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: November 2, 2005

  
	
  Holder: Trinity Financing Investments
  Corporation

  
	
  Address:

  	
  420 East 55th Street

  
	
   

  	
  New York, New York 10022

  
			



 


 


	
   

  	
  NOTE DUE MARCH 2, 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 March 2, 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 two 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 eighteen per cent
(18%) 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;r
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, Chief Executive Officer

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
  By: