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                  GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
             GUARANTEED MINIMUM WITHDRAWAL BENEFIT FOR LIFE RIDER

This rider is added to the Policy. It provides for a guaranteed minimum
withdrawal benefit for the life of the Annuitant(s) as described below. In
order to obtain the full benefit described in this rider, your annual partial
surrenders must be limited and you must allocate Account Value to the
prescribed Investment Strategy. You may not terminate this rider apart from the
Policy.

All rider terms will have the same meaning as under the Policy, unless
otherwise provided.

Asset Allocation Model - The Asset Allocation Model shown on the Policy Data
Pages.

Benefit Date - The date that will be the later of:

     (1) the Policy Date; and

     (2) the Valuation Day of the most recent reset of the Withdrawal Base.

Benefit Reduction Percentage - The percentage shown on the Policy Data Pages.

Benefit Year - Each one-year period following the Benefit Date and each
anniversary of that date.

Designated Investment Subdivisions - The Designated Investment Subdivisions
shown on the Policy Data Pages.

Gross Withdrawal - An amount partially surrendered from Account Value including
any surrender charge, any taxes withheld and any applicable premium taxes.

Investment Strategy - The Asset Allocation Model and/or Designated Investment
Subdivisions for this rider.

Joint Annuitant - the additional life on which the Withdrawal Factor may be
based.

Rider Death Benefit - The death benefit provided under this rider.

Roll-Up Value - An amount used to calculate the Withdrawal Limit. The Roll-Up
Value on the Policy Date is equal to the initial Purchase Payment. The Roll-Up
Value may be adjusted based on the daily roll-up rate shown on the Policy Data
Pages.

Withdrawal Base - An amount used to establish the Withdrawal Limit. The
Withdrawal Base on the Policy Date is equal to the initial Purchase Payment.
The Withdrawal Base may change as a result of a Purchase Payment, withdrawal,
or a restore or reset.

Withdrawal Factor - The percentage shown on the Policy Data Pages used to
establish the Withdrawal Limit. The Withdrawal Factor is based on the age of
the younger Annuitant on the earlier of the Valuation Day of the first Gross
Withdrawal and the Valuation Day when the Account Value is reduced to [$100].

Withdrawal Limit - The total amount you may partially surrender in a Benefit
Year without reducing the benefits provided under this rider.

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Investment Strategy

To maximize the Withdrawal Limit and Rider Death Benefit, you must allocate all
Account Value to the Investment Strategy. The Investment Strategy options are
shown on the Policy Data Pages and may include Designated Investment
Subdivisions and/or Asset Allocation Models.

On a monthly basis, we will rebalance Account Value to the Investment
Subdivisions in accordance with the percentages allocated. In addition, on any
Valuation Day after any transaction involving a partial surrender, receipt of a
Purchase Payment or a transfer of Account Value, we will rebalance Account
Value to the Investment Subdivisions in accordance with the percentages
allocated, unless you instruct us otherwise.

Beginning on the first Valuation Day after you choose not to follow the
Investment Strategy, your Withdrawal Factor and Rider Death Benefit will be
reduced as follows:

The Withdrawal Factor will be (a) minus (b), where:

     (a) is the Withdrawal Factor; and

     (b) is the Withdrawal Factor multiplied by the Benefit Reduction
         Percentage.

The Rider Death Benefit will be (a) minus (b), where:

     (a) is the Rider Death Benefit; and

     (b) is the Rider Death Benefit multiplied by the Benefit Reduction
         Percentage.

You may elect to resume participation in the Investment Strategy, as described
in the Restoration or Reset of the Benefit provision, provided we receive
notice at our [Home Office] of your election in a form acceptable to us.

We will not reduce your Withdrawal Factor or Rider Death Benefit if you are not
following the Investment Strategy due to a portfolio liquidation or a portfolio
dissolution and the assets are transferred from the liquidated or dissolved
portfolio to another portfolio.

The Guarantee Account, if any, under the Policy will not be available as an
Investment Option under this rider for as long as this rider is in effect.

Guaranteed Minimum Withdrawal Benefit

If you:

  .  allocate all Account Value to the Investment Strategy; and

  .  limit total Gross Withdrawals in a Benefit Year to an amount no greater
     than the Withdrawal Limit;

then you will be eligible to receive total Gross Withdrawals in each Benefit
Year equal to the Withdrawal Limit until the last death of an Annuitant.

Withdrawal Limit

The Withdrawal Limit is calculated on each Valuation Day. The Withdrawal Limit
is (a) multiplied by (b), where:

     (a) is the greatest of:

         (1) the Account Value on the prior Policy anniversary;

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         (2) the Withdrawal Base; and

         (3) the Roll-Up Value; and

     (b) is the Withdrawal Factor.

The Withdrawal Factor is established based on the age of the younger Annuitant
on the earlier of the Valuation Day of the first Gross Withdrawal and the
Valuation Day when the Account Value is reduced to [$100]. The Withdrawal
Factor percentages are shown on the Policy Data Pages.

Withdrawal Base

An amount used to establish the Withdrawal Limit. The Withdrawal Base on the
Policy Date is equal to the initial Purchase Payment. The Withdrawal Base may
change as a result of a Purchase Payment, withdrawal, or a restore or reset.

Roll-Up Value

The initial Roll-Up Value equals your Purchase Payment(s). On each Valuation
Day your Roll-Up Value will be adjusted. The new Roll-Up Value is equal to
(a) plus (b) plus (c), where:

     (a) is the Roll-Up Value on the prior Valuation Day;

     (b) is any Purchase Payment(s) made on the current Valuation Day;

     (c) is the daily roll-up rate, shown on the Policy Data Pages, multiplied
         by the cumulative Purchase Payments.

The Roll-Up Value will continue to increase until the earlier of the last
roll-up date, shown on the Policy Data Pages, or the date of the first
withdrawal. On these dates, the Roll-Up Value will equal the Roll-Up Value on
the prior Valuation Day. After this date, additional Purchase Payments will not
increase the Roll-Up Value.

On any Valuation Day you make a Gross Withdrawal, if that Gross Withdrawal plus
all prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal
Limit, your Roll-Up Value will be reduced to zero. After this date, additional
Purchase Payments will not increase the Roll-Up Value.

Purchase Payments

Any Purchase Payment applied to your Policy will adjust your Withdrawal Base
and Rider Death Benefit, and may adjust your Roll-Up Value as described in the
Roll-Up Value section above. In order to obtain the full benefit provided by
this rider, you must allocate all assets to the prescribed Investment Strategy
from the Benefit Date. Except as noted below, if you have allocated all assets
to the Investment Strategy from the Benefit Date, any subsequent Purchase
Payment will be added to the Withdrawal Base and the Rider Death Benefit and
may be added to the Roll-Up Value. Otherwise, the Purchase Payment will be
added to the Withdrawal Base and if applicable, the Roll-Up Value, and the
Rider Death Benefit will be increased by (a) minus (b), where:

     (a) is the Purchase Payment; and

     (b) is the Purchase Payment multiplied by the Benefit Reduction Percentage.

We reserve the right to not adjust the Withdrawal Base, Rider Death Benefit,
and/or the Roll-Up Value for any additional Purchase Payments.

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Restoration or Reset of the Benefit

Restoration

If your Withdrawal Factor and Rider Death Benefit have been reduced because you
have not allocated all assets to the prescribed Investment Strategy, you will
have an opportunity to restore your Withdrawal Factor and Rider Death Benefit
on a Policy anniversary. If such Policy anniversary is not a Valuation Day, the
restore will occur on the next Valuation Day. The restore feature available
under this rider may be used only once.

On the Valuation Day we restore your benefit, we will:

     (a) restore the Withdrawal Factor to 100% of the Withdrawal Factor
         established as of the date of the first withdrawal;

     (b) calculate your Rider Death Benefit to equal the lesser of the total
         Purchase Payments less Gross Withdrawals and current Account Value;

     (c) calculate your Withdrawal Base to equal the lesser of the Withdrawal
         Base as of the date of the restore, determined as if you have not
         allocated outside of the prescribed Investment Strategy, and the
         current Account Value;

     (d) allocate your assets to the Investment Strategy in effect as of the
         last Benefit Date prior to the reduction in benefits in accordance to
         your instructions; and

     (e) assess a rider charge equal to the charge that was in effect as of
         your last Benefit Date prior to the reduction in benefits.

If you want to restore your benefit, we must receive notice of your election in
a form acceptable to us [at least 15 days] prior to your next Policy
anniversary. The restore provision is not available if, on the Policy
anniversary, any Annuitant is older than the maximum restore age as shown on
the Policy Data Pages.

Reset

You may reset your Withdrawal Base on [an annual] anniversary of the Policy
Date when your Account Value is higher than the Withdrawal Base. If such Policy
anniversary is not a Valuation Day, the reset will occur on the next Valuation
Day. The reset date must be at least [12 months] after the later of the Policy
Date and the last reset date. Resets will occur automatically unless such
automatic resets are or have been terminated.

On the Valuation Day we reset your benefit, we will:

     (a) reset the Withdrawal Factor to 100% of the Withdrawal Factor
         established as of the date of first withdrawal;

     (b) reset the Rider Death Benefit to the lesser of the total Purchase
         Payments less Gross Withdrawals and current Account Value;

     (c) reset the Withdrawal Base to your Account Value;

     (d) reset the Investment Strategy to the current Investment Strategy; and

     (e) reset the charge for this rider (the new charge, which may be higher
         than your previous charge, will never exceed the maximum rider charge
         as shown on the Policy Data Pages).

Any change to the charge or to the required Investment Strategy for this rider
will be communicated to you in writing prior to the Policy anniversary date.
The reset provision will end

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if, on the Policy anniversary, any Annuitant is older than the maximum reset
age as shown on the Policy Data Pages.

Automatic resets will continue until and unless:

     (a) you submit a written request to terminate automatic resets (such
         request must be received [at least 15 days] prior to the Policy
         anniversary date);

     (b) the Investment Strategy is not followed;

     (c) the Investment Strategy changes, allocations are affected, and we do
         not receive confirmation of new allocations;

     (d) the Annuity Commencement Date is reached ;

     (e) there is a change in ownership of the Policy.

If automatic resets have terminated, you may later reinstate automatic resets
for any future Policy anniversary by submitting a written request to do so;
provided you are following the Investment Strategy and Income Payments have not
begun.

Withdrawals

If a Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is in
excess of the Withdrawal Limit, your Withdrawal Base, Rider Death Benefit and
Roll-Up Value are reduced.

The new Withdrawal Base equals the lesser of (a) and (b), where:

     (a) is the Account Value on the Valuation Day after the Gross Withdrawal;
         and

     (b) is the prior Withdrawal Base minus the Gross Withdrawal.

The new Rider Death Benefit is described in the Rider Death Benefit section.

The new Roll-Up Value will be zero. Additional Purchase Payments will not
increase the Roll-Up Value.

If the total Gross Withdrawals in a Benefit Year are less than or equal to the
Withdrawal Limit, we will waive any surrender charge on the Gross Withdrawals.

Required Minimum Distributions

If all Account Value is allocated to the Investment Strategy, the Withdrawal
Limit will be increased for any Benefit Year to the extent necessary to meet
any minimum distribution requirements (before death) under federal tax law.
This increase applies only to the required minimum distribution based on the
value of the Policy.

Reduction in Account Value

After taking a partial surrender, your Account Value may be less than the
amount required to keep your Policy in effect. In this event, or if your
Account Value is reduced to [$100] , the following will occur:

  .  If the Withdrawal Limit is less than $100, we will pay you the greatest of
     the Rider Death Benefit, the Account Value and the present value of the
     Withdrawal Limit in a lump sum, calculated using the Annuity 2000
     Mortality Table and an interest rate of 3%.

  .  If the Withdrawal Limit is greater than $100, we will begin Income
     Payments. We will make payments of a fixed amount for the life of the
     Annuitant or, if there are Joint Annuitants, the last surviving Annuitant.
     The fixed amount payable annually will equal the most recently calculated
     Withdrawal Limit. We will make payments monthly unless agreed otherwise.
     If the monthly amount is less than $100, we will reduce the frequency

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         so that the payment will be at least $100. The Rider Death Benefit
         will continue under this provision. The Rider Death Benefit will be
         reduced by each payment. The Rider Death Benefit, if any, will be
         payable on the death of the last surviving Annuitant.

Death Provisions

At the death of the last Annuitant, a Death Benefit may be payable under this
Policy and rider. The amount of any Death Benefit payable will be the greatest
of (a), (b) and (c), where:

     (a) is the Death Benefit as calculated under the base Policy;

     (b) is the Rider Death Benefit; and

     (c) is any amount payable by any other optional death benefit rider (if
         applicable).

The Death Benefit payable will be paid according to the distribution rules
under the Policy.

If the designated beneficiary is a surviving spouse who is not an Annuitant,
whose age is [45] through [85], and who elects to continue the Policy as the
new Owner, this rider will continue. The Withdrawal Base and Roll-Up Value for
the new Owner will be the Death Benefit determined as of the first Valuation
Day we receive at our [Home Office] due proof of death and all required forms.
The Withdrawal Factor for the new Owner will be based on the age of that Owner
on the date of the first Gross Withdrawal for that Owner.

If the designated beneficiary is a surviving spouse who is an Annuitant and who
elects to continue the Policy as the Owner, this rider will continue. The
Withdrawal Base and Roll-Up Value will be the same as it was under the Policy
for the deceased Owner. If no partial surrenders were taken prior to the first
Valuation Day we receive due proof of death and all required forms at our [Home
Office], the Withdrawal Factor for the surviving spouse will be established
based on the age of the surviving spouse on the date of the first Gross
Withdrawal for the surviving spouse. Otherwise, the Withdrawal Factor will
continue as it was under the Policy for the deceased Owner.

If the surviving spouse cannot continue the rider, the rider and the rider
charge will terminate on the next Policy anniversary.

Rider Death Benefit

The Rider Death Benefit is used to determine the death benefit, if any, payable
under this Policy and rider as described in the Death Provisions section above.

The Rider Death Benefit on the Policy Date is equal to the initial Purchase
Payment.

Purchase Payments in a Benefit Year increase the Rider Death Benefit. If you
have allocated all assets to the Investment Strategy from the Benefit Date, any
subsequent Purchase Payment will be added to the Rider Death Benefit.
Otherwise, the Rider Death Benefit will be increased by (a) minus (b), where:

     (a) is the Purchase Payment; and

     (b) is the Purchase Payment multiplied by the Benefit Reduction Percentage.

Gross Withdrawals in a Benefit Year decrease the Rider Death Benefit. If a
Gross Withdrawal plus all prior Gross Withdrawals in a Benefit Year is less
than or equal to the Withdrawal Limit, the Rider Death Benefit will be reduced
by the Gross Withdrawal. If a Gross Withdrawal plus all

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prior Gross Withdrawals in a Benefit Year is in excess of the Withdrawal Limit,
your Rider Death Benefit will equal the lesser of (a) and (b), where:

     (a) is the Account Value on the Valuation Day after the Gross Withdrawal;
         and

     (b) is the prior Rider Death Benefit minus the Gross Withdrawal.

If you choose not to follow the Investment Strategy, your Rider Death Benefit
will be reduced as described in the Investment Strategy provision.

Rider Charge

There will be a daily asset charge for this rider. This charge is added to the
Policy's daily mortality and expense charge and applied against all amounts
allocated to the Investment Subdivisions. The charge for this rider will depend
upon whether the Policy is a single Annuitant or Joint Annuitant Policy. This
charge is shown on the Policy Data Pages. Once applied, the Joint Annuitant
charge will continue while the rider is in effect. The charge for this rider
will be reset if you choose to reset your Withdrawal Base and Rider Death
Benefit. The new charge, which may be higher than your previous charge, will
never exceed the maximum charge as shown on the Policy Data Pages.

When this Rider is Effective

The rider becomes effective on the Policy Date. It will remain in effect while
this Policy is in force and before the Maturity Date. This rider may not be
terminated prior to the Maturity Date. On the Maturity Date, this rider will
terminate.

Change of Ownership

We must approve any assignment or sale of this Policy unless under a court
ordered assignment.

General Provisions

For purposes of this rider:

  .  A non-natural entity Owner must name an Annuitant and may name the
     Annuitant's spouse as a Joint Annuitant.

  .  An individual Owner must also be an Annuitant and may name his/her spouse
     as Joint Annuitant at issue.

  .  A Joint Owner must be the Owner's spouse.

  .  If you marry after issue, you may add your spouse as a Joint Owner and
     Joint Annuitant or as a Joint Annuitant only, subject to our approval.

For Genworth Life and Annuity Insurance Company,

                                      /s/ Pamela S. Schutz
                                      ------------------------
                                      Pamela S. Schutz
                                      President

                                      7Securities Purchase and Exchange Agreement

 Exhibit 10.1 
 MEDICAL SOLUTIONS MANAGEMENT INC. 
 $1,266,000 6% SENIOR SECURED DEBENTURES DUE APRIL 17, 2009

 WARRANTS TO PURCHASE 8,440,000 SHARES OF COMMON STOCK 
 SECURITIES PURCHASE AND EXCHANGE AGREEMENT 
 By and Among 
 MEDICAL SOLUTIONS MANAGEMENT INC. 
 and 
 THE PURCHASERS NAMED HEREIN 
 DATED APRIL 17, 2007 

 SECURITIES PURCHASE AND EXCHANGE AGREEMENT 
 This SECURITIES PURCHASE AND EXCHANGE AGREEMENT (the "Agreement"), dated this 17th day of April, 2007, is made by and among MEDICAL SOLUTIONS MANAGEMENT
INC., a Nevada corporation (the "Company"), and VICIS CAPITAL MASTER FUND ("Vicis") and APOGEE FINANCIAL INVESTMENTS INC. ("Apogee", together with Vicis, the "Purchasers"). 
 R E C I T A L S 
 WHEREAS, pursuant to the terms and conditions of this
Agreement, the Company wishes to issue and sell to the Purchasers the following securities (collectively, the "Securities"): (a) 6% Convertible Senior Subordinated Secured Debentures due April 17, 2009 in the aggregate principal amount of
$1,266,000 and in the form attached hereto as Exhibit A (each a "Debenture" and collectively, the "Debentures"); (b) warrants to purchase an aggregate of 4,220,000 shares of common stock, par value $.0001 per share (the "Common Stock"),
of the Company initially at an exercise price of $.345 per share in the form attached hereto as Exhibit B (the "$.345 Warrants"); and (c) warrants to purchase an aggregate of 4,220,000 shares of Common Stock initially at an exercise
price of $.375 per share in the form attached hereto as Exhibit C (the "$.375 Warrants", and together with the $.345 Warrants, the "Warrants"), and each Purchaser desires to purchase such Securities from the Company in such amounts as set
forth on Schedule 1.1 attached hereto. 
 WHEREAS, Vicis is the holder of a promissory note issued by the Company, dated
December 29, 2006, in the principal amount of $400,000, a promissory note issued by the Company, dated January 18, 2007, in the principal amount of $200,000, and a promissory note issued by the Company dated February 20, 2007, in the
principal amount of $450,000 (collectively, the “Vicis Bridge Notes”), which, pursuant to that certain Note Purchase Agreement, dated February 20, 2007, between Vicis and the Company, will automatically convert into a Debenture to be
issued pursuant to this Agreement; 
 WHEREAS, Apogee is the holder of a promissory and original issue discount note issued by the Company in
the principal amount of $216,000 (the “Apogee Bridge Note”), which will be converted and exchanged into a Debenture to be issued pursuant to this Agreement 
 NOW, THEREFORE, the Company and the Purchasers 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 each Purchaser,
and each Purchaser will purchase from the Company, the Securities set forth, and for the consideration (the "Purchase Price") set forth, on Schedule 1.1 hereto opposite the name of such Purchaser. 
  

 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. CDT on April 17, 2007 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 will deliver to each Purchaser: (a) a Debenture dated the Closing Date, in the principal amount set forth on Schedule 1.1
hereto opposite the name of such Purchaser; (b) a warrant to purchase the number of shares of Common Stock as set forth on Schedule 1.1 hereto opposite the name of such Purchaser, registered in such Purchaser's name representing such
Purchaser's $.345 Warrants; and (c) a warrant to purchase the number of shares of Common Stock as set forth on Schedule 1.1 hereto opposite the name of such Purchaser, registered in such Purchaser's name representing such Purchaser's
$.375 Warrants. 
 (b) Each Purchaser shall deliver to the Company the Purchase Price set forth next to such Purchaser's name on Schedule
1.1 hereto. 
 ARTICLE II 
 SECURITY DOCUMENTS 
 2.1 Company Security Documents. 
 (a) Security Agreement. All of the obligations of the Company under the Debentures shall be secured by a lien on all the personal property and
assets of the Company now existing or hereinafter acquired granted pursuant to a security agreement dated of even date herewith between the Company and Vicis, as agent for the Purchasers ("Security Agreement"). 
 (b) Stock Pledge Agreement. To secure the obligations of the Company under the Debentures, the Company shall pledge, to Vicis, as agent for the
Purchasers, all the capital stock of its subsidiary, OrthoSupply Management, Inc., a Delaware corporation ("OrthoSupply" or "Subsidiary"), pursuant to a stock pledge agreement ("Stock Pledge Agreement"). The Company represents that a certificate
representing all shares of capital stock of OrthoSupply have been delivered to Vicis pursuant to that certain Pledge Agreement, dated June 28, 2006, between Vicis and the Company. 
 (c) Guaranty. All of the obligations of the Company under the Debentures shall be guaranteed pursuant to a guaranty agreement by OrthoSupply
("Guaranty Agreement"). 
 (d) Guarantor Security Documents. All of the obligations of OrthoSupply under the Guaranty Agreement shall
be secured by a lien on all the personal property and assets of OrthoSupply now existing or hereinafter acquired granted pursuant to a guarantor security agreement dated of even date herewith between OrthoSupply and Vicis, as agent for the
Purchasers ("Guarantor Security Agreement"). 
  

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 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
 The Company hereby represents and warrants to the
Purchasers 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, condition
(financial or otherwise) or prospects of the Company and its Subsidiary 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 under the Transaction Documents (as hereinafter defined). 
 3.2 Subsidiaries. The Company has no subsidiaries
other than OrthoSupply and its indirect wholly-owned subsidiary, OrthoSupply Management, LLC, a Massachusetts limited liability company (the "LLC"). The LLC currently has no assets and is not currently conducting operations of any kind (business or
otherwise), and since December 30, 2005, has not conducted any such operations. The Company owns, directly or indirectly, all of the capital stock of OrthoSupply, consisting of 100 shares of common stock, free and clear of any and all Liens,
and all the issued and outstanding shares of capital stock of OrthoSupply are validly issued and are fully paid, non-assessable and free of preemptive and similar rights. OrthoSupply 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. OrthoSupply 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. 
 3.3 No Violation. Neither the Company nor any of its subsidiaries is in violation of: (a) any of the
provisions of its certificate or articles of incorporation, bylaws or other organizational or charter documents; or (b) any judgment, decree or order or any statute, ordinance, rule or regulation (including federal and state securities laws)
applicable to the Company or OrthoSupply, except for possible violations which would not, individually or in the aggregate, have a Material Adverse Effect. 
 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 $.0001 per share, of which (A) 20,471,729 shares 

  

 3 

 
are outstanding, (B) 25,290,335 shares are reserved for issuance upon the exercise of all outstanding warrants, and (C) 9,661,088 shares are
reserved for issuance upon the conversion of all outstanding debentures,and (2) 5,000,000 shares of preferred stock, par value $.001 per share, of which no shares are outstanding. All of such outstanding shares have been, or upon issuance will
be, validly issued, are fully paid and nonassessable. 
 (b) Except as disclosed in the Company's reports, schedules, forms, statements and
other documents required to be filed by it with the Securities and Exchange Commission (the "SEC") pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the date hereof (the "SEC
Documents"): 
 (i) except pursuant to the Amended and Restated Investor Rights Agreement of the Company, dated as of June 28, 2006 (the
"Investor Rights Agreement"), 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 OrthoSupply, or contracts, commitments, understandings or arrangements by which the Company or OrthoSupply is or may become
bound to issue additional shares of capital stock of the Company or OrthoSupply 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 OrthoSupply; 
 (iii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness (as defined in Section 3.14 hereof) of the Company or OrthoSupply or by which the Company or OrthoSupply is or may
become bound; 
 (iv) except for filings made by Vicis, there are no financing statements securing obligations in any material amounts,
either singly or in the aggregate, filed in connection with the Company; 
 (v) except for the Investor Rights Agreement, there are no
agreements or arrangements under which the Company or OrthoSupply 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 OrthoSupply that contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or OrthoSupply is or may become bound to redeem a security of the Company or OrthoSupply; 
 (vii) there are no securities or instruments containing antidilution or similar provisions that will be triggered by the issuance of the Securities (except for such warrants with respect to which waivers of
anti-dilution rights are being obtained in connection herewith); and 
  

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 (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, the Company has authorized and reserved shares of Common Stock necessary for the issuance of all shares of Common Stock issuable upon conversion of the Debentures (the
"Debenture Shares") and shares of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares"). 
 (b) All actions by the board
of directors of the Company (the "Board"), the Company and its stockholders necessary for the valid issuance of the Debenture Shares and the Warrant Shares pursuant to the terms of the Debentures and the Warrants, respectively, has been taken.

 (c) The Debenture Shares and Warrant Shares, when issued and paid for upon conversion of the Debentures or exercise of the Warrants,
respectively, 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. Assuming the
accuracy of each of the representations and warranties set forth in Article IV hereof, the issuance by the Company to the Purchasers 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, the Security Agreement, the Stock Pledge Agreement, the Debentures, 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 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 Debentures 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 such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies or (ii) as any rights to indemnity or contribution hereunder may be limited by federal and state securities laws and public policy consideration. 
 3.7 Dilutive Effect. The Company understands and acknowledges that its obligation to issue the Debenture Shares and Warrant Shares upon conversion
of the Debentures or the exercise of the Warrants, as the case may be, in accordance therewith is absolute and 

  

 5 

 
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 Debenture Shares and the 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 OrthoSupply 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 OrthoSupply is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations applicable to the Company or OrthoSupply or by which any property or asset of the Company or OrthoSupply is bound or
affected, except in the case of clauses (ii) and (iii), for such breaches or defaults as would not be reasonably expected to have a Material Adverse Effect. 
 3.9 Governmental Consents. Except for the filing of a Form D with the SEC and any filings (if any) required by applicable state securities laws, the registration of the Shares under the Securities Act for
resale by the Purchasers, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person (as
hereinafter defined) 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. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain at or prior to the Closing pursuant to the preceding sentence have been obtained or effected. The Company is unaware of any facts or circumstances which might prevent the Company from
obtaining or effecting any of the foregoing. 
 3.10 No General Solicitation. Neither the Company, nor any of its affiliates, nor any
Person acting on its or their behalf, has 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 the Securities. 
 3.11 No Integrated Offering. None of the Company, its subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the Securities Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the Securities Act or any applicable stockholder approval provisions. 
 3.12
Placement Agent's Fees. 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 either Purchaser) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold the 

  

 6 

 
Purchasers harmless against, any liability, loss or expense (including, without limitation, attorney's fees and out-of-pocket expenses) arising in connection
with any claim for any such fees or commissions. 
 3.13 Litigation. There is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company, the transactions contemplated by the Transaction Documents, the
Common Stock or any of its subsidiaries or any of their respective current or former officers or directors in their capacities as such. To the knowledge of the Company, there has not been within the past two (2) years, and there is not pending,
any investigation by the SEC involving the Company or any current or former director or officer of the Company (in his or her capacity as such). The SEC has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the Securities Act within the past two (2) years. 
 3.14 Indebtedness and Other Contracts.
Except as disclosed in the SEC Documents, neither the Company nor OrthoSupply (a) has any outstanding Indebtedness (as defined below), (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 

  

 7 

 
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. 
 3.15 Financial Information; SEC Documents. Since December 31, 2005, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act. As of their respective dates, the SEC Documents filed since December 31, 2005 complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of such SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in such SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Purchasers that is not included in the SEC Documents filed since December 31, 2005 contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. 
 3.16 Absence of Certain Changes. Except as disclosed in the SEC Documents, since December 31, 2005, there has been no material adverse change
and no material adverse development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its subsidiaries. Since December 31, 2005, the Company has not
(i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $50,000 outside of the ordinary course of business or (iii) had capital expenditures, individually or in the aggregate, in excess
of $100,000. The Company has not taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which 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 

  

 8 

 
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. 
 3.17 Foreign
Corrupt Practices. 
 (a) Since December 31, 2005, neither the Company, nor any director, officer, agent, employee or other Person
acting on behalf of the Company has, in the course of its actions (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. 
 (b) None of the subsidiaries of the Company, 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 (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. 
 3.18 Transactions With Affiliates. Except as set forth in the SEC Documents,
none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or OrthoSupply (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. 
 3.19 Insurance. The Company and OrthoSupply 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 OrthoSupply are engaged. Neither the Company nor OrthoSupply has been refused any insurance coverage sought or applied for and
neither the Company nor OrthoSupply 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. 
 3.20 Employee Relations. Neither the Company nor OrthoSupply 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 

  

 9 

 
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 the continued employment of each such executive officer does not subject the Company or
OrthoSupply to any liability with respect to any of the foregoing matters. The Company and OrthoSupply 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. 
 3.21 Title. The Company and OrthoSupply 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, encumbrances and defects except such as are described in the SEC Documents or such as do not materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and OrthoSupply. Any real property and facilities held under lease by the Company and OrthoSupply 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 and OrthoSupply. 
 3.22 Intellectual Property Rights. Neither the Company nor OrthoSupply has any patents, trademarks, trade names, service marks copyrights, or registrations and applications therefor, trade secrets or any other intellectual property
right, whether owned by the Company, OrthoSupply or a third party. 
 3.23 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. 
 3.24 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, 

  

 10 

 
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. 
 3.25 Sarbanes-Oxley Act.
The Company is in compliance with any and all 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, except where such noncompliance would not have a Material Adverse Effect. 
 3.26 FDA
Compliance. The Company and OrthoSupply, and the manufacture, marketing and sales of the Company's and OrthoSupply's products, complies with any and all applicable requirements of the Federal Food, Drug and Cosmetic Act, any rules and
regulations of the Food and Drug Administration promulgated thereunder, and any similar laws outside of the United States to which the company is subject, except where such noncompliance would not have a Material Adverse Effect. 
 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 $100,000 (each an "Applicable 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 Applicable 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 Applicable Contract. The Company has not given or received from any other entity any notice or other communication (whether oral or written) regarding any actual, alleged, possible or
potential violation or breach of, or default under, any Applicable Contract. 
 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, 2006. 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 Ranking of Debentures. Except for the $2,000,000 6% Senior Secured Convertible
Debenture Due June 28, 2008 issued to Vicis and any amounts payable by the Company to Vicis under the Guarantee Fee, Reimbursement and Indemnification Agreement, by and between the 

  

 11 

 
Company and Vicis, no Indebtedness of the Company is senior to or ranks pari passu with the Debentures in right of payment, whether with respect of
payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise. 
 3.31 Disclosure. The Company confirms
that neither it nor any other Person acting on its behalf has provided the Purchasers or their respective agents or counsel with any information that constitutes or might constitute material, nonpublic information that has not been disclosed in the
SEC Documents. The Company understands and confirms that the Purchasers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Purchasers 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. 
 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 
 Each Purchaser, severally and not jointly, hereby represents and warrants to the Company as of the date of this Agreement as follows: 
 4.1 Accredited Investor. Such Purchaser acknowledges and agrees that (i) the offering and sale of the Securities to be purchased hereunder by
such Purchaser are intended to be exempt from registration under the Securities Act by virtue of Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder, (ii) such Securities have not been registered under the
Securities Act and (iii) the Company has represented to such Purchaser (assuming the veracity of the representations of such Purchaser made herein) that such Securities have been offered and sold by the Company in reliance upon an exemption
from registration provided in Section 4(2) of the Securities Act and Regulation D thereunder. In accordance therewith and in furtherance thereof, such Purchaser represents and warrants to and agrees with the Company that it is an
accredited investor (as defined in Rule 501 promulgated under the Securities Act). 
 4.2 No Distribution. Such Purchaser hereby
represents and warrants that such Purchaser is acquiring the Securities to be purchased hereunder by such Purchaser for its own account for investment and not with a view to distribution, and with no present intention of distributing such Securities
or selling such Securities for distribution. Such Purchaser understands that such Securities are being sold to such Purchaser in a transaction which is exempt from the registration requirements of the Securities Act. Accordingly, such Purchaser
acknowledges that it has been advised that such Securities have not been registered under the Securities Act and are being sold by the Company in reliance upon the veracity of such Purchaser's representations contained herein and upon the exemption
from the registration requirements provided by the Securities Act and the securities laws of all applicable states. Such Purchaser's acquisition of such Securities shall constitute a confirmation of the foregoing representation and warranty and
understanding thereof. 
 4.3 Evaluation. Such Purchaser has such knowledge and experience in financial and business matters as is
required for evaluating the merits and risks of making this investment, and such Purchaser has received such information requested by such Purchaser concerning the 

  

 12 

 
business, management and financial affairs of the Company in order to evaluate the merits and risks of making this investment. Further, such Purchaser
acknowledges that such Purchaser has had the opportunity to ask questions of, and receive answers from, the officers of the Company concerning the terms and conditions of this investment and to obtain information relating to the organization,
operation and business of the Company and of the Company's contracts, agreements and obligations or needed to verify the accuracy of any information contained herein or any other information about the Company. Except as set forth in this Agreement,
no representation or warranty is made by the Company to induce such Purchaser to make this investment, and any representation or warranty not made herein or therein is specifically disclaimed and no information furnished to such Purchaser or such
Purchaser's advisor(s) in connection with the sale were in any way inconsistent with the information stated herein. Such Purchaser further understands and acknowledges that no Person has been authorized by the Company to make any representations or
warranties concerning the Company, including as to the accuracy or completeness of the information contained in this Agreement. 
 4.4
Investment Risks. The purchase of the Securities to be purchased hereunder by such Purchaser involves risks which such Purchaser has evaluated, and such Purchaser is able to bear the economic risk of the purchase of such Securities and the
loss of its entire investment. Such Purchaser is able to bear the substantial economic risk of the investment for an indefinite period of time, has no need for liquidity in such investment and can afford a complete loss of such investment. Such
Purchaser's overall commitment to investments that are not readily marketable is not, and its acquisition of Securities will not cause such overall commitment to become, disproportionate to its net worth and such Purchaser has adequate means of
providing for its current needs and contingencies. 
 4.5 Accuracy of Representations. Such Purchaser is making the foregoing
representations and warranties with the intent that they may be relied upon by the Company in determining the suitability of the sale of the Securities to be purchased hereunder to such Purchaser for purposes of federal and state securities laws.
Accordingly, such Purchaser represents and warrants that the information stated herein is true, accurate and complete. 
 4.6
Authorization; Enforceability. The individual signing below on behalf of such Purchaser hereby warrants and represents that he/she is authorized to execute this Agreement on behalf of such Purchaser. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action, if any, in respect thereof on the part of such Purchaser and no other proceedings on the part of such Purchaser are necessary
to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Purchaser and constitutes a valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms (subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity (whether applied in a proceeding in equity or at law)).

 4.7 Resale; Certificate Legend. In entering into this Agreement and in purchasing the Securities to be purchased hereunder by such
Purchaser, such Purchaser further acknowledges that: 
  

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 (a) Neither such Securities nor any interest therein may be resold by such Purchaser in the absence of a
registration under the Securities Act or an exemption from registration. In particular, such Purchaser is aware that such Securities will be "restricted securities", as such term is defined in Rule 144 promulgated under the Securities Act ("Rule
144"), and they may not be sold pursuant to Rule 144, unless the conditions thereof are met. The Company has no obligation to register such Securities (or Debenture Shares or Warrant Shares issuable upon conversion or exercise thereof). 

(b) The following legends (or similar language) shall be placed on the certificate(s) or other instruments evidencing the Securities to be purchased
hereunder by such Purchaser (or Debenture Shares or Warrant Shares issued upon conversion or exercise thereof): 
 THE SECURITIES REPRESENTED
BY THIS [DEBENTURE] [CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

 (c) The Company may at any time place a stop transfer order on its transfer books against the Securities to be purchased hereunder by such
Purchaser (or Debenture Shares or Warrant Shares issuable upon conversion or exercise thereunder). Such stop order will be removed, and further transfer of such securities will be permitted, upon an effective registration of such securities, or the
receipt by the Company of an opinion of counsel satisfactory to the Company that such further transfer may be effected pursuant to an applicable exemption from registration. 
 ARTICLE V 
 CONDITIONS TO CLOSING OF THE PURCHASERS 
 The obligation of each Purchaser to purchase the Securities at the Closing is subject to the fulfillment to such 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 

  

 14 

 
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 any 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 Purchasers hereunder shall be legally permitted by all laws and regulations to which
the Purchasers and the Company are subject. 
 5.4 Other Agreements and Documents. The Company or OrthoSupply, as applicable, shall
have executed and delivered the following agreements and documents: 
 (a) The Debentures in the form of Exhibit A attached hereto;

 (b) The $.345 Warrants in the form of Exhibit B attached hereto; 
 (c) The $.375 Warrants in the form of Exhibit C attached hereto; 
 (d) The Security Agreement in the form of Exhibit D hereto; 
 (e) The Stock Pledge Agreement in the
form of Exhibit E attached hereto; 
 (f) The Guaranty Agreement in the form of Exhibit F attached hereto; 
 (g) The Guarantor Security Agreement in the form of Exhibit G attached hereto; 
 (h) Financing Statements on Form UCC-1 with respect to all personal property and assets of the Company and OrthoSupply; 
 (i) A Certificate of Good Standing from the state of incorporation of the Company and OrthoSupply; 
 (j) 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 Purchasers shall reasonably request; 
 (k) A written waiver, in form and substance satisfactory to the Purchasers, from each Person other than the Purchasers who has any of the following
rights: 
 (i) any currently effective right of first refusal to acquire the Securities; or 
  

 15 

 (ii) any right to an anti-dilution adjustment of securities issued by the Company that are held by such
Person that will be triggered as a result of the issuance of the Securities; and 
 (l) All necessary consents or waivers, if any, from all
parties to any other material agreements to which the Company is a party or by which it is bound immediately prior to the Closing in order that the transactions contemplated hereby may be consummated and the business of the Company may be conducted
by the Company after the Closing without adversely affecting the Company; and 
 5.5 Due Diligence Investigation. No fact shall have
been discovered, whether or not reflected in the Schedules hereto, which in the Purchasers' determination would make the consummation of the transactions contemplated by this Agreement not in the Purchasers' best interests. 
 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 Purchasers
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 any 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 Purchasers hereunder shall be legally permitted by all laws and
regulations to which the Purchasers and the Company are subject. 
 6.3 Payment of Purchase Price; Surrender of Notes. The Company
shall have received from each Purchaser the Purchase Price set forth opposite the name of such Purchaser on Schedule 1.1 hereto, and, in connection therewith, Vicis shall have surrendered for cancellation the Vicis Bridge Notes and Apogee
shall have surrendered for cancellation the Apogee Bridge Note. 
 ARTICLE VII 
 AFFIRMATIVE COVENANTS 
 The Company hereby covenants and agrees, so long as any
Debenture 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 

  

 16 

 
marks, copyrights, patents or processes owned or possessed by it and necessary to the conduct of its business. 
 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 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.

 7.4 Payment of Indebtedness. The Company shall and shall cause its subsidiaries to pay or cause to be paid 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. 
 7.5 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. 
 7.6 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); 
  

 17 

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

(c) the institution or threatening of 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, could materially adversely affect the business, prospects, properties, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole whether or not arising in the ordinary course of business; or 
 (d) any information relating to the Company or any subsidiary which could reasonably be expected to materially and adversely affect the assets, property, business or condition (financial or otherwise) of the Company or its ability to
perform the terms of this Agreement. 
 Any notice given under this Section 7.6 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. 
 7.7 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. 
 7.8 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, including, but not limited to, the requirements of the FDA Act, the Prescription Drug Marketing Act, the
Control Substance Act, the Employee Retirement Income Security Act of 1978, the Environmental Protection Act, the Occupational Safety and Health Act, the Foreign Corrupt Practices Act and the rules and regulations of each of the agencies
administering such acts. 
 7.9 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 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. 
 7.10 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 generally accepted accounting principles applied on a consistent basis. 
  

 18 

 (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 7.10 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. 
 7.11 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. 
 7.12 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 and not for debt repayment. 
 7.13 Payment of the Debenture. The Company shall pay the principal of and interest on the Debenture in the time, the manner and the form provided therein, except to the extent converted into Common Stock in
accordance with its terms. 
 7.14 SEC Reporting Requirements. The Company shall comply with its reporting and filing obligations
pursuant to Section 13 or 15(d) of the Exchange Act, and the Company shall not, prior to April 17, 2009, 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 otherwise permit such termination. 
 7.15 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of providing for the conversion of the Debentures (including shares issued in payment of interest thereon) and the exercise of the Warrants,
such number of shares of Common Stock as shall from time to time equal the Debenture Shares issuable upon the due conversion of 100% of the Debentures (including shares issued in payment of interest thereon) and the Warrant Shares issuable upon the
due exercise of the Warrants, in accordance with their respective terms 
 7.16 Further Assurances. From time to time the Company
shall execute and deliver to the Purchasers and the Purchasers 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. 
  

 19 

 ARTICLE VIII 
 NEGATIVE COVENANTS 
 The Company hereby covenants and agrees, so long as any Debenture remains
outstanding, it will not (and not allow any of its subsidiaries to), directly or indirectly, without the prior written consent of holders of the majority of the principal amount of Debentures then outstanding (the "Majority Holders"), as follows:

 8.1 Payment of Dividends; Stock Purchase. Declare or pay any cash dividends on, or make any distribution to the holders of, any
shares of capital stock of the Company, other than dividends or distributions payable in such capital stock, or purchase, redeem or otherwise acquire or retire for value any shares of capital stock of the Company or warrants or rights to acquire
such capital stock, other than in connection with repurchases upon the termination of employment of employee equityholders. 
 8.2 Stay,
Extension and Usury Laws. At any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereinafter in force, which may affect the
covenants or the performance of the Debentures, the Company hereby expressly waiving all benefit or advantage of any such law, or by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Purchasers but will
suffer and permit the execution of every such power as though no such law had been enacted. 
 8.3 Reclassification. Effect any
reclassification, combination or reverse stock split of the Common Stock. 
 8.4 Liens. Except as otherwise provided in this Agreement
or otherwise created in favor of Vicis, 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; 
 (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 securing indebtedness of the Company owing to Vicis as of the date hereof or liens securing indebtedness of the Company or any subsidiaries
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 Purchasers; 
  

 20 

 (d) 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; 
 (e) 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); 
 (f) any attachment or judgment lien not constituting an Event of Default; 
 (g) 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; 
 (h) 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; 
 (i) 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; 
 (j) 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;

 (k) 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; and 
 (l) the replacement, extension
or renewal of any lien permitted by this Section 8.4 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. 
 All of the Foregoing Liens described in subsections (a) – (l) above shall be referred to as "Permitted
Liens". 
 8.5 Indebtedness. Create, incur, assume, suffer, permit to exist, or guarantee, directly or indirectly, any Indebtedness,
excluding, however, from the operation of this covenant: 
  

 21 

 (a) any indebtedness or the incurring, creating or assumption of any indebtedness secured by liens
permitted by the provisions of Section 8.4(c) above; 
 (b) the endorsement of instruments for the purpose of deposit or collection in
the ordinary course of business; 
 (c) 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; 
 (d) indebtedness under
the Debentures or disclosed in the SEC Reports filed prior to the date hereof and otherwise existing on the date hereof; 
 (e) 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; 
 (f) indebtedness relating to loans from the Company to its subsidiaries; 
 (g) indebtedness relating to capital leases in an amount not to exceed $500,000; 
 (h) accounts or notes
payable arising out of the purchase of merchandise or services in the ordinary course of business; or 
 (i) indebtedness (if any) expressly
permitted by, and in accordance with, the terms and conditions of this Agreement. 
 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, or acquire all or substantially all of the capital stock or assets of another business or entity. 
 8.7 Change of Control Transaction. Enter into a Change in Control Transaction. For purposes of this Agreement, "Change in Control Transaction"
means, except with respect to acquisitions by the Company in the normal course of business or in connection with the possible expansion of the Board to up to five persons, 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 voting securities by the Purchasers 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 

  

 22 

 
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 reincorporation merger involving the Company or with respect to which the Company is the survivor), 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). 
 8.8 Amendment of Charter Documents.
Make any further amendment to the articles of incorporation or by-laws of the Company or any of its subsidiaries. 
 8.9 Loans and
Advances. Except for loans and advances outstanding as of the Closing Date, 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. 
 8.10 Transactions with Affiliates. 
 (a) Make any intercompany transfers 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. 
 8.12 Investments. Make any investments in, or purchase any stock, option, warrant, or other security or evidence of indebtedness of, any Person
(exclusive of any subsidiary), other than 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. 
 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 and the Debentures (each an "Event of Default" and, collectively, "Events of Default"): 
 (a) if the Company shall default in the payment of (i) any part of the principal of any Debenture, when the same shall become due and payable, whether at maturity or at a date fixed for prepayment or by acceleration or otherwise; or
(ii) the interest on any Debenture; when the same shall become due and payable; and in each case such default shall 

  

 23 

 
have continued without cure for ten (10) 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 VIII or IX hereof and such default shall have continued
without cure for fifteen (15) days after a Default Notice is given to the Company; 
 (c) if the Company shall default in the
performance of any other material agreement or covenant contained in this Agreement and such default shall not have been remedied to the satisfaction of the Majority Holders within thirty-five (35) days after a Default Notice shall have been
given to the Company; 
 (d) if the Company shall have failed to obtain the waivers of all Persons holding preemptive or anti-dilution
adjustment rights as required by Section 5.4(k) hereof and such default shall not have been remedied to the satisfaction of the Majority Holders, within thirty-five (35) days after a Default Notice shall have been given to the Company;

 (e) if any representation or warranty made in this Agreement or in or any certificate delivered pursuant hereto shall prove to have been
incorrect in any material respect when made; 
 (f) if any default shall occur under any indenture, mortgage, agreement, instrument or
commitment evidencing or under which there is at the time outstanding any indebtedness of the Company or a subsidiary, in excess of $100,000, or which results in such indebtedness, in an aggregate amount (with other defaulted indebtedness) in excess
of $250,000 becoming due and payable prior to its due date and if such indenture or instrument so requires, the holder or holders thereof (or a trustee on their behalf) shall have declared such indebtedness due and payable; 
 (g) 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; 
 (h) 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 
 (i) if the Company or any subsidiary shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts; or
if the Company or any subsidiary shall suffer a receiver or trustee for it or substantially all of its assets to be appointed, and, if appointed without its consent, not to be discharged or stayed within ninety (90) days; or if the Company or
any subsidiary shall suffer proceedings under any law relating to bankruptcy, insolvency or the reorganization or relief of debtors to be instituted by or against it, and, if contested by it, not to be dismissed or stayed within ninety
(90) days; or if the Company or any subsidiary shall suffer any writ of attachment or execution or any similar process to be issued or levied against it or any significant part of its property which is not 

  

 24 

 
released, stayed, bonded or vacated within ninety (90) days after its issue or levy; or if the Company or any subsidiary takes corporate action in
furtherance of any of the aforesaid purposes or conditions. 
 9.2 Remedies. 
 (a) Upon the occurrence and continuance of an Event of Default, the Majority Holders may at any time (unless all defaults shall theretofore have been
remedied) at their option, by written notice or notices to the Company (i) declare the Debentures to be due and payable, whereupon the same shall forthwith mature and become due and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which are hereby waived; and (ii) declare any other amounts payable to the Purchasers under this Agreement or as contemplated hereby due and payable. 
 (b) Notwithstanding anything contained in Section 9.2(a), in the event that at any time after the principal of the Debentures shall so become due
and payable and prior to the date of maturity stated in the Debentures all arrears of principal of and interest on the Debentures (with interest at the rate specified in the Debentures on any overdue principal and, to the extent legally enforceable,
on any interest overdue) shall be paid by or for the account of the Company, then the Majority Holders, by written notice or notices to the Company, may (but shall not be obligated to) waive such Event of Default and its consequences and rescind or
annul such declaration, but no such waiver shall extend to or affect any subsequent Event of Default or impair any right resulting therefrom. 
 (c) Enforcement. In case any one or more Events of Default shall occur and be continuing, a 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 its Debenture 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 principal of or interest on a Debenture, the Company will pay to the applicable Purchaser such further amount as shall be sufficient to cover the cost and the expenses of collection, including, without limitation,
reasonable 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 the Debentures upon the Purchasers 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 
 [INTENTIONALLY OMITTED] 
 ARTICLE XI 
 INDEMNIFICATION 
 11.1 Indemnification by the Company. The Company agrees to defend, indemnify and hold harmless each Purchaser and shall reimburse each Purchaser
for, from and against each claim, loss, liability, cost and expense (including without limitation, interest, penalties, costs of preparation and investigation, and the reasonable fees, disbursements and expenses of 

  

 25 

 
attorneys, accountants and other professional advisors) (collectively, "Losses") 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 Company contained herein or in any certificate, document, or instrument delivered to such Purchaser pursuant
hereto. 
 11.2 Indemnification by the Purchasers. Each Purchaser, severally and not jointly, agrees to defend, indemnify and hold
harmless the Company and shall reimburse the Company for, from and against all Losses 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 of such Purchaser contained herein or in any certificate, document or instrument delivered to the Company pursuant hereto. 
 11.3 Procedure. The indemnified party shall promptly notify the indemnifying party of any claim, demand, action or proceeding for which indemnification will be sought under Sections 11.1 or 11.2 of this
Agreement, and, if such claim, demand, action or proceeding is a third party claim, demand, action or proceeding, the indemnifying party will have the right at its expense to assume the defense thereof using counsel reasonably acceptable to the
indemnified party. The indemnified party shall have the right to participate, at its own expense, with respect to any such third party claim, demand, action or proceeding. In connection with any such third party claim, demand, action or proceeding,
the Purchasers and the Company shall cooperate with each other and provide each other with access to relevant books and records in their possession. No such third party claim, demand, action or proceeding shall be settled without the prior written
consent of the indemnified party, which shall not be unreasonably withheld. If a firm written offer is made to settle any such third party claim, demand, action or proceeding and the indemnifying party proposes to accept such settlement and the
indemnified party refuses to consent to such settlement, then: (i) the indemnifying party shall be excused from, and the indemnified party shall be solely responsible for, all further defense of such third party claim, demand, action or
proceeding; and (ii) the maximum liability of the indemnifying party relating to such third party claim, demand, action or proceeding shall be the amount of the proposed settlement if the amount thereafter recovered from the indemnified party
on such third party claim, demand, action or proceeding is greater than the amount of the proposed settlement. 
 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 Majority Holders. 
  

 26 

 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. Any Purchaser may assign its rights hereunder (provided, that such Purchaser may
not so assign any of such rights to any competitor of the Company), and the Company may not assign its rights or obligations hereunder without the consent of the Majority Holders. 
 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 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, addressed as follows: 
  

			
		
	if to the Company:	  	
		
		  	Medical Solutions Management Inc.
		  	237 Cedar Hill Street
		  	Marlboro MA 01752
		  	Attn: Chief Executive Officer
		  	with a copy to:
		  	Andrew B. White, Esq.
		  	Bingham McCutchen LLP
		  	150 Federal Street
		  	Boston, Massachusetts 02110
		
	if to the Purchasers:	  	
		
		  	Vicis Capital Master Fund
		  	Tower 56, Suite 700
		  	126 E. 56th Street, 7th Floor
		  	New York, NY 10022
		  	Attn: Shad Stastney

  

 27 

			
	 	  	Apogee Financial Investments, Inc.
		  	4902 Eisenhower Blvd, Suite 185
		  	Tampa, Florida 33634
		  	Attn: Chris Phillips
		
		  	with a copy to:
		
		  	Andrew D. Ketter, Esq.
		  	Quarles & Brady LLP
		  	411 East Wisconsin Avenue
		  	Milwaukee, Wisconsin 53202

 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. 
 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. Each party 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. 
 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 

  

 28 

 
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. 
 12.12
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 
 12.13 Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser confirms that it has independently participated in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors. 
 [signature page follows] 
  

 29 

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

	
	COMPANY:
	
	MEDICAL SOLUTIONS MANAGEMENT INC.
	
	 /s/ Brian Lesperance

	Brian Lesperance
	Chief Executive Officer
	
	PURCHASERS:
	
	VICIS CAPITAL MASTER FUND
	
	    By: Vicis Capital LLC
	
	 /s/ Shad Stastney

	Shad Stastney
	Chief Operating Officer
	
	APOGEE FINANCIAL INVESTMENTS INC.
	
	 /s/ Chris Phillips

	Chris Phillips
	President

 EXHIBIT A 
 FORM OF DEBENTURE 

 EXHIBIT B 
 FORM OF $.345 WARRANTS 

 EXHIBIT C 
 FORM OF $.375 WARRANTS 

 EXHIBIT D 
 FORM OF SECURITY AGREEMENT 

 EXHIBIT E 
 FORM OF STOCK PLEDGE AGREEMENT 

 EXHIBIT F 
 FORM OF GUARANTY AGREEMENT 

 EXHIBIT G 
 FORM OF GUARANTOR SECURITY AGREEMENT 

 DISCLOSURE SCHEDULE 
 Schedule 1.1 Securities 
  

							
	 Purchaser
	  	 Purchase Price
	  	Security	  	Amount
	Vicis	  	Surrender of	  	Debenture	  	$ 1,050,000
		  	Vicis Bridge Notes	  	$.345 Warrant	  	3,500,000 shares of Common Stock
		  		  	$.375 Warrant	  	3,500,000 shares of Common Stock
				
	Apogee	  	Surrender of	  	Debenture	  	$ 216,000
		  	Apogee Bridge Note	  	$.345 Warrant	  	720,000 shares of Common Stock
		  		  	$.375 Warrant	  	720,000 shares of Common Stock

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]