**Exhibit 10.9**

 

**EXHIBIT B**

 

**REGISTRATION RIGHTS AGREEMENT**

 

ThisRegistration Rights Agreement (this “Agreement”) is made and enteredinto as of October 28, 2004, among Power 3 Medical Products, Inc., a New Yorkcorporation (the “Company”), and the purchasers signatory hereto (eachsuch purchaser is a “Purchaser” and all such purchasers are,collectively, the “Purchasers”).

 

This Agreementis made pursuant to the Securities Purchase Agreement, dated as of the datehereof among the Company and the Purchasers (the “Purchase Agreement”).

 

The Companyand the Purchasers hereby agree as follows:

 

1. Definitions

 

**Capitalized terms used and not otherwisedefined herein that are defined in the Purchase Agreement shall have themeanings given such terms in the Purchase Agreement.**As used in this Agreement, the following terms shall have the followingmeanings:

 

“Advice” shall have the meaning set forth in Section 6(d).

 

“Effectiveness Date” means, with respect to the initialRegistration Statement required to be filed hereunder, the 90thcalendar day following the First Closing Date (120th calendar day inthe event the Registration Statement is reviewed by the Commission) and, withrespect to any additional Registration Statements which may be requiredpursuant to Section 3(c), the 90th calendar day following the dateon which the Company first knows, or reasonably should have known, that suchadditional Registration Statement is required hereunder (120thcalendar day in the event the Registration Statement is reviewed by theCommission); provided, however, in the event the Company isnotified by the Commission that one of the above Registration Statements willnot be reviewed or is no longer subject to further review and comments, theEffectiveness Date as to such Registration Statement shall be the fifth TradingDay following the date on which the Company is so notified if such dateprecedes the dates required above.

 

“Effectiveness Period” shall have the meaning set forth inSection 2(a).

 

“Event” shall have the meaning set forth in Section 2(b).

 

“Event Date” shall have the meaning set forth in Section 2(b).

 

“Filing Date” means, with respect to the initial RegistrationStatement required hereunder, the 45th calendar day following theFirst Closing Date and, with respect to any additional Registration Statementswhich may be required pursuant to Section 3(c), the

 

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20thday following the date on which the Company first knows, or reasonably shouldhave known that such additional Registration Statement is required hereunder.

 

“Holder” or “Holders” means the holder or holders, as thecase may be, from time to time of Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section5(c).

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“Proceeding” means an action, claim, suit, investigation orproceeding (including, without limitation, an investigation or partialproceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in a RegistrationStatement (including, without limitation, a prospectus that includes anyinformation previously omitted from a prospectus filed as part of an effectiveregistration statement in reliance upon Rule 430A promulgated under theSecurities Act), as amended or supplemented by any prospectus supplement, withrespect to the terms of the offering of any portion of the RegistrableSecurities covered by a Registration Statement, and all other amendments andsupplements to the Prospectus, including post-effective amendments, and allmaterial incorporated by reference or deemed to be incorporated by reference insuch Prospectus.

 

“Registrable Securities” means (i) all of the shares of CommonStock issuable at the Closings or upon conversion in full of the Debentures,(ii) all Warrant Shares, (iii) all of the Additional Investment Right Shares,(iv) any securities issued or issuable upon any stock split, dividend or otherdistribution recapitalization or similar event with respect to the foregoingand (v) any additional shares issuable in connection with any anti-dilutionprovisions in the Debentures or the Warrants.

 

“Registration Statement” means the registration statementsrequired to be filed hereunder and any additional registration statementscontemplated by Section 3(c), including (in each case) the Prospectus,amendments and supplements to such registration statement or Prospectus,including pre- and post-effective amendments, all exhibits thereto, and allmaterial incorporated by reference or deemed to be incorporated by reference insuch registration statement.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuantto the Securities Act, as such Rule may be amended from time to time, or anysimilar rule or regulation hereafter adopted by the Commission havingsubstantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuantto the Securities Act, as such Rule may be amended from time to time, or anysimilar rule or

 

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regulationhereafter adopted by the Commission having substantially the same purpose andeffect as such Rule.

 

2. Shelf Registration

 

(a) On or prior to each Filing Date, theCompany shall prepare and file with the Commission a “Shelf” RegistrationStatement covering the resale of 125% of the Registrable Securities on suchFiling Date for an offering to be made on a continuous basis pursuant to Rule415.  The Registration Statement shall beon Form S-3 (except if the Company is not then eligible to register for resalethe Registrable Securities on Form S-3, in which case such registration shallbe on another appropriate form in accordance herewith) and shall contain (unlessotherwise directed by the Holders) substantially the “Plan of Distribution”attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall use its bestefforts to cause the Registration Statement to be declared effective under theSecurities Act as promptly as possible after the filing thereof, but in anyevent prior to the applicable Effectiveness Date, and shall use its bestefforts to keep such Registration Statement continuously effective under theSecurities Act until all Registrable Securities covered by such RegistrationStatement have been sold or may be sold without volume restrictions pursuant toRule 144(k) as determined by the counsel to the Company pursuant to a writtenopinion letter to such effect, addressed and acceptable to the Company’stransfer agent and the affected Holders (the “Effectiveness Period”).  The Company shall notify the Holders viafacsimile of the effectiveness of the Registration Statement within 1 TradingDay of the day that the Company receives notification of the effectiveness fromthe Commission.  Failure to so notify theHolder within 1 Trading Day of such notification shall be deemed an Event underSection 2(b).

 

(b) If: (i) a Registration Statement is notfiled on or prior to its Filing Date (if the Company files a RegistrationStatement without affording the Holders the opportunity to review and commenton the same as required by Section 3(a), the Company shall not be deemed tohave satisfied this clause (i)), or (ii) the Company fails to file with theCommission a request for acceleration in accordance with Rule 461 promulgatedunder the Securities Act, within five Trading Days of the date that the Companyis notified (orally or in writing, whichever is earlier) by the Commission thata Registration Statement will not be “reviewed,” or not subject to furtherreview, or (iii) prior to its Effectiveness Date, the Company fails to file apre-effective amendment and otherwise respond in writing to comments made bythe Commission in respect of such Registration Statement within 10 calendardays after the receipt of comments by or notice from the Commission that suchamendment is required in order for a Registration Statement to be declaredeffective, or (iv) a Registration Statement filed or required to be filedhereunder is not declared effective by the Commission by its EffectivenessDate, or (v) after the Effectiveness Date, a Registration Statement ceases forany reason to remain continuously effective as to all Registrable Securitiesfor which it is required to be effective, or the Holders are not permitted toutilize the Prospectus therein to resell such Registrable Securities for 10consecutive calendar days but no more than an aggregate of 45 calendar daysduring any 12-month period (which need not be consecutive Trading Days) (anysuch failure or breach being referred to as an “Event”, and for purposes of clause (i) or (iv) the date onwhich such Event occurs, or for purposes of clause (ii) the date on which suchfive Trading Day period is exceeded,

 

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or for purposes of clause (iii) the date which such 10 calendar dayperiod is exceeded, or for purposes of clause (v) the date on which such 10 or45 calendar day period, as applicable, is exceeded being referred to as “Event Date”), then in additionto any other rights the Holders may have hereunder or under applicable law, oneach such Event Date and on each monthly anniversary of each such Event Date(if the applicable Event shall not have been cured by such date) until theapplicable Event is cured, the Company shall pay to each Holder an amount incash, as partial liquidated damages and not as a penalty, equal to 2.0% of theaggregate purchase price paid by such Holder pursuant to the Purchase Agreementfor any Registrable Securities then held by such Holder.  If the Company fails to pay any partialliquidated damages pursuant to this Section in full within seven days after thedate payable, the Company will pay interest thereon at a rate of 18% per annum(or such lesser maximum amount that is permitted to be paid by applicable law)to the Holder, accruing daily from the date such partial liquidated damages aredue until such amounts, plus all such interest thereon, are paid in full. Thepartial liquidated damages pursuant to the terms hereof shall apply on a dailypro-rata basis for any portion of a month prior to the cure of an Event.

 

3. RegistrationProcedures

 

In connectionwith the Company’s registration obligations hereunder, the Company shall:

 

(a)           Not less than fiveTrading Days prior to the filing of each Registration Statement or any relatedProspectus and not less than two Trading Days before the filing of anyamendment or supplement thereto (including any document that would be incorporatedor deemed to be incorporated therein by reference), the Company shall, (i)furnish to each Holder copies of all such documents proposed to be filed, whichdocuments (other than those incorporated or deemed to be incorporated byreference) will be subject to the review of such Holders, and (ii) cause itsofficers and directors, counsel and independent certified public accountants torespond to such inquiries as shall be necessary, in the reasonable opinion ofrespective counsel to conduct a reasonable investigation within the meaning ofthe Securities Act. The Company shall not file the Registration Statement orany such Prospectus or any amendments or supplements thereto to which theHolders of a majority of the Registrable Securities shall reasonably object ingood faith, provided that, the Company is notified of such objection in writingno later than 5 Trading Days, or 2 Trading Days, as applicable, after theHolders have been so furnished copies of such documents. Each Holder agrees tofurnish to the Company such information as the Company may reasonably requireto effect such Registration, including a completed Questionnaire substantiallyin the form attached to this Agreement as Annex B (a **“**SellingHolder Questionnaire**”**) not lessthan two Trading Days prior to the Filing Date or by the end of the fourthTrading Day following the date on which such Holder receives draft materials inaccordance with this Section.

 

(b)           (i) Prepare and filewith the Commission such amendments, including post-effective amendments, to aRegistration Statement and the Prospectus used in connection therewith as maybe necessary to keep a Registration Statement continuously effective as to theapplicable Registrable Securities for the Effectiveness Period and prepare and filewith the Commission such additional Registration Statements in order toregister for resale under the

 

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Securities Actall of the Registrable Securities; (ii) cause the related Prospectus to beamended or supplemented by any required Prospectus supplement (subject to theterms of this Agreement), and as so supplemented or amended to be filedpursuant to Rule 424; (iii) respond as promptly as reasonably possible to anycomments received from the Commission with respect to a Registration Statementor any amendment thereto and as promptly as reasonably possible provide theHolders true and complete copies of all correspondence from and to theCommission relating to a Registration Statement; and (iv) comply in allmaterial respects with the provisions of the Securities Act and the ExchangeAct with respect to the disposition of all Registrable Securities covered by aRegistration Statement during the applicable period in accordance (subject tothe terms of this Agreement) with the intended methods of disposition by theHolders thereof set forth in such Registration Statement as so amended or insuch Prospectus as so supplemented.

 

(c)           If during theEffectiveness Period, the number of Registrable Securities at any time exceeds90% of the number of shares of Common Stock then registered in a RegistrationStatement, then the Company shall, as necessary, file as soon as reasonablypracticable but in any case prior to the applicable Filing Date, an additionalRegistration Statement covering the resale by the Holders of not less than 125%of the number of such Registrable Securities.

 

(d)           Notify the Holders ofRegistrable Securities to be sold (which notice shall, pursuant to clauses (ii)through (vi) hereof, be accompanied by an instruction to suspend the use of theProspectus until the requisite changes have been made) as promptly asreasonably possible (and, in the case of (i)(A) below, not less than twoTrading Days prior to such filing) and (if requested by any such Person)confirm such notice in writing no later than one Trading Day following the day(i)(A) when a Prospectus or any Prospectus supplement or post-effectiveamendment to a Registration Statement is proposed to be filed; (B) when theCommission notifies the Company whether there will be a “review” of suchRegistration Statement and whenever the Commission comments in writing on suchRegistration Statement (the Company shall provide true and complete copiesthereof and all written responses thereto to each of the Holders); and (C) withrespect to a Registration Statement or any post-effective amendment, when thesame has become effective; (ii) of any request by the Commission or any otherFederal or state governmental authority for amendments or supplements to aRegistration Statement or Prospectus or for additional information; (iii) ofthe issuance by the Commission or any other federal or state governmentalauthority of any stop order suspending the effectiveness of a RegistrationStatement covering any or all of the Registrable Securities or the initiationof any Proceedings for that purpose; (iv) of the receipt by the Company of anynotification with respect to the suspension of the qualification or exemptionfrom qualification of any of the Registrable Securities for sale in anyjurisdiction, or the initiation or threatening of any Proceeding for suchpurpose; (v) of the occurrence of any event or passage of time that makes thefinancial statements included in a Registration Statement ineligible for inclusiontherein or any statement made in a Registration Statement or Prospectus or anydocument incorporated or deemed to be incorporated therein by reference untruein any material respect or that requires any revisions to a RegistrationStatement, Prospectus or other documents so that, in the case of a RegistrationStatement or the Prospectus, as the case may be, it will not contain any untruestatement of a material fact or omit to state any material fact required to bestated therein or necessary to make the statements therein, in light of thecircumstances under which they were made, not

 

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misleading;and (vi) the occurrence or existence of any pending corporate development withrespect to the Company that the Company believes may be material and that, inthe determination of the Company, makes it not in the best interest of theCompany to allow continued availability of the Registration Statement orProspectus; provided that any and all of such information shall remainconfidential to each Holder until such information otherwise becomes public,unless disclosure by a Holder is required by law; provided, further,notwithstanding each Holder’s agreement to keep such information confidential,the Holders make no acknowledgement that any such information is material,non-public information.

 

(e)           Use its best efforts toavoid the issuance of, or, if issued, obtain the withdrawal of (i) any ordersuspending the effectiveness of a Registration Statement, or (ii) anysuspension of the qualification (or exemption from qualification) of any of theRegistrable Securities for sale in any jurisdiction, at the earliestpracticable moment.

 

(f)            Furnish to eachHolder, without charge, at least one conformed copy of each such RegistrationStatement and each amendment thereto, including financial statements andschedules, all documents incorporated or deemed to be incorporated therein byreference to the extent requested by such Person, and all exhibits to theextent requested by such Person (including those previously furnished orincorporated by reference) promptly after the filing of such documents with theCommission.

 

(g)           Promptly deliver toeach Holder, without charge, as many copies of the Prospectus or Prospectuses(including each form of prospectus) and each amendment or supplement thereto assuch Persons may reasonably request in connection with resales by the Holder ofRegistrable Securities.  Subject to theterms of this Agreement, the Company hereby consents to the use of suchProspectus and each amendment or supplement thereto by each of the sellingHolders in connection with the offering and sale of the Registrable Securitiescovered by such Prospectus and any amendment or supplement thereto, exceptafter the giving on any notice pursuant to Section 3(d).

 

(h)           Prior to any resale ofRegistrable Securities by a Holder, use its commercially reasonable efforts toregister or qualify or cooperate with the selling Holders in connection withthe registration or qualification (or exemption from the Registration orqualification) of such Registrable Securities for the resale by the Holderunder the securities or Blue Sky laws of such jurisdictions within the UnitedStates as any Holder reasonably requests in writing, to keep each registrationor qualification (or exemption therefrom) effective during the EffectivenessPeriod and to do any and all other acts or things reasonably necessary toenable the disposition in such jurisdictions of the Registrable Securitiescovered by each Registration Statement; provided, that the Company shall not berequired to qualify generally to do business in any jurisdiction where it isnot then so qualified, subject the Company to any material tax in any suchjurisdiction where it is not then so subject or file a general consent toservice of process in any such jurisdiction.

 

(i)            If requested by theHolders, cooperate with the Holders to facilitate the timely preparation anddelivery of certificates representing Registrable Securities to be delivered toa transferee pursuant to a Registration Statement, which certificates shall befree, to the extent permitted by the Purchase Agreement and applicable law, ofall restrictive legends, and to enable

 

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suchRegistrable Securities to be in such denominations and registered in such namesas any such Holders may request.

 

(j)            Upon the occurrence ofany event contemplated by this Section 3, as promptly as reasonably possibleunder the circumstances taking into account the Company’s good faith assessmentof any adverse consequences to the Company and its stockholders of thepremature disclosure of such event, prepare a supplement or amendment,including a post-effective amendment, to a Registration Statement or asupplement to the related Prospectus or any document incorporated or deemed tobe incorporated therein by reference, and file any other required document sothat, as thereafter delivered, neither a Registration Statement nor suchProspectus will contain an untrue statement of a material fact or omit to statea material fact required to be stated therein or necessary to make thestatements therein, in light of the circumstances under which they were made,not misleading.  If the Company notifiesthe Holders in accordance with clauses (ii) through (v) of Section 3(d) aboveto suspend the use of any Prospectus until the requisite changes to suchProspectus have been made, then the Holders shall suspend use of suchProspectus.  The Company will use its bestefforts to ensure that the use of the Prospectus may be resumed as promptly asis practicable.  The Company shall beentitled to exercise its right under this Section 3(j) to suspend theavailability of a Registration Statement and Prospectus, subject to the paymentof partial liquidated damages pursuant to Section 2(b), for a period not toexceed 60 days (which need not be consecutive days) in any 12 month period.

 

(k)           Comply in all materialrespects with all applicable rules and regulations of the Commission.

 

(l)            The Company mayrequire each selling Holder to furnish to the Company a certified statement asto the number of shares of Common Stock beneficially owned by such Holder and,if required by the Commission, the person thereof that has voting and dispositivecontrol over such shares. During any periods that the Company is unable to meetits obligations hereunder with respect to the registration of the RegistrableSecurities solely because any Holder fails to furnish such information withinthree Trading Days of the Company’s request, any liquidated damages that areaccruing at such time as to such Holder only shall be tolled and any Event thatmay otherwise occur solely because of such delay shall be suspended as to suchHolder only, until such information is delivered to the Company.

 

4. RegistrationExpenses. All fees and expenses incident to the performance of orcompliance with this Agreement by the Company shall be borne by the Companywhether or not any Registrable Securities are sold pursuant to the RegistrationStatement. The fees and expenses referred to in the foregoing sentence shallinclude, without limitation, (i) all registration and filing fees (including,without limitation, fees and expenses (A) with respect to filings required to bemade with the Trading Market on which the Common Stock is then listed fortrading, and (B) in compliance with applicable state securities or Blue Skylaws reasonably agreed to by the Company in writing (including, withoutlimitation, fees and disbursements of counsel for the Company in connectionwith Blue Sky qualifications or exemptions of the Registrable Securities anddetermination of the eligibility of the Registrable Securities for investmentunder the laws of such jurisdictions as requested by the Holders), (ii)printing expenses (including, without 

 

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limitation, expenses ofprinting certificates for Registrable Securities and of printing prospectusesif the printing of prospectuses is reasonably requested by the holders of amajority of the Registrable Securities included in a Registration Statement),(iii) messenger, telephone and delivery expenses, (iv) fees and disbursementsof counsel for the Company, (v) Securities Act liability insurance, if theCompany so desires such insurance, and (vi) fees and expenses of all otherPersons retained by the Company in connection with the consummation of thetransactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internalexpenses incurred in connection with the consummation of the transactionscontemplated by this Agreement (including, without limitation, all salaries andexpenses of its officers and employees performing legal or accounting duties),the expense of any annual audit and the fees and expenses incurred inconnection with the listing of the Registrable Securities on any securitiesexchange as required hereunder.  In noevent shall the Company be responsible for any underwriting discounts, brokeror similar commissions, transfer taxes applicable to the sale of RegistrableSecurities or, except to the extent provided for in the Transaction Documents,any legal fees or other costs of the Holders.

 

5. Indemnification

 

(a) Indemnification by the Company.The Company shall, notwithstanding any termination of this Agreement, indemnifyand hold harmless each Holder, the officers, directors, agents, brokers(including brokers who offer and sell Registrable Securities as principal as aresult of a pledge or any failure to perform under a margin call of CommonStock), investment advisors and employees of each of them, each Person whocontrols any such Holder (within the meaning of Section 15 of the SecuritiesAct or Section 20 of the Exchange Act) and the officers, directors, agents andemployees of each such controlling Person, to the fullest extent permitted byapplicable law, from and against any and all losses, claims, damages,liabilities, costs (including, without limitation, reasonable attorneys’ fees)and expenses (collectively, “Losses”), as incurred, arising out of orrelating to any untrue or alleged untrue statement of a material fact containedin a Registration Statement, any Prospectus or any form of prospectus or in anyamendment or supplement thereto or in any preliminary prospectus, or arisingout of or relating to any omission or alleged omission of a material factrequired to be stated therein or necessary to make the statements therein (inthe case of any Prospectus or form of prospectus or supplement thereto, inlight of the circumstances under which they were made) not misleading, exceptto the extent, but only to the extent, that (i) such untrue statements oromissions are based upon information furnished in writing to the Company bysuch Holder expressly for use therein, or to the extent that such informationrelates to such Holder or such Holder’s proposed method of distribution ofRegistrable Securities and was reviewed and expressly approved in writing bysuch Holder expressly for use in a Registration Statement, such Prospectus orsuch form of Prospectus or in any amendment or supplement thereto (it beingunderstood that the Holder has approved Annex A hereto for this purpose), (ii)in the case of an occurrence of an event of the type specified in Section3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectusafter the Company has notified such Holder in writing that the Prospectus isoutdated or defective and prior to the receipt by such Holder of the Advicecontemplated in Section 6(d), or (iii) the failure of Holder to deliver at orprior to the written confirmation of sale, the most recent Prospectus, asamended or supplemented.  The Companyshall notify the Holders

 

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promptly of the institution,threat or assertion of any Proceeding arising from or in connection with thetransactions contemplated by this Agreement of which the Company is aware.

 

(b) Indemnification by Holders. EachHolder shall, severally and not jointly, indemnify and hold harmless theCompany, its directors, officers, agents and employees, each Person whocontrols the Company (within the meaning of Section 15 of the Securities Actand Section 20 of the Exchange Act), and the directors, officers, agents oremployees of such controlling Persons, to the fullest extent permitted byapplicable law, from and against all Losses, as incurred, to the extent arisingout of or based solely upon: (x) such Holder’s failure to comply with theprospectus delivery requirements of the Securities Act or (y) any untrue oralleged untrue statement of a material fact contained in any RegistrationStatement, any Prospectus, or any form of prospectus, or in any amendment orsupplement thereto or in any preliminary prospectus, or arising out of orrelating to any omission or alleged omission of a material fact required to bestated therein or necessary to make the statements therein not misleading (i)to the extent, but only to the extent, that such untrue statement or omission ismade in reliance upon and in conformity with any information so furnished inwriting by such Holder to the Company specifically for inclusion in suchRegistration Statement or such Prospectus, as amended or supplemented, or (ii)to the extent that (1) such untrue statements or omissions are based solelyupon information regarding such Holder furnished in writing to the Company bysuch Holder expressly for use therein, or to the extent that such informationrelates to such Holder or such Holder’s proposed method of distribution ofRegistrable Securities and was reviewed and expressly approved in writing bysuch Holder expressly for use in the Registration Statement (it beingunderstood that the Holder has approved Annex A hereto for this purpose), suchProspectus or such form of Prospectus or in any amendment or supplement theretoor (2) in the case of an occurrence of an event of the type specified inSection 3(d)(ii)-(vi), the use by such Holder of an outdated or defectiveProspectus after the Company has notified such Holder in writing that theProspectus is outdated or defective and prior to the receipt by such Holder ofthe Advice contemplated in Section 6(d), or (3) the failure of the Holder tootherwise deliver at or prior to the written confirmation of sale, the mostrecent Prospectus, as amended or supplemented. In no event shall the liabilityof any selling Holder hereunder be greater in amount than the dollar amount ofthe net proceeds received by such Holder upon the sale of the Registrable Securitiesgiving rise to such indemnification obligation.

 

(c) Conduct of Indemnification Proceedings.If any Proceeding shall be brought or asserted against any Person entitled toindemnity hereunder (an “Indemnified Party”), such Indemnified Partyshall promptly notify the Person from whom indemnity is sought (the “IndemnifyingParty”) in writing, and the Indemnifying Party shall have the right toassume the defense thereof, including the employment of counsel reasonablysatisfactory to the Indemnified Party and the payment of all fees and expensesincurred in connection with defense thereof; provided, that the failure of anyIndemnified Party to give such notice shall not relieve the Indemnifying Partyof its obligations or liabilities pursuant to this Agreement, except (and only)to the extent that it shall be finally determined by a court of competentjurisdiction (which determination is not subject to appeal or further review)that such failure shall have prejudiced the Indemnifying Party.

 

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An IndemnifiedParty shall have the right to employ separate counsel in any such Proceedingand to participate in the defense thereof, but the fees and expenses of suchcounsel shall be at the expense of such Indemnified Party or Partiesunless:  (1) the Indemnifying Party hasagreed in writing to pay such fees and expenses; (2) the Indemnifying Partyshall have failed promptly to assume the defense of such Proceeding and toemploy counsel reasonably satisfactory to such Indemnified Party in any suchProceeding; or (3) the named parties to any such Proceeding (including anyimpleaded parties) include both such Indemnified Party and the IndemnifyingParty, and such Indemnified Party shall reasonably believe, based upon the writtenopinion of counsel, that a material conflict of interest is likely to exist ifthe same counsel were to represent such Indemnified Party and the IndemnifyingParty (in which case, if such Indemnified Party notifies the Indemnifying Partyin writing that it elects to employ separate counsel at the expense of theIndemnifying Party, the Indemnifying Party shall not have the right to assumethe defense thereof and the reasonable fees and expenses of one separatecounsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liablefor any settlement of any such Proceeding effected without its written consent,which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without theprior written consent of the Indemnified Party, effect any settlement of anypending Proceeding in respect of which any Indemnified Party is a party, unlesssuch settlement includes an unconditional release of such Indemnified Partyfrom all liability on claims that are the subject matter of such Proceeding.

 

Subject to theterms of this Agreement, all reasonable fees and expenses of the IndemnifiedParty (including reasonable fees and expenses to the extent incurred inconnection with investigating or preparing to defend such Proceeding in amanner not inconsistent with this Section) shall be paid to the IndemnifiedParty, as incurred, within ten Trading Days of written notice thereof to theIndemnifying Party; provided, that the Indemnified Party shall promptlyreimburse the Indemnifying Party for that portion of such fees and expensesapplicable to such actions for which such Indemnified Party is not entitled toindemnification hereunder, determined based upon the relative faults of theparties.

 

(d) Contribution. If a claim forindemnification under Section 5(a) or 5(b) is unavailable to an IndemnifiedParty (by reason of public policy or otherwise), then each Indemnifying Party,in lieu of indemnifying such Indemnified Party, shall contribute to the amountpaid or payable by such Indemnified Party as a result of such Losses, in suchproportion as is appropriate to reflect the relative fault of the IndemnifyingParty and Indemnified Party in connection with the actions, statements oromissions that resulted in such Losses as well as any other relevant equitableconsiderations.  The relative fault ofsuch Indemnifying Party and Indemnified Party shall be determined by referenceto, among other things, whether any action in question, including any untrue oralleged untrue statement of a material fact or omission or alleged omission ofa material fact, has been taken or made by, or relates to information suppliedby, such Indemnifying Party or Indemnified Party, and the parties’ relativeintent, knowledge, access to information and opportunity to correct or preventsuch action, statement or omission.  Theamount paid or payable by a party as a result of any Losses shall be deemed toinclude, subject to the limitations set forth in this Agreement, any reasonableattorneys’ or other reasonable fees or expenses incurred by such party inconnection with any Proceeding to the extent such party would have beenindemnified for such fees or expenses if the indemnification provided for inthis Section was available to such party in accordance with its terms.

 

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The partieshereto agree that it would not be just and equitable if contribution pursuantto this Section 5(d) were determined by pro rata allocation or by any othermethod of allocation that does not take into account the equitableconsiderations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of thisSection 5(d), no Holder shall be required to contribute, in the aggregate, anyamount in excess of the amount by which the proceeds actually received by suchHolder from the sale of the Registrable Securities subject to the Proceedingexceeds the amount of any damages that such Holder has otherwise been requiredto pay by reason of such untrue or alleged untrue statement or omission oralleged omission, except in the case of fraud by such Holder.

 

The indemnityand contribution agreements contained in this Section are in addition to anyliability that the Indemnifying Parties may have to the Indemnified Parties.

 

6. Miscellaneous

 

(a)           Remedies.  In the event of a breach by the Company or bya Holder, of any of their obligations under this Agreement, each Holder or theCompany, as the case may be, in addition to being entitled to exercise allrights granted by law and under this Agreement, including recovery of damages,will be entitled to specific performance of its rights under thisAgreement.  The Company and each Holderagree that monetary damages would not provide adequate compensation for anylosses incurred by reason of a breach by it of any of the provisions of thisAgreement and hereby further agrees that, in the event of any action forspecific performance in respect of such breach, it shall waive the defense thata remedy at law would be adequate.

 

(b)           No Piggyback on Registrations.Except as set forth on Schedule 6(b) attached hereto, neither theCompany nor any of its security holders (other than the Holders in suchcapacity pursuant hereto) may include securities of the Company in theRegistration Statement other than the Registrable Securities.  The Company shall not file any otherregistration statements (except Registration Statements on Form S-8) until theinitial Registration Statement required hereunder is declared effective by theCommission, provided that this Section 6(b) shall not prohibit the Company fromfiling amendments to registration statements already filed.

 

(c)           Compliance. Each Holder covenantsand agrees that it will comply with the prospectus delivery requirements of theSecurities Act as applicable to it in connection with sales of RegistrableSecurities pursuant to the Registration Statement.

 

(d)           Discontinued Disposition. EachHolder agrees by its acquisition of such Registrable Securities that, uponreceipt of a notice from the Company of the occurrence of any event of the kinddescribed in Section 3(d), such Holder will forthwith discontinue dispositionof such Registrable Securities under a Registration Statement until such Holder’sreceipt of the copies of the supplemented Prospectus and/or amendedRegistration Statement, or until it is advised in writing (the “Advice”)by the Company that the use of the applicable Prospectus may be resumed, and,in either case, has received copies of any additional or supplemental filingsthat are incorporated or deemed to be incorporated by reference in suchProspectus or Registration

 

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Statement.  The Company will use its best efforts toensure that the use of the Prospectus may be resumed as promptly as itpracticable.  The Company agrees andacknowledges that any periods during which the Holder is required todiscontinue the disposition of the Registrable Securities hereunder shall besubject to the provisions of Section 2(b).

 

(e)           Piggy-Back Registrations. If atany time during the Effectiveness Period there is not an effective RegistrationStatement covering all of the Registrable Securities and the Company shalldetermine to prepare and file with the Commission a registration statement relatingto an offering for its own account or the account of others under theSecurities Act of any of its equity securities, other than on Form S-4 or FormS-8 (each as promulgated under the Securities Act) or their then equivalentsrelating to equity securities to be issued solely in connection with anyacquisition of any entity or business or equity securities issuable inconnection with the stock option or other employee benefit plans, then theCompany shall send to each Holder a written notice of such determination and,if within fifteen days after the date of such notice, any such Holder shall sorequest in writing, the Company shall include in such registration statementall or any part of such Registrable Securities such holder requests to beregistered; provided, that, the Company shall not be required to register anyRegistrable Securities pursuant to this Section 6(e) that are eligible forresale pursuant to Rule 144(k) promulgated under the Securities Act or that arethe subject of a then effective Registration Statement.

 

(f)            Amendments and Waivers. Theprovisions of this Agreement, including the provisions of this sentence, maynot be amended, modified or supplemented, and waivers or consents to departuresfrom the provisions hereof may not be given, unless the same shall be inwriting and signed by the Company and each Holder of the then outstandingRegistrable Securities.  Notwithstandingthe foregoing, a waiver or consent to depart from the provisions hereof withrespect to a matter that relates exclusively to the rights of Holders and thatdoes not directly or indirectly affect the rights of other Holders may be givenby Holders of all of the Registrable Securities to which such waiver or consentrelates; provided, however, that the provisions of this sentencemay not be amended, modified, or supplemented except in accordance with theprovisions of the immediately preceding sentence.

 

(g)           Notices. Any and all notices orother communications or deliveries required or permitted to be provided hereundershall be delivered as set forth in the Purchase Agreement.

 

(h)           Successors and Assigns. ThisAgreement shall inure to the benefit of and be binding upon the successors andpermitted assigns of each of the parties and shall inure to the benefit of eachHolder. The Company may not assign its rights or obligations hereunder withoutthe prior written consent of all of the Holders of the then-outstandingRegistrable Securities. Each Holder may assign their respective rightshereunder in the manner and to the Persons as permitted under the PurchaseAgreement.

 

(i)            No Inconsistent Agreements.Neither the Company nor any of its subsidiaries has entered, as of the datehereof, nor shall the Company or any of its subsidiaries, on or after the dateof this Agreement, enter into any agreement with respect to its securities,that would have the effect of impairing the rights granted to the Holders inthis Agreement or otherwise conflicts

 

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with theprovisions hereof.  Except as set forthon Schedule 6(b), neither the Company nor any of its subsidiaries haspreviously entered into any agreement granting any registration rights withrespect to any of its securities to any Person that have not been satisfied infull.

 

(j)            Execution and Counterparts. ThisAgreement may be executed in any number of counterparts, each of which when soexecuted shall be deemed to be an original and, all of which taken togethershall constitute one and the same Agreement. In the event that any signature isdelivered by facsimile transmission, such signature shall create a validbinding obligation of the party executing (or on whose behalf such signature isexecuted) the same with the same force and effect as if such facsimilesignature were the original thereof.

 

(k)           Governing Law.  Allquestions concerning the construction, validity, enforcement and interpretationof this Agreement shall be governed by and construed and enforced in accordancewith the internal laws of the State of New York, without regard to theprinciples of conflicts of law thereof. Each party agrees that all legal proceedings concerning theinterpretations, enforcement and defense of the transactions contemplated bythis Agreement (whether brought against a party hereto or its respectiveaffiliates, directors, officers, shareholders, employees or agents) shall becommenced exclusively in the state and federal courts sitting in the City ofNew York.  Each party hereby irrevocablysubmits to the exclusive jurisdiction of the state and federal courts sittingin the City of New York, borough of Manhattan for the adjudication of anydispute hereunder or in connection herewith or with any transactioncontemplated hereby or discussed herein, and hereby irrevocably waives, andagrees not to assert in any suit, action or proceeding, any claim that it isnot personally subject to the jurisdiction of any such court, that such suit,action or proceeding is improper or inconvenient venue for suchproceeding.  Each party herebyirrevocably waives personal service of process and 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 Agreementand agrees 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 thisAgreement, 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.

 

(l)            Cumulative Remedies. The remediesprovided herein are cumulative and not exclusive of any remedies provided bylaw.

 

(m)          Severability. If any term,provision, covenant or restriction of this Agreement is held by a court ofcompetent jurisdiction to be invalid, illegal, void or unenforceable, theremainder of the terms, provisions, covenants and restrictions set forth hereinshall remain in full force and effect and shall in no way be affected, impairedor invalidated, and the parties hereto shall use their commercially reasonableefforts to find and employ an alternative means to achieve the same orsubstantially the same result as that contemplated by such term, provision,covenant or restriction. It is hereby stipulated and declared to be theintention of the parties that

 

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they wouldhave executed the remaining terms, provisions, covenants and restrictionswithout including any of such that may be hereafter declared invalid, illegal,void or unenforceable.

 

(n)           Headings. The headings in thisAgreement are for convenience of reference only and shall not limit orotherwise affect the meaning hereof.

 

(o)           Independent Nature of Holders’ Obligationsand Rights. The obligations of each Holder hereunder are several andnot joint with the obligations of any other Holder hereunder, and no Holdershall be responsible in any way for the performance of the obligations of anyother Holder hereunder. Nothing contained herein or in any other agreement ordocument delivered at any closing, and no action taken by any Holder pursuanthereto or thereto, shall be deemed to constitute the Holders as a partnership,an association, a joint venture or any other kind of entity, or create apresumption that the Holders are in any way acting in concert with respect tosuch obligations or the transactions contemplated by this Agreement. EachHolder shall be entitled to protect and enforce its rights, including withoutlimitation the rights arising out of this Agreement, and it shall not benecessary for any other Holder to be joined as an additional party in anyproceeding for such purpose.

 

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

 

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IN WITNESSWHEREOF, the parties have executed this Registration Rights Agreement as of thedate first written above.

 

 
|   | **POWER 3 MEDICAL PRODUCTS, INC.** |
|--------|------------------------------------|
|   | ** **                         |
|   | ** **                         |
|   | By:                                | Steven B. Rash |
|   |                               | Name: Steven B.  Rash |
|   |                               | Title: Chairman  and CEO |

 

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |   Bach  Farms LLC        |   |
|-----------------------------------------------------------|------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/:*Richard H.  Bach             |   |
| Name of  Authorized Signatory:                            |    Richard  H. Bach |   |
| Title of  Authorized Signatory:                           |                               |   |
|                                                           |                                    |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Citiplatz  Limited         |   |
|-----------------------------------------------------------|----------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | * /s/:  Francis (Illegible)*            |   |
| Name of  Authorized Signatory:                            |     Francis  (Illegible) |   |
| Title of Authorized  Signatory:                           |                                         |   |
|                                                           |                                              |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Crescent  International Ltd.                  |   |
|-----------------------------------------------------------|-----------------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/:Mel Craw and Maxi Brezzi*                                  |   |
| Name of  Authorized Signatory:                            |     Mel  Craw and Maxi Brezzi               |   |
| Title of  Authorized Signatory:                           |        Authorized  Signatory |   |
|                                                           |                                                                 |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Crestview  Capital Master, LLC        |   |
|-----------------------------------------------------------|---------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s*/Stewart R.  Flink                                  |   |
| Name of  Authorized Signatory:                            |     Stewart  R. Flink               |   |
| Title of  Authorized Signatory:                           |         Manager |   |
|                                                           |                                                         |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    DKR SoundShore Oasis  Holding Fund, Ltd. |   |
|-----------------------------------------------------------|------------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | /s*/ Barbara Burger*                                       |   |
| Name of  Authorized Signatory:                            |      Barbara Burger               |   |
| Title of  Authorized Signatory:                           |       Alternate  Director    |   |
|                                                           |                                                            |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Gryphon Master Fund L.P.                  |   |
|-----------------------------------------------------------|-------------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/:E.B. Lyon IV*                                          |   |
| Name of  Authorized Signatory:                            |     E.B.  Lyon IV                       |   |
| Title of  Authorized Signatory:                           |        Authorized  Agent |   |
|                                                           |                                                             |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    GSSF Master Fund, LP                      |   |
|-----------------------------------------------------------|-------------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/:E.B. Lyon IV*                                          |   |
| Name of  Authorized Signatory:                            |     E.B.  Lyon IV                       |   |
| Title of  Authorized Signatory:                           |        Authorized  Agent |   |
|                                                           |                                                             |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Mohawk Funding                          |   |
|-----------------------------------------------------------|-----------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/:Richard H. Bach*                                     |   |
| Name of  Authorized Signatory:                            |     Richard  H. Bach                  |   |
| Title of  Authorized Signatory:                           |        Manager  Member |   |
|                                                           |                                                           |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Richard Molinsky |   |
|-----------------------------------------------------------|------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/ Richard Molinsky*             |   |
| Name of  Authorized Signatory:                            |                               |   |
| Title of  Authorized Signatory:                           |                               |   |
|                                                           |                                    |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Omicron Master Trust                      |   |
|-----------------------------------------------------------|-------------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/Bruce Bernstein*                                        |   |
| Name of  Authorized Signatory:                            |     Bruce  Bernstein                    |   |
| Title of  Authorized Signatory:                           |        Managing  Partner |   |
|                                                           |                                                             |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Otape Investments LLC                          |   |
|-----------------------------------------------------------|------------------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/ Richard M. Cayne*                                           |   |
| Name of  Authorized Signatory:                            |     Richard  M. Cayne                        |   |
| Title of  Authorized Signatory:                           |         General  Counsel |   |
|                                                           |                                                                  |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Platinum Partners Value  Arbitrage Fund L.P.     |   |
|-----------------------------------------------------------|--------------------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/Richard Geyser*                                                |   |
| Name of  Authorized Signatory:                            |     Richard  Geyser                            |   |
| Title of  Authorized Signatory:                           |         Managing  Director |   |
|                                                           |                                                                    |        |  |  |  |

 

 

[SIGNATURE PAGESCONTINUE]

 

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[SIGNATURE PAGE OFHOLDERS TO PWRM RRA]

 

 
| Name of  Investing Entity:                                |    Sage Capital Investments  Limited       |   |
|-----------------------------------------------------------|-----------------------------------------------------------|--------|
| *Signature of Authorized Signatory of  Investing Entity:* | */s/ Anthony Thompson*                                    |   |
| Name of  Authorized Signatory:                            |     Anthony  Thompson                 |   |
| Title of  Authorized Signatory:                           |         Secretary |   |
|                                                           |                                                           |        |  |  |  |

 

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Plan of Distribution

 

Each SellingStockholder (the “Selling Stockholders”) of the common stock (“CommonStock”) of Power 3 Medical Products, Inc., a New York corporation (the “Company”)and any of their pledgees, assignees and successors-in-interest may, from timeto time, sell any or all of their shares of Common Stock on the Trading Marketor any other stock exchange, market or trading facility on which the shares aretraded or in private transactions.  Thesesales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methodswhen selling shares:

 

•      ordinary brokeragetransactions and transactions in which the broker-dealer solicits purchasers;

 

•      block trades in which thebroker-dealer will attempt to sell the shares as agent but may position andresell a portion of the block as principal to facilitate the transaction;

 

•      purchases by a broker-dealeras principal and resale by the broker-dealer for its account;

 

•      an exchange distribution inaccordance with the rules of the applicable exchange;

 

•      privately negotiatedtransactions;

 

•      settlement of short salesentered into after the date of this prospectus;

 

•      broker-dealers may agreewith the Selling Stockholders to sell a specified number of such shares at a stipulatedprice per share;

 

•      a combination of any suchmethods of sale;

 

•      through the writing orsettlement of options or other hedging transactions, whether through an optionsexchange or otherwise; or

 

•      any other method permittedpursuant to applicable law.

 

The SellingStockholders may also sell shares under Rule 144 under the Securities Act of1933, as amended (the “Securities Act”), if available, rather than underthis prospectus.

 

Broker-dealersengaged by the Selling Stockholders may arrange for other brokers-dealers toparticipate in sales.  Broker-dealers mayreceive commissions or discounts from the Selling Stockholders (or, if anybroker-dealer acts as agent for the purchaser of shares, from the purchaser) inamounts to be negotiated.  Each SellingStockholder does not expect these commissions and discounts relating to itssales of shares to exceed what is customary in the types of transactionsinvolved.

 

In connection withthe sale of our common stock or interests therein, the Selling Stockholders mayenter into hedging transactions with broker-dealers or other financial

 

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institutions, which may in turn engage in short sales of the commonstock in the course of hedging the positions they assume.  The Selling Stockholders may also sell sharesof our common stock short and deliver these securities to close out their shortpositions, or loan or pledge the common stock to broker-dealers that in turnmay sell these securities.  The SellingStockholders may also enter into option or other transactions withbroker-dealers or other financial institutions or the creation of one or morederivative securities which require the delivery to such broker-dealer or otherfinancial institution of shares offered by this prospectus, which shares suchbroker-dealer or other financial institution may resell pursuant to thisprospectus (as supplemented or amended to reflect such transaction).

 

The SellingStockholders and any broker-dealers or agents that are involved in selling theshares may be deemed to be “underwriters” within the meaning of the SecuritiesAct in connection with such sales.  Insuch event, any commissions received by such broker-dealers or agents and anyprofit on the resale of the shares purchased by them may be deemed to beunderwriting commissions or discounts under the Securities Act.  Each Selling Stockholder has informed theCompany that it does not have any agreement or understanding, directly orindirectly, with any person to distribute the Common Stock.

 

The Company isrequired to pay certain fees and expenses incurred by the Company incident tothe registration of the shares.  TheCompany has agreed to indemnify the Selling Stockholders against certainlosses, claims, damages and liabilities, including liabilities under theSecurities Act.

 

The SellingShareholders may agree to indemnify any agent, dealer or broker-dealer thatparticipates in transactions involving sales of the shares against certainliabilities, including liabilities arising under the Securities Act.

 

Because SellingStockholders may be deemed to be “underwriters” within the meaning of theSecurities Act, they will be subject to the prospectus delivery requirements ofthe Securities Act.  In addition, anysecurities covered by this prospectus which qualify for sale pursuant to Rule144 under the Securities Act may be sold under Rule 144 rather than under thisprospectus.  Each Selling Stockholder hasadvised us that they have not entered into any agreements, understandings or arrangementswith any underwriter or broker-dealer regarding the sale of the resaleshares.  There is no underwriter orcoordinating broker acting in connection with the proposed sale of the resaleshares by the Selling Stockholders.

 

We agreed to keepthis prospectus effective until the earlier of (i) the date on which the sharesmay be resold by the Selling Stockholders without registration and withoutregard to any volume limitations by reason of Rule 144(k) under the SecuritiesAct or any other rule of similar effect or (ii) all of the shares have beensold pursuant to the prospectus or Rule 144 under the Securities Act or anyother rule of similar effect.  The resaleshares will be sold only through registered or licensed brokers or dealers ifrequired under applicable state securities laws. In addition, in certainstates, the resale shares may not be sold unless they have been registered orqualified for sale in the applicable state or an exemption from theregistration or qualification requirement is available and is complied with.

 

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Under applicablerules and regulations under the Exchange Act, any person engaged in thedistribution of the resale shares may not simultaneously engage in marketmaking activities with respect to our common stock for a period of two businessdays prior to the commencement of the distribution.  In addition, the Selling Stockholders will besubject to applicable provisions of the Exchange Act and the rules andregulations thereunder, including Regulation M, which may limit the timing ofpurchases and sales of shares of our common stock by the Selling Stockholdersor any other person.  We will make copiesof this prospectus available to the Selling Stockholders and have informed themof the need to deliver a copy of this prospectus to each purchaser at or priorto the time of the sale.

 

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**Annex B**

 

**Power3 Medical Products, Inc.**

** **

**SellingSecurityholder Notice and Questionnaire**

** **

The undersigned beneficial owner of commonstock, par value $0.001 per share (the “Common Stock”), of Power 3Medical Products, Inc., a New York corporation (the “Company”), (the “RegistrableSecurities”) understands that the Company has filed or intends to file withthe Securities and Exchange Commission (the “Commission”) a registrationstatement (the “Registration Statement”) for the registration and resaleunder Rule 415 of the Securities Act of 1933, as amended (the “SecuritiesAct”), of the Registrable Securities, in accordance with the terms of theRegistration Rights Agreement, dated as of October      ,2004 (the “Registration Rights Agreement”), among the Company and thePurchasers named therein.  A copy of theRegistration Rights Agreement is available from the Company upon request at theaddress set forth below.  All capitalizedterms not otherwise defined herein shall have the meanings ascribed thereto inthe Registration Rights Agreement.

 

Certain legal consequences arise from beingnamed as a selling securityholder in the Registration Statement and the relatedprospectus.  Accordingly, holders andbeneficial owners of Registrable Securities are advised to consult their ownsecurities law counsel regarding the consequences of being named or not beingnamed as a selling securityholder in the Registration Statement and the relatedprospectus.

 

**NOTICE**

** **

The undersigned beneficial owner (the “SellingSecurityholder”) of Registrable Securities hereby elects to include theRegistrable Securities owned by it and listed below in Item 3 (unless otherwisespecified under such Item 3) in the Registration Statement.

 

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The undersigned hereby provides the following information to theCompany and represents and warrants that such information is accurate:

 

**QUESTIONNAIRE**

 

**1.****            ****Name.**

 

(a)           Full Legal Name ofSelling Securityholder

 

 

 

(b)           Full Legal Name ofRegistered Holder (if not the same as (a) above) through which RegistrableSecurities Listed in Item 3 below are held:

 

 

 

(c)           Full Legal Name ofNatural Control Person (which means a natural person who directly youindirectly alone or with others has power to vote or dispose of the securitiescovered by the questionnaire):

 

 

 

**2.  Address forNotices to Selling Securityholder:**

 

 
|             |
|------------------|
|             |
| Telephone:       |
| Fax:             |
| Contact  Person: |

 

 

**3.  BeneficialOwnership of Registrable Securities:**

 

(a)           Type and PrincipalAmount of Registrable Securities beneficially owned:

 

 

 

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**4. Broker-Dealer Status:**

 

(a)           Are you abroker-dealer?

 

Yes   o                                  No   o

 

Note:      If yes, theCommission’s staff has indicated that you should be identified as anunderwriter in the Registration Statement.

 

(b)           Are you anaffiliate of a broker-dealer?

 

Yes   o                                  No   o

 

(c)           If you are anaffiliate of a broker-dealer, do you certify that you bought the RegistrableSecurities in the ordinary course of business, and at the time of the purchaseof the Registrable Securities to be resold, you had no agreements orunderstandings, directly or indirectly, with any person to distribute theRegistrable Securities?

 

Yes   o                                  No   o

 

Note:      If no, theCommission’s staff has indicated that you should be identified as anunderwriter in the Registration Statement.

 

**5.  BeneficialOwnership of Other Securities of the Company Owned by the SellingSecurityholder.**

 

*Except as set forth below in this Item 5, the undersigned isnot the beneficial or registered owner of any securities of the Company otherthan the Registrable Securities listed above in Item 3.*

 

(a)           Type and Amountof Other Securities beneficially owned by the Selling Securityholder:

 

 

 

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**6. Relationships with the Company:**

 

*Except as set forth below, neither the undersigned nor anyof its affiliates, officers, directors or principal equity holders (owners of5% of more of the equity securities of the undersigned) has held any positionor office or has had any other material relationship with the Company (or itspredecessors or affiliates) during the past three years.*

 

State any exceptions here:

 

 

 

The undersigned agrees to promptly notify theCompany of any inaccuracies or changes in the information provided herein thatmay occur subsequent to the date hereof at any time while the RegistrationStatement remains effective.

 

By signing below, the undersigned consents tothe disclosure of the information contained herein in its answers to Items 1through 6 and the inclusion of such information in the Registration Statementand the related prospectus.  Theundersigned understands that such information will be relied upon by theCompany in connection with the preparation or amendment of the RegistrationStatement and the related prospectus.

 

IN WITNESS WHEREOF the undersigned, byauthority duly given, has caused this Notice and Questionnaire to be executedand delivered either in person or by its duly authorized agent.

 
| Dated: |   |   | Beneficial Owner: |   |   |
|--------|--------|--------|-------------------|--------|--------|
|   |   |
|   | By:    |   |              |
|   |   | Name:  |
|   |   | Title: |
|        |        |        |                   |        |        |  |

 

**PLEASEFAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURNTHE ORIGINAL BY OVERNIGHT MAIL, TO:**

 

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