**Exhibit 4.2**

 

**EXHIBIT C**

 

NEITHER THIS SECURITY NORTHE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTEREDWITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANYSTATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACTOF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BEOFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDERTHE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTIONNOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND INACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGALOPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICHSHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITYMAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOANSECURED BY SUCH SECURITIES.

 

**COMMON STOCK PURCHASE WARRANT**

 

To Purchase               Shares of Common Stock of

 

**Power 3 Medical Products, Inc.**

 

THIS COMMON STOCKPURCHASE WARRANT (the “Warrant”) certifies that, for value received,                        (the“Holder”), is entitled, upon the terms and subject to the limitations onexercise and the conditions hereinafter set forth, at any time on or after thedate hereof (the “Initial Exercise Date”) and on or prior to the closeof business on the fifth anniversary of the Initial Exercise Date (the “TerminationDate”) but not thereafter, to subscribe for and purchase from Power 3Medical Products, Inc., a New York corporation (the “Company”), upto             shares(the “Warrant Shares”) of Common Stock, par value $0.001 per share, ofthe Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shallbe equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.                                            Definitions.  Capitalized terms used and not otherwisedefined herein shall have the meanings set forth in that certain Securities PurchaseAgreement (the “Purchase Agreement”), dated October      , 2004, among the Company and the purchaserssignatory thereto.

 

Section 2.                                            Exercise.

 

a)                                      Exerciseof Warrant.  Exercise of the purchaserights represented by this Warrant may be made at any time or times on or afterthe Initial Exercise Date and on or before the Termination Date by delivery tothe Company of a duly executed facsimile copy of the Notice of Exercise Form annexed  hereto (orsuch other office or agency of the Company as it may designate by notice inwriting to the registered Holder at the address of such Holder appearing on thebooks of the Company); provided, however,

 

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within 5 Trading Days ofthe date said Notice of Exercise is delivered to the Company, the Holder shallhave surrendered this Warrant to the Company and the Company shall havereceived  payment of the aggregateExercise Price of the shares thereby purchased by wire transfer or cashier’scheck drawn on a United States bank.

 

b)                                     Exercise Price.  The exercise price of each share of CommonStock under this Warrant shall be **$               **(1), subject to adjustment hereunder (the “Exercise Price”).

 

c)                                      CashlessExercise.  If at any time after oneyear from the date of issuance of this Warrant there is no effective RegistrationStatement registering the resale of the Warrant Shares by the Holder, then thisWarrant may also be exercised at such time by means of a “cashless exercise” inwhich the Holder shall be entitled to receive a certificate for the number ofWarrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),where:

 

(A) = the Closing Price on the Trading Dayimmediately preceding the date of such election;

 

(B) =  the Exercise Price of this Warrant, asadjusted; and

 

(X) =  thenumber of Warrant Shares issuable upon exercise of this Warrant in accordancewith the terms of this Warrant by means of a cash exercise rather than acashless exercise.

 

d)                                     ExerciseLimitations; Holder’s Restrictions. The Holder shall not have the right to exercise any portion of thisWarrant, pursuant to Section 2(c) or otherwise, to the extent thatafter giving effect to such issuance after exercise, the Holder (together withthe Holder’s affiliates), as set forth on the applicable Notice of Exercise,would beneficially own in excess of 4.99% of the number of shares of the CommonStock outstanding immediately after giving effect to such issuance.  Forpurposes of the foregoing sentence, the number of shares of Common Stockbeneficially owned by the Holder and its affiliates shall include the number ofshares of Common Stock issuable upon exercise of this Warrant with respect towhich the determination of such sentence is being made, but shall exclude thenumber of shares of Common Stock which would be issuable upon (A) exerciseof the remaining, nonexercised portion of this Warrant beneficially owned bythe Holder or any of its affiliates and (B) exercise or conversion of theunexercised or nonconverted portion of any other securities of the Company(including, without limitation, any other Debentures or Warrants) subject to alimitation on conversion or exercise analogous to the limitation containedherein beneficially owned by the Holder or any of its affiliates.  Exceptas set forth in the preceding sentence, for purposes of this Section 2(d),beneficial ownership shall be calculated in accordance with Section 13(d) ofthe Exchange Act, it being acknowledged by Holder that the Company is notrepresenting to Holder that such calculation is in compliance with Section 13(d) ofthe Exchange Act and Holder is solely responsible for any schedules required tobe filed

 

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(1)          120% of theMarket Price.

 

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inaccordance therewith.   To the extentthat the limitation contained in this Section 2(d) applies, thedetermination of whether this Warrant is exercisable (in relation to othersecurities owned by the Holder) and of which portion of this Warrant isexercisable shall be in the sole discretion of such Holder, and the submissionof a Notice of Exercise shall be deemed to be such Holder’s determination ofwhether this Warrant is exercisable (in relation to other securities owned bysuch Holder) and of which portion of this Warrant is exercisable, in each casesubject to such aggregate percentage limitation, and the Company shall have noobligation to verify or confirm the accuracy of such determination.  For purposes of this Section 2(d), indetermining the number of outstanding shares of Common Stock, the Holder mayrely on the number of outstanding shares of Common Stock as reflected in (x)the Company’s most recent Form 10-QSB or Form 10-KSB, as the case maybe, (y) a more recent public announcement by the Company or (z) any othernotice by the Company or the Company’s Transfer Agent setting forth the numberof shares of Common Stock outstanding.  Upon the written or oral requestof the Holder, the Company shall within two Trading Days confirm orally and inwriting to the Holder the number of shares of Common Stock thenoutstanding.  In any case, the number of outstanding shares of CommonStock shall be determined after giving effect to the conversion or exercise ofsecurities of the Company, including this Warrant, by the Holder or itsaffiliates since the date as of which such number of outstanding shares ofCommon Stock was reported.

 

e)                                      Mechanicsof Exercise.

 

i.                                          Authorizationof Warrant Shares.  The Companycovenants that all Warrant Shares which may be issued upon the exercise of thepurchase rights represented by this Warrant will, upon exercise of the purchaserights represented by, and in accordance with the terms of, this Warrant, beduly authorized, validly issued, fully paid and nonassessable and free from alltaxes, liens and charges in respect of the issue thereof (other than taxes inrespect of any transfer occurring contemporaneously with such issue).  The Company covenants that during the periodthe Warrant is outstanding, it will reserve from its authorized and unissuedCommon Stock a sufficient number of shares to provide for the issuance of theWarrant Shares upon the exercise of any purchase rights under thisWarrant.  The Company further covenantsthat its issuance of this Warrant shall constitute full authority to itsofficers who are charged with the duty of executing stock certificates toexecute and issue the necessary certificates for the Warrant Shares upon theexercise of the purchase rights under, and in accordance with the terms of,this Warrant.  The Company will take allsuch reasonable action as may be necessary to assure that such Warrant Shares maybe issued as provided herein without violation of any applicable law orregulation, or of any requirements of the Trading Market upon which the CommonStock may be listed.

 

ii.                                       Deliveryof Certificates Upon Exercise.  Certificates for shares purchased hereundershall be transmitted by the transfer agent of the Company to the Holder bycrediting the account of the Holder’s prime

 

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broker with theDepository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”)system if the Company is a participant in such system, and otherwise byphysical delivery to the address specified by the Holder in the Notice ofExercise within 3 Trading Days from the delivery to the Company of the Noticeof Exercise Form, surrender of this Warrant and payment of the aggregateExercise Price as set forth above (“Warrant Share Delivery Date”).  This Warrant shall be deemed to have beenexercised on the date the Exercise Price is received by the Company.  The Warrant Shares shall be deemed to havebeen issued, and Holder or any other person so designated to be named thereinshall be deemed to have become a holder of record of such shares for allpurposes, as of the date the Warrant has been exercised by payment to theCompany of the Exercise Price and all taxes required to be paid by the Holder,if any, pursuant to Section 2(e)(vii) priorto the issuance of such shares, have been paid.

 

iii.                                    Deliveryof New Warrants Upon Exercise.  If this Warrant shall have been exercised inpart, the Company shall, at the time of delivery of the certificate orcertificates representing Warrant Shares, deliver to Holder a new Warrantevidencing the rights of Holder to purchase the unpurchased Warrant Sharescalled for by this Warrant, which new Warrant shall in all other respects be identicalwith this Warrant.

 

iv.                                   RescissionRights.  If the Company fails tocause its transfer agent to transmit to the Holder a certificate orcertificates representing the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date, then theHolder will have the right to rescind such exercise.

 

v.                                      Buy-InCompensation.  In addition to anyother rights available to the Holder, if the Company fails to cause itstransfer agent to transmit to the Holder a certificate or certificates representingthe Warrant Shares pursuant to an exercise on or before the Warrant ShareDelivery Date, and if after such date the Holder is required by its broker topurchase (in an open market transaction or otherwise) shares of Common Stock todeliver in satisfaction of a sale by the Holder of the Warrant Shares which theHolder anticipated receiving upon such exercise (a “Buy-In”), then theCompany shall (1) pay in cash to the Holder the amount by which (x) theHolder’s total purchase price (including brokerage commissions, if any) for theshares of Common Stock so purchased exceeds (y) the amount obtained bymultiplying (A) the number of Warrant Shares that the Company was requiredto deliver to the Holder in connection with the exercise at issue times (B) theprice at which the sell order giving rise to such purchase obligation wasexecuted, and (2) at the option of the Holder, either reinstate theportion of the Warrant and equivalent number of Warrant Shares for which suchexercise was not honored or deliver to the Holder the number of shares ofCommon Stock that would have been

 

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issuedhad the Company timely complied with its exercise and delivery obligationshereunder.  For example, if the Holderpurchases Common Stock having a total purchase price of $11,000 to cover aBuy-In with respect to an attempted exercise of shares of Common Stock with anaggregate sale price giving rise to such purchase obligation of $10,000, underclause (1) of the immediately preceding sentence the Company shall berequired to pay the Holder $1,000. The Holder shall provide the Company writtennotice indicating the amounts payable to the Holder in respect of the Buy-In,together with applicable confirmations and other evidence reasonably requestedby the Company.  Nothing herein shalllimit a Holder’s right to pursue any other remedies available to it hereunder,at law or in equity including, without limitation, a decree of specificperformance and/or injunctive relief with respect to the Company’s failure totimely deliver certificates representing shares of Common Stock upon exerciseof the Warrant as required pursuant to the terms hereof.

 

vi.                                   NoFractional Shares or Scrip.  Nofractional shares or scrip representing fractional shares shall be issued uponthe exercise of this Warrant.  As to anyfraction of a share which Holder would otherwise be entitled to purchase uponsuch exercise, the Company shall pay a cash adjustment in respect of such finalfraction in an amount equal to such fraction multiplied by the Exercise Price.

 

vii.                                Charges,Taxes and Expenses.  Issuance ofcertificates for Warrant Shares shall be made without charge to the Holder forany issue or transfer tax or other incidental expense in respect of theissuance of such certificate, all of which taxes and expenses shall be paid bythe Company, and such certificates shall be issued in the name of the Holder orin such name or names as may be directed by the Holder; provided, however,that in the event certificates for Warrant Shares are to be issued in a nameother than the name of the Holder, this Warrant when surrendered for exerciseshall be accompanied by the Assignment Form attached hereto duly executedby the Holder; and the Company may require, as a condition thereto, the paymentof a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

viii.                             Closingof Books.  The Company will not closeits stockholder books or records in any manner which prevents the timelyexercise of this Warrant, pursuant to the terms hereof.

 

Section 3.                                            CertainAdjustments.

 

a)                                      StockDividends and Splits. If the Company, at any time while this Warrant isoutstanding: (A) pays a stock dividend or otherwise make a distribution ordistributions on shares of its Common Stock or any other equity or equityequivalent securities payable in shares of Common Stock (which, for avoidanceof doubt, shall not

 

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include any shares ofCommon Stock issued by the Company pursuant to this Warrant, the Debentures orthe Additional Investment Rights), (B) subdivides outstanding shares ofCommon Stock into a larger number of shares, (C) combines (including byway of reverse stock split) outstanding shares of Common Stock into a smallernumber of shares, or (D) issues by reclassification of shares of theCommon Stock any shares of capital stock of the Company, then in each case theExercise Price shall be multiplied by a fraction of which the numerator shallbe the number of shares of Common Stock (excluding treasury shares, if any)outstanding before such event and of which the denominator shall be the numberof shares of Common Stock outstanding after such event and the number of sharesissuable upon exercise of this Warrant shall be proportionately adjusted.  Any adjustment made pursuant to this Section 3(a) shallbecome effective immediately after the record date for the determination ofstockholders entitled to receive such dividend or distribution and shall becomeeffective immediately after the effective date in the case of a subdivision,combination or re-classification.

 

b)                                     SubsequentEquity Sales. If the Company or any Subsidiary thereof, as applicable, atany time while this Warrant is outstanding, shall offer, sell, grant any optionto purchase or offer, sell or grant any right to reprice its securities, orotherwise dispose of or issue (or announce any offer, sale, grant or any optionto purchase or other disposition) any Common Stock or Common Stock Equivalentsentitling any Person to acquire shares of Common Stock, at an effective priceper share less than the then Exercise Price (such lower price, the “BaseShare Price” and such issuances collectively, a “Dilutive Issuance”),as adjusted hereunder (if the holder of the Common Stock or Common StockEquivalents so issued shall at any time, whether by operation of purchase priceadjustments, reset provisions, floating conversion, exercise or exchange pricesor otherwise, or due to warrants, options or rights per share which is issuedin connection with such issuance, be entitled to receive shares of Common Stockat an effective price per share which is less than the Exercise Price, suchissuance shall be deemed to have occurred for less than the Exercise Price),then, the Exercise Price shall be reduced to equal the Base Share Price. Suchadjustment shall be made whenever such Common Stock or Common Stock Equivalentsare issued.  The Company shall notify theHolder in writing, no later than the business day following the issuance of anyCommon Stock or Common Stock Equivalents subject to this section, indicatingtherein the applicable issuance price, or of applicable reset price, exchangeprice, conversion price and other pricing terms.

 

c)                                      ProRata Distributions.  If the Company,at any time prior to the Termination Date, shall distribute to all holders ofCommon Stock (and not to Holders of the Warrants) evidences of its indebtednessor assets or rights or warrants to subscribe for or purchase any security otherthan the Common Stock (which shall be subject to Section 3(b)), then ineach such case the Exercise Price shall be adjusted by multiplying the ExercisePrice in effect immediately prior to the record date fixed for determination ofstockholders entitled to receive such distribution by a fraction of which thedenominator shall be the Closing Price determined as of the record datementioned above, and of which the numerator shall be such Closing Price on suchrecord date less the then per share fair market value at such record date ofthe portion of such assets or evidence of indebtedness so distributedapplicable to one outstanding share of the Common Stock as

 

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determinedby the Board of Directors in good faith. In either case the adjustments shall be described in a statementprovided to the Holders of the portion of assets or evidences of indebtednessso distributed or such subscription rights applicable to one share of CommonStock.  Such adjustment shall be madewhenever any such distribution is made and shall become effective immediatelyafter the record date mentioned above.

 

d)                                     Calculations.All calculations under this Section 3 shall be made to the nearest cent orthe nearest 1/100th of a share, as the case may be.  For purposes of this Section 3, thenumber of shares of Common Stock outstanding as of a given date shall be thesum of the number of shares of Common Stock (excluding treasury shares, if any)outstanding.

 

e)                                      Noticeto Holders.

 

i.                                          Adjustmentto Exercise Price. Whenever the Exercise Price is adjusted pursuant to thisSection 3, the Company shall promptly mail to each Holder a notice settingforth the Exercise Price after such adjustment and setting forth a briefstatement of the facts requiring such adjustment. If the Company issues avariable rate security, despite the prohibition thereon in the PurchaseAgreement, the Company shall be deemed to have issued Common Stock or CommonStock Equivalents at the lowest possible conversion or exercise price at whichsuch securities may be converted or exercised in the case of a Variable RateTransaction (as defined in the Purchase Agreement), or the lowest possibleadjustment price in the case of an MFN Transaction (as defined in the PurchaseAgreement.

 

ii.                                       Noticeto Allow Exercise by Holder. If (A) the Company shall declare adividend (or any other distribution) on the Common Stock; (B) the Companyshall declare a special nonrecurring cash dividend on or a redemption of theCommon Stock; (C) the Company shall authorize the granting to all holdersof the Common Stock rights or warrants to subscribe for or purchase any sharesof capital stock of any class or of any rights; (D) the approval of anystockholders of the Company shall be required in connection with anyreclassification of the Common Stock, any consolidation or merger to which theCompany is a party, any sale or transfer of all or substantially all of the assetsof the Company, of any compulsory share exchange whereby the Common Stock isconverted into other securities, cash or property; (E) the Company shallauthorize the voluntary or involuntary dissolution, liquidation or winding upof the affairs of the Company; then, in each case, the Company shall cause tobe mailed to the Holder at its last addresses as it shall appear upon theWarrant Register of the Company, at least 20 calendar days prior to theapplicable record or effective date hereinafter specified, a notice stating (x)the date on which a record is to be taken for the purpose of such dividend,distribution, redemption, rights or warrants, or if a record is not to betaken, the date as of which the holders of the Common Stock of

 

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record to be entitled tosuch dividend, distributions, redemption, rights or warrants are to bedetermined or (y) the date on which such reclassification, consolidation,merger, sale, transfer or share exchange is expected to become effective orclose, and the date as of which it is expected that holders of the Common Stockof record shall be entitled to exchange their shares of the Common Stock forsecurities, cash or other property deliverable upon such reclassification,consolidation, merger, sale, transfer or share exchange; provided, thatthe failure to mail such notice or any defect therein or in the mailing thereofshall not affect the validity of the corporate action required to be specifiedin such notice.  The Holder is entitledto exercise this Warrant during the 20-day period commencing the date of suchnotice to the effective date of the event triggering such notice.

 

f)                                        FundamentalTransaction. If, at any time while this Warrant is outstanding, (A) theCompany effects any merger or consolidation of the Company with or into anotherPerson, (B) the Company effects any sale of all or substantially all ofits assets in one or a series of related transactions, (C) any tenderoffer or exchange offer (whether by the Company or another Person) is completedpursuant to which holders of Common Stock are permitted to tender or exchangetheir shares for other securities, cash or property, or (D) the Companyeffects any reclassification of the Common Stock or any compulsory shareexchange pursuant to which the Common Stock is effectively converted into orexchanged for other securities, cash or property (in any such case, a “FundamentalTransaction”), then, upon any subsequent conversion of this Warrant, theHolder shall have the right to receive, for each Warrant Share that would havebeen issuable upon such exercise absent such Fundamental Transaction, thenumber of shares of Common Stock of the successor or acquiring corporation orof the Company, if it is the surviving corporation, and Alternate Considerationreceivable upon or as a result of such reorganization, reclassification,merger, consolidation or disposition of assets by a Holder of the number ofshares of Common Stock for which this Warrant is exercisable immediately priorto such event (the “Alternate Consideration”).  For purposes of any such exercise, thedetermination of the Exercise Price shall be appropriately adjusted to apply tosuch Alternate Consideration based on the amount of Alternate Considerationissuable in respect of one share of Common Stock in such FundamentalTransaction, and the Company shall apportion the Exercise Price among theAlternate Consideration in a reasonable manner reflecting the relative value ofany different components of the Alternate Consideration.  If holders of Common Stock are given anychoice as to the securities, cash or property to be received in a FundamentalTransaction, then the Holder shall be given the same choice as to the AlternateConsideration it receives upon any exercise of this Warrant following suchFundamental Transaction.  To the extentnecessary to effectuate the foregoing provisions, any successor to the Companyor surviving entity in such Fundamental Transaction shall issue to the Holder anew warrant consistent with the foregoing provisions and evidencing the Holder’sright to exercise such warrant into Alternate Consideration. The terms of anyagreement pursuant to which a Fundamental Transaction is effected shall includeterms requiring any such successor or surviving entity to comply with theprovisions of this paragraph (f) and insuring that this

 

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Warrant (or any suchreplacement security) will be similarly adjusted upon any subsequenttransaction analogous to a Fundamental Transaction.

 

g)                                     ExemptIssuance. Notwithstanding the foregoing, no adjustments, AlternateConsideration nor notices shall be made, paid or issued under this Section 3in respect of an Exempt Issuance.

 

h)                                     VoluntaryAdjustment By Company. The Company may at any timeduring the term of this Warrant reduce the then current Exercise Price to anyamount and for any period of time deemed appropriate by the Board of Directorsof the Company.

 

Section 4.                                            Transfer of Warrant.

 

a)                                      Transferability.  Subject to compliance with any applicablesecurities laws and the conditions set forth in Sections 5(a) and 4(d) hereofand to the provisions of Section 4.1 of the Purchase Agreement, thisWarrant and all rights hereunder are transferable, in whole or in part, uponsurrender of this Warrant at the principal office of the Company, together witha written assignment of this Warrant substantially in the form attached heretoduly executed by the Holder or its agent or attorney and funds sufficient topay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, suchpayment, the Company shall execute and deliver a new Warrant or Warrants in thename of the assignee or assignees and in the denomination or denominationsspecified in such instrument of assignment, and shall issue to the assignor anew Warrant evidencing the portion of this Warrant not so assigned, and thisWarrant shall promptly be cancelled.  AWarrant, if properly assigned, may be exercised by a new holder for thepurchase of Warrant Shares without having a new Warrant issued.

 

b)                                     NewWarrants. This Warrant may be divided or combined with other Warrants uponpresentation hereof at the aforesaid office of the Company, together with awritten notice specifying the names and denominations in which new Warrants areto be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a),as to any transfer which may be involved in such division or combination, theCompany shall execute and deliver a new Warrant or Warrants in exchange for theWarrant or Warrants to be divided or combined in accordance with such notice.

 

c)                                      WarrantRegister. The Company shall register this Warrant, upon records to bemaintained by the Company for that purpose (the “Warrant Register”), inthe name of the record Holder hereof from time to time.  The Company may deem and treat the registeredHolder of this Warrant as the absolute owner hereof for the purpose of anyexercise hereof or any distribution to the Holder, and for all other purposes,absent actual notice to the contrary.

 

d)                                     TransferRestrictions. If, at the time of the surrender of this Warrant inconnection with any transfer of this Warrant, the transfer of this Warrantshall not be registered pursuant to an effective registration statement underthe Securities Act and under applicable state securities or blue sky laws, theCompany may require, as a condition of allowing such transfer (i) that theHolder or transferee of this Warrant, as the

 

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case may be, furnish tothe Company a written opinion of counsel (which opinion shall be in form,substance and scope customary for opinions of counsel in comparabletransactions) to the effect that such transfer may be made without registrationunder the Securities Act and under applicable state securities or blue skylaws, (ii) that the holder or transferee execute and deliver to theCompany an investment letter in form and substance acceptable to the Companyand (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1),(a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act ora qualified institutional buyer as defined in Rule 144A(a) under theSecurities Act.

 

Section 5.                                            Miscellaneous.

 

a)                                      Titleto Warrant.  Prior to the TerminationDate and subject to compliance with applicable laws and Section 4 of this Warrant,this Warrant and all rights hereunder are transferable, in whole or in part, atthe office or agency of the Company by the Holder in person or by dulyauthorized attorney, upon surrender of this Warrant together with theAssignment Form annexed hereto properly endorsed.  The transferee shall sign an investmentletter in form and substance reasonably satisfactory to the Company.

 

b)                                     NoRights as Shareholder Until Exercise.  This Warrant does not entitle the Holder toany voting rights or other rights as a shareholder of the Company prior to theexercise hereof.  Upon the surrender ofthis Warrant and the payment of the aggregate Exercise Price (or by means of acashless exercise), the Warrant Shares so purchased shall be and be deemed tobe issued to such Holder as the record owner of such shares as of the close ofbusiness on the later of the date of such surrender or payment.

 

c)                                      Loss,Theft, Destruction or Mutilation of Warrant. The Company covenants thatupon receipt by the Company of evidence reasonably satisfactory to it of theloss, theft, destruction or mutilation of this Warrant or any stock certificaterelating to the Warrant Shares, and in case of loss, theft or destruction, ofindemnity or security reasonably satisfactory to it (which, in the case of theWarrant, shall not include the posting of any bond), and upon surrender andcancellation of such Warrant or stock certificate, if mutilated, the Companywill make and deliver a new Warrant or stock certificate of like tenor anddated as of such cancellation, in lieu of such Warrant or stock certificate.

 

d)                                     Saturdays,Sundays, Holidays, etc.  If the lastor appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall be a Saturday, Sunday or a legal holiday, thensuch action may be taken or such right may be exercised on the next succeedingday not a Saturday, Sunday or legal holiday.

 

e)                                      AuthorizedShares.

 

The Company covenantsthat during the period the Warrant is outstanding, it will reserve from itsauthorized and unissued Common Stock a sufficient number of shares to providefor the issuance of the Warrant Shares upon the exercise of any purchase rightsunder this Warrant.  The Company furthercovenants that its issuance of this Warrant shall constitute full authority toits

 

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officerswho are charged with the duty of executing stock certificates to execute andissue the necessary certificates for the Warrant Shares upon the exercise ofthe purchase rights under, and in accordance with the terms of, thisWarrant.  The Company will take all suchreasonable action as may be necessary to assure that such Warrant Shares may beissued as provided herein without violation of any applicable law orregulation, or of any requirements of the Trading Market upon which the CommonStock may be listed.

 

Except and to the extentas waived or consented to by the Holder, the Company shall not by any action,including, without limitation, amending its certificate of incorporation orthrough any reorganization, transfer of assets, consolidation, merger,dissolution, issue or sale of securities or any other voluntary action, avoidor seek to avoid the observance or performance of any of the terms of thisWarrant, but will at all times in good faith assist in the carrying out of allsuch terms and in the taking of all such actions as may be necessary orappropriate to protect the rights of Holder as set forth in this Warrantagainst impairment.  Without limiting thegenerality of the foregoing, the Company will (a) not increase the parvalue of any Warrant Shares above the amount payable therefor upon suchexercise immediately prior to such increase in par value, (b) take allsuch action as may be necessary or appropriate in order that the Company mayvalidly and legally issue fully paid and nonassessable Warrant Shares upon theexercise of this Warrant, and (c) use commercially reasonable efforts toobtain all such authorizations, exemptions or consents from any publicregulatory body having jurisdiction thereof as may be necessary to enable theCompany to perform its obligations under this Warrant.

 

Before taking any actionwhich would result in an adjustment in the number of Warrant Shares for whichthis Warrant is exercisable or in the Exercise Price, the Company shall obtainall such authorizations or exemptions thereof, or consents thereto, as may benecessary from any public regulatory body or bodies having jurisdictionthereof.

 

f)                                        GoverningLaw.  All questions concerning theconstruction, validity, enforcement and interpretation of this Warrant shall begoverned by and construed and enforced in accordance with the internal laws ofthe State of New York, without regard to the principles of conflicts of lawthereof.  Each party agrees that alllegal proceedings concerning the interpretations, enforcement and defense ofthe transactions contemplated by this Warrant (whether brought against a partyhereto or its respective affiliates, directors, officers, shareholders,employees or agents) shall be commenced exclusively in the state and federalcourts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction ofthe state and federal courts sitting in the City of New York, borough of Manhattanfor the adjudication of any dispute hereunder or in connection herewith or withany transaction contemplated hereby or discussed herein, and hereby irrevocablywaives, and agrees not to assert in any suit, action or proceeding, any claimthat it is not personally subject to the jurisdiction of any such court, thatsuch suit, action or proceeding is improper or inconvenient venue for suchproceeding.  Each party herebyirrevocably waives personal service of process and

 

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consents to process beingserved in any such suit, action or proceeding by mailing a copy thereof viaregistered or certified mail or overnight delivery (with evidence of delivery)to such party at the address in effect for notices to it under this Warrant andagrees that such service shall constitute good and sufficient service ofprocess and notice thereof.  Nothingcontained herein shall be deemed to limit in any way any right to serve processin any manner permitted by law.  Theparties hereby waive, to the fullest extent permitted by applicable law, allrights to a trial by jury.  If eitherparty shall commence an action or proceeding to enforce any provisions of thisWarrant, then the prevailing party in such action or proceeding shall bereimbursed by the other party for its attorneys’ fees and other costs andexpenses incurred with the investigation, preparation and prosecution of suchaction or proceeding.

 

g)                                     Restrictions.  The Holder acknowledges that the WarrantShares acquired upon the exercise of this Warrant, if not registered, will haverestrictions upon resale imposed by state and federal securities laws.

 

h)                                     Nonwaiverand Expenses.  No course of dealingor any delay or failure to exercise any right hereunder on the part of Holdershall operate as a waiver of such right or otherwise prejudice Holder’s rights,powers or remedies, notwithstanding the fact that all rights hereunderterminate on the Termination Date.  Ifthe Company willfully and knowingly fails to comply with any provision of thisWarrant, which results in any material damages to the Holder, the Company shallpay to Holder such amounts as shall be sufficient to cover any costs andexpenses including, but not limited to, reasonable attorneys’ fees, includingthose of appellate proceedings, incurred by Holder in collecting any amountsdue pursuant hereto or in otherwise enforcing any of its rights, powers orremedies hereunder.

 

i)                                         Notices.  Any notice, request or other documentrequired or permitted to be given or delivered to the Holder by the Companyshall be delivered in accordance with the notice provisions of the PurchaseAgreement.

 

j)                                         Limitationof Liability.  No provision hereof,in the absence of any affirmative action by Holder to exercise this Warrant orpurchase Warrant Shares, and no enumeration herein of the rights or privilegesof Holder, shall give rise to any liability of Holder for the purchase price ofany Common Stock or as a stockholder of the Company, whether such liability isasserted by the Company or by creditors of the Company.

 

k)                                      Remedies.  Holder, in addition to being entitled toexercise all rights granted by law, including recovery of damages, will beentitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damageswould not be adequate compensation for any loss incurred by reason of a breachby it of the provisions of this Warrant and hereby agrees to waive the defensein any action for specific performance that a remedy at law would be adequate.

 

l)                                         Successorsand Assigns.  Subject to applicablesecurities laws, this Warrant and the rights and obligations evidenced herebyshall inure to the benefit of and be binding upon the successors of the Companyand the successors and permitted assigns

 

----

 

ofHolder.  The provisions of this Warrantare intended to be for the benefit of all Holders from time to time of thisWarrant and shall be enforceable by any such Holder or holder of WarrantShares.

 

m)                                   Amendment.  This Warrant may be modified or amended orthe provisions hereof waived with the written consent of the Company and theHolder.

 

n)                                     Severability.  Wherever possible, each provision of thisWarrant shall be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Warrant shall be prohibited by orinvalid under applicable law, such provision shall be ineffective to the extentof such prohibition or invalidity, without invalidating the remainder of suchprovisions or the remaining provisions of this Warrant.

 

o)                                     Headings.  The headings used in this Warrant are for theconvenience of reference only and shall not, for any purpose, be deemed a partof this Warrant.

 

********************

 

----

 

IN WITNESSWHEREOF, the Company has caused this Warrant to be executed by its officerthereunto duly authorized.

 

Dated:  October     , 2004

 

 
| ** ** | **POWER 3 MEDICAL  PRODUCTS, INC.** |
|------------|-------------------------------------|
| ** ** | ** **                          |
|       |                                |
|       | By:                                 |   |   |
|       |                                | Name: |   |
|       |                                | Title: |   |

 

----

 

**NOTICE OF EXERCISE**

 

TO: POWER 3 MEDICALPRODUCTS, INC.

 

(1)          The undersigned herebyelects to purchase            Warrant Shares of the Company pursuant to the terms of the attached Warrant (onlyif exercised in full), and tenders herewith payment of the exercise price infull, together with all applicable transfer taxes, if any.

 

(2)          Payment shall take theform of (check applicable box):

 

oin lawful money of the United States; or

 

othe cancellation of such number of Warrant Shares asis necessary, in accordance with the formula set forth in subsection 2(c),to exercise this Warrant with respect to the maximum number of Warrant Sharespurchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)          Please issue acertificate or certificates representing said Warrant Shares in the name of theundersigned or in such other name as is specified below:

 

 

 

The Warrant Shares shallbe delivered to the following:

 

 

 

 

 

 

(4)          AccreditedInvestor.  The undersigned is an “accreditedinvestor” as defined in Regulation D promulgated under the Securities Act of1933, as amended.

 
|   | [PURCHASER] |
|--------|-------------|
|   |        |
|   | By:         |   |   |
|   | Name:       |
|   | Title:      |
|   |        |
|   |        |   | Dated: |   |   |
|        |             |  |  |  |  |  |  |

 

15

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**ASSIGNMENT FORM**

 

(To assign the foregoing warrant, executethis form and supply required information. Do not use this form to exercise the warrant.)

 

FOR VALUERECEIVED, the foregoing Warrant and all rights evidenced thereby are herebyassigned to

 
|                   |  whose address is    |   |
|------------------------|---------------------------|--------|
|                   | .                         |
|                   |                      |
|                   |                      |
|                   |                      |
|                   | Dated:                    |   | , |   |   |
|                   |                      |
|                   | Holder’s  Signature: |   |   |
|                   |                      |   |   |
|                   | Holder’s  Address:   |   |   |
|                   |                      |   |   |
|                   |                      |   |   |
|                   |                      |
|                   |                      |
| Signature  Guaranteed: |                      |   |
|                        |                           |        |  |  |  |  |  |  |  |  |

 

NOTE:  The signature to this Assignment Form mustcorrespond with the name as it appears on the face of the Warrant, withoutalteration or enlargement or any change whatsoever, and must be guaranteed by abank or trust company.  Officers ofcorporations and those acting in a fiduciary or other representative capacityshould file proper evidence of authority to assign the foregoing Warrant.

 

16

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SCHEDULE TO

 

FORM OF COMMON STOCK PURCHASE WARRANT

 

The Company has issued Common Stock Purchase Warrants to the following listed holders. The terms of the Common Stock Purchase Warrants are identical except for the name of the holder and the number of shares of the Company’s Common Stock issuable upon exercise of the warrant.

 
| **HOLDER**                                  | ** ** | **NUMBER OF WARRANT SHARES** | ** ** |
|---------------------------------------------|------------|------------------------------|------------|
|                                        |       |                         |       |
| Bach Farms LLC                              |       | 4,167                        |       |
|                                        |       |                         |       |
| Cityplatz Limited                           |       | 125,000                      |       |
|                                        |       |                         |       |
| Crescent International Ltd.                 |       | 500,000                      |       |
|                                        |       |                         |       |
| Crestview Capital Master, LLC               |       | 375,000                      |       |
|                                        |       |                         |       |
| DKR SoundShore Oasis Holding Fund Ltd.      |       | 125,000                      |       |
|                                        |       |                         |       |
| Gryphon Master Fund L.P.                    |       | 250,000                      |       |
|                                        |       |                         |       |
| GSSF Master Fund, LP                        |       | 250,000                      |       |
|                                        |       |                         |       |
| Mohawk Funding                              |       | 25,000                       |       |
|                                        |       |                         |       |
| Omicron Master Trust                        |       | 250,000                      |       |
|                                        |       |                         |       |
| Otape Investments LLC                       |       | 250,000                      |       |
|                                        |       |                         |       |
| Platinum Partners Value Arbitrage Fund L.P. |       | 208,333                      |       |
|                                        |       |                         |       |
| Richard Molinsky                            |       | 75,000                       |       |
|                                        |       |                         |       |
| Sage Capital Investments Limited            |       | 62,500                       |       |

 

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