Document:

exhibit10-15.htm

    Exhibit 10.15

    

    SECURITIES
      PURCHASE
      AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”) is dated as of April 17,
      2007, between Power3 Medical Products, Inc., a New York corporation (the
“Company”), and NeoGenomics, Inc. a Nevada Corporation, (the
“Purchaser”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”), and Rule 506 promulgated thereunder, the Company desires to issue and
      sell to the Purchaser, and the Purchaser desires to purchase from the Company,
      securities of the Company as more fully described in this
      Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration, the receipt and adequacy of
      which
      are hereby acknowledged, the Company and the Purchaser agree as
      follows:

     

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1  Definitions.  In
      addition to the terms defined elsewhere in this Agreement, the following terms
      have the meanings set forth in this Section 1.1:

     

    “Action”
      shall have the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate”
      means any Person that, directly or indirectly through one or more
      intermediaries, controls or is controlled by or is under common control with
      a
      Person, as such terms are used in and construed under Rule 144.  With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as the Purchaser will
      be
      deemed to be an Affiliate of the Purchaser.

     

    “Board”
      means the Board of Directors of the Company.

     

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

     

    “Capital
      Raising Offer” shall have the meaning ascribed to such term in Section
      4.13.

     

    “Closing”
      means the closing of the purchase and sale of the Securities pursuant to Section
      2.1.

     

    “Closing
      Date” means the Trading Day when all of the Transaction Documents required
      to be executed and delivered pursuant to the Purchase Agreement have been
      executed and delivered by the applicable parties thereto, and all conditions
      precedent to (i) the Purchaser’s obligations to pay the Subscription Amount and
      (ii) the Company’s obligations to deliver the Debentures have been satisfied or
      waived.

     

    “Commission”
      means the Securities and Exchange Commission.

     

    “Common
      Stock” means the common stock, par value $0.001 per share, of the Company
      and any other class of securities into which such securities may hereafter
      be
      reclassified or changed into.

     

    “Common
      Stock Equivalents” means any securities of the Company or the Subsidiaries
      which would entitle the holder thereof to acquire at any time Common Stock,
      including, without limitation, any debt, preferred stock, rights, options,
      warrants or other instrument that is at any time convertible into or exercisable
      or exchangeable for, or otherwise entitles the holder thereof to receive, Common
      Stock.

     

    “Compensation
      Committee” means the Compensation Committee of the Board.

     

    “Conversion
      Price” shall have the meaning ascribed to such term in the
      Debentures.

     

    “Debentures”
      means the 6% Convertible Debentures due, subject to the terms therein, 2 years
      from their date of issuance, issued by the Company to the Purchaser hereunder,
      in the form of Exhibit A attached hereto.

     

    “Disclosure
      Schedules” shall have the meaning ascribed to such term in Section
      3.1.

     

    “Evaluation
      Date” shall have the meaning ascribed to such term in Section
      3.1(r).

     

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended, and the rules
      and regulations promulgated thereunder.

    

    “GAAP”
      shall have the meaning ascribed to such term in Section 3.1(h).

     

    “Indebtedness”
      shall have the meaning ascribed to such term in Section 3.1(aa).

     

    “Intellectual
      Property Rights” shall have the meaning ascribed to such term in Section
      3.1(o).

     

    “Joint
      Venture Agreement” means the proposed Joint Venture Agreement between the
      Company and the Purchaser.

     

    “Letter
      Agreement” means the letter agreement between the Company and the Purchaser,
      dated as of April 2, 2007.

     

    “Liens”
      means a lien, charge, security interest, encumbrance, right of first refusal,
      preemptive right or other restriction.

     

    “Material
      Adverse Effect” shall have the meaning assigned to such term in Section
      3.1(b).

     

    “Material
      Permits” shall have the meaning ascribed to such term in Section
      3.1(m).

     

     “Person”
      means an individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision thereof) or other entity
      of any kind.

     

    “Pre-Notice”
      shall have the meaning ascribed to such term in Section 4.13.

     

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

     

    “Purchaser
      Party” shall have the meaning ascribed to such term in Section
      4.11.

     

    “Registration
      Statement” means a registration statement meeting the requirements set forth
      in Exhibit C and covering the resale of the Shares by the
      Purchaser.

     

    “Required
      Approvals” shall have the meaning ascribed to such term in Section
      3.1(e).

     

    “Rule
      144” means Rule 144 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      effect as such Rule.

     

    “SEC
      Reports” shall have the meaning ascribed to such term in Section
      3.1(h).

     

    “Securities”
      means the Shares and the Debentures.

     

    “Securities
      Act” means the Securities Act of 1933, as amended, and the rules and
      regulations promulgated hereunder.

     

    “Shares”
      means the shares of Common Stock issued or issuable to the Purchaser pursuant
      to
      the Debentures.

     

    “Short
      Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
      under the Exchange Act (but shall not be deemed to include the location and/or
      reservation of borrowable shares of Common Stock). 

     

    “Subscription
      Amount” means, as to the Purchaser, the aggregate amount to be paid for the
      Debentures purchased hereunder.

     

    “Subsidiary”
      means any subsidiary of the Company which is set forth on Schedule
      3.1(a).

     

    “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 Pink Sheets
      Electronic Quotation Service, the American Stock Exchange, the Nasdaq Capital
      Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New
      York Stock Exchange.

     

    “Transaction
      Documents” means this Agreement, the Debentures, the Joint Venture
      Agreement, all documents and securities contemplated and agreed to in the Letter
      Agreement and any other documents or agreements executed in connection with
      the
      transactions contemplated hereunder.

     

    “Variable
      Rate Transaction” shall have the meaning ascribed to such term in Section
      4.15(b).

     

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1  Closing.  On
      the Closing Date, upon the terms and subject to the conditions set forth herein,
      substantially concurrent with the execution and delivery of this Agreement
      by
      the parties hereto, the Company agrees to sell, and the Purchaser agrees to
      purchase the Debentures.  The Purchaser shall deliver to the Company,
      via wire transfer, immediately available funds equal to its Subscription Amount
      and the Company shall deliver to the Purchaser its Debentures, as determined
      pursuant to Section 2.2(a), and the Company and the Purchaser shall deliver
      the
      other items set forth in Section 2.2 deliverable at the Closing.  Upon
      satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing
      shall occur at the offices of Kirkpatrick & Lockhart Preston Gates Ellis LLP
      or such other location as the parties shall mutually agree.

     

    2.2  Deliveries.

     

    (a)  On
      the
      Closing Date, the Company shall deliver or cause to be delivered to the
      Purchaser the following:

     

    
      	
              (i)  

            	
              this
                Agreement duly executed by the Company;
                and

            

    

     

    (ii)  the
      Debentures.

     

    (b)  On
      the
      Closing Date, the Purchaser shall deliver or cause to be delivered to the
      Company the following:

     

    
      	
              (i)  

            	
              this
                Agreement duly executed by the Purchaser;
                and

            

    

     

    (ii)  the
      Subscription Amount by wire transfer to the account as specified in writing
      by
      the Company.

     

    2.3  Closing
      Conditions.

     

    (a)  The
      obligations of the Company hereunder in connection with the Closing are subject
      to the following conditions being met:

     

    (i)  the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Purchaser contained herein;

     

    (ii)  all
      obligations, covenants and agreements of the Purchaser required to be performed
      at or prior to the Closing Date shall have been performed; and

     

    (iii)  the
      delivery by the Purchaser of the items set forth in Section 2.2(b) of this
      Agreement.

     

    (b)  The
      obligations of the Purchaser hereunder in connection with the Closing are
      subject to the following conditions being met:

     

    (i)  the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Company contained herein;

     

    (ii)  all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date shall have been performed;

     

    (iii)  the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement;

     

    (iv)  there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof; and

     

    (v)  from
      the
      date hereof to the Closing Date, trading in the Common Stock shall not have
      been
      suspended by the Commission  or the Company’s principal Trading Market
      (except for any suspension of trading of limited duration agreed to by the
      Company, which suspension shall be terminated prior to the Closing), and, at
      any
      time prior to the Closing Date, trading in securities generally as reported
      by
      Bloomberg L.P. shall not have been suspended or limited, or minimum prices
      shall
      not have been established on securities whose trades are reported by such
      service, or on any Trading Market, nor shall a banking moratorium have been
      declared either by the United States or New York State authorities nor shall
      there have occurred any material outbreak or escalation of hostilities or other
      national or international calamity of such magnitude in its effect on, or any
      material adverse change in, any financial market which, in each case, in the
      reasonable judgment of the Purchaser, makes it impracticable or inadvisable
      to
      purchase the Debentures at the Closing.

     

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1  Representations
      and Warranties of the Company.

     

    Except
      as
      set forth in the Disclosure Schedules, which Disclosure Schedules shall be
      deemed a part hereof and shall qualify any representation or otherwise made
      herein to the extent of the disclosure contained in the corresponding section
      of
      the Disclosure Schedules, the Company hereby makes the following representations
      and warranties to the Purchaser:

     

    (a)  Subsidiaries.  All
      of the direct and indirect subsidiaries of the Company are set forth on
Schedule 3.1(a).  The Company owns, directly or indirectly, all
      of the capital stock or other equity interests of each Subsidiary free and
      clear
      of any Liens, and all of the issued and outstanding shares of capital stock
      of
      each Subsidiary are validly issued and are fully paid, non-assessable and free
      of preemptive and similar rights to subscribe for or purchase
      securities.  If the Company has no subsidiaries, all other references
      to the Subsidiaries or any of them in the Transaction Documents shall be
      disregarded.

     

    (b)  Organization
      and Qualification.  The Company and each of the Subsidiaries is an
      entity duly incorporated or otherwise organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation or organization
      (as applicable), with the requisite power and authority to own and use its
      properties and assets and to carry on its business as currently
      conducted.  Neither the Company nor any Subsidiary is in violation or
      default of any of the provisions of its respective certificate or articles
      of
      incorporation, bylaws or other organizational or charter
      documents.  Each of the Company and the Subsidiaries is duly qualified
      to conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) of the Company and the
      Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
      Company’s ability to perform in any material respect on a timely basis its
      obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no Proceeding has been instituted in any
      such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
      or curtail such power and authority or qualification.

     

    (c)  Authorization;
      Enforcement.  The Company has the requisite corporate power and
      authority to enter into and to consummate the transactions contemplated by
      each
      of the Transaction Documents and otherwise to carry out its obligations
      hereunder and thereunder.  The execution and delivery of each of the
      Transaction Documents by the Company and the consummation by it of the
      transactions contemplated hereby and thereby have been duly authorized by all
      necessary action on the part of the Company and no further action is required
      by
      the Company, its board of directors or its stockholders in connection therewith
      other than in connection with the Required Approvals.  Each
      Transaction Document has been (or upon delivery will have been) duly executed
      by
      the Company and, when delivered in accordance with the terms hereof and thereof,
      will constitute the valid and binding obligation of the Company enforceable
      against the Company in accordance with its terms except (i) as limited by
      general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    (d)  No
      Conflicts.  The execution, delivery and performance of the
      Transaction Documents by the Company and the consummation by the Company of
      the
      other transactions contemplated hereby and thereby do not and will not: (i)
      conflict with or violate any provision of the Company’s or any Subsidiary’s
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents, or (ii) conflict with, or constitute a default (or an event
      that with notice or lapse of time or both would become a default) under, result
      in the creation of any Lien upon any of the properties or assets of the Company
      or any Subsidiary, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or both)
      of,
      any agreement, credit facility, debt or other instrument (evidencing a Company
      or Subsidiary debt or otherwise) or other understanding to which the Company
      or
      any Subsidiary is a party or by which any property or asset of the Company
      or
      any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
      conflict with or result in a violation of any law, rule, regulation, order,
      judgment, injunction, decree or other restriction of any court or governmental
      authority to which the Company or a Subsidiary is subject (including federal
      and
      state securities laws and regulations), or by which any property or asset of
      the
      Company or a Subsidiary is bound or affected; except in the case of each of
      clauses (ii) and (iii), such as could not have or reasonably be expected to
      result in a Material Adverse Effect.

     

    (e)  Filings,
      Consents and Approvals.  The Company is not required to obtain any
      consent, waiver, authorization or order of, give any notice to, or make any
      filing or registration with, any court or other federal, state, local or other
      governmental authority or other Person in connection with the execution,
      delivery and performance by the Company of the Transaction Documents, other
      than
      (i) filings required pursuant to Section 4.6, (ii) the filing with the
      Commission of the Registration Statement and (iii) the notice and/or
      application(s) to each applicable Trading Market for the issuance and sale
      of
      the Securities and the listing of the Underlying Shares for trading thereon
      in
      the time and manner required thereby and (iv) the filing of Form D with the
      Commission and such filings as are required to be made under applicable state
      securities laws (collectively, the “Required Approvals”).

     

    (f)  Issuance
      of the Securities.  The Securities are duly authorized and, when
      issued and paid for in accordance with the applicable Transaction Documents,
      will be duly and validly issued, fully paid and nonassessable, free and clear
      of
      all Liens imposed by the Company other than restrictions on transfer provided
      for in the Transaction Documents.  The Company has reserved from its
      duly authorized capital stock a number of shares of Common Stock for issuance
      of
      the Shares.

     

    (g)  Capitalization.  The
      capitalization of the Company is as set forth on Schedule 3.1(g), which
Schedule 3.1(g) shall also include the number of shares of Common Stock
      owned beneficially, and of record, by Affiliates of the Company as of the date
      hereof. The Company has not issued any capital stock since its most recently
      filed periodic report under the Exchange Act, other than pursuant to the
      exercise of employee stock options under the Company’s stock option plans, the
      issuance of shares of Common Stock to employees pursuant to the Company’s
      employee stock purchase plan and pursuant to the conversion or exercise of
      Common Stock Equivalents outstanding as of the date of the most recently filed
      periodic report under the Exchange Act.  No Person has any right of
      first refusal, preemptive right, right of participation, or any similar right
      to
      participate in the transactions contemplated by the Transaction
      Documents.  Except as a result of the purchase and sale of the
      Securities, there are no outstanding options, warrants, scrip rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities, rights or obligations convertible into or exercisable or
      exchangeable for, or giving any Person any right to subscribe for or acquire,
      any shares of Common Stock, or contracts, commitments, understandings or
      arrangements by which the Company or any Subsidiary is or may become bound
      to
      issue additional shares of Common Stock or Common Stock Equivalents. The
      issuance and sale of the Securities will not obligate the Company to issue
      shares of Common Stock or other securities to any Person (other than the
      Purchaser) and will not result in a right of any holder of Company securities
      to
      adjust the exercise, conversion, exchange or reset price under any of such
      securities. All of the outstanding shares of capital stock of the Company are
      validly issued, fully paid and nonassessable, have been issued in compliance
      with all federal and state securities laws, and none of such outstanding shares
      was issued in violation of any preemptive rights or similar rights to subscribe
      for or purchase securities.  No further approval or authorization of
      any stockholder, the Board of Directors of the Company or others is required
      for
      the issuance and sale of the Securities.  There are no stockholders
      agreements, voting agreements or other similar agreements with respect to the
      Company’s capital stock to which the Company is a party or, to the knowledge of
      the Company, between or among any of the Company’s stockholders.

     

    (h)  SEC
      Reports; Financial Statements.  The Company has filed all reports,
      schedules, forms, statements and other documents required to be filed by the
      Company under the Securities Act and the Exchange Act, including pursuant to
      Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
      (or
      such shorter period as the Company was required by law or regulation to file
      such material) (the foregoing materials, including the exhibits thereto and
      documents incorporated by reference therein, being collectively referred to
      herein as the “SEC Reports”) on a timely basis or has received a valid
      extension of such time of filing and has filed any such SEC Reports prior to
      the
      expiration of any such extension.  As of their respective dates, the
      SEC Reports complied in all material respects with the requirements of the
      Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
      when filed, contained any untrue statement of a material fact or omitted to
      state a material fact required to be stated therein or necessary in order to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading.  The financial statements of the Company
      included in the SEC Reports comply in all material respects with applicable
      accounting requirements and the rules and regulations of the Commission with
      respect thereto as in effect at the time of filing.  Such financial
      statements have been prepared in accordance with United States generally
      accepted accounting principles applied on a consistent basis during the periods
      involved (“GAAP”), except as may be otherwise specified in such financial
      statements or the notes thereto and except that unaudited financial statements
      may not contain all footnotes required by GAAP, and fairly present in all
      material respects the financial position of the Company and its consolidated
      Subsidiaries as of and for the dates thereof and the results of operations
      and
      cash flows for the periods then ended, subject, in the case of unaudited
      statements, to normal, immaterial, year-end audit adjustments.

     

    (i)  Material
      Changes.  Since the date of the latest audited financial
      statements included within the SEC Reports, except as specifically disclosed
      in
      a subsequent SEC Report filed prior to the date hereof, (i) there has been
      no
      event, occurrence or development that has had or that could reasonably be
      expected to result in a Material Adverse Effect, (ii) the Company has not
      incurred any liabilities (contingent or otherwise) other than (A) trade payables
      and accrued expenses incurred in the ordinary course of business consistent
      with
      past practice and (B) liabilities not required to be reflected in the Company’s
      financial statements pursuant to GAAP or disclosed in filings made with the
      Commission, (iii) the Company has not altered its method of accounting, (iv)
      the
      Company has not declared or made any dividend or distribution of cash or other
      property to its stockholders or purchased, redeemed or made any agreements
      to
      purchase or redeem any shares of its capital stock and (v) the Company has
      not
      issued any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock option plans. The Company does not have
      pending before the Commission any request for confidential treatment of
      information.  Except for the issuance of the Securities contemplated
      by this Agreement or as set forth on Schedule 3.1(i), no event, liability
      or development has occurred or exists with respect to the Company or its
      Subsidiaries or their respective business, properties, operations or financial
      condition, that would be required to be disclosed by the Company under
      applicable securities laws at the time this representation is made that has
      not
      been publicly disclosed at least one Trading Day prior to the date that this
      representation is made.

     

    (j)  Litigation.  There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which (i) adversely affects or challenges the legality, validity or
      enforceability of any of the Transaction Documents or the Securities or (ii)
      could, if there were an unfavorable decision, have or reasonably be expected
      to
      result in a Material Adverse Effect.  Neither the Company nor any
      Subsidiary, nor any director or officer thereof, is or has been the subject
      of
      any Action involving a claim of violation of or liability under federal or
      state
      securities laws or a claim of breach of fiduciary duty.  There has not
      been, and to the knowledge of the Company, there is not pending or contemplated,
      any investigation by the Commission involving the Company or any current or
      former director or officer of the Company.  The Commission has not
      issued any stop order or other order suspending the effectiveness of any
      registration statement filed by the Company or any Subsidiary under the Exchange
      Act or the Securities Act.

     

    (k)  Labor
      Relations.  No material labor dispute exists or, to the knowledge
      of the Company, is imminent with respect to any of the employees of the Company
      which could reasonably be expected to result in a Material Adverse
      Effect.  None of the Company’s or its Subsidiaries’ employees is a
      member of a union that relates to such employee’s relationship with the Company,
      and neither the Company or any of its Subsidiaries is a party to a collective
      bargaining agreement, and the Company and its Subsidiaries believe that their
      relationships with their employees are good.  No executive officer, to
      the knowledge of the Company, is, or is now expected to be, in violation of
      any
      material term of any employment contract, confidentiality, disclosure or
      proprietary information agreement or non-competition agreement, or any other
      contract or agreement or any restrictive covenant, and the continued employment
      of each such executive officer does not subject the Company or any of its
      Subsidiaries to any liability with respect to any of the foregoing
      matters.  The Company and its Subsidiaries are in compliance with all
      U.S. federal, state, local and foreign laws and regulations relating to
      employment and employment practices, terms and conditions of employment and
      wages and hours, except where the failure to be in compliance could not,
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

     

    (l)  Compliance.  Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      and all such laws that affect the environment, except in each case as could
      not
      have or reasonably be expected to result in a Material Adverse
      Effect.

     

    (m)  Regulatory
      Permits.  The Company and the Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate federal,
      state, local or foreign regulatory authorities necessary to conduct their
      respective businesses as described in the SEC Reports, except where the failure
      to possess such permits could not have or reasonably be expected to result
      in a
      Material Adverse Effect (“Material Permits”), and neither the Company nor
      any Subsidiary has received any notice of proceedings relating to the revocation
      or modification of any Material Permit.

     

    (n)  Title
      to Assets.  The Company and the Subsidiaries have good and
      marketable title in fee simple to all real property owned by them that is
      material to the business of the Company and the Subsidiaries and good and
      marketable title in all personal property owned by them that is material to
      the
      business of the Company and the Subsidiaries, in each case free and clear of
      all
      Liens, except for Liens as do not materially affect the value of such property
      and do not materially interfere with the use made and proposed to be made of
      such property by the Company and the Subsidiaries and Liens for the payment
      of
      federal, state or other taxes, the payment of which is neither delinquent nor
      subject to penalties.  Any real property and facilities held under
      lease by the Company and the Subsidiaries are held by them under valid,
      subsisting and enforceable leases with which the Company and the Subsidiaries
      are in compliance.

     

    (o)  Patents
      and Trademarks.  The Company and the Subsidiaries have, or have
      rights to use, all patents, patent applications, trademarks, trademark
      applications, service marks, trade names, trade secrets, inventions, copyrights,
      licenses and other intellectual property rights and similar rights necessary
      or
      material for use in connection with their respective businesses as described
      in
      the SEC Reports and which the failure to so have could have a Material Adverse
      Effect (collectively, the “Intellectual Property
      Rights”).  Neither the Company nor any Subsidiary has received a
      notice (written or otherwise) that the Intellectual Property Rights used by
      the
      Company or any Subsidiary violates or infringes upon the rights of any Person.
      To the knowledge of the Company, all such Intellectual Property Rights are
      enforceable and there is no existing infringement by another Person of any
      of
      the Intellectual Property Rights.  The Company and its Subsidiaries
      have taken reasonable security measures to protect the secrecy, confidentiality
      and value of all of their intellectual properties, except where failure to
      do so
      could not, individually or in the aggregate, reasonably be expected to have
      a
      Material Adverse Effect.

     

    (p)  Insurance.  The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage at least equal to the aggregate Subscription Amount.  Neither
      the Company nor any Subsidiary has any reason to believe that it will not be
      able to renew its existing insurance coverage as and when such coverage expires
      or to obtain similar coverage from similar insurers as may be necessary to
      continue its business without a significant increase in cost.

     

    (q)  Transactions
      with Affiliates and Employees.  Except as set forth in the SEC
      Reports, none of the officers or directors of the Company and, to the knowledge
      of the Company, none of the employees of the Company is presently a party to
      any
      transaction with the Company or any Subsidiary (other than for services as
      employees, officers and directors), including any contract, agreement or other
      arrangement providing for the furnishing of services to or by, providing for
      rental of real or personal property to or from, or otherwise requiring payments
      to or from any officer, director or such employee or, to the knowledge of the
      Company, any entity in which any officer, director, or any such employee has
      a
      substantial interest or is an officer, director, trustee or partner, in each
      case in excess of $60,000 other than for (i) payment of salary or consulting
      fees for services rendered, (ii) reimbursement for expenses incurred on behalf
      of the Company and (iii) other employee benefits, including stock option
      agreements under any stock option plan of the Company.

     

    (r)  Sarbanes-Oxley;
      Internal Accounting Controls.  The Company is in material
      compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are
      applicable to it as of the Closing Date.  The Company and the
      Subsidiaries maintain a system of internal accounting controls sufficient to
      provide reasonable assurance that (i) transactions are executed in accordance
      with management’s general or specific authorizations, (ii) transactions are
      recorded as necessary to permit preparation of financial statements in
      conformity with GAAP and to maintain asset accountability, (iii) access to
      assets is permitted only in accordance with management’s general or specific
      authorization, and (iv) the recorded accountability for assets is compared
      with
      the existing assets at reasonable intervals and appropriate action is taken
      with
      respect to any differences. The Company has established disclosure controls
      and
      procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
      Company and designed such disclosure controls and procedures to ensure that
      information required to be disclosed by the Company in the reports it files
      or
      submits under the Exchange Act is recorded, processed, summarized and reported,
      within the time periods specified in the Commission’s rules and
      forms.  The Company’s certifying officers have evaluated the
      effectiveness of the Company’s disclosure controls and procedures as of the end
      of the period covered by the Company’s most recently filed periodic report under
      the Exchange Act (such date, the “Evaluation Date”).  The
      Company presented in its most recently filed periodic report under the Exchange
      Act the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date.  Since the Evaluation Date, there have been no
      changes in the Company’s internal control over financial reporting (as such term
      is defined in the Exchange Act) that has materially affected, or is reasonably
      likely to materially affect, the Company’s internal control over financial
      reporting.

     

    (s)  Certain
      Fees.  Other than as has been previously disclosed to the
      Purchaser, no brokerage or finder’s fees or commissions are or will be payable
      by the Company to any broker, financial advisor or consultant, finder, placement
      agent, investment banker, bank or other Person with respect to the transactions
      contemplated by the Transaction Documents.  The Purchaser shall have
      no obligation with respect to any fees or with respect to any claims made by
      or
      on behalf of other Persons for fees of a type contemplated in this Section
      that
      may be due in connection with the transactions contemplated by the Transaction
      Documents.

     

    (t)  Private
      Placement.  Assuming the accuracy of the Purchaser’s
      representations and warranties set forth in Section 3.2, no registration under
      the Securities Act is required for the offer and sale of the Securities by
      the
      Company to the Purchaser as contemplated hereby. The issuance and sale of the
      Securities hereunder does not contravene the rules and regulations of the
      Trading Market.

     

    (u)  Investment
      Company. The Company is not, and is not an Affiliate of, and, immediately
      after receipt of payment for the Securities, will not be or be an Affiliate
      of,
      an “investment company” within the meaning of the Investment Company Act of
      1940, as amended.  The Company shall conduct its business in a manner
      so that it will not become subject to the Investment Company Act of 1940, as
      amended.

     

    (v)  Registration
      Rights.  Other than the Purchaser, no Person has any right to
      cause the Company to effect the registration under the Securities Act of any
      securities of the Company.

     

    (w)  Listing
      and Maintenance Requirements.  The Company’s Common Stock is
      registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
      Company has taken no action designed to, or which to its knowledge is likely
      to
      have the effect of, terminating the registration of the Common Stock under
      the
      Exchange Act nor has the Company received any notification that the Commission
      is contemplating terminating such registration.  The Company has not,
      in the 12 months preceding the date hereof, received notice from any Trading
      Market on which the Common Stock is or has been listed or quoted to the effect
      that the Company is not in compliance with the listing or maintenance
      requirements of such Trading Market. The Company is, and has no reason to
      believe that it will not in the foreseeable future continue to be, in compliance
      with all such listing and maintenance requirements.

     

    (x)  Application
      of Anti-Takeover Protections.  The Company and its board of
      directors have taken all necessary action, if any, in order to render
      inapplicable any control share acquisition, business combination, poison pill
      (including any distribution under a rights agreement) or other similar
      anti-takeover provision under the Company’s certificate of incorporation (or
      similar charter documents) or the laws of its state of incorporation that is
      or
      could become applicable to the Purchaser as a result of the Purchaser and the
      Company fulfilling their obligations or exercising their rights under the
      Transaction Documents, including without limitation as a result of the Company’s
      issuance of the Securities and the Purchaser’s ownership of the
      Securities.

     

    (y)  Disclosure.  Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company confirms that neither
      it
      nor any other Person acting on its behalf has provided the Purchaser or its
      agents or counsel with any information that it believes constitutes or might
      constitute material, nonpublic information.  The Company understands
      and confirms that the Purchaser will rely on the foregoing representation in
      effecting transactions in securities of the Company.  All disclosure
      furnished by or on behalf of the Company to the Purchaser regarding the Company,
      its business and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, is true and correct and does not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in light of the circumstances under
      which they were made, not misleading.   The press releases
      disseminated by the Company during the twelve months preceding the date of
      this
      Agreement taken as a whole do not contain any untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      in order to make the statements, in light of the circumstances under which
      they
      were made and when made, not misleading.  The Company acknowledges and
      agrees that the Purchaser does not make and has not made any representations
      or
      warranties with respect to the transactions contemplated hereby other than
      those
      specifically set forth in Section 3.2 hereof.

     

    (z)  No
      Integrated Offering. Assuming the accuracy of the Purchaser’s
      representations and warranties set forth in Section 3.2, neither the Company,
      nor any of its Affiliates, nor any Person acting on its or their behalf has,
      directly or indirectly, made any offers or sales of any security or solicited
      any offers to buy any security, under circumstances that would cause this
      offering of the Securities to be integrated with prior offerings by the Company
      for purposes of the Securities Act or any applicable shareholder approval
      provision of any Trading Market on which any of the securities of the Company
      are listed or designated.

     

    (aa)  Solvency.  Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the fair saleable value of the Company’s assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business as now conducted and as
      proposed to be conducted including its capital needs taking into account the
      particular capital requirements of the business conducted by the Company, and
      projected capital requirements and capital availability thereof; and (iii)
      the
      current cash flow of the Company, together with the proceeds the Company would
      receive, were it to liquidate all of its assets, after taking into account
      all
      anticipated uses of the cash, would be sufficient to pay all amounts on or
      in
      respect of its liabilities when such amounts are required to be
      paid.  The Company does not intend to incur debts beyond its ability
      to pay such debts as they mature (taking into account the timing and amounts
      of
      cash to be payable on or in respect of its debt).  The Company has no
      knowledge of any facts or circumstances which lead it to believe that it will
      file for reorganization or liquidation under the bankruptcy or reorganization
      laws of any jurisdiction within one year from the Closing
      Date.  Schedule 3.1(aa) sets forth as of the dates thereof all
      outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
      or for which the Company or any Subsidiary has commitments.  For the
      purposes of this Agreement, “Indebtedness” means (a) any liabilities for
      borrowed money or amounts owed in excess of $50,000 (other than trade accounts
      payable incurred in the ordinary course of business), (b) all guaranties,
      endorsements and other contingent obligations in respect of Indebtedness of
      others, whether or not the same are or should be reflected in the Company’s
      balance sheet (or the notes thereto), except guaranties by endorsement of
      negotiable instruments for deposit or collection or similar transactions in
      the
      ordinary course of business and (c) the present value of any lease payments
      in
      excess of $50,000 due under leases required to be capitalized in accordance
      with
      GAAP.  Neither the Company nor any Subsidiary is in default with
      respect to any Indebtedness.

     

    (bb)  Tax
      Status.                                
Except for matters that would not, individually or in the aggregate, have
      or
      reasonably be expected to result in a Material Adverse Effect, the Company
      and
      each Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

    (cc)  No
      General Solicitation. Neither the Company nor any person acting on behalf of
      the Company has offered or sold any of the Securities by any form of general
      solicitation or general advertising.  The Company has offered the
      Securities for sale only to the Purchaser and certain other “accredited
      investors” within the meaning of Rule 501 under the Securities Act.

     

    (dd)  Foreign
      Corrupt Practices.  Neither the Company, nor to the knowledge of
      the Company, any agent or other person acting on behalf of the Company, has
      (i)
      directly or indirectly, used any funds for unlawful contributions, gifts,
      entertainment or other unlawful expenses related to foreign or domestic
      political activity, (ii) made any unlawful payment to foreign or domestic
      government officials or employees or to any foreign or domestic political
      parties or campaigns from corporate funds, (iii) failed to disclose fully any
      contribution made by the Company (or made by any person acting on its behalf
      of
      which the Company is aware) which is  in violation of law, or (iv)
      violated in any material respect any provision of the Foreign Corrupt Practices
      Act of 1977, as amended.

     

    (ee)  Accountants.  The
      Company’s accounting firm is set forth on Schedule 3.1(ee) of the
      Disclosure Schedule.  To the knowledge and belief of the Company, such
      accounting firm (i) is a registered public accounting firm as required by the
      Exchange Act and (ii) shall express its opinion with respect to the financial
      statements to be included in the Company’s Annual Report on Form 10-KSB for the
      year ending December 31, 2006.

     

    (ff)  Seniority.  As
      of the Closing Date, no Indebtedness or other claim against the Company is
      senior to the Debentures in right of payment, whether with respect to interest
      or upon liquidation or dissolution, or otherwise, other than indebtedness
      secured by purchase money security interests (which is senior only as to
      underlying assets covered thereby) and capital lease obligations (which is
      senior only as to the property covered thereby).

     

    (gg)  No
      Disagreements with Accountants and Lawyers.  Other than as has
      been previously disclosed to the Purchaser, there are no disagreements of any
      kind presently existing, or reasonably anticipated by the Company to arise,
      between the Company and the accountants and lawyers formerly or presently
      employed by the Company and the Company is current with respect to any fees
      owed
      to its accountants and lawyers.

     

    (hh)  Acknowledgment
      Regarding Purchaser’s Purchase of Securities.  The Company
      acknowledges and agrees that the Purchaser is acting solely in the capacity
      of
      an arm’s length purchaser with respect to the Transaction Documents and the
      transactions contemplated thereby.  The Company further acknowledges
      that the Purchaser is not acting as a financial advisor or fiduciary of the
      Company (or in any similar capacity) with respect to the Transaction Documents
      and the transactions contemplated thereby and any advice given by the Purchaser
      or any of its respective representatives or agents in connection with the
      Transaction Documents and the transactions contemplated thereby is merely
      incidental to the Purchaser’s purchase of the Securities.  The Company
      further represents to the Purchaser that the Company’s decision to enter into
      this Agreement and the other Transaction Documents has been based solely on
      the
      independent evaluation of the transactions contemplated hereby by the Company
      and its representatives.

     

    (ii)  Acknowledgment
      Regarding Purchaser’s Trading Activity.  Anything in this
      Agreement or elsewhere herein to the contrary notwithstanding (except for
      Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the
      Company that (i) the Purchaser has not been asked to agree, nor has the
      Purchaser agreed, to desist from purchasing or selling, long and/or short,
      securities of the Company, or “derivative” securities based on securities issued
      by the Company or to hold the Securities for any specified term; (ii) past
      or
      future open market or other transactions by the Purchaser, including Short
      Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
      placement transactions, may negatively impact the market price of the Company’s
      publicly-traded securities; (iii) the Purchaser, and counter-parties in
“derivative” transactions to which the Purchaser is a party, directly or
      indirectly, may presently have a “short” position in the Common Stock, and (iv)
      the Purchaser shall not be deemed to have any affiliation with or control over
      any arm’s length counter-party in any “derivative” transaction.  The
      Company further understands and acknowledges that (a) the Purchaser may engage
      in hedging activities at various times during the period that the Securities
      are
      outstanding, including, without limitation, during the periods that the value
      of
      the Shares deliverable with respect to the Securities are being determined
      and
      (b) such hedging activities (if any) could reduce the value of the existing
      stockholders' equity interests in the Company at and after the time that the
      hedging activities are being conducted.  The Company acknowledges that such
      aforementioned hedging activities do not constitute a breach of any of the
      Transaction Documents.

     

    (jj)  Regulation
      M Compliance.  The Company has not, and to its knowledge no one acting
      on its behalf has, (i) taken, directly or indirectly, any action designed to
      cause or to result in the stabilization or manipulation of the price of any
      security of the Company to facilitate the sale or resale of any of the
      Securities, (ii) sold, bid for, purchased, or paid any compensation for
      soliciting purchases of, any of the securities of the Company or (iii) paid
      or
      agreed to pay to any Person any compensation for soliciting another to purchase
      any other securities of the Company, other than, in the case of clauses (ii)
      and
      (iii), compensation paid to the Company’s placement agent in connection with the
      placement of the Securities.

     

    3.2  Representations
      and Warranties of the Purchaser.  The Purchaser represents and
      warrants as of the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a)  Organization;
      Authority.  The Purchaser is an entity duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization with full right, corporate or partnership power and authority
      to
      enter into and to consummate the transactions contemplated by the Transaction
      Documents and otherwise to carry out its obligations hereunder and thereunder.
      The execution, delivery and performance by the Purchaser of the transactions
      contemplated by this Agreement have been duly authorized by all necessary
      corporate or similar action on the part of the Purchaser.  Each
      Transaction Document to which it is a party has been duly executed by the
      Purchaser, and when delivered by the Purchaser in accordance with the terms
      hereof, will constitute the valid and legally binding obligation of the
      Purchaser, enforceable against it in accordance with its terms, except (i)
      as
      limited by general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    (b)  Own
      Account.  The Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
      any applicable state securities law and is acquiring the Securities as principal
      for its own account and not with a view to or for distributing or reselling
      such
      Securities or any part thereof in violation of the Securities Act or any
      applicable state securities law, has no present intention of distributing any
      of
      such Securities in violation of the Securities Act or any applicable state
      securities law and has no direct or indirect arrangement or understandings
      with
      any other persons to distribute or regarding the distribution of such Securities
      (this representation and warranty not limiting the Purchaser’s right to sell the
      Securities pursuant to the Registration Statement or otherwise in compliance
      with applicable federal and state securities laws) in violation of the
      Securities Act or any applicable state securities law.

     

    (c)  Purchaser
      Status.  At the time the Purchaser was offered the Securities, it
      was, and at the date hereof it is, and on each date on which it converts any
      Debentures it will be either: (i) an “accredited investor” as defined in Rule
      501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii)
      a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
      Act.  The Purchaser is not required to be registered as a
      broker-dealer under Section 15 of the Exchange Act.

     

    (d)  Experience
      of the Purchaser.  The Purchaser, either alone or together with
      its representatives, has such knowledge, sophistication and experience in
      business and financial matters so as to be capable of evaluating the merits
      and
      risks of the prospective investment in the Securities, and has so evaluated
      the
      merits and risks of such investment.  The Purchaser is able to bear
      the economic risk of an investment in the Securities and, at the present time,
      is able to afford a complete loss of such investment.

     

    (e)  General
      Solicitation.  The Purchaser is not purchasing the Securities as a
      result of any advertisement, article, notice or other communication regarding
      the Securities published in any newspaper, magazine or similar media or
      broadcast over television or radio or presented at any seminar or any other
      general solicitation or general advertisement.

     

    (f)  Short
      Sales and Confidentiality Prior To The Date Hereof.  Other
      than the transaction contemplated hereunder, the Purchaser has not directly
      or
      indirectly, nor has any Person acting on behalf of or pursuant to any
      understanding with the Purchaser, executed any transaction, including Short
      Sales, in the securities of the Company during the period commencing from
      the time that the Purchaser first received a term sheet (written or oral) from
      the Company or any other Person setting forth the material terms of the
      transactions contemplated hereunder until the date hereof (“Discussion
      Time”).

     

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1  Transfer
      Restrictions.

     

    (a)  The
      Securities may only be disposed of in compliance with state and federal
      securities laws.  In connection with any transfer of Securities other
      than pursuant to an effective registration statement or Rule 144, to the Company
      or to an Affiliate of the Purchaser or in connection with a pledge as
      contemplated in Section 4.1(b), the Company may require the transferor thereof
      to provide to the Company an opinion of counsel selected by the transferor
      and
      reasonably acceptable to the Company, the form and substance of which opinion
      shall be reasonably satisfactory to the Company, to the effect that such
      transfer does not require registration of such transferred Securities under
      the
      Securities Act.  As a condition of transfer, any such transferee shall
      agree in writing to be bound by the terms of this Agreement and shall have
      the
      rights of a Purchaser under this Agreement.

     

    (b)  The
      Purchaser agrees to the imprinting, so long as is required by this Section
      4.1,
      of a legend on any of the Securities in the following form:

     

    [NEITHER]
      THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE]
      HAS
      [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS 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.

     

    Certificates
      evidencing Securities shall not be required to contain the legend set forth
      in
      Section 4.1(b) or any other legend (i) while a Registration Statement covering
      the resale of such Securities is effective under the Securities Act, or (ii)
      following any sale of such Securities pursuant to Rule 144, or (iii) if such
      Securities are eligible for sale under Rule 144(k), or (iv) if such legend
      is
      not required under applicable requirements of the Securities Act (including
      judicial interpretations and pronouncements issued by the Staff of the
      Commission).  The Company shall cause its counsel to issue the legal
      opinion included in the transfer agent instructions to the Company’s transfer
      agent promptly after the Effective Date to effect the removal of the legend
      hereunder.  At such time as a legend is no longer required for certain
      Securities, the Company will promptly, following the delivery by a Purchaser
      to
      the Company’s transfer agent of a legended certificate representing such
      Securities, deliver or cause to be delivered to such Purchaser a certificate
      representing such Securities that is free from all restrictive and other
      legends.  The Company may not make any notation on its records or give
      instructions to any transfer agent of the Company that enlarge the restrictions
      on transfer set forth in Section 4.1(b).

     

    4.2  Acknowledgment
      of Dilution.  The Company acknowledges that the issuance of the
      Securities may result in dilution of the outstanding shares of Common Stock,
      which dilution may be substantial.  The Company further acknowledges
      that its obligations under the Transaction Documents, including without
      limitation its obligation to issue the Shares pursuant to the Transaction
      Documents, are unconditional and absolute and not subject to any right of set
      off, counterclaim, delay or reduction, regardless of the effect of any such
      dilution or any claim the Company may have against the Purchaser and regardless
      of the dilutive effect that such issuance may have on the ownership of the
      other
      stockholders of the Company.

     

    4.3  Furnishing
      of Information.  As long as the Purchaser owns Securities, the
      Company covenants to timely file (or obtain extensions in respect thereof and
      file within the applicable grace period) all reports required to be filed by
      the
      Company after the date hereof pursuant to the Exchange Act.  As long
      as the Purchaser owns Securities, if the Company is not required to file reports
      pursuant to the Exchange Act, it will prepare and furnish to the Purchaser
      and
      make publicly available in accordance with Rule 144(c) such information as
      is
      required for the Purchaser to sell the Securities under Rule 144.  The
      Company further covenants that it will take such further action as any holder
      of
      Securities may reasonably request, to the extent required from time to time
      to
      enable such Person to sell such Securities without registration under the
      Securities Act within the requirements of the exemption provided by Rule
      144.

     

    4.4  Integration.  The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchaser or that would be integrated with the offer
      or
      sale of the Securities for purposes of the rules and regulations of any Trading
      Market.

     

    4.5  Conversion
      Procedures.  The form of Notice of Conversion included in the
      Debentures set forth the totality of the procedures
      required of the Purchaser in order to convert the Debentures.  No
      additional legal opinion or other information or instructions shall be required
      of the Purchaser to convert its Debentures.  The Company shall honor
      conversions of the Debentures and shall deliver Shares in accordance with the
      terms, conditions and time periods set forth in the Transaction
      Documents.

     

    4.6  Securities
      Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m. (New
      York City time) on the Trading Day following the date hereof, issue a press
      release disclosing all material terms of the transactions contemplated hereby,
      and, on or before 8:30 a.m. on the fourth Trading Day following the date hereof,
      file a Current Report on Form 8-K disclosing the material terms of the
      transactions contemplated hereby and attaching the Transaction Documents as
      exhibits thereto.  The Company and the Purchaser shall consult with
      each other in issuing any other press releases with respect to the transactions
      contemplated hereby, and neither the Company nor the Purchaser shall issue
      any
      such press release or otherwise make any such public statement without the
      prior
      consent of the Company, with respect to any press release of the Purchaser,
      or
      without the prior consent of the Purchaser, with respect to any press release
      of
      the Company, which consent shall not unreasonably be withheld or delayed, except
      if such disclosure is required by law, in which case the disclosing party shall
      promptly provide the other party with prior notice of such public statement
      or
      communication.

     

    4.7  Intentionally
      Omitted.

     

    4.8  Non-Public
      Information.  Except with respect to the material terms and
      conditions of the transactions contemplated by the Transaction Documents, the
      Company covenants and agrees that neither it nor any other Person acting on
      its
      behalf will provide the Purchaser or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto the Purchaser shall have executed a written agreement regarding
      the confidentiality and use of such information.  The Company
      understands and confirms that the Purchaser shall be relying on the foregoing
      representations in effecting transactions in securities of the
      Company.

     

    4.9  Use
      of
      Proceeds.  The Company shall use the net proceeds from the sale of
      the Securities hereunder for general corporate purposes and shall not otherwise
      use such proceeds for (a) the satisfaction of any portion of the Company’s debt
      (other than payment of trade payables in the ordinary course of the Company’s
      business and prior practices), (b) the redemption of any Common Stock or Common
      Stock Equivalents or (c) the settlement of any outstanding
      litigation.

     

    4.10  Board
      Seat.  So long as the Purchaser owns at least 10% of the issued
      and outstanding voting securities of the Company (calculated on an as-converted
      basis with respect to the Purchaser), from and after the Closing Date, the
      Purchaser shall have the right to appoint at least one (1) member to the Board,
      upon written notice provided to the Company; provided, however, if
      the Purchaser elects not to appoint a director to the Board, the Purchaser
      shall
      have the right to have a representative act as an observer at all Board meetings
      and any other Board proceeding, including without limitation the right to review
      proposed transactions that require Board approval.  During any time
      during which there are not at least two (i) independent directors or (ii)
      officers of the Company serving on the Compensation Committee, then the
      Purchaser shall have the right to approve all Compensation Committee decisions
      prior to such decisions becoming final.

     

    4.11  Indemnification
      of Purchaser.   Subject to the provisions of this Section
      4.11, the Company will indemnify and hold the Purchaser and its directors,
      officers, shareholders, members, partners, employees and agents (and any other
      Persons with a functionally equivalent role of a Person holding such titles
      notwithstanding a lack of such title or any other title), each Person who
      controls the Purchaser (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, shareholders,
      agents, members, partners or employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles notwithstanding
      a
      lack of such title or any other title) of such controlling person (each, a
      “Purchaser Party”) harmless from any and all losses, liabilities,
      obligations, claims, contingencies, damages, costs and expenses, including
      all
      judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that such Purchaser Party may suffer or incur
      as
      a result of or relating to (a) any breach of any of the representations,
      warranties, covenants or agreements made by the Company in this Agreement or
      in
      the other Transaction Documents or (b) any action instituted against the
      Purchaser, or any of them or their respective Affiliates, by any stockholder
      of
      the Company who is not an Affiliate of the Purchaser, with respect to any of
      the
      transactions contemplated by the Transaction Documents (unless such action
      is
      based upon a breach of the Purchaser’s representations, warranties or covenants
      under the Transaction Documents or any agreements or understandings the
      Purchaser may have with any such stockholder or any violations by the Purchaser
      of state or federal securities laws or any conduct by the Purchaser which
      constitutes fraud, gross negligence, willful misconduct or
      malfeasance).  If any action shall be brought against any Purchaser
      Party in respect of which indemnity may be sought pursuant to this Agreement,
      such Purchaser Party shall promptly notify the Company in writing, and the
      Company shall have the right to assume the defense thereof with counsel of
      its
      own choosing reasonably acceptable to such Purchaser Party.  Any
      Purchaser Party shall have the right to employ separate counsel in any such
      action and participate in the defense thereof, but the fees and expenses of
      such
      counsel shall be at the expense of such Purchaser Party except to the extent
      that (i) the employment thereof has been specifically authorized by the Company
      in writing, (ii) the Company has failed after a reasonable period of time to
      assume such defense and to employ counsel or (iii) in such action there is,
      in
      the reasonable opinion of such separate counsel, a material conflict on any
      material issue between the position of the Company and the position of such
      Purchaser Party, in which case the Company shall be responsible for the
      reasonable fees and expenses of no more than one such separate
      counsel.  The Company will not be liable to any Purchaser Party under
      this Agreement (i) for any settlement by a Purchaser Party effected without
      the
      Company’s prior written consent, which shall not be unreasonably withheld or
      delayed; or (ii) to the extent, but only to the extent that a loss, claim,
      damage or liability is attributable to any Purchaser Party’s breach of any of
      the representations, warranties, covenants or agreements made by such Purchaser
      Party in this Agreement or in the other Transaction Documents.

     

    4.12  Reservation
      and Listing of Securities.

     

    (a)  The
      Company shall maintain a reserve from its duly authorized shares of Common
      Stock
      for issuance pursuant to the Debentures in such amount as may be required to
      fulfill its obligations in full under the Transaction Documents.

     

    (b)  The
      Company shall, if applicable: (i) in the time and manner required by the
      principal Trading Market, prepare and file with such Trading Market an
      additional shares listing application covering the Shares, (ii) take all steps
      necessary to cause such shares of Common Stock to be approved for listing on
      such Trading Market as soon as possible thereafter, (iii) provide to the
      Purchaser evidence of such listing, and (iv) maintain the listing of such Common
      Stock on such Trading Market or another Trading Market.

     

    4.13  Right
      of First Refusal. As long as any portion of the Debentures remain
      outstanding (including principal or accrued interest), the Company will use
      its
      reasonable best efforts to keep the Purchaser fully informed regarding its
      intentions to raise equity capital and the expected terms and conditions of
      such
      financing.  Further, so long as the Debentures remain outstanding, if
      the Company undertakes arrangements to raise additional capital by the issuance
      or sale of capital stock of the Company, including without limitation shares
      of
      any class of Common Stock, any Common Stock Equivalents, any class of preferred
      stock, options, warrants or any other equity or debt securities convertible
      or
      exercisable into shares of Common Stock (whether the offering is conducted
      by
      the Company, underwriter, placement agent or any third party or the issuance
      is
      pursuant to an acquisition, joint venture or other arrangement not involving
      the
      sale of securities) (a “Capital Raising Offer”), the Company shall offer
      to the Purchaser such Capital Raising Offer, by providing in writing the
      principal amount of capital it intends to raise and outline of the material
      terms of such capital raise (such writing, a “Pre-Notice”), prior to
      offering the Capital Raising Offer to any third parties, including but not
      limited to, current or former officers or directors, current or former
      shareholders and/or investors of the Company, underwriters, brokers, agents
      or
      other third parties.  The Purchaser shall have fifteen (15) business
      days from receipt of a Pre-Notice to accept or reject all or a portion of the
      related Capital Raising Offer.

     

    4.14  Short
      Sales and Confidentiality After The Date Hereof. The Purchaser covenants
      that neither the Purchaser nor any Affiliate acting on its behalf or pursuant
      to
      any understanding with it will execute any Short Sales during the period
      commencing at the Discussion Time and ending upon the filing of the Form 8-K
      required under Section 4.6.  The Purchaser covenants that until such
      time as the transactions contemplated by this Agreement are publicly disclosed
      by the Company as described in Section 4.6, the Purchaser will maintain the
      confidentiality of all disclosures made to it in connection with this
      transaction (including the existence and terms of this
      transaction).  The Purchaser understands and acknowledges that the
      Commission currently takes the position that coverage of short sales of shares
      of the Common Stock “against the box” prior to the Effective Date of the
      Registration Statement with the Securities is a violation of Section 5 of the
      Securities Act, as set forth in Item 65, Section A, of the Manual of Publicly
      Available Telephone Interpretations, dated July 1997, compiled by the Office
      of
      Chief Counsel, Division of Corporation Finance.

     

    4.15  Subsequent
      Equity Sales.  From the date hereof until such time as the
      Purchaser holds any of the Securities, the Company shall not effect, or enter
      into any agreement that effects, any Subsequent Financing involving a Variable
      Rate Transaction. “Variable Rate Transaction” means a transaction in
      which the Company issues or sells (i) any debt or equity securities that are
      convertible into, exchangeable or exercisable for, or include the right to
      receive additional shares of Common Stock either (A) at a conversion, exercise
      or exchange rate or other price that is based upon and/or varies with the
      trading prices of or quotations for the shares of Common Stock at any time
      after
      the initial issuance of such debt or equity securities, or (B) with a
      conversion, exercise or exchange price that is subject to being reset at some
      future date after the initial issuance of such debt or equity security or upon
      the occurrence of specified or contingent events directly or indirectly related
      to the business of the Company or the market for the Common Stock or (ii) enters
      into any agreement, including, but not limited to, an equity line of credit,
      whereby the Company may sell its securities at a future determined
      price.

     

    4.16  Form
      D; Blue Sky Filings.  The Company agrees to timely file a Form D
      with respect to the Securities as required under Regulation D and to provide
      a
      copy thereof, promptly upon request of the Purchaser. The Company shall take
      such action as the Company shall reasonably determine is necessary in order
      to
      obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
      at the Closing under applicable securities or “Blue Sky” laws of the states of
      the United States, and shall provide evidence of such actions promptly upon
      request of the Purchaser.

     

    4.17           Capital
      Changes.  The Company shall not undertake a reverse or forward
      stock split or reclassification of the Common Stock without the written consent
      of the Purchaser.

     

    4.18           Joint
      Venture Agreement.  As soon as practicable after Closing (but in
      no event more than 30 days), the parties agree to cooperate on the formation
      of
      a joint venture pursuant to the Joint Venture Agreement on such terms and
      conditions as are set forth in the Letter Agreement.

     

    4.19           Additional
      Agreements.  As soon as practicable after Closing (but in no event
      more than 30 days), the parties agree to use their commercially reasonable
      best
      effort set forth to negotiate, execute and deliver the additional agreements
      and
      securities contemplated and agreed to in the Letter Agreement.

     

    4.20           Registration
      Rights.  The Company hereby grants to the Purchaser the
      Registration Rights set forth on Exhibit B hereto with respect to the
      Shares.

     

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1  Termination. 
      This Agreement may be terminated by the Purchaser, by the written notice to
      the
      other parties, if the Closing has not been consummated on or before April 19,
      2007; provided, however, that such termination will not affect the
      right of any party to sue for any breach by the other party (or
      parties).

     

    5.2  Fees
      and Expenses.  Except as expressly set forth in the Transaction
      Documents to the contrary, each party shall pay the fees and expenses of its
      advisers, counsel, accountants and other experts, if any, and all other expenses
      incurred by such party incident to the negotiation, preparation, execution,
      delivery and performance of this Agreement.  The Company shall pay all
      transfer agent fees, stamp taxes and other taxes and duties levied in connection
      with the delivery of any Securities to the Purchaser.

     

    5.3  Entire
      Agreement.  This Agreement and the Letter Agreement, together with
      the exhibits and schedules thereto, contain the entire understanding of the
      parties with respect to the subject matter hereof and supersede all prior
      agreements and understandings, oral or written, with respect to such matters,
      which the parties acknowledge have been merged into such documents, exhibits
      and
      schedules.

     

    5.4  Notices.  Any
      and all notices or other communications or deliveries required or permitted
      to
      be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto prior to 5:30 p.m. (New York City time)
      on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      set
      forth on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
      Trading Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given.  The address for such notices and
      communications shall be as set forth on the signature pages attached
      hereto.

     

    5.5  Amendments;
      Waivers.  No provision of this Agreement may be waived, modified,
      supplemented or amended except in a written instrument signed, in the case
      of an
      amendment, by the Company and the Purchaser or, in the case of a waiver, by
      the
      party against whom enforcement of any such waived provision is
      sought.  No waiver of any default with respect to any provision,
      condition or requirement of this Agreement shall be deemed to be a continuing
      waiver in the future or a waiver of any subsequent default or a waiver of any
      other provision, condition or requirement hereof, nor shall any delay or
      omission of any party to exercise any right hereunder in any manner impair
      the
      exercise of any such right.

     

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

     

    5.7  Successors
      and Assigns.  This Agreement shall be binding upon and inure to
      the benefit of the parties and their successors and permitted
      assigns.  The Company may not assign this Agreement or any rights or
      obligations hereunder without the prior written consent of the Purchaser (other
      than by merger).  The Purchaser may assign any or all of its rights
      under this Agreement to any Person to whom the Purchaser assigns or transfers
      any Securities, provided that such transferee agrees in writing to be bound,
      with respect to the transferred Securities, by the provisions of the Transaction
      Documents that apply to the “Purchaser.”

     

    5.8  No
      Third-Party Beneficiaries.  This Agreement is intended for the
      benefit of the parties hereto and their respective successors and permitted
      assigns and is not for the benefit of, nor may any provision hereof be enforced
      by, any other Person, except as otherwise set forth in Section
      4.11.

     

    5.9  Governing
      Law.  All questions concerning the construction, validity,
      enforcement and interpretation of the Transaction Documents 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.  The parties hereby waive all rights to a trial by
      jury.  If either party shall commence an action or proceeding to
      enforce any provisions of the Transaction Documents, then the prevailing party
      in such action or proceeding shall be reimbursed by the other party for its
      reasonable attorneys’ fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such action or
      proceeding.

     

    5.10  Survival.  The
      representations and warranties shall survive the Closing and the delivery of
      the
      Securities for the applicable statue of limitations.

     

    5.11  Severability.
      If any term, provision, covenant or restriction of this Agreement is held by
      a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their commercially
      reasonable efforts to find and employ an alternative means to achieve the same
      or substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

     

    5.12  Rescission
      and Withdrawal Right.  Notwithstanding anything to the contrary
      contained in (and without limiting any similar provisions of) any of the other
      Transaction Documents, whenever the Purchaser exercises a right, election,
      demand or option under a Transaction Document and the Company does not timely
      perform its related obligations within the periods therein provided, then the
      Purchaser may rescind or withdraw, in its sole discretion from time to time
      upon
      written notice to the Company, any relevant notice, demand or election in whole
      or in part without prejudice to its future actions and rights; provided,
however, in the case of a rescission of a conversion of a Debenture,
      the
      Purchaser shall be required to return any shares of Common Stock delivered
      in
      connection with any such rescinded conversion notice.

     

    5.13  Replacement
      of Securities.  If any certificate or instrument evidencing any
      Securities is mutilated, lost, stolen or destroyed, the Company shall issue
      or
      cause to be issued in exchange and substitution for and upon cancellation
      thereof (in the case of mutilation), or in lieu of and substitution therefor,
      a
      new certificate or instrument, but only upon receipt of evidence reasonably
      satisfactory to the Company of such loss, theft or destruction.  The
      applicant for a new certificate or instrument under such circumstances shall
      also pay any reasonable third-party costs (including customary indemnity)
      associated with the issuance of such replacement Securities.

     

    5.14  Remedies.  In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Purchaser and the Company will
      be entitled to specific performance under the Transaction
      Documents.  The parties agree that monetary damages may not be
      adequate compensation for any loss incurred by reason of any breach of
      obligations contained in the Transaction Documents and hereby agrees to waive
      and not to assert in any action for specific performance of any such obligation
      the defense that a remedy at law would be adequate.

     

    5.15  Payment
      Set Aside. To the extent that the Company makes a payment or payments to the
      Purchaser pursuant to any Transaction Document or the Purchaser enforces or
      exercises its rights thereunder, and such payment or payments or the proceeds
      of
      such enforcement or exercise or any part thereof are subsequently invalidated,
      declared to be fraudulent or preferential, set aside, recovered from, disgorged
      by or are required to be refunded, repaid or otherwise restored to the Company,
      a trustee, receiver or any other person under any law (including, without
      limitation, any bankruptcy law, state or federal law, common law or equitable
      cause of action), then to the extent of any such restoration the obligation
      or
      part thereof originally intended to be satisfied shall be revived and continued
      in full force and effect as if such payment had not been made or such
      enforcement or setoff had not occurred.

     

    5.16  Liquidated
      Damages.  The Company’s obligations to pay any partial liquidated
      damages or other amounts owing under the Transaction Documents is a continuing
      obligation of the Company and shall not terminate until all unpaid partial
      liquidated damages and other amounts have been paid notwithstanding the fact
      that the instrument or security pursuant to which such partial liquidated
      damages or other amounts are due and payable shall have been
      canceled.

     

    5.17  Construction.
      The parties agree that each of them and/or their respective counsel has reviewed
      and had an opportunity to revise the Transaction Documents and, therefore,
      the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

    (Signature
      Pages Follow)

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    
      	
              POWER3
                MEDICAL PRODUCTS, INC.

               

               

            	
              Address
                for Notice:

               

            
	
              By:_____________________________

                   Name:

                   Title:

               

            	
              Power3
                Medical Products, Inc.

              3400
                Research Forest Drive, Suite B2-3

              The
                Woodlands, Texas 77381

              Facsimile:
                (281) 466 1481

              Attention:
                Steven B. Rash, President and CEO

            
	
               

               

              NEOGNOMICS,
                INC.

               

               

            	
               

               

              Address
                for Notice:

            
	
              By:_____________________________

                   Name:

                   Title:

               

            	
              NeoGenomics,
                Inc.

              12701
                Commonwealth Drive, Suite 9

              Fort
                Myers, Florida 33913

              Facsimile:
                (239) 768-0711

              Attention:
                Robert P. Gasparini, President and Chief Scientific
                Officer

            
	 	
               

               

              With
                a Copy to:

            
	 	
               

              Kirkpatrick
                & Lockhart Preston Gates Ellis, LLP

              201
                South Biscayne Boulevard, Suite 2000

              Miami,
                Florida 33131

              Facsimile:                                (305)
                358-7095

              Attention:                                Clayton
                E. Parker, Esq.

               

            

    

    

    

    EXHIBITS

    

    

    EXHIBIT
      A
– FORM OF DEBENTURE

    

    EXHIBIT
      B
– REGISTRATION RIGHTS

    

    

    EXHIBIT
      A

    FORM
      OF DEBENTURE

    

    EXHIBIT
      B

    REGISTRATION
      RIGHTS

    

               1.1           Registration
      Rights

     

    .  The
      Company hereby grants the following registration rights to Purchaser with
      respect to the Shares.

     

    (a)  On
      one occasion after November 16, 2007, upon a written request therefor from
      the
      Purchaser, the Company shall prepare and file with the Commission a registration
      statement under the Securities Act (on Form SB-2 registration statement or
      such
      other form that it is eligible to use) registering the Shares which are the
      subject of such request for unrestricted public resale by the holder
      thereof.  The Company will register not less than a number of shares
      of Common Stock in the aforedescribed registration statement that is equal
      to
      100% of the Shares for which registration is requested pursuant to this
      Exhibit.  Except with the written consent of the Purchaser, no
      securities of the Company other than the Shares will be included in the
      Registration Statement.

     

    (b)  If
      the Company at any time proposes to register any of its securities under the
      Securities Act for sale to the public, whether for its own account or for the
      account of other security holders or both, except with respect to registration
      statements on Forms S-4, S-8 or another form not available for registering
      the
      Shares for sale to the public, provided the Shares are not otherwise registered
      for resale by the Purchaser pursuant to an effective registration statement,
      each such time it will give at least fifteen (15) days’ prior written
      notice to the record Purchaser of its intention so to do. Upon the written
      request of the Purchaser, received by the Company within ten (10) days
      after the giving of any such notice by the Company, to register any of the
      Shares not previously registered, the Company will cause such Shares as to
      which
      registration shall have been so requested to be included with the securities
      to
      be covered by the registration statement proposed to be filed by the Company,
      all to the extent required to permit the sale or other disposition of the Shares
      so registered by the Purchaser. In the event that any registration pursuant
      to
      this Exhibit shall be, in whole or in part, an underwritten public offering
      of common stock of the Company, the number of shares of Shares to be included
      in
      such an underwriting may be reduced by the managing underwriter if and to the
      extent that the Company and the underwriter shall reasonably be of the opinion
      that such inclusion would adversely affect the marketing of the securities
      to be
      sold by the Company therein; provided, however, that the Company shall notify
      the Purchaser in writing of any such reduction. Notwithstanding the foregoing
      provisions, or Section 1.4 hereof, the Company may withdraw or delay or suffer
      a
      delay of any registration statement referred to in this Section
      1.1(b) without thereby incurring any liability to the
      Purchaser.

     

               1.2           Registration
      Procedures

     

    .  If
      and whenever the Company is required by the provisions of Section 1.1(a) or
      1.1(b) to effect the registration of any Shares under the Securities Act, the
      Company will, as expeditiously as possible.

     

    (a)  subject
      to the timelines provided in this Agreement, prepare and file with the
      Commission a registration statement required by Section 1, with respect to
      such
      Shares and use its best efforts to cause such registration statement to become
      and remain effective for the period of the distribution contemplated thereby
      (determined as herein provided), promptly provide to the holders of the Shares
      copies of all filings and Commission letters of comment and notify Purchaser
      (by
      telecopier and by e-mail addresses provided by Purchaser)  on or before
      6:00 PM EST on the same business day that the Company receives notice that
      (i) the Commission has no comments or no further comments on the
      Registration Statement, and (ii) the registration statement has been
      declared effective;

     

    (b)  prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective until such registration
      statement has been effective for a period of two (2) years, and comply with
      the provisions of the Securities Act with respect to the disposition of all
      of
      the Shares covered by such registration statement in accordance with the
      Purchaser’s intended method of disposition set forth in such registration
      statement for such period;

     

    (c)  furnish
      to the Purchaser, at the Company’s expense, such number of copies of the
      registration statement and the prospectus included therein (including each
      preliminary prospectus) as such persons reasonably may request in order to
      facilitate the public sale or their disposition of the securities covered by
      such registration statement or make them electronically available;

     

    (d)  use
      its commercially reasonable best efforts to register or qualify the Shares
      covered by such registration statement under the securities or “blue sky” laws
      of Florida and such jurisdictions as the Purchaser shall request in writing,
      provided, however, that the Company shall not for any such purpose be required
      to qualify generally to transact business as a foreign corporation in any
      jurisdiction where it is not so qualified or to consent to general service
      of
      process in any such jurisdiction;

     

    (e)  if
      applicable, list the Shares covered by such registration statement with any
      securities exchange on which the Common Stock is then listed;

     

    (f)  notify
      the Purchaser within one (1) business day of the Company’s becoming aware that a
      prospectus relating thereto is required to be delivered under the Securities
      Act, of the happening of any event of which the Company has knowledge as a
      result of which the prospectus contained in such registration statement, as
      then
      in effect, includes an untrue statement of a material fact or omits to state
      a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading in light of the circumstances then existing or which
      becomes subject to a Commission, state or other governmental order suspending
      the effectiveness of the registration statement covering any of the Shares;
      and

     

    (g)  provided
      same would not be in violation of the provision of Regulation FD under the
      Exchange Act, make available for inspection by the Purchasers, and any attorney,
      accountant or other agent retained by the Purchaser or underwriter, all publicly
      available, non-confidential financial and other records, pertinent corporate
      documents and properties of the Company, and cause the Company’s officers,
      directors and employees to supply all publicly available, non-confidential
      information reasonably requested by the Purchaser, attorney, accountant or
      agent
      in connection with such registration statement.

     

    1.3           Expenses

     

    .  All
      expenses incurred by the Company in complying with Section 1, including, without
      limitation, all registration and filing fees, printing expenses (if required),
      fees and disbursements of counsel and independent public accountants for the
      Company, fees and expenses (including reasonable counsel fees) incurred in
      connection with complying with state securities or “blue sky” laws, fees of the
      National Association of Securities Dealers, Inc., transfer taxes, and fees
      of
      transfer agents and registrars, are called “Registration Expenses.” All
      underwriting discounts and selling commissions applicable to the sale of Shares
      are called “Selling Expenses.”  The Company will pay all
      Registration Expenses in connection with the registration statement under
      Section 1.

     

               1.4           Indemnification
      and
      Contribution.

     

    (a)  In
      the event of a registration of any Shares under the Securities Act pursuant
      to
      Section 1, the Company will, to the extent permitted by law, indemnify and
      hold
      harmless the Purchaser, each officer of the Purchaser, each director of the
      Purchaser, each underwriter of such Shares thereunder and each other person,
      if
      any, who controls such Purchaser or underwriter within the meaning of the
      Securities Act, against any losses, claims, damages or liabilities, joint or
      several, to which the Purchaser, or such underwriter or controlling person
      may
      become subject under the Securities Act or otherwise, insofar as such losses,
      claims, damages or liabilities (or actions in respect thereof) arise out of
      or are based upon any untrue statement or alleged untrue statement of any
      material fact contained in any registration statement under which such Shares
      was registered under the Securities Act pursuant to Section 1, any preliminary
      prospectus or final prospectus contained therein, or any amendment or supplement
      thereof, or arise out of or are based upon the omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading in light of the circumstances when made,
      and will subject to the provisions of Section 1.4(c) reimburse the
      Purchaser, each such underwriter and each such controlling person for any legal
      or other expenses reasonably incurred by them in connection with investigating
      or defending any such loss, claim, damage, liability or action; provided,
      however, that the Company shall not be liable to the Purchaser to the extent
      that any such damages arise out of or are based upon an untrue statement or
      omission (A) made in any preliminary prospectus if (i) the Purchaser failed
      to send or deliver a copy of the final prospectus delivered by the Company
      to
      the Purchaser with or prior to the delivery of written confirmation of the
      sale
      by the Purchaser to the person asserting the claim from which such damages
      arise
      and (ii) the final prospectus would have corrected such untrue statement or
      alleged untrue statement or such omission or alleged omission, or (B) to
      the extent that any such loss, claim, damage or liability arises out of or
      is
      based upon an untrue statement or alleged untrue statement or omission or
      alleged omission so made in conformity with information furnished by any such
      Purchaser, or any such controlling person in writing specifically for use in
      such registration statement or prospectus.

     

    (b)  In
      the event of a registration of any of the Shares under the Securities Act
      pursuant to Section 1, the Purchaser will, to the extent permitted by law,
      indemnify and hold harmless the Company, and each person, if any, who controls
      the Company within the meaning of the Securities Act, each officer of the
      Company who signs the registration statement, each director of the Company,
      each
      underwriter and each person who controls any underwriter within the meaning
      of
      the Securities Act, against all losses, claims, damages or liabilities, joint
      or
      several, to which the Company or such officer, director, underwriter or
      controlling person may become subject under the Securities Act or otherwise,
      insofar as such losses, claims, damages or liabilities (or actions in respect
      thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in the registration statement
      under which such Shares were registered under the Securities Act pursuant to
      Section 1, any preliminary prospectus or final prospectus contained therein,
      or
      any amendment or supplement thereof, or arise out of or are based upon the
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements therein not misleading,
      and
      will reimburse the Company and each such officer, director, underwriter and
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action, provided, however, that the Purchaser will be liable
      hereunder in any such case if and only to the extent that any such loss, claim,
      damage or liability arises out of or is based upon an untrue statement or
      alleged untrue statement or omission or alleged omission made in reliance upon
      and in conformity with information pertaining to such Purchaser, as such,
      furnished in writing to the Company by such Purchaser specifically for use
      in
      such registration statement or prospectus, and provided, further, however,
      that
      the liability of the Purchaser hereunder shall be limited to the net proceeds
      actually received by the Purchaser from the sale of Shares covered by such
      registration statement.

     

    All
      references to “Section 1” in this Exhibit D shall only mean this Section 1 of
      this Exhibit and shall not refer to any other section of this Purchase
      Agreement.exhibit10-16.htm

    Exhibit 10.16

     

    NEITHER
      THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE 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.

     

     $200,000

     

    POWER3
      MEDICAL PRODUCTS, INC.

     

    Convertible
      Debenture

     

    

     

    Due
      April 17, 2009

     

    This
      Convertible Debenture (the “Debenture”) is issued by POWER3
      MEDICAL PRODUCTS, INC., a New York corporation (the “Obligor”),
      to NEOGENOMICS, INC., a Nevada corporation (the
“Holder”), pursuant to that certain Securities Purchase Agreement
      (the
“Purchase Agreement”) of even date herewith.  Capitalized terms
      used and not defined herein have the meanings given to them in the Purchase
      Agreement.

     

    FOR
      VALUE
      RECEIVED, the Obligor hereby promises to pay to the Holder or its successors
      and
      assigns the principal sum of Two Hundred Thousand Dollars ($200,000) together
      with accrued but unpaid interest on or before April 17, 2009 (the “Maturity
      Date”) in accordance with the following terms:

     

    This
      Debenture is subject to the following additional provisions:

     

    Section
      1.                                Interest;
      Exchange.  Interest shall accrue on the outstanding principal
      balance hereof at an annual rate equal to six percent (6%).  Interest
      shall be calculated on the basis of a 365-day year and the actual number of
      days
      elapsed, to the extent permitted by applicable law.  Interest
      hereunder will be paid on the last day of each calendar quarter to the Holder
      or
      its assignee (as defined in Section 5) in whose name this Debenture is
      registered on the records of the Obligor regarding registration and transfers
      of
      Debentures (the “Debenture Register”).  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.

     

    Section
      2.                                Events
      of Default.

     

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

     

    (i)           Any
      default in the payment of the principal of, interest on or other charges in
      respect of this Debenture, free of any claim of subordination, as and when
      the
      same shall become due and payable (whether on a Conversion Date or the Maturity
      Date or by acceleration or otherwise);

     

    (ii)           The
      Obligor shall fail to observe or perform any other covenant, agreement or
      warranty contained in, or otherwise commit any breach or default of any
      provision of this Debenture (except as may be covered by Section 2(a)(i) hereof)
      or any Transaction Document which is not cured with in the time
      prescribed;

     

    (iii)           The
      Obligor or any subsidiary of the Obligor shall commence, or there shall be
      commenced against the Obligor or any subsidiary of the Obligor under any
      applicable bankruptcy or insolvency laws as now or hereafter in effect or any
      successor thereto, or the Obligor or any subsidiary of the Obligor 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 Obligor or
      any
      subsidiary of the Obligor or there is commenced against the Obligor or any
      subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding
      which remains undismissed for a period of sixty-one (61) days; or the Obligor
      or
      any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any
      order
      of relief or other order approving any such case or proceeding is entered;
      or
      the Obligor or any subsidiary of the Obligor suffers any appointment of any
      custodian, private or court appointed receiver or the like for it or any
      substantial part of its property which continues undischarged or unstayed for
      a
      period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor
      makes a general assignment for the benefit of creditors; or the Obligor or
      any
      subsidiary of the Obligor 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
      the
      Obligor or any subsidiary of the Obligor shall call a meeting of its creditors
      with a view to arranging a composition, adjustment or restructuring of its
      debts; or the Obligor or any subsidiary of the Obligor shall by any act or
      failure to act expressly indicate its consent to, approval of or acquiescence
      in
      any of the foregoing; or any corporate or other action is taken by the Obligor
      or any subsidiary of the Obligor for the purpose of effecting any of the
      foregoing;

     

    (iv)           The
      Obligor or any subsidiary of the Obligor shall default in any of its obligations
      under any other debenture or any mortgage, credit agreement or other facility
      (other than existing defaults with respect to outstanding convertible debentures
      and notes that have previously been disclosed to the Holder), 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 Obligor or any subsidiary of the Obligor in an amount exceeding one
      hundred thousand dollars ($100,000), whether such indebtedness now exists or
      shall hereafter be created and such default shall result in such indebtedness
      becoming or being declared due and payable prior to the date on which it would
      otherwise become due and payable;

     

    (v)           The
      Common Stock shall cease to be quoted for trading or listing for trading on
      either the Pink Sheets Electronic Quotation Service (the “Pink Sheets”),
      or if then listed on the OTC Bulletin Board, Nasdaq Capital Market, New York
      Stock Exchange, American Stock Exchange or the Nasdaq National Market (each,
      a
“Subsequent Market”) shall cease to be quoted for trading or listing on
      such Subsequent Market and shall not again be quoted or listed for trading
      thereon within five (5) Trading Days of such delisting;

     

    (vi)           The
      Obligor or any subsidiary of the Obligor shall be a party to any Change of
      Control Transaction (as defined in Section 5);

     

    (vii)           The
      Obligor, following the exercise by the Holder of its registration rights
      pursuant to Section 2 of the Registration Rights Agreement, shall fail to
      file the Registration Statement with the Commission or the Registration
      Statement shall not have been declared effective by the Commission, in each
      case
      within the time periods set forth in the Registration Rights
      Agreement;

     

    (viii)                      If
      the effectiveness of the Registration Statement lapses for any reason or the
      Holder shall not be permitted to resell the shares of Common Stock underlying
      this Debenture under the Registration Statement, in either case, for more than
      five (5) consecutive Trading Days or an aggregate of eight (8) Trading Days
      (which need not be consecutive Trading Days);

     

    (ix)           The
      Obligor shall fail for any reason to deliver Common Stock certificates to a
      Holder prior to the fifth Trading Day after a Conversion Date or the Obligor
      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 this
      Debenture in accordance with the terms hereof;

     

    (x)           The
      Obligor shall fail for any reason to deliver the payment in cash pursuant to
      a
      Buy-In (as defined herein) within three (3) days after notice is claimed
      delivered hereunder;

     

    (b)           During
      the time that any portion of this Debenture is outstanding, if any Event of
      Default has occurred, the full principal amount of this Debenture, together
      with
      interest and other amounts owing in respect thereof, to the date of acceleration
      shall become at the Holder’s election, immediately due and payable in cash,
      provided however, the Holder may request (but shall have no obligation to
      request) payment of such amounts in Common Stock of the Obligor.  In
      addition to any other remedies, the Holder shall have the right (but not the
      obligation) to convert this Debenture at any time after (x) an Event of Default
      or (y) the Maturity Date at the Conversion Price then in-effect.  The
      Holder need not provide and the Obligor 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. No such rescission or annulment shall affect any subsequent Event
      of
      Default or impair any right consequent thereon.

     

    Section
      3.                                Conversion.

     

    (a)           Conversion
      at Option of Holder.

     

    (i)           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, after the
      Original Issue Date (as defined in Section 5). The number of shares of Common
      Stock issuable upon a conversion hereunder equals the quotient obtained by
      dividing (x) the outstanding amount of this Debenture to be converted by (y)
      the
      Conversion Price (as defined in Section 3(b)(i)).  The Obligor shall
      deliver Common Stock certificates to the Holder prior to the fifth (5th) Trading
      Day after
      a Conversion Date.

     

    (ii)           Notwithstanding
      anything to the contrary contained herein, if on any Conversion
      Date:  (1) the number of shares of Common Stock at the time
      authorized, unissued and unreserved for all purposes, or held as treasury stock,
      is insufficient to pay principal and interest hereunder in shares of Common
      Stock; (2) the Common Stock is not listed or quoted for trading on the Pink
      Sheets or on a Subsequent Market; or (3) the Obligor has failed to timely
      satisfy its conversion obligations, then, at the option of the Holder, the
      Obligor, in lieu of delivering shares of Common Stock pursuant to Section
      3(a)(i), shall deliver, within three (3) Trading Days of each applicable
      Conversion Date, an amount in cash equal to the product of the outstanding
      principal amount to be converted plus any interest due therein divided by the
      Conversion Price, chosen by the Holder, and multiplied by the highest closing
      price of the stock from date of the conversion notice till the date that such
      cash payment is made.

     

    Further,
      if the Obligor shall not have delivered any cash due in respect of conversion
      of
      this Debenture or as payment of interest thereon by the fifth (5th) Trading
      Day after
      the Conversion Date, the Holder may, by notice to the Obligor, require the
      Obligor to issue shares of Common Stock pursuant to Section 3(b), except that
      for such purpose the Conversion Price applicable thereto shall be the lesser
      of
      the Conversion Price on the Conversion Date and the Conversion Price on the
      date
      of such Holder demand. Any such shares will be subject to the provisions of
      this
      Section.

     

    (iii)           The
      Holder shall effect conversions by delivering to the Obligor a completed notice
      in the form attached hereto as Exhibit A (a “Conversion
      Notice”).  The date on which a Conversion Notice is delivered is
      the “Conversion Date.” Unless the Holder is converting the entire
      principal amount outstanding under this Debenture, the Holder is not required
      to
      physically surrender this Debenture to the Obligor in order to effect
      conversions.  Conversions hereunder shall have the effect of lowering
      the outstanding principal amount of this Debenture plus all accrued and unpaid
      interest thereon in an amount equal to the applicable conversion. The Holder
      and
      the Obligor shall maintain records showing the principal amount converted and
      the date of such conversions. In the event of any dispute or discrepancy, the
      records of the Holder shall be controlling and determinative in the absence
      of
      manifest error.

     

    

     

    (b)           Conversion
      Price and Adjustments to Conversion Price.

     

    (i)          The
      conversion price in effect on any Conversion Date shall be, at the sole option
      of the Holder, equal to $0.20 per share (the “Fixed Conversion Price”),
      subject to adjustment as set forth herein.

     

    (ii)          If
      the Obligor, at any time while this Debenture is outstanding, shall (a) 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, (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 Obligor, then the Fixed 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.

     

    (iii)           If
      the Obligor, at any time while this Debenture is outstanding, shall issue
      rights, options or warrants to all holders of Common Stock (and not to the
      Holder) (a “Distribution Security”) entitling them to subscribe for or
      purchase shares of Common Stock at a price per share less than the Fixed
      Conversion Price, then the Fixed Conversion Price shall be determined by (i)
      multiplying (x) the difference between the Fixed Conversion Price prior to
      the
      issuance of such Distribution Securities and the issuance price per share of
      the
      Distribution Security by (y) one minus the percentage amount (subject to a
      maximum of 100%) determined by dividing the number of shares of Common Stock
      or
      any other security convertible into or exchangeable for shares of Common Stock
      (“Common Stock Equivalents”) issued through such issuance of the
      Distribution Security by the total number of Common Stock Equivalents held
      by
      the Holder; and then (ii) adding the resulting product to the issuance price
      per
      share of such Distribution Security.  Such adjustment shall be made
      whenever such Distribution Securities are issued, and shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such Distribution Securities.

     

    (iv)           If
      the Obligor or any subsidiary thereof, as applicable, at any time while this
      Debenture is outstanding, shall issue shares of Common Stock or Common Stock
      Equivalents entitling any Person to acquire shares of Common Stock, at a price
      per share less than the Fixed Conversion Price (if the holder of the Common
      Stock or Common Stock Equivalent 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 a price per share which is less than the
      Fixed
      Conversion Price, such issuance shall be deemed to have occurred for less than
      the Fixed Conversion Price), then the Fixed Conversion Price shall be determined
      by (i) multiplying (x) the difference between the Fixed Conversion Price prior
      to the issuance of such Common Stock or Common Stock Equivalents and the
      issuance price per share of such Common Stock or Common Stock
      Equivalents  by; (y) one minus the percentage amount (subject to a
      maximum of 100%) determined by dividing the number of shares of Common Stock
      or
      Common Stock Equivalents issued by the total number of shares of Common Stock
      Equivalents held by the Holder; and then (ii) adding the resulting product
      to
      the issuance price per share of such Common Stock or Common Stock
      Equivalents.  Such adjustment shall be made whenever such Common Stock
      or Common Stock Equivalents are issued, and shall become effective immediately
      after the record date for the determination of stockholders entitled to receive
      such Common Stock or Common Stock Equivalents. The Obligor shall notify the
      Holder in writing, no later than one (1) business day following any issuance
      of
      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.

     

    (v)           [Intentionally
      Omitted]

     

    (vi)           In
      case of any reclassification of the Common Stock or any compulsory share
      exchange pursuant to which the Common Stock is converted into other securities,
      cash or property, the Holder shall have the right thereafter to, at its
      option,  (A) convert the then outstanding principal amount, together
      with all accrued but unpaid interest and any other amounts then owing hereunder
      in respect of this Debenture into the shares of stock and other securities,
      cash
      and property receivable upon or deemed to be held by holders of the Common
      Stock
      following such reclassification or share exchange, and the Holder of this
      Debenture shall be entitled upon such event to receive such amount of
      securities, cash or property as the shares of the Common Stock of the Obligor
      into which the then outstanding principal amount, together with all accrued
      but
      unpaid interest and any other amounts then owing hereunder in respect of this
      Debenture could have been converted immediately prior to such reclassification
      or share exchange would have been entitled, or (B) require the Obligor to prepay
      the outstanding principal amount of this Debenture, plus all interest and other
      amounts due and payable thereon. The entire prepayment price shall be paid
      in
      cash.  This provision shall similarly apply to successive
      reclassifications or share exchanges.

     

    (vii)           The
      Obligor shall at all times reserve and keep available out of its authorized
      Common Stock the full number of shares of Common Stock issuable upon conversion
      of all outstanding amounts under this Debenture; and within three (3) Business
      Days following the receipt by the Obligor of a Holder’s notice that such minimum
      number of Underlying Shares is not so reserved, the Obligor shall promptly
      reserve a sufficient number of shares of Common Stock to comply with such
      requirement.

     

    (viii)                      All
      calculations under this Section 3 shall be rounded up to the nearest $0.001
      or
      whole share.

     

    (ix)           Whenever
      the Conversion Price is adjusted pursuant to Section 3 hereof, the Obligor
      shall
      promptly mail to the Holder a notice setting forth the Conversion Price after
      such adjustment and setting forth a brief statement of the facts requiring
      such
      adjustment.

     

    (x)           If
      (A) the Obligor shall declare a dividend (or any other distribution) on the
      Common Stock; (B) the Obligor shall declare a special nonrecurring cash dividend
      on or a redemption of the Common Stock; (C) the Obligor 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 Obligor shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Obligor is a party, any sale or transfer of all or substantially all of
      the
      assets of the Obligor, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; or (E) the Obligor shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Obligor; then, in each case, the Obligor shall cause to
      be
      filed at each office or agency maintained for the purpose of conversion of
      this
      Debenture, and shall cause to be mailed to the Holder at its last address as
      it
      shall appear upon the stock books of the Obligor, at least twenty (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.  The Holder is entitled to convert
      this Debenture during the twenty (20) day calendar period commencing the date
      of
      such notice to the effective date of the event triggering such
      notice.

     

    (xi)           In
      case of any (1) merger or consolidation of the Obligor or any subsidiary of
      the
      Obligor with or into another Person, or (2) sale by the Obligor or any
      subsidiary of the Obligor of more than one-half of the assets of the Obligor
      in
      one or a series of related transactions, a Holder shall have the right to (A)
      exercise any rights under Section 2(b), (B) convert the aggregate amount of
      this
      Debenture then outstanding into the shares of stock and other securities, cash
      and property receivable upon or deemed to be held by holders of Common Stock
      following such merger, consolidation or sale, and such Holder shall be entitled
      upon such event or series of related events to receive such amount of
      securities, cash and property as the shares of Common Stock into which such
      aggregate principal amount of this Debenture could have been converted
      immediately prior to such merger, consolidation or sales would have been
      entitled, or (C) in the case of a merger or consolidation, require the surviving
      entity to issue to the Holder a convertible Debenture with a principal amount
      equal to the aggregate principal amount of this Debenture then held by such
      Holder, plus all accrued and unpaid interest and other amounts owing thereon,
      which such newly issued convertible Debenture shall have terms identical
      (including with respect to conversion) to the terms of this Debenture, and
      shall
      be entitled to all of the rights and privileges of the Holder of this Debenture
      set forth herein and the agreements pursuant to which this Debentures were
      issued. In the case of clause (C), the conversion price applicable for the
      newly
      issued shares of convertible preferred stock or convertible Debentures shall
      be
      based upon the amount of securities, cash and property that each share of Common
      Stock would receive in such transaction and the Conversion Price in effect
      immediately prior to the effectiveness or closing date for such transaction.
      The
      terms of any such merger, sale or consolidation shall include such terms so
      as
      to continue to give the Holder the right to receive the securities, cash and
      property set forth in this Section upon any conversion or redemption following
      such event. This provision shall similarly apply to successive such
      events.

     

    (c)           [Intentionally
      Omitted]

     

    (d)           Other
      Provisions.

     

    (i)           The
      Obligor 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 this Debenture and payment of interest on this
      Debenture, each as herein provided, free from preemptive rights or any other
      actual contingent purchase rights of persons other than the Holder, not less
      than such number of shares of the Common Stock as shall (subject to any
      additional requirements of the Obligor as to reservation of such shares set
      forth in this Debenture) be issuable (taking into account the adjustments and
      restrictions of Section 3(b)) upon the conversion of the outstanding principal
      amount of this Debenture and payment of interest hereunder. The Obligor
      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 has been declared effective under the Securities
      Act, registered for public sale in accordance with such Registration
      Statement.

     

    (ii)           Upon
      a conversion hereunder the Obligor 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 Bid Price at such time. If the Obligor 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.

     

    (iii)           The
      issuance of certificates for shares of the Common Stock on conversion of this
      Debenture shall be made without charge to the Holder 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 Obligor 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 conversion in a name other than that
      of
      the Holder of such Debenture so converted and the Obligor 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 Obligor the amount of
      such tax or shall have established to the satisfaction of the Obligor that
      such
      tax has been paid.

     

    (iv)           Nothing
      herein shall limit a Holder’s right to pursue actual damages or declare an Event
      of Default pursuant to Section 2 herein for the Obligor ‘s failure to deliver
      certificates representing shares of Common Stock upon conversion 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, in each case without
      the need to post a bond or provide other security. The exercise of any such
      rights shall not prohibit the Holder from seeking to enforce damages pursuant
      to
      any other Section hereof or under applicable law.

     

    (v)           In
      addition to any other rights available to the Holder, if the Obligor fails
      to
      deliver to the Holder such certificate or certificates pursuant to Section
      3(a)(i) by the fifth (5th) Trading
      Day after
      the Conversion Date, and if after such fifth (5th) Trading
      Day the
      Holder purchases (in an open market transaction or otherwise) Common Stock
      to
      deliver in satisfaction of a sale by such Holder of the Underlying Shares which
      the Holder anticipated receiving upon such conversion (a “Buy-In”), then
      the Obligor 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 market price of the Common Stock at the time of
      the
      sale giving rise to such purchase obligation and (B) at the option of the
      Holder, either reissue a Debenture in the principal amount equal to the
      principal amount of the attempted conversion or deliver to the Holder the number
      of shares of Common Stock that would have been issued had the Obligor timely
      complied with its delivery requirements under Section 3(a)(i). 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 market price of the Underlying Shares on the date of
      conversion was a total of $10,000 under clause (A) of the immediately preceding
      sentence, the Obligor shall be required to pay the Holder $1,000.  The
      Holder shall provide the Obligor written notice indicating the amounts payable
      to the Holder in respect of the Buy-In.

     

    Section
      4.                                Notices.                      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms hereof must be in writing and will be deemed to have
      been
      delivered:  (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) trading day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same.  The addresses and facsimile numbers for such
      communications shall be:

     

    
      	
              If
                to the Obligor, to:

            	
              Power3
                Medical Products, Inc.

            
	 	
              3400
                Research Forest Drive, Suite B2-3

            
	 	
              The
                Woodlands, Texas 77381

            
	 	
              Attention:  Steven
                B. Rash, President and CEO

            
	 	
              Telephone:  (281)
                466-1600

            
	 	
              Facsimile:  (281)
                466 1481

            
	 	 
	
              If
                to the Holder:

            	
              Neogenomics,
                Inc.

            
	 	
              12701
                Commonwealth Drive, Suite 9

            
	 	
              Fort
                Myers, Florida 33913

            
	 	
              Attention:  Robert
                P. Gasparini, President and Chief Scientific Officer

            
	 	
              Telephone:  (239)
                768-0600

            
	 	 
	
              With
                a copy to:

            	
              Kirkpatrick
                & Lockhart Preston Gates Ellis, LLP

            
	 	
              201
                South Biscayne Boulevard, Suite 2000

            
	 	
              Miami,
                Florida 33131

            
	 	
              Attention:  Clayton
                E. Parker, Esq.

            
	 	
              Telephone:  (305)
                539-3306

            
	 	
              Facsimile:  (305)
                358-7095

            

    

    

    or
      at
      such other address and/or facsimile number and/or to the attention of such
      other
      person as the recipient party has specified by written notice given to each
      other party three (3) business days prior to the effectiveness of such
      change.  Written confirmation of receipt (i) given by the recipient of
      such notice, consent, waiver or other communication, (ii) mechanically or
      electronically generated by the sender’s facsimile machine containing the time,
      date, recipient facsimile number and an image of the first page of such
      transmission or (iii) provided by a nationally recognized overnight delivery
      service, shall be rebuttable evidence of personal service, receipt by facsimile
      or receipt from a nationally recognized overnight delivery service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

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

     

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

     

    “Change
      of Control Transaction” means the occurrence of (a) 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 Obligor, by
      contract or otherwise) of in excess of fifty percent (50%) of the voting
      securities of the Obligor (except that the acquisition of voting securities
      by
      the Holder shall not constitute a Change of Control Transaction for purposes
      hereof), (b) a replacement at one time or over time of more than one-half of
      the
      members of the board of directors of the Obligor 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), (c) the merger, consolidation or sale of fifty percent (50%) or more
      of
      the assets of the Obligor or any subsidiary of the Obligor in one or a series
      of
      related transactions with or into another entity, or (d) the execution by the
      Obligor of an agreement to which the Obligor is a party or by which it is bound,
      providing for any of the events set forth above in (a), (b) or (c).

     

    “Closing
      Bid Price” means the price per share in the last reported trade of the
      Common Stock on the Pink Sheets or on the exchange on which the Common Stock
      is
      then listed as quoted by Bloomberg, LP.

     

    “Common
      Stock” means the common stock, par value $.001, of the Obligor and stock of
      any other class into which such shares may hereafter be changed or
      reclassified.

     

    “Conversion
      Date” shall mean the date upon which the Holder gives the Obligor notice of
      their intention to effectuate a conversion of this Debenture into shares of
      the
      Obligor’s Common Stock as outlined herein.

     

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    “Original
      Issue Date” shall mean the date of the first issuance of this Debenture
      regardless of the number of transfers and regardless of the number of
      instruments, which may be issued to evidence such Debenture.

     

    “Person”
      means a corporation, an association, a partnership, organization, a business,
      an
      individual, a government or political subdivision thereof or a governmental
      agency.

     

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

     

    “Trading
      Day” means a day on which the shares of Common Stock are quoted on the Pink
      Sheets or quoted or traded on such Subsequent Market on which the shares of
      Common Stock are then quoted or listed; provided, that in the event that the
      shares of Common Stock are not listed or quoted, then Trading Day shall mean
      a
      Business Day.

     

    “Underlying
      Shares” means the shares of Common Stock issuable upon conversion of this
      Debenture or as payment of interest in accordance with the terms
      hereof.

     

    Capitalized
      terms that are not otherwise defined herein have the meanings given to such
      terms in the Purchase Agreement.

     

    Section
      6.                                Ranking.  Except
      as expressly provided herein, no provision of this Debenture shall alter or
      impair the obligations of the Obligor, which are absolute and unconditional,
      to
      pay the principal of, interest and other charges (if any) on, this Debenture
      at
      the time, place, and rate, and in the coin or currency, herein
      prescribed.  This Debenture is a direct obligation of the Obligor.
      This Debenture ranks pari passu with all other Debentures now or hereafter
      issued under the terms set forth herein. As long as this Debenture is
      outstanding, the Obligor shall not and shall cause their subsidiaries not to,
      without the consent of the Holder, (i) amend its certificate of incorporation,
      bylaws or other charter documents so as to adversely affect any rights of the
      Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise
      acquire shares of its Common Stock or other equity securities other than as
      to
      the Underlying Shares to the extent permitted or required under the Transaction
      Documents; or (iii) enter into any agreement with respect to any of the
      foregoing.

     

    Section
      7.                                No
      Rights as Stockholder.  This Debenture shall not entitle the
      Holder to any of the rights of a stockholder of the Obligor, including without
      limitation, the right to vote, to receive dividends and other distributions,
      or
      to receive any notice of, or to attend, meetings of stockholders or any other
      proceedings of the Obligor, unless and to the extent converted into shares
      of
      Common Stock in accordance with the terms hereof.

     

    Section
      8.                                Replacement.  If
      this Debenture is mutilated, lost, stolen or destroyed, the Obligor shall
      execute and deliver, in exchange and substitution for and upon cancellation
      of
      the 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
      Obligor.

     

    Section
      9.                                Priority.  No
      indebtedness of the Obligor is senior to this Debenture in right of payment,
      whether with respect to interest, damages or upon liquidation or dissolution
      or
      otherwise.  Without the Holder’s consent, the Obligor will not and
      will not permit any of their subsidiaries to, directly or indirectly, enter
      into, create, incur, assume or suffer to exist any indebtedness 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 there from that is senior
      in
      any respect to the obligations of the Obligor under this Debenture.

     

    Section
      10.                                Governing
      Law.  This Debenture shall be governed by and construed in
      accordance with the laws of the State of New York, without giving effect to
      conflicts of laws thereof.  Each of the parties consents to the
      exclusive jurisdiction of the United States federal courts and the state courts
      located in the City of New York, Borough of Manhattan in connection with any
      dispute arising under this Debenture and hereby waives, to the maximum extent
      permitted by law, any objection, including any objection based on
forumnonconveniens to the bringing of any such proceeding
      in such jurisdictions.

     

    Section
      11.                                Expenses.  If
      the Obligor fails to strictly comply with the terms of this Debenture, then
      the
      Obligor shall reimburse the Holder promptly for all fees, costs and expenses,
      including, without limitation, attorneys’ fees and expenses incurred by the
      Holder in any action in connection with this Debenture, including, without
      limitation, those incurred: (i) during any workout, attempted workout, and/or
      in
      connection with the rendering of legal advice as to the Holder’s rights,
      remedies and obligations, (ii) collecting any sums which become due to the
      Holder, (iii) defending or prosecuting any proceeding or any counterclaim to
      any
      proceeding or appeal; or (iv) the protection, preservation or enforcement of
      any
      rights or remedies of the Holder.

     

    Section
      12.                                Waiver.  Any
      waiver by 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
      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.

     

    Section
      13.                                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 shall violate applicable
      laws governing usury, the applicable rate of interest due hereunder shall
      automatically be lowered to equal the maximum permitted rate of interest. The
      Obligor 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 Obligor 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 Obligor (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.

     

    Section
      14.                                Payment
      Date.  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.

     

    Section
      15.                                Jury
      Trial.  THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
      INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
      OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
      THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE
      OF
      DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
      PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’
ACCEPTANCE OF THIS AGREEMENT.

     

    [REMAINDER
      OF PAGE INTENTIONLLY LEFT BLANK]

     

    IN
      WITNESS WHEREOF, the Obligor has caused this Convertible Debenture to be duly
      executed by a duly authorized officer as of the date set forth
      above.

     

    
      	 	
              POWER3
                MEDICAL PRODUCTS, INC.

            
	 	 
	 	
              By:                                                                

            
	 	
              Name:                      

            
	 	
              Title:                      

            

    

    

    

     

    EXHIBIT
      “A”

     

     

    NOTICE
      OF CONVERSION

     

     

    (To
      be executed by the Holder in order to convert the
      Debenture)

     

    

    
      	
              TO:

            	 

    

    

    The
      undersigned hereby irrevocably elects to convert $ of the principal
      amount of the above Debenture into Shares of Common Stock of, according to
      the
      conditions stated therein, as of the Conversion Date written below.

     

    
      	
              Conversion
                Date:

            	 
	
              Applicable
                Conversion Price:

            	 
	
              Signature:

            	 
	
              Name:

            	 
	
              Address:

            	 
	
              Amount
                to be converted:

            	
              $

            
	
              Amount
                of Debenture unconverted:

            	
              $

            
	
              Conversion
                Price per share:

            	
              $

            
	
              Number
                of shares of Common Stock to be issued:

            	 
	
              Please
                issue the shares of Common Stock in the following name and to the
                following address:

            	 
	
              Issue
                to:

            	 
	
              Authorized
                Signature:

            	 
	
              Name:

            	 
	
              Title:

            	 
	
              Phone
                Number:

            	 
	
              Broker
                DTC Participant Code:

            	 
	
              Account
                Number:

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