Document:

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      LETTERHEAD --------

    
 

    January
      10, 2008

    

    

    Private
      and Confidential

    

    Mr.
      Patrick Doran

    4780
      Outlook Way

    Marietta,
      GA 30066

     

    

    Dear
      Mr.
      Doran,

    

    On
      behalf
      of Equity Media Holdings Corporation (“EMHC”), I am pleased to offer you a
      position as Chief Financial Officer. In this position you will report directly
      to Larry Morton, President and CEO of EMHC. Your office will be located at
      our
      facility in Little Rock, Arkansas. We understand that up to one week per month
      you, at your sole expense, may work from a remote location at your expense.
      Your
      official start date will be January 10, 2008.

     

    This
      letter summarizes the components of your compensation package:

    

    
      	·	
              Your
                annual base salary for this position will be
                $280,000.

            

    

    

    
      	·	
              You
                will be eligible for two (2) weeks of Personal Days, as defined by
                the
                Equity Media Handbook (“Handbook”, during your first year of employment
                and then your Personal Days will be governed by the
                Handbooko.

            

    

    

    
      	·	
              You
                will be eligible for a $30,000 annual bonus with the parameters for
                achieving the bonus to be agreed to in the next 60 days. The bonus
                will be
                designed so that it is based on quarterly results and paid within
                30 days
                of the quarterly SEC filings being
                made.

            

    

    

    
      	·	
              You
                will be responsible for all travel and lodging expenses when not
                on a
                previously approved business trip. You will be responsible for your
                living
                expense in Little Rock and travel expenses between Little Rock and
                Atlanta
                or any other remote work location.

            

    

    

    
      	·	
              You
                will be granted options for 200,000 shares of EMHC which will vest
                according to EMHC’s stock option
                plan.

            

    

     

    You
      will
      be provided the Handbook and additional information as to the other company
      benefits including family health insurance. Your employment will be governed
      by
      the Handbook.

    

    This
      offer is subject to the customary background and screening tests that EMHC
      requires. 

    In
      addition, although your employment with EMHC will be “at will”, EMHC will agree
      to provide you with severance equal to the remaining balance of one year’s base
      salary in the event that your employment is involuntarily terminated for any
      reason other than “for cause”. “For cause” will include, but not be limited to
      your inability to perform the essential functions of your position after
      reasonable notice, gross negligence or willful misfeasance, breach of a
      fiduciary duty in the performance of duties, an act of fraud, embezzlement
      or
      any other crime, or conviction of a felony which involves dishonesty or a breach
      of trust.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    It
      is our
      understanding that you are not currently a party to any employment agreement
      that would restrict your ability to work for EMHC. Please advise immediately
      if
      our understanding is incorrect. 

    

    The
      Immigration Reform Control Act requires all employers to verify the identity
      and
      employment eligibility of new employees. Therefore, please provide us with
      your
      United States Passport or valid driver’s license and social security card on
      your first day of employment.

    

    We
      are
      very excited about you joining our team and look forward to your positive
      response. Please feel free to contact me regarding any questions you may have
      regarding this offer or any other matters you have discussed with my colleagues.
      Please indicate your acceptance of this offer by signing in the space below
      and
      returning to me.

    

    Warmest
      Regards,

     

    

    Larry
      Morton

    President
      & CEO

    Equity
      Media Holdings Corp.

     

    

    
      	/s/
              Patrick Doran	January 22, 2008	 
	Accepted: Patrick Doran	DateSECURITIES
      PURCHASE AGREEMENT

     

    By
      and Between

     

    MDWERKS,
      INC.

     

    and

     

    VICIS
      CAPITAL MASTER FUND

     

    DATED
      JANUARY 18, 2008

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated this 18th day of January,
      2008, is made by and between MDWERKS, INC., a Delaware corporation (the
“Company”), and VICIS CAPITAL MASTER FUND (the “Purchaser”), a series of the
      Vicis Capital Master Trust, a trust formed under the laws of the Cayman
      Islands.

     

    RECITALS

     

    WHEREAS,
      pursuant to the terms and conditions of this Agreement, the Company wishes
      to
      issue and sell to the Purchaser the following securities (collectively, the
      “Securities”): (a) 50 shares (the “Preferred Shares”) of the Company’s
      Series B Convertible Preferred Stock, par value $.001 per share (the “Series B
      Preferred Stock”), with such terms, rights and preferences as are set forth in
      the Amended and Restated Certificate of Designations for the Series B Preferred
      Stock set forth on Exhibit
      A
      attached
      hereto; (b) a Series F Warrant to purchase an aggregate of 375,000 shares
      of common stock, par value $.001 per share (the “Common Stock”), of the Company
      initially at an exercise price of $2.25 per share in the form attached hereto
      as
Exhibit
      B
      (the
“Series F Warrant”); and (c) a Series G Warrant to purchase an aggregate of
      250,000 shares of Common Stock initially at an exercise price of $2.50 per
      share
      in the form attached hereto as Exhibit
      C
      (the
“Series G Warrant”, and together with the Series F Warrant, the
“Warrants”).

     

    WHEREAS,
      the Purchaser desires to purchase such Securities from the Company according
      to
      the terms hereinafter set forth.

     

    NOW,
      THEREFORE, 
      the
      Company and the Purchaser hereby agree as follows:

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF THE SECURITIES

     

    1.1 Purchase
      and Sale of the Securities.
      Subject
      to the terms and conditions hereof and in reliance on the representations and
      warranties contained herein, or made pursuant hereto, the Company will issue
      and
      sell to the Purchaser, and the Purchaser will purchase from the Company at
      the
      closing of the transactions contemplated hereby (the “Closing”), the Securities
      for the $500,000 (the “Purchase Price”) in cash, less the sum of documentary
      stamp taxes imposed upon the Transaction Documents by the state of Florida
      in
      the amount of $1,750.

     

    1.2 Closing.
      The
      Closing shall be deemed to occur at the offices of Quarles & Brady, LLP, 411
      East Wisconsin Avenue, Milwaukee, Wisconsin, at 5:00 p.m. CST on January 18,
      2008, or at such other place, date or time as mutually agreeable to the parties
      (the “Closing Date”). 

     

    1.3 Closing
      Matters.
      On the
      Closing Date, subject to the terms and conditions hereof, the following actions
      shall be taken:

     

    (a) The
      Company, against delivery of payment of the Purchase Price in accordance with
      Section 1.3(b), will deliver to the Purchaser the documents set forth in Section
      5.4 hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) The
      Purchaser shall deliver to the Company the Cash Payment by wire transfer of
      immediately available funds in accordance with the instructions of the
      Company.

     

    1.4 Subsequent
      Financings.
      

     

    (a) Other
      than in connection with a Permitted Financing (defined below), for the 12-month
      period following the Closing Date, the Purchaser shall have the right to
      participate
      pro
      rata, pari passu
      with
      Gottbetter Capital Master, Ltd. (“Gottbetter”) based upon Gottbetter’s and
      Purchaser’s respective aggregate investment amounts (including initial and
      subsequent investments) in the Company’s securities set forth in Schedule 1.4(a)
      hereto, collectively, up to 100% of each such subsequent financing that involves
      the sale of securities of the Company and results in gross proceeds to the
      Company in excess of $250,000 (each such financing, a “Subsequent
      Financing”).  In the event Gottbetter elects not to participate in a
      Subsequent Financing, the Purchaser also shall have the right to participate
      in
      such Subsequent Financing to the extent and in the amount that Gottbetter does
      not participate. At least 15 days prior to the making or accepting an offer
      for
      a Subsequent Financing, the Company shall deliver to the Purchaser a written
      notice of its intention to effect a Subsequent Financing and the details of
      such
      Subsequent Financing (a “Subsequent Financing Notice”). The Subsequent
      Financing Notice shall describe in reasonable detail the proposed terms of
      such
      Subsequent Financing, the amount of proceeds intended to be raised thereunder
      and the Person with whom such Subsequent Financing is proposed to be effected,
      and shall include, as an attachment thereto, a term sheet or similar document
      relating thereto.    If the Purchaser elects to participate in
      the Subsequent Financing, the closing of such Subsequent Financing shall be
      as
      mutually agreed between the parties participating in such Subsequent Financing.
      If by 6:30 p.m. (Eastern Time) on the fifteenth day after the Purchaser has
      received the Subsequent Financing Notice, the Purchaser fails to notify the
      Company of its election to participate or elects to participate in an amount
      that is less than the total amount of the Subsequent Financing, then the Company
      may effect the remaining portion of such Subsequent Financing on the terms
      and
      with the Persons set forth in the Subsequent Financing Notice.  The Company
      must provide the Purchaser with a second Subsequent Financing Notice, and the
      Purchaser will again have the right of participation set forth above in this
      Section 1.4(a), if the Subsequent Financing subject to the initial Subsequent
      Financing Notice is not consummated for any reason on the terms set forth in
      such Subsequent Financing Notice within 60 days after the date of the initial
      Subsequent Financing Notice. 

     

    (b) In
      the
      event that the Purchaser elects to participate in a Subsequent Financing, the
      Purchaser may, at its option, on one occasion only, exchange any or all shares
      of Series B Preferred Stock held by the Purchaser for securities issued in
      the
      Subsequent Financing at a rate of 1 Preferred Share for each $11,500 of
      securities issued in the Subsequent Financing.

     

    (c) Notwithstanding
      the foregoing, Section 1.4(a) shall not apply in respect to the issuance of
      the
      following (each, a “Permitted Financing”): (i) shares of Common Stock or Common
      Stock options, warrants or other rights to purchase Common Stock issued to
      employees, officers, directors or consultants of the Company pursuant to any
      stock, option, equity incentive or similar plan duly adopted by the Board of
      Directors of the Company or shares of Common Stock issued upon exercise of
      any
      option or warrant or conversion of any convertible security issued pursuant
      to
      any stock, option, equity incentive or similar plan duly adopted by the Board
      of
      Directors of the Company, (ii) securities issued upon the exercise of or
      conversion of any securities issued pursuant to this Agreement, (iii) Common
      Stock issued upon the exercise or conversion of options, warrants, preferred
      stock or convertible debt instruments issued and outstanding on the date of
      this
      Agreement; provided that, (A) such securities have not been amended since the
      date of this Agreement to increase the number of such securities or underlying
      Common Stock or (B) to decrease the exercise or conversion price of any such
      security (except in the case of (A) and (B) pursuant to any anti-dilution or
      price reset provisions or otherwise that are in effect as of the date hereof),
      (iv) securities issued pursuant to acquisitions or strategic transactions,
      provided any such issuance shall only be to a Person which is, itself or through
      its subsidiaries, an operating company in a business synergistic with the
      business of the Company and in which the Company receives benefits in addition
      to the investment of funds, but shall not include an issuance or transaction
      in
      which the Company is issuing securities primarily for the purpose of raising
      capital or to an entity whose primary business is investing in securities,
      and
      (v) securities issued in connection with loans made to the Company or Xeni
      Financial Services, Corp. for the purpose of financing loans from the Company
      or
      its subsidiaries to healthcare providers as part of the business of Xeni
      Financial Services, Corp.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

     

    SECURITY
      DOCUMENTS 

     

    2.1 Company
      Security Documents.
      

     

    (a) Security
      Agreement.
      All of
      the obligations of the Company under the Preferred Shares shall be secured
      by a
      lien on all the personal property and assets of the Company now existing or
      hereinafter acquired granted pursuant to that certain Security Agreement dated
      September 28, 2007 between the Company and the Purchaser (the “Security
      Agreement”). The parties acknowledge and agree that the term “Obligations”
as
      defined in the Security Agreement, includes all obligations of the Company
      to
      the Purchaser, including without limitation, those obligations of the Company
      under the Series B Preferred Stock and Transaction Documents (as defined herein
      in Section 3.6). Such lien is and shall remain expressly subordinated and junior
      to the liens of Gottbetter as is set forth in the Security Agreement.

     

    (b) Guaranty.
      All of
      the obligations of the Company under the Preferred Shares shall be guaranteed
      pursuant to those certain guaranty agreements (each, a “Guaranty Agreement” and
      collectively, the “Guaranty Agreements”), each dated September 28, 2007 between
      Purchaser and each of the following subsidiaries of the Company (each a
“Subsidiary and collectively, the “Subsidiaries”): MDwerks
      Global Holdings, Inc., a corporation, organized under the laws of the State
      of
      Florida (“MGHI”), Xeni Medical Systems, Inc., a corporation organized under the
      laws of the State of Delaware (“XMSI”), Xeni Financial Services Corp., a
      corporation organized under the laws of the State of Florida (“XFSC”), Xeni
      Medical Billing, Corp., a corporation organized under the laws of the State
      of
      Delaware (“XMBC”), and Patient Payment Solutions, Inc., a corporation organized
      under the laws of the State of Florida (“PPS”).
      Each
      Subsidiary acknowledges and agrees that the term “Obligations”
as
      defined in the applicable Guaranty Agreement, includes all obligations of the
      Company to the Purchaser, including without limitation, those obligations of
      the
      Company under the Series B Preferred Stock and Transaction Documents.

     

    
      
        
        

      

      
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    (c) Guarantor
      Security Documents.
      All of
      the obligations of each Subsidiary under its Guaranty Agreement shall be secured
      by a lien on all the personal property and assets of such Subsidiary now
      existing or hereinafter acquired granted pursuant those certain guarantor
      security agreements (each, a “Guarantor Security Agreement” and collectively,
      the “Guarantor Security Agreements”), each dated September 28, 2007 between
      Purchaser and each Subsidiary. Each Subsidiary acknowledges and agrees that
      the
      term “Obligations”
as
      defined in the applicable Guarantor Security Agreement, includes all obligations
      of the Company to the Purchaser, including without limitation, those obligations
      of the Company under the Series B Preferred Stock and Transaction Documents.
      The
      parties further acknowledge and agree that the lien on the personal property
      of
      XFSC does not include the accounts receivable of XFSC as is set forth in XFSC’s
      security agreement with Purchaser and that liens granted pursuant to the
      Guarantor Security Agreements are and shall remain expressly subordinated and
      junior to the liens of Gottbetter as further set forth in the Guarantor Security
      Agreements. 

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    The
      Company hereby represents and warrants to the Purchaser as of the date of this
      Agreement as follows: 

     

    3.1 Organization
      and Qualification.
      The
      Company is a corporation duly organized and validly existing and in good
      standing under the laws of the jurisdiction in which it is incorporated, and
      has
      all requisite corporate power and authority to carry on its business as now
      conducted. The Company is duly qualified as a foreign corporation to do business
      and is in good standing in every jurisdiction in which its ownership of property
      or the nature of the business conducted by it makes such qualification
      necessary, except to the extent that the failure to be so qualified or be in
      good standing would not have a Material Adverse Effect. As used in this
      Agreement, “Material Adverse Effect” means any material adverse effect on the
      business, properties, assets, operations, results of operations, or condition
      (financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
      or on the transactions contemplated hereby or by the agreements and instruments
      to be entered into in connection herewith, or on the authority or ability of
      the
      Company to perform its obligations in all material respects under the
      Transaction Documents.

     

    3.2 Subsidiaries.
      The
      Company has no subsidiaries other than the Subsidiaries. The Company owns,
      directly or indirectly, all of the capital stock of each Subsidiary, free and
      clear of any and all Liens (as defined in Section 8.3), except Permitted Liens
      (as defined in Section 8.3), and all the issued and outstanding shares of
      capital stock of each Subsidiary are validly issued and are fully paid,
      non-assessable and free of preemptive and similar rights. Each Subsidiary is
      a
      corporation duly organized and validly existing and in good standing under
      the
      laws of the jurisdiction in which it is incorporated, and has all requisite
      corporate power and authority to carry on its business as now conducted. Each
      Subsidiary is duly qualified as a foreign corporation to do business and is
      in
      good standing in every jurisdiction in which its ownership of property or the
      nature of the business conducted by it makes such qualification necessary,
      except to the extent that the failure to be so qualified or be in good standing
      would not have a Material Adverse Effect. 

     

    
      
        
        

      

      
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    3.3 Compliance.
      

     

    (a) Neither
      the Company nor any Subsidiary (i) is in default under or in violation of
      (and no event has occurred that has not been waived that, with notice or lapse
      of time or both, would result in a default by the Company or any Subsidiary
      under), nor has the Company or any Subsidiary received notice of a claim that
      it
      is in default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound, except such that, individually
      or in
      the aggregate, such default(s) and violations(s) would not have a Material
      Adverse Effect, (ii) is in violation of any order of any court, arbitrator
      or governmental body, or (iii) is in violation of any of the provisions of
      its certificate or articles of incorporation, bylaws or other organizational
      or
      charter documents.

     

    (b) The
      business of the Company and each Subsidiary is presently being conducted in
      accordance with all applicable foreign, federal, state and local governmental
      laws, rules, regulations and ordinances (including, without limitation, rules
      and regulations of each governmental and regulatory agency, self regulatory
      organization and Trading Market applicable to the Company or any Subsidiary),
      except such that, individually or in the aggregate, the noncompliance therewith
      would not have a Material Adverse Effect. The Company has all franchises,
      permits, licenses, consents and other governmental or regulatory authorizations
      and approvals necessary for the conduct of its business as now being conducted
      by it unless the failure to possess such franchises, permits, licenses, consents
      and other governmental or regulatory authorizations and approvals, individually
      or in the aggregate, would not have a Material Adverse Effect, and the Company
      has not received any written notice of proceedings relating to the revocation
      or
      modification of any of the foregoing. For purposes of this Agreement, “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 NYSE Arca, OTC
      Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the
      Nasdaq National Market or the Nasdaq Capital Market.

     

    
      
        
        

      

      
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    3.4 Capitalization.

     

    (a) As
      of the
      date hereof and without giving effect to the sale of Securities at Closing
      as
      contemplated hereby, the Company’s authorized capital stock consists of (1)
      100,000,000 shares of Common Stock, par value $.001 per share, of which
      12,940,065 shares are outstanding and (2) 10,000,000 shares of preferred stock,
      par value $.001 per share, of which (x) 1,000 shares have been designated as
      Series A Convertible Preferred Stock, par value $0.001 per share, of which
      2
      shares are outstanding and included in the Common Stock shares reserved above,
      and (y) 250 shares have been designated as Series B Convertible Preferred Stock,
      par value $0.001, of which 200 shares are outstanding. All of such outstanding
      shares have been, or upon issuance will be, validly issued, are fully paid
      and
      nonassessable. 14,575,095 shares of Common Stock are reserved for issuance
      upon
      the exercise or conversion of all outstanding warrants, convertible notes,
      options, or other securities exchangeable, convertible or exercisable into
      shares of Common Stock

     

    (b) Except
      for the Securities, or as disclosed in Schedule 3.4(b) attached
      hereto:

     

    (i) no
      holder
      of shares of the Company’s capital stock has any preemptive rights or any other
      similar rights or has been granted or holds any Liens or encumbrances suffered
      or permitted by the Company;

     

    (ii) there
      are
      no outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any shares of capital
      stock of the Company or any Subsidiary, or contracts, commitments,
      understandings or arrangements by which the Company or any Subsidiary is or
      may
      become bound to issue additional shares of capital stock of the Company or
      any
      Subsidiary or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any shares of capital
      stock of the Company or any Subsidiary;

     

    (iii) there
      are
      no outstanding debt securities, notes, credit agreements, credit facilities
      or
      other agreements, documents or instruments evidencing Indebtedness (as defined
      in Section 3.13 hereof) of the Company or any Subsidiary in excess of $100,000
      or by which the Company or a Subsidiary is or may become bound and involves
      Indebtedness in excess of $100,000;

     

    (iv) there
      are
      no financing statements securing obligations in any material amounts, either
      singly or in the aggregate, filed in connection with the Company or its
      Subsidiaries;

     

    (v) there
      are
      no agreements or arrangements under which the Company or any Subsidiary is
      obligated to register the sale of any of their securities under the Securities
      Act of 1933, as amended (the “Securities Act”); 

     

    (vi) there
      are
      no outstanding securities or instruments of the Company or any Subsidiary that
      contain any redemption or similar provisions, and there are no contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to redeem a security of the Company or a
      Subsidiary;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (vii) there
      are
      no securities or instruments containing antidilution or similar provisions
      that
      will be triggered by the issuance of the Securities; and

     

    (viii) the
      Company does not have any stock appreciation rights or “phantom stock” plans or
      agreements or any similar plan or agreement.

     

    3.5 Issuance
      of Securities.
      

     

    (a) The
      Securities to be issued hereunder are duly authorized and, upon payment and
      issuance in accordance with the terms hereof, shall be free from all taxes,
      Liens and charges with respect to the issuance thereof. As of the Closing Date,
      the Company has authorized and has reserved free of preemptive rights and other
      similar contractual rights of stockholders, a number of its authorized but
      unissued shares of Common Stock equal to one hundred twenty-five percent (125%)
      of the aggregate number of shares of Common Stock to effect the conversion
      of
      the Preferred Shares (the “Conversion Shares”) and one hundred percent (100%) of
      the aggregate number of shares of Common Stock to effect the exercise of the
      Warrants (the “Warrant Shares”).

     

    (b) The
      Conversion Shares and Warrant Shares, when issued and paid for upon conversion
      of the Preferred Shares and exercise of the Warrants, as the case may be, will
      be validly issued, fully paid and nonassessable and free from all taxes, Liens
      and charges with respect to the issue thereof, with the holders being entitled
      to all rights accorded to a holder of the Common Stock. 

     

    (c) Assuming
      the accuracy of each of the representations and warranties made by the Purchaser
      and set forth in Article IV hereof (and assuming no change in applicable law
      and
      no unlawful distribution of the Securities by the Purchaser or other Persons),
      the issuance by the Company to the Purchaser of the Securities is exempt from
      registration under the Securities Act.

     

    3.6 Authorization;
      Enforcement; Validity.
      The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Agreement, that certain First Amendment
      to
      Registration Rights Agreement to be entered into between the Company and the
      Purchaser on even date herewith in the form attached hereto as Exhibit
      D
      (the
“Registration Rights Agreement Amendment”), which amends that certain
      Registration Rights Agreement dated as of September 28, 2007 (the “Registration
      Rights Agreement”), which First Amendment to the Registration Rights Agreement
      is the Security Agreement, the Certificate of Designations for the Series B
      Preferred Stock, and the Warrants, and each of the other agreements or
      instruments entered into by the parties hereto in connection with the
      transactions contemplated by this Agreement (collectively, the “Transaction
      Documents”) and to issue the Securities (including without limitation, the
      Conversion Shares and Warrant Shares) in accordance with the terms hereof and
      thereof. The execution and delivery of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      and
      thereby, including, without limitation, and the issuance of the Preferred Shares
      and the Warrants, have been duly authorized by the Board, and no further consent
      or authorization is required by the Company, the Board or its stockholders.
      This
      Agreement and the other Transaction Documents have been duly executed and
      delivered by the Company, and constitute the legal, valid and binding
      obligations of the Company enforceable against the Company in accordance with
      their respective terms, except (i) as limited by general equitable principles
      and applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
      conveyance and other laws of general application affecting enforcement of
      creditors’ rights and remedies generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law or by principles of public policy
      thereunder.

     

    
      
        
        

      

      
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    3.7 Dilutive
      Effect.
      The
      Company understands and acknowledges that its obligation to issue the Conversion
      Shares and Warrant Shares upon conversion of the Preferred Shares and exercise
      of the Warrants, as the case may be, is absolute and unconditional regardless
      of
      the dilutive effect that such issuance may have on the ownership interests
      of
      other stockholders of the Company.

     

    3.8 No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      and
      thereby (including, without limitation, the reservation for issuance of the
      Conversion Shares and Warrant Shares) will not (i) result in a violation of
      any articles or certificate of incorporation, any certificate of designations,
      preferences and rights of any outstanding series of preferred stock or bylaws
      of
      the Company or any Subsidiary or (ii) conflict with, or constitute a
      default (or an event which with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any material agreement, indenture or instrument
      to which the Company or any Subsidiary is a party (except where such defaults,
      conflicts, rights of termination, amendment, acceleration or cancellation have
      been waived or postponed until the fulfillment of the Company’s obligations
      under the Transaction Documents), or (iii) result in a violation of any
      federal, state, local or foreign statute, rule, regulation, order, judgment
      or
      decree (including federal and state securities laws and regulations and rules
      and regulations of any governmental or any regulatory agency, self-regulatory
      organization, or Trading Market applicable to the Company) or by which any
      property or asset of the Company are bound or affected, except in the case
      of
      clauses (ii) and (iii), for such breaches, violations or defaults as would
      not
      be reasonably expected to have a Material Adverse Effect. 

     

    3.9 Governmental
      Consents.
      Except
      for (i) filings
      required under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”) to disclose the existence of the transactions contemplated by this
      Agreement, (ii) the filing of a registration statement pursuant to the
      Registration Rights Agreement (as defined in Section 3.6),
      (iii) application(s) to each Trading Market for the listing of the
      Conversion Shares and Warrant Shares for trading thereon in the time and manner
      required thereby, and (iv) the filing of Form D with the Commission and
      such filings as are required to be made under applicable state securities
      laws,
      the
      Company is not required to obtain any consent, authorization or order of, or
      make any filing or registration with, any court, governmental or any regulatory
      agency, self-regulatory organization or any other Person (as defined in Section
      3.12) in order for it to execute, deliver or perform any of its obligations
      under or contemplated by the Transaction Documents, in each case, in accordance
      with the terms hereof or thereof. The
      Company is unaware of any facts or circumstances relating to the Company or
      its
      Subsidiaries which might prevent the Company from obtaining or effecting any
      of
      the foregoing.

     

    
      
        
        

      

      
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    3.10 Registration
      and Approval of Sale of Securities.
      Based
      in material part upon the representations and warranties herein (and in the
      other Transaction Documents) of the Purchaser, the Company has complied and
      will
      comply with all applicable federal and state securities laws in connection
      with
      the offer, issuance and sale of the Securities hereunder (except in the case
      of
      state securities laws, for any failures to comply that, individually or in
      the
      aggregate, will not have a Material Adverse Effect). Assuming the accuracy
      of
      the representations and warranties in Article IV hereof (and assuming no change
      in applicable law and no unlawful distribution of the Securities by the
      Purchaser or other Persons), no registration under the Securities Act is
      required for the offer and sale of the Securities by the Company to the
      Purchaser as is contemplated hereby. Neither the Company nor any Person acting
      on its behalf, directly or indirectly, has or will sell, offer to sell or
      solicit offers to buy any of the Securities or similar securities to, or solicit
      offers with respect thereto from, or enter into any negotiations relating
      thereto with, any Person, or has taken or will take any action so as to either
      (a) bring the issuance and sale of any of the Securities under the
      registration provisions of the Securities Act or applicable state securities
      laws, or (b) trigger shareholder approval provisions under the rules or
      regulations of any Trading Market. Neither the Company nor any of its affiliates
      that it controls, nor any Person acting on its or their behalf, has: (x) engaged
      in any form of general solicitation or general advertising (within the meaning
      of Regulation D under the Securities Act) in connection with the offer or sale
      of any of the Securities; or (y) directly or indirectly made any offers or
      sales
      of any security or solicited any offers to buy any security under circumstances
      that would cause the offering of the Securities pursuant to this Agreement
      to be
      integrated with prior offerings by the Company for purposes of the Securities
      Act in a manner that would prevent the Company from selling the Securities
      pursuant to Regulation D and Rule 506 thereof under the Securities Act, nor
      will
      the Company or any of its affiliates that it controls or Persons acting on
      its
      or their behalf engage in any form of general solicitation or take any action
      or
      steps that would cause the offering of the Securities to be integrated with
      other offerings. 

     

    3.11 Placement
      Agent’s Fees.
      Except
      as set forth on Schedule 3.11, no brokerage or finder’s fee or commission are or
      will be payable to any Person with respect to the transactions contemplated
      by
      this Agreement based upon arrangements made by the Company or any of its
      affiliates. The Company agrees that it shall be responsible for the payment
      of
      any placement agent’s fees, financial advisory fees, or brokers’ commissions
      (other than for Persons engaged by the Purchaser or any of its affiliates)
      relating to or arising out of the transactions contemplated hereby. The Company
      shall pay, and hold the Purchaser harmless against, any liability, loss or
      expense (including, without limitation, reasonable attorney’s fees and
      out-of-pocket expenses) arising in connection with any claim for any such fees
      or commissions.

     

    3.12 Litigation.
      Except
      as disclosed in Schedule 3.12 or as disclosed in the SEC Documents, there is
      no
      action, suit, written notice of violation, or written notice of any proceeding
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Common Stock or the Company, any Subsidiary or any of their respective executive
      officers, directors or properties before or by any court, arbitrator,
      governmental or administrative agency, regulatory authority (federal, state,
      county, local or foreign), self regulatory authority or Trading Market
      (collectively, an “Action”) which (i) adversely affects or challenges the
      legality, validity or enforceability of any of the Transaction Documents or
      the
      Securities or (ii) would, if there were an unfavorable decision, have or
      reasonably be expected to result in a Material Adverse Effect. To the Company’s
      knowledge, neither the Company nor any Subsidiary, nor any director or executive
      officer thereof (in his/her capacity as such), is or, within the last five
      years, has been the subject of any Action involving a claim of violation of
      or
      liability under federal or state securities laws or a claim of breach of
      fiduciary duty. To the knowledge of the Company, there has not been, and there
      is not pending or threatened in writing, any investigation by the United States
      Securities and Commission (the “Commission” or “SEC”) involving the Company or
      any current director or executive officer of the Company. The Commission has
      not
      issued any stop order or other order suspending the effectiveness of any
      registration statement filed by the Company under the Exchange Act or the
      Securities Act. There is no action, suit, claim, investigation, arbitration,
      alternate dispute resolution proceeding or other proceeding pending or, to
      the
      knowledge of the Company, threatened in writing against or involving the Company
      or any of its properties or assets, which individually or in the aggregate,
      would reasonably be expected to have a Material Adverse Effect. There are no
      outstanding orders, judgments, injunctions, awards or decrees of any court,
      arbitrator or governmental or regulatory body against the Company or any
      executive officers or directors of the Company in their capacities as such,
      which individually or in the aggregate, would reasonably be expected to have
      a
      Material Adverse Effect.

     

    
      
        
        

      

      
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    3.13 Indebtedness
      and Other Contracts.
      Except
      as disclosed in the SEC Documents (as defined in Section 3.14), neither the
      Company nor any Subsidiary (a) has any outstanding Indebtedness (as defined
      below in this Section 3.13), (b) is a party to any contract, agreement or
      instrument, the violation of which, or default under, by any other party to
      such
      contract, agreement or instrument would result in a Material Adverse Effect,
      (c) is in violation of any term of or in default under any contract,
      agreement or instrument relating to any Indebtedness, except where such
      violations and defaults would not result, individually or in the aggregate,
      in a
      Material Adverse Effect, or (d) is a party to any contract, agreement or
      instrument relating to any Indebtedness, the performance of which, in the
      judgment of the Company’s officers, has or is expected to have a Material
      Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any
      Person means, without duplication (i) all indebtedness for borrowed money,
      (ii) all obligations issued, undertaken or assumed as the deferred purchase
      price of property or services (other than trade payables entered into in the
      ordinary course of business), (iii) all reimbursement or payment
      obligations with respect to letters of credit, surety bonds and other similar
      instruments, (iv) all obligations evidenced by notes, bonds, debentures or
      similar instruments, including obligations so evidenced incurred in connection
      with the acquisition of property, assets or businesses, (v) all
      indebtedness created or arising under any conditional sale or other title
      retention agreement, or incurred as financing, in either case with respect
      to
      any property or assets acquired with the proceeds of such indebtedness (even
      though the rights and remedies of the seller or bank under such agreement in
      the
      event of default are limited to repossession or sale of such property),
      (vi) all monetary obligations under any leasing or similar arrangement
      which, in connection with generally accepted accounting principles, consistently
      applied for the periods covered thereby, is classified as a capital lease,
      (vii) all indebtedness referred to in clauses (i) through (vi) above
      secured by (or for which the holder of such Indebtedness has an existing right,
      contingent or otherwise, to be secured by) any mortgage, Lien, pledge, change,
      security interest or other encumbrance upon or in any property or assets
      (including accounts and contract rights) owned by any Person, even though the
      Person which owns such assets or property has not assumed or become liable
      for
      the payment of such indebtedness, and (viii) all Contingent Obligations in
      respect of indebtedness or obligations of others of the kinds referred to in
      clauses (i) through (vii) above; (y) “Contingent Obligation” means, as
      to any Person, any direct or indirect liability, contingent or otherwise, of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto; and (z) “Person” means an individual, a limited
      liability company, a partnership, a joint venture, a corporation, a trust,
      an
      unincorporated organization and a government or any department or agency
      thereof.

     

    
      
        
        

      

      
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    3.14 Financial
      Information; SEC Documents.
      The
      Company has filed all reports required to be filed by it under the Exchange
      Act,
      including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (or such shorter period as the Company was required
      by
      law to file such material) (the foregoing materials, including the exhibits
      thereto, being collectively referred to herein as the “SEC Documents”) on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Documents prior to the expiration of any such extension.
      As
      of their respective dates, the SEC Documents complied in all material respects
      with the requirements of the Securities Act and the Exchange Act and the rules
      and regulations of the Commission promulgated thereunder, and none of the SEC
      Documents, when filed, contained any untrue statement of a material fact or
      omitted to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading; provided, however, that the Company makes no
      representation as to the information included in any SEC Documents prepared
      by
      third parties and included therein, and the Company makes no representation
      as
      to the accuracy of information contained in third party studies and reports
      cited in the SEC Documents. Each registration statement and any amendment
      thereto filed by the Company during the two years preceding the date hereof
      pursuant to the Securities Act and the rules and regulations thereunder, as
      of
      the date such statement or amendment became effective, complied as to form
      in
      all material respects with the Securities Act and did not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary in order to make the statements made therein not
      misleading; provided, however, that the Company makes no representation as
      to
      the information included in any SEC Documents prepared by third parties and
      included therein, and the Company makes no representation as to the accuracy
      of
      information contained in third party studies and reports cited in the SEC
      Documents; and each prospectus filed pursuant to Rule 424(b) under the
      Securities Act, as of its issue date and as of the closing of any sale of
      securities pursuant thereto did not contain any untrue statement of a material
      fact or omit to state any material fact required to be stated therein or
      necessary in order to make the statements made therein, in the light of the
      circumstances under which they were made, not misleading; provided, however,
      that the Company makes no representation as to the information included in
      any
      SEC Documents prepared by third parties and included therein and the Company
      makes no representation as to the accuracy of information contained in third
      party studies and reports cited in the SEC Documents. The financial statements
      of the Company included in the SEC Documents comply in all material respects
      with applicable accounting requirements and the rules and regulations of the
      Commission with respect thereto as in effect at the time of filing. Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”), except as may be otherwise specified in such
      financial statements or the notes thereto and except that unaudited financial
      statements may not contain all footnotes required by GAAP and remain subject
      to
      year end adjustments, and fairly present in all material respects the financial
      position of the Company and its consolidated subsidiaries as of and for the
      dates thereof and the results of operations and cash flows for the periods
      then
      ended, subject, in the case of unaudited statements, to normal year-end audit
      adjustments.

     

    
      
        
        

      

      
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    3.15 Absence
      of Certain Changes or Developments.
      Except
      as disclosed in Schedule 3.15 attached hereto or as disclosed in the SEC
      Documents or as contemplated herein and in the Transaction Documents, since
      September 30, 2007:

     

    (a) there
      has
      been no Material Adverse Effect, and no event or circumstance has occurred
      or
      exists with respect to the Company or its businesses, properties, operations
      or
      financial condition, which, under Exchange Act, Securities Act, or rules or
      regulations of any Trading Market, requires public disclosure or announcement
      by
      the Company but which has not been so publicly announced or disclosed;

     

    (b) the
      Company has not:

     

    (i) issued
      any stock, bonds or other corporate securities or any right, options or warrants
      with respect thereto, except pursuant to the exercise or conversion of
      securities outstanding as of such date;

     

    (ii) borrowed
      any amount in excess of $250,000 or incurred or become subject to any other
      liabilities in excess of $250,000 (absolute or contingent) except current
      liabilities incurred in the ordinary course of business which are comparable
      in
      nature and amount to the current liabilities incurred in the ordinary course
      of
      business during the comparable portion of its prior fiscal year, as adjusted
      to
      reflect the current nature and volume of the business of the
      Company;

     

    (iii) discharged
      or satisfied any Lien or encumbrance in excess of $250,000 or paid any
      obligation or liability (absolute or contingent) in excess of $250,000, other
      than current liabilities paid in the ordinary course of business and payments
      of
      principal and interest to Gottbetter;

     

    (iv) declared
      or made any payment or distribution of cash or other property to stockholders
      with respect to its stock, or purchased or redeemed, or made any agreements
      so
      to purchase or redeem, any shares of its capital stock, in each case in excess
      of $50,000 individually or $100,000 in the aggregate;

     

    (v) sold,
      assigned or transferred any other tangible assets, or canceled any debts or
      claims, in each case in excess of $250,000, except in the ordinary course of
      business;

     

    (vi) sold,
      assigned or transferred any patent rights, trademarks, trade names, copyrights,
      trade secrets or other intangible assets or intellectual property rights in
      excess of $250,000, or disclosed any proprietary confidential information to
      any
      person except to customers in the ordinary course of business;

     

    
      
        
        

      

      
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    (vii) suffered
      any material losses or waived any rights of material value, whether or not
      in
      the ordinary course of business, or suffered the loss of any material amount
      of
      prospective business;

     

    (viii) made
      any
      changes in employee compensation except in the ordinary course of business
      and
      consistent with past practices;

     

    (ix) made
      capital expenditures or commitments therefor that aggregate in excess of
      $250,000;

     

    (x) entered
      into any material transaction, whether or not in the ordinary course of business
      that has not been disclosed in the SEC Documents;

     

    (xi) made
      charitable contributions or pledges in excess of $10,000;

     

    (xii) suffered
      any material damage, destruction or casualty loss, whether or not covered by
      insurance;

     

    (xiii) experienced
      any material problems with labor or management in connection with the terms
      and
      conditions of their employment; 

     

    (xiv) altered
      its method of accounting, except to the extent required by GAAP;

     

    (xv) issued
      any equity securities to any officer, director or affiliate (as such term is
      defined in Rule 144 of the Securities Act), except pursuant to existing Company
      stock, option, equity incentive or similar incentive plans; or 

     

    (xvi) entered
      into an agreement, written or otherwise, to take any of the foregoing
      actions.

     

    3.16 Solvency.
      The
      Company has not taken, nor does it have any intention to take, any steps to
      seek
      protection pursuant to any bankruptcy or similar law. The Company does not
      have
      any actual knowledge nor has it received any written notice that its creditors
      intend to initiate involuntary bankruptcy proceedings or any actual knowledge
      of
      any fact that, as of the date hereof, would reasonably lead a creditor to do
      so.
      After giving effect to the transactions contemplated hereby to occur at the
      Closing, the Company will not be Insolvent (as hereinafter defined). For
      purposes of this Agreement, “Insolvent” means (i) the present fair saleable
      value of the Company’s assets is less than the amount required to pay the
      Company’s total Indebtedness, contingent or otherwise, (ii) the Company is
      unable to pay its debts and liabilities, subordinated, contingent or otherwise,
      as such debts and liabilities become absolute and matured, (iii) the
      Company intends to incur or believes that it will incur debts that would be
      beyond its ability to pay as such debts mature or (iv) the Company has
      unreasonably small capital with which to conduct the business in which it is
      engaged as such business is now conducted and is proposed to be
      conducted.

     

    
      
        
        

      

      
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    3.17 Off-Balance
      Sheet Arrangements.
      There
      is no transaction, arrangement, or other relationship between the Company and
      an
      unconsolidated or other off balance sheet entity that is required to be
      disclosed by the Company in its Exchange Act filings and is not so disclosed
      or
      that if made or not made would be reasonably likely to have a Material Adverse
      Effect.

     

    3.18 Foreign
      Corrupt Practices.
      None of
      the Company, any Subsidiary, nor any of their respective directors, officers,
      agents, employees or other Persons acting on behalf of such subsidiaries has,
      in
      the course of their respective actions for or on behalf of the Company or any
      of
      its subsidiaries (a) used any corporate funds for any unlawful contribution,
      gift, entertainment or other unlawful expenses relating to political activity,
      (b) made any direct or indirect unlawful payment to any foreign or domestic
      government official or employee from corporate funds, (c) violated or is in
      violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
      as
      amended or (d) made any unlawful bribe, rebate, payoff, influence payment,
      kickback or other unlawful payment to any foreign or domestic government
      official or employee.

     

    3.19 Transactions
      With Affiliates.
      Except
      as set forth in the SEC Documents or as disclosed in Schedule 3.19 attached
      hereto, none of the officers, directors or employees of the Company is presently
      a party to any transaction with the Company or any Subsidiary (other than for
      ordinary course services as employees, officers or directors), including any
      contract, agreement or other arrangement providing for the furnishing of
      services to or by, providing for rental of real or personal property to or
      from,
      or otherwise requiring payments to or from any such officer, director or
      employee or, to the knowledge of the Company, any corporation, partnership,
      trust or other entity in which any such officer, director, or employee has
      a
      substantial interest or is an officer, director, trustee or
      partner.

     

    3.20 Insurance.
      Except
      as disclosed in Schedule 3.20, the Company and each Subsidiary are insured
      by
      insurers of recognized financial responsibility against such losses and risks
      and in such amounts as management of the Company believes to be prudent and
      customary in the businesses in which the Company and each Subsidiary are
      engaged. Neither the Company nor any Subsidiary has been refused any insurance
      coverage sought or applied for and neither the Company nor any Subsidiary has
      any reason to believe that it will not be able to renew its existing insurance
      coverage as and when such coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business at a cost that
      would not have a Material Adverse Effect.

     

    3.21 Employee
      Relations.
      Neither
      the Company nor any Subsidiary is a party to any collective bargaining agreement
      or employs any member of a union. No Executive Officer of the Company (as
      defined in Rule 501(f) of the Securities Act) has notified the Company that
      such
      officer intends to leave the Company or otherwise terminate such officer’s
      employment with the Company. No Executive Officer of the Company, to the
      knowledge of the Company, is, or is now, in violation of any material term
      of
      any employment contract, confidentiality, disclosure or proprietary information
      agreement, non-competition agreement, or any other contract or agreement or
      any
      restrictive covenant, and, to the actual knowledge of the Company, the continued
      employment of each such executive officer does not subject the Company or any
      Subsidiary to any liability with respect to any of the foregoing matters. The
      Company and each Subsidiary are in compliance with all federal, state, local
      and
      foreign laws and regulations respecting employment and employment practices,
      terms and conditions of employment and wages and hours, except where failure
      to
      be in compliance would not, either individually or in the aggregate, reasonably
      be expected to result in a Material Adverse Effect. 

     

    
      
        
        

      

      
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    3.22 Title.
      Except
      as set forth in the SEC Documents or Schedule 3.22, the Company and each
      Subsidiary have good and marketable title to all personal property owned by
      them
      which is material to their respective business, in each case free and clear
      of
      all Liens. Any real property and facilities held under lease by the Company
      or
      any Subsidiary are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company or any
      Subsidiary.

     

    3.23 Intellectual
      Property Rights.
      The
      Company and its Subsidiaries own or possess the rights to use all patents,
      trademarks, domain names (whether or not registered) and any patentable
      improvements or copyrightable derivative works thereof, websites and
      intellectual property rights relating thereto, service marks, trade names,
      copyrights, licenses and authorizations which are necessary for the conduct
      of
      its business as now conducted (collectively, the “Intellectual Property Rights”)
      without any conflict with the rights of others, except any failures as,
      individually or in the aggregate, are not reasonably likely to have a Material
      Adverse Effect. Neither the Company nor any Subsidiary has received a written
      notice that the Intellectual Property Rights used by the Company or any
      Subsidiary violates or infringes upon the rights of any Person. To the knowledge
      of the Company, all such Intellectual Property Rights are enforceable and there
      is no existing infringement by another Person of any of the Intellectual
      Property Rights. The Company and its Subsidiaries have taken reasonable measures
      to protect the value of the Intellectual Property Rights. 

     

    3.24 Environmental
      Laws.
      The
      Company and each of its Subsidiaries (a) are in compliance with any and all
      Environmental Laws (as hereinafter defined), (b) have received all permits,
      licenses or other approvals required of them under applicable Environmental
      Laws
      to conduct their respective businesses and (c) are in compliance with all
      terms and conditions of any such permit, license or approval where, in each
      of
      the foregoing clauses (a), (b) and (c), the failure to so comply could be
      reasonably expected to have, individually or in the aggregate, a Material
      Adverse Effect. The term “Environmental Laws” means all federal, state, local or
      foreign laws relating to pollution or protection of human health or the
      environment (including, without limitation, ambient air, surface water,
      groundwater, land surface or subsurface strata), including, without limitation,
      laws relating to emissions, discharges, releases or threatened releases of
      chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
      (collectively, “Hazardous Materials”) into the environment, or otherwise
      relating to the manufacture, processing, distribution, use, treatment, storage,
      disposal, transport or handling of Hazardous Materials, as well as all
      authorizations, codes, decrees, demands or demand letters, injunctions,
      judgments, licenses, notices or notice letters, orders, permits, plans or
      regulations issued, entered, promulgated or approved thereunder.

     

    3.25 Tax
      Matters.
      The
      Company and each of its Subsidiaries (a) have made or filed all federal and
      state income and all other tax returns, reports and declarations required by
      any
      jurisdiction to which it is subject, (b) have paid all taxes and other
      governmental assessments and charges that are material in amount, shown or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith and (c) have set aside on its books
      reasonably adequate provision for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations apply,
      except where such failure would not have a Material Adverse Effect. There are
      no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for any
      such
      claim.

     

    
      
        
        

      

      
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    3.26 Sarbanes-Oxley
      Act;
      Internal Accounting and Disclosure Controls.
      The
      Company is in compliance in all material respects with the requirements of
      the
      Sarbanes-Oxley Act of 2002 that are effective as of the date hereof and
      applicable to it, and any and all rules and regulations promulgated by the
      SEC
      thereunder that are effective and applicable to it as of the date hereof. The
      Company maintains a system of internal accounting controls sufficient, in the
      judgment of the Company’s board of directors, to provide reasonable assurance
      that (i) transactions are executed in accordance with management’s general
      or specific authorizations, (ii) transactions are recorded as necessary to
      permit preparation of financial statements in conformity with GAAP and to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate actions are taken with respect to any
      differences. The
      Company has established disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
      disclosure controls and procedures to ensure that material information relating
      to the Company, including its Subsidiaries, is made known to the certifying
      officers by others within those entities, particularly during the period in
      which the Company’s most recently filed periodic report under the Exchange Act,
      as the case may be, is being prepared. The Company’s certifying officers have
      evaluated the effectiveness of the Company’s controls and procedures as of the
      date prior to the filing date of the most recently filed periodic report under
      the Exchange Act (such date, the “Evaluation Date”). The Company presented in
      its most recently filed periodic report under the Exchange Act the conclusions
      of the certifying officers about the effectiveness of the disclosure controls
      and procedures based on their evaluations as of the Evaluation Date. Since
      the
      Evaluation Date, there have been no significant changes in the Company’s
      internal controls (as such term is defined in Item 307(c) of Regulation S-B
      under the Exchange Act) or, to the Company’s knowledge, in other factors that
      could significantly affect the Company’s internal controls. The
      Company maintains and will continue to maintain a standard system of accounting
      established and administered in accordance with United States GAAP and the
      applicable requirements of the Exchange Act.

     

    3.27 Investment
      Company Status.
      The
      Company is not, and immediately after receipt of payment for the Securities
      will
      not be, an “investment company,” an “affiliated person” of, “promoter” for or
“principal underwriter” for, or an entity “controlled” by an “investment
      company,” within the meaning of the Investment Company Act.

     

    3.28 Material
      Contracts.
      Each
      contract of the Company that involves expenditures or receipts in excess of
      $250,000 (each, a “Material Contract”) is in full force and effect and is valid
      and enforceable in accordance with its terms. The Company is and has been in
      full compliance with all applicable terms and requirements of each Material
      Contract and no event has occurred or circumstance exists that (with or without
      notice or lapse of time) may contravene, conflict with or result in a violation
      or breach of, or give the Company or any other entity the right to declare
      a
      default or exercise any remedy under, or to accelerate the maturity or
      performance of, or to cancel, terminate or modify any Material Contract. The
      Company has not given or received from any other Person any notice or other
      communication (whether oral or written) regarding any actual, alleged, possible
      or potential violation or breach of, or default under, any Material
      Contract.

     

    
      
        
        

      

      
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    3.29 Inventory.
      All
      inventory of the Company consists of a quality and quantity usable and salable
      in the ordinary course of business, except for obsolete items and items of
      below-standard quality, all of which have been or will be written off or written
      down to net realizable value on the unaudited consolidated balance sheet of
      the
      Company and its Subsidiaries as of September 30, 2007. The quantities of each
      type of inventory (whether raw materials, work-in-process, or finished goods)
      are not excessive, but are reasonable and warranted in the present circumstances
      of the Company.

     

    3.30 No
      Disagreements with Accountants.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the Company and the accountants formerly or
      presently employed by the Company.

     

    3.31 Ranking
      of Series B Preferred Stock.
      No
      capital stock of the Company is senior to or ranks pari
      passu
      with the
      Series B Preferred Stock in right of payment, whether with respect of payment
      of
      redemptions, interest, damages or upon liquidation or dissolution or
      otherwise.

     

    3.32 Manipulation
      of Price.
      The
      Company has not, and to its knowledge no one acting on its behalf has, taken,
      directly or indirectly, any action designed to cause or to result or that could
      reasonably be expected to cause or result, in the stabilization or manipulation
      of the price of any security of the Company to facilitate the sale or resale
      of
      any of the Securities.

     

    3.33 Listing
      and Maintenance Requirements.
      The
      Company has not, in the 12 months preceding the date hereof, received notice
      from any Trading Market on which the Common Stock is or has been listed or
      quoted to the effect that the Company is not in compliance with the listing
      or
      maintenance requirements of such Trading Market. The Company is in compliance
      with all such maintenance requirements.

     

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

     

    3.35 Disclosure.
      All
      written disclosure provided to the Purchaser regarding the Company, its business
      and
      the
      transactions contemplated hereby,
      including the Schedules to this Agreement, furnished by or on behalf of the
      Company are true and correct and do not contain any untrue statement of a
      material fact or omit to state any material fact necessary in order to make
      the
      statements made therein, in light of the circumstances under which they were
      made, not misleading; provided however, the Company makes no representation
      as
      to studies and reports prepared by third parties not engaged by the Company
      and
      included in the materials delivered to Purchaser.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASER

     

    The
      Purchaser hereby represents and warrants to the Company as of the date of this
      Agreement as follows:

     

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

     

    4.2 Own
      Account.
      The
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof except in compliance with the Securities Act, has no present intention
      of distributing any of such Securities and has no arrangement or understanding
      with any other persons regarding the distribution of such Securities (this
      representation and warranty not limiting the Purchaser’s right to sell the
      Securities pursuant to a Registration Statement (defined below) or otherwise
      in
      compliance with applicable federal and state securities laws), except in
      compliance with the Securities Act. The Purchaser is acquiring the Securities
      hereunder in the ordinary course of its business. The Purchaser does not have
      any agreement or understanding, directly or indirectly, with any Person to
      distribute any of the Securities.

     

    4.3 Purchaser
      Status.
      At the
      time the Purchaser was offered the Securities, it was, and at the date hereof
      it
      is, and on each date on which it exercises any Warrants, it will be either:
      (i)
      an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
      (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as
      defined in Rule 144A(a) under the Securities Act. 

     

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

     

    
      
        
        

      

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

     

    4.6 No
      Short Position.
      Neither
      the Purchaser nor any of its affiliates has an open short position in the Common
      Stock of the Company. From and after Closing, the Purchaser will not use any
      share of Common Stock acquired pursuant to this Agreement to cover any short
      position until such time as the Registration Statement covering such share
      of
      Common Stock has been declared effective by the Commission. For purposes of
      this
      Agreement a “short sale” or “short position” includes, without limitation, all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the
      1934 Act and all types of direct and indirect stock pledges, forward sale
      contracts, options, puts, calls, swaps and similar arrangements (including
      on a
      total return basis), and sales and other transactions through non-US broker
      dealers or foreign regulated brokers. 

     

    ARTICLE
      V

     

    CONDITIONS
      TO CLOSING OF THE PURCHASER

     

    The
      obligation of the Purchaser to purchase the Securities at the Closing is subject
      to the fulfillment to the Purchaser’s satisfaction on or prior to the Closing
      Date of each of the following conditions, any of which may be waived by such
      Purchaser:

     

    5.1 Representations
      and Warranties Correct.
      The
      representations and warranties in Article III hereof shall be true and correct
      when made, and shall be true and correct on the Closing Date with the same
      force
      and effect as if they had been made on and as of the Closing Date.

     

    5.2 Performance.
      All
      covenants, agreements and conditions contained in this Agreement to be performed
      or complied with by the Company on or prior to the Closing Date shall have
      been
      performed or complied with by the Company in all material respects.

     

    5.3 No
      Impediments.
      Neither
      the Company nor the Purchaser shall be subject to any order, decree or
      injunction of a court or administrative agency of competent jurisdiction that
      prohibits the transactions contemplated hereby or would impose any material
      limitation on the ability of such Purchaser to exercise full rights of ownership
      of the Securities. At the time of the Closing, the purchase of the Securities
      to
      be purchased by the Purchaser hereunder shall be legally permitted by all laws
      and regulations to which the Purchaser and the Company are subject.

     

    5.4 Other
      Agreements and Documents.
      The
      Company shall have delivered the following agreements and
      documents:

     

    (a) Certificates,
      registered in the name of the Purchaser, representing the Preferred
      Shares;

     

    
      
        
        

      

      
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    (b) The
      Series F Warrant in the form of Exhibit
      B
      attached
      hereto;

     

    (c) The
      Series G Warrant in the form of Exhibit
      C
      attached
      hereto;

     

    (d) The
      First
      Amendment to the Registration Rights Agreement in the form of Exhibit
      D
      hereto,
      executed by the Company;

     

    (e) An
      opinion of counsel to the Company, dated the date of the Closing, substantially
      in the form of Exhibit
      E
      hereto,
      with such exceptions and limitations as shall be reasonably acceptable to
      counsel to the Purchaser;

     

    (f) The
      Irrevocable Transfer Agent Instructions, substantially in the form of
Exhibit
      F
      attached
      hereto, shall have been delivered to the Company’s transfer agent.

     

    (g) To
      the
      extent necessary, Financing Statements on Form UCC-1 with respect to all
      personal property and assets of the Company and each Subsidiary; 

     

    (h) A
      Certificate of Good Standing from the state of incorporation of the Company
      and
      each Subsidiary; 

     

    (i) A
      certificate of the Company’s CEO, dated the Closing Date, certifying
      (i) the fulfillment of the conditions specified in Sections 5.1 and 5.2 of
      this Agreement, (ii) the Board resolutions approving this Agreement and the
      transactions contemplated hereby, and (iii) other matters as the Purchaser
      shall reasonably request; and

     

    (j) A
      completed and duly executed Florida documentary stamp tax return on Form
      DR-228.

     

    5.5 Certificate
      of Designations.
      The
      Company shall have filed the Amended and Restated Certificate of Designations
      for the Series B Preferred Stock in the form attached hereto as Exhibit
      A
      with the
      Delaware Secretary of State.

     

    5.6 Trading
      Markets.
      The
      listing or trading of the Conversion Shares and Warrant Shares on each Trading
      Market shall have been approved by such Trading Market authority.

     

    5.7 Gottbetter
      Consent.
      The
      Company shall have obtained the consent of Gottbetter to the transactions
      contemplated hereby.

     

    5.8 Due
      Diligence Investigation.
      No fact
      shall have been discovered, whether or not reflected in the Schedules hereto,
      which in the Purchaser’s determination would make the consummation of the
      transactions contemplated by this Agreement not in the Purchaser’s best
      interests.

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    CONDITIONS
      TO CLOSING OF THE COMPANY

     

    The
      Company’s obligation to sell the Securities at the Closing is subject to the
      fulfillment to its satisfaction on or prior to the Closing Date of each of
      the
      following conditions:

     

    6.1 Representations.
      The
      representations made by the Purchaser pursuant to Article IV hereof shall
      be true and correct when made and shall be true and correct on the Closing
      Date.

     

    6.2 No
      Impediments.
      Neither
      the Company nor the Purchaser shall be subject to any order, decree or
      injunction of a court or administrative agency of competent jurisdiction that
      prohibits the transactions contemplated hereby or would impose any material
      limitation on the ability of the Purchaser to exercise full rights of ownership
      of the Securities. At the time of the Closing, the purchase of the Securities
      to
      be purchased by the Purchaser hereunder shall be legally permitted by all laws
      and regulations to which the Purchaser and the Company are subject.

     

    ARTICLE
      VII

     

    AFFIRMATIVE
      COVENANTS

     

    The
      Company hereby covenants and agrees, so long as any Preferred Share remains
      outstanding, as follows:

     

    7.1 Maintenance
      of Corporate Existence.
      The
      Company shall and shall cause its subsidiaries to, maintain in full force and
      effect its corporate existence, rights and franchises and all material terms
      of
      licenses and other rights to use licenses, trademarks, trade names, service
      marks, copyrights, patents or processes owned or possessed by it and necessary
      to the conduct of its business, except where the failure to maintain such
      corporate existence, rights, franchises, licenses and rights to use licenses,
      trademarks, trade names, service marks, copyrights, patents or processes would
      not (a) result in a Material Adverse Effect or (b) materially adversely affect
      the rights of Purchaser under any Transaction Document.

     

    7.2 Maintenance
      of Properties.
      The
      Company shall and shall cause its subsidiaries to, keep each of its properties
      necessary to the conduct of its business in good repair, working order and
      condition, reasonable wear and tear excepted, and from time to time make all
      needful and proper repairs, renewals, replacements, additions and improvements
      thereto; and the Company shall and shall its subsidiaries to at all times comply
      with each material provision of all material leases to which it is a party
      or
      under which it occupies property.

     

    7.3 Payment
      of Taxes.
      The
      Company shall and shall cause its subsidiaries to, promptly pay and discharge,
      or cause to be paid and discharged when due and payable, all lawful taxes,
      assessments and governmental charges or levies imposed upon the income, profits,
      assets, property or business of the Company and its subsidiaries; provided,
      however, that any such tax, assessment, charge or levy need not be paid if
      the
      validity thereof shall be contested timely and in good faith by appropriate
      proceedings, if the Company or its subsidiaries shall have set aside on its
      books adequate reserves with respect thereto, and the failure to pay shall
      not
      be prejudicial in any material respect to the holders of the Securities, and
      provided, further, that the Company or its subsidiaries will pay or cause to
      be
      paid any such tax, assessment, charge or levy forthwith upon the commencement
      of
      proceedings to foreclose any Lien which may have attached as security therefor.
      

     

    
      
        
        

      

      
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    7.4 Payment
      of Indebtedness.
      The
      Company shall, and shall cause its subsidiaries to, pay or cause to be paid
      when
      due all Indebtedness incident to the operations of the Company or its
      subsidiaries (including, without limitation, claims or demands of workmen,
      materialmen, vendors, suppliers, mechanics, carriers, warehousemen and
      landlords) which, if unpaid might become a Lien (except for Permitted Liens)
      upon the assets or property of the Company or its subsidiaries, except where
      the
      Company (or its subsidiary, as the case may be) disputes the payment of such
      Indebtedness in good faith by appropriate proceedings.

     

    7.5 Reservation
      of Common Stock.
      The
      Company shall continue to reserve, free of preemptive rights and other similar
      contractual rights of stockholders, a number of its authorized but unissued
      shares of Common Stock not less than one hundred twenty-five percent (125%)
      of
      the aggregate number of shares of Common Stock to effect the conversion of
      the
      Preferred Shares and one hundred percent (100%) of the aggregate number of
      shares of Common Stock to effect the exercise of the Warrants.

     

    7.6 Maintenance
      of Insurance.
      The
      Company shall and shall cause its subsidiaries to, keep its assets which are
      of
      an insurable character insured by financially sound and reputable insurers
      against loss or damage by theft, fire, explosion and other risks customarily
      insured against by companies in the line of business of the Company or its
      subsidiaries, in amounts sufficient to prevent the Company and its subsidiaries
      from becoming a co-insurer of the property insured; and the Company shall and
      shall cause its subsidiaries to maintain, with financially sound and reputable
      insurers, insurance against other hazards and risks and liability to persons
      and
      property to the extent and in the manner customary for companies in similar
      businesses similarly situated or as may be required by law, including, without
      limitation, general liability, fire and business interruption insurance, and
      product liability insurance as may be required pursuant to any license agreement
      to which the Company or its subsidiaries is a party or by which it is
      bound.

     

    7.7 Notice
      of Adverse Change.
      The
      Company shall promptly give notice to all holders of any Securities (but in
      any
      event within seven (7) days) after becoming aware of the existence of any
      condition or event which constitutes, or the occurrence of, any of the
      following:

     

    (a) any
      Event
      of Default (as hereinafter defined);

     

    (b) any
      other
      event of noncompliance by the Company or its subsidiaries under this Agreement
      in any material respect;

     

    (c) the
      institution of an action, suit or proceeding against the Company or any
      subsidiary before any court, administrative agency or arbitrator, including,
      without limitation, any action of a foreign government or instrumentality,
      which, if adversely decided, would result in a Material Adverse Effect whether
      or not arising in the ordinary course of business; or

     

    
      
        
        

      

      
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    (d) any
      information relating to the Company or any subsidiary which would reasonably
      be
      expected to result in a material adverse effect on its inability to perform
      its
      obligations of under any Transaction Document. 

     

    Any
      notice given under this Section 7.7 shall specify the nature and period of
      existence of the condition, event, information, development or circumstance,
      the
      anticipated effect thereof and what actions the Company has taken and/or
      proposes to take with respect thereto.

     

    7.8 Compliance
      With Agreements.
      The
      Company shall and shall cause its subsidiaries to comply in all material
      respects, with the terms and conditions of all material agreements, commitments
      or instruments to which the Company or any of its subsidiaries is a party or
      by
      which it or they may be bound. 

     

    7.9 Other
      Agreements.
      The
      Company shall not enter into any agreement in which the terms of such agreement
      would restrict or impair the right or ability to perform of the Company under
      any Transaction Document.

     

    7.10 Compliance
      With Laws.
      The
      Company shall and shall cause each of its subsidiaries to duly comply in all
      material respects with any material laws, ordinances, rules and regulations
      of
      any foreign, federal, state or local government or any agency thereof, or any
      writ, order or decree, and conform to all valid requirements of governmental
      authorities relating to the conduct of their respective businesses, properties
      or assets.

     

    7.11 Protection
      of Licenses, etc.
      The
      Company shall and shall cause its subsidiaries to, maintain, defend and protect
      to the best of their ability licenses and sublicenses (and to the extent the
      Company or a subsidiary is a licensee or sublicensee under any license or
      sublicense, as permitted by the license or sublicense agreement), trademarks,
      trade names, service marks, patents and applications therefor and other
      proprietary information owned or used by it or them, (except where the failure
      to defend and protect such licenses and sublicenses would not (a) result in
      a
      Material Adverse Effect or (b) materially adversely affect the rights of
      Purchaser under any Transaction Document) and shall keep duplicate copies of
      any
      licenses, trademarks, service marks or patents owned or used by it, if any,
      at a
      secure place selected by the Company.

     

    7.12 Accounts
      and Records; Inspections.

     

    (a) The
      Company shall keep true records and books of account in which full, true and
      correct entries will be made of all dealings or transactions in relation to
      the
      business and affairs of the Company and its subsidiaries in accordance with
      GAAP
      applied on a consistent basis.

     

    (b) The
      Company shall permit each holder of any Securities or any of such holder’s
      officers, employees or representatives during regular business hours of the
      Company, upon reasonable notice and as often as such holder may reasonably
      request, to visit and inspect the offices and properties of the Company and
      its
      subsidiaries and to make extracts or copies of the books, accounts and records
      of the Company or its subsidiaries at such holder’s expense.

     

    (c) Nothing
      contained in this Section 7.12 shall be construed to limit any rights which
      a
      holder of any Securities may otherwise have with respect to the books and
      records of the Company and its subsidiaries, to inspect its properties or to
      discuss its affairs, finances and accounts.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    7.13 Maintenance
      of Office.
      The
      Company will maintain its principal office at the address of the Company set
      forth in Section 12.6 of this Agreement where notices, presentments and demands
      in respect of this Agreement and any of the Securities may be made upon the
      Company, until such time as the Company shall notify the holders of the
      Securities in writing, at least thirty (30) days prior thereto, of any change
      of
      location of such office.

     

    7.14 Use
      of
      Proceeds.
      The
      Company shall use all the proceeds received from the sale of the Securities
      pursuant to this Agreement solely for the purpose of working capital; the
      Company will not use such proceeds for the purpose of paying Indebtedness for
      borrowed money except for principal and interest payments, when due, owed to
      Gottbetter pursuant to promissory notes issued on October 19 and November 9,
      2006, respectively, in the aggregate principal amount of
      $5,000,000.

     

    7.15 Payment
      of the Preferred Share Dividends.
      The
      Company shall pay the dividends on, and redeem, the Preferred Shares, in the
      time, the manner and the form as provided in the Certificate of Designations
      for
      the Series B Preferred Stock.

     

    7.16 SEC
      Reporting Requirements.
      For so
      long as the Purchaser beneficially owns any of the Securities, and until such
      time as all the Conversion Shares and Warrant Shares are saleable by the
      Purchaser without restriction as to volume or manner of sale under Rule 144
      under the Securities Act, the Company shall timely file all reports required
      to
      be filed with the Commission pursuant to the Exchange Act, and the Company
      shall
      not terminate its status as an issuer required to file reports under the
      Exchange Act even if the Exchange Act or the rules and regulations thereunder
      would permit such termination. As long as the Purchaser owns Securities,
      Conversion Shares or Warrant Shares, the Company will prepare and furnish to
      the
      Purchaser and make publicly available in accordance with Rule 144 or any
      successor rule such information as is required for the Purchaser to sell the
      Securities under Rule 144 without regard to the volume and manner of sale
      limitations. The Company further covenants that it will take such further action
      as any holder of Securities, Conversion Shares or Warrant Shares may reasonably
      request, all to the extent required from time to time to enable such Person
      to
      sell such Securities, Conversion Shares or Warrant Shares without registration
      under the Securities Act within the limitation of the exemptions provided by
      Rule 144.

     

    7.17 Listing
      Maintenance.
      The
      Company hereby agrees to use best efforts to maintain the listing or trading
      of
      the Common Stock on a Trading Market. The Company further agrees, if the Company
      applies to have the Common Stock traded on any other Trading Market, it will
      include in such application all of the Conversion Shares and Warrant Shares,
      and
      will take such other action as is necessary to cause all of the Conversion
      Shares and Warrant Shares to be listed on such other Trading Market as promptly
      as possible. The Company will take all action reasonably necessary to continue
      the listing and trading of its Common Stock on, and will comply in all respects
      with the Company’s reporting, filing and other obligations under the bylaws or
      rules of, each such Trading Market on which the Company’s Common Stock is listed
      or trades. 

     

    
      
        
        

      

      
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    7.18 Disclosure
      of Transaction.
      The
      Company shall issue a press release describing the material terms of the
      transactions contemplated hereby (the “Press Release”) and shall also file with
      the Commission a Current Report on Form 8-K (the “Form 8-K”) describing the
      material terms of the transactions contemplated hereby (and attaching as
      exhibits thereto this Agreement, the Registration Rights Agreement, the Security
      Agreement, the Guaranty Agreements, the Guarantor Security Agreements, each
      form
      of Warrant and the Press Release) as soon as practicable following the Closing
      Date but in no event more than four (4) Trading Days (defined below) following
      the Closing Date, which Press Release and Form 8-K shall be subject to prior
      review and reasonable comment by the Purchaser. For purposes of this Agreement,
      “Trading Day” means any day during which the principal Trading Market on which
      the Common Stock is listed or traded shall be open for trading.

     

    7.19 Further
      Assurances.
      From
      time to time the Company shall execute and deliver to the Purchaser and the
      Purchaser shall execute and deliver to the Company such other instruments,
      certificates, agreements and documents and take such other action and do all
      other things as may be reasonably requested by the other party in order to
      implement or effectuate the terms and provisions of this Agreement and any
      of
      the Securities.

     

    For
      purposes of Articles VII-IX, the term “subsidiary” shall be deemed to include
      each Subsidiary and any subsidiary of the Company acquired or formed after
      the
      date hereof.

     

    ARTICLE
      VIII

     

    NEGATIVE
      COVENANTS

     

    The
      Company hereby covenants and agrees, so long as more than 12.5% of the aggregate
      amount of authorized shares of Series B Preferred Stock remain outstanding
      (or
      such amount as adjusted for stock splits, recapitalizations and similar
      transactions), it will not (and not allow any subsidiary to), without the prior
      written consent of the holder(s) of more than 50% of number of shares of Series
      B Preferred Stock outstanding (the “Majority Holders”), directly or indirectly:

     

    8.1 Distributions
      and Redemptions.
      (i) Except with respect to the Series B Preferred Stock, declare or pay any
      dividends or make any distributions to any holder(s) of any shares of capital
      stock of the Company or (ii) purchase, redeem or otherwise acquire for
      value, directly or indirectly, any shares of Common Stock of the Company or
      warrants or rights to acquire such Common
      Stock, except as may be required by the terms of the Series B Preferred Stock;
      or (iii) purchase, redeem or otherwise acquire for value, directly or
      indirectly, any shares of preferred stock of the Company or warrants or rights
      to acquire such stock, except as may be required by the terms of such preferred
      stock.

     

    8.2 Reclassification.
      Effect
      any reclassification, combination or reverse stock split of the Common
      Stock.

     

    8.3 Liens.
      Except
      as provided in this Agreement, create, incur, assume or permit to exist any
      mortgage, lien, pledge, charge, security interest or other encumbrance, or
      any
      interest or title of any vendor, lessor, lender or other secured party to or
      of
      the Company or any subsidiary under any conditional sale or other title
      retention agreement or any capital lease, upon or with respect to any property
      or asset of the Company or any subsidiary (each, a “Lien” and collectively,
“Liens”), except that the foregoing restrictions shall not apply
      to:

     

    (a) liens
      for
      taxes, assessments and other governmental charges, if payment thereof shall
      not
      at the time be required to be made, and provided such reserve as shall be
      required by generally accepted accounting principles consistently applied shall
      have been made therefor;

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (b) liens
      of
      workmen, materialmen, vendors, suppliers, mechanics, carriers, warehouseman
      and
      landlords or other like liens, incurred in the ordinary course of business
      for
      sums not then due or being contested in good faith, if an adverse decision
      in
      which contest would not materially affect the business of the
      Company;

     

    (c) liens
      existing on the date hereof securing Indebtedness of the Company or any
      subsidiary that are senior to liens on the same assets held by the Purchaser
      and
      that are filed prior to the date hereof and disclosed in Schedule 3.22
      hereto;

     

    (d) liens
      securing Indebtedness of the Company or any subsidiary which is in an aggregate
      principal amount not exceeding $250,000 and which liens are subordinate to
      liens
      on the same assets held by the Purchaser;

     

    (e) statutory
      liens of landlords, statutory liens of banks and rights of set-off, and other
      liens imposed by law, in each case incurred in the ordinary course of business
      (i) for amounts not yet overdue or (ii) for amounts that are overdue
      and that are being contested in good faith by appropriate proceedings, so long
      as such reserves or other appropriate provisions, if any, as shall be required
      by generally accepted accounting principles shall have been made for any such
      contested amounts;

     

    (f) 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 tenders, statutory obligations, surety
      and appeal bonds, bids, leases, government contracts, trade contracts,
      performance and return-of-money bonds and other similar obligations (exclusive
      of obligations for the payment of borrowed money);

     

    (g) any
      attachment or judgment lien not constituting an Event of Default;

     

    (h) easements,
      rights-of-way, restrictions, encroachments, and other minor defects or
      irregularities in title, in each case which do not and will not interfere in
      any
      material respect with the ordinary conduct of the business of the Company or
      any
      of its subsidiaries;

     

    (i) any
      (i) interest or title of a lessor or sublessor under any lease,
      (ii) restriction or encumbrance that the interest or title of such lessor
      or sublessor may be subject to, or (iii) subordination of the interest of
      the lessee or sublessee under such lease to any restriction or encumbrance
      referred to in the preceding clause (ii), so long as the holder of such
      restriction or encumbrance agrees to recognize the rights of such lessee or
      sublessee under such lease;

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (j) liens
      in
      favor of customs and revenue authorities arising as a matter of law to secure
      payment of customs duties in connection with the importation of
      goods;

     

    (k) any
      zoning or similar law or right reserved to or vested in any governmental office
      or agency to control or regulate the use of any real property;

     

    (l) liens
      securing obligations (other than obligations representing debt for borrowed
      money) under operating, reciprocal easement or similar agreements entered into
      in the ordinary course of business of the Company and its subsidiaries;

     

    (m) the
      replacement, extension or renewal of any lien permitted by this Section 8.3
      upon
      or in the same property theretofore subject or the replacement, extension or
      renewal (without increase in the amount or change in any direct or contingent
      obligor) of the Indebtedness secured thereby; and

     

    (n) Liens
      on
      accounts receivable, security interests, loan documents, reserve accounts and
      the proceeds thereof of the Company and its subsidiaries securing obligations
      under any Permitted Financing Indebtedness (defined below); provided that such
      Liens are: (i) placed on assets of the Company and its subsidiaries not securing
      obligations of the Company to Purchaser under the Transaction Documents; or
      (ii)
      expressly subordinated to the Liens on the assets of the Company and its
      subsidiaries granted to Purchaser under the Transaction Documents.

     

    All
      of
      the foregoing Liens described in subsections (a) - (n) above shall be referred
      to as “Permitted Liens”.

     

    8.4 Indebtedness.
      Create,
      incur, assume, suffer, permit to exist, or guarantee, directly or indirectly,
      any Indebtedness, excluding, however, from the operation of this
      covenant:

     

    (a) Indebtedness
      to the extent disclosed in the SEC Documents filed prior to the date hereof
      and
      otherwise existing on the date hereof;

     

    (b) Indebtedness
      which may, from time to time be incurred or guaranteed by the Company which
      in
      the aggregate principal amount does not exceed $250,000 and is subordinate
      to
      the Indebtedness under this Agreement;

     

    (c) the
      endorsement of instruments for the purpose of deposit or collection in the
      ordinary course of business;

     

    (d) Indebtedness
      relating to contingent obligations of the Company and its subsidiaries under
      guaranties in the ordinary course of business of the obligations of suppliers,
      customers, and licensees of the Company and its subsidiaries;

     

    (e) Indebtedness
      relating to loans from the Company to its subsidiaries;

     

    (f) Indebtedness
      relating to capital leases in an amount not to exceed $250,000; 

     

    
      
        
        

      

      
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    (g) accounts
      or notes payable arising out of the purchase of merchandise, supplies,
      equipment, software, computer programs or services in the ordinary course of
      business; 

     

    (h) Indebtedness
      of XFSC to Northern Healthcare LLC or its affiliates in connection with a
      revolving credit facility not to exceed $2.5 million to be used by XFSC to
      provide financing to certain clients of Medical Solutions Management, Inc.;
      or

     

    (i) Indebtedness
      of the Company and its subsidiaries to a third party relating to a credit
      facility or similar financing arrangement not to exceed $25 million between
      such
      third party and XFSC. 

     

    The
      foregoing Indebtedness described in subsections (h) - (i) above shall be
      referred to as “Permitted Financing Indebtedness”. 

     

    Purchaser
      hereby agrees that clause (i) of Section 8.4 of that certain Securities Purchase
      Agreement, dated September 28, 2007, between Purchaser and the Company is hereby
      amended and restated in its entirety to read as is set forth in clause (i)
      of
      Section 8.4 of this Agreement.

     

    8.5 Capital
      Stock.
      Except
      for issuances to the Purchaser, issue any equity security that is senior to
      or
      ranks pari
      passu
      with the
      Series B Preferred Stock, whether with respect to right of payment of
      redemptions, interest, damages or upon liquidation or dissolution or
      otherwise.

     

    8.6 Liquidation
      or Sale.
      Sell,
      transfer, lease or otherwise dispose of 10% or more of its consolidated assets
      (as shown on the most recent financial statements of the Company or the
      subsidiary, as the case may be) in any single transaction or series of related
      transactions (other than the sale of inventory in the ordinary course of
      business), or liquidate, dissolve, recapitalize or reorganize in any form of
      transaction.

     

    8.7 Change
      of Control Transaction.
      Enter
      into a Change in Control Transaction. For purposes of this Agreement, “Change in
      Control Transaction” means the occurrence of (a) an acquisition 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 fifty percent (50%) of the voting securities of
      the
      Company (except that the acquisition of Securities by the Purchaser, Medical
      Solutions Management, Inc., or Purchaser’s or Medical Solutions Mangagment
      Inc.’s designees or affiliates, shall not constitute a Change of Control
      Transaction for purposes hereof), (b) a replacement at one time or over
      time of more than one-half of the members of the Board of the Company which
      is
      not approved by a majority of those individuals who are members of the Board
      on
      the date hereof (or by those individuals who are serving as members of the
      Board
      on any date whose nomination to the Board was approved by a majority of the
      members of the Board who are members on the date hereof), (c) the merger or
      consolidation of the Company or any subsidiary of the Company in one or a series
      of related transactions with or into another entity (except in connection with
      a
      merger involving the Company solely for the purpose, and with the sole effect,
      of reorganizing the Company under the laws of another jurisdiction; provided
      that the certificate of incorporation and bylaws (or similar charter or
      organizational documents) of the surviving entity are substantively identical
      to
      those of the Company and do not otherwise adversely impair the rights of the
      Purchaser), or (d) 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 (a), (b) or (c).

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    8.8 Amendment
      of Charter Documents.
      The
      Company shall not amend or waive any provision of the Certificate of
      Incorporation or Bylaws of the Company in any way that materially adversely
      affects the rights of the Purchaser without the prior written consent of the
      Purchaser. 

     

    8.9 Loans
      and Advances.
      Except
      for loans and advances outstanding as of the Closing Date and loans and advances
      to clients through XFSC, directly or indirectly, make any advance or loan to,
      or
      guarantee any obligation of, any Person, except for intercompany loans or
      advances and those provided for in this Agreement. Notwithstanding anything
      to
      the contrary contained herein, Purchaser hereby consents, pursuant to the terms
      of this Agreement and that certain Securities Purchase Agreement, dated
      September 28, 2007, between Purchaser and the Company to the following loans
      made by the Company to Patient Access Solutions, Inc. (“PAS”), each of which is
      evidenced by a secured promissory note: 

     

    

      
        	
                Principal
                  Amount

              	 	
                Date

              
	
                $25,000

              	 	
                September
                  30, 2007

              
	
                $25,000

              	 	
                October
                  15, 2007

              
	
                $16,667

              	 	
                October
                  30, 2007

              
	
                $16,667

              	 	
                November
                  15, 2007

              
	
                $16,667

              	 	
                November
                  30, 2007

              
	
                $16,667

              	 	
                December
                  15, 2007

              
	
                $16,667

              	 	
                December
                  31, 2007

              

      

    

     

    8.10 Transactions
      with Affiliates.

     

    (a) Make
      any
      intercompany transfers to XFSC of monies or other assets in any single
      transaction or series of transactions, except as otherwise permitted in this
      Agreement.

     

    (b) Engage
      in
      any transaction with any of the officers, directors, employees or affiliates
      of
      the Company or of its subsidiaries, except on terms no less favorable to the
      Company or the subsidiary as could be obtained in an arm’s length
      transaction.

     

    (c) Divert
      (or permit anyone to divert) any business or opportunity of the Company or
      subsidiary to any other corporate or business entity.

     

    8.11 Other
      Business.
      Enter
      into or engage, directly or indirectly, in any business other than the business
      currently conducted or proposed to be conducted as of the date of this Agreement
      by the Company or any subsidiary, except where the entry into such new lines
      of
      business in the aggregate does not involve expenditures by the Company or its
      Subsidiaries in excess of $250,000 in a calendar year or the issuance of
      securities in the aggregate with a value in excess of $250,000 in a calendar
      year.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    8.12 Investments.
      Make
      any investments in excess of $250,000 in a calendar year in the aggregate in,
      or
      purchase any stock, option, warrant, or other security or evidence of
      Indebtedness of, any Person (exclusive of any subsidiary), other than (i)
      obligations of the United States Government or certificates of deposit or other
      instruments maturing within one year from the date of purchase from financial
      institutions with capital in excess of $50 million; (ii) loans made to, and
      purchases of accounts receivable of, healthcare providers in the ordinary course
      of business of XFSC and (iii) loans in the aggregate amount of $133,335 from
      the
      Company to PAS.

     

    8.13 Registration
      Statements.
      Without
      the consent of the Purchaser, file any registration statement with the
      Commission until the earlier of: (i) 60 Trading Days following the date that
      a
      registration statement or registration statements registering all the Conversion
      Shares and Warrant Shares is declared effective by the Commission; and (ii)
      the
      date the Conversion Shares and Warrant Shares are saleable by Purchaser under
      Rule 144 under the Securities Act without limitation as to volume or manner
      of
      sale; provided that this Section shall not prohibit the Company from filing
      a
      registration statement on Form S-4 or other applicable from for securities
      to be
      issued in connection with acquisitions of businesses by the Company or its
      subsidiaries, or post effective amendments to registration statements that
      were
      declared effective prior to the date hereof or to a registration statement
      filed
      with the Commission on Forms S-4 or S-8. 

     

    ARTICLE
      IX

     

    EVENTS
      OF DEFAULT

     

    9.1 Events
      of Default.
      The
      occurrence and continuance of any of the following events shall constitute
      an
      event of default under this Agreement (each, an “Event of Default” and,
      collectively, “Events of Default”):

     

    (a) if
      the
      Company shall default in the payment of any dividend on or redemption of any
      Preferred Share when the same shall become due and payable; and in each case
      such default shall have continued without cure for five (5) Trading Days after
      written notice (a “Default Notice”) is given to the Company of such
      default;

     

    (b) if
      the
      Company shall default in the performance of any of the covenants contained
      in
      Articles VII or VIII hereof and (i) such default shall have continued without
      cure for ten (10) Trading Days after a Default Notice is given to the Company
      or
      (ii) such default shall have materially adversely affected the Purchaser
      regardless of any action taken by the Company to cure such default;

     

    (c) subject
      to any grace periods and the ability of the Company to delay the effectiveness
      of the Registration Statement pursuant the Registration Rights Agreement, any
      registration statement (each, a “Registration Statement”) providing for the
      resale of Conversion Shares and Warrant Shares is not declared effective by
      the
      Commission on or prior to the date which is thirty (30) days after the date
      required therefor by the Registration Rights Agreement, unless the failure
      of
      such Registration Statement to become effective results from the Commission’s
      refusal to grant effectiveness by reason of its application of Rule 415 under
      the Securities Act;

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (d) the
      suspension from listing, without subsequent listing on any one of, or the
      failure of the Common Stock to be listed or quoted on at least one of the
      following: the OTC Bulletin Board, the American Stock Exchange, the Nasdaq
      Global Market, the Nasdaq Capital Market or The New York Stock Exchange, Inc.
      for a period of ten (10) consecutive Trading Days and such suspension from
      listing (or listing on an alternate exchange or quotation system) is not cured
      within ten (10) days after the tenth (10th)
      consecutive day of such suspension from listing; 

     

    (e) the
      Company’s notice to the Purchaser, including by way of public announcement, at
      any time, of its inability to comply for any reason or its intention not to
      comply with proper requests for issuance of Conversion Shares upon conversion
      of
      Preferred Shares or issuance of Warrant Shares upon exercise of the Warrants;
      

     

    (f) the
      Company shall fail to (i) timely deliver the shares of Common Stock upon
      conversion of the Preferred Shares or exercise of a Warrant by the fifth (5th)
      Trading Day after the date of delivery required therefor or otherwise in
      accordance with the provisions of the Transaction Documents, (ii) file a
      Registration Statement in accordance with the terms of the Registration Rights
      Agreement, or (iii) make the payment of any fees and/or liquidated damages
      under
      this Agreement or any Transaction Document, which failure in the case of items
      (i) and (iii) of this Section is not remedied within five (5) Trading Days
      after
      the incurrence thereof and, solely with respect to item (iii) above, five (5)
      Trading Days after the Purchaser delivers a Default Notice to the Company of
      the
      incurrence thereof; 

     

    (g) while
      a
      Registration Statement is required to be maintained effective pursuant to the
      terms of the Registration Rights Agreement, the effectiveness of the
      Registration Statement lapses for any reason (including, without limitation,
      the
      issuance of a stop order) or is unavailable to the Purchaser for sale of the
      Registrable Securities (as defined in the Registration Rights Agreement) in
      accordance with the terms of the Registration Rights Agreement, and such lapse
      or unavailability continues for a period of ten (10) consecutive Trading Days,
      provided that the Company has not exercised its rights pursuant to Section
      3(n)
      of the Registration Rights Agreement;

     

    (h) if
      the
      Company shall default in the performance of any other material agreement or
      covenant contained in this Agreement or the Transaction Documents and such
      default shall not have been remedied to the satisfaction of the Purchaser within
      thirty-five (35) days after a Default Notice shall have been given to the
      Company;

     

    (i) if
      any
      material representation or warranty made in this Agreement, any Transaction
      Document or in or any certificate delivered by the Company or its subsidiaries
      pursuant hereto or thereto shall prove to have been incorrect in any material
      respect when made;

     

    (j) the
      Company shall (A) default in any payment of any amount or amounts of principal
      of or interest on any Indebtedness (other than the Indebtedness hereunder)
      the
      aggregate principal amount of which Indebtedness is in excess of
      $250,000 or
      (B)
      default in the observance or performance of any other agreement or condition
      relating to any such Indebtedness or contained in any instrument or agreement
      evidencing, securing or relating thereto, or any other event shall occur or
      condition exist, the effect of which default or other event or condition is
      to
      cause, or to permit the holder or holders or beneficiary or beneficiaries of
      such Indebtedness to cause with the giving of notice if required, such
      Indebtedness to become due prior to its stated maturity;

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (k) if
      any of
      the Company or its subsidiaries shall default in the observance or performance
      of any term or provision of an agreement to which it is a party or by which
      it
      is bound, which default will have a Material Adverse Effect and such default
      is
      not waived or cured within the applicable grace period provided for in such
      agreement;

     

    (l) if
      a
      final judgment which, either alone or together with other outstanding final
      judgments against the Company and its subsidiaries, exceeds an aggregate of
      $250,000 shall be rendered against the Company or any subsidiary and such
      judgment shall have continued undischarged or unstayed for thirty-five (35)
      days
      after entry thereof; or

     

    (m) the
      Company or any subsidiary shall (i) apply for or consent to the appointment
      of,
      or the taking of possession by, a receiver, custodian, trustee or liquidator
      of
      itself or of all or a substantial part of its property or assets, (ii) make
      a
      general assignment for the benefit of its creditors, (iii) commence a voluntary
      case under the United States Bankruptcy Code (as now or hereafter in effect)
      or
      under the comparable laws of any jurisdiction (foreign or domestic), (iv) file
      a
      petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
      reorganization or other similar law affecting the enforcement of creditors’
rights generally, (v) acquiesce in writing to any petition filed against it
      in
      an involuntary case under United States Bankruptcy Code (as now or hereafter
      in
      effect) or under the comparable laws of any jurisdiction (foreign or domestic),
      or admit in writing its inability to pay its debts (vi) issue a notice of
      bankruptcy or winding down of its operations or issue a press release regarding
      same, or (vii) take any action under the laws of any jurisdiction (foreign
      or
      domestic) analogous to any of the foregoing; or 

     

    (n) a
      proceeding or case shall be commenced in respect of the Company or any of its
      subsidiaries, without its application or consent, in any court of competent
      jurisdiction, seeking (i) the liquidation, reorganization, moratorium,
      dissolution, winding up, or composition or readjustment of its debts, (ii)
      the
      appointment of a trustee, receiver, custodian, liquidator or the like of it
      or
      of all or any substantial part of its assets in connection with the liquidation
      or dissolution of the Company or any of its subsidiaries or (iii) similar relief
      in respect of it under any law providing for the relief of debtors, and such
      proceeding or case described in clause (i), (ii) or (iii) shall continue
      undismissed, or unstayed and in effect, for a period of sixty (60) days or
      any
      order for relief shall be entered in an involuntary case under United States
      Bankruptcy Code (as now or hereafter in effect) or under the comparable laws
      of
      any jurisdiction (foreign or domestic) against the Company or any of its
      subsidiaries or action under the laws of any jurisdiction (foreign or domestic)
      analogous to any of the foregoing shall be taken with respect to the Company
      or
      any of its subsidiaries and shall continue undismissed, or unstayed and in
      effect for a period of thirty (30) days; or.

     

    9.2 Remedies.

     

    (a) Upon
      the
      occurrence and continuance of an Event of Default, the Purchaser may at any
      time
      (unless all defaults shall theretofore have been remedied) at its option, by
      written notice or notices to the Company require the Company to immediately
      redeem in cash all or a portion of the Preferred Shares held by the Purchaser
      at
      a price per share equal to one hundred twenty-five percent (125%) of the Stated
      Value of the Series B Preferred Stock plus all accrued and unpaid dividends
      thereon at the time of such request. The remedy conferred by this Section 9.2(a)
      shall not be exclusive of any other remedy provided by any Transaction Document
      or now or hereafter available at law, in equity, by statute or
      otherwise.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (b) The
      Purchaser, by written notice or notices to the Company, may in its own
      discretion waive an Event of Default and its consequences and rescind or annul
      such declaration; provided that, no such waiver shall extend to or affect any
      subsequent Event of Default or impair any right resulting therefrom.

     

    (c) In
      case
      any one or more Events of Default shall occur and be continuing, the Purchaser
      may proceed to protect and enforce its rights by an action at law, suit in
      equity or other appropriate proceeding, whether for the specific performance
      of
      any agreement contained herein or in any Transaction Document or for an
      injunction against a violation of any of the terms hereof or thereof, or in
      aid
      of the exercise of any power granted hereby or thereby or by law. In case of
      a
      default in the payment of any dividend on or redemption of any Preferred Share,
      the Company will pay to the Purchaser such further amount as shall be sufficient
      to cover the cost and the expenses of collection, including, without limitation,
      actual attorney’s fees, expenses and disbursements. No course of dealing and no
      delay on the part of a Purchaser in exercising any rights shall operate as
      a
      waiver thereof or otherwise prejudice such Purchaser’s rights. No right
      conferred hereby or by any Transaction Document upon the Purchaser shall be
      exclusive of any other right referred to herein or therein or now available
      at
      law in equity, by statute or otherwise.

     

    ARTICLE
      X

     

    CERTIFICATE
      LEGENDS

     

    10.1 Legend.
      Each
      certificate representing the Securities shall be stamped or otherwise imprinted
      with a legend substantially in the following form (in addition to any legend
      required by applicable state securities or “blue sky” laws):

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
      IS
      NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
      RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
      BE
      PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
      ARRANGEMENT SECURED BY THE SECURITIES.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates, registered in the name of
      each
      Purchaser or its respective nominee(s), for the Conversion Shares and the
      Warrant Shares in such amounts as specified from time to time by each Purchaser
      to the Company upon conversion of the Preferred Shares or exercise of the
      Warrants in the form of Exhibit
      I
      attached
      hereto (the “Irrevocable
      Transfer Agent Instructions”).
      Prior
      to registration of the Conversion Shares and the Warrant Shares under the
      Securities Act, all such certificates shall bear the restrictive legend
      specified in this Section 10.1. Certificates evidencing the Conversion
      Shares and Warrant Shares shall not contain any legend (including the legend
      set
      forth in Section 10.1 hereof), (i) while a registration statement
      (including the Registration Statement) covering the resale of such security
      is
      effective under the Securities Act, or (ii) following any sale of such
      Conversion Shares or Warrant Shares pursuant to Rule 144, or (iii) if such
      Conversion Shares or Warrant Shares are eligible for sale under Rule 144 by
      the
      Purchaser without limitation as to volume or manner of sale, or (iv) if
      such legend is not required under applicable requirements of the Securities
      Act
      (including judicial interpretations and pronouncements issued by the Staff
      of
      the Commission). The Company shall cause its counsel to issue a legal opinion
      to
      the Company’s transfer agent promptly after the effective date of a registration
      statement covering such Conversions Shares or Warrant Shares, if required by
      the
      Company’s transfer agent, to effect the removal of the legend hereunder. If all
      or any portion of the Preferred Shares or a Warrant is exercised at a time
      when
      there is an effective registration statement to cover the resale of the
      Conversion Shares or the Warrant Shares, such Conversions Shares and Warrant
      Shares, as the case may be, shall be issued free of all legends. The Company
      agrees that following the effective date of the registration statement covering
      Conversion Shares or Warrant Shares or at such time as such legend is no longer
      required under this Section 10.1, it will, no later than five (5) Trading
      Days following the delivery by the Purchaser to the Company or the Company’s
      transfer agent of a certificate representing Conversion Shares or Warrant
      Shares, as the case may be, issued with a restrictive legend (such date, the
      “Delivery Date”), deliver or cause to be delivered to the Purchaser a
      certificate representing such Securities that is free from all restrictive
      and
      other legends. The Company may not make any notation on its records or give
      instructions to any transfer agent of the Company that enlarge the restrictions
      on transfer set forth in this Section. Whenever a certificate representing
      the
      Conversion Shares or Warrant Shares is required to be issued to the Purchaser
      without a legend, in lieu of delivering physical certificates representing
      the
      Conversion Shares or Warrant Shares, provided the Company’s transfer agent is
      participating in the Depository Trust Company (“DTC”) Fast Automated Securities
      Transfer program, the Company shall use its reasonable best efforts to cause
      its
      transfer agent to electronically transmit the Conversion Shares or Warrant
      Shares to the Purchaser by crediting the account of such Purchaser’s Prime
      Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system
      (to the extent not inconsistent with any provisions of this Agreement).

     

    10.2 Liquidated
      Damages.
      The
      Company understands that a delay in the delivery of unlegended certificates
      for
      the Conversion Shares or the Warrant Shares as set forth in Section 10.1
      hereof beyond the Delivery Date could result in economic loss to the Purchaser.
      If the Company fails to deliver to a Purchaser such shares via DWAC or a
      certificate or certificates pursuant to this Section hereunder by the
      Delivery Date, the Company shall pay to the Purchaser, in cash,
      as
      partial liquidated damages and not as a penalty, for each $500 of Conversion
      Shares or Warrant Shares (based on the closing price of the Common Stock
      reported by the principal Trading Market on the date such Securities are
      submitted to the Company’s transfer agent) subject to Section 10.1, $10 per
      Trading Day (increasing to $15 per Trading Day five (5) Trading Days after
      such
      damages have begun to accrue and increasing to $20 per Trading Day ten (10)
      Trading Days after such damages have begun to accrue) for each Trading Day
      after
      the Legend Removal Date until such certificate is delivered.
      Nothing
      herein shall limit the Purchaser’s right to pursue actual damages for the
      Company’s failure to deliver certificates representing any Securities as
      required by the Transaction Documents, and the Purchaser 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.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    10.3 Sales
      by the Purchaser.
      The
      Purchaser agrees that the removal of the restrictive legend from certificates
      representing Securities as set forth in Section 10.1 is predicated upon the
      Company’s reliance that the Purchaser will sell any Securities pursuant to
      either the registration requirements of the Securities Act, including any
      applicable prospectus delivery requirements, or an exemption
      therefrom.

     

    ARTICLE
      XI INDEMNIFICATION

     

    11.1 Indemnification
      by the Company.
      The
      Company agrees to defend, indemnify and hold harmless the Purchaser and shall
      reimburse the Purchaser for, from and against each claim, loss, liability,
      cost
      and expense (including without limitation, interest, penalties, costs of
      preparation and investigation, and the actual fees, disbursements and expenses
      of attorneys, accountants and other professional advisors) (collectively,
“Losses”) directly or indirectly relating to, resulting from or arising out of
      (a) any untrue representation, misrepresentation, breach of warranty or
      non-fulfillment of any covenant, agreement or other obligation by or of the
      Company contained in any Transaction Document or
      in any
      certificate, document, or instrument delivered
      by the
      Company
      to the
      Purchaser pursuant to Section 5.4(i) hereof;
      or (b)
      any action instituted against the Purchaser or its affiliates, by any
      stockholder of the Company who is not an affiliate of the Purchaser, with
      respect to any of the transactions contemplated by the Transaction Documents
      (unless such action is based upon a breach of the Purchaser’s representations,
      warranties or covenants under the Transaction Documents or any agreements or
      understandings the Purchaser may have with any such stockholder or any
      violations by the Purchaser of state or federal securities laws or any conduct
      by the Purchaser which constitutes fraud, gross negligence, willful misconduct
      or malfeasance).

     

    11.2 Indemnification
      by the Purchaser.
      Purchaser shall defend, indemnify and hold harmless the Company and its
      subsidiaries and shall reimburse the Company and its Subsidiaries for, from
      and
      against each Loss directly or indirectly relating to, resulting from or arising
      out of any untrue representation, misrepresentation, breach of warranty or
      non-fulfillment of any covenant, agreement or other obligation by or of the
      Purchaser contained in any Transaction Document delivered to the Company or
      any
      of its subsidiaries pursuant thereto.

     

    11.3 Procedure.
      

     

    (a) The
      indemnified party shall promptly notify the indemnifying party of any claim,
      demand, action or proceeding for which indemnification will be sought under
      this
      Agreement; provided, that the failure of any party entitled to indemnification
      hereunder to give notice as provided herein shall not relieve the indemnifying
      party of its obligations under this Article XI except to the extent that the
      indemnifying party is actually prejudiced by such failure to give notice.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    (b) In
      case
      any such action, proceeding or claim is brought against an indemnified party
      in
      respect of which indemnification is sought hereunder, the indemnifying party
      shall be entitled to participate in and, unless in the reasonable, good-faith
      judgment of the indemnified party a conflict of interest between it and the
      indemnifying party exists with respect to such action, proceeding or claim
      (in
      which case the indemnifying party shall be responsible for the reasonable fees
      and expenses of one separate counsel for the indemnified party), to assume
      the
      defense thereof with counsel reasonably satisfactory to the indemnified party.
      If the indemnifying party elects to defend any such action or claim, then the
      indemnified party shall be entitled to participate in such defense (but not
      control) with counsel of its choice at its sole cost and expense (except that
      the indemnifying party shall remain responsible for the reasonable fees and
      expenses of one separate counsel for the indemnified party in the event in
      the
      reasonable, good-faith judgment of the indemnified party a conflict of interest
      between it and the indemnifying party exists).

     

    (c) In
      the
      event that the indemnifying party advises an indemnified party that it will
      contest such a claim for indemnification hereunder, or fails, within thirty
      (30)
      days of receipt of any indemnification notice to notify, in writing, such person
      of its election to defend, settle or compromise, at its sole cost and expense,
      any action, proceeding or claim (or discontinues its defense at any time after
      it commences such defense), then the indemnified party may, at its option,
      defend, settle or otherwise compromise or pay such action or claim. In any
      event, unless and until the indemnifying party elects in writing to assume
      and
      does so assume the defense of any such claim, proceeding or action, the
      indemnified party’s costs and expenses arising out of the defense, settlement or
      compromise of any such action, claim or proceeding shall be Losses subject
      to
      indemnification hereunder. 

     

    (d) The
      parties shall cooperate fully with each other in connection with any negotiation
      or defense of any such action or claim and shall furnish to the other party
      all
      information reasonably available to such party which relates to such action
      or
      claim. The each party shall keep the other party fully apprised at all times
      as
      to the status of the defense or any settlement negotiations with respect
      thereto. 

     

    (e) Notwithstanding
      anything in this Article XI to the contrary, the indemnifying party shall not,
      without the indemnified party’s prior written consent, settle or compromise any
      claim or consent to entry of any judgment in respect thereof which imposes
      any
      future obligation on the indemnified party or which does not include, as an
      unconditional term thereof, the giving by the claimant or the plaintiff to
      the
      indemnified party of a release from all liability in respect of such claim.
      The
      indemnification obligations to defend the indemnified party required by this
      Article XI shall be made by periodic payments of the amount thereof during
      the
      course of investigation or defense, as and when the Loss is incurred, so long
      as
      the indemnified party shall refund such moneys if it is ultimately determined
      by
      a court of competent jurisdiction that such party was not entitled to
      indemnification. The indemnity agreements contained herein shall be in addition
      to (i) any cause of action or similar rights of the indemnified party
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law. 

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XII

     

    MISCELLANEOUS

     

    12.1 Governing
      Law.
      This
      Agreement and the rights of the parties hereunder shall be governed in all
      respects by the laws of the State of New York wherein the terms of this
      Agreement were negotiated.

     

    12.2 Survival.
      Except
      as specifically provided herein, the representations, warranties, covenants
      and
      agreements made herein shall survive the Closing.

     

    12.3 Amendment.
      This
      Agreement may not be amended, discharged or terminated (or any provision hereof
      waived) without the written consent of the Company and the Purchaser.

     

    12.4 Successors
      and Assigns.
      Except
      as otherwise expressly provided herein, the provisions hereof shall inure to
      the
      benefit of, and be binding upon and enforceable by and against, the successors,
      assigns, heirs, executors and administrators of the parties hereto. The
      Purchaser may assign its rights hereunder, and the Company may not assign its
      rights or obligations hereunder without the consent of the Purchaser.

     

    12.5 Entire
      Agreement.
      This
      Agreement, the Transaction Documents and the other documents delivered pursuant
      hereto and simultaneously herewith constitute the full and entire understanding
      and agreement between the parties with regard to the subject matter hereof
      and
      thereof.

     

    12.6 Notices,
      etc.
      All
      notices, demands or other communications given hereunder shall be in writing
      and
      shall be sufficiently given if delivered either personally, by facsimile, or
      by
      a nationally recognized courier service marked for next business day delivery
      or
      sent in a sealed envelope by first class mail, postage prepaid and either
      registered or certified with return receipt, addressed as follows:

     

    
      
        	
                if
                  to the Company:

              	 	 
	 	 	
                MDwerks,
                  Inc.

              
	 	 	
                1020
                  NW 6th
                  Street

              
	 	 	
                Deerfield
                  Beach, FL 33442

              
	 	 	
                Telephone:
                  (954) 389-8300

              
	 	 	
                Facsimile:
                  (954) 427-5871

              
	 	 	
                Attention:
                  Howard B. Katz, CEO

              
	 	 	 
	
                with
                  a copy to:

              	 	 
	 	 	
                Stephen
                  P. Katz, Esq.

              
	 	 	
                Peckar
                  & Abramson, P.C.

              
	 	 	
                70
                  Grand Avenue

              
	 	 	
                River
                  Edge, NJ 07661

              
	 	 	
                Telephone:
                  (201) 343-3434

              
	 	 	
                Facsimile:
                  (201) 343-6306

              

      

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      
        	
                if
                  to the Purchaser:

              	 	 
	 	 	
                Vicis
                  Capital Master Fund

              
	 	 	
                Tower
                  56, Suite 700 

              
	 	 	
                126
                  E. 56th Street, 7th Floor 

              
	 	 	
                New
                  York, NY 10022

              
	 	 	
                Phone:
                  (212) 909-4600

              
	 	 	
                Fax:
                  (212) 909-4601

              
	 	 	
                Attn:
                  Shad Stastney

              
	
                with
                  a copy to:

              	 	 
	 	 	
                Andrew
                  D. Ketter, Esq.

              
	 	 	
                Quarles
                  & Brady LLP

              
	 	 	
                411
                  East Wisconsin Avenue

              
	 	 	
                Milwaukee,
                  WI 53202

              
	 	 	
                Phone:
                  (414) 277-5629

              
	 	 	
                Fax:
                  (414) 978-8972 

              

      

    

     

    Such
      communications shall be effective immediately if delivered in person or by
      confirmed facsimile, upon the date acknowledged to have been received in return
      receipt, or upon the next business day if sent by overnight courier
      service.

    

    12.7 Delays
      or Omissions.
      No
      delay or omission to exercise any right, power or remedy accruing to any holder
      of any Securities upon any breach or default of the Company under this Agreement
      shall impair any such right, power or remedy of such holder nor shall it be
      construed to be a waiver of any such breach or default, or an acquiescence,
      therein, or of or in any similar breach or default thereafter occurring; nor
      shall any waiver of any single breach or default be deemed a waiver of any
      other
      breach or default theretofore or thereafter occurring. Any waiver, permit,
      consent or approval of any kind or character on the part of any holder of any
      breach or default under this Agreement, or any waiver on the part of any holder
      of any provisions or conditions of this Agreement must be, made in writing
      and
      shall be effective only to the extent specifically set forth in such writing.
      All remedies, either under this Agreement or by law or otherwise afforded to
      any
      holder, shall be cumulative and not alternative.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    12.8 Severability.
      The
      invalidity of any provision or portion of a provision of this Agreement shall
      not affect the validity of any other provision of this Agreement or the
      remaining portion of the applicable provision. It is the desire and intent
      of
      the parties hereto that the provisions of this Agreement shall be enforced
      to
      the fullest extent permissible under the laws and public policies applied in
      each jurisdiction in which enforcement is sought. Accordingly, if any particular
      provision of this Agreement shall be adjudicated to be invalid or unenforceable,
      such provision shall be deemed amended to delete therefrom the portion thus
      adjudicated to be invalid or unenforceable, such deletion to apply only with
      respect to the operation of such provision in the particular jurisdiction in
      which such adjudication is made.

     

    12.9 Expenses.
      The
      Company shall bear its own expenses and legal fees incurred on its behalf with
      respect to the negotiation, execution and consummation of the transactions
      contemplated by this Agreement and shall pay all documentary stamp or similar
      taxes imposed by any authority upon the transactions contemplated by this
      Agreement or any Transaction Document. The Company shall pay all reasonable,
      documented third-party fees and expenses incurred by the Purchaser in connection
      with the enforcement of this Agreement or any of the other Transaction
      Documents, including, without limitation, all actual reasonable attorneys’ fees
      and expenses.

     

    12.10 Consent
      to Jurisdiction; Waiver of Jury Trial.
      EACH
      OF
      THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS
      TO
      THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED THE STATE
      AND
      COUNTY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
      RELATING TO THIS AGREEMENT AND THE TRANSACTION DOCUMENTS. EACH OF THE PARTIES
      TO
      THIS AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
      ANY
      OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
      OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS AND ANY CLAIM THAT ANY SUCH
      PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
      EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
      BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY SUCH LEGAL PROCEEDING. EACH OF THE
      PARTIES TO THIS AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS BY NOTICE IN
      THE
      MANNER SPECIFIED IN SECTION 12.6 AND IRREVOCABLY WAIVES, TO THE FULLEST
      EXTENT PERMITTED BY LAW, ANY OBJECTION SUCH PARTY MAY NOW OR HEREAFTER HAVE
      TO
      SERVICE OF PROCESS IN SUCH MANNER.

     

    12.11 Titles
      and Subtitles.
      The
      titles of the articles, sections and subsections of this Agreement are for
      convenience of reference only and are not to be considered in construing this
      Agreement.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    12.12 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

     

    [Signature
      Page Follows]

    
      
        
        

      

      
        40

        
          

        

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Securities Purchase
      Agreement, as of the day and year first above written.

     

    
      	 	 	 
	 	
              COMPANY:

            
	 	 
	 	
              MDWERKS,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Howard B. Katz
	 	
              
Name: Howard
              B. Katz
	 	Title: Chief
              Executive Officer

      	 	 	 
	 	
              PURCHASER:

            
	 	 
	 	
              VICIS
                CAPITAL MASTER FUND

            
	 	
              By:
                Vicis Capital LLC

            
	 	 
	 
 	 
 	 
 
	
            	By:  	/s/
              Keith W. Hughes
	 	
              

              Name: Keith
                W. Hughes

            
	 	
              Title: Chief
                Financial Officer

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      A

    

    FORM
      OF AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS OF 

    SERIES
      B CONVERTIBLE PREFERRED STOCK

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      B

    

    FORM
      OF SERIES F WARRANT

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      C

    

    FORM
      OF SERIES G WARRANT

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      D

     

    FORM
      OF FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      E

    

    FORM
      OF OPINION OF COUNSEL

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      F

    

    FORM
      OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

    

    MDWERKS,
      INC.

     

    as
      of
      January __, 2008

     

    [Name
      and
      address of Transfer Agent]

    Attn:
      _____________

    

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Securities Purchase Agreement (the “Purchase
      Agreement”), dated January __, 2008, by and between MDwerks, Inc., a Delaware
      corporation (the “Company”), and the purchaser named therein (the “Purchasers”)
      pursuant to which the Company is issuing to the Purchasers shares of its Series
      B Preferred Stock, par value $0.001 per share (the “Preferred Shares”),
      convertible into shares of the Company’s common stock, par value $0.001 per
      share (the “Common Stock”) and warrants (the “Warrants”) to purchase shares of
      the Company’s Common Stock. This letter shall serve as our irrevocable
      authorization and direction to you (provided that you are the transfer agent
      of
      the Company at such time) to issue shares of Common Stock upon conversion of
      the
      Preferred Shares (the “Conversion Shares”) and exercise of the Warrants (the
“Warrant Shares”) to or upon the order of a Purchaser from time to time upon
      (i) surrender to you of a properly completed and duly executed Conversion
      Notice or Exercise Notice, as the case may be, in the form attached hereto
      as
      Exhibit I and Exhibit II, respectively, (ii) in the case of the conversion
      of Preferred Shares, a copy of the certificate representing the Preferred Shares
      (with the original delivered to the Company) representing the Preferred Shares
      being converted or, in the case of Warrants being exercised, a copy of the
      Warrants (with the original Warrants delivered to the Company) being exercised
      (or, in each case, an indemnification undertaking with respect to such Preferred
      Shares or the Warrants in the case of their loss, theft or destruction), and
      (iii) delivery of a treasury order or other appropriate order duly executed
      by a duly authorized officer of the Company. So long as you have previously
      received written confirmation from counsel to the Company that a registration
      statement covering resales of the Conversion Shares or Warrant Shares, as
      applicable, has been declared effective by the Securities and Exchange
      Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933
      Act”), and you have not received any subsequent notice by the Company or its
      counsel of the suspension or termination of the effectiveness of such
      registration statement, then certificates representing the Conversion Shares
      and
      the Warrant Shares, as the case may be, shall not bear any legend restricting
      transfer of the Conversion Shares and the Warrant Shares, as the case may be,
      thereby and should not be subject to any stop-transfer restriction; provided,
      however, that if you have not previously received written confirmation from
      counsel to the Company that a registration statement covering resales of the
      Conversion Shares or Warrant Shares, as applicable, has been declared effective
      by the SEC under the 1933 Act, then the certificates for the Conversion Shares
      and the Warrant Shares shall bear the following legend:

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
      IS
      NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
      RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
      BE
      PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
      ARRANGEMENT SECURED BY THE SECURITIES.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    A
      form of
      written confirmation from counsel to the Company that a registration statement
      covering resales of the Conversion Shares and the Warrant Shares has been
      declared effective by the SEC under the 1933 Act is attached hereto as Exhibit
      III.

     

    Please
      be
      advised that the Purchasers are relying upon this letter as an inducement to
      enter into the Purchase Agreement, and, accordingly, each Purchaser is a third
      party beneficiary to these instructions.

     

    Please
      execute this letter in the space indicated to acknowledge your agreement to
      act
      in accordance with these instructions. Should you have any questions concerning
      this matter, please contact me at ___________.

     

    
      	 	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	
              MDWERKS,
                INC. 

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
               

              Name:

            	
              
 
	 	
               

              Title:

            	
              
 
	 	
              

            

    

     

    
      	
              ACKNOWLEDGED
                AND AGREED:

            	 	 	 
	 	 	 	 
	
              [TRANSFER
                AGENT]

            	 	 	 
	 	 	 	 
	 	 	 	 
	
              By:

            	 	 	
            
	
              
                

              

            	 	 	
            
	
              Name:

            	 	 	
            
	
              
                

              

              Title:

            	 	 	 
	
              
                

              

              Date:

            	 	 	 
	
              
                
 

            	 	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      I 

     

    MDWERKS,
      INC. 

     

    FORM
      OF CONVERSION NOTICE 

     

    Reference
      is made to the Certificate of Designations Designating the Series B Preferred
      Stock of MDwerks, Inc. (the “Certificate
      of Designations”).
      In
      accordance with and pursuant to the Certificate of Designations, the undersigned
      hereby elects to convert the number of shares of Series B Preferred Stock,
      par
      value $.001 per share (the “Preferred
      Shares”),
      of
      MDwerks, Inc., a Delaware corporation (the “Company”),
      indicated below into shares of Common Stock, par value $.001 per share (the
      “Common
      Stock”),
      of
      the Company, by tendering the stock certificate(s) representing the share(s)
      of
      Preferred Shares specified below as of the date specified below.

     

    Date
      to
      effect
      conversion: ______________________________________________________________     

     

     

    Number
      of
      shares of Preferred Stock owned prior to conversion:
      __________________________________   

     

     

    Number
      of
      shares of Preferred Stock to be converted:
      __________________________________________

     

     

    Stated
      Value of shares of Preferred Stock to be converted:
      ______________________________________

     

     

    Applicable
      Conversion Price:
      ____________________________________________________________

     

     

    Number
      of
      shares of Common Stock to be issued:
      _____________________________________________

     

     

    Number
      of
      shares of Preferred Stock owned subsequent to conversion:
      ____________________________

     

    
      	
              [HOLDER]

            	 	 	 
	 	 	 	 
	 	 	 	 
	
              By:

            	 	 	
            
	
              
                

              

              Name:
                

              Title:

            	 	 	
            

      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

     

    EXHIBIT
      II

     

    MDWERKS,
      INC.

     

    FORM
      OF EXERCISE NOTICE

     

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock (“Warrant
      Shares”)
      of
      MDwerks, Inc., a Delaware corporation (the “Company”),
      evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

     

    
      	 	 	 
	
              Dated:
                _________________

            	
              Signature
                

            	
            
	 	 	
              

            
	 	
              Address

            	 
	 	 	
              

            
	 	
              

            
	 	
              

            

    

    

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the date of Exercise: _________________________

     

    The
      undersigned intends that payment of the Warrant Price shall be made as (check
      one or both): 

     

    Cash
      Exercise  _______
      

     

    Cashless
      Exercise       _______

     

    In
      the
      event that the holder has elected a Cash Exercise with respect to some or all
      of
      the Warrant Shares to be issued pursuant hereto, the holder shall pay the
      Aggregate Exercise Price in the sum of $___________________ to the Company
      in
      accordance with the terms of the Warrant. 

     

    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 Closing Sale Price of the shares
      of Common Stock (as reported by Bloomberg) on the date prior to exercise, which
      product is _________________.

     

    Net
      Number =   (A
      x
      B) - (A x C)

                         
         B

    

    For
      purposes of the foregoing formula:

     

    
      	 	
              A
                =

            	
              the
                total number of shares with respect to which this Warrant is then
                being
                exercised.

            

    

    
      	 	 	 

      	 	
              B
                =

            	
              the
                Closing Sale Price of the shares of Common Stock (as reported by
                Bloomberg) on the date immediately preceding the date of the Exercise
                Notice.

            

      	 	 	 

    

    
      	 	
              C
                =

            	
              the
                Exercise Price then in effect for the applicable Warrant Shares at
                the
                time of such exercise.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the within Warrant and all rights evidenced thereby and
      does
      irrevocably constitute and appoint _____________, attorney, to transfer the
      said
      Warrant on the books of the within named corporation.

     

    
      
        	 	 	 
	
                Dated:
                  _________________

              	
                Signature
                  

              	
              
	 	 	
                

              
	 	
                Address

              	 
	 	 	
                

              
	 	
                

              
	 	
                

              

      

       

      PARTIAL
        ASSIGNMENT

    

    

    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the right to purchase _________ Warrant Shares evidenced
      by
      the within Warrant together with all rights therein, and does irrevocably
      constitute and appoint ___________________, attorney, to transfer that part
      of
      the said Warrant on the books of the within named corporation.

     

    
      
        	 	 	 
	
                Dated:
                  _________________

              	
                Signature
                  

              	
              
	 	 	
                

              
	 	
                Address

              	 
	 	 	
                

              
	 	
                

              
	 	
                

              

      

       

    

    FOR
      USE
      BY THE ISSUER ONLY:

    

    This
      Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
      ___________, _____, shares of Common Stock issued therefor in the name of
      _______________, Warrant No. W-_____ issued for ____ shares of Common Stock
      in
      the name of _______________.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    EXHIBIT
      III

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    [Name
      and
      address of Transfer Agent]

    Attn:
      _____________

    

    Re: MDwerks,
      Inc.

     

    Ladies
      and Gentlemen:

     

    We
      are
      special counsel to MDwerks, a Delaware corporation (the “Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Purchase
      Agreement”),
      dated
      as of January __, 2008, by and among the Company and the purchasers named
      therein (collectively, the “Purchasers”)
      pursuant to which the Company issued to the Purchasers secured convertible
      promissory notes (the “Notes”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $0.001 per share (the
“Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company has also entered into a
      Registration Rights Agreement with the Purchasers (the “Registration
      Rights Agreement”),
      dated
      as of January __, 2008, pursuant to which the Company agreed, among other
      things, to register the Registrable Securities (as defined in the Registration
      Rights Agreement), including the shares of Common Stock issuable upon conversion
      of the Notes and exercise of the Warrants, under the Securities Act of 1933,
      as
      amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ________________, 2007, the Company filed a Registration Statement
      on Form SB-2 (File No. 333-________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the resale of the Registrable Securities which names each of the
      present Purchasers as a selling stockholder thereunder.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the 1933 Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      accordingly, the Registrable Securities are available for resale under the
      1933
      Act pursuant to the Registration Statement.

     

    
      	 	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	
              [COMPANY
                COUNSEL]

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

            

    

     

    cc: [LIST
      NAMES OF PURCHASERS]

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    Schedule
      1.4(a)—Investment Amounts

    

    
      	
              Investor

            	 	
              Investment
                Amount

            	 
	
              Gottbetter
                Capital Master, Ltd.

            	 	
              $

            	
              5,000,000

            	 
	
              Vicis
                Capital Master Fund

            	 	
              $

            	
              3,075,000

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

     

    Schedule
      3.4(b)(i) 

    

    
      	 	
              1.

            	
              Section
                4(o)(iii) of the Securities Purchase Agreement, dated October 19,
                2006,
                between Gottbetter Capital Master, Ltd. and the Company contains
                a right
                of first refusal in favor of Gottbetter Capital Master, Ltd. with
                respect
                to issuances of securities by the
                Company.

            

    

    

    
      	 	
              2.

            	
              Section
                4(o)(iii) of the Securities Purchase Agreement, dated November 9,
                2006,
                between Gottbetter Capital Master, Ltd. and the Company contains
                a right
                of first refusal in favor of Gottbetter Capital Master, Ltd. with
                respect
                to issuances of securities by the
                Company.

            

    

    

    
      	 	
              3.

            	
              Securities
                Purchase Agreement by and between MDwerks, Inc. and Vicis Capital
                Master
                Fund dated September 28, 2007.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

     

    Schedule
      3.4(b)(ii) 

    

    See
      attached

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        MDwerks,
          Inc.

      

      
        Fully
          Diluted Capital Table

        
          As
            of 1/15/08

        

      

       

      
        
          	 	 	 	 	 	 	 	 	
                  Issued
                    &

                	 
	 	 	 	 	
                  Issued
                    &

                	 	 	 	
                  Issuable
                    

                	 
	 	 	 	 	
                  Issuable

                	 	 	 	
                  w/
                    Reserve 

                	 
	
                  Common
                    Stock Issued

                	 	 	 	 	 	
                  12,940,065

                	 	 	 	 	 	
                  12,940,065
                    

                	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Other
                    Issued and Issuable:

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Preferred
                    Series A Issued (Common Stock Equivalent)

                	 	 	
                  40,000

                	 	 	 	 	 	
                  40,000
                    

                	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  9/28/07
                    Preferred Series B Issued (Common Stock Equivalent)*

                	 	 	
                  888,889

                	 	 	 	 	 	
                  1,111,111
                    

                	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  12/28/07
                    Preferred Series B (Common Stock Equivalent)*

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Warrants
                    Granted**(Pages 2-3)

                	 	 	
                  5,566,345

                	 	 	 	 	 	
                  6,503,845
                    

                	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Options
                    Granted (Pages 4-5)

                	 	 	
                  3,514,250

                	 	 	 	 	 	
                  3,514,250
                    

                	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Debt
                    Conversion (Common Stock Equivalent)**

                	 	 	
                  2,222,222

                	 	 	 	 	 	
                  3,888,889
                    

                	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Total
                    Other Issued and Issuable

                	 	 	 	 	 	
                  12,231,706

                	 	 	 	 	 	
                  15,058,095

                	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Total
                    Issued and Issuable

                	 	 	 	 	 	
                  25,171,771

                	 	 	 	 	 	
                  27,998,160

                	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  *
                    Preferred Series B Shares reserved at 125% (included
                    above)

                	 
	
                  9/28/07
                    Preferred Series B 

                	 	 	
                  888,889

                	 	 	 	 	 	
                  1,111,111
                    

                	 	 	 	 
	
                  1/18/08
                    Preferred Series B

                	 	 	 	 	 	 	 	 	
                  -
                    

                	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  **
                    Warrants and Debt Conversion reserved at 175% (included
                    above)

                	 
	
                  Warrants
                    Issued with Note

                	 	 	
                  750,000

                	 	 	 	 	 	
                  1,312,500
                    

                	 	 	 	 
	
                  Warrants
                    Issued for 9/27/07 Note Deferral

                	 	 	
                  500,000

                	 	 	 	 	 	
                  875,000
                    

                	 	 	 	 
	
                  Warrants
                    Issued for 1/18/08 Note Deferral

                	 	 	
                  0

                	 	 	 	 	 	
                  -
                    

                	 	 	 	 
	
                  Debt
                    Conversions

                	 	 	
                  2,222,222

                	 	 	 	 	 	
                  3,888,889
                    

                	 	 	 	 

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        MDwerks,
          Inc.

      

      
        Warrants

        
          As
            of 1/15/08

           

        

      

      
        
          	 	 	 	 	 	 	 	 	
                  Warrant

                	 	 
	 	 	
                  Warrant
                    Grant

                	 	
                  Shares

                	 	
                  Expiration

                	 	 
	 	 	
                  Date

                	 	
                  Value

                	 	
                  Granted

                	 	
                  Date

                	 	 
	
                  MDwerks,
                    Inc.

                	 	 	 	 	 	 	 	 	 	 
	
                  Thomas
                    Stephens

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  5,000

                	 	 	
                  11/16/08

                	 	 
	
                  Roger
                    Hermes

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Ronald
                    Hankins

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  8,800

                	 	 	
                  11/16/08

                	 	 
	
                  Rosemarie
                    Manchio

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Alphonse
                    Tribuiani

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Carlos
                    A. Jimenez

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Carlos
                    A. Jimenez/Jason Beccaris

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Constantine
                    G. Barbounis

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  20,000

                	 	 	
                  11/16/08

                	 	 
	
                  Daniel
                    O'Sullivan

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  40,000

                	 	 	
                  11/16/08

                	 	 
	
                  Daniel
                    R. Brown

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Domenico
                    Iannucci

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  100,000

                	 	 	
                  11/16/08

                	 	 
	
                  Donna
                    Hachem Rev. Trust

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  20,000

                	 	 	
                  11/16/08

                	 	 
	
                  Dr.
                    Irving Karten

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Eric
                    W. Penttinen

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Jamie
                    Toddings

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Jason
                    Clarke/Tanya Clark

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Jonathan
                    Rotella

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  JTP
                    Holdings, LLC

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  Philip
                    J. Hempleman

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  40,000

                	 	 	
                  11/16/08

                	 	 
	
                  Robert
                    E. Zimmerman

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  30,000

                	 	 	
                  11/16/08

                	 	 
	
                  Roger
                    Walker

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  10,000

                	 	 	
                  11/16/08

                	 	 
	
                  SCG
                    Capital LLC

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  120,000

                	 	 	
                  11/16/08

                	 	 
	
                  Todd
                    Weisberg

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  20,000

                	 	 	
                  11/16/08

                	 	 
	
                  Jon
                    Zimmerman

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  20,000

                	 	 	
                  11/16/08

                	 	 
	
                  Todd
                    Snyder

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  20,000

                	 	 	
                  11/16/08

                	 	 
	
                  RAJ
                    Inv

                	 	 	
                  3/22/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  3/22/09

                	 	 
	
                  Daniel
                    Sullivan

                	 	 	
                  3/22/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  40,000

                	 	 	
                  3/22/09

                	 	 
	
                  Kevin
                    Walker

                	 	 	
                  3/22/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  3/22/09

                	 	 
	
                  Rick
                    Bennett

                	 	 	
                  3/22/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  3/22/09

                	 	 
	
                  Brookshire
                    Placement fee

                	 	 	
                  6/28/06

                	 	
                  $

                	
                  1.50

                	 	 	
                  10,000

                	 	 	
                  6/27/11

                	 	 
	
                  Frank
                    Cappo

                	 	 	
                  4/20/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  40,000

                	 	 	
                  4/20/09

                	 	 
	
                  Rion
                    Needs

                	 	 	
                  4/20/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  4/20/09

                	 	 
	
                  Joseph
                    Levine

                	 	 	
                  5/4/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  5/4/09

                	 	 
	
                  Tim
                    Johnson

                	 	 	
                  5/4/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  5/4/09

                	 	 
	
                  Joe
                    Sparieino

                	 	 	
                  5/4/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  5/4/09

                	 	 
	
                  Gerald
                    Hueper

                	 	 	
                  5/12/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  16,666

                	 	 	
                  5/12/09

                	 	 
	
                  Terence
                    Smith

                	 	 	
                  5/12/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  5/12/09

                	 	 
	
                  Kevin
                    & Brenda Narcomey

                	 	 	
                  5/12/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  8,333

                	 	 	
                  5/12/09

                	 	 
	
                  PHD
                    Investements

                	 	 	
                  5/15/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  50,000

                	 	 	
                  5/15/09

                	 	 
	
                  Louise
                    Rehling

                	 	 	
                  5/15/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  8,334

                	 	 	
                  5/15/09

                	 	 
	
                  Scott
                    Mcnair

                	 	 	
                  5/18/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  16,667

                	 	 	
                  5/18/09

                	 	 
	
                  Daniel
                    Craig Sager

                	 	 	
                  5/18/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  8,334

                	 	 	
                  5/18/09

                	 	 
	
                  Joseph
                    Lewin

                	 	 	
                  5/18/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  5/18/09

                	 	 
	
                  GH
                    Medical PSP

                	 	 	
                  5/22/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  25,000

                	 	 	
                  5/22/09

                	 	 

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          
            MDwerks,
              Inc.

          

          
            Warrants

            
              As
                of 1/15/08

               

            

          

        

        
          	 	 	 	 	 	 	 	 	 	 	 	 	
                  Warrant

                	 	 
	 	 	 	
                  Warrant
                    Grant

                	 	 	
                  Shares

                	 	 	
                  Expiration

                	 	 
	 	 	 	
                  Date

                	 	 	
                  Value

                	 	 	
                  Granted

                	 	 	
                  Date

                	 	 
	
                  MDwerks,
                    Inc.

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Joe
                    & Carolyn Hubbard

                	 	 	
                  5/22/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  5/22/09

                	 	 
	
                  John
                    Harrison

                	 	 	
                  5/22/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  10,000

                	 	 	
                  5/22/09

                	 	 
	
                  Melvin
                    Sanders

                	 	 	
                  6/6/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  6/6/09

                	 	 
	
                  Randy
                    Bean Revocable

                	 	 	
                  6/6/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  10,000

                	 	 	
                  6/6/09

                	 	 
	
                  Edward
                    White/Brenda Fortunate

                	 	 	
                  6/6/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  10,000

                	 	 	
                  6/6/09

                	 	 
	
                  Kevin
                    & Brenda Narcomey

                	 	 	
                  6/6/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  8,333

                	 	 	
                  6/6/09

                	 	 
	
                  James
                    Lees

                	 	 	
                  6/6/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  25,000

                	 	 	
                  6/6/09

                	 	 
	
                  Michael
                    Anderson

                	 	 	
                  6/6/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  20,000

                	 	 	
                  6/6/09

                	 	 
	
                  Sharon
                    Sootin

                	 	 	
                  6/29/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  30,000

                	 	 	
                  6/29/09

                	 	 
	
                  John
                    Harrison

                	 	 	
                  6/29/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  10,000

                	 	 	
                  6/29/09

                	 	 
	
                  Edward
                    White/Brenda Fortunate

                	 	 	
                  6/29/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  10,000

                	 	 	
                  6/29/09

                	 	 
	
                  Arrowhead
                    Consultants, Inc

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  59,800

                	 	 	
                  11/16/08

                	 	 
	
                  Brookshire
                    Securities Corp.

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  1.25

                	 	 	
                  64,000

                	 	 	
                  11/16/10

                	 	 
	
                  Brookshire
                    Securities Corp.

                	 	 	
                  11/16/05

                	 	
                  $

                	
                  2.50

                	 	 	
                  6,800

                	 	 	
                  11/16/08

                	 	 
	
                  Brookshire
                    Placement fee

                	 	 	
                  6/28/06

                	 	
                  $

                	
                  1.50

                	 	 	
                  46,667

                	 	 	
                  6/27/11

                	 	 
	
                  Noteholders

                	 	 	
                  7/5/06

                	 	
                  $

                	
                  1.25

                	 	 	
                  90,000

                	 	 	
                  7/4/10

                	 	 
	
                  David
                    Goldner

                	 	 	
                  8/24/06

                	 	
                  $

                	
                  2.25

                	 	 	
                  111,111

                	 	 	
                  8/24/09

                	 	 
	
                  Todd
                    Adler

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  1.25

                	 	 	
                  30,000

                	 	 	
                  10/18/09

                	 	 
	
                  John
                    Garrell

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  1.25

                	 	 	
                  15,000

                	 	 	
                  10/18/09

                	 	 
	
                  Gottbetter
                    Series D Warrants

                	 	 	
                  10/19/06

                	 	
                  $

                	
                  2.25

                	 	 	
                  187,500

                	 	 	
                  10/19/11

                	
                  *

                	 
	
                  Gottbetter
                    Series E Warrants

                	 	 	
                  10/19/06

                	 	
                  $

                	
                  2.25

                	 	 	
                  187,500

                	 	 	
                  10/19/11

                	
                  *

                	 
	
                  Gottbetter
                    Series D Warrants

                	 	 	
                  11/9/06

                	 	
                  $

                	
                  2.25

                	 	 	
                  187,500

                	 	 	
                  11/9/11

                	
                  *

                	 
	
                  Gottbetter
                    Series E Warrants

                	 	 	
                  11/9/06

                	 	
                  $

                	
                  2.25

                	 	 	
                  187,500

                	 	 	
                  11/9/11

                	
                  *

                	 
	
                  Husni
                    Charara

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  3.76

                	 	 	
                  175,000

                	 	 	
                  10/18/09

                	 	 
	
                  Alphonse
                    Tribuiani

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  3.76

                	 	 	
                  10,000

                	 	 	
                  10/18/09

                	 	 
	
                  Angela
                    Rosania

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  3.76

                	 	 	
                  15,000

                	 	 	
                  10/18/09

                	 	 
	
                  Roger
                    Lallemond

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  3.76

                	 	 	
                  25,000

                	 	 	
                  10/18/09

                	 	 
	
                  Joseph
                    Carino

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  4.00

                	 	 	
                  2,500

                	 	 	
                  10/18/09

                	 	 
	
                  Troy
                    Goldberg

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  4.00

                	 	 	
                  2,500

                	 	 	
                  10/18/09

                	 	 
	
                  Sierra
                    Equity Group

                	 	 	
                  10/18/06

                	 	
                  $

                	
                  3.00

                	 	 	
                  12,500

                	 	 	
                  10/18/09

                	 	 
	
                  Gottbetter
                    Series D Warrants

                	 	 	
                  9/27/07

                	 	
                  $

                	
                  2.25

                	 	 	
                  500,000

                	 	 	
                  9/27/12

                	
                  *

                	 
	
                  Vicis
                    Series F Warrants

                	 	 	
                  9/28/07

                	 	
                  $

                	
                  2.25

                	 	 	
                  1,500,000

                	 	 	
                  9/28/14

                	 	 
	
                  Vicis
                    Series G Warrants

                	 	 	
                  9/28/07

                	 	
                  $

                	
                  2.50

                	 	 	
                  1,000,000

                	 	 	
                  9/28/14

                	 	 
	
                  Vicis
                    Series F Warrants

                	 	 	
                  1/18/08

                	 	
                  $

                	
                  2.25

                	 	 	
                  0

                	 	 	
                  1/18/15

                	 	 
	
                  Vicis
                    Series G Warrants

                	 	 	
                  1/18/08

                	 	
                  $

                	
                  2.50

                	 	 	
                  0

                	 	 	
                  1/18/15

                	 	 
	
                  Total
                    Warrants

                	 	 	 	 	 	 	 	 	
                  5,566,345

                	 	 	 	 	 

        

         

      

      *
        To be
        reserved at 175%

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
           

          MDwerks,
            Inc.

        

        
          2005
            Incentive Compensation Plan Report - Options

          As
            of 1/15/08

           

          
            	 	 	 	 	 	 	
                    Shares
                      Granted

                  	 	
                  	 	 	 	 	 
	 	 	
                  	 	 	 	
                    Incentive

                  	 	
                    Non-Qual

                  	 	 	 	
                  	 	 	 	 	 
	 	 	
                    
                      Option
                        Grant

                    

                  	 	
                    Stock

                  	 	
                    Stock

                  	 	 	 	
                    
                      
                        
                          Exercise
                            Date and %

                        

                      

                    

                  	 
	 	 	
                    Date

                  	 	
                    Value

                  	 	
                    Option

                  	 	
                    Option

                  	 	
                    Total

                  	 	
                    33.3%

                  	 	
                    33.3%

                  	 	
                    33.4%

                  	 
	
                    MDwerks,
                      Inc.

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Howard
                      Katz

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Howard
                      Katz

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    H&D
                      Katz as TEN ENT

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    0

                  	 	 	
                    400,000

                  	 	 	
                    400,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    Howard
                      Katz

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    3,750

                  	 	 	
                    0

                  	 	 	
                    3,750

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    H&D
                      Katz TEN ENT

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    0

                  	 	 	
                    246,250

                  	 	 	
                    246,250

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    H&D
                      Katz TEN ENT

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    500,000

                  	 	 	
                    500,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    H&D
                      Katz TEN ENT

                  	 	 	
                    12/27/06

                  	 	
                    $

                  	
                    1.39

                  	 	 	
                    0

                  	 	 	
                    50,000

                  	 	 	
                    50,000

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/06

                  	 
	
                    H&D
                      Katz TEN ENT

                  	 	 	
                    12/31/07

                  	 	
                    $

                  	
                    0.38

                  	 	 	
                    263,000

                  	 	 	
                    0

                  	 	 	
                    263,000

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 
	
                    Solon
                      Kandel

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Solon
                      Kandel

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    S&V
                      Kandel TEN ENT

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    0

                  	 	 	
                    275,000

                  	 	 	
                    275,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    Solon
                      Kandel

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    3,750

                  	 	 	
                    0

                  	 	 	
                    3,750

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    S&V
                      Kandel TEN ENT

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    0

                  	 	 	
                    71,250

                  	 	 	
                    71,250

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    S&V
                      Kandel TEN ENT

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    100,000

                  	 	 	
                    100,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    Vincent
                      Colangelo

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Vincent
                      Colangelo

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    V&M
                      Colangelo TEN ENT

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    0

                  	 	 	
                    100,000

                  	 	 	
                    100,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    Vincent
                      Colangelo

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    3,750

                  	 	 	
                    0

                  	 	 	
                    3,750

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    V&M
                      Colangelo TEN ENT

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    0

                  	 	 	
                    71,250

                  	 	 	
                    71,250

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    V&M
                      Colangelo TEN ENT

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    75,000

                  	 	 	
                    75,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    V&M
                      Colangelo TEN ENT

                  	 	 	
                    12/27/06

                  	 	
                    $

                  	
                    1.39

                  	 	 	
                    0

                  	 	 	
                    15,000

                  	 	 	
                    15,000

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/06

                  	 
	
                    Gerald
                      Maresca

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Gerald
                      Maresca

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    5,000

                  	 	 	
                    0

                  	 	 	
                    5,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    Gerald
                      Maresca

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    20,750

                  	 	 	
                    0

                  	 	 	
                    20,750

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Gerald
                      Maresca

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    0

                  	 	 	
                    4,250

                  	 	 	
                    4,250

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Gerald
                      Maresca

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    25,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    Stephen
                      Weiss

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Stephen
                      Weiss

                  	 	 	
                    1/3/06

                  	 	
                    $

                  	
                    3.40

                  	 	 	
                    5,000

                  	 	 	
                    0

                  	 	 	
                    5,000

                  	 	 	
                    1/3/07

                  	 	 	
                    1/3/08

                  	 	 	
                    1/3/09

                  	 
	
                    Stephen
                      Weiss

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    20,750

                  	 	 	
                    0

                  	 	 	
                    20,750

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Stephen
                      Weiss

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    0

                  	 	 	
                    4,250

                  	 	 	
                    4,250

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Stephen
                      Weiss

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    25,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    Stephen
                      Weiss

                  	 	 	
                    12/27/06

                  	 	
                    $

                  	
                    1.39

                  	 	 	
                    0

                  	 	 	
                    15,000

                  	 	 	
                    15,000

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/07

                  	 	 	
                    12/27/08

                  	 
	
                    Total

                  	 	 	 	 	 	 	 	 	
                    525,750

                  	 	 	
                    1,977,250

                  	 	 	
                    2,503,000

                  	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Xeni
                      Medical Systems, Inc.

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Adam
                      Friedman

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Adam
                      Friedman

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    0

                  	 	 	
                    15,000

                  	 	 	
                    15,000

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Adam
                      Friedman

                  	 	 	
                    12/27/06

                  	 	
                    $

                  	
                    1.39

                  	 	 	
                    0

                  	 	 	
                    5,000

                  	 	 	
                    5,000

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/07

                  	 	 	
                    12/27/08

                  	 
	
                    Lila
                      Sobel

                  	 	 	
                    12/27/06

                  	 	
                    $

                  	
                    1.39

                  	 	 	
                    30,000

                  	 	 	
                    0

                  	 	 	
                    30,000

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/07

                  	 	 	
                    12/27/08

                  	 
	
                    Lila
                      Sobel (resigned)

                  	 	 	
                    5/24/07

                  	 	 	 	 	 	
                    -20,000

                  	 	 	
                    0

                  	 	 	
                    -20,000

                  	 	 	 	 	 	 	 	 	 	 
	
                    Phil
                      Margetts

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    20,000

                  	 	 	
                    0

                  	 	 	
                    20,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Phil
                      Margetts

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    12,500

                  	 	 	
                    0

                  	 	 	
                    12,500

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Phil
                      Margetts

                  	 	 	
                    12/27/06

                  	 	
                    $

                  	
                    1.39

                  	 	 	
                    10,000

                  	 	 	
                    0

                  	 	 	
                    10,000

                  	 	 	
                    12/27/06

                  	 	 	
                    12/27/07

                  	 	 	
                    12/27/08

                  	 
	
                    Lyuda
                      Koukos

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    20,000

                  	 	 	
                    0

                  	 	 	
                    20,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Lyuda
                      Koukos

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    12,500

                  	 	 	
                    0

                  	 	 	
                    12,500

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Sue
                      Barton

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    15,000

                  	 	 	
                    0

                  	 	 	
                    15,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Sue
                      Barton

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    6,250

                  	 	 	
                    0

                  	 	 	
                    6,250

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Betty
                      Faulk

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    10,000

                  	 	 	
                    0

                  	 	 	
                    10,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Betty
                      Faulk

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    5,000

                  	 	 	
                    0

                  	 	 	
                    5,000

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Total

                  	 	 	 	 	 	 	 	 	
                    146,250

                  	 	 	
                    20,000

                  	 	 	
                    166,250

                  	 	 	 	 	 	 	 	 	 	 

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
            MDwerks,
              Inc.

            
              2005
                Incentive Compensation Plan Report - Options

              As
                of 1/15/08

            

          

           

          
            	 	 	 	 	 	 	 	 	 	
                    Shares
                      Granted

                  	 	 	 	 	 	 	 	 	 	 
	 	 	 	
                  	 	 	 	 	 	
                    Incentive 

                  	 	 	
                    Non-Qual 

                  	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	
                    
                      Option
                        Grant

                    

                  	 	 	
                    Stock 

                  	 	 	
                    Stock 

                  	 	 	 	 	 	
                    Exercise
                      Date and % 

                  	 
	 	 	 	
                    Date

                  	 	 	
                    Value

                  	 	 	
                    Option 

                  	 	 	
                    Option 

                  	 	 	
                    Total

                  	 	 	
                    33.3%

                  	 	 	
                    33.3%

                  	 	 	
                    33.4%

                  	 
	
                    Xeni
                      Medical Billing, Corp.

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Larry
                      Robinson

                  	 	 	
                    12/29/05

                  	 	
                    $

                  	
                    3.25

                  	 	 	
                    10,000

                  	 	 	
                    0

                  	 	 	
                    10,000

                  	 	 	
                    12/29/06

                  	 	 	
                    12/29/07

                  	 	 	
                    12/29/08

                  	 
	
                    Larry
                      Robinson

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    5,000

                  	 	 	
                    0

                  	 	 	
                    5,000

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Larry
                      Robinson (resigned)

                  	 	 	
                    8/25/06

                  	 	 	 	 	 	
                    -15,000

                  	 	 	
                    0

                  	 	 	
                    -15,000

                  	 	 	 	 	 	 	 	 	 	 
	
                    Total

                  	 	 	 	 	 	 	 	 	
                    0

                  	 	 	
                    0

                  	 	 	
                    0

                  	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Directors,
                      Vendors and Other

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Stephen
                      Katz

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    44,000

                  	 	 	
                    0

                  	 	 	
                    44,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    Stephen
                      Katz

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    131,000

                  	 	 	
                    131,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    David
                      Barnes

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    44,000

                  	 	 	
                    0

                  	 	 	
                    44,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    David
                      Barnes

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    31,000

                  	 	 	
                    31,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    David
                      Barnes

                  	 	 	
                    12/31/07

                  	 	
                    $

                  	
                    0.38

                  	 	 	
                    150,000

                  	 	 	
                    0

                  	 	 	
                    150,000

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 
	
                    Peter
                      Dunne

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    25,000

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Peter
                      Dunne

                  	 	 	
                    6/19/06

                  	 	
                    $

                  	
                    4.00

                  	 	 	
                    0

                  	 	 	
                    50,000

                  	 	 	
                    50,000

                  	 	 	
                    6/19/07

                  	 	 	
                    6/19/08

                  	 	 	
                    6/19/09

                  	 
	
                    Peter
                      Dunne

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    25,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    Peter
                      Dunne

                  	 	 	
                    12/31/07

                  	 	
                    $

                  	
                    0.38

                  	 	 	
                    35,000

                  	 	 	
                    0

                  	 	 	
                    35,000

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 
	
                    Paul
                      Kushner

                  	 	 	
                    6/22/06

                  	 	
                    $

                  	
                    4.25

                  	 	 	
                    23,500

                  	 	 	
                    0

                  	 	 	
                    23,500

                  	 	 	
                    6/22/07

                  	 	 	
                    6/22/08

                  	 	 	
                    6/22/09

                  	 
	
                    Paul
                      Kushner

                  	 	 	
                    6/22/06

                  	 	
                    $

                  	
                    4.25

                  	 	 	
                    0

                  	 	 	
                    51,500

                  	 	 	
                    51,500

                  	 	 	
                    6/22/07

                  	 	 	
                    6/22/08

                  	 	 	
                    6/22/09

                  	 
	
                    Paul
                      Kushner

                  	 	 	
                    10/11/06

                  	 	
                    $

                  	
                    2.25

                  	 	 	
                    0

                  	 	 	
                    25,000

                  	 	 	
                    25,000

                  	 	 	
                    10/11/06

                  	 	 	
                    10/11/07

                  	 	 	
                    10/11/08

                  	 
	
                    Paul
                      Kushner

                  	 	 	
                    12/31/07

                  	 	
                    $

                  	
                    0.38

                  	 	 	
                    35,000

                  	 	 	
                    0

                  	 	 	
                    35,000

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 	 	
                    12/31/07

                  	 
	
                    Bennu
                      Advisors

                  	 	 	
                    9/27/07

                  	 	
                    $

                  	
                    0.67

                  	 	 	
                    100,000

                  	 	 	
                    0

                  	 	 	
                    100,000

                  	 	 	
                    9/27/07

                  	 	 	
                    9/27/08

                  	 	 	
                    9/27/09

                  	 
	
                    David
                      Goldner

                  	 	 	
                    9/27/07

                  	 	
                    $

                  	
                    0.67

                  	 	 	
                    0

                  	 	 	
                    75,000

                  	 	 	
                    75,000

                  	 	 	
                    9/27/08

                  	 	 	
                    9/27/09

                  	 	 	
                    9/27/10

                  	 
	
                    Total

                  	 	 	 	 	 	 	 	 	
                    456,500

                  	 	 	
                    388,500

                  	 	 	
                    845,000

                  	 	 	 	 	 	 	 	 	 	 
	
                    Total
                      Options

                  	 	 	 	 	 	 	 	 	
                    1,128,500

                  	 	 	
                    2,385,750

                  	 	 	
                    3,514,250

                  	 	 	 	 	 	 	 	 	 	 

          

           

          
            Expiration
              Schedule

             

            
              All
                options expire on the tenth anniversary of the Option Grant
                Date

            

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

        

      

    

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

     

    Schedule
      3.4(b)(iii) 

    

    
      	 	
              1.

            	
              Senior
                Secured Convertible Note, dated October 19, 2006, in the original
                principal amount of $2,500,000, issued by the Company to Gottbetter
                Capital Master, Ltd.

            

    

    

    
      	 	
              2.

            	
              Senior
                Secured Convertible Note, dated November 9, 2006, in the original
                principal amount of $2,500,000, issued by the Company to Gottbetter
                Capital Master, Ltd.

            

    

    

    
      	 	
              3.

            	
              Securities
                Purchase Agreement by and between MDwerks, Inc. and Vicis Capital
                Master
                Fund dated September 28, 2007

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

     

    Schedule
      3.4(b)(iv) 

    

    See
      attached

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

     
        
        

        
          

        

      

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

    

    Schedule
      3.4(b)(v) 

    

    
      	 	
              1.

            	
              Registration
                rights contained in Registration Rights Agreement, dated October
                19, 2006,
                between Gottbetter Capital Master, Ltd. and the
                Company.

            

    

    

    
      	 	
              2.

            	
              Registration
                rights contained in Registration Rights Agreement, dated November
                9, 2006,
                between Gottbetter Capital Master, Ltd. and the
                Company.

            

    

    

    
      	 	
              3.

            	
              Registration
                rights granted to purchasers of the Company’s Series A Preferred Stock,
                Common Stock and detachable warrants contained in the Subscription
                Agreements for the private placement of such
                securities.

            

    

    

    
      	 	
              4.

            	
              Registration
                rights contained in Registration Rights Agreement, dated September
                28,
                2007, between Vicis Capital Master Fund and the Company.
                

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

    

    Schedule
      3.4(b)(vi) 

    

    
      	 	
              1.

            	
              Senior
                Secured Convertible Note, dated October 19, 2006, in the original
                principal amount of $2,500,000, issued by the company to Gottbetter
                Capital Master, Ltd.

            

    

    

    
      	 	
              2.

            	
              Senior
                Secured Convertible Note, dated November 9, 2006, in the original
                principal amount of $2,500,000, issued by the company to Gottbetter
                Capital Master, Ltd.

            

    

    

    
      	 	
              3.

            	
              Series
                D Warrants to initially purchase 187,500 shares of Common Stock at
                a price
                of $2.25 per share, issued by the Company to Gottbetter Capital Master,
                Ltd. on October 19, 2006

            

    

    

    
      	 	
              4.

            	
              Series
                E Warrants to initially purchase 187,500 shares of Common Stock at
                a price
                of $3.25 per share reduced to $2.25 per share on September 28, 2007,
                issued by the Company to Gottbetter Capital Master, Ltd. on November
                9,
                2006

            

    

    

    
      	 	
              5.

            	
              Series
                F Warrants to initially purchase 1,500,000 shares of Common Stock
                at a
                price of $2.25 per share, issued by the Company to Vicis Capital
                Master
                Fund, on September 28, 2007

            

    

    

    
      	 	
              6.

            	
              Series
                G Warrants to initially purchase 1,000,000 shares of Common Stock
                at a
                price of $2.50 per share, issued by the Company to Vicis Capital
                Master
                Fund, on September 28, 2007

            

    

    

    
      	 	
              7.

            	
              Series
                D Warrants to purchase 500,000 shares of Common Stock at a price
                of $2.25
                per share, issued by the Company to Gottbetter Capital Master, Ltd.
                on
                September 28, 2007. 

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

     

    Schedule
      3.4 (b) (vii)

     

    
      	 	
              1.

            	
              Series
                D Warrants to initially purchase 187,500 shares of Common Stock at
                a price
                of $2.25 per share, issued by the Company to Gottbetter Capital Master,
                Ltd. on October 19, 2006

            

    

    

    
      	 	
              2.

            	
              Series
                E Warrants to initially purchase 187,500 shares of Common Stock at
                a price
                of $3.25 per share, reduced to $2.25 per share on September 28, 2007,
                issued by the Company to Gottbetter Capital Master, Ltd. on November
                9,
                2006

            

    

    

    
      	 	
              3.

            	
              Series
                F Warrants to initially purchase 1,500,000 shares of Common Stock
                at a
                price of $2.25 per share, issued by the Company to Vicis Capital
                Master
                Fund, on September 28, 2007

            

    

    

    
      	 	
              4.

            	
              Series
                G Warrants to initially purchase 1,000,000 shares of Common Stock
                at a
                price of $2.50 per share, issued by the Company to Vicis Capital
                Master
                Fund, on September 28, 2007

            

    

    

    
      	 	
              5.

            	
              Series
                D Warrants to purchase 500,000 shares of Common Stock at a price
                of $2.25
                per share, issued by the Company to Gottbetter Capital Master, Ltd.
                on
                September 28, 2007. 

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

    

    Schedule
      3.4(b)(viii) 

    

    See
      attached

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

       

        
          

        

      

      
         

        MDWERKS,
          INC.

         

        2005
          INCENTIVE COMPENSATION PLAN

        
           

          
            

          

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        MDWERKS,
          INC.

         

        2005
          INCENTIVE COMPENSATION PLAN

         

        1. Purpose.
          The
          purpose of this MDWERKS, INC. 2005 INCENTIVE
          COMPENSATION PLAN (the “Plan”) is to assist MDwerks, Inc., a Delaware
          corporation (the “Company”) and its Related Entities (as hereinafter defined) in
          attracting, motivating, retaining and rewarding high-quality executives
          and
          other employees, officers, directors, consultants and other persons who
          provide
          services to the Company or its Related Entities by enabling such persons
          to
          acquire or increase a proprietary interest in the Company in order to strengthen
          the mutuality of interests between such persons and the Company's shareholders,
          and providing such persons with performance incentives to expend their
          maximum
          efforts in the creation of shareholder value.

         

        2. Definitions.
          For
          purposes of the Plan, the following terms shall be defined as set forth
          below,
          in addition to such terms defined in Section 1 hereof.

         

        (a) “Award”
means
          any Option, Stock Appreciation Right, Restricted Stock Award, Deferred
          Stock
          Award, Share granted as a bonus or in lieu of another award, Dividend
          Equivalent, Other Stock-Based Award or Performance Award, together with
          any
          other right or interest, granted to a Participant under the Plan.

         

        (b) “Award
          Agreement”
means
          any written agreement, contract or other instrument or document evidencing
          any
          Award granted by the Committee hereunder.

         

        (c) “Beneficiary”
means
          the person, persons, trust or trusts that have been designated by a Participant
          in his or her most recent written beneficiary designation filed with the
          Committee to receive the benefits specified under the Plan upon such
          Participant's death or to which Awards or other rights are transferred
          if and to
          the extent permitted under Section 10(b) hereof. If, upon a Participant's
          death,
          there is no designated Beneficiary or surviving designated Beneficiary,
          then the
          term Beneficiary means the person, persons, trust or trusts entitled by
          will or
          the laws of descent and distribution to receive such benefits.

         

        (d) “Beneficial
          Owner”
shall
          have the meaning ascribed to such term in Rule 13d-3 under the Exchange
          Act and
          any successor to such Rule.

         

        (e) “Board”
means
          the Company's Board of Directors.

         

        (f) “Cause”
shall,
          with respect to any Participant have the meaning specified in the Award
          Agreement. In the absence of any definition in the Award Agreement, “Cause”
shall have the equivalent meaning or the same meaning as “cause” or “for cause”
set forth in any employment, consulting, or other agreement for the performance
          of services between the Participant and the Company or a Related Entity
          or, in
          the absence of any such agreement or any such definition in such agreement,
          such
          term shall mean (i) the failure by the Participant to perform, in a reasonable
          manner, his or her duties as assigned by the Company or a Related Entity,
          (ii)
          any violation or breach by the Participant of his or her employment, consulting
          or other similar agreement with the Company or a Related Entity, if any,
          (iii)
          any violation or breach by the Participant of any non-competition,
          non-solicitation, non-disclosure and/or other similar agreement with the
          Company
          or a Related Entity, (iv) any act by the Participant of dishonesty or bad
          faith
          with respect to the Company or a Related Entity, (v) use of alcohol, drugs
          or
          other similar substances in a manner that adversely affects the Participant’s
          work performance, or (vi) the commission by the Participant of any act,
          misdemeanor, or crime reflecting unfavorably upon the Participant or the
          Company
          or any Related Entity. The good faith determination by the Committee of
          whether
          the Participant’s Continuous Service was terminated by the Company for “Cause”
shall be final and binding for all purposes hereunder.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (g) “Change
          in Control”
means
          a
          Change in Control as defined with related terms in Section 9(b) of the
          Plan.

         

        (h) “Code”
means
          the Internal Revenue Code of 1986, as amended from time to time, including
          regulations thereunder and successor provisions and regulations thereto.
          

         

        (i) “Committee”
means
          a
          committee designated by the Board to administer the Plan; provided, however,
          that if the Board fails to designate a committee or if there are no longer
          any
          members on the committee so designated by the Board, then the Board shall
          serve
          as the Committee. The Committee shall consist of at least two directors,
          and
          each member of the Committee shall be (i) a “non-employee director” within
          the meaning of Rule 16b-3 (or any successor rule) under the Exchange Act,
          unless
          administration of the Plan by “non-employee directors” is not then required in
          order for exemptions under Rule 16b-3 to apply to transactions under the
          Plan,
          (ii) an “outside director” within the meaning of Section 162(m) of the Code, and
          (iii) “Independent.” 

         

        (j) “Consultant”
means
          any person (other than an Employee or a Director, solely with respect to
          rendering services in such person’s capacity as a director) who is engaged by
          the Company or any Related Entity to render consulting or advisory services
          to
          the Company or such Related Entity.

         

        (k) “Continuous
          Service”
means
          the uninterrupted provision of services to the Company or any Related Entity
          in
          any capacity of Employee, Director, Consultant or other service provider.
          Continuous Service shall not be considered to be interrupted in the case
          of (i)
          any approved leave of absence, (ii) transfers among the Company, any Related
          Entities, or any successor entities, in any capacity of Employee, Director,
          Consultant or other service provider, or (iii) any change in status as
          long as
          the individual remains in the service of the Company or a Related Entity
          in any
          capacity of Employee, Director, Consultant or other service provider (except
          as
          otherwise provided in the Award Agreement). An approved leave of absence
          shall
          include sick leave, military leave, or any other authorized personal leave.
          

         

        (l) “Covered
          Employee”
means
          an Eligible Person who is a “covered employee” within the meaning of Section
          162(m)(3) of the Code, or any successor provision thereto. 

         

        (m) “Deferred
          Stock”
means
          a
          right to receive Shares, including Restricted Stock, cash or a combination
          thereof, at the end of a specified deferral period. 

         

        (n) “Deferred
          Stock Award”
means
          an Award of Deferred Stock granted to a Participant under Section 6(e)
          hereof.

         

        (o) “Director”
means
          a
          member of the Board or the board of directors of any Related Entity.

         

        (p) “Disability”
means
          a
          permanent and total disability (within the meaning of Section 22(e) of
          the
          Code), as determined by a medical doctor satisfactory to the Committee.
          

         

        (q) “Discounted
          Option”
means
          any Option awarded under Section 6(b) hereof with an exercise price that
          is less
          than the Fair Market Value of a Share on the date of grant.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (r) “Discounted
          Stock Appreciation Right”
means
          any Stock Appreciation Right awarded under Section 6(c) hereof with an
          exercise
          price that is less than the Fair Market Value of a Share on the date of
          grant.

         

        (s) “Dividend
          Equivalent”
means
          a
          right, granted to a Participant under Section 6(g) hereof, to receive cash,
          Shares, other Awards or other property equal in value to dividends paid
          with
          respect to a specified number of Shares, or other periodic payments.

         

        (t) “Effective
          Date”
means
          the effective date of the Plan, which shall be October __, 2005. 

         

        (u) “Eligible
          Person”
means
          each officer, Director, Employee, Consultant and other person who provides
          services to the Company or any Related Entity. The foregoing notwithstanding,
          only employees of the Company, or any parent corporation or subsidiary
          corporation of the Company (as those terms are defined in Sections 424(e)
          and
          (f) of the Code, respectively), shall be Eligible Persons for purposes
          of
          receiving any Incentive Stock Options. An Employee on leave of absence
          may be
          considered as still in the employ of the Company or a Related Entity for
          purposes of eligibility for participation in the Plan. 

         

        (v) “Employee”
means
          any person, including an officer or Director, who is an employee of the
          Company
          or any Related Entity. The payment of a director’s fee by the Company or a
          Related Entity shall not be sufficient to constitute “employment” by the
          Company.

         

        (w) “Exchange
          Act”
means
          the Securities Exchange Act of 1934, as amended from time to time, including
          rules thereunder and successor provisions and rules thereto. 

         

        (x) “Fair
          Market Value”
means
          the fair market value of Shares, Awards or other property as determined
          by the
          Committee, or under procedures established by the Committee. Unless otherwise
          determined by the Committee, the Fair Market Value of a Share as of any
          given
          date shall be the closing sale price per Share reported on a consolidated
          basis
          for stock listed on the principal stock exchange or market on which Shares
          are
          traded on the date as of which such value is being determined or, if there
          is no
          sale on that date, then on the last previous day on which a sale was reported.
          

         

        (y) “Good
          Reason”
shall,
          with respect to any Participant, have the meaning specified in the Award
          Agreement. In the absence of any definition in the Award Agreement, “Good
          Reason” shall have the equivalent meaning or the same meaning as “good reason”
or “for good reason” set forth in any employment, consulting or other agreement
          for the performance of services between the Participant and the Company
          or a
          Related Entity or, in the absence of any such agreement or any such definition
          in such agreement, such term shall mean (i) the assignment to the Participant
          of
          any duties inconsistent in any material respect with the Participant's
          position,
          authority, duties or responsibilities as assigned by the Company or a Related
          Entity, or any other action by the Company or a Related Entity which results
          in
          a material diminution in such position, authority, duties or responsibilities,
          excluding for this purpose any action not taken in bad faith and which
          is
          remedied by the Company or a Related Entity promptly after receipt of notice
          thereof given by the Participant, or any action taken with the consent
          of the
          Participant; or (ii) any material failure by the Company or a Related Entity
          to
          comply with its obligations to the Participant as agreed upon, other than
          any
          failure not occurring in bad faith and which is remedied by the Company
          or a
          Related Entity promptly after receipt of notice thereof given by the
          Participant. 

         

        (z) “Incentive
          Stock Option”
means
          any Option intended to be designated as an incentive stock option within
          the
          meaning of Section 422 of the Code or any successor provision thereto.
          

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (aa) “Independent,”
when
          referring to either the Board or members of the Committee, shall have the
          same
          meaning as used in the rules of the American Stock Exchange or any national
          securities market on which any securities of the Company are listed for
          trading,
          and if not quoted or listed for trading, by the rules of the American Stock
          Exchange.

         

        (bb) “Incumbent
          Board”
means
          the Incumbent Board as defined in Section 9(b)(ii) of the Plan. 

         

        (cc) “Option”
means
          a
          right granted to a Participant under Section 6(b) hereof, to purchase Shares
          or
          other Awards at a specified price during specified time periods. 

         

        (dd) “Optionee”
means
          a
          person to whom an Option is granted under this Plan or any person who succeeds
          to the rights of such person under this Plan. 

         

        (ee) “Option
          Proceeds”
means
          the cash actually received by the Company for the exercise price in connection
          with the exercise of Options that are exercised after the Effective Date
          of the
          Plan, plus the maximum tax benefit that could be realized by the Company
          as a
          result of the exercise of such Options, which tax benefit shall be determined
          by
          multiplying (i) the amount that is deductible for Federal income tax purposes
          as
          a result of any such option exercise (currently, equal to the amount upon
          which
          the Participant's withholding tax obligation is calculated), times (ii)
          the
          maximum Federal corporate income tax rate for the year of exercise. With
          respect
          to Options, to the extent that a Participant pays the exercise price and/or
          withholding taxes with Shares, Option Proceeds shall not be calculated
          with
          respect to the amounts so paid in Shares.

         

        (ff) “Other
          Stock-Based Awards”
means
          Awards granted to a Participant under Section 6(i) hereof. 

         

        (gg) “Outside
          Director”
means
          a
          member of the Board who is not an Employee.

         

        (hh) “Participant”
means
          a
          person who has been granted an Award under the Plan which remains outstanding,
          including a person who is no longer an Eligible Person. 

         

        (ii) “Performance
          Award”
shall
          mean any Award of Performance Shares or Performance Units granted pursuant
          to
          Section 6(h).

         

        (jj) “Performance
          Period”
means
          that period established by the Committee at the time any Performance Award
          is
          granted or at any time thereafter during which any performance goals specified
          by the Committee with respect to such Award are to be measured.

         

        (kk) “Performance
          Share”
means
          any grant pursuant to Section 6(h) of a unit valued by reference to a designated
          number of Shares, which value may be paid to the Participant by delivery
          of such
          property as the Committee shall determine, including cash, Shares, other
          property, or any combination thereof, upon achievement of such performance
          goals
          during the Performance Period as the Committee shall establish at the time
          of
          such grant or thereafter.

         

        (ll) “Performance
          Unit”
means
          any grant pursuant to Section 6(h) of a unit valued by reference to a designated
          amount of property (including cash) other than Shares, which value may
          be paid
          to the Participant by delivery of such property as the Committee shall
          determine, including cash, Shares, other property, or any combination thereof,
          upon achievement of such performance goals during the Performance Period
          as the
          Committee shall establish at the time of such grant or thereafter.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (mm) “Person”
shall
          have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
          Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as
          defined in Section 13(d) thereof. 

         

        (nn) “Related
          Entity”
means
          any Subsidiary, and any business, corporation, partnership, limited liability
          company or other entity designated by Board in which the Company or a Subsidiary
          holds a substantial ownership interest, directly or indirectly.

         

        (oo) “Restricted
          Stock”
means
          any Share issued with the restriction that the holder may not sell, transfer,
          pledge or assign such Share and with such risks of forfeiture and other
          restrictions as the Committee, in its sole discretion, may impose (including
          any
          restriction on the right to vote such Share and the right to receive any
          dividends), which restrictions may lapse separately or in combination at
          such
          time or times, in installments or otherwise, as the Committee may deem
          appropriate.

         

        (pp) “Restricted
          Stock Award”
means
          an Award granted to a Participant under Section 6(d) hereof. 

         

        (qq) “Rule
          16b-3”
means
          Rule 16b-3, as from time to time in effect and applicable to the Plan and
          Participants, promulgated by the Securities and Exchange Commission under
          Section 16 of the Exchange Act.

         

        (rr) “Shareholder
          Approval Date”
means
          the date on which this Plan is approved shareholders of the Company eligible
          to
          vote in the election of directors, by a vote sufficient to meet the requirements
          of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange
          Act (if applicable), applicable requirements under the rules of any stock
          exchange or automated quotation system on which the Shares may be listed
          on
          quoted, and other laws, regulations and obligations of the Company applicable
          to
          the Plan.

         

        (ss) “Shares”
means
          the shares of common stock of the Company, par value $.001 per share, and
          such
          other securities as may be substituted (or resubstituted) for Shares pursuant
          to
          Section 10(c) hereof. 

         

        (tt) “Stock
          Appreciation Right”
means
          a
          right granted to a Participant under Section 6(c) hereof. 

         

        (uu) “Subsidiary”
means
          any corporation or other entity in which the Company has a direct or indirect
          ownership interest of 50% or more of the total combined voting power of
          the then
          outstanding securities or interests of such corporation or other entity
          entitled
          to vote generally in the election of directors or in which the Company
          has the
          right to receive 50% or more of the distribution of profits or 50% or more
          of
          the assets on liquidation or dissolution. 

         

        (vv) “Substitute
          Awards”
shall
          mean Awards granted or Shares issued by the Company in assumption of, or
          in
          substitution or exchange for, awards previously granted, or the right or
          obligation to make future awards, by a company acquired by the Company
          or any
          Related Entity or with which the Company or any Related Entity
          combines.

         

        3. Administration.

         

        (a) Authority
          of the Committee.
          The
          Plan shall be administered by the Committee, except
          to
          the extent the Board elects to administer the Plan, in which case the Plan
          shall
          be administered by only those directors who are Independent Directors,
          in which
          case references herein to the “Committee” shall be deemed to include references
          to the Independent members of the Board. The Committee shall have full
          and final
          authority, subject to and consistent with the provisions of the Plan, to
          select
          Eligible Persons to become Participants, grant Awards, determine the type,
          number and other terms and conditions of, and all other matters relating
          to,
          Awards, prescribe Award Agreements (which need not be identical for each
          Participant) and rules and regulations for the administration of the Plan,
          construe and interpret the Plan and Award Agreements and correct defects,
          supply
          omissions or reconcile inconsistencies therein, and to make all other decisions
          and determinations as the Committee may deem necessary or advisable for
          the
          administration of the Plan. In exercising any discretion granted to the
          Committee under the Plan or pursuant to any Award, the Committee shall
          not be
          required to follow past practices, act in a manner consistent with past
          practices, or treat any Eligible Person or Participant in a manner consistent
          with the treatment of other Eligible Persons or Participants.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (b) Manner
          of Exercise of Committee Authority.
          The
          Committee, and not the Board, shall exercise sole and exclusive discretion
          on
          any matter relating to a Participant then subject to Section 16 of the
          Exchange Act with respect to the Company to the extent necessary in order
          that
          transactions by such Participant shall be exempt under Rule 16b-3 under
          the
          Exchange Act. Any action of the Committee shall be final, conclusive and
          binding
          on all persons, including the Company, its Related Entities, Participants,
          Beneficiaries, transferees under Section 10(b) hereof or other persons
          claiming
          rights from or through a Participant, and shareholders. The express grant
          of any
          specific power to the Committee, and the taking of any action by the Committee,
          shall not be construed as limiting any power or authority of the Committee.
          The
          Committee may delegate to officers or managers of the Company or any Related
          Entity, or committees thereof, the authority, subject to such terms as
          the
          Committee shall determine, to perform such functions, including administrative
          functions as the Committee may determine to the extent that such delegation
          will
          not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards
          granted
          to Participants subject to Section 16 of the Exchange Act in respect of
          the
          Company and will not cause Awards intended to qualify as “performance-based
          compensation” under Code Section 162(m) to fail to so qualify. The Committee may
          appoint agents to assist it in administering the Plan.

         

        (c) Limitation
          of Liability.
          The
          Committee and the Board, and each member thereof, shall be entitled to,
          in good
          faith, rely or act upon any report or other information furnished to him
          or her
          by any officer or Employee, the Company's independent auditors, Consultants
          or
          any other agents assisting in the administration of the Plan. Members of
          the
          Committee and the Board, and any officer or Employee acting at the direction
          or
          on behalf of the Committee or the Board, shall not be personally liable
          for any
          action or determination taken or made in good faith with respect to the
          Plan,
          and shall, to the extent permitted by law, be fully indemnified and protected
          by
          the Company with respect to any such action or determination.

         

        4. Shares
          Subject to Plan.

         

        (a) Limitation
          on Overall Number of Shares Available for Delivery Under Plan.
          Subject
          to adjustment as provided in Section 10(c) hereof, the total number of
          Shares
          reserved and available for delivery under the Plan shall be 10,000,000.
          Any
          Shares delivered under the Plan may consist, in whole or in part, of authorized
          and unissued shares or treasury shares.

         

        (b) Application
          of Limitation to Grants of Award.
          No Award
          may be granted if the number of Shares to be delivered in connection with
          such
          an Award or, in the case of an Award relating to Shares but settled only
          in cash
          (such as cash-only Stock Appreciation Rights), the number of Shares to
          which
          such Award relates, exceeds the number of Shares remaining available for
          delivery under the Plan, minus the number of Shares deliverable in settlement
          of
          or relating to then outstanding Awards. The Committee may adopt reasonable
          counting procedures to ensure appropriate counting, avoid double counting
          (as,
          for example, in the case of tandem or substitute awards) and make adjustments
          if
          the number of Shares actually delivered differs from the number of Shares
          previously counted in connection with an Award.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (c) Availability
          of Shares Not Delivered under Awards and Adjustments to Limits. 

         

        (i) If
          any
          Shares subject to an Award are forfeited, expire or otherwise terminate
          without
          issuance of such Shares, or any Award is settled for cash or otherwise
          does not
          result in the issuance of all or a portion of the Shares subject to such
          Award
          or award, the Shares shall, to the extent of such forfeiture, expiration,
          termination, cash settlement or non-issuance, again be available for Awards
          under the Plan, subject to Section 4(c)(v) below. 

         

        (ii) In
          the
          event that any Option or other Award granted hereunder is exercised through
          the
          tendering of Shares (either actually or by attestation) or by the withholding
          of
          Shares by the Company, or withholding tax liabilities arising from such
          option
          or other award are satisfied by the tendering of Shares (either actually
          or by
          attestation) or by the withholding of Shares by the Company, then only
          the
          number of Shares issued net of the Shares tendered or withheld shall be
          counted
          for purposes of determining
          the maximum number of Shares available for grant under the Plan. 

         

        (iii) Shares
          reacquired by the Company on the open market using Option Proceeds shall
          be
          available for Awards under the Plan. The increase in Shares available pursuant
          to the repurchase of Shares with Option Proceeds shall not be greater than
          the
          amount of such proceeds divided by the Fair Market Value of a Share on
          the date
          of exercise of the Option giving rise to such Option Proceeds. 

         

        (iv) Substitute
          Awards shall not reduce the Shares authorized for grant under the Plan
          or
          authorized for grant to a Participant in any period. Additionally, in the
          event
          that a company acquired by the Company or any Related Entity or with which
          the
          Company or any Related Entity combines has shares available under a pre-existing
          plan approved by shareholders and not adopted in contemplation of such
          acquisition or combination, the shares available for delivery pursuant
          to the
          terms of such pre-existing plan (as adjusted, to the extent appropriate,
          using
          the exchange ratio or other adjustment or valuation ratio or formula used
          in
          such acquisition or combination to determine the consideration payable
          to the
          holders of common stock of the entities party to such acquisition or
          combination) may be used for Awards under the Plan and shall not reduce
          the
          Shares authorized for delivery under the Plan; provided that Awards using
          such
          available shares shall not be made after the date awards or grants could
          have
          been made under the terms of the pre-existing plan, absent the acquisition
          or
          combination, and shall only be made to individuals who were not Employees
          or
          Directors prior to such acquisition or combination. 

         

        (v) Any
          Shares that again become available for delivery pursuant to this Section
          4(c)
          shall be added back as one (1) Share. 

         

        (vi) Notwithstanding
          anything in this Section 4(c) to the contrary and solely for purposes of
          determining whether Shares are available for the delivery of Incentive
          Stock
          Options, the maximum aggregate number of shares that may be granted under
          this
          Plan shall be determined without regard to any Shares restored pursuant
          to this
          Section 4(c) that, if taken into account, would cause the Plan to fail
          the
          requirement under Code Section 422 that the Plan designate a maximum aggregate
          number of shares that may be issued.

         

        5. Eligibility;
          Per-Person Award Limitations. Awards
          may be granted under the Plan only to Eligible Persons. Subject to adjustment
          as
          provided in Section 10(c), in any fiscal year of the Company during any
          part of
          which the Plan is in effect, no Participant may be granted (i) Options
          or Stock
          Appreciation Rights with respect to more than 2,000,000 Shares or (ii)
          Restricted Stock, Deferred Stock, Performance Shares and/or Other Stock-Based
          Awards with respect to more than 2,000,000 Shares. In addition, the maximum
          dollar value payable to any one Participant with respect to Performance
          Units is
          (x) $3,000,000 with respect to any 12-month Performance Period, and (y)
          with
          respect to any Performance Period that is more than 12 months, $3,000,000
          multiplied by the number of full years in the Performance Period. 

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        6. Specific
          Terms of Awards.

         

        (a) General.
          Awards
          may be granted on the terms and conditions set forth in this Section 6.
          In
          addition, the Committee may impose on any Award or the exercise thereof,
          at the
          date of grant or thereafter (subject to Section 10(e)), such additional
          terms
          and conditions, not inconsistent with the provisions of the Plan, as the
          Committee shall determine, including terms requiring forfeiture of Awards
          in the
          event of termination of the Participant’s Continuous Service and terms
          permitting a Participant to make elections relating to his or her Award.
          The
          Committee shall retain full power and discretion to accelerate, waive or
          modify,
          at any time, any term or condition of an Award that is not mandatory under
          the
          Plan. Except in cases in which the Committee is authorized to require other
          forms of consideration under the Plan, or to the extent other forms of
          consideration must be paid to satisfy the requirements of applicable law,
          no
          consideration other than services may be required for the grant (but not
          the
          exercise) of any Award.

         

        (b) Options.
          The
          Committee is authorized to grant Options to any Eligible Person on the
          following
          terms and conditions:

         

        (i) Exercise
          Price. Other
          than in connection with Substitute Awards, the exercise price per Share
          purchasable under an Option shall be determined by the Committee, provided
          that
          such exercise price shall not, in the case of Incentive Stock Options,
          be less
          than 100% of the Fair Market Value of a Share on the date of grant of the
          Option
          and shall not, in any event, be less than the par value of a Share on the
          date
          of grant of the Option. If an Employee owns or is deemed to own (by reason
          of
          the attribution rules applicable under Section 424(d) of the Code) more
          than 10%
          of the combined voting power of all classes of stock of the Company (or
          any
          parent corporation or subsidiary corporation of the Company, as those terms
          are
          defined in Sections 424(e) and (f) of the Code, respectively) and an Incentive
          Stock Option is granted to such employee, the exercise price of such Incentive
          Stock Option (to the extent required by the Code at the time of grant)
          shall be
          no less than 110% of the Fair Market Value a Share on the date such Incentive
          Stock Option is granted.
          

         

        (ii) Time
          and Method of Exercise.
          The
          Committee shall determine the time or times at which or the circumstances
          under
          which an Option may be exercised in whole or in part (including based on
          achievement of performance goals and/or future service requirements), the
          time
          or times at which Options shall cease to be or become exercisable following
          termination of Continuous Service or upon other conditions, the methods
          by which
          the exercise price may be paid or deemed to be paid (including in the discretion
          of the Committee a cashless exercise procedure), the form of such payment,
          including, without limitation, cash, Shares, other Awards or awards granted
          under other plans of the Company or a Related Entity, or other property
          (including notes or other contractual obligations of Participants to make
          payment on a deferred basis provided that such deferred payments are not
          in
          violation of the Sarbanes-Oxley Act of 2002, or any rule or regulation
          adopted
          thereunder or any other applicable law), and the methods by or forms in
          which
          Shares will be delivered or deemed to be delivered to Participants.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (iii) Incentive
          Stock Options.
          The
          terms of any Incentive Stock Option granted under the Plan shall comply
          in all
          respects with the provisions of Section 422 of the Code. Anything in the
          Plan to
          the contrary notwithstanding, no term of the Plan relating to Incentive
          Stock
          Options (including any Stock Appreciation Right issued in tandem therewith)
          shall be interpreted, amended or altered, nor shall any discretion or authority
          granted under the Plan be exercised, so as to disqualify either the Plan
          or any
          Incentive Stock Option under Section 422 of the Code, unless the Participant
          has
          first requested, or consents to, the change that will result in such
          disqualification. Thus, if and to the extent required to comply with Section
          422
          of the Code, Options granted as Incentive Stock Options shall be subject
          to the
          following special terms and conditions:

         

        (A) the
          Option shall not be exercisable more than ten years after the date such
          Incentive Stock Option is granted; provided, however, that if a Participant
          owns
          or is deemed to own (by reason of the attribution rules of Section 424(d)
          of the
          Code) more than 10% of the combined voting power of all classes of stock
          of the
          Company (or any parent corporation or subsidiary corporation of the Company,
          as
          those terms are defined in Sections 424(e) and (f) of the Code, respectively)
          and the Incentive Stock Option is granted to such Participant, the term
          of the
          Incentive Stock Option shall be (to the extent required by the Code at
          the time
          of the grant) for no more than five years from the date of grant;
          and

         

        (B) The
          aggregate Fair Market Value (determined as of the date the Incentive Stock
          Option is granted) of the Shares with respect to which Incentive Stock
          Options
          granted under the Plan and all other option plans of the Company (and any
          parent
          corporation or subsidiary corporation of the Company, as those terms are
          defined
          in Sections 424(e) and (f) of the Code, respectively) during any calendar
          year
          exercisable for the first time by the Participant during any calendar year
          shall
          not (to the extent required by the Code at the time of the grant) exceed
          $100,000.

         

        (c) Stock
          Appreciation Rights.
          The
          Committee may grant Stock Appreciation Rights to any Eligible Person in
          conjunction with all or part of any Option granted under the Plan or at
          any
          subsequent time during the term of such Option (a “Tandem Stock Appreciation
          Right”), or without regard to any Option (a “Freestanding Stock Appreciation
          Right”), in each case upon such terms and conditions as the Committee may
          establish in its sole discretion, not inconsistent with the provisions
          of the
          Plan, including the following:

         

        (i) Right
          to Payment.
          A Stock
          Appreciation Right shall confer on the Participant to whom it is granted
          a right
          to receive, upon exercise thereof, the excess of (A) the Fair Market Value
          of
          one Share on the date of exercise over (B) the grant price of the Stock
          Appreciation Right as determined by the Committee. The grant price of a
          Stock
          Appreciation Right shall not be less than 100% of the Fair Market Value
          of a
          Share on the date of grant, in the case of a Freestanding Stock Appreciation
          Right, or less than the associated Option exercise price, in the case of
          a
          Tandem Stock Appreciation Right. 

         

        (ii) Other
          Terms.
          The
          Committee shall determine at the date of grant or thereafter, the time
          or times
          at which and the circumstances under which a Stock Appreciation Right may
          be
          exercised in whole or in part (including based on achievement of performance
          goals and/or future service requirements), the time or times at which Stock
          Appreciation Rights shall cease to be or become exercisable following
          termination of Continuous Service or upon other conditions, the method
          of
          exercise, method of settlement, form of consideration payable in settlement,
          method by or forms in which Shares will be delivered or deemed to be delivered
          to Participants, whether or not a Stock Appreciation Right shall be in
          tandem or
          in combination with any other Award, and any other terms and conditions
          of any
          Stock Appreciation Right.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (iii) Tandem
          Stock Appreciation Rights. Any
          Tandem Stock Appreciation Right may be granted at the same time as the
          related
          Option is granted or, for Options that are not Incentive Stock Options,
          at any
          time thereafter before exercise or expiration of such Option. Any Tandem
          Stock
          Appreciation Right related to an Option may be exercised only when the
          related
          Option would be exercisable and the Fair Market Value of the Shares subject
          to
          the related Option exceeds the exercise price at which Shares can be acquired
          pursuant to the Option. In addition, if a Tandem Stock Appreciation Right
          exists
          with respect to less than the full number of Shares covered by a related
          Option,
          then an exercise or termination of such Option shall not reduce the number
          of
          Shares to which the Tandem Stock Appreciation Right applies until the number
          of
          Shares then exercisable under such Option equals the number of Shares to
          which
          the Tandem Stock Appreciation Right applies. Any Option related to a Tandem
          Stock Appreciation Right shall no longer be exercisable to the extent the
          Tandem
          Stock Appreciation Right has been exercised, and any Tandem Stock Appreciation
          Right shall no longer be exercisable to the extent the related Option has
          been
          exercised.

         

        (d) Restricted
          Stock Awards.
          The
          Committee is authorized to grant Restricted Stock Awards to any Eligible
          Person
          on the following terms and conditions:

         

        (i) Grant
          and Restrictions.
          Restricted Stock Awards shall be subject to such restrictions on
          transferability, risk of forfeiture and other restrictions, if any, as
          the
          Committee may impose, or as otherwise provided in this Plan, covering a
          period
          of time specified by the Committee (the “Restriction Period”). The terms of any
          Restricted Stock Award granted under the Plan shall be set forth in a written
          Award Agreement which shall contain provisions determined by the Committee
          and
          not inconsistent with the Plan. The restrictions may lapse separately or
          in
          combination at such times, under such circumstances (including based on
          achievement of performance goals and/or future service requirements), in
          such
          installments or otherwise, as the Committee may determine at the date of
          grant
          or thereafter. Except to the extent restricted under the terms of the Plan
          and
          any Award Agreement relating to a Restricted Stock Award, a Participant
          granted
          Restricted Stock shall have all of the rights of a shareholder, including
          the
          right to vote the Restricted Stock and the right to receive dividends thereon
          (subject to any mandatory reinvestment or other requirement imposed by
          the
          Committee). During the Restriction Period, subject to Section 10(b) below,
          the
          Restricted Stock may not be sold, transferred, pledged, hypothecated, margined
          or otherwise encumbered by the Participant.

         

        (ii) Forfeiture.
          Except
          as otherwise determined by the Committee, upon termination of a Participant's
          Continuous Service during the applicable Restriction Period, the Participant's
          Restricted Stock that is at that time subject to a risk of forfeiture that
          has
          not lapsed or otherwise been satisfied shall be forfeited and reacquired
          by the
          Company; provided that the Committee may provide, by rule or regulation
          or in
          any Award Agreement, or may determine in any individual case, that forfeiture
          conditions relating to Restricted Stock Awards shall be waived in whole
          or in
          part in the event of terminations resulting from specified causes.

         

        (iii) Certificates
          for Stock.
          Restricted Stock granted under the Plan may be evidenced in such manner
          as the
          Committee shall determine. If certificates representing Restricted Stock
          are
          registered in the name of the Participant, the Committee may require that
          such
          certificates bear an appropriate legend referring to the terms, conditions
          and
          restrictions applicable to such Restricted Stock, that the Company retain
          physical possession of the certificates, and that the Participant deliver
          a
          stock power to the Company, endorsed in blank, relating to the Restricted
          Stock.

         

        (iv) Dividends
          and Splits.
          As a
          condition to the grant of a Restricted Stock Award, the Committee may require
          or
          permit a Participant to elect that any cash dividends paid on a Share of
          Restricted Stock be automatically reinvested in additional Shares of Restricted
          Stock or applied to the purchase of additional Awards under the Plan. Unless
          otherwise determined by the Committee, Shares distributed in connection
          with a
          stock split or stock dividend, and other property distributed as a dividend,
          shall be subject to restrictions and a risk of forfeiture to the same extent
          as
          the Restricted Stock with respect to which such Shares or other property
          have
          been distributed.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (e) Deferred
          Stock Award.
          The
          Committee is authorized to grant Deferred Stock Awards to any Eligible
          Person on
          the following terms and conditions:

         

        (i) Award
          and Restrictions.
          Satisfaction of a Deferred Stock Award shall occur upon expiration of the
          deferral period specified for such Deferred Stock Award by the Committee
          (or, if
          permitted by the Committee, as elected by the Participant). In addition,
          a
          Deferred Stock Award shall be subject to such restrictions (which may include
          a
          risk of forfeiture) as the Committee may impose, if any, which restrictions
          may
          lapse at the expiration of the deferral period or at earlier specified
          times
          (including based on achievement of performance goals and/or future service
          requirements), separately or in combination, in installments or otherwise,
          as
          the Committee may determine. A Deferred Stock Award may be satisfied by
          delivery
          of Shares, cash equal to the Fair Market Value of the specified number
          of Shares
          covered by the Deferred Stock, or a combination thereof, as determined
          by the
          Committee at the date of grant or thereafter. Prior to satisfaction of
          a
          Deferred Stock Award, a Deferred Stock Award carries no voting or dividend
          or
          other rights associated with Share ownership.

         

        (ii) Forfeiture.
          Except
          as otherwise determined by the Committee, upon termination of a Participant's
          Continuous Service during the applicable deferral period or portion thereof
          to
          which forfeiture conditions apply (as provided in the Award Agreement evidencing
          the Deferred Stock Award), the Participant's Deferred Stock Award that
          is at
          that time subject to a risk of forfeiture that has not lapsed or otherwise
          been
          satisfied shall be forfeited; provided that the Committee may provide,
          by rule
          or regulation or in any Award Agreement, or may determine in any individual
          case, that forfeiture conditions relating to a Deferred Stock Award shall
          be
          waived in whole or in part in the event of terminations resulting from
          specified
          causes, and the Committee may in other cases waive in whole or in part
          the
          forfeiture of any Deferred Stock Award.

         

        (iii) Dividend
          Equivalents.
          Unless
          otherwise determined by the Committee at date of grant, any Dividend Equivalents
          that are granted with respect to any Deferred Stock Award shall be either
          (A)
          paid with respect to such Deferred Stock Award at the dividend payment
          date in
          cash or in Shares of unrestricted stock having a Fair Market Value equal
          to the
          amount of such dividends, or (B) deferred with respect to such Deferred
          Stock
          Award and the amount or value thereof automatically deemed reinvested in
          additional Deferred Stock, other Awards or other investment vehicles, as
          the
          Committee shall determine or permit the Participant to elect.

         

        (f) Bonus
          Stock and Awards in Lieu of Obligations.
          The
          Committee is authorized to grant Shares to any Eligible Persons as a bonus,
          or
          to grant Shares or other Awards in lieu of obligations to pay cash or deliver
          other property under the Plan or under other plans or compensatory arrangements,
          provided that, in the case of Eligible Persons subject to Section 16 of
          the
          Exchange Act, the amount of such grants remains within the discretion of
          the
          Committee to the extent necessary to ensure that acquisitions of Shares
          or other
          Awards are exempt from liability under Section 16(b) of the Exchange Act.
          Shares
          or Awards granted hereunder shall be subject to such other terms as shall
          be
          determined by the Committee.

         

        (g) Dividend
          Equivalents.
          The
          Committee is authorized to grant Dividend Equivalents to any Eligible Person
          entitling the Eligible Person to receive cash, Shares, other Awards, or
          other
          property equal in value to the dividends paid with respect to a specified
          number
          of Shares, or other periodic payments. Dividend Equivalents may be awarded
          on a
          free-standing basis or in connection with another Award. The Committee
          may
          provide that Dividend Equivalents shall be paid or distributed when accrued
          or
          shall be deemed to have been reinvested in additional Shares, Awards, or
          other
          investment vehicles, and subject to such restrictions on transferability
          and
          risks of forfeiture, as the Committee may specify.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (h) Performance
          Awards.
          The
          Committee is authorized to grant Performance Awards to any Eligible Person
          payable in cash, Shares, or other Awards, on terms and conditions established
          by
          the Committee, subject to the provisions of Section 8 if and to the extent
          that
          the Committee shall, in its sole discretion, determine that an Award shall
          be
          subject to those provisions. The performance criteria to be achieved during
          any
          Performance Period and the length of the Performance Period shall be determined
          by the Committee upon the grant of each Performance Award.
          Except
          as provided in Section 9 or as may be provided in an Award Agreement,
          Performance Awards will be distributed only after the end of the relevant
          Performance Period. The performance goals to be achieved for each Performance
          Period shall be conclusively determined by the Committee and may be based
          upon
          the criteria set forth in Section 8(b), or in the case of an Award that
          the
          Committee determines shall not be subject to Section 8 hereof, any other
          criteria that the Committee, in its sole discretion, shall determine should
          be
          used for that purpose. The amount of the Award to be distributed shall
          be
          conclusively determined by the Committee. Performance Awards may be paid
          in a
          lump sum or in installments following the close of the Performance Period
          or, in
          accordance with procedures established by the Committee, on a deferred
          basis.

         

        (i) Other
          Stock-Based Awards.
          The
          Committee is authorized, subject to limitations under applicable law, to
          grant
          to any Eligible Person such other Awards that may be denominated or payable
          in,
          valued in whole or in part by reference to, or otherwise based on, or related
          to, Shares, as deemed by the Committee to be consistent with the purposes
          of the
          Plan. Other Stock-Based Awards may be granted to Participants either alone
          or in
          addition to other Awards granted under the Plan, and such Other Stock-Based
          Awards shall also be available as a form of payment in the settlement of
          other
          Awards granted under the Plan. The Committee shall determine the terms
          and
          conditions of such Awards. Shares delivered pursuant to an Award in the
          nature
          of a purchase right granted under this Section 6(i) shall be purchased
          for such
          consideration (including,
          without limitation, loans from the Company or a Related Entity provided
          that
          such loans are not in violation of the Sarbanes Oxley Act of 2002, or any
          rule
          or regulation adopted thereunder or any other applicable law)
          paid for
          at such times, by such methods, and in such forms, including, without
          limitation, cash, Shares, other Awards or other property, as the Committee
          shall
          determine. 

         

        7. Certain
          Provisions Applicable to Awards.

         

        (a) Stand-Alone,
          Additional, Tandem and Substitute Awards.
          Awards
          granted under the Plan may, in the discretion of the Committee, be granted
          either alone or in addition to, in tandem with, or in substitution or exchange
          for, any other Award or any award granted under another plan of the Company,
          any
          Related Entity, or any business entity to be acquired by the Company or
          a
          Related Entity, or any other right of a Participant to receive payment
          from the
          Company or any Related Entity. Such additional, tandem, and substitute
          or
          exchange Awards may be granted at any time. If an Award is granted in
          substitution or exchange for another Award or award, the Committee shall
          require
          the surrender of such other Award or award in consideration for the grant
          of the
          new Award. In addition, Awards may be granted in lieu of cash compensation,
          including in lieu of cash amounts payable under other plans of the Company
          or
          any Related Entity, in which the value of Stock subject to the Award is
          equivalent in value to the cash compensation (for example, Deferred Stock
          or
          Restricted Stock), or in which the exercise price, grant price or purchase
          price
          of the Award in the nature of a right that may be exercised is equal to
          the Fair
          Market Value of the underlying Stock minus the value of the cash compensation
          surrendered (for example, Options or Stock Appreciation Right granted with
          an
          exercise price or grant price “discounted” by the amount of the cash
          compensation surrendered).

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (b) Term
          of Awards.
          The
          term of each Award shall be for such period as may be determined by the
          Committee; provided that in no event shall the term of any Option or Stock
          Appreciation Right exceed a period of ten years (or in the case of an Incentive
          Stock Option such shorter term as may be required under Section 422 of
          the
          Code).

         

        (c) Form
          and Timing of Payment Under Awards; Deferrals.
          Subject
          to the terms of the Plan and any applicable Award Agreement, payments to
          be made
          by the Company or a Related Entity upon the exercise of an Option or other
          Award
          or settlement of an Award may be made in such forms as the Committee shall
          determine, including, without limitation, cash, Shares, other Awards or
          other
          property, and may be made in a single payment or transfer, in installments,
          or
          on a deferred basis. Any installment or deferral provided for in the preceding
          sentence shall, however, be subject to the Company’s compliance with the
          provisions of the Sarbanes-Oxley Act of 2002, the rules and regulations
          adopted
          by the U.S. Securities and Exchange Commission thereunder, and all applicable
          rules of the Nasdaq Stock Market or any national securities exchange on
          which
          the Company’s securities are listed for trading and, if not listed for trading
          on either the Nasdaq Stock Market or a national securities exchange, then
          the
          rules of the Nasdaq Stock Market. The settlement of any Award may be
          accelerated, and cash paid in lieu of Shares in connection with such settlement,
          in the discretion of the Committee or upon occurrence of one or more specified
          events (in addition to a Change in Control). Installment or deferred payments
          may be required by the Committee (subject to Section 10(e) of the Plan,
          including the consent provisions thereof in the case of any deferral of
          an
          outstanding Award not provided for in the original Award Agreement) or
          permitted
          at the election of the Participant on terms and conditions established
          by the
          Committee. Payments may include, without limitation, provisions for the
          payment
          or crediting of a reasonable interest rate on installment or deferred payments
          or the grant or crediting of Dividend Equivalents or other amounts in respect
          of
          installment or deferred payments denominated in Shares.

         

        (d) Exemptions
          from Section 16(b) Liability.
          It is
          the intent of the Company that the grant of any Awards to or other transaction
          by a Participant who is subject to Section 16 of the Exchange Act shall
          be
          exempt from Section 16 pursuant to an applicable exemption (except for
          transactions acknowledged in writing to be non-exempt by such Participant).
          Accordingly, if any provision of this Plan or any Award Agreement does
          not
          comply with the requirements of Rule 16b-3 then applicable to any such
          transaction, such provision shall be construed or deemed amended to the
          extent
          necessary to conform to the applicable requirements of Rule 16b-3 so that
          such
          Participant shall avoid liability under Section 16(b). 

         

        8. Code
          Section 162(m) Provisions.

         

        (a) Covered
          Employees.
          The
          Committee, in its discretion, may determine at the time an Award is granted
          to
          an Eligible Person who is, or is likely to be, as of the end of the tax
          year in
          which the Company would claim a tax deduction in connection with such Award,
          a
          Covered Employee, that the provisions of this Section 8 shall be applicable
          to
          such Award. 

         

        (b) Performance
          Criteria.
          If an
          Award is subject to this Section 8, then the lapsing of restrictions thereon
          and
          the distribution of cash, Shares or other property pursuant thereto, as
          applicable, shall be contingent upon achievement of one or more objective
          performance goals. Performance goals shall be objective and shall otherwise
          meet
          the requirements of Section 162(m) of the Code and regulations thereunder
          including the requirement that the level or levels of performance targeted
          by
          the Committee result in the achievement of performance goals being
“substantially uncertain.” One or more of the following business criteria for
          the Company, on a consolidated basis, and/or for Related Entities, or for
          business or geographical units of the Company and/or a Related Entity (except
          with respect to the total shareholder return and earnings per share criteria),
          shall be used by the Committee in establishing performance goals for such
          Awards: (1) earnings per share; (2) revenues or margins; (3) cash
          flow; (4) operating margin; (5) return on net assets, investment,
          capital, or equity; (6) economic value added; (7) direct contribution;
          (8) net income; pretax earnings; earnings before interest and taxes;
          earnings before interest, taxes, depreciation and amortization; earnings
          after
          interest expense and before extraordinary or special items; operating income;
          income before interest income or expense, unusual items and income taxes,
          local,
          state or federal and excluding budgeted and actual bonuses which might
          be paid
          under any ongoing bonus plans of the Company; (9) working capital;
          (10) management of fixed costs or variable costs; (11) identification
          or consummation of investment opportunities or completion of specified
          projects
          in accordance with corporate business plans, including strategic mergers,
          acquisitions or divestitures; (12) total shareholder return; and
          (13) debt reduction. Any of the above goals may be determined on an
          absolute or relative basis or as compared to the performance of a published
          or
          special index deemed applicable by the Committee including, but not limited
          to,
          the Standard & Poor’s 500 Stock Index or a group of companies that are
          comparable to the Company. The Committee may exclude the impact of an event
          or
          occurrence which the Committee determines should appropriately be excluded,
          including without limitation (i) restructurings, discontinued operations,
          extraordinary items, and other unusual or non-recurring charges, (ii) an
          event
          either not directly related to the operations of the Company or not within
          the
          reasonable control of the Company’s management, or (iii) a change in accounting
          standards required by generally accepted accounting principles.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (c) Performance
          Period; Timing For Establishing Performance Goals.
          Achievement
          of performance goals in respect of such Performance Awards shall be measured
          over a Performance Period no shorter than 12 months and no longer than
          five
          years, as specified by the Committee. Performance goals shall be established
          not
          later than 90 days after the beginning of any Performance Period applicable
          to
          such Performance Awards, or at such other date as may be required or permitted
          for “performance-based compensation” under Code Section 162(m).

         

        (d) Adjustments.
          The
          Committee may, in its discretion, reduce the amount of a settlement otherwise
          to
          be made in connection with Awards subject to this Section 8, but may not
          exercise discretion to increase any such amount payable to a Covered Employee
          in
          respect of an Award subject to this Section 8. The Committee shall specify
          the
          circumstances in which such Awards shall be paid or forfeited in the event
          of
          termination of Continuous Service by the Participant prior to the end of
          a
          Performance Period or settlement of Awards.

         

        (e) Committee
          Certification.
          No
          Participant shall receive any payment under the Plan unless the Committee
          has
          certified, by resolution or other appropriate action in writing, that the
          performance criteria and any other material terms previously established
          by the
          Committee or set forth in the Plan, have been satisfied to the extent necessary
          to qualify as “performance based compensation” under Code Section
          162(m).

         

        9. Change
          in Control.

         

        (a) Effect
          of “Change in Control.”
          Subject
          to Section 9(a)(iv), and if and only to the extent provided in the Award
          Agreement, or to the extent otherwise determined by the Committee, upon
          the
          occurrence of a “Change in Control,” as defined in Section 9(b):

         

        (i) Any
          Option or Stock Appreciation Right that was not previously vested and
          exercisable as of the time of the Change in Control, shall become immediately
          vested and exercisable, subject to applicable restrictions set forth in
          Section
          10(a) hereof.

         

        (ii) Any
          restrictions, deferral of settlement, and forfeiture conditions applicable
          to a
          Restricted Stock Award, Deferred Stock Award or an Other Stock-Based Award
          subject only to future service requirements granted under the Plan shall
          lapse
          and such Awards shall be deemed fully vested as of the time of the Change
          in
          Control, except to the extent of any waiver by the Participant and subject
          to
          applicable restrictions set forth in Section 10(a) hereof.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (iii) With
          respect to any outstanding Award subject to achievement of performance
          goals and
          conditions under the Plan, the Committee may, in its discretion, deem such
          performance goals and conditions as having been met as of the date of the
          Change
          in Control. 

         

        (iv) Notwithstanding
          the foregoing, if in the event of a Change in Control the successor company
          assumes or substitutes for an Option, Stock Appreciation Right, Restricted
          Stock
          Award, Deferred Stock Award or Other Stock-Based Award, then each outstanding
          Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock
          Award
          or Other Stock-Based Award shall not be accelerated as described in Sections
          9(a)(i), (ii) and (iii). For the purposes of this Section 9(a)(iv), an
          Option,
          Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award
          or Other
          Stock-Based Award shall be considered assumed or substituted for if following
          the Change in Control the award confers the right to purchase or receive,
          for
          each Share subject to the Option, Stock Appreciation Right, Restricted
          Stock
          Award, Deferred Stock Award or Other Stock-Based Award immediately prior
          to the
          Change in Control, the consideration (whether stock,
          cash or
          other securities or property) received in the transaction constituting
          a Change
          in Control by holders of Shares for each Share held on the effective date
          of
          such transaction (and if holders were offered a choice of consideration,
          the
          type of consideration chosen by the holders of a majority of the outstanding
          shares); provided, however, that if such consideration received in the
          transaction constituting a Change in Control is not solely common stock
          of the
          successor company or its parent or subsidiary, the Committee may, with
          the
          consent of the successor company or its parent or subsidiary, provide that
          the
          consideration to be received upon the exercise or vesting of an Option,
          Stock
          Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other
          Stock-Based Award, for each Share subject thereto, will be solely common
          stock
          of the successor company or its parent or subsidiary substantially equal
          in fair
          market value to the per share consideration received by holders of Shares
          in the
          transaction constituting a Change in Control. The determination of such
          substantial equality of value of consideration shall be made by the Committee
          in
          its sole discretion and its determination shall be conclusive and binding.
           

         

        (b) Definition
          of “Change in Control.”
          Unless
          otherwise specified in an Award Agreement, a “Change in Control” shall mean the
          occurrence of any of the following:

         

        (i) The
          acquisition by any Person of Beneficial Ownership (within the meaning of
          Rule
          13d-3 promulgated under the Exchange Act) of more than fifty percent (50%)
          of
          either (A) the then outstanding shares of common stock of the Company (the
          “Outstanding Company Common Stock”) or (B) the combined voting power of the then
          outstanding voting securities of the Company entitled to vote generally
          in the
          election of directors (the “Outstanding Company Voting Securities) (the
          foregoing Beneficial Ownership hereinafter being referred to as a “Controlling
          Interest”); provided, however, that for purposes of this Section 9(b), the
          following acquisitions shall not constitute or result in a Change of Control:
          (v) any acquisition directly from the Company; (w) any acquisition by the
          Company; (x) any acquisition by any Person that as of the Effective Date
          owns
          Beneficial Ownership of a Controlling Interest; (y) any acquisition by
          any
          employee benefit plan (or related trust) sponsored or maintained by the
          Company
          or any Subsidiary; or (z) any acquisition by any corporation pursuant to
          a
          transaction which complies with clauses (A), (B) and (C) of subsection
          (iii)
          below; or

         

        (ii) During
          any period of two (2) consecutive years (not including any period prior
          to the
          Effective Date) individuals who constitute the Board on the Effective Date
          (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
          Board; provided, however, that any individual becoming a director subsequent
          to
          the Effective Date whose election, or nomination for election by the Company’s
          shareholders, was approved by a vote of at least a majority of the directors
          then comprising the Incumbent Board shall be considered as though such
          individual were a member of the Incumbent Board, but excluding, for this
          purpose, any such individual whose initial assumption of office occurs
          as a
          result of an actual or threatened election contest with respect to the
          election
          or removal of directors or other actual or threatened solicitation of proxies
          or
          consents by or on behalf of a Person other than the Board; or

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (iii) Consummation
          of a reorganization, merger, statutory share exchange or consolidation
          or
          similar corporate transaction involving the Company or any of its Subsidiaries,
          a sale or other disposition of all or substantially all of the assets of
          the
          Company, or the acquisition of assets or stock of another entity by the
          Company
          or any of its Subsidiaries (each a “Business Combination”), in each case,
          unless, following such Business Combination, (A) all or substantially all
          of the
          individuals and entities who were the Beneficial Owners, respectively,
          of the
          Outstanding Company Common Stock and Outstanding Company Voting Securities
          immediately prior to such Business Combination beneficially own, directly
          or
          indirectly, more than fifty percent (50%) of the then outstanding shares
          of
          common stock and the combined voting power of the then outstanding voting
          securities entitled to vote generally in the election of directors, as
          the case
          may be, of the corporation resulting from such Business Combination (including,
          without limitation, a corporation which as a result of such transaction
          owns the
          Company or all or substantially all of the Company’s assets either directly or
          through one or more subsidiaries) in substantially the same proportions
          as their
          ownership, immediately prior to such Business Combination, of the Outstanding
          Company Common Stock and Outstanding Company Voting Securities, as the
          case may
          be, (B) no Person (excluding any employee benefit plan (or related trust)
          of the
          Company or such corporation resulting from such Business Combination or
          any
          Person that as of the Effective Date owns Beneficial Ownership of a Controlling
          Interest) beneficially owns, directly or indirectly, fifty percent (50%)
          or more
          of the then outstanding shares of common stock of the corporation resulting
          from
          such Business Combination or the combined voting power of the then outstanding
          voting securities of such corporation except to the extent that such ownership
          existed prior to the Business Combination and (C) at least a majority of
          the
          members of the Board of Directors of the corporation resulting from such
          Business Combination were members of the Incumbent Board at the time of
          the
          execution of the initial agreement, or of the action of the Board, providing
          for
          such Business Combination; or 

         

        (iv) Approval
          by the shareholders of the Company of a complete liquidation or dissolution
          of
          the Company. 

         

        10. General
          Provisions. 

         

        (a) Compliance
          With Legal and Other Requirements.
          The
          Company may, to the extent deemed necessary or advisable by the Committee,
          postpone the issuance or delivery of Shares or payment of other benefits
          under
          any Award until completion of such registration or qualification of such
          Shares
          or other required action under any federal or state law, rule or regulation,
          listing or other required action with respect to any stock exchange or
          automated
          quotation system upon which the Shares or other Company securities are
          listed or
          quoted, or compliance with any other obligation of the Company, as the
          Committee, may consider appropriate, and may require any Participant to
          make
          such representations, furnish such information and comply with or be subject
          to
          such other conditions as it may consider appropriate in connection with
          the
          issuance or delivery of Shares or payment of other benefits in compliance
          with
          applicable laws, rules, and regulations, listing requirements, or other
          obligations. 

         

        (b) Limits
          on Transferability; Beneficiaries.
          No
          Award or other right or interest granted under the Plan shall be pledged,
          hypothecated or otherwise encumbered or subject to any lien, obligation
          or
          liability of such Participant to any party, or assigned or transferred
          by such
          Participant otherwise than by will or the laws of descent and distribution
          or to
          a Beneficiary upon the death of a Participant, and such Awards or rights
          that
          may be exercisable shall be exercised during the lifetime of the Participant
          only by the Participant or his or her guardian or legal representative,
          except
          that Awards and other rights (other than Incentive Stock Options and Stock
          Appreciation Rights in tandem therewith) may be transferred to one or more
          Beneficiaries or other transferees during the lifetime of the Participant,
          and
          may be exercised by such transferees in accordance with the terms of such
          Award,
          but only if and to the extent such transfers are permitted by the Committee
          pursuant to the express terms of an Award Agreement (subject to any terms
          and
          conditions which the Committee may impose thereon). A Beneficiary, transferee,
          or other person claiming any rights under the Plan from or through any
          Participant shall be subject to all terms and conditions of the Plan and
          any
          Award Agreement applicable to such Participant, except as otherwise determined
          by the Committee, and to any additional terms and conditions deemed necessary
          or
          appropriate by the Committee.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (c) Adjustments. 

         

        (i) Adjustments
          to Awards. In
          the
          event that any extraordinary dividend or other distribution (whether in
          the form
          of cash, Shares, or other property), recapitalization, forward or reverse
          split,
          reorganization, merger, consolidation, spin-off, combination, repurchase,
          share
          exchange, liquidation, dissolution or other similar corporate transaction
          or
          event affects the Shares and/or such other securities of the Company or
          any
          other issuer such that a substitution, exchange, or adjustment is determined
          by
          the Committee to be appropriate, then the Committee shall, in such manner
          as it
          may deem equitable, substitute, exchange or adjust any or all of (A) the
          number and kind of Shares which may be delivered in connection with Awards
          granted thereafter, (B) the number and kind of Shares by which annual
          per-person Award limitations are measured under Section 5 hereof, (C) the
          number and kind of Shares subject to or deliverable in respect of outstanding
          Awards, (D) the exercise price, grant price or purchase price relating to
          any Award and/or make provision for payment of cash or other property in
          respect
          of any outstanding Award, and (E) any other aspect of any Award that the
          Committee determines to be appropriate. 

         

        (ii) Adjustments
          in Case of Certain Corporate Transactions.
          In the
          event of any merger, consolidation or other reorganization in which the
          Company
          does not survive, or in the event of any Change in Control, any outstanding
          Awards may be dealt with in accordance with any of the following approaches,
          as
          determined by the agreement effectuating the transaction or, if and to
          the
          extent not so determined, as determined by the Committee: (a) the continuation
          of the outstanding Awards by the Company, if the Company is a surviving
          corporation, (b) the assumption or substitution for, as those terms are
          defined
          in Section 9(b)(iv) hereof, the outstanding Awards by the surviving corporation
          or its parent or subsidiary, (c) full exercisability or vesting and accelerated
          expiration of the outstanding Awards, or (d) settlement of the value of
          the
          outstanding Awards in cash or cash equivalents or other property followed
          by
          cancellation of such Awards (which value, in the case of Options or Stock
          Appreciation Rights, shall be measured by the amount, if any, by which
          the Fair
          Market Value of a Share exceeds the exercise or grant price of the Option
          or
          Stock Appreciation Right as of the effective date of the transaction).
          The
          Committee shall give written notice of any proposed transaction referred
          to in
          this Section 10(c)(ii) a reasonable period of time prior to the closing
          date for
          such transaction (which notice may be given either before or after the
          approval
          of such transaction), in order that Participants may have a reasonable
          period of
          time prior to the closing date of such transaction within which to exercise
          any
          Awards that are then exercisable (including any Awards that may become
          exercisable upon the closing date of such transaction). A Participant may
          condition his exercise of any Awards upon the consummation of the
          transaction.

         

        (iii) Other
          Adjustments.
          The
          Committee (and the Board if and only to the extent such authority is not
          required to be exercised by the Committee to comply with Section 162(m)
          of the
          Code) is authorized to make adjustments in the terms and conditions of,
          and the
          criteria included in, Awards (including Performance Awards, or performance
          goals
          relating thereto) in recognition of unusual or nonrecurring events (including,
          without limitation, acquisitions and dispositions of businesses and assets)
          affecting the Company, any Related Entity or any business unit, or the
          financial
          statements of the Company or any Related Entity, or in response to changes
          in
          applicable laws, regulations, accounting principles, tax rates and regulations
          or business conditions or in view of the Committee's assessment of the
          business
          strategy of the Company, any Related Entity or business unit thereof,
          performance of comparable organizations, economic and business conditions,
          personal performance of a Participant, and any other circumstances deemed
          relevant; provided that no such adjustment shall be authorized or made
          if and to
          the extent that such authority or the making of such adjustment would cause
          Options, Stock Appreciation Rights, Performance Awards granted pursuant
          to
          Section 8(b) hereof to Participants designated by the Committee as Covered
          Employees and intended to qualify as “performance-based compensation” under Code
          Section 162(m) and the regulations thereunder to otherwise fail to qualify
          as
“performance-based compensation” under Code Section 162(m) and regulations
          thereunder.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (d) Taxes.
          The
          Company and any Related Entity are authorized to withhold from any Award
          granted, any payment relating to an Award under the Plan, including from
          a
          distribution of Shares, or any payroll or other payment to a Participant,
          amounts of withholding and other taxes due or potentially payable in connection
          with any transaction involving an Award, and to take such other action
          as the
          Committee may deem advisable to enable the Company or any Related Entity
          and
          Participants to satisfy obligations for the payment of withholding taxes
          and
          other tax obligations relating to any Award. This authority shall include
          authority to withhold or receive Shares or other property and to make cash
          payments in respect thereof in satisfaction of a Participant's tax obligations,
          either on a mandatory or elective basis in the discretion of the
          Committee.

         

        (e) Changes
          to the Plan and Awards.
          The
          Board may amend, alter, suspend, discontinue or terminate the Plan, or
          the
          Committee's authority to grant Awards under the Plan, without the consent
          of
          shareholders or Participants, except that any amendment or alteration to
          the
          Plan shall be subject to the approval of the Company's shareholders not
          later
          than the annual meeting next following such Board action if such shareholder
          approval is required by any federal or state law or regulation (including,
          without limitation, Rule 16b-3 or Code Section 162(m)) or the rules of
          any stock
          exchange or automated quotation system on which the Shares may then be
          listed or
          quoted), and the Board may otherwise, in its discretion, determine to submit
          other such changes to the Plan to shareholders for approval; provided that,
          without the consent of an affected Participant, no such Board action may
          materially and adversely affect the rights of such Participant under any
          previously granted and outstanding Award. The Committee may waive any conditions
          or rights under, or amend, alter, suspend, discontinue or terminate any
          Award
          theretofore granted and any Award Agreement relating thereto, except as
          otherwise provided in the Plan; provided that, without the consent of an
          affected Participant, no such Committee or the Board action may materially
          and
          adversely affect the rights of such Participant under such Award. 

         

        (f) Limitation
          on Rights Conferred Under Plan.
          Neither
          the Plan nor any action taken hereunder shall be construed as (i) giving
          any Eligible Person or Participant the right to continue as an Eligible
          Person
          or Participant or in the employ or service of the Company or a Related
          Entity;
          (ii) interfering in any way with the right of the Company or a Related
          Entity to terminate any Eligible Person's or Participant's Continuous Service
          at
          any time, (iii) giving an Eligible Person or Participant any claim to be
          granted any Award under the Plan or to be treated uniformly with other
          Participants and Employees, or (iv) conferring on a Participant any of the
          rights of a shareholder of the Company unless and until the Participant
          is duly
          issued or transferred Shares in accordance with the terms of an
          Award.

         

        (g) Unfunded
          Status of Awards; Creation of Trusts.
          The
          Plan is intended to constitute an “unfunded” plan for incentive and deferred
          compensation. With respect to any payments not yet made to a Participant
          or
          obligation to deliver Shares pursuant to an Award, nothing contained in
          the Plan
          or any Award shall give any such Participant any rights that are greater
          than
          those of a general creditor of the Company; provided that the Committee
          may
          authorize the creation of trusts and deposit therein cash, Shares, other
          Awards
          or other property, or make other arrangements to meet the Company's obligations
          under the Plan. Such trusts or other arrangements shall be consistent with
          the
“unfunded” status of the Plan unless the Committee otherwise determines with the
          consent of each affected Participant. The trustee of such trusts may be
          authorized to dispose of trust assets and reinvest the proceeds in alternative
          investments, subject to such terms and conditions as the Committee may
          specify
          and in accordance with applicable law.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (h) Nonexclusivity
          of the Plan.
          Neither
          the adoption of the Plan by the Board nor its submission to the shareholders
          of
          the Company for approval shall be construed as creating any limitations
          on the
          power of the Board or a committee thereof to adopt such other incentive
          arrangements as it may deem desirable including incentive arrangements
          and
          awards which do not qualify under Section 162(m) of the Code.

         

        (i) Payments
          in the Event of Forfeitures; Fractional Shares.
          Unless
          otherwise determined by the Committee, in the event of a forfeiture of
          an Award
          with respect to which a Participant paid cash or other consideration, the
          Participant shall be repaid the amount of such cash or other consideration.
          No
          fractional Shares shall be issued or delivered pursuant to the Plan or
          any
          Award. The Committee shall determine whether cash, other Awards or other
          property shall be issued or paid in lieu of such fractional shares or whether
          such fractional shares or any rights thereto shall be forfeited or otherwise
          eliminated.

         

        (j) Governing
          Law.
          The
          validity, construction and effect of the Plan, any rules and regulations
          under
          the Plan, and any Award Agreement shall be determined in accordance with
          the
          laws of the State of Delaware without giving effect to principles of conflict
          of
          laws, and applicable federal law.

         

        (k) Non-U.S.
          Laws.
          The
          Committee shall have the authority to adopt such modifications, procedures,
          and
          subplans as may be necessary or desirable to comply with provisions of
          the laws
          of foreign countries in which the Company or its Subsidiaries may operate
          to
          assure the viability of the benefits from Awards granted to Participants
          performing services in such countries and to meet the objectives of the
          Plan.

         

        (l) Plan
          Effective Date and Shareholder Approval; Termination of Plan.
          The
          Plan shall become effective on the Effective Date, subject to subsequent
          approval, within 12 months of its adoption by the Board, by shareholders
          of the
          Company eligible to vote in the election of directors, by a vote sufficient
          to
          meet the requirements of Code Sections 162(m) (if applicable) and 422,
          Rule
          16b-3 under the Exchange Act (if applicable), applicable requirements under
          the
          rules of any stock exchange or automated quotation system on which the
          Shares
          may be listed or quoted, and other laws, regulations, and obligations of
          the
          Company applicable to the Plan. Awards may be granted subject to shareholder
          approval, but may not be exercised or otherwise settled in the event the
          shareholder approval is not obtained. The Plan shall terminate at the earliest
          of (a) such time as no Shares remain available for issuance under the Plan,
          (b)
          termination of this Plan by the Board, or (c) the tenth anniversary of
          the
          Effective Date. Awards outstanding upon expiration of the Plan shall remain
          in
          effect until they have been exercised or terminated, or have expired.

         

        Adopted
          October __, 2005

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

     

    Schedule
      3.11

    

    None

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

    

    Schedule
      3.20 

     

    The
      Company has not obtained Key Man and other life and disability insurance with
      respect to any of its executive officers.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Purchase Agreement

    By
      and
      Between MDwerks, Inc. and Vicis Capital Master Fund

    January
      18, 2008

     

    Schedule
      7.14

    

    
      	 	
              1.

            	
              Interest
                and $5,000,000 principal on Senior Secured Convertible Notes issued
                by the
                Company to Gottbetter Capital Master,
                Ltd.

            

    

    

    
      	 	
              2.

            	
              General
                working capital and client financing requirements of the
                company

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