there is no effective registration statement naming the Holder as selling stockholder pursuant to which the Holder would be entitled to sell the Warrant Shares on such date, or (ii) on the Automatic Exercise Date (as defined below), whether or not there is an effective Registration Statement covering the Warrant Shares on such date. If the Notice of Exercise form elects a “cashless” exercise, the Holder shall thereby be entitled to receive a number of shares of Common Stock equal to (w) the excess of the Current Market Value (as defined below) over the total cash exercise price of the portion of the Warrant then being exercised, divided by (x) the Market Price of the Common Stock. For the purposes of this Warrant, the terms (y) “Current Market Value” shall mean an amount equal to the Market Price of the Common Stock, multiplied by the number of shares of Common Stock specified in the applicable Notice of Exercise, and (z) “Market Price of the Common Stock” shall mean the VWAP for the Trading Day immediately prior to the Exercise Date.

(c) If the Holder provides on the Notice of Exercise form that the Holder has elected a “cash” exercise (or if the cashless exercise referred to in the immediately preceding paragraph (b) is not available in accordance with its terms), the Exercise Price per share of Common Stock for the shares then being exercised shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire transfer in accordance with instructions provided by the Company at the request of the Holder.

(d) Upon the appropriate payment, if any, of the Exercise Price for the shares of Common Stock purchased, together with the surrender of this Warrant Certificate (if required), the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased. The Company shall deliver such certificates representing the Warrant Shares in accordance with the instructions of the Holder as provided in the Notice of Exercise (the certificates delivered in such manner, the “Warrant Share Certificates”) within ten (10) Trading Days (such third Trading Day, a “Delivery Date”) of (i) with respect to a “cashless exercise,” the Exercise Date or the Automatic Exercise Date, as the case may be, or, (ii) with respect to a “cash” exercise, the later of the Exercise Date or the date the payment of the Exercise Price for the relevant Warrant Shares is received by the Company.

(e) The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the provisions of this Section 2.1 on the Exercise Date.

2.2Limitation on Exercise. Notwithstanding the provisions of this Warrant, in no event (except (i) as specifically provided in this Warrant as an exception to this provision, (ii) on the Automatic Exercise Date, or (iii) while there is outstanding a tender offer for any or all of the shares of the Company’s Common Stock) shall the Holder be entitled to exercise this Warrant, or shall the Company have the obligation to issue shares upon such exercise of all or any portion of this Warrant to the extent that, after such exercise the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of the Warrants or other rights to purchase Common Stock or through the ownership of the unconverted portion of convertible securities), and (2) the number of shares of Common Stock issuable upon the exercise of the Warrants with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock (after taking into account the shares to be issued to the Holder upon such exercise). For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, except as otherwise provided in clause (1) of such sentence. Nothing herein shall preclude the Holder from disposing of a sufficient number of other shares of Common Stock beneficially owned by the Holder so as to thereafter permit the continued exercise of this Warrant.

2.3Automatic Exercise. If any portion of this Warrant remains unexercised as of the Expiration Date and the Market Price of the Common Stock as of the Expiration Date is greater than the applicable Exercise Price as of the Expiration Date, then, without further action by the Holder, this Warrant shall be deemed to have been exercised automatically on the date (the “Automatic Exercise Date”) which is the day immediately prior to the close of business on the Expiration Date (or, in the event that the Expiration Date is not a Trading Day, the immediately preceding Trading Day) as if the Holder had duly given a Notice of Exercise for a “cashless” exercise as contemplated by Section 2.1(b) hereof, and the Holder (or such other person or persons as directed by the Holder) shall be treated for all purposes as the holder of record of such Warrant Shares as of the close of business on such Automatic Exercise Date. This Warrant shall be deemed to be surrendered to the Company on the Automatic Exercise Date by virtue of this Section 2.3 without any action by the Holder.

2.4Certain Definitions. As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:

(a)“Expiration Date” means the earlier of (i) the Scheduled Expiration Date or (ii) the Accelerated Expiration Date (as defined below).

(b) “Scheduled Expiration Date” means the date which is the last calendar day of the month in which the seventh anniversary of the Issue Date occurs.

2.5Accelerated Expiration Date.

(a)At any time after the date which is six (6) months from the Issue Date, if all, but not less than all, of the Acceleration Conditions (as defined below) are satisfied, during the Accelerated Period (as defined below), the Company, in its sole discretion, may give a written notice (the “Accelerated Expiration Notice”) to the Holder specifying that the rights to exercise all or a specified part of this Warrant will expire on a date (the “Accelerated Expiration Date”) specified in the Accelerated Expiration Notice, provided that the date so specified shall be thirty (30) Trading Days after the date (the “Accelerated Expiration Notice Date”) on which the Company gives of the Accelerated Expiration Notice (but provided that the Holder actually receives such Accelerated Expiration Notice no later than the Trading Day immediately after such notice is given by the Company); provided, however, that if the Holder gives the Company a notice that the exercise of the entire outstanding Warrant, alone or together with any other Warrants held by the Holder which are subject to the same or a similar Accelerated Expiration Notice (each in accordance with its respective terms) would exceed the limits contemplated by Section 2.2 hereof, the Accelerated Expiration Date shall be the date which is six (6) months after the Accelerated Expiration Notice Date (but provided that the Holder actually receives such Accelerated Expiration Notice no later than the Trading Day immediately after such notice is given by the Company). Notwithstanding the foregoing, if the Acceleration Period Conditions (as defined below) are not satisfied during the period (the “Accelerated Period”) commencing on the Accelerated Expiration Notice Date through and including the Accelerated Expiration Date, the Accelerated Expiration Notice shall be deemed cancelled.

(b)The Holder will continue to have the right to exercise this Warrant through and including the Accelerated Expiration Date, as determined in accordance with the provisions, but not thereafter. If the Accelerated Expiration Notice provides that less than all of the outstanding Warrant is subject to such acceleration, any exercise of the Warrant by the Holder on or after the Accelerated Expiration Notice Date shall be applied against such acceleration.

(c)The term “Acceleration Determination Period” means the consecutive twenty (20) Trading Days ending on the Trading Day immediately before the Accelerated Expiration Notice Date.

(d) The term “Acceleration Conditions” means that, as of the Accelerated Expiration Notice Date, each of (and not less than all of) the following conditions has been satisfied:

(i) there is no Event of Default (as that term is defined in the Debenture, but the existence of such Event of Default shall be determined without regard to the passage of time or the giving of notice or both as may be provided in the Debenture);

(ii) for each Trading Day of the Acceleration Determination Period, the VWAP is at least one hundred fifty percent (150%) of the Exercise Price as in effect on the Issue Date (as the same may be adjusted for adjusted pursuant to the provisions of Section 6 hereof other than pursuant to Section 6.4 hereof);

(iii) the Holder would be eligible to sell all of the Warrant Shares either pursuant to an effective registration statement or pursuant to Rule 144; and

(iv) the Company shall have duly issued, and the Holder shall have timely received, the Accelerated Expiration Notice.

(e)The term “Acceleration Period Conditions” means that, at all times during the Acceleration Period, each of (and not less than all of) the following conditions has been satisfied:

(i) there is no Event of Default (as that term is defined in the Debenture, but the existence of such Event of Default shall be determined without regard to the passage of time or the giving of notice or both as may be provided in the Debenture);

(ii) the Company has issued and delivered to the Holder all Warrant Shares for all Warrant exercises by the Holder within two (2) Trading Days after the relevant Delivery Date; and

(iii) the Holder would be eligible to sell all of the Warrant Shares either pursuant to an effective registration statement or pursuant to Rule 144 and, on the request of the Holder, the Company Counsel issues an opinion to such effect to the Holder and, if relevant, to the Transfer Agent.

3.Reservation of Shares. The Company hereby agrees that, subject to shareholder approval, at all times during the term of this Warrant, there shall be reserved for issuance upon exercise of this Warrant, one hundred percent (100%) of the number of shares of its Common Stock as shall be required for issuance of the Warrant Shares for the then unexercised portion of this Warrant.

4.Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

5.Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

6.Transfer to Comply with the Securities Act. This Warrant has not been registered under the Securities Act of 1933, as amended, (the “1933 Act”) and has been issued to the Holder for investment and not with a view to the distribution of either the Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of an effective registration statement under the 1933 Act relating to such security or an opinion of counsel satisfactory to the Company that registration is not required under the 1933 Act. Each certificate for the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section.

7.Supplements and Amendments; Whole Agreement. This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto. This Warrant contains the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings other than expressly contained herein and therein.

8.Governing Law, This Warrant shall be deemed to be a contract made under the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Warrant and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions.

9.JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with this Warrant.

10.Counterparts. This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

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15.Descriptive Headings. Descriptive headings of the several Sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.

Dated: _________________, 2008

POWER3 MEDICAL PRODUCTS, INC.

By: ________________________________

___________________________________

(Print Name)

___________________________________

(Title)

NOTICE OF EXERCISE OF WARRANT

TO:	POWER3 MEDICAL PRODUCTS, INC.	VIA FAX: (281) 466-1481
	3400 Research Forest Drive, Suite B2-3
	The Woodlands, TX 77381
	Attn: President

The undersigned hereby irrevocably elects to exercise the right, represented by the Common Stock Purchase Warrant, dated as of _____________________, 20___, to purchase ___________ shares of the Common Stock, $0.001 par value (“Common Stock”), of POWER3 MEDICAL PRODUCTS, INC. and tenders herewith payment in accordance with Section 2 of said Common Stock Purchase Warrant, as follows:

9CASH:$ = (Exercise Price x Exercise Shares)

Payment is being made by:

9enclosed check

9wire transfer

9other

9CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:

Net number of Warrant Shares to be issued to Holder :_________*

* based on: Current Market Value - (Exercise Price x Exercise Shares)

Market Price of Common Stock

where:

Market Price of Common Stock [“MP”]                         =$_______________

Current Market Value [MP x Exercise Shares]=$_______________

It is the intention of the Holder to comply with the provisions of Section 2.2 of the Warrant regarding certain limits on the Holder's right to exercise thereunder. The Holder believes this exercise complies with the provisions of said Section 2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby, the Holder would have more shares than permitted under said Section, this notice should be amended and revised, ab initio, to refer to the exercise which would result in the issuance of shares consistent with such provision. Any exercise above such amount is hereby deemed void and revoked.

As contemplated by the Warrant, this Notice of Conversion is being sent by facsimile to the telecopier number and officer indicated above.

If this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, the Holder either (1) has previously surrendered the Warrant to the Company or (2) will surrender (or cause to be surrendered) the Warrant to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or facsimile transmission of this Notice of Exercise.

The certificates representing the Warrant Shares should be transmitted by the Company to the Holder

9via express courier, or

9by electronic transfer

after receipt of this Notice of Exercise (by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

Dated: ______________________

____________________________

[Name of Holder]

By: _________________________