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.

    


    
      	 	 	 
	
              No.
                B1

            	
              U.S.
                $266,000.00

            	
              Original
                Issue Date: May 31, 2006

            
	
              Holder:

            	
              John
                Fife

            	 
	 	 	 
	
              Address:

            	
              303
                East Wacker Drive

            	 
	 	
              Suite
                301

            	 
	 	
              Chicago,
                IL 60601

            	 


    

    


     SERIES
      2006 SECURED NOTE DUE AUGUST 12, 2006

    


    THIS
      Note
      is one of a duly authorized issue of Notes of 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”),
      designated as its Note (the “Note”),
      due
      upon the earlier of (i) August 12, 2006; or (ii) on the fifth day following
      the
      effective date of the Company’s registration statement on Form SB-2 (file no.
      ________) (“Maturity Date”), in an aggregate face amount of up Two Hundred Sixty
      Six Thousand and 00/100 Dollars ($266,000.00). 

    


    FOR
      VALUE
      RECEIVED, the Company promises to pay to the Holder or registered assigns,
      the
      principal sum of Two Hundred Sixty Six Thousand and 00/100 Dollars
      ($266,000.00), on the Maturity Date. Upon default, all amounts due hereunder
      shall bear interest at the rate of 18% per annum from the day such interest
      is
      due hereunder through and including the date of payment. If any payment is
      not
      received by the Holder within fifteen (15) days
      following its due date, without limiting any right or remedy under this Note,
      the Holder may charge a late fee equal to one and one-half (1.5%) percent of
      the
      total amount overdue. 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 last appearing on the Note Register.

    


    This
      Note
      is subject to the following additional provisions:

    


    Section
      1.
      The
      Notes are 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). Promptly upon receiving such written notice, the
      Company shall present copies thereof to the Company’s counsel. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i) If
      in the
      opinion of such counsel the proposed transfer may be effected without
      registration or qualification (under any federal or state securities laws),
      the
      Company, as promptly as practicable, shall notify the Holder of such opinion,
      whereupon the Holder shall be entitled to transfer this Note or to dispose
      of
      Underlying Shares received upon the previous conversion of this Note, all in
      accordance with the terms of the notice delivered by the Holder to the Company;
      provided that an appropriate legend may be endorsed on this Note respecting
      restrictions upon transfer thereof necessary or advisable in the opinion of
      counsel and satisfactory to the Company to prevent further transfers which
      would
      be in violation of Section 5 of the Securities Act and applicable state
      securities laws; and provided further that the prospective transferee or
      purchaser shall execute such documents and make such representations,
      warranties, and agreements as may be required solely to comply with the
      exemptions relied upon by the Company for the transfer or disposition of the
      Note.

     

    (ii) If
      in the
      opinion of the counsel referred to in this Section 2, the proposed transfer
      or
      disposition of this Note described in the written notice given pursuant to
      this
      Section 2 may not be effected without registration or qualification of this
      Note, the Company shall promptly give written notice thereof to the Holder,
      and
      the Holder will limit its activities in respect to such as, in the opinion
      of
      such counsel, are permitted by law.

     

    (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, free of any claim of subordination, 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 Stock Pledge Agreement, including but not limited to the obligation
      of
      the Pledgor to issue additional Collateral , 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; 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 $2,000,000.00, 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); or

    


    (vi) The
      Company shall have its Common Stock suspended or delisted from trading for
      in
      excess of three (3) Trading Days:

    


    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) 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 and liquidated damages (if any) on, this Note 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. Legal
      Expenses.

    


    In
      consideration the agreements herein and in order to induce the Holder to make
      and maintain the Loan pursuant to the Note, the Company hereby agrees to pay
      the
      reasonable fees and expenses of one counsel for the Holder. 

    


    Section
      10. 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. 

    


    (b) company
      hereby submits for itself and in respect of its property, generally and
      unconditionally, to the jurisdiction of the aforesaid courts and waives, to
      the
      extent permitted under applicable law, any right it may have to assert the
      doctrine of forum non conveniens or to object to venue to the extent any
      proceeding is brought in accordance with this section. 

    


    (c) 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.

    


    (d) 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.

    


    (e)
       To
      the
      extent determined by such court, the Company shall reimburse the Holder for
      any
      reasonable legal fees and disbursements incurred by the Holder in enforcement
      of
      or protection of any of its rights under any of this Note.

    


    Section
      11. 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
      12. 
      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
      13. 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
      14. Security.
      The
      obligation of the Company for payment of principal, interest and all other
      sums
      hereunder, in the event of a default and failure of the Company to perform
      hereunder, is secured by the pledge of certain securities (the “Pledged
      Shares”)
      by
      Steven B. Rash and Ira Goldknopf as Pledgors under the terms and conditions
      of a
      Stock Pledge Agreement, and a Guaranty executed and delivered by such
      parties.

    


    Section
      15.
      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 ). The Holder’s rights
      under this Section 7 shall expire at such time as the Holder can sell all of
      the
      Pledged Shares under Rule 144(k) without volume or other restrictions or
      limit.

    


    Section
      16.
      Waiver
      of Jury Trial.
      Company
      hereby waives its respective 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.

    


    


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    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:
                /s/:
                Steven B.
                Rash                                       
                

              Steven
                B. Rash, Chief Executive Officer

            


    

    


    Attest:

    


    


    By:
      /s/:
      Linh
      Rivera