POWER3 MEDICAL PRODUCTS, INC.

2008 COMPENSATION PLAN

THIS POWER3 MEDICAL PRODUCTS, INC. 2008 COMPENSATION PLAN (the "Plan") is
designed to retain non-executive employees, consultants, and advisors
(“Participants) and reward them for making major contributions to the success of
the Company.  These objectives are accomplished by making long-term incentive
awards under the Plan thereby providing Participants with a proprietary interest
in the growth and performance of the Company.

1.

Definitions.

(a)

"Board" - The Board of Directors of the Company.

(b)

"Code" - The Internal Revenue Code of 1986, as amended from time to time.

(c)

"Committee" - The Compensation Committee of the Company's Board, or such other
committee of the Board that is designated by the Board to administer the Plan,
composed of not less than two members of the Board all of whom are disinterested
persons, as contemplated by Rule 16b-3 ("Rule 16b-3") promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").

(d)

"Company" – Power3 Medical Products, inc. and its subsidiaries.

(e)

"Exchange Act" - The Securities Exchange Act of 1934, as amended from time to
time.

(f)

"Fair Market Value" - The fair market value of the Company's issued and
outstanding Stock as determined in good faith by the Board or Committee.

(g)

"Grant" - The grant of any stock award to a Participant pursuant to such terms,
conditions and limitations as the Committee may establish in order to fulfill
the objectives of the Plan.

(h)

"Grant Agreement" - An agreement between the Company and a Participant that sets
forth the terms, conditions and limitations applicable to a Grant.

(i)

“Option” – An Option to purchase the Company's Stock that may be awarded to a
Participant under the Plan. A Participant who receives an award of an Option
shall be referred to as an "Optionee."

(j)

"Participant" - An outside consultant, professional and service provider of the
Company to whom an Award has been made under the Plan.

(k)

"Securities Act" - The Securities Act of 1933, as amended from time to time.

--------------------------------------------------------------------------------

(l)

"Stock" - Authorized and issued or unissued shares of common stock of the
Company.

(m)

"Stock Award" - A Grant made under the Plan in Stock, Options to purchase Stock,
or denominated in units of stock for which the Participant is not obligated to
pay additional consideration.

2.

Administration.

The Plan shall be administered by the Board, provided however, that the Board
may delegate such administration to the Committee. Subject to the provisions of
the Plan, the Board and/or the Committee shall have authority to (a) grant, in
its discretion, Stock Awards; (b) determine in good faith the fair market value
of the Stock covered by any Grant; (c) determine which eligible persons shall
receive Grants and the number of shares, restrictions, terms and conditions to
be included in such Grants; (d) construe and interpret the Plan; (e) promulgate,
amend and rescind rules and regulations relating to its administration, and
correct defects, omissions and inconsistencies in the Plan or any Grant; (f)
consistent with the Plan and with the consent of the Participant, as
appropriate, amend any outstanding Grant; (g) determine the duration and purpose
of leaves of absence which may be granted to Participants without constituting
termination of their engagement for the purpose of the Plan or any Grant; and
(h) make all other determinations necessary or advisable for the Plan's
administration. The interpretation and construction by the Board of any
provisions of the Plan or selection of Participants shall be conclusive and
final. No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant made
thereunder.

3.

Eligibility.

The persons who shall be eligible to receive Grants shall be retain
non-executive employees, consultants, and advisors to the Company. The term
consultant shall mean any person, other than an employee, who is engaged by the
Company to render services and is compensated for such services.

4.

Stock.

(a)

Authorized Stock: Stock subject to Grants may be either unissued or reacquired
Stock.

(b)

Number of Shares:  The total number of shares of Stock which may be purchased or
granted directly by Options or Stock Awards or purchased indirectly through
exercise of Options granted under the Plan shall not exceed Five Million
(5,000,000) shares.  If any Grant shall for any reason terminate or expire, any
shares allocated thereto but remaining unpurchased upon such expiration or
termination shall again be available for Grants with respect thereto under the
Plan as though no Grant had previously occurred with respect to such shares. Any
shares of Stock issued pursuant

- 2 -

--------------------------------------------------------------------------------

to a Grant and repurchased pursuant to the terms thereof shall be available for
future Grants as though not previously covered by a Grant.

(c)

Reservation of Shares:  The Company shall reserve and keep available at all
times during the term of the Plan such number of shares as shall be sufficient
to satisfy the requirements of the Plan. If, after reasonable efforts, which
efforts shall not include the registration of the Plan or Grants under the
Securities Act, the Company is unable to obtain authority from any applicable
regulatory body, which authorization is deemed necessary by legal counsel for
the Company for the lawful issuance of shares hereunder, the Company shall be
relieved of any liability with respect to its failure to issue and sell the
shares for which such requisite authority was so deemed necessary unless and
until such authority is obtained.

5.

Stock Awards.

All or part of any Stock Award under the Plan may be subject to conditions
established by the Board or the Committee, and set forth in a Stock Award
Agreement, which may include, but are not limited to, continuous service with
the Company, achievement of specific business objectives, increases in specified
indices, attaining growth rates and other comparable measurements of Company
performance. Such Awards may be based on Fair Market Value or other specified
valuation. All Stock Awards will be made pursuant to the execution of a Stock
Award Agreement.

(a)

Conditions and Restrictions.  Shares of Stock which Participants may receive as
a Stock Award under a Stock Award Agreement may include such restrictions as the
Board or Committee, as applicable, shall determine, including restrictions on
transfer, repurchase rights, right of first refusal, and forfeiture provisions.
When transfer of Stock is so restricted or subject to forfeiture provisions it
is referred to as "Restricted Stock."  Further, with Board or Committee
approval, Stock Awards may be deferred, either in the form of installments or a
future lump sum distribution. The Board or Committee may permit selected
Participants to elect to defer distributions of Stock Awards in accordance with
procedures established by the Board or Committee to assure that such deferrals
comply with applicable requirements of the Code including, at the choice of
Participants, the capability to make further deferrals for distribution after
retirement. Any deferred distribution, whether elected by the Participant or
specified by the Stock Award Agreement or by the Board or Committee, may require
the payment be forfeited in accordance with the provisions of Section 5(b).
.Dividends or dividend equivalent rights may be extended to and made part of any
Stock Award, subject to such terms, conditions and restrictions as the Board or
Committee may establish.

(b)

Cancellation and Rescission of Grants.  Unless the Stock Award Agreement
specifies otherwise, the Board or Committee, as applicable, may cancel any
unvested or deferred Grants at any time if the Participant is not in compliance
with all other applicable provisions of the Stock Award Agreement, the Plan and
with the

- 3 -

--------------------------------------------------------------------------------

following conditions:

(i)

A Participant shall not render services for any organization or engage directly
or indirectly in any business which, in the judgment of the chief executive
officer of the Company or other senior officer designated by the Board or
Committee, is or becomes competitive with the Company, or which organization or
business, or the rendering of services to such organization or business, is or
becomes otherwise prejudicial to or in conflict with the interests of the
Company. For Participants whose engagement has terminated, the judgment of the
chief executive officer shall be based on the Participant's position and
responsibilities while employed by the Company, the Participant's
post-engagement responsibilities and position with the other organization or
business, the extent of past, current and potential competition or conflict
between the Company and the other organization or business, the effect on the
Company's customers, suppliers and competitors and such other considerations as
are deemed relevant given the applicable facts and circumstances. A Participant
who has retired shall be free, however, to purchase as an investment or
otherwise, stock or other securities of such organization or business so long as
they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than five percent (5%) equity
interest in the organization or business.

(ii)

A Participant shall not, without prior written authorization from the Company,
disclose to anyone outside the Company, or use in other than the Company's
business, any confidential information or material relating to the business of
the Company, acquired by the Participant either during or after engagement with
the Company.

(iii)

A Participant shall disclose promptly and assign to the Company all right, title
and interest in any invention or idea, patentable or not, made or conceived by
the Participant during engagement by the Company, relating in any manner to the
actual or anticipated business, research or development work of the Company and
shall do anything reasonably necessary to enable the Company to secure a patent
where appropriate in the United States and in foreign countries.

(iv)

Upon exercise, payment or delivery pursuant to a Grant, the Participant shall
certify on a form acceptable to the Committee that he or she is in compliance
with the terms and conditions of the Plan.

(c)

Nonassignability.

(i)

Except as set forth in Section 5(c)(ii), no Grant or any other benefit under the
Plan shall be assignable or transferable, or payable to, anyone other than the
Participant to whom it was granted.

(ii)

Where a Participant terminates engagement and retains a Grant pursuant to
Section 5(d)(ii) in order to assume a position with a governmental, charitable
or

- 4 -

--------------------------------------------------------------------------------

educational institution, the Board or Committee, in its discretion and to the
extent permitted by law, may authorize a third party (including but not limited
to the trustee of a "blind" trust), acceptable to the applicable governmental or
institutional authorities, the Participant and the Board or Committee, to act on
behalf of the Participant with regard to such Awards.

(d)

Termination of Engagement.  If the engagement or service to the Company of a
Participant terminates, other than pursuant to any of the following provisions
under this Section 5(d), all unvested or deferred Stock Awards shall be
cancelled immediately, unless the Stock Award Agreement provides otherwise:

(i)

Retirement Under a Company Retirement Plan.  When a Participant's engagement
terminates as a result of retirement in accordance with the terms of a Company
retirement plan, the Board or Committee may permit Stock Awards to continue in
effect beyond the date of retirement in accordance with the applicable Grant
Agreement and vesting of any such Grants may be accelerated.

(ii)

Rights in the Best Interests of the Company.  When a Participant resigns from
the Company and, in the judgment of the Board or Committee, the acceleration
and/or continuation of outstanding Stock Awards would be in the best interests
of the Company, the Board or Committee may (i) authorize, where appropriate, the
acceleration and/or continuation of all or any part of Grants issued prior to
such termination and (ii) permit the vesting of such Grants for such period as
may be set forth in the applicable Grant Agreement, subject to earlier
cancellation at such time as the Board or Committee shall deem the continuation
of all or any part of the Participant's Grants are not in the Company's best
interest.

(iii)

Death or Disability of a Participant.

(1)

In the event of a Participant's death, the Participant's estate or beneficiaries
shall have a period up to the expiration date specified in the Grant Agreement
within which to receive or exercise any outstanding Grant held by the
Participant under such terms as may be specified in the applicable Grant
Agreement. Rights to any such outstanding Grants shall pass by will or the laws
of descent and distribution in the following order: (a) to beneficiaries so
designated by the Participant; if none, then (b) to a legal representative of
the Participant; if none, then (c) to the persons entitled thereto as determined
by a court of competent jurisdiction. Grants so passing shall be made at such
times and in such manner as if the Participant were living.

(2)

In the event a Participant is deemed by the Board or Committee to be unable to
perform his or her usual duties by reason of mental disorder or medical
condition which does not result from facts which would be grounds for
termination for cause, Grants and rights to any such Grants may be paid to the
Participant, if legally competent, or a committee or other legally

- 5 -

--------------------------------------------------------------------------------

designated guardian or representative if the Participant is legally incompetent
by virtue of such disability.

(3)

After the death or disability of a Participant, the Board or Committee may in
its sole discretion at any time (1) terminate restrictions in Grant Agreements;
(2) accelerate any or all installments and rights; and (3) instruct the Company
to pay the total of any accelerated payments in a lump sum to the Participant,
the Participant's estate, beneficiaries or representative; notwithstanding that,
in the absence of such termination of restrictions or acceleration of payments,
any or all of the payments due under the Grant might ultimately have become
payable to other beneficiaries.

(4)

In the event of uncertainty as to interpretation of or controversies concerning
this Section 5, the determinations of the Board or Committee, as applicable,
shall be binding and conclusive.

6.

Investment Intent.  All Grants under the Plan are intended to be exempt from
registration under the Securities Act provided by Rule 701 thereunder. Unless
and until the sale and issuance of Stock subject to the Plan are registered
under the Securities Act or shall be exempt pursuant to the rules promulgated
thereunder, each Grant under the Plan shall provide that the purchases or other
acquisitions of Stock thereunder shall be for investment purposes and not with a
view to, or for resale in connection with, any distribution thereof. Further,
unless the issuance and sale of the Stock have been registered under the
Securities Act, each Grant shall provide that no shares shall be purchased upon
the exercise of the rights under such Grant unless and until (i) all then
applicable requirements of state and federal laws and regulatory agencies shall
have been fully complied with to the satisfaction of the Company and its
counsel, and (ii) if requested to do so by the Company, the person exercising
the rights under the Grant shall (i) give written assurances as to knowledge and
experience of such person (or a representative employed by such person) in
financial and business matters and the ability of such person (or
representative) to evaluate the merits and risks of receiving the Stock as
compensation, and (ii) execute and deliver to the Company a letter of investment
intent and/or such other form related to applicable exemptions from
registration, all in such form and substance as the Company may require. If
shares are issued upon exercise of any rights under a Grant without registration
under the Securities Act, subsequent registration of such shares shall relieve
the purchaser thereof of any investment restrictions or representations made
upon the exercise of such rights.

7.

Amendment, Modification, Suspension or Discontinuance of the Plan.  The Board
may, insofar as permitted by law, from time to time, with respect to any shares
at the time not subject to outstanding Grants, suspend or terminate the Plan or
revise or amend it in any respect whatsoever, except that without the approval
of the shareholders of the Company, no such revision or amendment shall (i)
increase the number of shares subject to the Plan, (ii) decrease the price at
which Grants may be granted, (iii) materially increase the benefits to
Participants, or (iv) change the class of persons eligible to receive Grants
under the Plan; provided, however, no such action shall alter or impair the
rights and obligations under any Stock Award outstanding as of the date thereof

- 6 -

--------------------------------------------------------------------------------

without the written consent of the Participant thereunder. No Grant may be
issued while the Plan is suspended or after it is terminated, but the rights and
obligations under any Grant issued while the Plan is in effect shall not be
impaired by suspension or termination of the Plan.

In the event of any change in the outstanding Stock by reason of a stock split,
stock dividend, combination or reclassification of shares, recapitalization,
merger, or similar event, the Board or the Committee may adjust proportionally
(a) the number of shares of Stock (i) reserved under the Plan, (ii) covered by
outstanding Stock Awards; (b) the Stock prices related to outstanding Grants;
and (c) the appropriate Fair Market Value and other price determinations for
such Grants. In the event of any other change affecting the Stock or any
distribution (other than normal cash dividends) to holders of Stock, such
adjustments as may be deemed equitable by the Board or the Committee, including
adjustments to avoid fractional shares, shall be made to give proper effect to
such event. In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Board or the
Committee shall be authorized to issue or assume stock options, whether or not
in a transaction to which Section 424(a) of the Code applies, and other Grants
by means of substitution of new Grant Agreements for previously issued Grants or
an assumption of previously issued Grants.

8.

Tax Withholding. The Company shall have the right to deduct applicable taxes
from any Grant payment and withhold, at the time of delivery or exercise of
Stock Awards or vesting of shares under such Grants, an appropriate number of
shares for payment of taxes required by law or to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. If Stock is used to satisfy tax withholding, such
stock shall be valued based on the Fair Market Value when the tax withholding is
required to be made.

9.

Availability of Information. During the term of the Plan and any additional
period during which a Grant granted pursuant to the Plan shall be payable, the
Company shall make available, not later than one hundred and twenty (120) days
following the close of each of its fiscal years, such financial and other
information regarding the Company as is required by the bylaws of the Company
and applicable law to be furnished in an annual report to the shareholders of
the Company.

10.

Notice. Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the chief personnel officer or to the chief
executive officer of the Company, and shall become effective when it is received
by the office of the chief personnel officer or the chief executive officer.

11.

Indemnification of Board. In addition to such other rights or indemnifications
as they may have as directors or otherwise, and to the extent allowed by
applicable law, the members of the Board and the Committee shall be indemnified
by the Company against the reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any claim,
action, suit or proceeding, or in connection with any appeal thereof, to which
they or any of them may be a party by reason of any

- 7 -

--------------------------------------------------------------------------------

action taken, or failure to act, under or in connection with the Plan or any
Grant granted thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such claim, action, suit or proceeding, except in any case in relation to
matters as to which it shall be adjudged in such claim, action, suit or
proceeding that such Board or Committee member is liable for negligence or
misconduct in the performance of his or her duties; provided that within sixty
(60) days after institution of any such action, suit or Board proceeding the
member involved shall offer the Company, in writing, the opportunity, at its own
expense, to handle and defend the same.

12.

Governing Law. The Plan and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Code or the securities laws
of the United States, shall be governed by the law of the State of Delaware and
construed accordingly.

[SIGNATURE PAGE FOLLOWS]

- 8 -

--------------------------------------------------------------------------------

The foregoing 2008 COMPENSATION PLAN (consisting of 8 pages, including this
page) was duly adopted and approved by the Board of Directors on June 6, 2008.

 

POWER3 MEDICAL PRODUCTS, INC.
a New York corporation

- 9 -

--------------------------------------------------------------------------------