THIS
      WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR WITH ANY STATE
      SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER
      IN THE ABSENCE OF A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE
      SECURITIES ACT AND APPLICABLE STATE LAWS AND RULES, OR, UNLESS, IMMEDIATELY
      PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER MAY BE EFFECTED WITHOUT
      VIOLATION OF THE SECURITIES ACT AND OTHER APPLICABLE STATE LAWS AND
      RULES.

     

    MORLEX,
      INC.

     

    WARRANT

    

      
        	
                Warrant
                  No. ___

              	
                Dated:
                  May __, 2008

              


      

    

     

    Morlex,
      Inc., a Colorado corporation (the “Company”),
      hereby certifies that, for value received, Joseph Gunnar & Co., LLC or its
      registered assigns (including permitted transferees, the “Holder”),
      is
      entitled to purchase from the Company up to a total of [___________] shares
      (as
      adjusted from time to time as provided in Section
      9
      hereof)
      of Common Stock (as defined below) (each such share, a “Warrant
      Share”
and
      all
      such shares, the “Warrant
      Shares”)
      at an
      exercise price equal to $0.75 per share (as adjusted from time to time as
      provided in Section 9
      hereof,
      the “Exercise
      Price”),
      at
      any time and from time to time on and after the date that is 120 days from
      the
      date of this Warrant (the “Initial
      Exercise Date”)
      through and including April __, 2013 (the “Expiration
      Date”),
      and
      subject to the following terms and conditions. This Warrant (the “Warrant”)
      is
      issued pursuant to that certain Placement Agent Agreement, dated as of April
      11,
      2008, by and among the Company and the Holder (the “Placement
      Agent Agreement”).
      

     

    1. Definitions.
      The
      capitalized terms used herein and not otherwise defined shall have the meanings
      set forth below: 

     

    “Affiliate”
of
      any
      specified Person means any other person or entity directly or indirectly
      controlling, controlled by or under direct or indirect common control with
      such
      specified Person. For purposes of this definition, “control” means the power to
      direct the management and policies of such Person or firm, directly or
      indirectly, whether through the ownership of voting securities, by contract
      or
      otherwise.

     

    “Common
      Stock”
means
      the common stock of the Company as constituted on the Original Issue
      Date.

     

    “Company
      Offer”
means
      any tender offer (including exchange offer), as amended from time to time,
      made
      by the Company or any of its subsidiaries for the purchase (including the
      acquisition pursuant to an exchange offer) of all or any portion of the
      outstanding shares of Common Stock, except as permitted pursuant to Rule 10b-18
      promulgated under the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Convertible
      Securities”
means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock.

     

    “Eligible
      Market”
means
      any of the New York Stock Exchange, the American Stock Exchange, Nasdaq Stock
      Market or the Over-the-Counter Bulletin Board (the “OTCBB”).

     

    “Market
      Price”
shall
      mean (i) if the principal trading market for such securities is an exchange,
      the
      average of the last reported sale prices per share for the last five previous
      Trading Days on the OTCBB or other trading market, (ii) if clause (i) is not
      applicable, the average of the closing bid price per share for the last five
      previous Trading Days as set forth by Nasdaq or (iii) if clauses (i) and (ii)
      are not applicable, the average of the closing bid price per share for the
      last
      five previous Trading Days as set forth in the pink sheets. Notwithstanding
      the
      foregoing, if there is no reported sales price or closing bid price, as the
      case
      may be, on any of the ten (10) Trading Days preceding the event requiring a
      determination of Market Price hereunder, then the Market Price shall be
      determined in good faith by resolution of the Board of Directors of the Company,
      based on the best information available to it.

     

    “Original
      Issue Date”
means
      May _, 2008.

     

    “Other
      Securities”
refers
      to any capital stock (other than Common Stock) and other securities of the
      Company or any other Person that the Holder of this Warrant at any time shall
      be
      entitled to receive, or shall have received, upon the exercise of this Warrant,
      in lieu of or in addition to Common Stock, or that at any time shall be issuable
      or shall have been issued in exchange for or in replacement of Common Stock
      or
      Other Securities pursuant to Section
      9
      hereof
      or otherwise. 

     

    “Person”
means
      any court or other federal, state, local or other governmental authority or
      other 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. 

     

    “Purchase
      Agreement”
means
      the form of those
      certain Securities Purchase Agreements entered into from time to time by and
      among the Company, Holder and certain other investors.

     

    “Registration
      Statement”
shall
      have the meaning set forth in the Purchase Agreement. 

     

    “Trading
      Day”
means
      any day on which the Common Stock is listed or quoted on any Eligible
      Market.

     

    “Warrant
      Shares”
shall
      initially mean shares of Common Stock and in addition may include Other
      Securities and Distributed Property (as defined in Section
      9(e) hereof)
      issued or issuable from time to time upon exercise of this Warrant.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    “Weighted
      Average Price”
means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the OTC Bulletin Board during the period beginning at 9:30:01
      a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as
      reported by Bloomberg through its “Volume at Price” function or, if the
      foregoing does not apply, the dollar volume-weighted average price of such
      security in the over-the-counter market on the electronic bulletin board for
      such security during the period beginning at 9:30:01 a.m., New York City time,
      and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or,
      if
      no dollar volume-weighted average price is reported for such security by
      Bloomberg for such hours, the average of the highest closing bid price and
      the
      lowest closing ask price of any of the market makers for such security as
      reported in the “pink sheets” by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
      for
      such security on such date on any of the foregoing bases, the Weighted Average
      Price of such security on such date shall be the fair market value as mutually
      determined by the Company and the Holder. If the Company and the Holder are
      unable to agree upon the fair market value of such security, then such dispute
      shall be resolved pursuant to Section 16 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.” All such determinations shall
      be appropriately adjusted for any share dividend, share split or other similar
      transaction during such period.

     

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

     

    3. Transfers;
      Registration of Transfers.
      

     

    (a) The
      Holder may not assign, pledge, or otherwise transfer this Warrant, except to
      one
      or more of its controlled Affiliates or principals.

     

    (b) The
      Company shall register the transfer of any portion of this Warrant in the
      Warrant Register, upon surrender of this Warrant, with the Form of Assignment
      attached hereto as Appendix
      A
      duly
      completed and signed, to the Company at its address specified herein. Upon
      any
      such registration and transfer, a new warrant in substantially the form of
      a
      Warrant (any such new warrant, a “New
      Warrant”),
      evidencing the portion of this Warrant so transferred shall be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, shall be issued to the transferring Holder. The
      acceptance of the New Warrant by the transferee thereof shall be deemed the
      acceptance by such transferee of all of the rights and obligations of a holder
      of a Warrant. 

     

    4. Exercise
      and Duration of Warrant.

     

    (a) This
      Warrant shall be exercisable by the registered Holder at any time and from
      time
      to time One Hundred Twenty (120) days after the final Closing of the Offering
      (as defined in the Placement Agent Agreement) to and including the Expiration
      Date. At 5:00 P.M. New York City time on the Expiration Date, the portion
      of this Warrant not exercised prior thereto shall be and become void and of
      no
      value. 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (b) A
      Holder
      may exercise this Warrant by delivering to the Company (i) an exercise notice,
      in the form attached hereto as Appendix
      B
      (the
“Exercise
      Notice”),
      appropriately completed and duly signed, and (ii) payment of the Exercise Price
      for the number of Warrant Shares as to which this Warrant is being exercised
      (as
      set forth in Section
      4(d) below),
      and the date such items are received by the Company is an “Exercise
      Date.”
      Execution and delivery of the Exercise Notice shall have the same effect as
      cancellation of the original Warrant and issuance of a New Warrant evidencing
      the right to purchase the remaining number of Warrant Shares.

     

    (c) At
      any
      time during the exercise period, the Holder may, at its option, exercise this
      Warrant on a cashless basis by exchanging this Warrant, in whole or in part,
      by
      means of a “cashless exercise”, by presenting and surrendering to the Company
      this Warrant and the Exercise Notice, and indicating in the Exercise Notice
      that
      the Holder is electing the “cashless exercise” option, in which event the
      Company shall issue to the Holder the number of Warrant Shares determined as
      follows:

     

    
      	
              X
                =
                

            	
              Y
                [(A-B)/A]

            
	 
	
              where:

            
	 	 
	
              X
                =
                

            	
              the
                number of Warrant Shares to be issued to the Holder upon such cashless
                exercise;

            
	 	 
	
              Y
                =
                

            	
              the
                number of Warrant Shares with respect to which this Warrant is being
                exercised;

            
	 	 
	
              A
                =
                

            	
              the
                Market Price on the Exercise Date; and

            
	 	 
	
              B
                =
                

            	
              the
                Exercise Price

            


    

     

    ;provided
      that if the Market Price on the Exercise Date is equal to or less than the
      Exercise Price, then “X” shall equal zero. 

     

    (d) If
      an
      exercise of this Warrant is to be made in connection with a registered public
      offering or sale of the Company, such exercise may, at the election of the
      Holder, be conditioned on the consummation of the public offering or sale of
      the
      Company, in which case such exercise shall not be deemed effective until the
      consummation of such transaction.

     

    5. Delivery
      of Warrant Shares.

     

    (a) Upon
      exercise of this Warrant, the Company shall within three Trading Days after
      receipt of the Exercise Notice attached hereto as Appendix
      B,
      issue
      or cause to be issued and deliver or cause to be delivered to the Holder, in
      such name or names as the Holder may designate, a certificate for the Warrant
      Shares issuable upon such exercise bearing (only if such legend is required
      by
      applicable law) the restrictive legend as set forth in the Placement Agent
      Agreement. The Holder, or any Person so designated by the Holder to receive
      the
      Warrant Shares as permitted by this Warrant, shall be deemed to have become
      holder of record of such Warrant Shares as of the Exercise Date. 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (b) This
      Warrant is exercisable, either in its entirety or, from time to time, for a
      portion of the number of Warrant Shares. Upon surrender of this Warrant
      following one or more partial exercises, the Company shall issue or cause to
      be
      issued, at its expense, a New Warrant evidencing the right to purchase the
      remaining number of Warrant Shares. 

     

    6. Charges,
      Taxes and Expenses.
      Issuance and delivery of certificates for shares of Common Stock upon exercise
      of this Warrant shall be made without charge to the Holder for any issue or
      transfer tax, withholding tax, transfer agent fee or other incidental tax or
      expense in respect of the issuance of such certificates, all of which taxes
      and
      expenses shall be paid by the Company; provided, however, that the Company
      shall
      not be required to pay any tax that may be payable in respect of any transfer
      involved in the registration of any certificates for Warrant Shares or Warrant
      in a name other than that of the Holder. The Holder shall be responsible for
      all
      other tax liability that may arise as a result of holding or transferring this
      Warrant or receiving Warrant Shares upon exercise hereof.

     

    7. Replacement
      of Warrant.
      If this
      Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
      cause to be issued in exchange and substitution for and upon cancellation
      hereof, or in lieu of and in substitution for this Warrant, a New Warrant,
      but
      only upon receipt of evidence reasonably satisfactory to the Company of such
      loss, theft or destruction and customary and reasonable indemnity, if
      requested.

     

    8. Reservation
      of Warrant Shares.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      the aggregate of its authorized but unissued and otherwise unreserved Common
      Stock, solely for the purpose of enabling it to issue Warrant Shares upon
      exercise of this Warrant as herein provided, the number of Warrant Shares that
      are then issuable and deliverable upon the exercise of this entire Warrant,
      free
      from all taxes, liens, claims, encumbrances with respect to the issuance of
      such
      Warrant Shares and will not be subject to any pre-emptive rights or similar
      rights (taking into account the adjustments and restrictions of Section
      9 hereof).
      The Company covenants that all Warrant Shares so issuable and deliverable shall,
      upon issuance and the payment of the applicable Exercise Price in accordance
      with the terms hereof, be duly and validly authorized, issued, fully paid and
      nonassessable. The Company will take all such action as may be necessary to
      assure that such shares of Common Stock may be issued as provided herein without
      violation of any applicable law or regulation, or of any requirements of any
      securities exchange or automated quotation system upon which the Common Stock
      may be listed or quoted, as the case may be.

     

    9. Certain
      Adjustments.
      The
      Exercise Price and number of Warrant Shares issuable upon exercise of this
      Warrant are subject to adjustment from time to time as set forth in this
Section
      9.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    (a) Stock
      Dividends.
      If the
      Company, at any time while this Warrant is outstanding, pays a dividend on
      its
      Common Stock payable in additional shares of Common Stock or otherwise makes
      a
      distribution on any class of capital stock that is payable in shares of Common
      Stock, then in each such case the Exercise Price shall be multiplied by a
      fraction, (i) the numerator of which shall be the number of shares of Common
      Stock outstanding immediately prior to the opening of business on the day after
      the record date for the determination of stockholders entitle to receive such
      dividend or distribution and (ii) the denominator of which shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to this Section
      9(a)
      shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such dividend or distribution. 

     

    (b) Stock
      Splits.
      If the
      Company, at any time while this Warrant is outstanding, (i) subdivides
      outstanding shares of Common Stock into a larger number of shares, or (ii)
      combines outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction,
      (A)
      the numerator of which shall be the number of shares of Common Stock outstanding
      immediately before such event and (B) the denominator of which shall be the
      number of shares of Common Stock outstanding immediately after such event.
      Any
      adjustment pursuant to this Section
      9(b) shall
      become effective immediately after the effective date of such subdivision or
      combination.

     

    (c) Reclassifications.
      A
      reclassification of the Common Stock (other than any such reclassification
      in
      connection with a merger or consolidation to which Section
      9(f) applies)
      into shares of any other class of stock shall be deemed:

     

    (i) a
      distribution by the Company to the holders of its Common Stock of such shares
      of
      such other class of stock for the purposes and within the meaning of this
Section
      9;
      and

     

    (ii) if
      the
      outstanding shares of Common Stock shall be changed into a larger or smaller
      number of shares of Common Stock as part of such reclassification, such change
      shall be deemed a subdivision or combination, as the case may be, of the
      outstanding shares of Common Stock for the purposes and within the meaning
      of
Section
      9(b)
      hereof.

     

    (d) Self-Tender
      Offers.
      In the
      event, at any time or from time to time after the Original Issue Date while
      the
      Warrants remain outstanding and unexpired, in whole or in part, a Company Offer
      shall be made and expire, then and in each such event the Exercise Price in
      effect immediately prior to close of business on the date of the last time
      (the
“Expiration
      Time”)
      tenders could have been made pursuant to such Company Offer shall be decreased
      by multiplying such Exercise Price by a fraction (not to be greater than
      1):

     

    (i) the
      numerator of which shall be equal to (A) the product of (1) the Market Price
      per
      share of the Common Stock on the date of the Expiration Time and (2) the number
      of shares of Common Stock outstanding (including any tendered shares) at the
      Expiration Time less (B) the fair market value (as determined in good faith
      by
      the Board of Directors of the Company) of the aggregate consideration payable
      to
      stockholders based on the acceptance (up to any maximum specified in the terms
      of the Company Offer) of all shares validly tendered and not withdrawn as of
      the
      Expiration Time (the shares deemed so accepted, up to any maximum amount
      provided for in connection with such Company Offer, being referred to as the
      “Purchased
      Shares”);
      and

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (ii) the
      denominator of which shall be equal to the product of (A) the Market Price
      per
      share of the Common Stock on the date of the Expiration Time and (B) the number
      of shares of Common Stock outstanding (including any tendered shares) on the
      Expiration Time less the number of Purchased Shares.

     

    Any
      adjustment under this Section
      9(d)
      shall
      become effective immediately prior to the opening of business on the day after
      the Expiration Time.

     

    (e) Other
      Distributions.
      If the
      Company, at any time while this Warrant is outstanding, distributes to holders
      of Common Stock (i) evidences of its indebtedness, (ii) any security (other
      than
      a distribution of Common Stock covered by Section
      9(a) hereof),
      (iii)
      rights or warrants to subscribe for or purchase any security or (iv) any other
      asset (in each case, “Distributed
      Property”),
      then
      in each such case the Exercise Price in effect immediately prior to the record
      date fixed for determination of stockholders entitled to receive such
      distribution (and the Exercise Price thereafter applicable) shall be adjusted
      (effective on and after such record date) to equal the product of such Exercise
      Price multiplied by a fraction, (A) the numerator of which shall be Market
      Price
      on such record date less the then fair market value per share of the Distributed
      Property distributed in respect of one outstanding share of Common Stock, which,
      if the Distributed Property is other than cash or marketable securities, shall
      be as determined in good faith by the Board of Directors of the Company, and
      (B)
      the denominator of which shall be the Market Price on such record
      date.

     

    (f) Fundamental
      Transactions.
      If, at
      any time while this Warrant is outstanding, (i) the Company effects any merger
      or consolidation of the Company with or into another Person, (ii) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions or (iii) there shall occur any merger of another Person
      into the Company whereby the Common Stock is cancelled, converted or
      reclassified into or exchanged for other securities, cash or property (in any
      such case, a “Fundamental
      Transaction”),
      then,
      as a condition to the consummation of such Fundamental Transaction, the Company
      shall (or, in the case of any Fundamental Transaction in which the Company
      is
      not the surviving entity, the Company shall take all reasonable steps to cause
      such other Person to) execute and deliver to each Holder of Warrants a written
      instrument providing that:

     

    (i)  so
      long
      as any Warrant remains outstanding on such terms and subject to such conditions
      as shall be nearly equivalent as may be practicable to the provisions set forth
      in this Warrant, each Warrant, upon the exercise thereof at any time on or
      after
      the consummation of such Fundamental Transaction, shall be exercisable into,
      in
      lieu of Common Stock issuable upon such exercise prior to such consummation,
      the
      securities or other property (the “Substituted
      Property”)
      that
      would have been received in connection with such Fundamental Transaction by
      a
      holder of the number of shares of Common Stock into which such Warrant was
      exercisable immediately prior to such Fundamental Transaction, assuming such
      holder of Common Stock:

     

    (A)
      is not a
      Person with which the Company consolidated or into which the Company merged
      or
      which merged into the Company or to which such sale or transfer was made, as
      the
      case may be (a “Constituent
      Person”),
      or an
      Affiliate of a Constituent Person; and

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

       

    

    (B)
      failed
      to exercise such Holder’s rights of election, if any, as to the kind or amount
      of securities, cash and other property receivable in connection with such
      Fundamental Transaction (provided,
      however,
      that if
      the kind or amount of securities, cash or other property receivable in
      connection with such Fundamental Transaction is not the same for each share
      of
      Common Stock held immediately prior to such Fundamental Transaction by a Person
      other than a Constituent Person or an Affiliate thereof and in respect of which
      such rights of election shall not have been exercised (a “Non-Electing
      Share”),
      then,
      for the purposes of this Section
      9(f),
      the kind
      and amount of securities, cash and other property receivable in connection
      with
      such Fundamental Transaction by each Non-Electing Share shall be deemed to
      be
      the kind and amount so receivable per share by a plurality of the Non-Electing
      Shares); and

     

    (ii)  the
      rights and obligations of the Company (or, in the event of a transaction in
      which the Company is not the surviving Person, such other Person) and the
      Holders in respect of Substituted Property shall be as nearly equivalent as
      may
      be practicable to the rights and obligations of the Company and Holders in
      respect of Common Stock hereunder.

     

    Such
      written instrument shall provide for adjustments that, for events subsequent
      to
      the effective date of such written instrument, shall be as nearly equivalent
      as
      may be practicable to the adjustments provided for in Section
      9
      hereof.
      The
      above provisions of this Section 9(f)
      shall
      similarly apply to successive Fundamental Transactions. Notwithstanding the
      foregoing, in the event of a Dilutive Fundamental Transaction, at the request
      of
      the Holder delivered before the 90th day after the effective date of such
      Dilutive Fundamental Transaction, the Company (or successor entity) shall
      purchase this Warrant from the Holder by paying to the Holder, within five
      business days after such request, cash in an amount equal to the value of the
      remaining unexercised portion of this Warrant on the effective date of such
      Dilutive Fundamental Transaction, which value shall be determined by use of
      the
      Black-Scholes option pricing model, where the volatility input shall not be
      greater than 50%. For purposes of this section, a “Dilutive Fundamental
      Transaction” is a Fundamental Transaction in which the aggregate proceeds to the
      Holder, had the Holder exercised the then-unexercised portion of this Warrant
      in
      full immediately prior to the effective date of such Fundamental Transaction,
      is
      less than the aggregate Exercise Price of the Warrant with respect to the
      then-unexercised portion of this Warrant immediately prior to the effectiveness
      of such Fundamental Transaction. 

     

    (g) Adjustment
      of Exercise Price.
      Simultaneously with any adjustment to the Exercise Price pursuant to paragraphs
      (a) through (e) of this Section
      9,
      the
      number of Warrant Shares that may be purchased upon exercise of this Warrant
      shall be increased or decreased proportionately, so that after such adjustment
      the aggregate Exercise Price payable hereunder for the increased or decreased
      number of Warrant Shares shall be the same as the aggregate Exercise Price
      payable for the Warrant Shares immediately prior to such adjustment.


     

    (h) Calculations.
      All
      calculations under this Section
      9
      shall be
      made to the nearest cent or the nearest 1/100th of a share, as applicable.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company, and the disposition
      of any such shares shall be considered an issue or sale of Common Stock.


     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

       

    

    (i) Adjustments.
      Notwithstanding any provision of this Section
      9,
      no
      adjustment of the Exercise Price shall be required if such adjustment is less
      than $0.01; provided,
      however,
      that
      any adjustments that by reason of this Section
      9(j)
      are not
      required to be made shall be carried forward and taken into account for purposes
      of any subsequent adjustment. 

     

    (j)  Notice
      of Adjustments.
      Upon the
      occurrence of each adjustment pursuant to this Section
      9,
      the
      Company will promptly deliver to the Holder a certificate executed by the
      Company’s Chief Financial Officer setting forth, in reasonable detail, the event
      requiring such adjustment and the method by which such adjustment was
      calculated, the adjusted Exercise Price and the adjusted number or type of
      Warrant Shares or other securities issuable upon exercise of this Warrant (as
      applicable). The Company will retain at its office copies of all such
      certificates and cause the same to be available for inspection at said office
      during normal business hours by the Holder or any prospective purchaser of
      the
      Warrant designated by the Holder. 

     

    (k)  Notice
      of Corporate Events. If
      the
      Company (i) declares a dividend or any other distribution of cash, securities
      or
      other property in respect of its Common Stock, including, without limitation,
      any granting of rights or warrants to subscribe for or purchase any capital
      stock of the Company or any subsidiary of the Company, (ii) authorizes,
      approves, enters into any agreement contemplating, or solicits stockholder
      approval for, any Fundamental Transaction or (iii) authorizes the voluntary
      dissolution, liquidation or winding up of the affairs of the Company, then
      the
      Company shall deliver to the Holder a notice describing the material terms
      and
      conditions of such transaction at least 15 calendar days prior to the applicable
      record or effective date on which a Person would need to hold Common Stock
      in
      order to participate in or vote with respect to such transaction, and the
      Company will take all steps reasonably necessary in order to ensure that the
      Holder is given the practical opportunity to exercise this Warrant prior to
      such
      time so as to participate in or vote with respect to such transaction; provided,
      however, that the failure to deliver such notice or any defect therein shall
      not
      affect the validity of the corporate action required to be described in such
      notice. 

     

    10. Fractional
      Shares.
      The
      Company shall not be required to issue or cause to be issued fractional Warrant
      Shares on the exercise of this Warrant. If any fraction of a Warrant Share
      would, except for the provisions of this Section, be issuable upon exercise
      of
      this Warrant, the Company shall make a cash payment to the Holder equal to
      (a)
      such fraction multiplied by (b) the Market Price on the Exercise Date of one
      full Warrant Share. 

     

    11. Restricted
      Securities.
      The
      Holder represents and warrants that it (i) understands that the Warrant and
      the
      Warrant Shares have not been registered under the Securities Act and (ii)
      understands the restrictions set forth on the legend printed on the face of
      this
      Warrant.

     

    12. Remedies.
      The
      Company stipulates that the remedies at law of the Holder of this Warrant in
      the
      event of any default or threatened default by the Company in the performance
      of
      or compliance with any of the terms of this Warrant are not and will not be
      adequate, and that such terms may be specifically enforced by a decree for
      the
      specific performance of any agreement contained herein or by an injunction
      against a violation of any of the terms hereof or otherwise.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    13. Notices.
      Any and
      all notices or other communications or deliveries hereunder (including without
      limitation any Exercise Notice) shall be in writing and shall be mailed by
      certified mail, return receipt requested, or by a nationally recognized courier
      service or delivered (in person or by facsimile), against receipt to the party
      to whom such notice or other communication is to be given. The address for
      such
      notices or communications shall be as set forth in the Placement Agent Agreement
      entered into by the Holder and the Company. Any notice or other communication
      given by means permitted by this Section
      14 shall
      be
      deemed given at the time of receipt thereof. 

     

    14. Warrant
      Agent.
      The
      Company shall serve as warrant agent under this Warrant. Upon 30 days’ notice to
      the Holder, the Company may appoint a new warrant agent. Any Person into which
      any new warrant agent may be merged, any Person resulting from any consolidation
      to which any new warrant agent shall be a party or any Person to which any
      new
      warrant agent transfers substantially all of its corporate trust or shareholders
      services business shall be a successor warrant agent under this Warrant without
      any further act. Any such successor warrant agent shall promptly cause notice
      of
      its succession as warrant agent to be mailed (by first class mail, postage
      prepaid) to the Holder at the Holder’s last address as shown on the Warrant
      Register. 

     

    15. Miscellaneous.
      a)
      This
      Warrant may be assigned by the Holder solely to one or more controlled
      Affiliates or principals of the Holder. This Warrant may not be assigned by
      the
      Company, except to a successor in the event of a Fundamental Transaction. This
      Warrant shall be binding on and inure to the benefit of the parties hereto
      and
      their respective successors and assigns. Subject to the preceding sentence,
      nothing in this Warrant shall be construed to give to any Person other than
      the
      Company and the Holder any legal or equitable right, remedy or cause of action
      under this Warrant. This Warrant may be amended only in writing signed by the
      Company and the Holder and their successors and assigns.

     

    (b) The
      Company will not, by amendment of its governing documents or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, but will at
      all
      times in good faith assist in the carrying out of all such terms and in the
      taking of all such action as may be necessary or appropriate in order to protect
      the rights of the Holder against impairment. Without limiting the generality
      of
      the foregoing, the Company (i) will not increase the par value of any Warrant
      Shares above the amount payable therefor upon exercise thereof, (ii) will take
      all such action as may be reasonably necessary or appropriate in order that
      the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares on the exercise of this Warrant, free from all taxes, liens, claims
      and
      encumbrances and (iii) will not close its shareholder books or records in any
      manner that interferes with the timely exercise of this Warrant.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

       

    

    (c) This
      Warrant shall be governed by and construed and enforced in accordance with
      the
      laws of the State of New York without regard to conflicts of laws principles
      thereof. Each party hereby irrevocably submits to the jurisdiction of the state
      and Federal courts sitting in the City of New York, Borough of Manhattan, for
      the adjudication of any dispute hereunder or in connection herewith or with
      any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of the Placement Agent Agreement), and hereby irrevocably
      waives, and agrees not to assert any suit, action or proceeding, any claim
      that
      it is not personally subject to the jurisdiction of any such court, that such
      suit, action or proceeding is improper. Each party hereby irrevocably waives
      personal service of process and consents to process being served in any such
      suit, action or proceeding by mailing a copy thereof via registered or certified
      mail or overnight delivery (with evidence of delivery) to such party at the
      address in effect for notices to it under this Warrant and agrees that such
      service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. THE PARTIES HEREBY WAIVE ALL
      RIGHTS TO A TRIAL BY JURY.

     

    (d) Neither
      party shall be deemed in default of any provision of this Warrant, to the extent
      that performance of its obligations or attempts to cure a breach hereof are
      delayed or prevented by any event reasonably beyond the control of such party,
      including, without limitation, war, hostilities, acts of terrorism, revolution,
      riot, civil commotion, national emergency, strike, lockout, unavailability
      of
      supplies, epidemic, fire, flood, earthquake, force of nature, explosion,
      embargo, or any other Act of God, or any law, proclamation, regulation,
      ordinance, or other act or order of any court, government or governmental
      agency, provided that such party gives the other party written notice thereof
      promptly upon discovery thereof and uses reasonable best efforts to cure or
      mitigate the delay or failure to perform.

     

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

     

    (f) In
      case
      any one or more of the provisions of this Warrant shall be deemed invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Warrant shall not in any way be affected or
      impaired thereby and the parties will attempt in good faith to agree upon a
      valid and enforceable provision that shall be a commercially reasonable
      substitute therefor, and upon so agreeing, shall incorporate such substitute
      provision in this Warrant.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    


    The
      Company has caused this Warrant to be duly executed by its authorized officer
      as
      of the date first indicated above.

     

    
      	Morlex,
              Inc.
	 	 
	
              By:

            	 
	
               

            	
              Name: 

            
	
               

            	
              Title: 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
      A

     

    Form
      of Assignment

     

    (to
      be
      completed and signed only upon transfer of Warrant)

     

    For
      Value Received,
      the
      undersigned hereby sells, assigns and transfers unto
      ________________________________________ the right represented by the within
      Warrant to purchase _____________ shares of Common
      Stock of Morlex, Inc. to which the within warrant relates and appoints
      __________________________ attorney to transfer said right on the books of
      Morlex, Inc. with full power of substitution in the premises. 

     

    
      	
              Dated:
                ___________________

            	 	 
	 	 	
              (Signature
                must conform in all respects to name of Holder as specified on face
                of the
                Warrant)

            
	 	 	 
	 	 	
              Address
                of Transferee:

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    APPENDIX
      B

     

    Form
      of Exercise Notice

     

    (To
      be
      executed by the Holder to exercise the right to purchase shares of Common Stock
      under the foregoing Warrant) 

     

    To: Morlex,
      Inc.

     

    The
      undersigned is the Holder of Warrant No. _________ (the “Warrant”) issued by
Morlex,
      INC.
      (the
“Company”). Capitalized terms used herein and not otherwise defined have the
      respective meanings set forth in the Warrant. 

     

    
      	
              1.

            	
              The
                Warrant is currently exercisable to purchase a total of _________
                Warrant
                Shares. 

            


    

     

    
      	
              2.

            	
              The
                undersigned Holder hereby exercises its right to purchase __________
                Warrant Shares pursuant to the
                Warrant

            


    

     

    
      	
              3.

            	
              The
                Holder intends that payment of the Exercise Price shall be made as
                (check
                one): 

            


    

     

    Cash
      Exercise _______ 

     

    Cashless
      Exercise _______

     

    
      	
              4.

            	
              If
                the Holder has elected a Cash Exercise, the Holder shall pay the
                sum of
                $________ to the Company in accordance with the terms of the Warrant.
                

            


    

     

    
      	
              5.

            	
              If
                the Holder has elected a Cashless Exercise, a certificate shall be
                issued
                to the Holder for the number of shares equal to the whole number
                portion
                of the product of the calculation set forth below, which is ________.
                The
                Company shall pay a cash adjustment in respect of the fractional
                portion
                of the product of the calculation set forth below in an amount equal
                to
                the product of the fractional portion of such product and the Market
                Price
                on the Exercise Day, which product is
                __________.

            


    

     

    X
      =
      Y[(A-B)/A]

     

    X
      = the
      number of Warrant Shares to be issued to the Holder. 

     

    Number
      of
      Warrant Shares being exercised:   
      (“Y”).

     

    Market
      Price on the Exercise Day:   
      (“A”).


     

    Exercise
      Price:  
      (“B”)

     

    ;provided
      that if the Market Price on the Exercise Date is equal to or less than the
      Exercise Price, then “X” shall equal zero.

     

    
      
        
        

      

      
        1.

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              Pursuant
                to this exercise, the Company shall deliver to the Holder Warrant
                Shares
                in accordance with the terms of the
                Warrant.

            


    

     

    
      	
              7.

            	
              Following
                this exercise, the Warrant shall be exercisable to purchase a total
                of
                __________ Warrant Shares.

            


    

     

    
      	Dated: ___________________	 	
              Name
                of Holder:

            
	 	 	 
	 	 	 
	 	 	
              (Print)

            
	 	 	 	 
	 	 	
              By:

            	 
	 	 	 	 
	 	 	
              Name:

            	 
	 	 	 	 
	 	 	
              Title:

            	 
	 	 	 
	 	 	
              (Signature
                must conform in all respects to name of holder as specified on the
                face of
                the Warrant)

            


    

     

    
      
        
        

      

      
        2.