Exhibit
10.1


 


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. NEITHER THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE REGULATORY
AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THIS NOTE.


 


PROMISSORY
NOTE


 


	
  $251,000.00

  	
   

  	
  The Woodlands, Texas

  
	
   

  	
   

  	
  April 5, 2005

  



 


FOR VALUE RECEIVED, POWER 3 MEDICAL PRODUCTS, INC., a
New York corporation (the “Maker”), promises to pay to the order of Cordillera
Fund L.P., a limited partnership (the “Payee”), pursuant to the terms and
conditions contained in this promissory note (this “Note”) the principal sum of
Two Hundred Fifty-One Thousand Dollars ($251,000.00), together with interest on
the unpaid principal balance from the date hereof until paid in full, if
applicable, at the rate and on the terms provided herein.


 


1.             Term
and Payment.  Principal and interest
of this Note shall be payable as follows:


 


(i)            The
entire unpaid principal balance of this Note shall be payable, in cash, within
one Business Day (as hereinafter defined) of the closing of the Maker’s
issuance and sale of $1,600,000 aggregate principal amount of debentures
pursuant to the Securities Purchase Agreement dated October 28, 2004, as
amended, which closing is to occur within five trading days of the effectiveness
of the Maker’s registration statement on Form SB-2 currently pending with the
U.S. Securities and Exchange Commission (the “Registration Statement Funding”);
provided, however, that if the Registration Statement Funding does not occur on
or before August 15, 2005, the entire unpaid principal balance of this Note
shall be due and payable in full on such date. 
The payment date of the principal is referred to as the “Payment Date.”


 


(ii)           Interest,
computed on the unpaid principal balance of this Note, shall be due and payable
at Payee’s option, as follows:


 


(A)          the accrued
and unpaid interest calculated in accordance with Section 2 below shall be
paid, in cash, concurrently upon the Payment Date; or


 


(B)           the
accrued and unpaid interest payable on this Note shall be considered paid, in
full, upon Maker’s issuance and delivery of restricted shares of Maker’s common
stock calculated by the following formula: $251,000 ÷ common stock price X 20%
= Number of Shares to be Issued, such issuance and delivery to occur on the
date which is 95 days following the effectiveness of the registration
statement, subject to the provisions of the Securities Purchase Agreement.


 


If the Payment of
interest or principal is due on a day that is not a Business Day (as hereinafter
defined), such payment shall be made on the first Business Day following such
payment date.  For purposes of this Note,
“Business Day” means any day other than Saturday, Sunday or any other day on
which national banking associations in the State of New York generally are
closed for commercial banking business.


 





















 


2.             Interest
Rate.  During the period ending on
the Payment Date (the “Payment Period”), the unpaid principal balance of this
Note shall bear simple interest at a per annum rate equal to ten percent (10%)
for such period determined in accordance with this Section 2. Notwithstanding
the foregoing, upon an Event of Default (as hereinafter defined) with respect
to the Payment and until such Event of Default shall have been cured, such
Payment shall bear interest at a rate of twelve percent (12%) per annum.  Interest shall be payable as provided in
Section 1 above.


 


3.             Event
of Default.  It is expressly provided
that upon failure in the punctual payment of the principal due hereunder, as
the same shall become due and payable, and the passage of thirty (30) days
following when such payment was due and payable, during which period the Maker
may make such payment(s) as are due and payable and prevent a default of this
Note, an “Event of Default” will have occurred. Upon an Event of Default and
until such Event of Default shall have been cured, the holder of this Note may,
at its option, without further notice or demand, (i) declare the outstanding
principal balance of this Note, and accrued but unpaid interest payable on this
Note in cash at the rate provided in Section 2 hereof, at once due and payable,
(ii) pursue any and all rights, remedies and recourses available to the holder
hereof, including but not limited to any such rights, remedies or recourses at
law or in equity, or (iii) pursue any combination of the foregoing; and in the
event default is made in the prompt payment of this Note when due or declared
due, and the same is placed in the hands of an attorney for collection, or suit
is brought on the same, or the same is collected through probate, bankruptcy or
other judicial proceedings, then the Maker agrees and promises to pay all costs
of collection, including reasonable attorney’s fees.


 


4.             Right
of Prepayment.  The Maker shall have
the right to prepay all or any part of the unpaid principal or interest hereon
at any time without premium or penalty. 
Any and all prepayments with respect to this Note shall be applied first
to payment of accrued interest as of the date of such prepayment and the
balance, if any, shall be applied in reduction of the unpaid principal.


 


5.             No
Right of Setoff.  THE PAYEE
ACKNOWLEDGES AND AGREES THAT THE MAKER HAS NO RIGHTS OF SETOFF AGAINST THE
PAYMENT AND THEREFORE SHALL NOT WITHHOLD OR REDUCE THE PAYMENT ON THIS NOTE BY
ANY AMOUNTS DUE FROM THE PAYEE TO THE MAKER.


 


6.             No
Usury Intended; Usury Savings Clause.  In no event shall interest contracted for,
charged or received hereunder, plus any other charges in connection herewith
which constitute interest, exceed the maximum interest permitted by applicable
law. The amounts of such interest or other charges previously paid to the
holder of the Note in excess of the amounts permitted by applicable law shall
be applied by the holder of the Note to reduce the principal of the
indebtedness evidenced by the Note, or, at the option of the holder of the
Note, be refunded. To the extent permitted by applicable law, determination of
the legal maximum amount of interest shall at all times be made by amortizing,
prorating, allocating and spreading in equal parts during the period of the
full stated term of the loan and indebtedness, all interest at any time
contracted for, charged or received from the Maker hereof in connection with
the loan and indebtedness evidenced hereby, so that the actual rate of interest
on account of such indebtedness is uniform throughout the term hereof.


 


7.             Transferability.  The Payee may not transfer, sell, assign,
pledge, hypothecate, bequeath, gift, create a lien on, place in trust, assign
or in any other way encumber or dispose of, directly or indirectly and whether
or not by operation of law or for value, this Note or the obligations
represented hereby (collectively, “transfer”) or any beneficial interest in
this Note or any of the obligations represented hereby without the Maker’s
prior written consent, which shall not be unreasonably withheld provided that
the transferee of this Note or any portion hereof (i) executes and delivers to
the Maker an appropriate document, satisfactory to the Maker, in which such
permitted transferee agrees that it shall be bound by the same transfer
restrictions set forth herein with respect to all or any portion of this Note
received by such permitted transferee and (ii) delivers to the Maker an opinion
of counsel or other evidence satisfactory to the Maker to the effect that the
proposed transfer may be made without registration under the Securities Act of
1933 or the securities laws of any state.


 


8.             Waivers.  The Maker hereby waives presentment, protest,
demand for payment, notice of dishonor and all other notices of any kind.  No waiver of any default shall operate as a
waiver of any other default or of the same default on any future occasion, and
no action to enforce payment hereunder nor any indulgences or other


 


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arrangements granted to
the Maker, including any extension of time for payment due thereon, shall
release, waive or otherwise affect any right of the owner or holder hereof.


 


9.             Governing
Law.  This Note will be governed by
the laws of the State of New York without giving effect to any choice or
conflict of law principles of any jurisdiction.


 


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rest of this page is intentionally left blank.]


 


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IN WITNESS WHEREOF, the Maker has caused this Note to
be executed as of the day and year first above written.


 


	
   

  	
  POWER 3 MEDICAL PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven B. Rash

  	
   

  
	
   

  	
  Name:

  	
  Steven B. Rash

  
	
   

  	
  Title:

  	
  Chairman/CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CORDILLERA FUND L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stephen J. Carter

  	
   

  
	
   

  	
  Name:

  	
  Stephen J. Carter

  
	
   

  	
  Title:

  	
  Co-CEO of Andrew Carter Capital

  
	
   

  	
   

  	
  The GP of ACCF Gen Par, L.P.

  
	
   

  	
   

  	
  The GP of the Cordillera Fund L.P.

  
						



 


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