Document:

GUARANTY
      AGREEMENT

     

    THIS
      GUARANTY AGREEMENT (this “Guaranty”)
      is
      made as of November 14, 2008, by and between PATIENT
      PAYMENT SOLUTIONS, INC.,
      a
      Florida corporation (“Guarantor”),
      and
      DEBT OPPORTUNITY FUND, LLLP, a limited liability limited partnership
      organized under the laws of the State of Florida (the “Lender”).

     

    RECITALS

     

    A. Guarantor
      is either a direct or an indirect wholly-owned subsidiary of MDwerks, Inc.,
      a
      Delaware corporation (“MDwerks”).

     

    B.  Pursuant
      to a Loan and Securities Purchase Agreement of even date herewith by and between
      Lender, MDwerks, and Xeni Financial Services, Corp. (together with MDwerks,
      the
“Borrowers”), a Florida corporation (as amended or modified from time to time,
      the “Loan
      Agreement”),
      the
      Borrowers borrowed up to $10,300,000 from Lender (the “Loan”)
      evidenced by the issuance of a Senior Secured Promissory Note in the form
      attached thereto (the “Note”).

     

    C. It
      is a
      condition precedent to the Loan that Guarantor execute and deliver to Lender
      a
      guaranty in the form hereof. This is one of the Guaranty Agreements referred
      to
      in the Loan Agreement.

     

    AGREEMENTS

     

    In
      consideration of the recitals and for other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, Guarantor hereby
      agrees with Lender as follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    When
      used
      in this Guaranty, capitalized terms shall have the meanings specified in the
      Loan Agreement, the preamble, the recitals and as follows:

     

    Event
      of Default.
“Event
      of Default” shall have the meaning specified in the Loan Agreement.

     

    Guaranty.
      “Guaranty” shall mean this Guaranty, as the same shall be amended from time to
      time in accordance with the terms hereof.

     

    Law.
“Law”
      shall mean any federal, state, local or other law, rule, regulation or
      governmental requirement of any kind, and the rules, regulations,
      interpretations and orders promulgated thereunder.

     

    Obligations.
      “Obligations” shall mean (a) all obligations under the Note, including, without
      limitation, all principal, interest, costs, expenses and other amounts now
      or
      hereafter due under the Note (including, without limitation, all principal
      amounts advanced thereunder before, on or after the date hereof) and (b) all
      debts, liabilities, obligations, covenants and agreements of the Borrowers
      or
      Guarantor arising from or contained in the Transaction Documents.

    

    Person.
      “Person” shall mean and include an individual, partnership, corporation, trust,
      unincorporated association and any unit, department or agency of
      government.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      II

    THE
      GUARANTY

     

    2.1 The
      Guaranty.
      Guarantor, for itself, its successors and assigns, hereby unconditionally and
      absolutely guarantees to Lender the full and complete payment and performance
      when due (whether at stated maturity, by acceleration or otherwise) of each
      of
      the Obligations. This is a guaranty of payment and performance and not of
      collection.

     

    2.2 Waivers
      and Consents.

     

    (a) Guarantor
      acknowledges that the obligations undertaken herein involve the guaranty of
      obligations of a Person other than Guarantor and, in full recognition of that
      fact, Guarantor consents and agrees that Lender may, to the extent permitted
      under the Transaction Documents, at any time and from time to time, without
      notice or demand, and without affecting the enforceability or continuing
      effectiveness hereof: (i) supplement, modify, amend, extend, renew, accelerate
      or otherwise change the time for payment or the other terms of the Obligations
      or any part thereof, including without limitation any decrease of the principal
      amount thereof or the rate(s) of interest thereon; (ii) supplement, modify,
      amend or waive, or enter into or give any agreement, approval or consent with
      respect to, the Obligations or any part thereof, or any of the Transaction
      Documents or any additional security or guaranties, or any condition, covenant,
      default, remedy, right, representation or term thereof or thereunder; (iii)
      accept new or additional instruments, documents or agreements in exchange for
      or
      relative to any of the Transaction Documents or the Obligations or any part
      thereof; (iv) accept partial payments on the Obligations; (v) receive and hold
      additional security or guaranties for the Obligations or any part thereof;
      (vi)
      release, reconvey, terminate, waive, abandon, fail to perfect, subordinate,
      exchange, substitute, transfer and/or enforce any security or guaranties, and
      apply any security and direct the order or manner of sale thereof as Lender
      in
      its sole and absolute discretion may determine; (vii) release any Person from
      any personal liability with respect to the Obligations or any part thereof;
      (viii) settle, release on terms satisfactory to Lender or by operation of
      applicable Law or otherwise, liquidate or enforce any Obligations and any
      security or guaranty in any manner, consent to the transfer of any security
      and
      bid and purchase at any sale; and/or (ix) consent to the merger, change or
      any
      other restructuring or termination of the corporate existence of a Borrower
      or
      any other Person, and correspondingly restructure the Obligations, and any
      such
      merger, change, restructuring or termination shall not affect the liability
      of
      Guarantor or the continuing effectiveness hereof, or the enforceability hereof
      with respect to all or any part of the Obligations.

     

    (b) Upon
      the
      occurrence and during the continuance of any Event of Default, Lender may
      enforce this Guaranty independently of any other remedy, guaranty or security
      Lender at any time may have or hold in connection with the Obligations, and
      it
      shall not be necessary for Lender to marshal assets in favor of a Borrower,
      any
      other guarantor of the Obligations or any other Person or to proceed upon or
      against and/or exhaust any security or remedy before proceeding to enforce
      this
      Guaranty. Guarantor expressly waives any right to require Lender, upon the
      occurrence and during the continuance of an Event of Default, to marshal assets
      in favor of a Borrower or any other Person or to proceed against a Borrower
      or
      any other guarantor of the Obligations or any collateral provided by any Person,
      and agrees that Lender may proceed against any obligor and/or the collateral
      in
      such order as it shall determine in its sole and absolute discretion. Lender
      may
      file a separate action or actions against Guarantor, whether action is brought
      or prosecuted with respect to any security or against any other Person, or
      whether any other Person is joined in any such action or actions. Guarantor
      agrees that Lender and Borrowers may deal with each other in connection with
      the
      Obligations or otherwise, or alter any contracts or agreements now or hereafter
      existing between them, in any manner whatsoever, all without in any way altering
      or affecting the security of this Guaranty.

     

    
      
         

      

      
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    (c) The
      rights of Lender hereunder shall be reinstated and revived, and the
      enforceability of this Guaranty shall continue, with respect to any amount
      at
      any time paid on account of the Obligations which thereafter shall be required
      to be restored or returned by Lender upon the bankruptcy, insolvency or
      reorganization of any Person, all as though such amount had not been paid.
      The
      rights of Lender created or granted herein and the enforceability of this
      Guaranty shall remain effective at all times to guarantee the full amount of
      all
      the Obligations even though the Obligations, including any part thereof or
      any
      other security or guaranty therefor, may be or hereafter may become invalid
      or
      otherwise unenforceable as against Borrowers or any other guarantor of the
      Obligations and whether or not any Borrower or any other guarantor of the
      Obligations shall have any personal liability with respect thereto.

     

    (d) To
      the
      extent permitted by applicable law, Guarantor expressly waives any and all
      defenses now or hereafter arising or asserted by reason of: (i) any disability
      or other defense of any Borrower or any other guarantor for the Obligations
      with
      respect to the Obligations (other than full payment and performance of all
      of
      the Obligations); (ii) the unenforceability or invalidity of any security for
      or
      guaranty of the Obligations or the lack of perfection or continuing perfection
      or failure of priority of any security for the Obligations; (iii) the
      cessation for any cause whatsoever of the liability of any Borrower or any
      other
      guarantor of the Obligations (other than by reason of the full payment and
      performance of all Obligations); (iv) any failure of Lender to marshal assets
      in
      favor of any Borrower or any other Person; (v) any failure of Lender to give
      notice of sale or other disposition of collateral to any Borrower or any other
      Person liable for the Obligations or any defect in any notice that may be given
      in connection with any sale or disposition of collateral; (vi) any failure
      of
      Lender to comply with applicable Laws in connection with the sale or other
      disposition of any collateral or other security for any Obligation, including,
      without limitation, any failure of Lender to conduct a commercially reasonable
      sale or other disposition of any collateral or other security for any
      Obligation; (vii) any act or omission of Lender or others that directly or
      indirectly results in or aids the discharge or release of any Borrower or any
      other guarantor of the Obligations, or of any security or guaranty therefor
      by
      operation of Law or otherwise; (viii) any failure of Lender to file or enforce
      a
      claim in any bankruptcy or other proceeding with respect to any Person; (ix)
      the
      election by Lender, in any bankruptcy proceeding of any Person, of the
      application or non-application of Section 1111(b)(2) of the United States
      Bankruptcy Code; (x) any extension of credit or the grant of any lien under
      Section 364 of the United States Bankruptcy Code; (xi) any use of collateral
      under Section 363 of the United States Bankruptcy Code; (xii) any agreement
      or
      stipulation with respect to the provision of adequate protection in any
      bankruptcy proceeding of any Person; (xiii) the avoidance of any lien or
      security interest in favor of Lender for any reason; (xiv) any bankruptcy,
      insolvency, reorganization, arrangement, readjustment of debt, liquidation
      or
      dissolution proceeding commenced by or against any Person, including without
      limitation any discharge of, or bar or stay against collecting, all or any
      of
      the Obligations (or any interest thereon) in or as a result of any such
      proceeding; or (xv) any action taken by Lender that is authorized by this
      Section or any other provision of any Transaction Document. Until all of the
      Obligations have been paid in full, Guarantor expressly waives all presentments,
      demands for payment or performance, notices of nonpayment or nonperformance,
      protests, notices of protest, notices of dishonor and all other notices or
      demands of any kind or nature whatsoever with respect to the Obligations, and
      all notices of acceptance of this Guaranty or of the existence, creation or
      incurrence of new or additional Obligations.

     

    2.3 Condition
      of Borrowers.
      Guarantor represents and warrants to Lender that it has established adequate
      means of obtaining from the Borrowers, on a continuing basis, financial and
      other information pertaining to the business, operations and condition
      (financial and otherwise) of any Borrower and its assets and properties.
      Guarantor hereby expressly waives and relinquishes any duty on the part of
      Lender (should any such duty exist) to disclose to Guarantor any matter, fact
      or
      thing related to the business, operations or condition (financial or otherwise)
      of any Borrower or its assets or properties, whether now known or hereafter
      known by Lender during the life of this Guaranty. With respect to any of the
      Obligations, Lender need not inquire into the powers of any Borrower or agents
      acting or purporting to act on its behalf, and all Obligations made or created
      in good faith reliance upon the professed exercise of such powers shall be
      guaranteed hereby.

     

    
      
         

      

      
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    2.4 Continuing
      Guaranty.
      This is
      a continuing guaranty and shall remain in full force and effect as to all of
      the
      Obligations until all amounts owing by Borrowers to Lender on the Obligations
      shall have been paid in full.

     

    2.5  Subrogation;
      Subordination.
      Guarantor expressly subordinates and postpones any claim for reimbursement,
      contribution, indemnity or subrogation which Guarantor may have against a
      Borrower as a guarantor of the Obligations and any other legal or equitable
      claim against a Borrower arising out of the payment of the Obligations by
      Guarantor or from the proceeds of any collateral for this Guaranty, until all
      amounts owing to Lender under the Obligations shall have been paid in full.
      In
      furtherance, and not in limitation, of the foregoing waiver, until all amounts
      owing to Lender under the Obligations shall have been paid in full, Guarantor
      hereby agrees that no payment by Guarantor pursuant to this Guaranty shall
      constitute Guarantor a creditor of Borrower. Until all amounts owing to Lender
      under the Obligations shall have been paid in full, Guarantor shall not seek
      any
      reimbursement from any Borrower in respect of payments made by Guarantor in
      connection with this Guaranty, or in respect of amounts realized by Lender
      in
      connection with any collateral for the Obligations, and Guarantor expressly
      subordinates and postpones any right to enforce any remedy that Lender now
      has
      or hereafter may have against any other Person and waives the benefit of, or
      any
      right to participate in, any collateral now or hereafter held by Lender. No
      claim which any Guarantor may have against any other guarantor of any of the
      Obligations or against any Borrower, to the extent not subordinated and
      postponed pursuant to this Section, shall be enforced nor any payment accepted
      until the Obligations are paid in full.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF GUARANTOR

     

    Guarantor
      hereby represents and warrants to Lender as follows:

     

    3.1 Authorization.
      Guarantor is a corporation duly and validly organized and existing under the
      laws of the State of Florida, has the corporate power to own its owned assets
      and properties and to carry on its business, and is duly licensed or qualified
      to do business in all jurisdictions in which failure to do so would have a
      material adverse effect on its business or financial condition. The making,
      execution, delivery and performance of this Guaranty, and compliance with its
      terms, have been duly authorized by all necessary corporate action of
      Guarantor.

     

    3.2 Enforceability.
      This
      Guaranty is the legal, valid and binding obligation of Guarantor, enforceable
      against Guarantor in accordance with its terms, except (i) as limited by general
      equitable principles and applicable bankruptcy, insolvency, reorganization,
      moratorium and other laws of general application affecting enforcement of
      creditors’ rights generally, (ii) as limited by laws relating to the
      availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    3.3 Absence
      of Conflicting Obligations.
      The
      making, execution, delivery and performance of this Guaranty, and compliance
      with its terms, do not violate any existing provision of Law; the articles
      of
      incorporation or bylaws of Guarantor; or any material agreement or instrument
      to
      which Guarantor is a party or by which it or any of its assets is bound, subject
      to the consent of Vicis Capital Master Fund being obtained.

     

    
      
         

      

      
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    3.4 Consideration
      for Guaranty.
      Guarantor acknowledges and agrees with Lender that but for the execution and
      delivery of this Guaranty by Guarantor, Lender would not made the Loan to the
      Borrowers. Guarantor acknowledges and agrees that the proceeds of the Loan
      will
      result in significant benefit to Guarantor, which is either a direct or an
      indirect wholly-owned subsidiary of MDwerks and or intended beneficiary of
      such
      proceeds.

     

    ARTICLE
      IV

    COVENANTS
      OF THE GUARANTOR

     

    4.1 Actions
      by Guarantor.
      Guarantor shall not take or permit any act, or omit to take any act, that would:
      (a) cause a Borrower to breach any of the Obligations; (b) intentionally impair
      the ability of a Borrower to perform any of the Obligations; or (c) cause an
      Event of Default under the Loan Agreement.

     

    4.2 Reporting
      Requirements.
      To the
      extent not disclosed by MDwerks in reports required to be filed with the
      Commission pursuant to the Exchange Act, Guarantor shall furnish, or cause
      to be
      furnished, to Lender such information respecting the business, assets and
      financial condition of Guarantor as Lender may reasonably request in
      writing.

     

    ARTICLE
      V

    MISCELLANEOUS

     

    5.1 Expenses
      and Attorneys’ Fees.
      Guarantor shall pay all reasonable fees and expenses incurred by Lender,
      including the reasonable, documented fees of counsel, in connection with the
      protection or enforcement of its rights under this Guaranty, including without
      limitation the protection and enforcement of such rights in any bankruptcy,
      reorganization or insolvency proceeding involving a Borrower or Guarantor,
      both
      before and after judgment.

     

    5.2 Revocation.
      This is
      a continuing guaranty and shall remain in full force and effect until Lender
      receives written notice of revocation signed by Guarantor. Upon revocation
      by
      written notice, this Guaranty shall continue in full force and effect as to
      all
      Obligations contracted for or incurred before revocation, and as to them Lender
      shall have the rights provided by this Guaranty as if no revocation had
      occurred. Any renewal, extension, or increase in the interest rate(s) of any
      such Obligation, whether made before or after revocation, shall constitute
      an
      Obligation contracted for or incurred before revocation. Obligations contracted
      for or incurred before revocation shall also include credit extended after
      revocation pursuant to commitments made before revocation.

     

    5.3 Assignability;
      Successors.
      Guarantor’s rights and liabilities under this Guaranty are not assignable or
      delegable, in whole or in part, without the prior written consent of Lender.
      The
      provisions of this Guaranty shall be binding upon Guarantor, its successors
      and
      permitted assigns and shall inure to the benefit of Lender, its successors
      and
      assigns.

     

    5.4 Survival;
      Termination.
      All
      agreements, representations and warranties made herein or in any document
      delivered pursuant to this Guaranty shall survive the execution and delivery
      of
      this Guaranty and the delivery of any such document. This Guaranty automatically
      shall terminate upon the satisfaction of the Obligations, whether by a Borrower,
      Guarantor or any other Person, and thereafter Guarantor shall have no further
      liability or obligations hereunder. Upon the termination of this Guaranty,
      Lender shall execute and deliver to Guarantor an acknowledgment of the
      termination of this Guaranty and a release of Guarantor from all claims of
      any
      nature arising under this Guaranty.

     

    
      
         

      

      
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    5.5 Governing
      Law.
      This
      Guaranty and the documents issued pursuant to this Guaranty shall be governed
      by, and construed and interpreted in accordance with, the Laws of the State
      of
      New York applicable to contracts made and wholly performed within such
      state.

     

    5.6 Execution;
      Headings.
      This
      Guaranty may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original thereof.
      The article and section headings in this Guaranty are inserted for convenience
      of reference only and shall not constitute a part hereof.

     

    5.7 Notices.
      All
      notices, requests and demands to or upon Lender or Guarantor (to be delivered
      care of Borrowers) shall be delivered in the manner set forth in Section 12.6
      of
      the Loan Agreement.

     

    5.8 Amendment.
      No
      amendment of this Guaranty shall be effective unless in writing and signed
      by
      Guarantor and Lender.

     

    5.9 Severability.
      Any
      provision of this Guaranty that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions of this Guaranty in such jurisdiction or affecting the validity
      or
      enforceability of any provision in any other jurisdiction.

     

    5.10 Taxes.
      If any
      transfer or documentary taxes, assessments or charges levied by any governmental
      authority shall be payable by reason of the execution, delivery or recording
      of
      this Guaranty, Guarantor shall pay all such taxes, assessments and charges,
      including interest and penalties, and hereby indemnifies Lender against any
      liability therefor.

     

    5.11 WAIVER
      OF RIGHT TO JURY TRIAL.
      EACH OF
      THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
      ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF ANY
      CONTROVERSY THAT MAY ARISE UNDER THIS GUARANTY.

     

    5.12  SUBMISSION
      TO JURISDICTION; SERVICE OF PROCESS.

     

    (a) EACH
      OF
      THE PARTIES TO THIS GUARANTY 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 GUARANTY. EACH OF THE PARTIES TO THIS GUARANTY IRREVOCABLY
      WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT 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.

     

    (b) EACH
      OF
      THE PARTIES TO THIS GUARANTY HEREBY CONSENTS TO SERVICE OF PROCESS BY NOTICE
      IN
      THE MANNER SPECIFIED IN SECTION 12.6 OF THE LOAN AGREEMENT 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.

     

    [Signature
      Page Follows]

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF the undersigned has executed this Guaranty as of the day and
      year first above written.

    

    
      	
               

            	
              PATIENT
                PAYMENT SOLUTIONS, INC.

               

            
	
               

            	
              By:  

            	
               /s/
                Howard B. Katz

            
	
               

            	
               

            	
              Name:  

            	
              Howard
                B. Katz

            
	
               

            	
               

            	
              Title:  

            	
              Chief
                Executive Officer

            

    

     

    
      
         

      

      
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    ACCEPTANCE
      BY LENDER

     

    This
      Guaranty Agreement is accepted by Debt Opportunity Fund, LLLP.

    

    
      	 	
              DEBT
                OPPORTUNITY FUND, LLLP,

            
	 	
              a
                Florida limited liability limited partnership

            
	 	 	 
	 	
              By:

            	
              Total
                Capital Management, LLC,

            
	 	 	
              a
                Florida limited liability company,

            
	 	 	
              as
                its General Partner

            
	 	 	 
	 	
              By:

            	
              /s/
                Sean Lyons

            
	 	 	
              Name:
                Sean Lyons

            
	 	 	
              Title:  
                Manager

            

    

     

    
      
         

      

      
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          8
          -SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT (this “Security
      Agreement”)
      is
      made as of November 14, 2008, by and between MDWERKS, INC., a Delaware
      corporation (“Debtor”),
      and
      DEBT OPPORTUNITY FUND, LLLP, a limited liability limited partnership
      organized under the laws of the State of Florida (the “Lender”).

     

    RECITALS

     

    A. Pursuant
      to a Loan and Securities Purchase Agreement of even date herewith by and
      between, Lender, Xeni Financial Services, Corp., a Florida corporation (“XFSC”),
      and Debtor (as amended or modified from time to time, the “Loan
      Agreement”),
      Debtor and XFSC borrowed up to $10,300,000 from Lender (the “Loan”)
      evidenced by the issuance of a Senior Secured Promissory Note in the form
      attached thereto (the “Note”).

    

    B.  It
      is a
      condition precedent to the Loan that the Debtor execute and deliver to Lender
      a
      security agreement in the form hereof to secure its obligations under the Note.
      This is the Security Agreement referred to in the Loan Agreement.

     

    AGREEMENTS

     

    In
      consideration of the Recitals and for other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, Debtor hereby agrees
      with Lender as follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    Capitalized
      terms used herein but not defined herein shall have the respective meanings
      given to them in the Loan Agreement. Terms not otherwise defined herein and
      defined in the UCC shall have, unless the context otherwise requires, the
      meanings set forth in the UCC as in effect on the date hereof (except that
      the
      term “document” shall only have the meaning set forth in the UCC for purposes of
      clause (d) of the definition of Collateral). When used in this Security
      Agreement, the following terms shall have the following meanings:

     

    Accounts.
      “Accounts” shall mean all accounts, including without limitation all rights to
      payment for goods sold or services rendered that are not evidenced by
      instruments or chattel paper, whether or not earned by performance, and any
      associated rights thereto.

    

    Affliate.
      “Affiliate” means, with respect to any Person, any other Person that directly,
      or indirectly through one of more intermediaries, controls, is controlled by,
      or
      is under common control with, such Person. The term “control” (including the
      terms “controls,” “controlled by” and “under common control with”) means the
      possession, direct or indirect, of the power to direct or cause the direction
      of
      the management and policies of a Person, whether through the ownership or voting
      interests or capital stock, by contract or otherwise.

     

    Collateral.
      “Collateral” shall mean all personal properties and assets of Debtor, wherever
      located, whether tangible or intangible, and whether now owned or hereafter
      acquired or arising, including without limitation:

     

    (a) all
      Inventory and documents relating to Inventory;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) all
      Accounts and documents relating to Accounts;

     

    (c) all
      equipment, fixtures and other goods, including without limitation machinery,
      furniture and trade fixtures;

     

    (d) all
      general intangibles (including without limitation payment intangibles, software,
      customer lists, sales records and other business records, contract rights,
      causes of action, and licenses, permits, franchises, patents, copyrights,
      trademarks, and goodwill of the business in which the trademark is used, trade
      names, or rights to any of the foregoing), promissory notes, contract rights,
      chattel paper, documents, letter-of-credit rights and instruments;

     

    (e) (i)
      all
      deposit accounts and (ii) all cash and cash equivalents deposited with or
      delivered to Lender from time to time and pledged as additional security for
      the
      Obligations;

     

    (f) all
      investment property;

     

    (g) all
      commercial tort claims; and

     

    (h) all
      additions and accessions to, all spare and repair parts, special tools,
      equipment and replacements for, and all supporting obligations, proceeds and
      products of, any and all of the foregoing assets described in Sections (a)
      through (g), inclusive, above.

     

    Event
      of Default.
“Event
      of Default” shall have the meaning specified in the Loan Agreement.

     

    Inventory.
      “Inventory” shall mean all inventory, including without limitation all goods
      held for sale, lease or demonstration or to be furnished under contracts of
      service, goods leased to others, trade-ins and repossessions, raw materials,
      work in process and materials used or consumed in Debtor’s business, including,
      without limitation, goods in transit, wheresoever located, whether now owned
      or
      hereafter acquired by Debtor, and shall include such property the sale or other
      disposition of which has given rise to Accounts and which has been returned
      to
      or repossessed or stopped in transit by Debtor.

      

    Obligations.
      “Obligations” shall mean (a) all obligations under the Note, including, without
      limitation, all principal, interest, costs, expenses and other amounts now
      or
      hereafter due under the Note (including, without limitation, all principal
      amounts advanced thereunder before, on or after the date hereof) and (b) all
      debts, liabilities, obligations, covenants and agreements of Debtor arising
      from
      or contained in the Transaction Documents.

     

    Person.
      “Person” shall mean and include an individual, partnership, corporation, trust,
      unincorporated association and any unit, department or agency of
      government.

     

    Security
      Agreement.
      “Security Agreement” shall mean this Security Agreement, together with the
      schedules attached hereto, as the same may be amended, supplemented or otherwise
      modified from time to time in accordance with the terms hereof.

     

    Security
      Interest.
      “Security Interest” shall mean the security interest of Lender in the Collateral
      granted by Debtor pursuant to this Security Agreement.

     

    UCC.
“UCC”
      shall mean the Uniform Commercial Code as adopted in the State of New York
      and
      in effect from time to time.

    
      
         

      

      
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          2
          -

        
          

        

      

      
         

      

    

    ARTICLE
      II

    THE
      SECURITY INTEREST; REPRESENTATIONS AND WARRANTIES

     

    2.1 The
      Security Interest.
      To
      secure the full and complete payment and performance when due (whether at stated
      maturity, by acceleration, or otherwise) of each of the Obligations, Debtor
      hereby grants to Lender a security interest in all of Debtor’s right, title and
      interest in and to the Collateral.

     

    2.2 Representations
      and Warranties.
      Debtor
      hereby represents and warrants to Lender that:

     

    (a) The
      records of Debtor with respect to the Collateral are presently located only
      at
      the address(es) listed on Schedule
      1
      attached
      to this Security Agreement.

     

    (b) The
      Collateral is presently located only at the location(s) listed on Schedule 1
      attached
      to this Security Agreement.

     

    (c) The
      chief
      executive office and chief place(s) of business of Debtor are presently located
      at the address(es) listed on Schedule
      1
      to this
      Security Agreement.

     

    (d) Debtor
      is
      a Delaware corporation and its exact legal name is set forth in the definition
      of “Debtor” in the introductory paragraph of this Security Agreement. The
      organization identification number of Debtor is listed on Schedule
      1
      to this
      Security Agreement.

     

    (e) All
      of
      Debtor’s present patents and trademarks, if any, including those that have been
      registered with, or for which an application for registration has been filed
      in,
      the United States Patent and Trademark Office are listed on Schedule
      2
      attached
      to this Security Agreement. All of Debtor’s present copyrights registered with,
      or for which an application for registration has been filed in, the United
      States Copyright Office or any similar office or agency of any state or any
      other country are listed on Schedule
      2
      attached
      to this Security Agreement.

     

    (f) Debtor
      has good title to, or valid leasehold interest in, all of the Collateral, and
      there are no Liens on any of the Collateral except Permitted Liens.

     

    2.3 Authorization
      to File Financing Statements.
      Debtor
      hereby irrevocably
      authorizes Lender at any time and from time to time to file in any UCC
      jurisdiction any initial financing statements and amendments thereto that (a)
      indicate the Collateral (i) as all assets of Debtor or words of similar effect,
      regardless of whether any particular asset comprised in the Collateral falls
      within the scope of Article 9 of the UCC or such other jurisdiction, or (ii)
      as
      being of an equal or lesser scope or with greater detail, and (b) contain any
      other information required by part 5 of Article 9 of the UCC for the sufficiency
      of filing office acceptance of any financing statement or amendment, including
      whether Debtor is an organization, the type of organization and any state or
      federal organization identification number issued to Debtor. Debtor agrees
      to
      furnish any such information to Lender promptly upon written
      request.

     

    ARTICLE
      III 

    AGREEMENTS
      OF DEBTOR

     

    From
      and
      after the date of this Security Agreement, and until all of the Obligations
      are
      paid in full, Debtor shall:

     

    3.1 Sale
      of Collateral.  Not
      sell, lease, transfer or otherwise dispose of Collateral or any interest
      therein, except as provided for in the Loan Agreement and for sales of Inventory
      in the ordinary course of business.

    
      
         

      

      
        -
          3
          -

        
          

        

      

      
         

      

    

    3.2  Maintenance
      of Security Interest.  

     

    (a) At
      the
      expense of Debtor, defend the Security Interest against any and all claims
      of
      any Person adverse to Lender (but only to the extent the claim of such Person
      is
      subordinate or junior to the Security Interest of Lender) and take such action
      and execute such financing statements and other documents as Lender may from
      time to time reasonably request in writing to maintain the perfected status
      of
      the Security Interest. Debtor shall not further encumber or grant a security
      interest in any of the Collateral except as provided for in the Loan
      Agreement.

     

    (b) Debtor
      further agrees to take any other commercially reasonable action reasonably
      requested in writing by Lender if necessary to ensure the attachment, perfection
      and priority of, and the ability of Lender to enforce its security interest
      in
      any and all of the Collateral including, without limitation, (i) executing,
      delivering and, where appropriate, filing financing statements and amendments
      relating thereto under the UCC, to the extent, if any, that Debtor’s signature
      thereon is required therefor, (ii) complying with any provision of any
      statute, regulation or treaty of the United States as to any Collateral if
      compliance with such provision is a condition to attachment, perfection or
      priority of, or ability of Lender to enforce, its security interest in such
      Collateral, (iii) taking all actions required by any earlier versions of the
      UCC
      (to the extent applicable) or by other law, as applicable in any relevant UCC
      jurisdiction, or by other law as applicable in any foreign jurisdiction, (iv)
      obtaining waivers from landlords where any material portion of the tangible
      Collateral is located in form and substance reasonably satisfactory to Lender,
      and (v) executing such documents and cooperating with the Lender and any
      third-party to allow Lender to obtain control of any Collateral consisting
      of
      deposit accounts or investment property.

     

    3.3 Locations.
      Give
      Lender at least thirty (30) days prior written notice of Debtor’s intention to
      relocate any of the Collateral (other than Inventory in transit) or any of
      the
      records relating to the Collateral from the locations listed on Schedule
      1
      attached
      to this Security Agreement, in which event Schedule
      1
      shall be
      deemed amended to include the new location. Any additional filings or refilings
      requested in writing by Lender as a result of any such relocation in order
      to
      maintain the Security Interest in such Collateral shall be at Debtor’s
      expense.

     

    3.4 Insurance.
      Maintain insurance (including, without limitation, commercial general liability
      and property insurance) with respect to the Collateral consisting of tangible
      personal property in such amounts, against such risks, in such form and with
      responsible and reputable insurance companies or associations as is required
      by
      any governmental authority having jurisdiction with respect thereto or as is
      carried generally in accordance with sound business practice by companies in
      similar businesses similarly situated. If requested in writing by Lender, and
      if
      the existing third-party loss payee agrees to relinquish its position as loss
      payee, Debtor will obtain lender’s loss payable endorsements on applicable
      insurance policies in favor of Lender and will provide to Lender certificates
      of
      such insurance or copies thereof. If such request is made, and if the existing
      third-party loss payee agrees to relinquish its position as loss payee, Debtor
      shall use commercially reasonable efforts to cause each insurer to agree, by
      endorsement on the policy or policies or certificates of insurance issued by
      it
      or by independent instrument furnished to Lender, that such insurer will give
      thirty (30) days written notice to Lender before such policy will be altered
      or
      canceled. No settlement of any insurance claim shall be made without Lender’s
      prior consent, which consent will not be unreasonably withheld, conditioned
      or
      delayed. In the event of any insured loss, Debtor shall promptly notify Lender
      thereof in writing, and, after an Event of Default shall have occurred and
      be
      continuing, Debtor hereby authorizes and directs any insurer concerned to make
      payment of such loss directly to Lender as its interest may appear. Lender
      is
      authorized, in the name and on behalf of Debtor, to make proof of loss and
      to
      adjust, compromise and collect, in such manner and amounts as it reasonably
      shall determine, all claims under all policies; and Debtor agrees to sign,
      on
      written demand of Lender, all receipts, vouchers, releases and other instruments
      which may be necessary in aid of this authorization. After an Event of Default
      shall have occurred and be continuing, the proceeds of any insurance from loss,
      theft, or damage to the Collateral shall be held in a segregated account
      established by Lender and disbursed and applied at the discretion of Lender,
      either in reduction of the Obligations or applied toward the repair, restoration
      or replacement of the Collateral.

    
      
         

      

      
        -
          4
          -

        
          

        

      

      
         

      

    

    3.5 Name;
      Legal Status.
      (a)
      Without providing at least 30 days prior written notice to Lender, Debtor will
      not change its name, its place of business or, if more than one, chief executive
      office, or its mailing address or organizational identification number if it
      has
      one, (b) if Debtor does not have an organizational identification number and
      later obtains one, Debtor shall forthwith notify Lender of such organizational
      identification number, and (c) Debtor will not change its type of organization
      or jurisdiction of organization.

     

    ARTICLE
      IV 

    RIGHTS
      AND REMEDIES

     

    4.1 Right
      to Cure.
      In case
      of failure by Debtor after receipt of written notice from Lender to procure
      or
      maintain insurance, or to pay any fees, assessments, charges or taxes (subject
      to Debtor’s right to contest in good faith, such assessments, charges or taxes)
      arising with respect to the Collateral, Lender shall have the right, but shall
      not be obligated, to effect such insurance or pay such fees, assessments,
      charges or taxes, as the case may be, and, in that event, the cost thereof
      shall
      be payable by Debtor to Lender immediately upon demand, together with interest
      at an annual rate of 8% from the date of disbursement by Lender to the date
      of
      payment by Debtor. If Lender effects any insurance on behalf of Debtor, Debtor
      thereafter may cancel such insurance so effected after providing Lender with
      evidence that Debtor or another secured party having cure rights similar to
      those set forth in this Section 4.1 has obtained insurance as required by this
      Security Agreement.

     

    4.2 Rights
      of Parties.
      Upon
      the occurrence and during the continuance of an Event of Default, in addition
      to
      all the rights and remedies provided in the Transaction Documents or in
      Article 9 of the UCC and any other applicable law, Lender may (but is under
      no obligation so to do):

     

    (a) require
      Debtor to assemble the Collateral at a place designated by Lender, which is
      reasonably convenient to the parties; and

     

    (b) take
      possession of all Collateral and of Debtor’s records pertaining to all
      Collateral that are necessary to properly administer and control the Collateral
      or the handling and collection of Collateral, and sell, lease or otherwise
      dispose of the Collateral in a commercially reasonable manner in whole or in
      part, at public or private sale, on or off the premises of Debtor;
      and

     

    (c) collect
      any and all money due or to become due and enforce in Debtor’s name all rights
      with respect to the Collateral; and

     

    (d) settle,
      adjust or compromise any dispute with respect to any Account; and

     

    (e)  receive
      and open mail addressed to Debtor; and

     

    (f)  on
      behalf of Debtor, endorse checks, notes, drafts, money orders, instruments
      or
      other evidences of payment.

     

    4.3 Power
      of Attorney.
      Upon
      the occurrence and during the continuance of an Event of Default, Debtor does
      hereby constitute and appoint Lender as Debtor’s true and lawful attorney with
      full power of substitution for Debtor in Debtor’s name, place and stead for the
      purposes of performing any obligation of Debtor under this Security Agreement
      and taking any action and executing any instrument which Lender may deem
      necessary to perform any obligation of Debtor under this Security Agreement,
      which appointment is irrevocable and coupled with an interest, and shall not
      terminate until the Obligations are paid in full.

    
      
         

      

      
        -
          5
          -

        
          

        

      

      
         

      

    

    4.4 Right
      to Collect Accounts.
      Upon
      the occurrence and during the continuance of an Event of Default, and without
      limiting Debtor’s obligations under the Transaction Documents: (a) Debtor
      authorizes Lender to notify any and all debtors on the Accounts to make payment
      directly to Lender (or to such place as Lender may direct); (b) Debtor agrees,
      on written notice from Lender, to deliver to Lender promptly after receipt
      thereof, in the form in which received (together with all necessary
      endorsements), all payments received by Debtor on account of any Account; and
      (c) Lender may, at its option, apply all such payments against the Obligations
      or remit all or part of such payments to Debtor.

     

    4.5 Reasonable
      Notice.
      Written
      notice, when required by law, sent in accordance with the provisions of Section
      12.6 of the Loan Agreement and given at least ten (10) business days (counting
      the day of sending) before the date of a proposed disposition of the Collateral
      shall be reasonable notice.

     

    4.6 Limitation
      on Duties Regarding Collateral.  The
      sole duty of Lender with respect to the custody, safekeeping and physical
      preservation of the Collateral in its possession, under Section 9-207 of the
      UCC
      or otherwise, shall be to deal with it in the same manner as Lender deals with
      similar property for its own account. Neither Lender nor any of its directors,
      officers, employees or agents, shall be liable for failure to demand, collect
      or
      realize upon any of the Collateral or for any delay in doing so or shall be
      under any obligation to sell or otherwise dispose of any Collateral upon the
      request of Debtor or otherwise.

     

    4.7 Lock
      Box; Collateral Account.
      This
      Section 4.7 shall be effective only upon the occurrence and during the
      continuance of an Event of Default. If Lender so requests in writing, Debtor
      will direct each of its debtors on the Accounts to make payments due under
      the
      relevant Account or chattel paper directly to a special lock box to be under
      the
      control of Lender. Debtor hereby authorizes and directs Lender to deposit into
      a
      special collateral account to be established and maintained by Lender all
      checks, drafts and cash payments received in said lock box. All deposits in
      said
      collateral account shall constitute proceeds of Collateral and shall not
      constitute payment of any Obligation until so applied. At its option, Lender
      may, at any time, apply finally collected funds on deposit in said collateral
      account to the payment of the Obligations, in the order of application set
      forth
      in Section 4.8, or permit Debtor to withdraw all or any part of the balance
      on
      deposit in said collateral account. If a collateral account is so established,
      Debtor agrees that it will promptly deliver to Lender, for deposit into said
      collateral account, all payments on Accounts and chattel paper received by
      it.
      All such payments shall be delivered to Lender in the form received (except
      for
      Debtor’s endorsement where necessary). Until so deposited, all payments on
      Accounts and chattel paper received by Debtor shall be held in trust by Debtor
      for and as the property of Lender and shall not be commingled with any funds
      or
      property of Debtor.

     

    4.8 Application
      of Proceeds.
      Lender
      shall apply the proceeds resulting from any sale or disposition of the
      Collateral in the following order:

     

    (a) to
      the
      reasonable costs of any sale or other disposition;

     

    (b) to
      the
      reasonable expenses incurred by Lender in connection with any sale or other
      disposition, including attorneys’ fees;

     

    (c) to
      the
      payment of the Obligations then due and owing in any order selected by Lender
      in
      a commercially reasonable manner; and

    
      
         

      

      
        -
          6
          -

        
          

        

      

      
         

      

    

    (d) to
      Debtor.

     

    4.9 Other
      Remedies.
      No
      remedy herein conferred upon Lender is intended to be exclusive of any other
      remedy, and each and every such remedy shall be cumulative and shall be in
      addition to every other remedy given under this Security Agreement and the
      Transaction Documents now or hereafter existing at law or in equity or by
      statute or otherwise. No failure or delay on the part of Lender in exercising
      any right or remedy hereunder shall operate as a waiver thereof nor shall any
      single or partial exercise of any right hereunder preclude other or further
      exercise thereof or the exercise of any other right or remedy.

     

    ARTICLE
      V

    MISCELLANEOUS

    

    5.1 Expenses
      and Attorneys’ Fees.
      Debtor
      shall pay all reasonable fees and expenses incurred by Lender, including the
      reasonable fees of counsel, in connection with the preparation, administration
      and amendment of this Security Agreement and the protection, administration
      and
      enforcement of the rights of Lender under this Security Agreement or with
      respect to the Collateral, including without limitation the protection and
      enforcement of such rights in any bankruptcy.

     

    5.2 Setoff.
      Debtor
      agrees that, upon the occurrence and during the continuance of an Event of
      Default, Lender shall have all rights of setoff and bankers’ lien provided by
      applicable law.

     

    5.3 Assignability;
      Successors.
      Debtor’s rights and liabilities under this Security Agreement are not assignable
      or delegable, in whole or in part, without the prior written consent of Lender.
      The provisions of this Security Agreement shall inure to the benefit of and
      be
      binding upon the successors and assigns of the parties.

     

    5.4 Survival.
      All
      agreements, representations and warranties made in this Security Agreement
      or in
      any document delivered pursuant to this Security Agreement shall survive the
      execution and delivery of this Security Agreement, and the delivery of any
      such
      document.

     

    5.5 Governing
      Law.
      This
      Security Agreement shall be governed by, and construed and interpreted in
      accordance with, the laws of the State of New York applicable to contracts
      made
      and wholly performed within such state.

     

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

     

    5.7  Notices.
      All
      notices, requests and demands to or upon Lender or Debtor shall be delivered
      in
      the manner set forth in Section 12.6 of the Loan Agreement.

     

    5.8 Amendment.
      No
      amendment of this Security Agreement shall be effective unless in writing and
      signed by Debtor and Lender.

    
      
         

      

      
        -
          7
          -

        
          

        

      

      
         

      

    

    5.9 Severability.
      Any
      provision of this Security Agreement which is prohibited or unenforceable in
      any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions of this Security Agreement in such jurisdiction or affecting the
      validity or enforceability of any provision in any other
      jurisdiction.

     

    5.10 WAIVER
      OF RIGHT TO JURY TRIAL.
      EACH OF
      THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
      ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF ANY
      CONTROVERSY THAT MAY ARISE UNDER THIS SECURITY AGREEMENT.

     

    5.11  Submission
      to Jurisdiction.

     

    (a) EACH
      OF
      THE PARTIES TO THIS SECURITY 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 SECURITY AGREEMENT. EACH OF THE PARTIES TO THIS
      SECURITY AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
      ANY OBJECTION THAT 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.

     

    (b) EACH
      OF
      THE PARTIES TO THIS SECURITY AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS
      BY
      NOTICE IN THE MANNER SPECIFIED IN SECTION 12.6 OF THE LOAN AGREEMENT 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.

     

    [Signature
      Page Follows]

    
      
         

      

      
        -
          8
          -

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, this Security Agreement has been executed as of the day and
      year first above written.

     

    
      	 	
              MDWERKS, INC.

            
	 	 	 
	
               

            	
              By:  

            	
               /s/
                Howard B. Katz

            
	
               

            	
               

            	
              Name:  

            	
              Howard
                B. Katz

            
	
               

            	
               

            	
              Title:  

            	
              Chief
                Executive Officer

            

    

    

    
      	 	
              DEBT
                OPPORTUNITY FUND, LLLP,

              a
                Florida limited liability limited partnership

            
	 	 	 
	 	
              By:

            	
              Total
                Capital Management, LLC,

              a
                Florida limited liability company,

              as
                its General Partner

            
	 	 	 
	
               

            	
              By:  

            	
               /s/
                Sean Lyons

            
	
               

            	
               

            	
              Name:  

            	
              Sean
                Lyons

            
	
               

            	
               

            	
              Title:  

            	
              Manager

            

    

     

    
      
         

      

      
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          9
          -

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