Document:

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                                                                     EXHIBIT 4.1

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: January 26, 2005
Original Conversion Price (subject to adjustment herein): $_______

                                                                  $_____________

                              CONVERTIBLE DEBENTURE
                              DUE JANUARY 26, 2008

            THIS DEBENTURE is one of a series of duly authorized and issued
Convertible Debentures of Power 3 Medical Products, Inc., a New York
corporation, having a principal place of business at 3400 Research Forest Drive,
Suite B2-3, The Woodlands, Texas 77381 (the "Company"), designated as its
Convertible Debenture, due January 26, 2008 (the "Debentures").

         FOR VALUE RECEIVED, the Company promises to pay to __________________
or its registered assigns (the "Holder"), the principal sum of $________________
on January 26, 2008 or such earlier date as the Debentures are required or
permitted to be repaid as provided hereunder (the "Maturity Date"). This
Debenture is subject to the following additional provisions:

         Section 1. Definitions. For the purposes hereof, in addition to the
terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement,
and (b) the following terms shall have the following meanings:

                  "Alternate Consideration" shall have the meaning set forth in
         Section 5(e)(iii).

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                  "Business Day" means any day except Saturday, Sunday and any
         day which shall be a federal legal holiday in the United States 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 after the
         date hereof 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 effective control (whether
         through legal or beneficial ownership of capital stock of the Company,
         by contract or otherwise) of in excess of 50% of the voting securities
         of the Company, or (ii) a replacement at one time or within a three
         year period of more than one-half of the members of the Company's board
         of directors which is not approved by a majority of those individuals
         who are members of the board of directors on the date hereof (or by
         those individuals who are serving as members of the board of directors
         on any date whose nomination to the board of directors was approved by
         a majority of the members of the board of directors who are members on
         the date hereof), or (iii) 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).

                  "Closing Price" means on any particular date (a) the daily
         volume weighted average price per share of Common Stock on such date
         (or the nearest preceding date) on the Trading Market (as reported by
         Bloomberg L.P. based on a Trading Day from 9:30 a.m. Eastern Time to
         4:02 p.m. Eastern Time) using the VAP function, or (b) if the Common
         Stock is not then listed or quoted on the Trading Market and if prices
         for the Common Stock are then reported in the "pink sheets" published
         by the National Quotation Bureau Incorporated (or a similar
         organization or agency succeeding to its functions of reporting
         prices), the most recent bid price per share of the Common Stock so
         reported, or (c) if the shares of Common Stock are not then publicly
         traded the fair market value of a share of Common Stock as determined
         by a nationally-recognized independent appraiser selected in good faith
         by the Purchasers of a majority in interest of the principal amount of
         Debentures then outstanding and reasonably acceptable to the Company.

                   "Common Stock" means the common stock, par value $0.001 per
         share, of the Company and stock of any other class into which such
         shares may hereafter have been reclassified or changed.

                  "Conversion Date" shall have the meaning set forth in Section
         4(a) hereof.

                  "Conversion Price" shall have the meaning set forth in Section
         4(b).

                  "Conversion Shares" means the shares of Common Stock issuable
         upon conversion of Debentures in accordance with the terms hereof.

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                  "Dilutive Issuance" shall have the meaning set forth in
         Section 5(b) hereof.

                  "Effectiveness Period" shall have the meaning given to such
         term in the Registration Rights Agreement.

                  "Equity Conditions" shall mean, during the period in question,
         (i) the Company shall have duly honored all conversions and redemptions
         scheduled to occur or occurring by virtue of one or more Notice of
         Conversions, if any, (ii) all liquidated damages and other amounts
         owing in respect of the Debentures shall have been paid; (iii) there is
         an effective Registration Statement pursuant to which the Holder is
         permitted to utilize the prospectus thereunder to resell all of the
         shares issuable pursuant to the Transaction Documents (and the Company
         believes, in good faith, that such effectiveness will continue
         uninterrupted for the foreseeable future), (iv) the Common Stock is
         trading on the Trading Market and all of the shares issuable pursuant
         to the Transaction Documents are listed for trading on a Trading Market
         (and the Company believes, in good faith, that trading of the Common
         Stock on a Trading Market will continue uninterrupted for the
         foreseeable future), (v) there is a sufficient number of authorized but
         unissued and otherwise unreserved shares of Common Stock for the
         issuance of all of the shares issuable pursuant to the Transaction
         Documents, (vi) there is then existing no Event of Default or event
         which, with the passage of time or the giving of notice, would
         constitute an Event of Default and (vii) all of the shares issued or
         issuable pursuant to the Transaction Documents in full, ignoring for
         such purposes any conversion or exercise limitation therein, would not
         violate the limitations set forth in Section 4(c) and (ix) no public
         announcement of a pending or proposed Fundamental Transaction, Change
         of Control Transaction or acquisition transaction has occurred that has
         not been consummated.

                  "Event of Default" shall have the meaning set forth in Section
         8.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended.

                  "Fundamental Transaction" shall have the meaning set forth in
         Section 5(e)(iii) hereof.

                  "Late Fees" shall have the meaning set forth in the second
         paragraph to this Debenture.

                  "Mandatory Prepayment Amount" for any Debentures shall equal
         the sum of (i) the greater of: (A) 130% of the principal amount of
         Debentures to be prepaid, or (B) the principal amount of Debentures to
         be prepaid, divided by the Conversion Price on (x) the date the
         Mandatory Prepayment Amount is demanded or otherwise due or (y) the
         date the Mandatory Prepayment Amount is paid in full, whichever is
         less, multiplied by the Closing Price on (x) the date the Mandatory
         Prepayment Amount is demanded or otherwise due or (y) the date the
         Mandatory Prepayment Amount is paid in full, whichever is greater, and
         (ii) all other amounts, costs, expenses and liquidated damages due in
         respect of such Debentures.

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                  "Original Issue Date" shall mean the date of the first
         issuance of the Debentures regardless of the number of transfers of any
         Debenture and regardless of the number of instruments which may be
         issued to evidence such Debenture.

                  "Person" means a corporation, an association, a partnership, a
         limited liability company, organization, a business, an individual, a
         government or political subdivision thereof or a governmental agency.

                  "Purchase Agreement" means the Securities Purchase Agreement,
         dated as of October 28, 2004, to which the Company and the original
         Holder are parties, as amended by that certain Amendment to Securities
         Purchase Agreement dated as of January 19, 2005, as may be further
         amended, modified or supplemented from time to time in accordance with
         its terms.

                  "Registration Rights Agreement" means the Registration Rights
         Agreement, dated October 28, 2004, to which the Company and the
         original Holder are parties, as amended, modified or supplemented from
         time to time in accordance with its terms.

                  "Registration Statement" means a registration statement
         meeting the requirements set forth in the Registration Rights
         Agreement, covering among other things the resale of the Conversion
         Shares and naming the Holder as a "selling stockholder" thereunder.

                  "Securities Act" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder.

                  "Subsidiary" shall have the meaning given to such term in the
         Purchase Agreement.

                  "Trading Day" means a day on which the Common Stock is traded
         on a Trading Market.

                  "Trading Market" means the following markets or exchanges on
         which the Common Stock is listed or quoted for trading on the date in
         question: the Nasdaq SmallCap Market, the American Stock Exchange, the
         New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin
         Board.

                  "Transaction Documents" shall have the meaning set forth in
         the Purchase Agreement.

         Section 2. Interest.

                  a) No Payment of Interest. Except as set forth herein, the
         Company shall not pay interest to the Holder on this Debenture.

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                  b) Prepayment. Except as otherwise set forth in this
         Debenture, the Company may not prepay any portion of the principal
         amount of this Debenture without the prior written consent of the
         Holder.

         Section 3. Registration of Transfers and Exchanges.

                  a) Different Denominations. This Debenture is exchangeable for
         an equal aggregate principal amount of Debentures of different
         authorized denominations, as requested by the Holder surrendering the
         same. No service charge will be made for such registration of transfer
         or exchange.

                  b) Investment Representations. This Debenture has been issued
         subject to certain investment representations of the original Holder
         set forth in the Purchase Agreement and may be transferred or exchanged
         only in compliance with the Purchase Agreement and applicable federal
         and state securities laws and regulations.

                  c) Reliance on Debenture Register. Prior to due presentment to
         the Company for transfer of this Debenture, the Company and any agent
         of the Company may treat the Person in whose name this Debenture is
         duly registered on the Debenture Register as the owner hereof for the
         purpose of receiving payment as herein provided and for all other
         purposes, whether or not this Debenture is overdue, and neither the
         Company nor any such agent shall be affected by notice to the contrary.

         Section 4. Conversion.

                  a) Voluntary Conversion. Subject to the terms hereof and
         restrictions and limitations contained herein, at any time after the
         Original Issue Date until this Debenture is no longer outstanding, this
         Debenture shall be convertible into shares of Common Stock at the
         option of the Holder, in whole or in part at any time and from time to
         time (subject to the limitations on conversion set forth in Section
         4(c) hereof). The Holder shall effect conversions by delivering to the
         Company the form of Notice of Conversion attached hereto as Annex A (a
         "Notice of Conversion"), specifying therein the principal amount of
         Debentures to be converted and the date on which such conversion is to
         be effected (a "Conversion Date"). If no Conversion Date is specified
         in a Notice of Conversion, the Conversion Date shall be the date that
         such Notice of Conversion is provided hereunder. To effect conversions
         hereunder, the Holder shall not be required to physically surrender
         Debentures to the Company unless the entire principal amount of this
         Debenture has been so converted. Conversions hereunder shall have the
         effect of lowering the outstanding principal amount of this Debenture
         in an amount equal to the applicable conversion. The Holder and the
         Company shall maintain records showing the principal amount converted
         and the date of such conversions. The Company shall deliver any
         objection to any Notice of Conversion within 1 Business Day of receipt
         of such notice. In the event of any dispute or discrepancy, the records
         of the Holder shall be controlling and determinative in the absence of
         manifest error. The Holder and any assignee, by acceptance of this
         Debenture, acknowledge and agree that, by reason of the provisions of
         this paragraph, following conversion of a portion of this Debenture,
         the

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         unpaid and unconverted principal amount of this Debenture may be less
         than the amount stated on the face hereof.

                  b) Conversion Price. The conversion price in effect on any
         Conversion Date shall be equal to $0.90 (subject to adjustment herein);
         provided, however, if the lesser of (i) 75% of the average of the 5
         consecutive Closing Prices immediately prior to the Effective Date (as
         defined in the Purchase Agreement) and (ii) the Closing Price on the
         Effective Date (the lesser of (i) and (ii) being referred to as the
         "Effective Date Price") is less than the Conversion Price, the
         Conversion Price shall be reduced to equal the Effective Date Price
         (the "Conversion Price").

                  c) Conversion Limitations; Holder's Restriction on Conversion.
         The Company shall not effect any conversion of this Debenture, and the
         Holder shall not have the right to convert any portion of this
         Debenture, pursuant to Section 4(a) or otherwise, to the extent that
         after giving effect to such conversion, the Holder (together with the
         Holder's affiliates), as set forth on the applicable Notice of
         Conversion, would beneficially own in excess of 4.99% of the number of
         shares of the Common Stock outstanding immediately after giving effect
         to such conversion. For purposes of the foregoing sentence, the number
         of shares of Common Stock beneficially owned by the Holder and its
         affiliates shall include the number of shares of Common Stock issuable
         upon conversion of this Debenture with respect to which the
         determination of such sentence is being made, but shall exclude the
         number of shares of Common Stock which would be issuable upon (A)
         conversion of the remaining, nonconverted portion of this Debenture
         beneficially owned by the Holder or any of its affiliates and (B)
         exercise or conversion of the unexercised or nonconverted portion of
         any other securities of the Company (including, without limitation, any
         other Debentures or the Warrants) subject to a limitation on conversion
         or exercise analogous to the limitation contained herein beneficially
         owned by the Holder or any of its affiliates. Except as set forth in
         the preceding sentence, for purposes of this Section 4(c), beneficial
         ownership shall be calculated in accordance with Section 13(d) of the
         Exchange Act. To the extent that the limitation contained in this
         section applies, the determination of whether this Debenture is
         convertible (in relation to other securities owned by the Holder) and
         of which portion of this Debenture is convertible shall be in the sole
         discretion of such Holder. To ensure compliance with this restriction,
         the Holder will be deemed to represent to the Company each time it
         delivers a Notice of Conversion that such Notice of Conversion has not
         violated the restrictions set forth in this paragraph and the Company
         shall have no obligation to verify or confirm the accuracy of such
         determination. For purposes of this Section 4(c), in determining the
         number of outstanding shares of Common Stock, the Holder may rely on
         the number of outstanding shares of Common Stock as reflected in (x)
         the Company's most recent Form 10-QSB or Form 10-KSB, as the case may
         be, (y) a more recent public announcement by the Company or (z) any
         other notice by the Company or the Company's Transfer Agent setting
         forth the number of shares of Common Stock outstanding. Upon the
         written or oral request of the Holder, the Company shall within two
         Trading Days confirm orally and in writing to the Holder the number of
         shares of Common Stock then outstanding. In any case, the number of
         outstanding shares of Common Stock shall be determined after giving
         effect to the

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         conversion or exercise of securities of the Company, including this
         Debenture, by the Holder or its affiliates since the date as of which
         such number of outstanding shares of Common Stock was reported.

                  d) Mechanics of Conversion

                           i. Conversion Shares Issuable Upon Conversion of
                  Principal Amount. The number of shares of Common Stock
                  issuable upon a conversion hereunder shall be determined by
                  the quotient obtained by dividing (x) the outstanding
                  principal amount of this Debenture to be converted by (y) the
                  Conversion Price. i.

                           ii. Delivery of Certificate Upon Conversion. Not
                  later than three Trading Days after any Conversion Date, the
                  Company will deliver to the Holder a certificate or
                  certificates representing the Conversion Shares which shall be
                  free of restrictive legends and trading restrictions (other
                  than those required by the Purchase Agreement or applicable
                  law) representing the number of shares of Common Stock being
                  acquired upon the conversion of Debentures. The Company shall,
                  if available and if allowed under applicable securities laws,
                  use its commercially reasonable efforts to deliver any
                  certificate or certificates required to be delivered by the
                  Company under this Section electronically through the
                  Depository Trust Corporation or another established clearing
                  corporation performing similar functions.

                           iii. Failure to Deliver Certificates. If such
                  certificate or certificates are not delivered to or as
                  directed by the applicable Holder by the third Trading Day
                  after a Conversion Date, the Holder shall be entitled by
                  written notice to the Company at any time on or before its
                  receipt of such certificate or certificates thereafter, to
                  rescind such conversion, in which event the Company shall
                  immediately return the certificate representing the principal
                  amount of Debentures tendered for conversion, if it was
                  delivered to the Company by the Holder, and the Holder shall
                  immediately return any stock certificates representing
                  Conversion Shares from such rescinded conversion to the
                  Company.

                           iv. Partial Liquidated Damages. If the Company fails
                  for any reason to deliver to the Holder such certificate or
                  certificates pursuant to Section 4(d)(ii) by the third Trading
                  Day after the Conversion Date, the Company shall pay to such
                  Holder, in cash, as liquidated damages and not as a penalty,
                  for each $1000 of principal amount being converted, $10 per
                  Trading Day (increasing to $20 per Trading Day after 5 Trading
                  Days after such damages begin to accrue) for each Trading Day
                  after such third Trading Day until such certificates are
                  delivered. The Company's obligations to issue and deliver the
                  Conversion Shares upon conversion of this Debenture in
                  accordance with the terms hereof are absolute and
                  unconditional, irrespective of any action or inaction by the
                  Holder to enforce the same, any waiver or consent with respect
                  to any provision hereof, the recovery of any judgment against
                  any Person or any action to enforce the same, or any setoff,

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                  counterclaim, recoupment, limitation or termination, or any
                  breach or alleged breach by the Holder or any other Person of
                  any obligation to the Company or any violation or alleged
                  violation of law by the Holder or any other person, and
                  irrespective of any other circumstance which might otherwise
                  limit such obligation of the Company to the Holder in
                  connection with the issuance of such Conversion Shares;
                  provided, however, such delivery shall not operate as a waiver
                  by the Company of any such action the Company may have against
                  the Holder. In the event a Holder of this Debenture shall
                  elect to convert any or all of the outstanding principal
                  amount hereof, the Company may not refuse conversion based on
                  any claim that the Holder or any one associated or affiliated
                  with the Holder has been engaged in any violation of law,
                  agreement or for any other reason, unless, an injunction from
                  a court, on notice, restraining and or enjoining conversion of
                  all or part of this Debenture shall have been sought and
                  obtained and the Company posts a surety bond for the benefit
                  of the Holder in the amount equal to the principal amount of
                  this Debenture outstanding, which is subject to the
                  injunction, which bond shall remain in effect until the
                  completion of arbitration/litigation of the dispute and the
                  proceeds of which shall be payable to such Holder to the
                  extent it obtains judgment. In the absence of an injunction
                  precluding the same, the Company shall issue Conversion Shares
                  or, if applicable, cash, upon a properly noticed conversion.
                  Nothing herein shall limit a Holder's right to pursue actual
                  damages or declare an Event of Default pursuant to Section 8
                  herein for the Company's failure to deliver Conversion Shares
                  within the period specified herein and such Holder shall have
                  the right to pursue all remedies available to it at law or in
                  equity including, without limitation, a decree of specific
                  performance and/or injunctive relief. The exercise of any such
                  rights shall not prohibit the Holders from seeking to enforce
                  damages pursuant to any other Section hereof or under
                  applicable law.

                           v. Failure to Timely Deliver Certificates Upon
                  Conversion. In addition to any other rights available to the
                  Holder, if the Company fails for any reason to deliver to the
                  Holder such certificate or certificates pursuant to Section
                  4(d)(ii) by the third Trading Day after the Conversion Date,
                  and if after such third Trading Day the Holder is required by
                  its brokerage firm to purchase, or its brokerage firm
                  purchases (in an open market transaction or otherwise) Common
                  Stock to deliver in satisfaction of a sale by such Holder of
                  the Conversion Shares which the Holder anticipated receiving
                  upon such conversion (a "Buy-In"), then the Company shall (A)
                  pay in cash to the Holder (in addition to any remedies
                  available to or elected by the Holder) the amount by which (x)
                  the Holder's total purchase price (including brokerage
                  commissions, if any) for the Common Stock so purchased exceeds
                  (y) the product of (1) the aggregate number of shares of
                  Common Stock that such Holder anticipated receiving from the
                  conversion at issue multiplied by (2) the actual sale price of
                  the Common Stock at the time of the sale (including brokerage
                  commissions, if any) giving rise to such purchase obligation
                  and (B) at the option of the Holder, either reissue Debentures
                  in principal amount equal to the principal amount of the
                  attempted conversion or

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                  deliver to the Holder the number of shares of Common Stock
                  that would have been issued had the Company timely complied
                  with its delivery requirements under Section 4(d)(ii). For
                  example, if the Holder purchases Common Stock having a total
                  purchase price of $11,000 to cover a Buy-In with respect to an
                  attempted conversion of Debentures with respect to which the
                  actual sale price of the Conversion Shares at the time of the
                  sale (including brokerage commissions, if any) giving rise to
                  such purchase obligation was a total of $10,000 under clause
                  (A) of the immediately preceding sentence, the Company shall
                  be required to pay the Holder $1,000. The Holder shall provide
                  the Company written notice indicating the amounts payable to
                  the Holder in respect of the Buy-In. Notwithstanding anything
                  contained herein to the contrary, if a Holder requires the
                  Company to make payment in respect of a Buy-In for the failure
                  to timely deliver certificates hereunder and the Company
                  timely pays in full such payment, the Company shall not be
                  required to pay such Holder liquidated damages under Section
                  4(d)(iv) in respect of the certificates resulting in such
                  Buy-In.

                           vi. Reservation of Shares Issuable Upon Conversion.
                  The Company covenants that it will at all times reserve and
                  keep available out of its authorized and unissued shares of
                  Common Stock solely for the purpose of issuance upon
                  conversion of the Debentures free from preemptive rights or
                  any other actual contingent purchase rights of persons other
                  than the Holders, not less than such number of shares of the
                  Common Stock as shall (subject to any additional requirements
                  of the Company as to reservation of such shares set forth in
                  the Purchase Agreement) be issuable (taking into account the
                  adjustments and restrictions of Section 5) upon the conversion
                  of the outstanding principal amount of the Debentures. The
                  Company covenants that all shares of Common Stock that shall
                  be so issuable shall, upon issue, be duly and validly
                  authorized, issued and fully paid, nonassessable and, if the
                  Registration Statement is then effective under the Securities
                  Act, registered for public resale in accordance with such
                  Registration Statement.

                           vii. Fractional Shares. Upon a conversion hereunder
                  the Company shall not be required to issue stock certificates
                  representing fractions of shares of the Common Stock, but may
                  if otherwise permitted, make a cash payment in respect of any
                  final fraction of a share based on the Closing Price at such
                  time. If the Company elects not, or is unable, to make such a
                  cash payment, the Holder shall be entitled to receive, in lieu
                  of the final fraction of a share, one whole share of Common
                  Stock.

                           viii. Transfer Taxes. The issuance of certificates
                  for shares of the Common Stock on conversion of the Debentures
                  shall be made without charge to the Holders thereof for any
                  documentary stamp or similar taxes that may be payable in
                  respect of the issue or delivery of such certificate, provided
                  that the Company shall not be required to pay any tax that may
                  be payable in respect of any transfer involved in the issuance
                  and delivery of any such certificate upon

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                  conversion in a name other than that of the Holder of such
                  Debentures so converted and the Company shall not be required
                  to issue or deliver such certificates unless or until the
                  person or persons requesting the issuance thereof shall have
                  paid to the Company the amount of such tax or shall have
                  established to the satisfaction of the Company that such tax
                  has been paid.

         Section 5. Certain Adjustments.

                  a) Stock Dividends and Stock Splits. If the Company, at any
         time while the Debentures are outstanding: (A) shall pay a stock
         dividend or otherwise make a distribution or distributions on shares of
         its Common Stock or any other equity or equity equivalent securities
         payable in shares of Common Stock (which, for avoidance of doubt, shall
         not include any shares of Common Stock issued by the Company pursuant
         to this Debenture, the Warrants or the Additional Investment Rights),
         (B) subdivide outstanding shares of Common Stock into a larger number
         of shares, (C) combine (including by way of reverse stock split)
         outstanding shares of Common Stock into a smaller number of shares, or
         (D) issue by reclassification of shares of the Common Stock any shares
         of capital stock of the Company, then the Conversion Price shall be
         multiplied by a fraction of which the numerator shall be the number of
         shares of Common Stock (excluding treasury shares, if any) outstanding
         before such event and of which the denominator shall be the number of
         shares of Common Stock outstanding after such event. Any adjustment
         made pursuant to this Section shall become effective immediately after
         the record date for the determination of stockholders entitled to
         receive such dividend or distribution and shall become effective
         immediately after the effective date in the case of a subdivision,
         combination or re-classification.

                  b) Subsequent Equity Sales. If the Company or any Subsidiary
         thereof, as applicable, at any time while Debentures are outstanding,
         shall offer, sell, grant any option to purchase or offer, sell or grant
         any right to reprice its securities, or otherwise dispose of or issue
         (or announce any offer, sale, grant or any option to purchase or other
         disposition) any Common Stock or Common Stock Equivalents entitling any
         Person to acquire shares of Common Stock, at an effective price per
         share less than the then Conversion Price ("Dilutive Issuance"), as
         adjusted hereunder (if the holder of the Common Stock or Common Stock
         Equivalents so issued shall at any time, whether by operation of
         purchase price adjustments, reset provisions, floating conversion,
         exercise or exchange prices or otherwise, or due to warrants, options
         or rights per share which is issued in connection with such issuance,
         be entitled to receive shares of Common Stock at an effective price per
         share which is less than the Conversion Price, such issuance shall be
         deemed to have occurred for less than the Conversion Price), then the
         Conversion Price shall be reduced to equal the effective conversion,
         exchange or purchase price for such Common Stock or Common Stock
         Equivalents (including any reset provisions thereof) at issue. Such
         adjustment shall be made whenever such Common Stock or Common Stock
         Equivalents are issued. The Company shall notify the Holder in writing,
         no later than the business day following the issuance of any Common
         Stock or Common

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         Stock Equivalents subject to this section, indicating therein the
         applicable issuance price, or of applicable reset price, exchange
         price, conversion price and other pricing terms.

                  c) Pro Rata Distributions. If the Company, at any time while
         Debentures are outstanding, shall distribute to all holders of Common
         Stock (and not to Holders) evidences of its indebtedness or assets or
         rights or warrants to subscribe for or purchase any security, then in
         each such case the Conversion Price shall be determined by multiplying
         such Conversion Price in effect immediately prior to the record date
         fixed for determination of stockholders entitled to receive such
         distribution by a fraction of which the denominator shall be the
         Closing Price determined as of the record date mentioned above, and of
         which the numerator shall be such Closing Price on such record date
         less the then fair market value at such record date of the portion of
         such assets or evidence of indebtedness so distributed applicable to
         one outstanding share of the Common Stock as determined by the Board of
         Directors in good faith. In either case the adjustments shall be
         described in a statement provided to the Holders of the portion of
         assets or evidences of indebtedness so distributed or such subscription
         rights applicable to one share of Common Stock. Such adjustment shall
         be made whenever any such distribution is made and shall become
         effective immediately after the record date mentioned above.

                  d) Calculations. All calculations under this Section 5 shall
         be made to the nearest cent or the nearest 1/100th of a share, as the
         case may be. For purposes of this Section 5, the number of shares of
         Common Stock outstanding as of a given date shall be the sum of the
         number of shares of Common Stock (excluding treasury shares, if any)
         outstanding.

                  e) Notice to Holders.

                           i. Adjustment to Conversion Price. Whenever the
                  Conversion Price is adjusted pursuant to any of this Section
                  5, the Company shall promptly deliver to each Holder a notice
                  setting forth the Conversion Price after such adjustment and
                  setting forth a brief statement of the facts requiring such
                  adjustment. If the Company issues a variable rate security,
                  despite the prohibition thereon in the Purchase Agreement, the
                  Company shall be deemed to have issued Common Stock or Common
                  Stock Equivalents at the lowest possible conversion or
                  exercise price at which such securities may be converted or
                  exercised in the case of a Variable Rate Transaction (as
                  defined in the Purchase Agreement), or the lowest possible
                  adjustment price in the case of an MFN Transaction (as defined
                  in the Purchase Agreement).

                           ii. Notice to Allow Conversion by Holder. If (A) the
                  Company shall declare a dividend (or any other distribution)
                  on the Common Stock; (B) the Company shall declare a special
                  nonrecurring cash dividend on or a redemption of the Common
                  Stock; (C) the Company shall authorize the granting to all
                  holders of the Common Stock rights or warrants to subscribe
                  for or purchase any shares of capital stock of any class or of
                  any rights; (D) the approval of any stockholders of

                                       11
<PAGE>

                  the Company shall be required in connection with any
                  reclassification of the Common Stock, any consolidation or
                  merger to which the Company is a party, any sale or transfer
                  of all or substantially all of the assets of the Company, of
                  any compulsory share exchange whereby the Common Stock is
                  converted into other securities, cash or property; (E) the
                  Company shall authorize the voluntary or involuntary
                  dissolution, liquidation or winding up of the affairs of the
                  Company; then, in each case, the Company shall cause to be
                  filed at each office or agency maintained for the purpose of
                  conversion of the Debentures, and shall cause to be mailed to
                  the Holders at their last addresses as they shall appear upon
                  the stock books of the Company, at least 20 calendar days
                  prior to the applicable record or effective date hereinafter
                  specified, a notice stating (x) the date on which a record is
                  to be taken for the purpose of such dividend, distribution,
                  redemption, rights or warrants, or if a record is not to be
                  taken, the date as of which the holders of the Common Stock of
                  record to be entitled to such dividend, distributions,
                  redemption, rights or warrants are to be determined or (y) the
                  date on which such reclassification, consolidation, merger,
                  sale, transfer or share exchange is expected to become
                  effective or close, and the date as of which it is expected
                  that holders of the Common Stock of record shall be entitled
                  to exchange their shares of the Common Stock for securities,
                  cash or other property deliverable upon such reclassification,
                  consolidation, merger, sale, transfer or share exchange;
                  provided, that the failure to mail such notice or any defect
                  therein or in the mailing thereof shall not affect the
                  validity of the corporate action required to be specified in
                  such notice. Holders are entitled to convert Debentures during
                  the 20-day period commencing the date of such notice to the
                  effective date of the event triggering such notice.

                           iii. Fundamental Transaction. If, at any time while
                  this Debenture is outstanding, (A) the Company effects any
                  merger or consolidation of the Company with or into another
                  Person, (B) the Company effects any sale of all or
                  substantially all of its assets in one or a series of related
                  transactions, (C) any tender offer or exchange offer (whether
                  by the Company or another Person) is completed pursuant to
                  which holders of Common Stock are permitted to tender or
                  exchange their shares for other securities, cash or property,
                  or (D) the Company effects any reclassification of the Common
                  Stock or any compulsory share exchange pursuant to which the
                  Common Stock is effectively converted into or exchanged for
                  other securities, cash or property (in any such case, a
                  "Fundamental Transaction"), then upon any subsequent
                  conversion of this Debenture, the Holder shall have the right
                  to receive, for each Conversion Share that would have been
                  issuable upon such conversion absent such Fundamental
                  Transaction, the same kind and amount of securities, cash or
                  property as it would have been entitled to receive upon the
                  occurrence of such Fundamental Transaction if it had been,
                  immediately prior to such Fundamental Transaction, the holder
                  of one share of Common Stock (the "Alternate Consideration").
                  For purposes of any such conversion, the determination of the
                  Conversion Price shall be appropriately adjusted to apply to
                  such Alternate Consideration based on the amount of

                                       12
<PAGE>

                  Alternate Consideration issuable in respect of one share of
                  Common Stock in such Fundamental Transaction, and the Company
                  shall apportion the Conversion Price among the Alternate
                  Consideration in a reasonable manner reflecting the relative
                  value of any different components of the Alternate
                  Consideration. If holders of Common Stock are given any choice
                  as to the securities, cash or property to be received in a
                  Fundamental Transaction, then the Holder shall be given the
                  same choice as to the Alternate Consideration it receives upon
                  any conversion of this Debenture following such Fundamental
                  Transaction. To the extent necessary to effectuate the
                  foregoing provisions, any successor to the Company or
                  surviving entity in such Fundamental Transaction shall issue
                  to the Holder a new debenture consistent with the foregoing
                  provisions and evidencing the Holder's right to convert such
                  debenture into Alternate Consideration. The terms of any
                  agreement pursuant to which a Fundamental Transaction is
                  effected shall include terms requiring any such successor or
                  surviving entity to comply with the provisions of this
                  paragraph (iii) and insuring that this Debenture (or any such
                  replacement security) will be similarly adjusted upon any
                  subsequent transaction analogous to a Fundamental Transaction.

                           iv. Exempt Issuance. Notwithstanding the foregoing,
                  no adjustment will be made under this Section 5 in respect of
                  an Exempt Issuance.

         Section 6. RESERVED.

         Section 7. Negative Covenants. So long as any portion of this Debenture
is outstanding, the Company will not and will not permit any of its Subsidiaries
to directly or indirectly take any of the following actions unless approved by
the holder(s) of a two-thirds majority of the then-outstanding principal amount
of all Debentures:

                  a) enter into, create, incur, assume or suffer to exist any
         indebtedness or liens of any kind, on or with respect to any of its
         property or assets now owned or hereafter acquired or any interest
         therein or any income or profits therefrom that is senior to, in any
         respect, the Company's obligations under the Debentures except for
         Permitted Indebtedness and Permitted Liens described below;

                  b) amend its certificate of incorporation, bylaws or other
         charter documents so as to adversely affect any rights of the Holder
         (it being agreed by the Holder that the proposed amendments to the
         Company's Series A Preferred Stock and the designation of the proposed
         Series B Preferred Stock shall not be considered as adversely affecting
         any rights of the Holder);

                  c) repay, repurchase or offer to repay, repurchase or
         otherwise acquire more than a de minimis number of shares of its Common
         Stock or other equity securities other than as to the Conversion Shares
         to the extent permitted or required under the Transaction Documents or
         as otherwise permitted by the Transaction Documents; or

                                       13
<PAGE>

                  d) enter into any agreement with respect to any of the
         foregoing.

As used herein, "Permitted Indebtedness" shall mean:

                           i. indebtedness existing as of the date of the
                  Purchase Agreement;

                           ii. indebtedness, including capitalized lease
                  obligations, incurred by the Company or any subsidiary for the
                  purpose of financing all or any part of the purchase price of
                  property, plant, equipment or other assets (tangible or
                  intangible) used in the business of the Company or any
                  subsidiary; and

                           iii. funded indebtedness from a non-affiliated
                  lending institution or other third party in an amount not to
                  exceed $5,000,000.

As used herein, "Permitted Liens" shall mean:

                           i. liens for taxes, assessments for governmental
                  charges or claims either not delinquent or contested in good
                  faith by appropriate proceedings;

                           ii. statutory liens of landlords, carriers,
                  warehousemen, mechanics, suppliers, materialmen and other
                  liens imposed by law incurred in the ordinary course of
                  business for sums not yet delinquent or being contested in
                  good faith;

                           iii. liens incurred or deposits made in the ordinary
                  course of business in connection with workers' compensation,
                  unemployment insurance and other types of social security, or
                  to secure the performance of statutory obligations, surety and
                  appeal bonds and other similar obligations;

                           iv. liens securing any Permitted Indebtedness; and

                           v. liens arising from filing Uniform Commercial Code
                  financing statements regarding leases.

         Section 8. Events of Default.

                  a) "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
                                    amount of any Debenture, or liquidated
                                    damages in respect of, any Debenture, in
                                    each case free of any claim of
                                    subordination, as and when the same shall
                                    become due and payable (whether on a
                                    Conversion

                                       14
<PAGE>

                                    Date or the Maturity Date or by acceleration
                                    or otherwise) which default, is not cured,
                                    within 3 Trading Days;

                           ii.      the Company shall fail to observe or perform
                                    any other covenant or agreement contained in
                                    this Debenture or any of the other
                                    Transaction Documents (other than a breach
                                    by the Company of its obligations to deliver
                                    shares of Common Stock to the Holder upon
                                    conversion which breach is addressed in
                                    clause (xii) below) which failure is not
                                    cured, if possible to cure, within 10
                                    Trading Days after notice of such default
                                    sent by the Holder or by any other holder of
                                    Debentures;

                           iii.     a default or event of default (subject to
                                    any grace or cure period provided for in the
                                    applicable agreement, document or
                                    instrument) shall occur under (A) any of the
                                    Transaction Documents other than the
                                    Debentures, or (B) any other material
                                    agreement, lease, document or instrument to
                                    which the Company or any Subsidiary is
                                    bound;

                           iv.      any representation or warranty made herein,
                                    in any other Transaction Document, in any
                                    written statement pursuant hereto or
                                    thereto, or in any other report, financial
                                    statement or certificate made or delivered
                                    to the Holder or any other holder of
                                    Debentures pursuant to the Purchase
                                    Agreement shall be untrue or incorrect in
                                    any material respect as of the date when
                                    made or deemed made;

                           v.       (i) the Company or any of its Subsidiaries
                                    shall commence, or there shall be commenced
                                    against the Company or any such Subsidiary,
                                    a case under any applicable bankruptcy or
                                    insolvency laws as now or hereafter in
                                    effect or any successor thereto, or the
                                    Company or any Subsidiary 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 any
                                    Subsidiary thereof or (ii) there is
                                    commenced against the Company or any
                                    Subsidiary thereof any such bankruptcy,
                                    insolvency or other proceeding which remains
                                    undismissed for a period of 60 days; or
                                    (iii) the Company or any Subsidiary thereof
                                    is adjudicated by a court of competent
                                    jurisdiction insolvent or bankrupt; or any
                                    order of relief or other order approving any
                                    such case or proceeding is entered; or (iv)
                                    the Company or any Subsidiary thereof
                                    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

                                       15
<PAGE>

                                    of 60 days; or (v) the Company or any
                                    Subsidiary thereof makes a general
                                    assignment for the benefit of creditors; or
                                    (vi) the Company shall fail to pay, or shall
                                    state that it is unable to pay, or shall be
                                    unable to pay, its debts generally as they
                                    become due; or (vii) the Company or any
                                    Subsidiary thereof shall call a meeting of
                                    its creditors with a view to arranging a
                                    composition, adjustment or restructuring of
                                    its debts; or (viii) the Company or any
                                    Subsidiary thereof shall by any act or
                                    failure to act expressly indicate its
                                    consent to, approval of or acquiescence in
                                    any of the foregoing; or (ix) any corporate
                                    or other action is taken by the Company or
                                    any Subsidiary thereof for the purpose of
                                    effecting any of the foregoing;

                           vi.      the Company or any Subsidiary shall default
                                    in any of its obligations under any
                                    mortgage, credit agreement or other
                                    facility, indenture agreement, factoring
                                    agreement or other instrument under which
                                    there may be issued, or by which there may
                                    be secured or evidenced any indebtedness for
                                    borrowed money or money due under any long
                                    term leasing or factoring arrangement of the
                                    Company in an amount exceeding $150,000,
                                    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;

                           vii.     the Common Stock shall not be eligible for
                                    quotation on or quoted for trading on a
                                    Trading Market and shall not again be
                                    eligible for and quoted or listed for
                                    trading thereon within 10 Trading Days;

                           viii.    the Company shall be a party to any Change
                                    of Control Transaction or Fundamental
                                    Transaction (other than a Fundamental
                                    Transaction undertaken for the purpose of
                                    changing the domicile of the Company), shall
                                    agree to sell or dispose of all or in excess
                                    of 33% of its assets in one or more
                                    transactions (whether or not such sale would
                                    constitute a Change of Control Transaction),
                                    provided, that any license by the Company of
                                    its intellectual property rights shall not
                                    be considered a sale or other disposal
                                    hereunder, or shall redeem or repurchase
                                    more than a de minimis number of its
                                    outstanding shares of Common Stock or other
                                    equity securities of the Company (other than
                                    redemptions of Conversion Shares and
                                    repurchases of shares of Common Stock or
                                    other equity securities of departing
                                    officers and directors of the Company;
                                    provided such repurchases shall not

                                       16
<PAGE>

                                    exceed $100,000, in the aggregate, for all
                                    officers and directors during the term of
                                    this Debenture);

                           ix.      a Registration Statement shall not have been
                                    declared effective by the Commission on or
                                    prior to the 180th calendar day after the
                                    First Closing Date;

                           x.       if, during the Effectiveness Period (as
                                    defined in the Registration Rights
                                    Agreement), the effectiveness of the
                                    Registration Statement lapses for any reason
                                    or the Holder shall not be permitted to
                                    resell Registrable Securities (as defined in
                                    the Registration Rights Agreement) under the
                                    Registration Statement, in either case, for
                                    more than 30 consecutive Trading Days or 60
                                    non-consecutive Trading Days during any 12
                                    month period; provided, however, that in the
                                    event that the Company is negotiating a
                                    merger, consolidation, acquisition or sale
                                    of all or substantially all of its assets or
                                    a similar transaction and in the written
                                    opinion of counsel to the Company, the
                                    Registration Statement, would be required to
                                    be amended to include information concerning
                                    such transactions or the parties thereto
                                    that is not available or may not be publicly
                                    disclosed at the time, the Company shall be
                                    permitted an additional 10 consecutive
                                    Trading Days during any 12 month period
                                    relating to such an event;

                           xi.      an Event (as defined in the Registration
                                    Rights Agreement) shall not have been cured
                                    to the satisfaction of the Holder prior to
                                    the expiration of thirty days from the Event
                                    Date (as defined in the Registration Rights
                                    Agreement) relating thereto (other than an
                                    Event resulting from a failure of an
                                    Registration Statement to be declared
                                    effective by the Commission on or prior to
                                    the Effectiveness Date (as defined in the
                                    Registration Rights Agreement), which shall
                                    be covered by Section 8(a)(ix);

                           xii.     the Company shall fail for any reason to
                                    deliver certificates to a Holder prior to
                                    the fifth Trading Day after a Conversion
                                    Date pursuant to and in accordance with
                                    Section 4(d) or the Company shall provide
                                    notice to the Holder, including by way of
                                    public announcement, at any time, of its
                                    intention not to comply with requests for
                                    conversions of any Debentures in accordance
                                    with the terms hereof; or

                           xiii.    the Company shall fail for any reason to pay
                                    in full the amount of cash due pursuant to a
                                    Buy-In within 10 Trading Days after notice
                                    therefor is delivered hereunder or shall
                                    fail to pay all

                                       17
<PAGE>

                                    amounts owed on account of an Event of
                                    Default within 10 Trading Days of the date
                                    due.

                  b) Remedies Upon Event of Default. If any Event of Default
         occurs, the full principal amount of this Debenture, together with
         other amounts owing in respect thereof, to the date of acceleration
         shall become, at the Holder's election, immediately due and payable in
         cash. The aggregate amount payable upon an acceleration by reason of an
         Event of Default shall be equal to the Mandatory Prepayment Amount.
         Commencing 5 days after the occurrence of any Event of Default that
         results in the eventual acceleration of this Debenture, the interest
         rate on this Debenture shall accrue at the rate of 18% per annum, or
         such lower maximum amount of interest permitted to be charged under
         applicable law. All Debentures for which the full Mandatory Prepayment
         Amount hereunder shall have been paid in accordance herewith shall
         promptly be surrendered to or as directed by the Company. The Holder
         need not provide and the Company hereby waives any presentment, demand,
         protest or other notice of any kind, and the Holder may immediately and
         without expiration of any grace period enforce any and all of its
         rights and remedies hereunder and all other remedies available to it
         under applicable law. Such declaration may be rescinded and annulled by
         Holder at any time prior to payment hereunder and the Holder shall have
         all rights as a Debenture holder until such time, if any, as the full
         payment under this Section shall have been received by it. No such
         rescission or annulment shall affect any subsequent Event of Default or
         impair any right consequent thereon.

         Section 9. Miscellaneous.

                  a) Notices. Any and all notices or other communications or
         deliveries to be provided by the Holders hereunder, including, without
         limitation, any Notice of Conversion, shall be in writing and delivered
         personally, by facsimile, sent by a nationally recognized overnight
         courier service, addressed to the Company, at the address set forth
         above, facsimile number (281) 466-1480, Attn: Steven B. Rash, or such
         other address or facsimile number as the Company may specify for such
         purposes by notice to the Holders delivered in accordance with this
         Section. Any and all notices or other communications or deliveries to
         be provided by the Company hereunder shall be in writing and delivered
         personally, by facsimile, sent by a nationally recognized overnight
         courier service addressed to each Holder at the facsimile telephone
         number or address of such Holder appearing on the books of the Company,
         or if no such facsimile telephone number or address appears, at the
         principal place of business of the Holder. Any notice or other
         communication or deliveries hereunder shall be deemed given and
         effective on the earliest of (i) the date of transmission, if such
         notice or communication is delivered via facsimile (and the sender
         receives a confirmation of successful transmission) at the facsimile
         telephone number specified in this Section prior to 5:30 p.m. (New York
         City time), (ii) the date after the date of transmission, if such
         notice or communication is delivered via facsimile at the facsimile
         telephone number specified in this Section later than 5:30 p.m. (New
         York City time) on any date and earlier than 11:59 p.m. (New York City
         time) on such date, (iii) the second Business Day following the date of
         mailing, if

                                       18
<PAGE>

         sent by nationally recognized overnight courier service, or (iv) upon
         actual receipt by the party to whom such notice is required to be
         given.

                  b) Absolute Obligation. Except as expressly provided herein,
         no provision of this Debenture shall alter or impair the obligation of
         the Company, which is absolute and unconditional, to pay the principal
         of and liquidated damages (if any) on, this Debenture at the time,
         place, and rate, and in the coin or currency, herein prescribed. This
         Debenture is a direct debt obligation of the Company. This Debenture
         ranks pari passu with all other Debentures now or hereafter issued
         under the terms set forth herein.

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

                  d) Governing Law. All questions concerning the construction,
         validity, enforcement and interpretation of this Debenture shall be
         governed by and construed and enforced in accordance with the internal
         laws of the State of New York, without regard to the principles of
         conflicts of law thereof. Each party agrees that all legal proceedings
         concerning the interpretations, enforcement and defense of the
         transactions contemplated by any of the Transaction Documents (whether
         brought against a party hereto or its respective affiliates, directors,
         officers, shareholders, employees or agents) shall be commenced in the
         state and federal courts sitting in the City of New York, Borough of
         Manhattan (the "New York Courts"). Each party hereto hereby irrevocably
         submits to the exclusive jurisdiction of the New York Courts for the
         adjudication of any dispute hereunder or in connection herewith or with
         any transaction contemplated hereby or discussed herein (including with
         respect to the enforcement of any of the Transaction Documents), and
         hereby irrevocably waives, and agrees not to assert in any suit, action
         or proceeding, any claim that it is not personally subject to the
         jurisdiction of any such court, or such New York Courts are improper or
         inconvenient venue for such proceeding. Each party hereby irrevocably
         waives personal service of process and consents to process being served
         in any such suit, action or proceeding by mailing a copy thereof via
         registered or certified mail or overnight delivery (with evidence of
         delivery) to such party at the address in effect for notices to it
         under this Debenture and agrees that such service shall constitute good
         and sufficient service of process and notice thereof. Nothing contained
         herein shall be deemed to limit in any way any right to serve process
         in any manner permitted by law. Each party hereto hereby irrevocably
         waives, to the fullest extent permitted by applicable law, any and all
         right to trial by jury in any legal proceeding arising out of or
         relating to this Debenture or the transactions contemplated hereby. If
         either party shall commence an action or proceeding to enforce any
         provisions of this Debenture, then the prevailing party in such action
         or proceeding shall be

                                       19
<PAGE>

         reimbursed by the other party for its attorneys fees and other costs
         and expenses incurred with the investigation, preparation and
         prosecution of such action or proceeding.

                  e) Waiver. Any waiver by the Company or the Holder of a breach
         of any provision of this Debenture 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 Debenture. The failure of the Company or
         the Holder to insist upon strict adherence to any term of this
         Debenture 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 Debenture. Any waiver
         must be in writing.

                  f) Severability. If any provision of this Debenture is
         invalid, illegal or unenforceable, the balance of this Debenture 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. If it shall be found that any interest or
         other amount deemed interest due hereunder violates applicable laws
         governing usury, the applicable rate of interest due hereunder shall
         automatically be lowered to equal the maximum permitted rate of
         interest. The Company covenants (to the extent that it may lawfully do
         so) that it shall not at any time insist upon, plead, or in any manner
         whatsoever claim or take the benefit or advantage of, any stay,
         extension or usury law or other law which would prohibit or forgive the
         Company from paying all or any portion of the principal of or interest
         on this Debenture as contemplated herein, wherever enacted, now or at
         any time hereafter in force, or which may affect the covenants or the
         performance of this indenture, and the Company (to the extent it may
         lawfully do so) hereby expressly waives all benefits or advantage of
         any such law, and covenants that it will not, by resort to any such
         law, hinder, delay or impeded the execution of any power herein granted
         to the Holder, but will suffer and permit the execution of every such
         as though no such law has been enacted.

                  g) Next Business Day. 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 and no interest shall
         be payable in respect of such extension.

                  h) Headings. The headings contained herein are for convenience
         only, do not constitute a part of this Debenture and shall not be
         deemed to limit or affect any of the provisions hereof.

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

                                       20
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Convertible Debenture
to be duly executed by a duly authorized officer as of the date first above
indicated.

                                    POWER 3 MEDICAL PRODUCTS, INC.

                                    By:
                                       -----------------------------------------
                                       Name:       Steven B. Rash
                                       Title:      Chief Executive Officer

                                       21
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

         The undersigned hereby elects to convert principal under the
Convertible Debenture of Power 3 Medical Products, Inc., a New York corporation
(the "Company"), due on January 26, 2008, into shares of common stock, par value
$0.001 per share (the "Common Stock"), of the Company according to the
conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any.

         By the delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts determined in accordance with Section 13(d) of the Exchange
Act, specified under Section 4 of this Debenture.

         The undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection with any
transfer of the aforesaid shares of Common Stock.

Conversion calculations:

                                 Date to Effect Conversion:

                                 Principal Amount of Debentures to be Converted:

                                 Number of shares of Common Stock to be issued:

                                 Signature:

                                 Name:

                                 Address:

                                       22
<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

The Convertible Debenture due on January 26, 2008, in the aggregate principal
amount of $_____________ issued by Power 3 Medical Products, Inc., a New York
corporation. This Conversion Schedule reflects conversions made under Section 4
of the above referenced Debenture.

                                     Dated:

<Table>
<Caption>
                                                           Aggregate Principal
                                                             Amount Remaining
                                                              Subsequent to
      Date of Conversion                                        Conversion
(or for first entry, Original                                  (or original
         Issue Date)              Amount of Conversion      Principal Amount)       Company Attest
------------------------------    --------------------     ------------------       --------------
<S>                               <C>                      <C>                      <C>

</Table>

                                       23
<PAGE>

                                   SCHEDULE TO
                          FORM OF CONVERTIBLE DEBENTURE

         The Company has issued Convertible Debentures Due January 26, 2008 to
the following listed holders. The terms of the Convertible Debentures issued by
the Company to each of the following holders are identical except for the name
of the holder and the original principal amount of the Convertible Debenture.

<Table>
<Caption>
                  HOLDER                              ORIGINAL PRINCIPAL AMOUNT
                  ------                              -------------------------
<S>                                                   <C>
Cityplatz Limited                                           $ 50,000
Crestview Capital Master, LLC                               $150,000
Gryphon Master Fund L.P.                                    $100,000
GSSF Master Fund, LP                                        $100,000
</Table><PAGE>
                                                                     EXHIBIT 4.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

               To Purchase ____________ Shares of Common Stock of

                         POWER 3 MEDICAL PRODUCTS, INC.

                  THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies
that, for value received, _____________________ (the "Holder"), is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the "Initial
Exercise Date") and on or prior to the close of business on October 28, 2009
(the "Termination Date") but not thereafter, to subscribe for and purchase from
Power 3 Medical Products, Inc., a New York corporation (the "Company"), up to
_______ shares (the "Warrant Shares") of Common Stock, par value $0.001 per
share, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).

         Section 1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement dated October 28, 2004, among the Company and the purchasers
signatory thereto, as amended by that certain Amendment to Securities Purchase
Agreement dated effective January 19, 2005 (as amended, the "Purchase
Agreement").

         Section 2. Exercise.

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

<PAGE>

         within 5 Trading Days of the date said Notice of Exercise is delivered
         to the Company, the Holder shall have surrendered this Warrant to the
         Company and the Company shall have received payment of the aggregate
         Exercise Price of the shares thereby purchased by wire transfer or
         cashier's check drawn on a United States bank.

                  b) Exercise Price. The exercise price of each share of Common
         Stock under this Warrant shall be $1.44, subject to adjustment
         hereunder (the "Exercise Price").

                  c) Cashless Exercise. If at any time after one year from the
         date of issuance of this Warrant there is no effective Registration
         Statement registering the resale of the Warrant Shares by the Holder,
         then this Warrant may also be exercised at such time by means of a
         "cashless exercise" in which the Holder shall be entitled to receive a
         certificate for the number of Warrant Shares equal to the quotient
         obtained by dividing [(A-B) (X)] by (A), where:

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

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

                  (X) =  the number of Warrant Shares issuable upon exercise
                         of this Warrant in accordance with the terms of this
                         Warrant by means of a cash exercise rather than a
                         cashless exercise.

                  d) Exercise Limitations; Holder's Restrictions. The Holder
         shall not have the right to exercise any portion of this Warrant,
         pursuant to Section 2(c) or otherwise, to the extent that after giving
         effect to such issuance after exercise, the Holder (together with the
         Holder's affiliates), as set forth on the applicable Notice of
         Exercise, would beneficially own in excess of 4.99% of the number of
         shares of the Common Stock outstanding immediately after giving effect
         to such issuance. For purposes of the foregoing sentence, the number of
         shares of Common Stock beneficially owned by the Holder and its
         affiliates shall include the number of shares of Common Stock issuable
         upon exercise of this Warrant with respect to which the determination
         of such sentence is being made, but shall exclude the number of shares
         of Common Stock which would be issuable upon (A) exercise of the
         remaining, nonexercised portion of this Warrant beneficially owned by
         the Holder or any of its affiliates and (B) exercise or conversion of
         the unexercised or nonconverted portion of any other securities of the
         Company (including, without limitation, any other Debentures or
         Warrants) subject to a limitation on conversion or exercise analogous
         to the limitation contained herein beneficially owned by the Holder or
         any of its affiliates. Except as set forth in the preceding sentence,
         for purposes of this Section 2(d), beneficial ownership shall be
         calculated in accordance with Section 13(d) of the Exchange Act, it
         being acknowledged by Holder that the Company is not representing to
         Holder that such calculation is in compliance with Section 13(d) of the
         Exchange Act and Holder is solely responsible for any schedules
         required to be filed in accordance therewith. To the extent that the
         limitation contained in this Section 2(d) applies, the determination of
         whether this Warrant is exercisable (in relation to other securities
         owned by the Holder) and of which portion of this Warrant is
         exercisable shall

                                       -2-
<PAGE>

         be in the sole discretion of such Holder, and the submission of a
         Notice of Exercise shall be deemed to be such Holder's determination of
         whether this Warrant is exercisable (in relation to other securities
         owned by such Holder) and of which portion of this Warrant is
         exercisable, in each case subject to such aggregate percentage
         limitation, and the Company shall have no obligation to verify or
         confirm the accuracy of such determination. For purposes of this
         Section 2(d), in determining the number of outstanding shares of Common
         Stock, the Holder may rely on the number of outstanding shares of
         Common Stock as reflected in (x) the Company's most recent Form 10-QSB
         or Form 10-KSB, as the case may be, (y) a more recent public
         announcement by the Company or (z) any other notice by the Company or
         the Company's Transfer Agent setting forth the number of shares of
         Common Stock outstanding. Upon the written or oral request of the
         Holder, the Company shall within two Trading Days confirm orally and in
         writing to the Holder the number of shares of Common Stock then
         outstanding. In any case, the number of outstanding shares of Common
         Stock shall be determined after giving effect to the conversion or
         exercise of securities of the Company, including this Warrant, by the
         Holder or its affiliates since the date as of which such number of
         outstanding shares of Common Stock was reported.

                  e) Mechanics of Exercise.

                           i. Authorization of Warrant Shares. The Company
                  covenants that all Warrant Shares which may be issued upon the
                  exercise of the purchase rights represented by this Warrant
                  will, upon exercise of the purchase rights represented by, and
                  in accordance with the terms of, this Warrant, be duly
                  authorized, validly issued, fully paid and nonassessable and
                  free from all taxes, liens and charges in respect of the issue
                  thereof (other than taxes in respect of any transfer occurring
                  contemporaneously with such issue). The Company covenants that
                  during the period the Warrant is outstanding, it will reserve
                  from its authorized and unissued Common Stock a sufficient
                  number of shares to provide for the issuance of the Warrant
                  Shares upon the exercise of any purchase rights under this
                  Warrant. The Company further covenants that its issuance of
                  this Warrant shall constitute full authority to its officers
                  who are charged with the duty of executing stock certificates
                  to execute and issue the necessary certificates for the
                  Warrant Shares upon the exercise of the purchase rights under,
                  and in accordance with the terms of, this Warrant. The Company
                  will take all such reasonable action as may be necessary to
                  assure that such Warrant Shares may be issued as provided
                  herein without violation of any applicable law or regulation,
                  or of any requirements of the Trading Market upon which the
                  Common Stock may be listed.

                           ii. Delivery of Certificates Upon Exercise.
                  Certificates for shares purchased hereunder shall be
                  transmitted by the transfer agent of the Company to the Holder
                  by crediting the account of the Holder's prime broker with the
                  Depository Trust Company through its Deposit Withdrawal Agent
                  Commission ("DWAC") system if the Company is a participant in
                  such system, and otherwise by physical delivery to the

                                       -3-
<PAGE>

                  address specified by the Holder in the Notice of Exercise
                  within 3 Trading Days from the delivery to the Company of the
                  Notice of Exercise Form, surrender of this Warrant and payment
                  of the aggregate Exercise Price as set forth above ("Warrant
                  Share Delivery Date"). This Warrant shall be deemed to have
                  been exercised on the date the Exercise Price is received by
                  the Company. The Warrant Shares shall be deemed to have been
                  issued, and Holder or any other person so designated to be
                  named therein shall be deemed to have become a holder of
                  record of such shares for all purposes, as of the date the
                  Warrant has been exercised by payment to the Company of the
                  Exercise Price and all taxes required to be paid by the
                  Holder, if any, pursuant to Section 2(e)(vii) prior to the
                  issuance of such shares, have been paid.

                           iii. Delivery of New Warrants Upon Exercise. If this
                  Warrant shall have been exercised in part, the Company shall,
                  at the time of delivery of the certificate or certificates
                  representing Warrant Shares, deliver to Holder a new Warrant
                  evidencing the rights of Holder to purchase the unpurchased
                  Warrant Shares called for by this Warrant, which new Warrant
                  shall in all other respects be identical with this Warrant.

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

                           v. Buy-In Compensation. In addition to any other
                  rights available to the Holder, if the Company fails to cause
                  its transfer agent to transmit to the Holder a certificate or
                  certificates representing the Warrant Shares pursuant to an
                  exercise on or before the Warrant Share Delivery Date, and if
                  after such date the Holder is required by its broker to
                  purchase (in an open market transaction or otherwise) shares
                  of Common Stock to deliver in satisfaction of a sale by the
                  Holder of the Warrant Shares which the Holder anticipated
                  receiving upon such exercise (a "Buy-In"), then the Company
                  shall (1) pay in cash to the Holder the amount by which (x)
                  the Holder's total purchase price (including brokerage
                  commissions, if any) for the shares of Common Stock so
                  purchased exceeds (y) the amount obtained by multiplying (A)
                  the number of Warrant Shares that the Company was required to
                  deliver to the Holder in connection with the exercise at issue
                  times (B) the price at which the sell order giving rise to
                  such purchase obligation was executed, and (2) at the option
                  of the Holder, either reinstate the portion of the Warrant and
                  equivalent number of Warrant Shares for which such exercise
                  was not honored or deliver to the Holder the number of shares
                  of Common Stock that would have been issued had the Company
                  timely complied with its exercise and delivery obligations
                  hereunder. For example, if the Holder purchases Common Stock
                  having a total purchase price of $11,000 to cover a Buy-In
                  with

                                      -4-
<PAGE>

                  respect to an attempted exercise of shares of Common Stock
                  with an aggregate sale price giving rise to such purchase
                  obligation of $10,000, under clause (1) of the immediately
                  preceding sentence the Company shall be required to pay the
                  Holder $1,000. The Holder shall provide the Company written
                  notice indicating the amounts payable to the Holder in respect
                  of the Buy-In, together with applicable confirmations and
                  other evidence reasonably requested by the Company. Nothing
                  herein shall limit a Holder's right to pursue any other
                  remedies available to it hereunder, at law or in equity
                  including, without limitation, a decree of specific
                  performance and/or injunctive relief with respect to the
                  Company's failure to timely deliver certificates representing
                  shares of Common Stock upon exercise of the Warrant as
                  required pursuant to the terms hereof.

                           vi. No Fractional Shares or Scrip. No fractional
                  shares or scrip representing fractional shares shall be issued
                  upon the exercise of this Warrant. As to any fraction of a
                  share which Holder would otherwise be entitled to purchase
                  upon such exercise, the Company shall pay a cash adjustment in
                  respect of such final fraction in an amount equal to such
                  fraction multiplied by the Exercise Price.

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

                           viii. Closing of Books. The Company will not close
                  its stockholder books or records in any manner which prevents
                  the timely exercise of this Warrant, pursuant to the terms
                  hereof.

         Section 3. Certain Adjustments.

                  a) Stock Dividends and Splits. If the Company, at any time
         while this Warrant is outstanding: (A) pays a stock dividend or
         otherwise make a distribution or distributions on shares of its Common
         Stock or any other equity or equity equivalent securities payable in
         shares of Common Stock (which, for avoidance of doubt, shall not
         include any shares of Common Stock issued by the Company pursuant to
         this Warrant, the Debentures or the Additional Investment Rights), (B)
         subdivides outstanding shares of Common Stock into a larger number of
         shares, (C) combines (including by way of

                                       -5-
<PAGE>

         reverse stock split) outstanding shares of Common Stock into a smaller
         number of shares, or (D) issues by reclassification of shares of the
         Common Stock any shares of capital stock of the Company, then in each
         case the Exercise Price shall be multiplied by a fraction of which the
         numerator shall be the number of shares of Common Stock (excluding
         treasury shares, if any) outstanding before such event and of which the
         denominator shall be the number of shares of Common Stock outstanding
         after such event and the number of shares issuable upon exercise of
         this Warrant shall be proportionately adjusted. Any adjustment made
         pursuant to this Section 3(a) shall become effective immediately after
         the record date for the determination of stockholders entitled to
         receive such dividend or distribution and shall become effective
         immediately after the effective date in the case of a subdivision,
         combination or re-classification.

                  b) Subsequent Equity Sales. If the Company or any Subsidiary
         thereof, as applicable, at any time while this Warrant is outstanding,
         shall offer, sell, grant any option to purchase or offer, sell or grant
         any right to reprice its securities, or otherwise dispose of or issue
         (or announce any offer, sale, grant or any option to purchase or other
         disposition) any Common Stock or Common Stock Equivalents entitling any
         Person to acquire shares of Common Stock, at an effective price per
         share less than the then Exercise Price (such lower price, the "Base
         Share Price" and such issuances collectively, a "Dilutive Issuance"),
         as adjusted hereunder (if the holder of the Common Stock or Common
         Stock Equivalents so issued shall at any time, whether by operation of
         purchase price adjustments, reset provisions, floating conversion,
         exercise or exchange prices or otherwise, or due to warrants, options
         or rights per share which is issued in connection with such issuance,
         be entitled to receive shares of Common Stock at an effective price per
         share which is less than the Exercise Price, such issuance shall be
         deemed to have occurred for less than the Exercise Price), then, the
         Exercise Price shall be reduced to equal the Base Share Price. Such
         adjustment shall be made whenever such Common Stock or Common Stock
         Equivalents are issued. The Company shall notify the Holder in writing,
         no later than the business day following the issuance of any Common
         Stock or Common Stock Equivalents subject to this section, indicating
         therein the applicable issuance price, or of applicable reset price,
         exchange price, conversion price and other pricing terms.

                  c) Pro Rata Distributions. If the Company, at any time prior
         to the Termination Date, shall distribute to all holders of Common
         Stock (and not to Holders of the Warrants) evidences of its
         indebtedness or assets or rights or warrants to subscribe for or
         purchase any security other than the Common Stock (which shall be
         subject to Section 3(b)), then in each such case the Exercise Price
         shall be adjusted by multiplying the Exercise Price in effect
         immediately prior to the record date fixed for determination of
         stockholders entitled to receive such distribution by a fraction of
         which the denominator shall be the Closing Price determined as of the
         record date mentioned above, and of which the numerator shall be such
         Closing Price on such record date less the then per share fair market
         value at such record date of the portion of such assets or evidence of
         indebtedness so distributed applicable to one outstanding share of the
         Common Stock as determined by the Board of Directors in good faith. In
         either case the adjustments shall be described in a statement provided
         to the Holders of the portion of assets or evidences of indebtedness so
         distributed or such subscription rights applicable to one share of

                                      -6-
<PAGE>

         Common Stock. Such adjustment shall be made whenever any such
         distribution is made and shall become effective immediately after the
         record date mentioned above.

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

                  e) Notice to Holders.

                           i. Adjustment to Exercise Price. Whenever the
                  Exercise Price is adjusted pursuant to this Section 3, the
                  Company shall promptly mail to each Holder a notice setting
                  forth the Exercise Price after such adjustment and setting
                  forth a brief statement of the facts requiring such
                  adjustment. If the Company issues a variable rate security,
                  despite the prohibition thereon in the Purchase Agreement, the
                  Company shall be deemed to have issued Common Stock or Common
                  Stock Equivalents at the lowest possible conversion or
                  exercise price at which such securities may be converted or
                  exercised in the case of a Variable Rate Transaction (as
                  defined in the Purchase Agreement), or the lowest possible
                  adjustment price in the case of an MFN Transaction (as defined
                  in the Purchase Agreement.

                           ii. Notice to Allow Exercise by Holder. If (A) the
                  Company shall declare a dividend (or any other distribution)
                  on the Common Stock; (B) the Company shall declare a special
                  nonrecurring cash dividend on or a redemption of the Common
                  Stock; (C) the Company shall authorize the granting to all
                  holders of the Common Stock rights or warrants to subscribe
                  for or purchase any shares of capital stock of any class or of
                  any rights; (D) the approval of any stockholders of the
                  Company shall be required in connection with any
                  reclassification of the Common Stock, any consolidation or
                  merger to which the Company is a party, any sale or transfer
                  of all or substantially all of the assets of the Company, of
                  any compulsory share exchange whereby the Common Stock is
                  converted into other securities, cash or property; (E) the
                  Company shall authorize the voluntary or involuntary
                  dissolution, liquidation or winding up of the affairs of the
                  Company; then, in each case, the Company shall cause to be
                  mailed to the Holder at its last addresses as it shall appear
                  upon the Warrant Register of the Company, at least 20 calendar
                  days prior to the applicable record or effective date
                  hereinafter specified, a notice stating (x) the date on which
                  a record is to be taken for the purpose of such dividend,
                  distribution, redemption, rights or warrants, or if a record
                  is not to be taken, the date as of which the holders of the
                  Common Stock of record to be entitled to such dividend,
                  distributions, redemption, rights or warrants are to be
                  determined or (y) the date on which such reclassification,
                  consolidation, merger, sale, transfer or share exchange is

                                       -7-
<PAGE>

                  expected to become effective or close, and the date as of
                  which it is expected that holders of the Common Stock of
                  record shall be entitled to exchange their shares of the
                  Common Stock for securities, cash or other property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange; provided, that the failure
                  to mail such notice or any defect therein or in the mailing
                  thereof shall not affect the validity of the corporate action
                  required to be specified in such notice. The Holder is
                  entitled to exercise this Warrant during the 20-day period
                  commencing the date of such notice to the effective date of
                  the event triggering such notice.

                  f) Fundamental Transaction. If, at any time while this Warrant
         is outstanding, (A) the Company effects any merger or consolidation of
         the Company with or into another Person, (B) the Company effects any
         sale of all or substantially all of its assets in one or a series of
         related transactions, (C) any tender offer or exchange offer (whether
         by the Company or another Person) is completed pursuant to which
         holders of Common Stock are permitted to tender or exchange their
         shares for other securities, cash or property, or (D) the Company
         effects any reclassification of the Common Stock or any compulsory
         share exchange pursuant to which the Common Stock is effectively
         converted into or exchanged for other securities, cash or property (in
         any such case, a "Fundamental Transaction"), then, upon any subsequent
         conversion of this Warrant, the Holder shall have the right to receive,
         for each Warrant Share that would have been issuable upon such exercise
         absent such Fundamental Transaction, the number of shares of Common
         Stock of the successor or acquiring corporation or of the Company, if
         it is the surviving corporation, and Alternate Consideration receivable
         upon or as a result of such reorganization, reclassification, merger,
         consolidation or disposition of assets by a Holder of the number of
         shares of Common Stock for which this Warrant is exercisable
         immediately prior to such event (the "Alternate Consideration"). For
         purposes of any such exercise, the determination of the Exercise Price
         shall be appropriately adjusted to apply to such Alternate
         Consideration based on the amount of Alternate Consideration issuable
         in respect of one share of Common Stock in such Fundamental
         Transaction, and the Company shall apportion the Exercise Price among
         the Alternate Consideration in a reasonable manner reflecting the
         relative value of any different components of the Alternate
         Consideration. If holders of Common Stock are given any choice as to
         the securities, cash or property to be received in a Fundamental
         Transaction, then the Holder shall be given the same choice as to the
         Alternate Consideration it receives upon any exercise of this Warrant
         following such Fundamental Transaction. To the extent necessary to
         effectuate the foregoing provisions, any successor to the Company or
         surviving entity in such Fundamental Transaction shall issue to the
         Holder a new warrant consistent with the foregoing provisions and
         evidencing the Holder's right to exercise such warrant into Alternate
         Consideration. The terms of any agreement pursuant to which a
         Fundamental Transaction is effected shall include terms requiring any
         such successor or surviving entity to comply with the provisions of
         this paragraph (f) and insuring that this Warrant (or any such
         replacement security) will be similarly adjusted upon any subsequent
         transaction analogous to a Fundamental Transaction.

                                      -8-
<PAGE>

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

                  h) Voluntary Adjustment By Company. The Company may at any
         time during the term of this Warrant reduce the then current Exercise
         Price to any amount and for any period of time deemed appropriate by
         the Board of Directors of the Company.

         Section 4. Transfer of Warrant.

                  a) Transferability. Subject to compliance with any applicable
         securities laws and the conditions set forth in Sections 5(a) and 4(d)
         hereof and to the provisions of Section 4.1 of the Purchase Agreement,
         this Warrant and all rights hereunder are transferable, in whole or in
         part, upon surrender of this Warrant at the principal office of the
         Company, together with a written assignment of this Warrant
         substantially in the form attached hereto duly executed by the Holder
         or its agent or attorney and funds sufficient to pay any transfer taxes
         payable upon the making of such transfer. Upon such surrender and, if
         required, such payment, the Company shall execute and deliver a new
         Warrant or Warrants in the name of the assignee or assignees and in the
         denomination or denominations specified in such instrument of
         assignment, and shall issue to the assignor a new Warrant evidencing
         the portion of this Warrant not so assigned, and this Warrant shall
         promptly be cancelled. A Warrant, if properly assigned, may be
         exercised by a new holder for the purchase of Warrant Shares without
         having a new Warrant issued.

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

                  c) Warrant Register. The Company shall register this Warrant,
         upon records to be maintained by the Company for that purpose (the
         "Warrant Register"), in the name of the record Holder hereof from time
         to time. The Company may deem and treat the registered Holder of this
         Warrant as the absolute owner hereof for the purpose of any exercise
         hereof or any distribution to the Holder, and for all other purposes,
         absent actual notice to the contrary.

                  d) Transfer Restrictions. If, at the time of the surrender of
         this Warrant in connection with any transfer of this Warrant, the
         transfer of this Warrant shall not be registered pursuant to an
         effective registration statement under the Securities Act and under
         applicable state securities or blue sky laws, the Company may require,
         as a condition of allowing such transfer (i) that the Holder or
         transferee of this Warrant, as the case may be, furnish to the Company
         a written opinion of counsel (which opinion shall be in form, substance
         and scope customary for opinions of counsel in comparable transactions)
         to the effect that such transfer may be made without registration under
         the

                                       -9-
<PAGE>

         Securities Act and under applicable state securities or blue sky laws,
         (ii) that the holder or transferee execute and deliver to the Company
         an investment letter in form and substance acceptable to the Company
         and (iii) that the transferee be an "accredited investor" as defined in
         Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
         Securities Act or a qualified institutional buyer as defined in Rule
         144A(a) under the Securities Act.

         Section 5. Miscellaneous.

                  a) Title to Warrant. Prior to the Termination Date and subject
         to compliance with applicable laws and Section 4 of this Warrant, this
         Warrant and all rights hereunder are transferable, in whole or in part,
         at the office or agency of the Company by the Holder in person or by
         duly authorized attorney, upon surrender of this Warrant together with
         the Assignment Form annexed hereto properly endorsed. The transferee
         shall sign an investment letter in form and substance reasonably
         satisfactory to the Company.

                  b) No Rights as Shareholder Until Exercise. This Warrant does
         not entitle the Holder to any voting rights or other rights as a
         shareholder of the Company prior to the exercise hereof. Upon the
         surrender of this Warrant and the payment of the aggregate Exercise
         Price (or by means of a cashless exercise), the Warrant Shares so
         purchased shall be and be deemed to be issued to such Holder as the
         record owner of such shares as of the close of business on the later of
         the date of such surrender or payment.

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

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

                  e) Authorized Shares.

                           The Company covenants that during the period the
                  Warrant is outstanding, it will reserve from its authorized
                  and unissued Common Stock a sufficient number of shares to
                  provide for the issuance of the Warrant Shares upon the
                  exercise of any purchase rights under this Warrant. The
                  Company further covenants that its issuance of this Warrant
                  shall constitute full authority to its officers who are
                  charged with the duty of executing stock certificates to
                  execute and issue the necessary certificates for the Warrant
                  Shares upon the exercise of the purchase rights under, and in
                  accordance with the terms of, this Warrant. The

                                      -10-
<PAGE>

                  Company will take all such reasonable action as may be
                  necessary to assure that such Warrant Shares may be issued as
                  provided herein without violation of any applicable law or
                  regulation, or of any requirements of the Trading Market upon
                  which the Common Stock may be listed.

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

                           Before taking any action which would result in an
                  adjustment in the number of Warrant Shares for which this
                  Warrant is exercisable or in the Exercise Price, the Company
                  shall obtain all such authorizations or exemptions thereof, or
                  consents thereto, as may be necessary from any public
                  regulatory body or bodies having jurisdiction thereof.

                  f) Governing Law. All questions concerning the construction,
         validity, enforcement and interpretation of this Warrant shall be
         governed by and construed and enforced in accordance with the internal
         laws of the State of New York, without regard to the principles of
         conflicts of law thereof. Each party agrees that all legal proceedings
         concerning the interpretations, enforcement and defense of the
         transactions contemplated by this Warrant (whether brought against a
         party hereto or its respective affiliates, directors, officers,
         shareholders, employees or agents) shall be commenced exclusively in
         the state and federal courts sitting in the City of New York. Each
         party hereby irrevocably submits to the exclusive jurisdiction of the
         state and federal courts sitting in the City of New York, borough of
         Manhattan for the adjudication of any dispute hereunder or in
         connection herewith or with any transaction contemplated hereby or
         discussed herein, and hereby irrevocably waives, and agrees not to
         assert in any suit, action or proceeding, any claim that it is not
         personally subject to the jurisdiction of any such court, that such
         suit, action or proceeding is improper or inconvenient venue for such
         proceeding. Each party hereby irrevocably waives personal service of
         process and consents to process being served in any such suit, action
         or proceeding by mailing a copy thereof via registered or certified
         mail or overnight delivery (with evidence of delivery) to such party at
         the address in effect for notices to it under this Warrant and agrees
         that

                                      -11-
<PAGE>

         such service shall constitute good and sufficient service of process
         and notice thereof. Nothing contained herein shall be deemed to limit
         in any way any right to serve process in any manner permitted by law.
         The parties hereby waive, to the fullest extent permitted by applicable
         law, all rights to a trial by jury. If either party shall commence an
         action or proceeding to enforce any provisions of this Warrant, then
         the prevailing party in such action or proceeding shall be reimbursed
         by the other party for its attorneys' fees and other costs and expenses
         incurred with the investigation, preparation and prosecution of such
         action or proceeding.

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

                  h) Nonwaiver and Expenses. No course of dealing or any delay
         or failure to exercise any right hereunder on the part of Holder shall
         operate as a waiver of such right or otherwise prejudice Holder's
         rights, powers or remedies, notwithstanding the fact that all rights
         hereunder terminate on the Termination Date. If the Company willfully
         and knowingly fails to comply with any provision of this Warrant, which
         results in any material damages to the Holder, the Company shall pay to
         Holder such amounts as shall be sufficient to cover any costs and
         expenses including, but not limited to, reasonable attorneys' fees,
         including those of appellate proceedings, incurred by Holder in
         collecting any amounts due pursuant hereto or in otherwise enforcing
         any of its rights, powers or remedies hereunder.

                  i) Notices. Any notice, request or other document required or
         permitted to be given or delivered to the Holder by the Company shall
         be delivered in accordance with the notice provisions of the Purchase
         Agreement.

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

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

                  l) Successors and Assigns. Subject to applicable securities
         laws, this Warrant and the rights and obligations evidenced hereby
         shall inure to the benefit of and be binding upon the successors of the
         Company and the successors and permitted assigns of Holder. The
         provisions of this Warrant are intended to be for the benefit of all
         Holders from time to time of this Warrant and shall be enforceable by
         any such Holder or holder of Warrant Shares.

                                      -12-
<PAGE>

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

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

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

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

                                      -13-

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.

Dated:  January 26, 2005

                                           POWER 3 MEDICAL PRODUCTS, INC.

                                           By:
                                                -------------------------------
                                           Name:  Steven B. Rash
                                           Title: Chief Executive Officer

                                      -14-
<PAGE>

                               NOTICE OF EXERCISE

TO: POWER 3 MEDICAL PRODUCTS, INC.

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

         (2) Payment shall take the form of (check applicable box):

                           [ ] in lawful money of the United States; or

                           [ ] the cancellation of such number of Warrant Shares
                           as is necessary, in accordance with the formula set
                           forth in subsection 2(c), to exercise this Warrant
                           with respect to the maximum number of Warrant Shares
                           purchasable pursuant to the cashless exercise
                           procedure set forth in subsection 2(c).

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

                           -------------------------------------

The Warrant Shares shall be delivered to the following:

                           -------------------------------------

                           -------------------------------------

                           -------------------------------------

         (4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

                                            [PURCHASER]

                                             By:
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                             Dated:
                                                   ----------------------------

<PAGE>

                                 ASSIGNMENT FORM

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

         FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_______________________________________________ whose address is

_____________________________________________________________________________.

_____________________________________________________________________________

                                     Dated:  ____________, _____

                                     Holder's Signature: _______________________

                                     Holder's Address:    ______________________

                                                         _______________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

<PAGE>

                                   SCHEDULE TO
                      FORM OF COMMON STOCK PURCHASE WARRANT

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

<Table>
<Caption>
                  HOLDER                          NUMBER OF WARRANT SHARES
                  ------                          ------------------------
<S>                                               <C>
Cityplatz Limited                                            41,667
Crestview Capital Master, LLC                               125,000
Gryphon Master Fund L.P.                                     83,333
GSSF Master Fund, LP                                         83,333
</Table>

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