EXHIBIT 4.1
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: October ____, 2004
Original Conversion Price (subject to adjustment herein): $_____(1)
$_______________
CONVERTIBLE DEBENTURE
DUE OCTOBER ____, 2007
THIS DEBENTURE is one of a series of duly authorized and issued
Convertible Debentures of Power 3 Medical Products, Inc., a New York
corporation, having a principal place of business at 0000 Xxxxxxxx Xxxxxx Xxxxx,
Xxxxx X0-0, Xxx Xxxxxxxxx, Xxxxx 00000 (the "Company"), designated as its
Convertible Debenture, due October ____, 2007 (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to ____________________ or
its registered assigns (the "Holder"), the principal sum of $_______________ on
October ____, 2007 or such earlier date as the Debentures are required or
permitted to be repaid as provided hereunder (the "Maturity Date"). This
Debenture is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture: (a) capitalized terms not otherwise defined
herein have the
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(1) As to Debentures issued at the First Closing, 75% of the Market Price. As to
Debentures issuable at the Second Closing, the lesser of (a) 75% of the Market
Price and (b) the lesser of (i) 75% of the average of the five consecutive
Closing Prices immediately prior to the Effective Date (as defined in the
Purchase Agreement) and (ii) the Closing Price on the Effective Date.
meanings given to such terms in the Purchase Agreement, and (b) the following
terms shall have the following meanings:
"Alternate Consideration" shall have the meaning set forth in
Section 5(e)(iii).
"Business Day" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday in the United States or a day on
which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Change of Control Transaction" means the occurrence after the date
hereof of any of (i) an acquisition after the date hereof by an individual
or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated
under the Exchange Act) of effective control (whether through legal or
beneficial ownership of capital stock of the Company, by contract or
otherwise) of in excess of 50% of the voting securities of the Company, or
(ii) a replacement at one time or within a three year period of more than
one-half of the members of the Company's board of directors which is not
approved by a majority of those individuals who are members of the board
of directors on the date hereof (or by those individuals who are serving
as members of the board of directors on any date whose nomination to the
board of directors was approved by a majority of the members of the board
of directors who are members on the date hereof), or (iii) the execution
by the Company of an agreement to which the Company is a party or by which
it is bound, providing for any of the events set forth above in (i) or
(ii).
"Closing Price" means on any particular date (a) the daily volume
weighted average price per share of Common Stock on such date (or the
nearest preceding date) on the Trading Market (as reported by Bloomberg
L.P. based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time) using the VAP function, or (b) if the Common Stock is not
then listed or quoted on the Trading Market and if prices for the Common
Stock are then reported in the "pink sheets" published by the National
Quotation Bureau Incorporated (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (c) if the shares of
Common Stock are not then publicly traded the fair market value of a share
of Common Stock as determined by a nationally-recognized independent
appraiser selected in good faith by the Purchasers of a majority in
interest of the principal amount of Debentures then outstanding and
reasonably acceptable to the Company.
"Common Stock" means the common stock, par value $0.001 per share,
of the Company and stock of any other class into which such shares may
hereafter have been reclassified or changed.
"Conversion Date" shall have the meaning set forth in Section 4(a)
hereof.
"Conversion Price" shall have the meaning set forth in Section 4(b).
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"Conversion Shares" means the shares of Common Stock issuable upon
conversion of Debentures in accordance with the terms hereof.
"Dilutive Issuance" shall have the meaning set forth in Section 5(b)
hereof.
"Effectiveness Period" shall have the meaning given to such term in
the Registration Rights Agreement.
"Equity Conditions" shall mean, during the period in question, (i)
the Company shall have duly honored all conversions and redemptions
scheduled to occur or occurring by virtue of one or more Notice of
Conversions, if any, (ii) all liquidated damages and other amounts owing
in respect of the Debentures shall have been paid; (iii) there is an
effective Registration Statement pursuant to which the Holder is permitted
to utilize the prospectus thereunder to resell all of the shares issuable
pursuant to the Transaction Documents (and the Company believes, in good
faith, that such effectiveness will continue uninterrupted for the
foreseeable future), (iv) the Common Stock is trading on the Trading
Market and all of the shares issuable pursuant to the Transaction
Documents are listed for trading on a Trading Market (and the Company
believes, in good faith, that trading of the Common Stock on a Trading
Market will continue uninterrupted for the foreseeable future), (v) there
is a sufficient number of authorized but unissued and otherwise unreserved
shares of Common Stock for the issuance of all of the shares issuable
pursuant to the Transaction Documents, (vi) there is then existing no
Event of Default or event which, with the passage of time or the giving of
notice, would constitute an Event of Default and (vii) all of the shares
issued or issuable pursuant to the Transaction Documents in full, ignoring
for such purposes any conversion or exercise limitation therein, would not
violate the limitations set forth in Section 4(c) and (ix) no public
announcement of a pending or proposed Fundamental Transaction, Change of
Control Transaction or acquisition transaction has occurred that has not
been consummated.
"Event of Default" shall have the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fundamental Transaction" shall have the meaning set forth in
Section 5(e)(iii) hereof.
"Late Fees" shall have the meaning set forth in the second paragraph
to this Debenture.
"Mandatory Prepayment Amount" for any Debentures shall equal the sum
of (i) the greater of: (A) 130% of the principal amount of Debentures to
be prepaid, or (B) the principal amount of Debentures to be prepaid,
divided by the Conversion Price on (x) the date the Mandatory Prepayment
Amount is demanded or otherwise due or (y) the date the Mandatory
Prepayment Amount is paid in full, whichever is less, multiplied by the
Closing Price on (x) the date the Mandatory Prepayment Amount is demanded
or
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otherwise due or (y) the date the Mandatory Prepayment Amount is paid in
full, whichever is greater, and (ii) all other amounts, costs, expenses
and liquidated damages due in respect of such Debentures.
"Original Issue Date" shall mean the date of the first issuance of
the Debentures regardless of the number of transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence
such Debenture.
"Person" means a corporation, an association, a partnership, a
limited liability company, organization, a business, an individual, a
government or political subdivision thereof or a governmental agency.
"Purchase Agreement" means the Securities Purchase Agreement, dated
as of October 28, 2004, to which the Company and the original Holder are
parties, as amended, modified or supplemented from time to time in
accordance with its terms.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of the Purchase Agreement, to which the
Company and the original Holder are parties, as amended, modified or
supplemented from time to time in accordance with its terms.
"Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement, covering
among other things the resale of the Conversion Shares and naming the
Holder as a "selling stockholder" thereunder.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Subsidiary" shall have the meaning given to such term in the
Purchase Agreement.
"Trading Day" means a day on which the Common Stock is traded on a
Trading Market.
"Trading Market" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question:
the Nasdaq SmallCap Market, the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.
"Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
Section 2. Interest.
a) No Payment of Interest. Except as set forth herein, the Company
shall not pay interest to the Holder on this Debenture.
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b) Prepayment. Except as otherwise set forth in this Debenture, the
Company may not prepay any portion of the principal amount of this
Debenture without the prior written consent of the Holder.
Section 3. Registration of Transfers and Exchanges.
a) Different Denominations. This Debenture is exchangeable for an
equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holder surrendering the same. No
service charge will be made for such registration of transfer or exchange.
b) Investment Representations. This Debenture has been issued
subject to certain investment representations of the original Holder set
forth in the Purchase Agreement and may be transferred or exchanged only
in compliance with the Purchase Agreement and applicable federal and state
securities laws and regulations.
c) Reliance on Debenture Register. Prior to due presentment to the
Company for transfer of this Debenture, the Company and any agent of the
Company may treat the Person in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose
of receiving payment as herein provided and for all other purposes,
whether or not this Debenture is overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.
Section 4. Conversion.
a) Voluntary Conversion. Subject to the terms hereof and
restrictions and limitations contained herein, at any time after the
Original Issue Date until this Debenture is no longer outstanding, this
Debenture shall be convertible into shares of Common Stock at the option
of the Holder, in whole or in part at any time and from time to time
(subject to the limitations on conversion set forth in Section 4(c)
hereof). The Holder shall effect conversions by delivering to the Company
the form of Notice of Conversion attached hereto as Annex A (a "Notice of
Conversion"), specifying therein the principal amount of Debentures to be
converted and the date on which such conversion is to be effected (a
"Conversion Date"). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of
Conversion is provided hereunder. To effect conversions hereunder, the
Holder shall not be required to physically surrender Debentures to the
Company unless the entire principal amount of this Debenture has been so
converted. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Debenture in an amount equal to the
applicable conversion. The Holder and the Company shall maintain records
showing the principal amount converted and the date of such conversions.
The Company shall deliver any objection to any Notice of Conversion within
1 Business Day of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. The Holder and any
assignee, by acceptance of this Debenture, acknowledge and agree that, by
reason of the
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provisions of this paragraph, following conversion of a portion of this
Debenture, the unpaid and unconverted principal amount of this Debenture
may be less than the amount stated on the face hereof.
b) Conversion Price. The conversion price in effect on any
Conversion Date shall be equal to $____(2) (subject to adjustment herein)
[AS TO THE FIRST CLOSING DEBENTURES ONLY; PROVIDED, HOWEVER, IF THE LESSER
OF (i) 75% OF THE AVERAGE OF THE 5 CONSECUTIVE CLOSING PRICES IMMEDIATELY
PRIOR TO THE EFFECTIVE DATE (AS DEFINED IN THE PURCHASE AGREEMENT) AND
(ii) THE CLOSING PRICE ON THE EFFECTIVE DATE (THE LESSER OF (i) AND (ii)
BEING REFERRED TO AS THE "EFFECTIVE DATE PRICE") IS LESS THAN THE
CONVERSION PRICE, THE CONVERSION PRICE SHALL BE REDUCED TO EQUAL THE
EFFECTIVE DATE PRICE] (the "Conversion Price").
c) Conversion Limitations; Xxxxxx's Restriction on Conversion. The
Company shall not effect any conversion of this Debenture, and the Holder
shall not have the right to convert any portion of this Debenture,
pursuant to Section 4(a) or otherwise, to the extent that after giving
effect to such conversion, the Holder (together with the Holder's
affiliates), as set forth on the applicable Notice of Conversion, would
beneficially own in excess of 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to such conversion. For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include the
number of shares of Common Stock issuable upon conversion of this
Debenture with respect to which the determination of such sentence is
being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) conversion of the remaining, nonconverted
portion of this Debenture beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including,
without limitation, any other Debentures or the Warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its affiliates. Except
as set forth in the preceding sentence, for purposes of this Section 4(c),
beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act. To the extent that the limitation contained in this
section applies, the determination of whether this Debenture is
convertible (in relation to other securities owned by the Holder) and of
which portion of this Debenture is convertible shall be in the sole
discretion of such Holder. To ensure compliance with this restriction, the
Holder will be deemed to represent to the Company each time it delivers a
Notice of Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Company shall have no
obligation to verify or confirm the accuracy of such determination. For
purposes of this Section 4(c), in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) the Company's most recent Form
10-QSB or Form 10-KSB, as the case may be, (y) a
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(2) As to the Debentures issued at the First Closing, 75% of the Market Price.
As to Debentures issuable at the Second Closing, the lesser of (a) 75% of the
Market Price and (b) the lesser of (i) 75% of the average of the five
consecutive Closing Prices immediately prior to the Effective Date (as defined
in the Purchase Agreement) and (ii) the Closing Price on the Effective Date.
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more recent public announcement by the Company or (z) any other notice by
the Company or the Company's Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral request of
the Holder, the Company shall within two Trading Days confirm orally and
in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Debenture, by the Holder or its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.
d) Mechanics of Conversion
i. Conversion Shares Issuable Upon Conversion of Principal
Amount. The number of shares of Common Stock issuable upon a
conversion hereunder shall be determined by the quotient obtained by
dividing (x) the outstanding principal amount of this Debenture to
be converted by (y) the Conversion Price.
ii. Delivery of Certificate Upon Conversion. Not later than
three Trading Days after any Conversion Date, the Company will
deliver to the Holder a certificate or certificates representing the
Conversion Shares which shall be free of restrictive legends and
trading restrictions (other than those required by the Purchase
Agreement or applicable law) representing the number of shares of
Common Stock being acquired upon the conversion of Debentures. The
Company shall, if available and if allowed under applicable
securities laws, use its commercially reasonable efforts to deliver
any certificate or certificates required to be delivered by the
Company under this Section electronically through the Depository
Trust Corporation or another established clearing corporation
performing similar functions.
iii. Failure to Deliver Certificates. If such certificate or
certificates are not delivered to or as directed by the applicable
Holder by the third Trading Day after a Conversion Date, the Holder
shall be entitled by written notice to the Company at any time on or
before its receipt of such certificate or certificates thereafter,
to rescind such conversion, in which event the Company shall
immediately return the certificate representing the principal amount
of Debentures tendered for conversion, if it was delivered to the
Company by the Holder, and the Holder shall immediately return any
stock certificates representing Conversion Shares from such
rescinded conversion to the Company.
iv. Partial Liquidated Damages. If the Company fails for any
reason to deliver to the Holder such certificate or certificates
pursuant to Section 4(d)(ii) by the third Trading Day after the
Conversion Date, the Company shall pay to such Holder, in cash, as
liquidated damages and not as a penalty, for each $1000 of principal
amount being converted, $10 per Trading Day (increasing to $20 per
Trading Day after 5 Trading Days after such damages begin to accrue)
for each
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Trading Day after such third Trading Day until such certificates are
delivered. The Company's obligations to issue and deliver the
Conversion Shares upon conversion of this Debenture in accordance
with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery
of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any
other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other person, and
irrespective of any other circumstance which might otherwise limit
such obligation of the Company to the Holder in connection with the
issuance of such Conversion Shares; provided, however, such delivery
shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the event a Holder of this
Debenture shall elect to convert any or all of the outstanding
principal amount hereof, the Company may not refuse conversion based
on any claim that the Holder or any one associated or affiliated
with the Holder has been engaged in any violation of law, agreement
or for any other reason, unless, an injunction from a court, on
notice, restraining and or enjoining conversion of all or part of
this Debenture shall have been sought and obtained and the Company
posts a surety bond for the benefit of the Holder in the amount
equal to the principal amount of this Debenture outstanding, which
is subject to the injunction, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and
the proceeds of which shall be payable to such Holder to the extent
it obtains judgment. In the absence of an injunction precluding the
same, the Company shall issue Conversion Shares or, if applicable,
cash, upon a properly noticed conversion. Nothing herein shall limit
a Xxxxxx's right to pursue actual damages or declare an Event of
Default pursuant to Section 8 herein for the Company's failure to
deliver Conversion Shares within the period specified herein and
such Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holders from seeking to enforce
damages pursuant to any other Section hereof or under applicable
law.
v. Failure to Timely Deliver Certificates Upon Conversion. In
addition to any other rights available to the Holder, if the Company
fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(d)(ii) by the third Trading Day
after the Conversion Date, and if after such third Trading Day the
Holder is required by its brokerage firm to purchase, or its
brokerage firm purchases (in an open market transaction or
otherwise) Common Stock to deliver in satisfaction of a sale by such
Holder of the Conversion Shares which the Holder anticipated
receiving upon such conversion (a "Buy-In"), then the Company shall
(A) pay in cash to the Holder (in addition to any remedies available
to or elected by the Holder) the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for
the Common Stock
8
so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder anticipated receiving from
the conversion at issue multiplied by (2) the actual sale price of
the Common Stock at the time of the sale (including brokerage
commissions, if any) giving rise to such purchase obligation and (B)
at the option of the Holder, either reissue Debentures in principal
amount equal to the principal amount of the attempted conversion or
deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its
delivery requirements under Section 4(d)(ii). For example, if the
Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of
Debentures with respect to which the actual sale price of the
Conversion Shares at the time of the sale (including brokerage
commissions, if any) giving rise to such purchase obligation was a
total of $10,000 under clause (A) of the immediately preceding
sentence, the Company shall be required to pay the Holder $1,000.
The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
Notwithstanding anything contained herein to the contrary, if a
Holder requires the Company to make payment in respect of a Buy-In
for the failure to timely deliver certificates hereunder and the
Company timely pays in full such payment, the Company shall not be
required to pay such Holder liquidated damages under Section
4(d)(iv) in respect of the certificates resulting in such Buy-In.
vi. Reservation of Shares Issuable Upon Conversion. The
Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of the Debentures
free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holders, not less than such number
of shares of the Common Stock as shall (subject to any additional
requirements of the Company as to reservation of such shares set
forth in the Purchase Agreement) be issuable (taking into account
the adjustments and restrictions of Section 5) upon the conversion
of the outstanding principal amount of the Debentures. The Company
covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable and, if the Registration Statement is then
effective under the Securities Act, registered for public resale in
accordance with such Registration Statement.
vii. Fractional Shares. Upon a conversion hereunder the
Company shall not be required to issue stock certificates
representing fractions of shares of the Common Stock, but may if
otherwise permitted, make a cash payment in respect of any final
fraction of a share based on the Closing Price at such time. If the
Company elects not, or is unable, to make such a cash payment, the
Holder shall be entitled to receive, in lieu of the final fraction
of a share, one whole share of Common Stock.
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viii. Transfer Taxes. The issuance of certificates for shares
of the Common Stock on conversion of the Debentures shall be made
without charge to the Holders thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or
delivery of such certificate, provided that the Company shall not be
required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder
of such Debentures so converted and the Company shall not be
required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
Section 5. Certain Adjustments.
a) Stock Dividends and Stock Splits. If the Company, at any time
while the Debentures are outstanding: (A) shall pay a stock dividend or
otherwise make a distribution or distributions on shares of its Common
Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include
any shares of Common Stock issued by the Company pursuant to this
Debenture, the Warrants or the Additional Investment Rights), (B)
subdivide outstanding shares of Common Stock into a larger number of
shares, (C) combine (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (D) issue by
reclassification of shares of the Common Stock any shares of capital stock
of the Company, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If the Company or any Subsidiary
thereof, as applicable, at any time while Debentures are outstanding,
shall offer, sell, grant any option to purchase or offer, sell or grant
any right to reprice its securities, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at an effective price per share
less than the then Conversion Price ("Dilutive Issuance"), as adjusted
hereunder (if the holder of the Common Stock or Common Stock Equivalents
so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which
is issued in connection with such issuance, be entitled to receive shares
of Common Stock at an effective price per share which is less than the
Conversion Price, such issuance shall be deemed to have occurred for less
than the Conversion Price), then the Conversion
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Price shall be reduced to equal the effective conversion, exchange or
purchase price for such Common Stock or Common Stock Equivalents
(including any reset provisions thereof) at issue. Such adjustment shall
be made whenever such Common Stock or Common Stock Equivalents are issued.
The Company shall notify the Holder in writing, no later than the business
day following the issuance of any Common Stock or Common Stock Equivalents
subject to this section, indicating therein the applicable issuance price,
or of applicable reset price, exchange price, conversion price and other
pricing terms.
c) Pro Rata Distributions. If the Company, at any time while
Debentures are outstanding, shall distribute to all holders of Common
Stock (and not to Holders) evidences of its indebtedness or assets or
rights or warrants to subscribe for or purchase any security, then in each
such case the Conversion Price shall be determined by multiplying such
Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the Closing Price determined as
of the record date mentioned above, and of which the numerator shall be
such Closing Price on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness
so distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holders of
the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
d) Calculations. All calculations under this Section 5 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares of Common Stock
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) outstanding.
e) Notice to Holders.
i. Adjustment to Conversion Price. Whenever the Conversion
Price is adjusted pursuant to any of this Section 5, the Company
shall promptly deliver to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. If the Company
issues a variable rate security, despite the prohibition thereon in
the Purchase Agreement, the Company shall be deemed to have issued
Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be
converted or exercised in the case of a Variable Rate Transaction
(as defined in the Purchase Agreement), or the lowest possible
adjustment price in the case of an MFN Transaction (as defined in
the Purchase Agreement).
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ii. Notice to Allow Conversion by Xxxxxx. If (A) the Company
shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Company
shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company; then, in each case, the Company shall
cause to be filed at each office or agency maintained for the
purpose of conversion of the Debentures, and shall cause to be
mailed to the Holders at their last addresses as they shall appear
upon the stock books of the Company, at least 20 calendar days prior
to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such
notice. Holders are entitled to convert Debentures during the 20-day
period commencing the date of such notice to the effective date of
the event triggering such notice.
iii. Fundamental Transaction. If, at any time while this
Debenture is outstanding, (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets
in one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or
property, or (D) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "Fundamental
Transaction"), then upon any subsequent conversion of this
Debenture, the Holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion
absent such Fundamental Transaction, the same
12
kind and amount of securities, cash or property as it would have
been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of one share of Common Stock (the "Alternate
Consideration"). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Debenture
following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the
Holder a new debenture consistent with the foregoing provisions and
evidencing the Holder's right to convert such debenture into
Alternate Consideration. The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the
provisions of this paragraph (iii) and insuring that this Debenture
(or any such replacement security) will be similarly adjusted upon
any subsequent transaction analogous to a Fundamental Transaction.
iv. Exempt Issuance. Notwithstanding the foregoing, no
adjustment will be made under this Section 5 in respect of an Exempt
Issuance.
Section 6. RESERVED.
Section 7. Negative Covenants. So long as any portion of this Debenture is
outstanding, the Company will not and will not permit any of its Subsidiaries to
directly or indirectly take any of the following actions unless approved by the
holder(s) of a two-thirds majority of the then-outstanding principal amount of
all Debentures:
a) enter into, create, incur, assume or suffer to exist any
indebtedness or liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom that is senior to, in any respect, the
Company's obligations under the Debentures except for Permitted
Indebtedness and Permitted Liens described below;
b) amend its certificate of incorporation, bylaws or other charter
documents so as to adversely affect any rights of the Holder (it being
agreed by the Holder that the proposed amendments to the Company's Series
A Preferred Stock and the designation of the proposed Series B Preferred
Stock shall not be considered as adversely affecting any rights of the
Holder);
13
c) repay, repurchase or offer to repay, repurchase or otherwise
acquire more than a de minimis number of shares of its Common Stock or
other equity securities other than as to the Conversion Shares to the
extent permitted or required under the Transaction Documents or as
otherwise permitted by the Transaction Documents; or
d) enter into any agreement with respect to any of the foregoing.
As used herein, "Permitted Indebtedness" shall mean:
i. indebtedness existing as of the date of the Purchase
Agreement;
ii. indebtedness, including capitalized lease obligations,
incurred by the Company or any subsidiary for the purpose of
financing all or any part of the purchase price of property, plant,
equipment or other assets (tangible or intangible) used in the
business of the Company or any subsidiary; and
iii. funded indebtedness from a non-affiliated lending
institution or other third party in an amount not to exceed
$5,000,000.
As used herein, "Permitted Liens" shall mean:
i. liens for taxes, assessments for governmental charges or
claims either not delinquent or contested in good faith by
appropriate proceedings;
ii. statutory liens of landlords, carriers, warehousemen,
mechanics, suppliers, materialmen and other liens imposed by law
incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith;
iii. liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of statutory obligations, surety and appeal bonds and
other similar obligations;
iv. liens securing any Permitted Indebtedness; and
v. liens arising from filing Uniform Commercial Code financing
statements regarding leases.
Section 8. Events of Default.
a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment,
decree or order of any court, or any order, rule or regulation of any
administrative or governmental body):
i. any default in the payment of the principal amount
of any Debenture, or liquidated damages in respect
of, any Debenture, in each case free of any claim
of subordination, as and when the same shall
become due and payable (whether on a Conversion
14
Date or the Maturity Date or by acceleration or
otherwise) which default, is not cured, within 3
Trading Days;
ii. the Company shall fail to observe or perform any
other covenant or agreement contained in this
Debenture or any of the other Transaction
Documents (other than a breach by the Company of
its obligations to deliver shares of Common Stock
to the Holder upon conversion which breach is
addressed in clause (xii) below) which failure is
not cured, if possible to cure, within 10 Trading
Days after notice of such default sent by the
Holder or by any other holder of Debentures;
iii. a default or event of default (subject to any
grace or cure period provided for in the
applicable agreement, document or instrument)
shall occur under (A) any of the Transaction
Documents other than the Debentures, or (B) any
other material agreement, lease, document or
instrument to which the Company or any Subsidiary
is bound;
iv. any representation or warranty made herein, in any
other Transaction Document, in any written
statement pursuant hereto or thereto, or in any
other report, financial statement or certificate
made or delivered to the Holder or any other
holder of Debentures pursuant to the Purchase
Agreement shall be untrue or incorrect in any
material respect as of the date when made or
deemed made;
v. (i) the Company or any of its Subsidiaries shall
commence, or there shall be commenced against the
Company or any such Subsidiary, a case under any
applicable bankruptcy or insolvency laws as now or
hereafter in effect or any successor thereto, or
the Company or any Subsidiary commences any other
proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter
in effect relating to the Company or any
Subsidiary thereof or (ii) there is commenced
against the Company or any Subsidiary thereof any
such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 60 days;
or (iii) the Company or any Subsidiary thereof is
adjudicated by a court of competent jurisdiction
insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding
is entered; or (iv) the Company or any Subsidiary
thereof suffers any appointment of any custodian
or the like for it or any substantial part of its
property which continues undischarged or unstayed
for a period
15
of 60 days; or (v) the Company or any Subsidiary
thereof makes a general assignment for the benefit
of creditors; or (vi) the Company shall fail to
pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as
they become due; or (vii) the Company or any
Subsidiary thereof shall call a meeting of its
creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or
(viii) the Company or any Subsidiary thereof shall
by any act or failure to act expressly indicate
its consent to, approval of or acquiescence in any
of the foregoing; or (ix) any corporate or other
action is taken by the Company or any Subsidiary
thereof for the purpose of effecting any of the
foregoing;
vi. the Company or any Subsidiary shall default in any
of its obligations under any mortgage, credit
agreement or other facility, indenture agreement,
factoring agreement or other instrument under
which there may be issued, or by which there may
be secured or evidenced any indebtedness for
borrowed money or money due under any long term
leasing or factoring arrangement of the Company in
an amount exceeding $150,000, whether such
indebtedness now exists or shall hereafter be
created and such default shall result in such
indebtedness becoming or being declared due and
payable prior to the date on which it would
otherwise become due and payable;
vii. the Common Stock shall not be eligible for
quotation on or quoted for trading on a Trading
Market and shall not again be eligible for and
quoted or listed for trading thereon within 10
Trading Days;
viii. the Company shall be a party to any Change of
Control Transaction or Fundamental Transaction
(other than a Fundamental Transaction undertaken
for the purpose of changing the domicile of the
Company), shall agree to sell or dispose of all or
in excess of 33% of its assets in one or more
transactions (whether or not such sale would
constitute a Change of Control Transaction),
provided, that any license by the Company of its
intellectual property rights shall not be
considered a sale or other disposal hereunder, or
shall redeem or repurchase more than a de minimis
number of its outstanding shares of Common Stock
or other equity securities of the Company (other
than redemptions of Conversion Shares and
repurchases of shares of Common Stock or other
equity securities of departing officers and
directors of the Company; provided such
repurchases shall not
16
exceed $100,000, in the aggregate, for all
officers and directors during the term of this
Debenture);
ix. a Registration Statement shall not have been
declared effective by the Commission on or prior
to the 180th calendar day after the First Closing
Date;
x. if, during the Effectiveness Period (as defined in
the Registration Rights Agreement), the
effectiveness of the Registration Statement lapses
for any reason or the Holder shall not be
permitted to resell Registrable Securities (as
defined in the Registration Rights Agreement)
under the Registration Statement, in either case,
for more than 30 consecutive Trading Days or 60
non-consecutive Trading Days during any 12 month
period; provided, however, that in the event that
the Company is negotiating a merger,
consolidation, acquisition or sale of all or
substantially all of its assets or a similar
transaction and in the written opinion of counsel
to the Company, the Registration Statement, would
be required to be amended to include information
concerning such transactions or the parties
thereto that is not available or may not be
publicly disclosed at the time, the Company shall
be permitted an additional 10 consecutive Trading
Days during any 12 month period relating to such
an event;
xi. an Event (as defined in the Registration Rights
Agreement) shall not have been cured to the
satisfaction of the Holder prior to the expiration
of thirty days from the Event Date (as defined in
the Registration Rights Agreement) relating
thereto (other than an Event resulting from a
failure of an Registration Statement to be
declared effective by the Commission on or prior
to the Effectiveness Date (as defined in the
Registration Rights Agreement), which shall be
covered by Section 8(a)(ix);
xii. the Company shall fail for any reason to deliver
certificates to a Holder prior to the fifth
Trading Day after a Conversion Date pursuant to
and in accordance with Section 4(d) or the Company
shall provide notice to the Holder, including by
way of public announcement, at any time, of its
intention not to comply with requests for
conversions of any Debentures in accordance with
the terms hereof; or
xiii. the Company shall fail for any reason to pay in
full the amount of cash due pursuant to a Buy-In
within 10 Trading Days after notice therefor is
delivered hereunder or shall fail to pay all
17
amounts owed on account of an Event of Default
within 10 Trading Days of the date due.
b) Remedies Upon Event of Default. If any Event of Default occurs,
the full principal amount of this Debenture, together with other amounts
owing in respect thereof, to the date of acceleration shall become, at the
Holder's election, immediately due and payable in cash. The aggregate
amount payable upon an acceleration by reason of an Event of Default shall
be equal to the Mandatory Prepayment Amount. Commencing 5 days after the
occurrence of any Event of Default that results in the eventual
acceleration of this Debenture, the interest rate on this Debenture shall
accrue at the rate of 18% per annum, or such lower maximum amount of
interest permitted to be charged under applicable law. All Debentures for
which the full Mandatory Prepayment Amount hereunder shall have been paid
in accordance herewith shall promptly be surrendered to or as directed by
the Company. The Holder need not provide and the Company hereby waives any
presentment, demand, protest or other notice of any kind, and the Holder
may immediately and without expiration of any grace period enforce any and
all of its rights and remedies hereunder and all other remedies available
to it under applicable law. Such declaration may be rescinded and annulled
by Xxxxxx at any time prior to payment hereunder and the Holder shall have
all rights as a Debenture holder until such time, if any, as the full
payment under this Section shall have been received by it. No such
rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon.
Section 9. Miscellaneous.
a) Notices. Any and all notices or other communications or
deliveries to be provided by the Holders hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above,
facsimile number (000) 000-0000, Attn: Xxxxxx X. Xxxx, or such other
address or facsimile number as the Company may specify for such purposes
by notice to the Holders delivered in accordance with this Section. Any
and all notices or other communications or deliveries to be provided by
the Company hereunder shall be in writing and delivered personally, by
facsimile, sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile telephone number or address of
such Xxxxxx appearing on the books of the Company, or if no such facsimile
telephone number or address appears, at the principal place of business of
the Holder. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile
(and the sender receives a confirmation of successful transmission) at the
facsimile telephone number specified in this Section prior to 5:30 p.m.
(New York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:30 p.m. (New York
City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the second Business Day following the date of mailing, if
18
sent by nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be given.
b) Absolute Obligation. Except as expressly provided herein, no
provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
liquidated damages (if any) on, this Debenture at the time, place, and
rate, and in the coin or currency, herein prescribed. This Debenture is a
direct debt obligation of the Company. This Debenture ranks pari passu
with all other Debentures now or hereafter issued under the terms set
forth herein.
c) Lost or Mutilated Debenture. If this Debenture shall be
mutilated, lost, stolen or destroyed, the Company shall execute and
deliver, in exchange and substitution for and upon cancellation of a
mutilated Debenture, or in lieu of or in substitution for a lost, stolen
or destroyed Debenture, a new Debenture for the principal amount of this
Debenture so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory
to the Company.
d) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Debenture shall be
governed by and construed and enforced in accordance with the internal
laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the
transactions contemplated by any of the Transaction Documents (whether
brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the
state and federal courts sitting in the City of New York, Borough of
Manhattan (the "New York Courts"). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under
this Debenture and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial
by jury in any legal proceeding arising out of or relating to this
Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this
Debenture, then the prevailing party in such action or proceeding shall be
19
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
e) Waiver. Any waiver by the Company or the Holder of a breach of
any provision of this Debenture shall not operate as or be construed to be
a waiver of any other breach of such provision or of any breach of any
other provision of this Debenture. The failure of the Company or the
Holder to insist upon strict adherence to any term of this Debenture on
one or more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term
or any other term of this Debenture. Any waiver must be in writing.
f) Severability. If any provision of this Debenture is invalid,
illegal or unenforceable, the balance of this Debenture shall remain in
effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons
and circumstances. If it shall be found that any interest or other amount
deemed interest due hereunder violates applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest. The Company
covenants (to the extent that it may lawfully do so) that it shall not at
any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Company from paying all or any portion
of the principal of or interest on this Debenture as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this indenture, and the Company
(to the extent it may lawfully do so) hereby expressly waives all benefits
or advantage of any such law, and covenants that it will not, by resort to
any such law, hinder, delay or impeded the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every
such as though no such law has been enacted.
g) Next Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day and no interest shall be
payable in respect of such extension.
h) Headings. The headings contained herein are for convenience only,
do not constitute a part of this Debenture and shall not be deemed to
limit or affect any of the provisions hereof.
*********************
20
IN WITNESS WHEREOF, the Company has caused this Convertible Debenture to
be duly executed by a duly authorized officer as of the date first above
indicated.
POWER 3 MEDICAL PRODUCTS, INC.
By:__________________________________________
Name:
Title:
21
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible
Debenture of Power 3 Medical Products, Inc., a New York corporation (the
"Company"), due on October 28, 2007, into shares of common stock, par value
$0.001 per share (the "Common Stock"), of the Company according to the
conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts determined in accordance with Section 13(d) of the Exchange
Act, specified under Section 4 of this Debenture.
The undersigned agrees to comply with the prospectus delivery requirements
under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Debentures to be Converted:
Number of shares of Common Stock to be issued:
Signature:
Name:
Address:
22
SCHEDULE 1
CONVERSION SCHEDULE
The Convertible Debentures due on October 28, 2007, in the aggregate principal
amount of $____________ issued by Power 3 Medical Products, Inc., a New York
corporation. This Conversion Schedule reflects conversions made under Section 4
of the above referenced Debenture.
Dated:
Aggregate
Principal
Amount
Remaining
Subsequent to
Date of Conversion Conversion
(or for first entry, Amount of (or original
Original Issue Date) Conversion Principal Amount) Company Attest
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23
SCHEDULE TO
FORM OF CONVERTIBLE DEBENTURE
The Company has issued Convertible Debentures Due October 28, 2007 to
the following listed holders. The terms of the Convertible Debentures issued by
the Company to each of the following holders are identical except for the name
of the holder and the original principal amount of the Convertible Debenture.
HOLDER ORIGINAL PRINCIPAL AMOUNT
------ -------------------------
Cityplatz Limited $ 50,000
Crescent International Ltd. $ 200,000
Crestview Capital Master, LLC $ 150,000
DKR SoundShore Oasis Holding Fund Ltd. $ 50,000
Gryphon Master Fund L.P. $ 100,000
GSSF Master Fund, LP $ 100,000
Mohawk Funding $ 10,000
Omicron Master Trust $ 100,000
Otape Investments LLC $ 100,000
Platinum Partners Value Arbitrage Fund L.P. $ 83,333
Xxxxxxx Xxxxxxxx $ 30,000
Sage Capital Investments Limited $ 25,000
Bach Farms LLC $ 1,667
