SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (the “Agreement”), dated as of August 22,
2007, is made by and between Power3 Medical Products, Inc., a New York
corporation (“Power3”) and DKR SoundShore Oasis Holding Fund Ltd. (“DKR”).

WHEREAS, Power3 issued to DKR convertible debentures in the amount of $50,000 on
October 28, 2004 (the “Debenture”) (the Debenture, as well as all related
documentation thereto, shall collectively be referred to as the “Transaction
Documents”);

WHEREAS, Power3 desires to issue, and DKR desires to accept, Five Hundred Eighty
Eight Thousand Two Hundred Thirty Five (588,235) shares of Power3’s common stock
in full satisfaction of all principal, interest, damages, including liquidated
damages, and all obligations arising from the Transaction Documents;

WHEREAS, Power3 agrees to reduce the exercise price on all warrants issued under
the Transaction Documents (the “Warrants”) to $0.19, and DKR accepts such price
reduction, on condition that all provisions relating to cashless exercise of the
Warrants be voided under the Transaction Documents.

NOW, THEREFORE, in consideration of the mutual conditions and covenants
contained in this Agreement, and for other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, it is hereby
stipulated, consented to and agreed by and among Power3 and DKR as follows:

1. Power3 shall issue an aggregate of Five Hundred Eighty Eight Thousand Two
Hundred Thirty Five (588,235) shares of common stock (the “Shares”) to DKR in
full satisfaction of the Transaction Documents and all obligations arising
pursuant to the Transaction Documents. Upon issuance of the Shares, DKR shall
return, via overnight delivery, the original Debenture to Power3. The Shares
shall initially contain a restrictive legend. Power3 shall cause the restrictive
legend to be removed immediately upon DKR providing Power3 (or its attorneys)
with an appropriate Seller’s representation letter and other necessary
documentation. Power3 acknowledges receipt of such documentation provided by
Seller and will cause such legend to be removed.

2. In consideration of the foregoing, DKR releases and discharges Power3,
Power3’s officers, directors, principals, control persons, past and present
employees, insurers, successors, and assigns (“Power3 Parties”) from all
actions, cause of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against Power3 Parties ever had, now have or hereafter can, shall or may, have
for, upon, or by reason of any matter, cause or thing whatsoever, whether or not
known or unknown, from the beginning of the world to the day of the date of this
Release arising under the Transaction Documents.

3. In consideration of the foregoing, Power3 releases and discharges DKR, DKR’s
officers, directors, principals, control persons, past and present employees,
insurers, successors, and assigns (“DKR Parties”) from all actions, cause of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity, which against DKR Parties ever
had, now have or hereafter can, shall or may, have for, upon, or by reason of
any matter, cause or thing whatsoever, whether or not known or unknown, from the
beginning of the world to the day of the date of this Release arising under the
Transaction Documents.

 
 

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4. Disclosure. Power3 agrees to file a Current Report on Form 8-K within 4 days
following the date hereof, which shall disclose the material terms of this
Agreement.

5. All parties acknowledge and represent that: (a) they have read the Agreement;
(b) they clearly understand the Agreement and each of its terms; (c) they fully
and unconditionally consent to the terms of this Agreement; (d) they have had
the benefit and advice of counsel of their own selection; (e) they have executed
this Agreement, freely, with knowledge, and without influence or duress; (f)
they have not relied upon any other representations, either written or oral,
express or implied, made to them by any person; and (g) the consideration
received by them has been actual and adequate.

6. This Agreement contains the entire agreement and understanding concerning the
subject matter hereof between the parties and supersedes and replaces all prior
negotiations, proposed agreement and agreements, written or oral. Each of the
parties hereto acknowledges that neither any of the parties hereto, nor agents
or counsel of any other party whomsoever, has made any promise, representation
or warranty whatsoever, express or implied, not contained herein concerning the
subject hereto, to induce it to execute this Agreement and acknowledges ands
warrants that it is not executing this Agreement in reliance on any promise,
representation or warranty not contained herein.

7. This Agreement may not be modified or amended in any manner except by an
instrument in writing specifically stating that it is a supplement, modification
or amendment to the Agreement and signed by each of the parties hereto.

8. Should any provision of this Agreement be declared or be determined by any
court or tribunal to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby and said illegal or invalid
part, term or provision shall be severed and deemed not to be part of this
Agreement.

9. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York. Both parties and
the individuals executing this Agreement and other agreements on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs.

10. This Agreement may be executed in counterparts, each of which, when all
parties have executed at least one such counterpart, shall be deemed an
original, with the same force and effect as if all signatures were appended to
one instrument, but all of which together shall constitute one and the same
Agreement.

 
 

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first indicated above.

DKR SOUNDSHORE OASIS HOLDING FUND LTD.
By: DKR Oasis Management Company LP
 
By: /s/Rajni Narasi
Name: Rajni Narasi
Title: Authorized Signatory
DKR Sound Shore Oasis Holding Fund LTD
c/o DKR Oasis Management Company LP
1281 East Main Street
Stamford, Connecticut 06902
Tel: (203) 324-8400
Fax: (203-3248488
Email: rnarasi@dkrcapital.com
   
POWER3 MEDICAL PRODUCTS, INC.
 
 
By: /s/Steven B. Rash
Name: Steven B. Rash
Title: Chief Executive Officer
3400 Research Forest Drive, Suite B2-3
Woodlands, Texas 77381
Tel: (281) 466-1600
Fax: (281) 466-1481
Email: srash@power3medical.com

 
 

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