Exhibit 10.1


 


THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.


 


	
  U.S. $150,000

  	
  Original Issue Date: December 9,
  2005

  
	
  Holder: Trinity Financing
  Investments Corporation

  	
   

  
	
  Address: 

  	
  300 East 55th
  Street, Apt. 14 D

  
	
   

  	
  New York, New York 10022

  
			



 


NOTE DUE April 9, 2006


 


FOR
VALUE RECEIVED, POWER 3 MEDICAL PRODUCTS, INC., a New York corporation, having
a principal place of business at 3400 Research Forest Drive, The Woodlands,
Texas 77381  (the “Company”)
promises to pay to the order of Holder or registered assigns, the principal sum
of one hundred fifty thousand and 00/100 Dollars ($150,000.00), on April 9,
2006 (“Maturity Date”).  The principal
of, and interest on, this Note are payable in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts, at the address of the Holder as set forth above or
as otherwise provided to the Company.


 


Payment
of this Note is secured by a pledge of three million common shares of the
Company (the “Pledged Shares”) in accordance with the terms of a Stock Pledge
Agreement (the “Pledge Agreement”) being executed and delivered by Steven B.
Rash and Ira Goldknopf (“Pledgor”) concurrently with the execution and delivery
hereof.


 


This
Note is subject to the following additional provisions:


 


Section 1.                                            From the date hereof to (and including) the
scheduled Maturity Date, interest shall accrue on the unpaid principal sum of
this Note at the rate of eleven per cent (11%) per annum. All accrued interest
shall be paid together with principal on the Maturity Date.  Interest shall accrue on any portion of the
principal amount of this Note outstanding from time to time after the scheduled
Maturity Date until payment thereof in full, at the rate of twenty-four per
cent (24%) per annum. In no event shall the Holder hereof, or any successor or
permitted assign, be entitled to receive, collect or retain any amount of
interest paid hereon in excess of that permitted by applicable law.


 


This Note is exchangeable
for an equal aggregate principal amount of Notes of different authorized
denominations, as requested by the Holder surrendering the same but shall not
be issuable in denominations of less than integral multiples of Twenty Thousand
Dollars ($20,000) unless such amount represents the full principal balance of
Notes outstanding to such Holder.  No
service charge will be made for such registration of transfer or exchange.


 





















 


Section 2.


 


(a)                                  The Holder, by acceptance hereof, agrees to
give written notice to the Company before transferring this Note; such notice
will describe briefly the proposed transfer and will give the Company the name,
address, and tax identification number of the proposed transferee, and will
further provide the Company with an opinion of the Holder’s counsel that such
transfer can be accomplished in accordance with federal and applicable state
securities laws (unless such transaction is permitted by the plan of
distribution in an effective Registration Statement).


 


(b)                                 Prior to transfer of this Note in compliance
with this Section 2, the Company and any agent of the Company may treat
the person in whose name this Note is duly registered on the Note Register as
the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Note is overdue, and neither the
Company nor any such agent shall be affected by notice to the contrary.


 


Section 3.                                            Events of Default.


 


“Event
of Default” wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative or
governmental body):


 


(i)                                     any default in the payment of the principal
of, interest on, or other obligations in respect of, this Note, as and when the
same shall become due and payable, (whether on the Maturity Date or by
acceleration or otherwise);


 


(ii)                                  the Company or any Pledgor shall fail to
observe or perform any other covenant, agreement or warranty contained in, or
otherwise commit any breach of, this Note or the Pledge Agreement and such
failure or breach shall not have been remedied within 10 days after the date on
which notice of such failure or breach shall have been given;


 


(iii)                               the Company shall commence a voluntary case
under the United States Bankruptcy Code or insolvency laws as now or hereafter
in effect or any successor thereto (the “Bankruptcy Code”); or an
involuntary case is commenced against the Company under the Bankruptcy Code and
the petition is not controverted within 30 days, or is not dismissed within 60
days, after commencement of such involuntary case; or a “custodian” (as defined
in the Bankruptcy Code) is appointed for, or takes charge of, all or any
substantial part of the property of the Company or the Company commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or
there is commenced against the Company any such proceeding which remains
undismissed for a period of 60 days; or the Company is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company suffers any appointment of any custodian
or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or the Company makes a
general assignment for the benefit of creditors; or the Company shall fail to
pay, or shall state that it is unable to pay its debts generally as they become
due; or the Company shall call a meeting of all of its creditors with a view to
arranging a composition or adjustment of its debts; or the Company shall by any
act or failure to


 





















 


act
indicate its consent to, approval of or acquiescence in any of the foregoing;
or any corporate or other action is taken by the Company for the purpose of
effecting any of the foregoing;


 


(iv)                              the Company shall default in any of its
obligations under any mortgage, credit agreement or other facility, indenture,
agreement or other instrument under which there may be issued, or by which
there may be secured or evidenced any indebtedness of the Company in an amount
exceeding twenty thousand dollars ($20,000), whether such indebtedness now
exists or shall hereafter be created and such default shall result in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable;


 


(v)                                 the Company shall be a party to any Change of
Control Transaction (as defined in Section 6), shall agree to sell or
dispose of all or in excess of 49% of its assets (based on book value calculation
as reflected in the Company’s most recent financial statements) in one or more
transactions (whether or not such sale would constitute a Change of Control
Transaction).


 


Section 4.                                            Interest Rate Limitation. The parties intend to conform strictly to
the applicable usury laws in effect from time to time during the term of the
Loan. Accordingly, if any transaction contemplated hereby would be usurious
under such laws, then notwithstanding any other provision hereof: (i) the
aggregate of all interest that is contracted for, charged, or received under
this Agreement or under any other Loan Document shall not exceed the maximum
amount of interest allowed by applicable law (the “Highest Lawful Rate”), and
any excess shall be promptly credited to Borrower by Lender (or, to the extent
that such consideration shall have been paid, such excess shall be promptly
refunded to Borrower by Lender); (ii) neither Borrower nor any other
Person now or hereafter liable hereunder shall be obligated to pay the amount
of such interest to the extent that it is in excess of the Highest Lawful Rate;
and (iii) the effective rate of interest shall be reduced to the Highest
Lawful Rate. All sums paid, or agreed to be paid, to Lender for the use,
forbearance, and detention of the debt of Borrower to Lender shall, to the
extent permitted by applicable law, be allocated throughout the full term of
the Note until payment is made in full so that the actual rate of interest does
not exceed the Highest Lawful Rate in effect at any particular time during the
full term thereof. If at any time the rate of interest under the Note exceeds
the Highest Lawful Rate, the rate of interest to accrue pursuant to this
Agreement shall be limited, notwithstanding anything to the contrary in this
Agreement, to the Highest Lawful Rate, but any subsequent reductions in the
Base Rate shall not reduce the interest to accrue pursuant to this Agreement
below the Highest Lawful Rate until the total amount of interest accrued equals
the amount of interest that would have accrued if a varying rate per annum
equal to the interest rate under the Note had at all times been in effect. If
the total amount of interest paid or accrued pursuant to this Agreement under
the foregoing provisions is less than the total amount of interest that would
have accrued if a varying rate per annum equal to the interest rate under the
Note had been in effect, then Borrower agrees to pay to Lender an amount equal
to the difference between (x) the lesser of (A) the amount of interest
that would have accrued if the Highest Lawful Rate had at all times been in
effect, or (B) the amount of interest that would have accrued if a varying
rate per annum equal to the interest rate under the Note had at all times been
in effect, and (y) the amount of interest accrued in accordance with the other
provisions of this Agreement.


 


Section 5.                                            Prepayment.


 


(a)                                  The Company shall have the right to prepay
this Note in whole or in part thereon prior to the Maturity Date.


 


(b)                                 (i)                                     The Company shall give at least five (5) 
business days, but not more than ten (10)


 





















 


business
days, written notice of any intention to prepay this Note prior to the Maturity
Date to the Holder which notice shall specify the “Prepayment Date”.


 


Section 6.                                            Definitions.  For the purposes hereof, the
following terms shall have the following meanings:


 


“Business
Day” means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of New York
are authorized or required by law or other government action to close.


 


“Change
of Control Transaction” means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of in excess of 49% of the voting securities of the Company coupled with a
replacement of more than one-half of the members of the Company’s board of
directors which is not approved by those individuals who are members of the
board of directors on the date hereof in one or a series of related
transactions, or (ii) the merger of the Company with or into another
entity, consolidation or sale of all or substantially all of the assets of the
Company in one or a series of related transactions, unless following such
transaction, the holders of the Company’s securities continue to hold at least
40% of such securities following such transaction.  The execution by the Company of an agreement
to which the Company is a party or by which it is bound providing for any of
the events set forth above in (i) or (ii) does not constitute the
occurrence of the event until after the event in fact occurs.


 


Section 7.                                            Except as expressly provided herein, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, interest on,
liquidated damages (if any)  and all
other amounts due hereunder, at the time, place and rate, and in the coin or
currency, herein prescribed.  This Note
is a direct obligation of the Company.


 


Section 8.                                            If this Note shall be mutilated, lost, stolen
or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Note, or in lieu of or in
substitution for a lost, stolen or destroyed Note, a new Note for the principal
amount of this Note so mutilated, lost, stolen or destroyed but only upon
receipt of evidence of such loss, theft or destruction of such Note, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Company.


 


Section 9.                                            Choice of Law and Venue; Submission to
Jurisdiction; Service of Process.


 


(a)                                  THE VALIDITY OF THIS NOTE, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF).
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS NOTE SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK OR, AT THE SOLE OPTION OF
HOLDER, IN ANY OTHER COURT IN WHICH HOLDER SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. THE COMPANY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
SIMILAR DOCTRINE OR TO OBJECT TO VENUE WITH RESPECT TO ANY PROCEEDING BROUGHT
IN ACCORDANCE WITH THIS SECTION AND STIPULATES


 





















 


THAT THE STATE AND FEDERAL
COURTS LOCATED IN THE CITY AND COUNTY OF NEW YORK SHALL HAVE IN PERSONAM
JURISDICTION AND VENUE OVER IT FOR THE PURPOSE OF LITIGATING ANY DISPUTE,
CONTROVERSY OR PROCEEDING ARISING OUT OF OR RELATED TO THIS NOTE.


 


(b)                                 COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT, OR OTHER PROCESS ISSUED IN ANY ACTION OR PROCEEDING AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT, OR OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO COMPANY AT ITS ADDRESS
PROVIDED HEREIN.


 


(c)                                  NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF HOLDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY HOLDER OF ANY
JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.


 


(d)                                 The COMPANY SHALL REIMBURSE HOLDER FOR ALL
REASONABLE COSTS AND EXPENSES, INCLUDING WITHOUT LIMITATION REASONABLE
ATTORNEYS’ FEES AND COSTS, INCURRED IN CONNECTION WITH (I) DRAFTING,
NEGOTIATING, EXECUTING AND DELIVERING ANY AMENDMENT, MODIFICATION OR WAIVER OF,
OR CONSENT WITH RESPECT TO, ANY MATTER ELATING TO THE RIGHTS OF HOLDER
HEREUNDER AND (II) ENFORCING ANY PROVISIONS OF THIS NOTE AND/OR COLLECTING ANY
AMOUNTS DUE UNDER THIS NOTE.


 


Section 10.                                      The rights and remedies herein reserved to
any party shall be cumulative and in addition to any other or further rights
and remedies available at law or in equity. Any waiver by the Company or the
Holder of a breach of any provision of this Note shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Note.  The
failure of the Company or the Holder to insist upon strict adherence to any
term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note. 
Any waiver must be in writing.


 


Section 11.                                      If any provision of this Note is invalid,
illegal or unenforceable, the balance of this Note shall remain in effect, and
if any provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.


 


Section 12.                                      Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next calendar month, the preceding Business Day in
the appropriate calendar month).


 


Section 13.                                      Registration Rights. If, at any time prior to payment in full of
this Note, the Company participates (whether voluntarily or by reason of an
obligation to a third party) in the registration of any shares of the Company’s
stock (other than a registration on Form S-4, S-8 or successor form), the
Company shall give written notice thereof to the Holder and the Holder shall
have the right, exercisable within ten (10) business days after receipt of
such notice, to demand inclusion of all or a portion of the Pledged Shares in
such registration statement.  If the
Holder exercises such election, the Pledged Shares so designated shall be
included in the registration


 





















 


statement at no cost or
expense to the Holder (other than any costs or commissions which would be borne
by the Holder).


 


Section 15.                                      Waiver of Jury Trial


 


COMPANY HEREBY WAIVES ITS
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS NOTE. COMPANY REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


Section 16.                                      Additional Provisions


 


Successors and Assigns. All
of the terms and provisions of this Note shall be binding upon and inure to the
benefits of the parties hereto and their respective successors, heirs and
permitted assigns.


 


All notices, requests,
demands or other communications which are required to be or may be given or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered in person or after dispatch by a recognized overnight
courier to the appropriate party to whom the same is so given or made:


 


To Holder at its address set forth above


 


To Company at its address set forth above attention Steven B. Rash and
Ira Goldknopf


 


or to such other address as
a party has designated by notice in writing to the other party in the manner
provided by this Section.  All such
notices, requests, demands or other communications shall be deemed to have been
received on the date of delivery thereof (if delivered by hand) and on the next
day after sending thereof (if by overnight courier).


 


Assignment by the
Company.  Neither this Note nor any of
the rights, interests or obligations hereunder may be assigned, by operation of
law or otherwise, in whole or in part, by the Company, without the prior
written consent of the Holder.


 


No Set-off.  All payments by the Company under this Note
shall be made free and clear of and without any deduction for or on account of
any set-off or counterclaim.


 


Waiver of Presentment,
Demand, Etc.  To the fullest extent
permitted by applicable law, the Company expressly waives presentment, demand,
protest, notice of dishonor, notice of non-payment, notice of maturity, notice
of protest, presentment for the purpose of accelerating maturity of the
obligations under this Note, diligence in collection, and the benefit of any
exemption or insolvency laws.


 





















 


IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an
officer duly authorized for such purpose, as of the date first above indicated.


 


	
   

  	
  POWER 3 MEDICAL PRODUCTS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Steven B. Rash

  	
   

  
	
   

  	
   

  	
   Steven B. Rash,
  Chief Executive Officer

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/: John P.
  Burton