Document:

SECURITIES
      PURCHASE AGREEMENT

     

    By
      and Between

     

    MDWERKS,
      INC.

     

    and

     

    VICIS
      CAPITAL MASTER FUND

     

    DATED
      SEPTEMBER 28, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated this 28th day of
      September, 2007, is made by and between MDWERKS, INC., a Delaware corporation
      (the “Company”), and VICIS CAPITAL MASTER FUND (the “Purchaser”), a series of
      the Vicis Capital Master Trust, a trust formed under the laws of the Cayman
      Islands.

     

    RECITALS

     

    WHEREAS,
      pursuant to the terms and conditions of this Agreement, the Company wishes
      to
      issue and sell to the Purchaser the following securities (collectively, the
      “Securities”): (a) 200 shares (the “Preferred Shares”) of the Company’s
      Series B Convertible Preferred Stock, par value $.001 per share (the “Series B
      Preferred Stock”), with such terms, rights and preferences as are set forth in
      the Certificate of Designations for the Series B Preferred Stock set forth
      on
Exhibit
      A
      attached
      hereto; (b) a newly-designated Series F Warrant to purchase an aggregate of
      1,500,000 shares of common stock, par value $.001 per share (the “Common
      Stock”), of the Company initially at an exercise price of $2.25 per share in the
      form attached hereto as Exhibit
      B
      (the
“Series F Warrant”); and (c) a newly-designated Series G Warrant to
      purchase an aggregate of 1,000,000 shares of Common Stock initially at an
      exercise price of $2.50 per share in the form attached hereto as Exhibit
      C
      (the
“Series G Warrant”, and together with the Series F Warrant, the
“Warrants”).

     

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

     

    WHEREAS,
      Purchaser is the holder of that certain Convertible Note (the "Bridge Note")
      issued by the Company on August 31, 2007 in the principal amount of
      $250,000.

     

    WHEREAS,
      by its terms, the Bridge Note and all accrued and unpaid interest thereon
      ("Bridge Note Interest") automatically converts into the Securities acquired
      by
      Purchaser hereunder.

     

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

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF THE SECURITIES

     

    1.1 Purchase
      and Sale of the Securities.
      Subject
      to the terms and conditions hereof and in reliance on the representations and
      warranties contained herein, or made pursuant hereto, the Company will issue
      and
      sell to the Purchaser, and the Purchaser will purchase from the Company at
      the
      closing of the transactions contemplated hereby (the “Closing”), the Securities
      for the $2,000,000 (the “Purchase Price”) consisting of the following: (a)
      $1,750,000  in cash, less the sum of (i) documentary stamp taxes imposed
      upon the Transaction Documents in the amount of $7,000, (ii) Bridge Note
      Interest in the amount of $1555, and (iii) the fee owed to Vicis pursuant to
      Section 12.9 hereof in the amount of $50,000 (the “Cash Payment”); and
      (b) the surrender of the Bridge Note to the Company for
      cancellation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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 September
      28,
      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, against delivery of payment of the Purchase Price in accordance with
      Section 1.3(b), will deliver to the Purchaser the documents set forth in Section
      5.4 hereof.

     

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

     

    1.4 Subsequent
      Financings.
      

     

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

     

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

     

    
      
        
        

      

      
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    (c) Notwithstanding
      the foregoing, Section 1.4(a) shall not apply in respect to the issuance of
      the
      following (each a “Permitted Financing”): (i) shares of Common Stock or Common
      Stock options to employees, officers, directors or consultants of the Company
      pursuant to any stock, option, equity incentive or similar plan duly adopted
      by
      the Board of Directors of the Company or shares of Common Stock issued upon
      exercise of any option or conversion of any convertible security issued pursuant
      to any stock, option, equity incentive or similar plan duly adopted by the
      Board
      of Directors of the Company, (ii) securities issued upon the exercise of or
      conversion of any securities issued pursuant to this Agreement, (iii) Common
      Stock issued upon the exercise or conversion of options, warrants, preferred
      stock or convertible debt instruments issued and outstanding on the date of
      this
      Agreement; provided that, (A) such securities have not been amended since the
      date of this Agreement to increase the number of such securities or underlying
      Common Stock or (B) to decrease the exercise or conversion price of any such
      security (except in the case of (A) and (B) pursuant to any anti-dilution or
      price reset provisions or otherwise that are in effect as of the date hereof),
      (iv) securities issued pursuant to acquisitions or strategic transactions,
      provided any such issuance shall only be to a Person which is, itself or through
      its subsidiaries, an operating company in a business synergistic with the
      business of the Company and in which the Company receives benefits in addition
      to the investment of funds, but shall not include an issuance or transaction
      in
      which the Company is issuing securities primarily for the purpose of raising
      capital or to an entity whose primary business is investing in securities,
      (v)
      securities issued in connection with loans made to the Company or Xeni Financial
      Services, Corp. for the purpose of financing loans from the Company or its
      subsidiaries to healthcare providers as part of the business of Xeni Financial
      Services, Corp., (vi) the issuance to Gottbetter of a Series D Warrant of the
      Company to purchase 500,000 shares of stock of the Company at an exercise price
      of $2.25 per share as consideration for Gottbetter granting certain waivers
      and
      consent to the transaction contemplated hereby,
      and
      (vii) the
      amendments to that certain Series E Warrant of the Company issued to Gottbetter
      as a result of the transactions contemplated hereby to
      reduce
      the exercise price of such warrant to $2.25 per share and increase the number
      of
      shares of Common Stock for which such warrants may be exercised to 541,666
      and
      2/3 shares.

     

    ARTICLE
      II

     

    SECURITY
      DOCUMENTS 

     

    2.1 Company
      Security Documents.
      

     

    (a) Security
      Agreement.
      All of
      the obligations of the Company under the Preferred Shares shall be secured
      by a
      lien on all the personal property and assets of the Company now existing or
      hereinafter acquired granted pursuant to a security agreement dated of even
      date
      herewith between the Company and the Purchaser in the form attached hereto
      as
Exhibit
      D
      (“Security Agreement”). Such lien shall be expressly subordinated and junior to
      the liens of Gottbetter.

     

    (b) Guaranty.
      All of
      the obligations of the Company under the Preferred Shares shall be guaranteed
      pursuant to a guaranty agreement in the form attached hereto as Exhibit
      E
      (“Guaranty Agreement”) by each of the following subsidiaries of the Company
      (each a “Subsidiary and collectively, the “Subsidiaries”): MDwerks
      Global Holdings, Inc., a corporation, organized under the laws of the State
      of
      Florida (“MGHI”), Xeni Medical Systems, Inc., a corporation organized under the
      laws of the State of Delaware (“XMSI”), Xeni Financial Services Corp., a
      corporation organized under the laws of the State of Florida (“XFSC”), Xeni
      Medical Billing, Corp., a corporation organized under the laws of the State
      of
      Delaware (“XMBC”), and Patient Payment Solutions, Inc., a corporation organized
      under the laws of the State of Florida (“PPS”).

     

    
      
        
        

      

      
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    (c) Guarantor
      Security Documents.
      All of
      the obligations of each Subsidiary under its Guaranty Agreement shall be secured
      by a lien on all the personal property and assets of such Subsidiary now
      existing or hereinafter acquired granted pursuant to a guarantor security
      agreement dated of even date herewith between such Subsidiary and the Purchaser
      in the form attached hereto as Exhibit
      F
      (“Guarantor Security Agreement”); provided,
      however,
      that
      lien on the personal property of XFSC shall not include the accounts receivable
      of XFSC as shall be set forth in XFSC’s security agreement with Purchaser; and
provided,
      further,
      that
      such liens shall be expressly subordinated and junior to the liens of
      Gottbetter. 

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

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

     

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

     

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

     

    
      
        
        

      

      
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    3.3 Compliance.
      

     

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

     

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

     

    3.4 Capitalization.

     

    (a) As
      of the
      date hereof and without giving effect to the sale of Securities at Closing
      as
      contemplated hereby, the Company’s authorized capital stock consists of (1)
      100,000,000 shares of Common Stock, par value $.001 per share, of which (A)
      12,940,065 shares are outstanding, (B) 10,923,984 shares are reserved for
      issuance upon the exercise or conversion of all outstanding warrants,
      convertible notes, options, or other securities exchangeable, convertible or
      exercisable into shares of Common Stock, and (2) 10,000,000 shares of preferred
      stock, par value $.001 per share, of which 1,000 shares of Series A Convertible
      Preferred Stock are authorized and 2 shares Series A Preferred Stock are
      outstanding. All of such outstanding shares have been, or upon issuance will
      be,
      validly issued, are fully paid and nonassessable.

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    3.5 Issuance
      of Securities.
      

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    
      
        
        

      

      
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    3.13 Indebtedness
      and Other Contracts.
      Except
      as disclosed in the SEC Documents (as hereinafter defined), neither the Company
      nor any Subsidiary (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 liability, or the primary
      effect thereof, is to provide assurance to the obligee of such liability that
      such liability will be paid or discharged, or that any agreements relating
      thereto will be complied with, or that the holders of such liability will be
      protected (in whole or in part) against loss with respect thereto; and
      (z) ”Person” means an individual, a limited liability company, a
      partnership, a joint venture, a corporation, a trust, an unincorporated
      organization and a government or any department or agency thereof.

     

    
      
        
        

      

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

     

    
      
        
        

      

      
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    3.15 Absence
      of Certain Changes or Developments.
      Except
      as disclosed in Schedule 3.15 attached hereto or as disclosed in the SEC
      Documents or as contemplated herein and in the Transaction Documents, since
      December 31, 2006:

     

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

     

    (b) the
      Company has not:

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    (xiv) altered
      its method of accounting;

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    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 June 30, 2007. The quantities of each type
      of
      inventory (whether raw materials, work-in-process, or finished goods) are not
      excessive, but are reasonable and warranted in the present circumstances of
      the
      Company.

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASER

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    ARTICLE
      V

     

    CONDITIONS
      TO CLOSING OF THE PURCHASER

     

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

     

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

     

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

     

    5.3 No
      Impediments.
      Neither
      the Company nor 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 Purchaser hereunder shall be legally permitted by all laws
      and regulations to which the Purchaser and the Company are subject.

     

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

     

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

     

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

     

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

     

    (d) The
      Security Agreement in the form of Exhibit
      D
      hereto,
      executed by the Company;

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (e) The
      Guaranty Agreement in the form of Exhibit
      E
      attached
      hereto executed by each Subsidiary;

     

    (f) The
      Guarantor Security Agreement in the form of Exhibit
      F
      attached
      hereto, executed by each Subsidiary;

     

    (g) The
      Registration Rights Agreement in the form of Exhibit
      G
      hereto,
      executed by the Company;

     

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

     

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

     

    (j) Financing
      Statements on Form UCC-1 with respect to all personal property and assets of
      the
      Company and each Subsidiary; 

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
      VI

     

    CONDITIONS
      TO CLOSING OF THE COMPANY

     

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

     

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

     

    
      
        
        

      

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

     

    ARTICLE
      VII

     

    AFFIRMATIVE
      COVENANTS

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    7.5 Reservation
      of Common Stock.
      The
      Company shall continue to reserve, free of preemptive rights and other similar
      contractual rights of stockholders, a number of its authorized but unissued
      shares of Common Stock equal to one hundred twenty-five percent (125%) of the
      aggregate number of shares of Common Stock to effect the conversion of the
      Preferred Shares and one hundred percent (100%) of the aggregate number of
      shares of Common Stock to effect the exercise of the Warrants.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    7.11 Protection
      of Licenses, etc.
      The
      Company shall and shall cause its subsidiaries to, maintain, defend and protect
      to the best of their ability licenses and sublicenses (and to the extent the
      Company or a subsidiary is a licensee or sublicensee under any license or
      sublicense, as permitted by the license or sublicense agreement), trademarks,
      trade names, service marks, patents and applications therefor and other
      proprietary information owned or used by it or them and shall keep duplicate
      copies of any licenses, trademarks, service marks or patents owned or used
      by
      it, if any, at a secure place selected by the Company.

     

    7.12 Accounts
      and Records; Inspections.

     

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

     

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

     

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

     

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

     

    7.14 Use
      of
      Proceeds.
      The
      Company shall use all the proceeds received from the sale of the Securities
      pursuant to this Agreement solely for the purpose of working capital and payment
      of the following Indebtedness (but not for the prepayment of Indebtedness);
      provided that, the Company will not use such proceeds for the purpose of paying
      Indebtedness for borrowed money, except for such Indebtedness for borrowed
      money
      set forth in Schedule 7.14 hereto.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

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

     

    ARTICLE
      VIII

     

    NEGATIVE
      COVENANTS

     

    The
      Company hereby covenants and agrees, so long as more than 25 shares of Series
      B
      Preferred Stock remain outstanding (or such amount as adjusted for stock splits,
      recapitalizations and similar transactions), it will not (and not allow any
      subsidiary to), without the prior written consent of the holder(s) of more
      than
      50% of number of shares of Series B Preferred Stock outstanding (the “Majority
      Holders”), directly or indirectly: 

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (f) liens
      incurred or deposits made in the ordinary course of business in connection
      with
      workers’ compensation, unemployment insurance and other types of social
      security, or to secure the performance of tenders, statutory obligations, surety
      and appeal bonds, bids, leases, government contracts, trade contracts,
      performance and return-of-money bonds and other similar obligations (exclusive
      of obligations for the payment of borrowed money);

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (i) Indebtedness
      of the Company and its subsidiaries to a third party relating to a credit
      facility or similar financing arrangement not to exceed $10 million between
      such
      third party and XFSC.

     

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

     

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

     

    
      
        
        

      

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

     

    8.7 Change
      of Control Transaction.
      Enter
      into a Change in Control Transaction. For purposes of this Agreement, “Change in
      Control Transaction” means the occurrence of (a) an acquisition by an
      individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
      promulgated under the Exchange Act) of effective control (whether through legal
      or beneficial ownership of capital stock of the Company, by contract or
      otherwise) of in excess of fifty percent (50%) of the voting securities of
      the
      Company (except that the acquisition of Securities by the Purchaser shall not
      constitute a Change of Control Transaction for purposes hereof), (b) a
      replacement at one time or over time of more than one-half of the members of
      the
      Board of the Company which is not approved by a majority of those individuals
      who are members of the Board on the date hereof (or by those individuals who
      are
      serving as members of the Board on any date whose nomination to the Board was
      approved by a majority of the members of the Board who are members on the date
      hereof), (c) the merger or consolidation of the Company or any subsidiary
      of the Company in one or a series of related transactions with or into another
      entity (except in connection with a merger involving the Company solely for
      the
      purpose, and with the sole effect, of reorganizing the Company under the laws
      of
      another jurisdiction; provided that the certificate of incorporation and bylaws
      (or similar charter or organizational documents) of the surviving entity are
      substantively identical to those of the Company and do not otherwise adversely
      impair the rights of the Purchaser), or (d) the execution by the Company of
      an agreement to which the Company is a party or by which it is bound, providing
      for any of the events set forth above in (a), (b) or (c).

     

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

     

    8.9 Loans
      and Advances.
      Except
      for loans and advances outstanding as of the Closing Date, and loans and
      advances to clients through XFSC, directly or indirectly, make any advance
      or
      loan to, or guarantee any obligation of, any Person, except for intercompany
      loans or advances and those provided for in this Agreement.

     

    8.10 Transactions
      with Affiliates.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    ARTICLE
      IX

     

    EVENTS
      OF DEFAULT

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    9.2 Remedies.

     

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

     

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

     

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

     

    ARTICLE
      X

     

    CERTIFICATE
      LEGENDS

     

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

     

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

     

    
      
        
        

      

      
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    The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates, registered in the name of
      each
      Purchaser or its respective nominee(s), for the Conversion Shares and the
      Warrant Shares in such amounts as specified from time to time by each Purchaser
      to the Company upon conversion of the Preferred Shares or exercise of the
      Warrants in the form of Exhibit
      I
      attached
      hereto (the “Irrevocable
      Transfer Agent Instructions”).
      Prior
      to registration of the Conversion Shares and the Warrant Shares under the
      Securities Act, all such certificates shall bear the restrictive legend
      specified in this Section 5.1. Certificates evidencing the Conversion
      Shares and Warrant Shares shall not contain any legend (including the legend
      set
      forth in Section 5.1 hereof), (i) while a registration statement
      (including the Registration Statement) covering the resale of such security
      is
      effective under the Securities Act, or (ii) following any sale of such
      Conversion Shares or Warrant Shares pursuant to Rule 144, or (iii) if such
      Conversion Shares or Warrant Shares are eligible for sale under Rule 144(k),
      or
      (iv) if such legend is not required under applicable requirements of the
      Securities Act (including judicial interpretations and pronouncements issued
      by
      the Staff of the Commission). The Company shall cause its counsel to issue
      a
      legal opinion to the Company’s transfer agent promptly after the effective date
      of a registration statement covering such Conversions Shares or Warrant Shares,
      if required by the Company’s transfer agent, to effect the removal of the legend
      hereunder. If all or any portion of the Preferred Shares or a Warrant is
      exercised at a time when there is an effective registration statement to cover
      the resale of the Conversion Shares or the Warrant Shares, such Conversions
      Shares and Warrant Shares, as the case may be, shall be issued free of all
      legends. The Company agrees that following the effective date of the
      registration statement covering Conversion Shares or Warrant Shares or at such
      time as such legend is no longer required under this Section 5.1, it will,
      no later than five (5) Trading Days following the delivery by the Purchaser
      to
      the Company or the Company’s transfer agent of a certificate representing
      Conversion Shares or Warrant Shares, as the case may be, issued with a
      restrictive legend (such date, the “Delivery Date”), deliver or cause to be
      delivered to the Purchaser a certificate representing such Securities that
      is
      free from all restrictive and other legends. The Company may not make any
      notation on its records or give instructions to any transfer agent of the
      Company that enlarge the restrictions on transfer set forth in this Section.
      Whenever a certificate representing the Conversion Shares or Warrant Shares
      is
      required to be issued to the Purchaser without a legend, in lieu of delivering
      physical certificates representing the Conversion Shares or Warrant Shares,
      provided the Company’s transfer agent is participating in the Depository Trust
      Company (“DTC”) Fast Automated Securities Transfer program, the Company shall
      use its reasonable best efforts to cause its transfer agent to electronically
      transmit the Conversion Shares or Warrant Shares to the Purchaser by crediting
      the account of such Purchaser’s Prime Broker with DTC through its Deposit
      Withdrawal Agent Commission (“DWAC”)
      system
      (to the extent not inconsistent with any provisions of this Agreement).

     

    
      
        
        

      

      
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    10.2 Liquidated
      Damages.
      The
      Company understands that a delay in the delivery of unlegended certificates
      for
      the Conversion Shares or the Warrant Shares as set forth in Section 5.1
      hereof beyond the Delivery Date could result in economic loss to the Purchaser.
      If the Company fails to deliver to a Purchaser such shares via DWAC or a
      certificate or certificates pursuant to this Section hereunder by the
      Delivery Date, the Company shall pay to the Purchaser, in cash,
      as
      partial liquidated damages and not as a penalty, for each $500 of Conversion
      Shares or Warrant Shares (based on the closing price of the Common Stock
      reported by the principal Trading Market on the date such Securities are
      submitted to the Company’s transfer agent) subject to Section 10.1, $10 per
      Trading Day (increasing to $15 per Trading Day five (5) Trading Days after
      such
      damages have begun to accrue and increasing to $20 per Trading Day ten (10)
      Trading Days after such damages have begun to accrue) for each Trading Day
      after
      the Legend Removal Date until such certificate is delivered.
      Nothing
      herein shall limit the Purchaser’s right to pursue actual damages for the
      Company’s failure to deliver certificates representing any Securities as
      required by the Transaction Documents, and the Purchaser shall have the right
      to
      pursue all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief.

     

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

     

    ARTICLE
      XI INDEMNIFICATION

     

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

     

    
      
        
        

      

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

     

    11.3 Procedure.
      

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

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

     

    ARTICLE
      XII

     

    MISCELLANEOUS

     

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

     

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

     

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

     

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

     

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

     

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

     

    if
      to the
      Company:

     

    MDwerks,
      Inc.

    1020
      NW
      6th
      Street

    Deerfield
      Beach, FL 33442

    Telephone:
      (954) 389-8300

    Facsimile:
      (954) 427-5871

    Attention:
      Howard B. Katz, CEO

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    with
      a
      copy to:

     

    Stephen
      P. Katz, Esq.

    Peckar
      & Abramson, P.C.

    70
      Grand
      Avenue

    River
      Edge, NJ 07661

    Telephone:
      (201) 343-3434

    Facsimile:
      (201) 343-6306

     

    if
      to the
      Purchaser:

     

    Vicis
      Capital Master Fund

    Tower
      56,
      Suite 700 

    126
      E.
      56th Street, 7th Floor 

    New
      York,
      NY 10022

    Phone:
      (212) 909-4600

    Fax:
      (212) 909-4601

    Attn:
      Shad Stastney

     

    with
      a
      copy to:

     

    Andrew
      D.
      Ketter, Esq.

    Quarles
      & Brady LLP

    411
      East
      Wisconsin Avenue

    Milwaukee,
      Wisconsin 53202

    Phone:
      (414) 277-5629

    Fax:
      (414) 978-8972 

    

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

    

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

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

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

     

    12.9 Expenses.
      The
      Company shall bear its own expenses and legal fees incurred on its behalf with
      respect to the negotiation, execution and consummation of the transactions
      contemplated by this Agreement and shall pay all documentary stamp or similar
      taxes imposed by any authority upon the transactions contemplated by this
      Agreement or any Transaction Document. Without requiring any documentation
      therefor, the Company will reimburse the Purchaser $50,000 for all fees and
      expenses incurred by it with respect to the negotiation, execution and
      consummation of the transactions contemplated by this Agreement and the
      transactions contemplated hereby and due diligence conducted in connection
      therewith, including the fees and disbursements of counsel and auditors for
      the
      Purchaser. Such reimbursement shall be paid on the Closing Date by the Purchaser
      deducting such $50,000 from the Purchase Price. The Company shall pay all
      reasonable fees and expenses incurred by the Purchaser in connection with the
      enforcement of this Agreement or any of the other Transaction Documents,
      including, without limitation, all actual attorneys’ fees and
      expenses.

     

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

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

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

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	
              COMPANY:

               

              
                MDWERKS,
                  INC.

              

            
	 
 	 
 	 
 
	
            	     	
              /s/
                Howard B. Katz

            
	 	
              

              Name:
                Howard B. Katz

              Title:
                Chief Executive Officer

            
	 	 

    

    
      	 	 	 
	 	
              PURCHASER:

               

              
                VICIS
                  CAPITAL MASTER FUND

                By:
                  Vicis Capital LLC

              

            
	 
 	 
 	 
 
	
            	     	
              /s/
                Keith W. Hughes

            
	 	
              

              Name:
                Keith W. Hughes

              Title:
                Chief Financial Officer

            

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    FORM
      OF CERTIFICATE OF DESIGNATIONS OF 

    SERIES
      B CONVERTIBLE PREFERRED STOCK

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    FORM
      OF SERIES F WARRANTS

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    FORM
      OF SERIES G WARRANTS

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

    

    FORM
      OF SECURITY AGREEMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

    

    FORM
      OF GUARANTY AGREEMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      F

    

    FORM
      OF GUARANTOR SECURITY AGREEMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      G

    

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      H

    

    FORM
      OF OPINION OF COUNSEL

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      I

    

    FORM
      OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

    

    MDWERKS,
      INC.

     

    as
      of
      September __, 2007

     

    [Name
      and
      address of Transfer Agent]

    Attn:
      _____________

    

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Securities Purchase Agreement (the “Purchase
      Agreement”), dated as of September 28, 2007, by and among MDwerks, Inc., a
      Delaware corporation (the “Company”), and the purchasers named therein
      (collectively, the “Purchasers”) pursuant to which the Company is issuing to the
      Purchasers shares of its Series B Preferred Stock, par value $0.001 per share
      (the “Preferred Shares”), convertible into shares of the Company’s common stock,
      par value $0.001 per share (the “Common Stock”) and warrants (the “Warrants”) to
      purchase shares of the Company’s Common Stock. This letter shall serve as our
      irrevocable authorization and direction to you (provided that you are the
      transfer agent of the Company at such time) to issue shares of Common Stock
      upon
      conversion of the Preferred Shares (the “Conversion Shares”) and exercise of the
      Warrants (the “Warrant Shares”) to or upon the order of a Purchaser from time to
      time upon (i) surrender to you of a properly completed and duly executed
      Conversion Notice or Exercise Notice, as the case may be, in the form attached
      hereto as Exhibit I and Exhibit II, respectively, (ii) in the case of the
      conversion of Preferred Shares, a copy of the certificate representing the
      Preferred Shares (with the original delivered to the Company) representing
      the
      Preferred Shares being converted or, in the case of Warrants being exercised,
      a
      copy of the Warrants (with the original Warrants delivered to the Company)
      being
      exercised (or, in each case, an indemnification undertaking with respect to
      such
      Preferred Shares or the Warrants in the case of their loss, theft or
      destruction), and (iii) delivery of a treasury order or other appropriate
      order duly executed by a duly authorized officer of the Company. So long as
      you
      have previously received written confirmation from counsel to the Company that
      a
      registration statement covering resales of the Conversion Shares or Warrant
      Shares, as applicable, has been declared effective by the Securities and
      Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended
      (the “1933 Act”), and no subsequent notice by the Company or its counsel of the
      suspension or termination of its effectiveness, then certificates representing
      the Conversion Shares and the Warrant Shares, as the case may be, shall not
      bear
      any legend restricting transfer of the Conversion Shares and the Warrant Shares,
      as the case may be, thereby and should not be subject to any stop-transfer
      restriction. Provided, however, that if you have not previously received written
      confirmation from counsel to the Company that a registration statement covering
      resales of the Conversion Shares or Warrant Shares, as applicable, has been
      declared effective by the SEC under the 1933 Act, then the certificates for
      the
      Conversion Shares and the Warrant Shares shall bear the following
      legend:

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

    
      	 	 	 
	 	
              Very
                truly yours,

               

              
                MDWERKS,
                  INC. 

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                _____________________________

            
	 	
              Title:
                _____________________________

               

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ACKNOWLEDGED
      AND AGREED:

     

    [TRANSFER
      AGENT]

     

    By:     
      ____________________________________       

    Name:
      ____________________________________       

    Title:  
      ____________________________________       

    Date:  
      ____________________________________

           

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      I 

     

    MDWERKS,
      INC. 

     

    FORM
      OF CONVERSION NOTICE 

     

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

     

    Date
      to
      effect
      conversion: ______________________________________________________

     

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

     

    Number
      of
      shares of Preferred Stock to be converted:
      _________________________________

     

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

     

    Applicable
      Conversion Price:
      ____________________________________________________

     

    Number
      of
      shares of Common Stock to be issued:
      ____________________________________

     

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

     

    [HOLDER]
      

    
      	 	 	 	 
	By:	 	 	 
	
              
                

              

              Name:
                

              Title:
                

            	 	 	
            

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      II

     

    MDWERKS,
      INC.

     

    FORM
      OF EXERCISE NOTICE

     

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

     

    

    
      	
              Dated:
                _________________

            	 	
              Signature
                ______________________________

            
	 	 	 
	 	 	
              Address   ______________________________

                           
                _________________________

                           
                _________________________

               

            

    

       

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

     

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

     

    Cash
      Exercise              
_______
      

     

    Cashless
      Exercise         _______

     

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

     

    If
      the
      Holder has elected a Cashless Exercise, a certificate shall be issued to the
      Holder for the number of shares equal to the whole number portion of the product
      of the calculation set forth below, which is __________________.
      The
      Company shall pay a cash adjustment in respect of the fractional portion of
      the
      product of the calculation set forth below in an amount equal to the product
      of
      the fractional portion of such product and the Closing Sale Price of the shares
      of Common Stock (as reported by Bloomberg) on the date prior to exercise, which
      product is __________________.

     

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

                                                  
      ____________

                                                             
      B

    

    For
      purposes of the foregoing formula:

     

    
      	 	
              A
                =

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              B
                =

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

            

      	 	 	 

    

    
      	 	
              C
                =

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

            

    

    

    ASSIGNMENT

    

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

     

    
      
        	
                Dated:
                  _________________

              	 	
                Signature
                  ______________________________

              
	 	 	 
	 	 	
                Address   ______________________________

                             
                  _________________________

                             
                  _________________________

                 

              

      

    

    PARTIAL
      ASSIGNMENT

    

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

     

    
      
        	
                Dated:
                  _________________

              	 	
                Signature
                  ______________________________

              
	 	 	 
	 	 	
                Address   ______________________________

                             
                  _________________________

                             
                  _________________________

                 

              

      

    

    FOR
      USE
      BY THE ISSUER ONLY:

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      III

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    [Name
      and
      address of Transfer Agent]

    Attn:
      _____________

    

    Re: MDwerks,
      Inc.

     

    Ladies
      and Gentlemen:

     

    We
      are
      special counsel to MDwerks, a Delaware corporation (the “Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Purchase
      Agreement”),
      dated
      as of September 28, 2007, by and among the Company and the purchasers named
      therein (collectively, the “Purchasers”)
      pursuant to which the Company issued to the Purchasers secured convertible
      promissory notes (the “Notes”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $0.001 per share (the
“Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company has also entered into a
      Registration Rights Agreement with the Purchasers (the “Registration
      Rights Agreement”),
      dated
      as of September 28, 2007, pursuant to which the Company agreed, among other
      things, to register the Registrable Securities (as defined in the Registration
      Rights Agreement), including the shares of Common Stock issuable upon conversion
      of the Notes and exercise of the Warrants, under the Securities Act of 1933,
      as
      amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ________________, 2007, the Company filed a Registration Statement
      on Form SB-2 (File No. 333-________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the resale of the Registrable Securities which names each of the
      present Purchasers as a selling stockholder thereunder.

     

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

    
      	 	 	 
	 	
              Very
                truly yours,

               

              
                [COMPANY
                  COUNSEL]

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

            

    

     

    cc: [LIST
      NAMES OF PURCHASERS]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      1.4(a)—Subscription Amounts

    

    
      	
              Investor

            	 	
              Subscription
                

              Amount

            	 
	 	 	 	 
	
              Gottbetter
                Capital Master, Ltd.

            	 	
              $

            	
              5,000,000

            	 
	 	 	 	 	 
	
              Vicis
                Capital Master Fund

            	 	
              $

            	
              2,000,000

            	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      Securities
        Purchase Agreement

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

      September
        28, 2007

      

      Schedule
        3.4(b)(i)

      

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

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.4(b)(ii)

     

    MDwerks,
      Inc.

    
      Fully
        Diluted Capital Table

    

    
      As
        of 9/26/07

      
        	 	 	 	 	
                Issued
                  &

              	 
	 	 	
                Issued
                  &

              	 	
                Outstanding
                  

              	 
	 	 	
                Outstanding

              	 	
                w/
                  Reserve 

              	 
	
                Common
                  Stock

              	 	 	
                12,940,065

              	 	 	
                12,940,065
                  

              	 
	 	 	 	 	 	 	 	 
	
                Preferred
                  Series A (Common Stock Equivalent)

              	 	 	
                40,000

              	 	 	
                40,000
                  

              	 
	 	 	 	 	 	 	 	 
	
                Warrants*

              	 	 	
                3,066,345

              	 	 	
                4,003,845
                  

              	 
	 	 	 	 	 	 	 	 
	
                Options

              	 	 	
                3,031,250

              	 	 	
                3,031,250
                  

              	 
	 	 	 	 	 	 	 	 
	
                Debt
                  Conversions (Gottbetter)*

              	 	 	
                2,222,222

              	 	 	
                3,888,889
                  

              	 
	 	 	 	 	 	 	 	 
	
                Totals

              	 	 	
                21,299,882

              	 	 	
                23,904,049

              	 

      

       

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

              	 
	
                Warrants

              	 	 	 	 	 	
                1,250,000

              	 	 	
                2,187,500
                  

              	 
	
                Debt
                  Conversions

              	 	 	 	 	 	
                2,222,222

              	 	 	
                3,888,889
                  

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Schedule
        3.4(b)(ii)

       

      MDwerks,
        Inc.

      
        Warrants

      

      
        As
          of 9/26/07

         

      

      
        	 	 	 	 	 	 	 	 	
                Warrant

              	 
	 	 	
                Warrant
                  Grant

              	 	
                Shares

              	 	
                Expiration

              	 
	 	 	
                Date

              	 	
                Value

              	 	
                Granted

              	 	
                Date

              	 
	
                MDwerks,
                  Inc.

              	 	 	 	 	 	 	 	 	 
	
                Thomas
                  Stephens 

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                5,000

              	 	 	
                11/16/08

              	 
	
                Roger
                  Hermes

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Ronald
                  Hankins

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                8,800

              	 	 	
                11/16/08

              	 
	
                Rosemarie
                  Manchio

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Alphonse
                  Tribuiani

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Carlos
                  A. Jimenez

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Carlos
                  A. Jimenez/Jason Beccaris

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Constantine
                  G. Barbounis

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                20,000

              	 	 	
                11/16/08

              	 
	
                Daniel
                  O'Sullivan

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                40,000

              	 	 	
                11/16/08

              	 
	
                Daniel
                  R. Brown

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Domenico
                  Iannucci

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                100,000

              	 	 	
                11/16/08

              	 
	
                Donna
                  Hachem Rev. Trust

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                20,000

              	 	 	
                11/16/08

              	 
	
                Dr.
                  Irving Karten

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Eric
                  W. Penttinen

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Jamie
                  Toddings

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Jason
                  Clarke/Tanya Clark

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Jonathan
                  Rotella

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                JTP
                  Holdings, LLC

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                Philip
                  J. Hempleman

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                40,000

              	 	 	
                11/16/08

              	 
	
                Robert
                  E. Zimmerman

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                30,000

              	 	 	
                11/16/08

              	 
	
                Roger
                  Walker

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                10,000

              	 	 	
                11/16/08

              	 
	
                SCG
                  Capital LLC

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                120,000

              	 	 	
                11/16/08

              	 
	
                Todd
                  Weisberg

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                20,000

              	 	 	
                11/16/08

              	 
	
                Jon
                  Zimmerman

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                20,000

              	 	 	
                11/16/08

              	 
	
                Todd
                  Snyder

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                20,000

              	 	 	
                11/16/08

              	 
	
                RAJ
                  Inv

              	 	 	
                3/22/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                3/22/09

              	 
	
                Daniel
                  Sullivan

              	 	 	
                3/22/06

              	 	
                $

              	
                3.00

              	 	 	
                40,000

              	 	 	
                3/22/09

              	 
	
                Kevin
                  Walker

              	 	 	
                3/22/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                3/22/09

              	 
	
                Rick
                  Bennett

              	 	 	
                3/22/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                3/22/09

              	 
	
                Brookshire
                  Placement fee

              	 	 	
                6/28/06

              	 	
                $

              	
                1.50

              	 	 	
                10,000

              	 	 	
                6/27/11

              	 
	
                Frank
                  Cappo

              	 	 	
                4/20/06

              	 	
                $

              	
                3.00

              	 	 	
                40,000

              	 	 	
                4/20/09

              	 
	
                Rion
                  Needs

              	 	 	
                4/20/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                4/20/09

              	 
	
                Joseph
                  Levine

              	 	 	
                5/4/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                5/4/09

              	 
	
                Tim
                  Johnson

              	 	 	
                5/4/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                5/4/09

              	 
	
                Joe
                  Sparieino

              	 	 	
                5/4/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                5/4/09

              	 
	
                Gerald
                  Hueper

              	 	 	
                5/12/06

              	 	
                $

              	
                3.00

              	 	 	
                16,666

              	 	 	
                5/12/09

              	 
	
                Terence
                  Smith

              	 	 	
                5/12/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                5/12/09

              	 
	
                Kevin
                  & Brenda Narcomey

              	 	 	
                5/12/06

              	 	
                $

              	
                3.00

              	 	 	
                8,333

              	 	 	
                5/12/09

              	 
	
                PHD
                  Investements

              	 	 	
                5/15/06

              	 	
                $

              	
                3.00

              	 	 	
                50,000

              	 	 	
                5/15/09

              	 
	
                Louise
                  Rehling

              	 	 	
                5/15/06

              	 	
                $

              	
                3.00

              	 	 	
                8,334

              	 	 	
                5/15/09

              	 
	
                Scott
                  Mcnair

              	 	 	
                5/18/06

              	 	
                $

              	
                3.00

              	 	 	
                16,667

              	 	 	
                5/18/09

              	 
	
                Daniel
                  Craig Sager

              	 	 	
                5/18/06

              	 	
                $

              	
                3.00

              	 	 	
                8,334

              	 	 	
                5/18/09

              	 
	
                Joseph
                  Lewin

              	 	 	
                5/18/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                5/18/09

              	 
	
                GH
                  Medical PSP

              	 	 	
                5/22/06

              	 	
                $

              	
                3.00

              	 	 	
                25,000

              	 	 	
                5/22/09

              	 

      

      
         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
           

          Schedule
            3.4(b)(ii)

           

          MDwerks,
            Inc.

          
            Warrants

          

          
            As
              of 9/26/07

          

        

      

       

      
        	 	 	 	 	 	 	
                Warrant

              	 
	 	 	
                Warrant
                  Grant

              	 	
                Shares

              	 	
                Expiration

              	 
	 	 	
                Date

              	 	
                Value

              	 	
                Granted

              	 	
                Date

              	 
	MDwerks,
                Inc.	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Joe
                  & Carolyn Hubbard

              	 	 	
                5/22/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                5/22/09

              	 
	
                John
                  Harrison

              	 	 	
                5/22/06

              	 	
                $

              	
                3.00

              	 	 	
                10,000

              	 	 	
                5/22/09

              	 
	
                Melvin
                  Sanders

              	 	 	
                6/6/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                6/6/09

              	 
	
                Randy
                  Bean Revocable

              	 	 	
                6/6/06

              	 	
                $

              	
                3.00

              	 	 	
                10,000

              	 	 	
                6/6/09

              	 
	
                Edward
                  White/Brenda Fortunate

              	 	 	
                6/6/06

              	 	
                $

              	
                3.00

              	 	 	
                10,000

              	 	 	
                6/6/09

              	 
	
                Kevin
                  & Brenda Narcomey

              	 	 	
                6/6/06

              	 	
                $

              	
                3.00

              	 	 	
                8,333

              	 	 	
                6/6/09

              	 
	
                James
                  Lees

              	 	 	
                6/6/06

              	 	
                $

              	
                3.00

              	 	 	
                25,000

              	 	 	
                6/6/09

              	 
	
                Michael
                  Anderson

              	 	 	
                6/6/06

              	 	
                $

              	
                3.00

              	 	 	
                20,000

              	 	 	
                6/6/09

              	 
	
                Sharon
                  Sootin

              	 	 	
                6/29/06

              	 	
                $

              	
                3.00

              	 	 	
                30,000

              	 	 	
                6/29/09

              	 
	
                John
                  Harrison

              	 	 	
                6/29/06

              	 	
                $

              	
                3.00

              	 	 	
                10,000

              	 	 	
                6/29/09

              	 
	
                Edward
                  White/Brenda Fortunate

              	 	 	
                6/29/06

              	 	
                $

              	
                3.00

              	 	 	
                10,000

              	 	 	
                6/29/09

              	 
	
                Arrowhead
                  Consultants, Inc

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                59,800

              	 	 	
                11/16/08

              	 
	
                Brookshire
                  Securities Corp.

              	 	 	
                11/16/05

              	 	
                $

              	
                1.25

              	 	 	
                64,000

              	 	 	
                11/16/10

              	 
	
                Brookshire
                  Securities Corp.

              	 	 	
                11/16/05

              	 	
                $

              	
                2.50

              	 	 	
                6,800

              	 	 	
                11/16/08

              	 
	
                Brookshire
                  Placement fee

              	 	 	
                6/28/06

              	 	
                $

              	
                1.50

              	 	 	
                46,667

              	 	 	
                6/27/11

              	 
	
                Noteholders

              	 	 	
                7/5/06

              	 	
                $

              	
                1.25

              	 	 	
                90,000

              	 	 	
                7/4/10

              	 
	
                David
                  Goldner

              	 	 	
                8/24/06

              	 	
                $

              	
                2.25

              	 	 	
                111,111

              	 	 	
                8/24/09

              	 
	
                Todd
                  Adler

              	 	 	
                10/18/06

              	 	
                $

              	
                1.25

              	 	 	
                30,000

              	 	 	
                10/18/09

              	 
	
                John
                  Garrell

              	 	 	
                10/18/06

              	 	
                $

              	
                1.25

              	 	 	
                15,000

              	 	 	
                10/18/09

              	 
	
                Gottbetter

              	 	 	
                10/19/06

              	 	
                $

              	
                2.25

              	 	 	
                187,500

              	 	 	
                10/19/11

              	 
	
                Gottbetter

              	 	 	
                10/19/06

              	 	
                $

              	
                3.25

              	 	 	
                187,500

              	 	 	
                10/19/11

              	 
	
                Gottbetter

              	 	 	
                11/9/06

              	 	
                $

              	
                2.25

              	 	 	
                187,500

              	 	 	
                11/9/11

              	 
	
                Gottbetter

              	 	 	
                11/9/06

              	 	
                $

              	
                3.25

              	 	 	
                187,500

              	 	 	
                11/9/11

              	 
	
                Husni
                  Charara

              	 	 	
                10/18/06

              	 	
                $

              	
                3.76

              	 	 	
                175,000

              	 	 	
                10/18/09

              	 
	
                Alphonse
                  Tribuiani

              	 	 	
                10/18/06

              	 	
                $

              	
                3.76

              	 	 	
                10,000

              	 	 	
                10/18/09

              	 
	
                Angela
                  Rosania

              	 	 	
                10/18/06

              	 	
                $

              	
                3.76

              	 	 	
                15,000

              	 	 	
                10/18/09

              	 
	
                Roger
                  Lallemond

              	 	 	
                10/18/06

              	 	
                $

              	
                3.76

              	 	 	
                25,000

              	 	 	
                10/18/09

              	 
	
                Joseph
                  Carino

              	 	 	
                10/18/06

              	 	
                $

              	
                4.00

              	 	 	
                2,500

              	 	 	
                10/18/09

              	 
	
                Troy
                  Goldberg

              	 	 	
                10/18/06

              	 	
                $

              	
                4.00

              	 	 	
                2,500

              	 	 	
                10/18/09

              	 
	
                Sierra
                  Equity Group

              	 	 	
                10/18/06

              	 	
                $

              	
                3.00

              	 	 	
                12,500

              	 	 	
                10/18/09

              	 
	
                Gottbetter
                  Series D Warrants

              	 	 	
                9/27/07

              	 	
                $

              	
                2.25

              	 	 	
                500,000

              	 	 	
                9/27/12

              	 
	
                 

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Total
                  Warrants

              	 	 	 	 	 	 	 	 	
                3,066,345

              	 	 	 	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Schedule
        3.4(b)(ii)

       

      MDwerks,
        Inc.

      
        2005
          Incentinve Compensation Plan Report

      

      
        As
          of 9/26/07

      

    

    

      
        	 	 	 	 	 	 	
                Shares
                  Granted

              	 	 	 	 	 	 	 
	 	 	 	 	 	 	
                Incentive

              	 	
                Non-Qual

              	 	 	 	 	 	 	 	 	 
	 	 	
                Option
                  Grant

              	 	
                Stock

              	 	
                Stock

              	 	 	 	
                Exercise
                  Date and %

              	 
	 	 	
                Date

              	 	
                Value

              	 	
                Option

              	 	
                Option

              	 	
                Total

              	 	
                33.3%

              	 	
                33.3%

              	 	
                33.4%

              	 
	
                MDwerks,
                  Inc.

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Howard
                  Katz

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Howard
                  Katz

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                H&D
                  Katz as TEN ENT

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                0

              	 	 	
                400,000

              	 	 	
                400,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                Howard
                  Katz

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                3,750

              	 	 	
                0

              	 	 	
                3,750

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                H&D
                  Katz TEN ENT

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                0

              	 	 	
                246,250

              	 	 	
                246,250

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                H&D
                  Katz TEN ENT

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                500,000

              	 	 	
                500,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                H&D
                  Katz TEN ENT

              	 	 	
                12/27/06

              	 	
                $

              	
                1.39

              	 	 	
                0

              	 	 	
                50,000

              	 	 	
                50,000

              	 	 	
                12/27/06

              	 	 	
                12/27/06

              	 	 	
                12/27/06

              	 
	
                Solon
                  Kandel

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Solon
                  Kandel

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                S&V
                  Kandel TEN ENT

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                0

              	 	 	
                275,000

              	 	 	
                275,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                Solon
                  Kandel

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                3,750

              	 	 	
                0

              	 	 	
                3,750

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                S&V
                  Kandel TEN ENT

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                0

              	 	 	
                71,250

              	 	 	
                71,250

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                S&V
                  Kandel TEN ENT

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                100,000

              	 	 	
                100,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                Vincent
                  Colangelo

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Vincent
                  Colangelo

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                V&M
                  Colangelo TEN ENT

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                0

              	 	 	
                100,000

              	 	 	
                100,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                Vincent
                  Colangelo

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                3,750

              	 	 	
                0

              	 	 	
                3,750

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                V&M
                  Colangelo TEN ENT

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                0

              	 	 	
                71,250

              	 	 	
                71,250

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                V&M
                  Colangelo TEN ENT

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                75,000

              	 	 	
                75,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                V&M
                  Colangelo TEN ENT

              	 	 	
                12/27/06

              	 	
                $

              	
                1.39

              	 	 	
                0

              	 	 	
                15,000

              	 	 	
                15,000

              	 	 	
                12/27/06

              	 	 	
                12/27/06

              	 	 	
                12/27/06

              	 
	
                Gerald
                  Maresca

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Gerald
                  Maresca

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                5,000

              	 	 	
                0

              	 	 	
                5,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                Gerald
                  Maresca

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                20,750

              	 	 	
                0

              	 	 	
                20,750

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Gerald
                  Maresca

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                0

              	 	 	
                4,250

              	 	 	
                4,250

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Gerald
                  Maresca

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                25,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                Stephen
                  Weiss

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Stephen
                  Weiss

              	 	 	
                1/3/06

              	 	
                $

              	
                3.40

              	 	 	
                5,000

              	 	 	
                0

              	 	 	
                5,000

              	 	 	
                1/3/07

              	 	 	
                1/3/08

              	 	 	
                1/3/09

              	 
	
                Stephen
                  Weiss

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                20,750

              	 	 	
                0

              	 	 	
                20,750

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Stephen
                  Weiss

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                0

              	 	 	
                4,250

              	 	 	
                4,250

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Stephen
                  Weiss

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                25,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                Stephen
                  Weiss

              	 	 	
                12/27/06

              	 	
                $

              	
                1.39

              	 	 	
                0

              	 	 	
                15,000

              	 	 	
                15,000

              	 	 	
                12/27/06

              	 	 	
                12/27/07

              	 	 	
                12/27/08

              	 
	
                Total

              	 	 	 	 	 	 	 	 	
                262,750

              	 	 	
                1,977,250

              	 	 	
                2,240,000

              	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Xeni
                  Medical Systems,
                  Inc.

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Adam
                  Friedman

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Adam
                  Friedman

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                0

              	 	 	
                15,000

              	 	 	
                15,000

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Adam
                  Friedman

              	 	 	
                12/27/06

              	 	
                $

              	
                1.39

              	 	 	
                0

              	 	 	
                5,000

              	 	 	
                5,000

              	 	 	
                12/27/06

              	 	 	
                12/27/07

              	 	 	
                12/27/08

              	 
	
                Lila
                  Sobel

              	 	 	
                12/27/06

              	 	
                $

              	
                1.39

              	 	 	
                30,000

              	 	 	
                0

              	 	 	
                30,000

              	 	 	
                12/27/06

              	 	 	
                12/27/07

              	 	 	
                12/27/08

              	 
	
                Lila
                  Sobel (resigned)

              	 	 	
                5/24/07

              	 	 	 	 	 	
                -20,000

              	 	 	
                0

              	 	 	
                -20,000

              	 	 	 	 	 	 	 	 	 	 
	
                Phil
                  Margetts

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                20,000

              	 	 	
                0

              	 	 	
                20,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Phil
                  Margetts

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                12,500

              	 	 	
                0

              	 	 	
                12,500

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Phil
                  Margetts

              	 	 	
                12/27/06

              	 	
                $

              	
                1.39

              	 	 	
                10,000

              	 	 	
                0

              	 	 	
                10,000

              	 	 	
                12/27/06

              	 	 	
                12/27/07

              	 	 	
                12/27/08

              	 
	
                Lyuda
                  Koukos

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                20,000

              	 	 	
                0

              	 	 	
                20,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Lyuda
                  Koukos

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                12,500

              	 	 	
                0

              	 	 	
                12,500

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Sue
                  Barton

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                15,000

              	 	 	
                0

              	 	 	
                15,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Sue
                  Barton

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                6,250

              	 	 	
                0

              	 	 	
                6,250

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Betty
                  Faulk

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                10,000

              	 	 	
                0

              	 	 	
                10,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Betty
                  Faulk

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                5,000

              	 	 	
                0

              	 	 	
                5,000

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Total

              	 	 	 	 	 	 	 	 	
                146,250

              	 	 	
                20,000

              	 	 	
                166,250

              	 	 	 	 	 	 	 	 	 	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Schedule
        3.4(b)(ii)

       

      MDwerks,
        Inc.

      
        2005
          Incentinve Compensation Plan Report

      

      
        As
          of 9/26/07

      

    

    

      
        	 	 	 	 	 	 	
                Shares
                  Granted

              	 	 	 	 	 	 	 
	 	 	 	 	 	 	
                Incentive

              	 	
                Non-Qual

              	 	 	 	 	 	 	 	 	 
	 	 	
                Option
                  Grant

              	 	
                Stock

              	 	
                Stock

              	 	 	 	
                Exercise
                  Date and %

              	 
	 	 	
                Date

              	 	
                Value

              	 	
                Option

              	 	
                Option

              	 	
                Total

              	 	
                33.3%

              	 	
                33.3%

              	 	
                33.4%

              	 
	
                Xeni
                  Medical Systems,
                  Inc.

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Larry
                  Robinson

              	 	 	
                12/29/05

              	 	
                $

              	
                3.25

              	 	 	
                10,000

              	 	 	
                0

              	 	 	
                10,000

              	 	 	
                12/29/06

              	 	 	
                12/29/07

              	 	 	
                12/29/08

              	 
	
                Larry
                  Robinson

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                5,000

              	 	 	
                0

              	 	 	
                5,000

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Larry
                  Robinson (resigned)

              	 	 	
                8/25/06

              	 	 	 	 	 	
                -15,000

              	 	 	
                0

              	 	 	
                -15,000

              	 	 	 	 	 	 	 	 	 	 
	
                Total

              	 	 	 	 	 	 	 	 	
                0

              	 	 	
                0

              	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Directors,
                  Vendors and
                  Other

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Stephen
                  Katz

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                44,000

              	 	 	
                0

              	 	 	
                44,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                Stephen
                  Katz

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                131,000

              	 	 	
                131,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                David
                  Barnes

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                44,000

              	 	 	
                0

              	 	 	
                44,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                David
                  Barnes

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                31,000

              	 	 	
                31,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                Peter
                  Dunne

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                25,000

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Peter
                  Dunne

              	 	 	
                6/19/06

              	 	
                $

              	
                4.00

              	 	 	
                0

              	 	 	
                50,000

              	 	 	
                50,000

              	 	 	
                6/19/07

              	 	 	
                6/19/08

              	 	 	
                6/19/09

              	 
	
                Peter
                  Dunne

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                25,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                Paul
                  Kushner

              	 	 	
                6/22/06

              	 	
                $

              	
                4.25

              	 	 	
                23,500

              	 	 	
                0

              	 	 	
                23,500

              	 	 	
                6/22/07

              	 	 	
                6/22/08

              	 	 	
                6/22/09

              	 
	
                Paul
                  Kushner

              	 	 	
                6/22/06

              	 	
                $

              	
                4.25

              	 	 	
                0

              	 	 	
                51,500

              	 	 	
                51,500

              	 	 	
                6/22/07

              	 	 	
                6/22/08

              	 	 	
                6/22/09

              	 
	
                Paul
                  Kushner

              	 	 	
                10/11/06

              	 	
                $

              	
                2.25

              	 	 	
                0

              	 	 	
                25,000

              	 	 	
                25,000

              	 	 	
                10/11/06

              	 	 	
                10/11/07

              	 	 	
                10/11/08

              	 
	
                Bennu
                  Advisors

              	 	 	
                9/27/07

              	 	
                $

              	
                0.67

              	 	 	
                100,000

              	 	 	
                0

              	 	 	
                100,000

              	 	 	
                9/27/07

              	 	 	
                9/27/08

              	 	 	
                9/27/09

              	 
	
                David
                  Goldner

              	 	 	
                9/27/07

              	 	
                $

              	
                0.67

              	 	 	
                0

              	 	 	
                75,000

              	 	 	
                75,000

              	 	 	
                9/27/08

              	 	 	
                9/27/09

              	 	 	
                9/27/10

              	 
	
                Total

              	 	 	 	 	 	 	 	 	
                236,500

              	 	 	
                388,500

              	 	 	
                625,000

              	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Total
                  Options

              	 	 	 	 	 	 	 	 	
                645,500

              	 	 	
                2,385,750

              	 	 	
                3,031,250

              	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Expiration
                  Schedule

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

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      3.4(b)(iii)

    

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

    

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

     

    Secured
      Promissory Note, dated August 24, 2006, in the original principal amount of
      $250,000, issued by the Company to David Goldner. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.4(b)(iv)

     

    See
      attached UCC filing reports and attachments thereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Schedule
        3.4(b)(v)

       

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

       

      Piggyback
        Registration rights granted to David Goldner in Subscription Agreement, dated
        August 24, 2006.

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    Schedule
      3.4(b)(vi)

     

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

    

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

     

    Warrants
      to initially purchase 187,500 shares of Common Stock at a price of $3.25 per
      share, issued by the Company to Gottbetter Capital Master, Ltd. on October
      19,
      2006. 

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.4(b)(vii)

     

    Warrants
      to purchase shares of Common Stock at a price of $3.25 per share, issued by
      the
      Company to Gottbetter Capital Master, Ltd. on October 19, 2006. 

     

    Warrants
      to purchase shares of Common Stock at a price of $3.25 per share, issued by
      the
      Company to Gottbetter Capital Master, Ltd. on November 9, 2006. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.4(b)(viii)

     

    MDwerks,
      Inc. 2005 Incentive Compensation Plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

      
        

      

    

    
       

      MDWERKS,
        INC.

       

      2005
        INCENTIVE COMPENSATION PLAN

      
         

        
          

        

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      MDWERKS,
        INC.

       

      2005
        INCENTIVE COMPENSATION PLAN

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      3. Administration.

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

      4. Shares
        Subject to Plan.

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      6. Specific
        Terms of Awards.

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

      7. Certain
        Provisions Applicable to Awards.

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

      8. Code
        Section 162(m) Provisions.

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

      9. Change
        in Control.

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

      10. General
        Provisions. 

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c) Adjustments. 

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

      Adopted
        October __, 2005

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    Schedule
      3.11

    

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.20

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      7.14—Use of Proceeds

    

    
      	 	
              1.

            	
              Principal
                and interest owed by the Company under the Goldner Note in the principal
                amount of $150,000 due October 1,
                2007.

            

    

     

    
      	 	
              2.

            	
              Interest
                owed by the Company under notes issued to Gottbetter in the aggregate
                principal amount of $5,000,000.NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS WARRANT NOR THE
      SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.. THE
      SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A FORM REASONABLY
      ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
      ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
      BY THE SECURITIES.

     

    MDWERKS,
      INC.

     

    SERIES
      F WARRANT TO PURCHASE COMMON STOCK

     

    Warrant
      No.: W-F-1

     

    Number
      of
      Shares of Common Stock: 1,500,0000

     

    Date
      of
      Issuance: September 28, 2007 (“ISSUANCE DATE”)

     

    MDwerks,
      Inc., a Delaware corporation (the “COMPANY”), hereby certifies that, for good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, VICIS CAPITAL MASTER FUND, the registered holder hereof or its
      permitted assigns (the “HOLDER”), is entitled, subject to the terms set forth
      below, to purchase from the Company, at the Exercise Price (as defined below)
      then in effect, upon surrender of this Warrant to Purchase Common Stock
      (including any Warrants to purchase Common Stock issued in exchange, transfer
      or
      replacement hereof, the “WARRANT”), at any time or times on or after the date
      hereof, but not after 11:59 p.m., New York Time, on the Expiration Date (as
      defined below), One Million Five Hundred Thousand (1,500,000) fully paid
      nonassessable shares of Common Stock (as defined below) (the “WARRANT SHARES”).
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section 15. This Warrant is one of the Warrants
      to purchase Common Stock (the “WARRANTS”) issued pursuant to that certain
      Securities Purchase Agreement, dated as of September 28, 2007 (the “SUBSCRIPTION
      DATE”), by and among the Company and the Purchaser referred to therein (the
“SECURITIES PURCHASE AGREEMENT”).

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    1. EXERCISE
      OF WARRANT.

     

    (a) Mechanics
      of Exercise..
      Subject to the terms and conditions hereof (including, without limitation,
      the
      limitations set forth in Section 1(f)), this Warrant may be exercised by
      the Holder on any day on or after the date hereof, in whole or in part, by
      (i) delivery of a written notice, in the form attached hereto as Exhibit A
      (the “EXERCISE NOTICE”), of the Holder’s election to exercise this Warrant and
      (ii) (A) payment to the Company of an amount equal to the applicable
      Exercise Price multiplied by the number of Warrant Shares as to which this
      Warrant is being exercised (the “AGGREGATE EXERCISE PRICE”) in cash or by wire
      transfer of immediately available funds or (B) by notifying the Company
      that this Warrant is being exercised pursuant to a Cashless Exercise (as defined
      in Section 1(d)). The Holder shall not be required to deliver the original
      Warrant in order to affect an exercise hereunder. Execution and delivery of
      the
      Exercise Notice with respect to less than all of the Warrant Shares shall have
      the same effect as cancellation of the original Warrant and issuance of a new
      Warrant evidencing the right to purchase the remaining number of Warrant Shares.
      On or before the first (1st) Business Day following the date on which the
      Company has received each of the Exercise Notice and the Aggregate Exercise
      Price (or notice of a Cashless Exercise) (the “EXERCISE DELIVERY DOCUMENTS”),
      the Company shall transmit by facsimile an acknowledgment of confirmation of
      receipt of the Exercise Delivery Documents to the Holder and the Company’s
      transfer agent (the “TRANSFER AGENT”). On or before the third (3rd) Business Day
      following the date on which the Company has received all of the Exercise
      Delivery Documents (the “SHARE DELIVERY DATE”), the Company shall
      (X) provided that the Transfer Agent is participating in The Depository
      Trust Company (“DTC”) Fast Automated Securities Transfer Program, credit such
      aggregate number of shares of Common Stock to which the Holder is entitled
      pursuant to such exercise to the Holder’s or its designee’s balance account with
      DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
      Transfer Agent is not participating in the DTC Fast Automated Securities
      Transfer Program, issue and dispatch by overnight courier to the address as
      specified in the Exercise Notice, a certificate, registered in the Company’s
      share register in the name of the Holder or its designee, for the number of
      shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery of the Exercise Delivery Documents, the Holder shall
      be
      deemed for all corporate purposes to have become the holder of record of the
      Warrant Shares with respect to which this Warrant has been exercised,
      irrespective of the date such Warrant Shares are credited to the Holder’s DTC
      account or the date of delivery of the certificates evidencing such Warrant
      Shares as the case may be. If this Warrant is submitted in connection with
      any
      exercise pursuant to this Section 1(a) and the number of Warrant Shares
      represented by this Warrant submitted for exercise is greater than the number
      of
      Warrant Shares being acquired upon an exercise, then the Company shall as soon
      as practicable and in no event later than three Business Days after any exercise
      and at its own expense, issue, a new Warrant (in accordance with
      Section 7(d)) representing the right to purchase the number of Warrant
      Shares purchasable immediately prior to such exercise under this Warrant, less
      the number of Warrant Shares with respect to which this Warrant is exercised.
      No
      fractional shares of Common Stock are to be issued upon the exercise of this
      Warrant, but rather the number of shares of Common Stock to be issued shall
      be
      rounded up to the nearest whole number. The Company shall pay stamp and similar
      taxes which may be payable with respect to the issuance and delivery of Warrant
      Shares upon exercise of this Warrant. The Company shall not be required,
      however, to pay any transfer tax or similar charge imposed in connection with
      the issuance and delivery of Warrant shares in any name other than that of
      the
      Holder.

     

    (b) Exercise
      Price..
      For
      purposes of this Warrant, “EXERCISE PRICE” means $2.25 subject to adjustment as
      provided herein.

     

    (c) Company’s
      Failure to Timely Deliver Securities.
      

     

    (i) The
      Company understands that a delay in the delivery of the shares of Common Stock
      upon exercise of this Warrant beyond the Share Delivery Date could result in
      economic loss to the Holder. If the Company fails to deliver to the Holder
      such
      shares via DWAC or a certificate or certificates pursuant to this Section by
      the
      Share Delivery Date, the Company shall pay to the Holder, in cash,
      as
      partial liquidated damages and not as a penalty, for each $500 of Warrant Shares
      (based on the closing price of the Common Stock reported by the principal
      Trading Market on the date such securities are submitted to the Company’s
      transfer agent), $10 per Trading Day (increasing to $15 per Trading Day five
      (5)
      Trading Days after such damages have begun to accrue and increasing to $20
      per
      Trading Day ten (10) Trading Days after such damages have begun to accrue)
      for
      each Trading Day after the Share Delivery Date until such Common Stock
      certificate is delivered.
      Nothing
      herein shall limit a Holder’s right to pursue actual damages for the
Company’s
      failure
      to deliver certificates, and the Holder shall have the right to pursue all
      remedies available to it at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief.
      Notwithstanding anything to the contrary contained herein, the Holder shall
      be
      entitled to withdraw an Exercise Notice, and upon such withdrawal the Company
      shall only be obligated to pay the liquidated damages accrued in accordance
      with
      this Section through the date the Exercise Notice is withdrawn. Notwithstanding
      the foregoing, the Holder shall not be entitled to the damages set forth herein
      for the delay in the delivery of the shares of Common Stock upon exercise of
      this Warrant, if such delay is due to causes which are beyond the reasonable
      control of the Company, including, but not limited to, acts of God, acts of
      civil or military authority, fire, flood, earthquake, hurricane, riot, war,
      terrorism, sabotage and/or governmental action, provided that the Company:
      (i)
      gives the Holder prompt notice of each such cause; and (ii) uses reasonable
      efforts to correct such failure or delay in its performance. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (ii) In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the shares of Common Stock issuable upon exercise of the Warrant
      on
      or before the Share Delivery Date, and if after such date the Holder is required
      by its broker to purchase (in an open market transaction or otherwise) shares
      of
      Common Stock to deliver in satisfaction of a sale by the Holder of the shares
      of
      Common Stock issuable upon exercise of the Warrant which the Holder anticipated
      receiving upon such exercise (a “BUY-IN”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of shares of Common Stock issuable upon exercise
      of
      the Warrant that the Company was required to deliver to the Holder in connection
      with the conversion at issue times (B) the price at which the sell order giving
      rise to such purchase obligation was executed, and (2) at the option of the
      Holder, either reinstate the portion of the Warrant and equivalent number of
      shares of Common Stock for which such conversion was not honored or deliver
      to
      the Holder the number of shares of Common Stock that would have been issued
      had
      the Company timely complied with its conversion and delivery obligations
      hereunder. For example, if the Holder purchases Common Stock having a total
      purchase price of $11,000 to cover a Buy-In with respect to an attempted
      conversion of shares of Common Stock with an aggregate sale price giving rise
      to
      such purchase obligation of $10,000, under clause (1) of the immediately
      preceding sentence the Company shall be required to pay the Holder $1,000.
      The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In, together with applicable confirmations
      and other evidence reasonably requested by the Company. Nothing herein shall
      limit a Holder’s right to pursue any other remedies available to it hereunder,
      at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief with respect to the Company’s failure to
      timely deliver certificates representing shares of Common Stock upon exercise
      of
      the Warrant as required pursuant to the terms hereof.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (d) Cashless
      Exercise.
      Notwithstanding anything contained herein to the contrary, if, at the time
      of
      exercise of this Warrant, a Registration Statement (as defined in the
      Registration Rights Agreement) covering the Warrant Shares that are the subject
      of the Exercise Notice (the “UNAVAILABLE WARRANT SHARES”) is not available for
      the resale of such Unavailable Warrant Shares, the Holder may, in its sole
      discretion, exercise this Warrant in whole or in part and, in lieu of making
      the
      cash payment otherwise contemplated to be made to the Company upon such exercise
      in payment of the Aggregate Exercise Price, elect instead to receive upon such
      exercise the “Net Number” of shares of Common Stock determined according to the
      following formula (a “CASHLESS EXERCISE”):

     

    
      	
               Net
                Number =

            	 	
              (A
                x B) - (A x C)

              ___________

                          
                B

            

    

     

    For
      purposes of the foregoing formula:

     

    
      	 	
              A
                =

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

            

    

     

    
      	 	
              B
                =

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

            

    

     

    
      	 	
              C
                =

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

            

    

     

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 12.

     

    (f) Limitations
      on Exercises.

     

    (i) Notwithstanding
      anything to the contrary set forth in this Warrant, at no time may a Holder
      of
      this Warrant exercise this Warrant to the extent that after giving effect to
      such exercise, the Holder (together with the Holder’s affiliates) would
      beneficially own (as determined in accordance with Section 13(d) of the
      Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess
      of 4.99% of the number of shares of Common Stock outstanding immediately after
      giving effect to such exercise; provided, however, that upon a Holder of this
      Warrant providing the Company with sixty-one (61) days notice (the “WAIVER
      NOTICE”) that such Holder would like to waive this Section with regard to any or
      all shares of Common Stock issuable upon exercise of this Warrant, this Section
      will be of no force or effect with regard to all or a portion of the Warrant
      referenced in the Waiver Notice.

     

    (ii) Notwithstanding
      anything to the contrary set forth in this Warrant, at no time may a Holder
      of
      this Warrant exercise this Warrant to the extent that after giving effect to
      such exercise, the Holder (together with the Holder’s affiliates) would
      beneficially own (as determined in accordance with Section 13(d) of the
      Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess
      of 9.99% of the number of shares of Common Stock outstanding immediately after
      giving effect to such exercise; provided, however, that upon a Holder of this
      Warrant providing the Company with a Waiver Notice that such Holder would like
      to waive this Section with regard to any or all shares of Common Stock issuable
      upon exercise of the Warrant, this Section shall be of no force or effect with
      regard to all or a portion of the Warrant referenced in the Waiver
      Notice.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (iii) Notwithstanding
      anything to the contrary set forth in this Warrant, at no time may a Holder
      of
      this Warrant exercise this Warrant to the extent that the issuance of shares
      of
      Common Stock upon such exercise would exceed the aggregate number of shares
      of
      Common Stock which the Corporation may issue upon exercise of this Warrant
      without breaching the Company’s obligations under the rules or regulation of the
      principal exchange upon which shares of the Company’s Common Stock are traded.
      In such an event, the Company covenants to promptly as possible seek to obtain
      the necessary shareholder or other approvals necessary to issue the shares
      of
      Common Stock upon the exercise of this Warrant.

     

    (g) Insufficient
      Authorized Shares.
      If at
      any time while any of the Warrants remain outstanding the Company does not
      have
      a sufficient number of authorized and unreserved shares of Common Stock (an
      “AUTHORIZED SHARE FAILURE”) to satisfy its obligation to reserve for issuance
      upon exercise of the Warrants at least a number of shares of Common Stock equal
      to 100% of the number of shares of Common Stock as shall from time to time
      be
      necessary to effect the exercise of all of the Warrants then outstanding (the
      “REQUIRED RESERVE AMOUNT”), then the Company shall immediately take all action
      necessary to increase the Company’s authorized shares of Common Stock to an
      amount sufficient to allow the Company to reserve the Required Reserve Amount
      for the Warrants then outstanding. Without limiting the generality of the
      foregoing sentence, as soon as practicable after the date of the occurrence
      of
      an Authorized Share Failure, but in no event later than ninety (90) days after
      the occurrence of such Authorized Share Failure, the Company shall hold a
      meeting of its stockholders for the approval of an increase in the number of
      authorized shares of Common Stock. In connection with such meeting, the Company
      shall provide each stockholder with a proxy statement and shall use its
      reasonable best efforts to solicit its stockholders’ approval of such increase
      in authorized shares of Common Stock and to cause its board of directors to
      recommend to the stockholders that they approve such proposal.

     

    (h) Redemption.
      Except
      as otherwise explicitly provided for herein, this Warrant is not redeemable
      or
      callable by the Company at any time.

     

    2. ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.

     

    The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a) Adjustment
      upon Issuance of shares of Common Stock.
      If and
      whenever on or after the Subscription Date the Company issues or sells, or
      in
      accordance with this Section 2 is deemed to have issued or sold, any shares
      of Common Stock (including the issuance or sale of shares of Common Stock owned
      or held by or for the account of the Company, but excluding shares of Common
      Stock which are Excluded Securities or are deemed to have been issued by the
      Company in connection with any Excluded Securities) for a consideration per
      share (the “NEW ISSUANCE PRICE”) less than a price (the “APPLICABLE PRICE”)
      equal to the Exercise Price in effect immediately prior to such issue or sale
      or
      deemed issuance or sale (the foregoing a “DILUTIVE ISSUANCE”), then immediately
      after such Dilutive Issuance, the Exercise Price then in effect shall be reduced
      to an amount equal to the New Issuance Price. Upon each such adjustment of
      the
      Exercise Price hereunder, the number of Warrant Shares shall be adjusted to
      the
      number of shares of Common Stock determined by multiplying the Exercise Price
      in
      effect immediately prior to such adjustment by the number of Warrant Shares
      acquirable upon exercise of this Warrant immediately prior to such adjustment
      and dividing the product thereof by the Exercise Price resulting from such
      adjustment. For purposes of determining the adjusted Exercise Price under this
      Section 2(a), the following shall be applicable:

     

    (i) Issuance
      of Options.
      If the
      Company in any manner grants any Options and the lowest price per share for
      which one share of Common Stock is issuable upon the exercise of any such Option
      or upon conversion, exercise or exchange of any Convertible Securities issuable
      upon exercise of any such Option is less than the Applicable Price, then such
      shares of Common Stock (underlying such Option shall be deemed to be outstanding
      and to have been issued and sold by the Company at the time of the granting
      or
      sale of such Option for such price per share. For purposes of this
      Section 2(a)(i), the “lowest price per share for which one share of Common
      Stock is issuable upon exercise of such Options or upon conversion, exercise
      or
      exchange of such Convertible Securities” shall be equal to the sum of the lowest
      amounts of consideration (if any) received or receivable by the Company with
      respect to any one share of Common Stock upon the granting or sale of the
      Option, upon exercise of the Option and upon conversion, exercise or exchange
      of
      any Convertible Security issuable upon exercise of such Option. No further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      upon
      the actual issuance of such shares of Common Stock or of such Convertible
      Securities upon the exercise of such Options or upon the actual issuance of
      such
      shares of Common Stock upon conversion, exercise or exchange of such Convertible
      Securities.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (ii) Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such shares of Common Stock issuable upon conversion of such Convertible
      Securities shall be deemed to be outstanding and to have been issued and sold
      by
      the Company at the time of the issuance or sale of such Convertible Securities
      for such price per share. For the purposes of this Section 2(a)(ii), the
“lowest price per share for which one share of Common Stock is issuable upon
      the
      conversion, exercise or exchange” shall be equal to the sum of the lowest
      amounts of consideration (if any) received or receivable by the Company with
      respect to one share of Common Stock upon the issuance or sale of the
      Convertible Security and upon conversion, exercise or exchange of such
      Convertible Security. No further adjustment of the Exercise Price or number
      of
      Warrant Shares shall be made upon the actual issuance of such shares of Common
      Stock upon conversion, exercise or exchange of such Convertible Securities,
      and
      if any such issue or sale of such Convertible Securities is made upon exercise
      of any Options for which adjustment of this Warrant has been or is to be made
      pursuant to other provisions of this Section 2(a), no further adjustment of
      the Exercise Price or number of Warrant Shares shall be made by reason of such
      issue or sale. A change that permits the holder of an Option or Convertible
      Security to utilize a cashless exercise feature shall not be deemed to decrease
      the consideration payable by the holder solely by reason of the fact that the
      cashless exercise feature would result in a reduction in cash consideration
      receivable by the Company.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (iii) Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion, exercise or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are convertible
      into
      or exercisable or exchangeable for shares of Common Stock increases or decreases
      at any time, the Exercise Price and the number of Warrant Shares in effect
      at
      the time of such increase or decrease shall be adjusted to the Exercise Price
      and the number of Warrant Shares which would have been in effect at such time
      had such Options or Convertible Securities provided for such increased or
      decreased purchase price, additional consideration or increased or decreased
      conversion rate, as the case may be, at the time initially granted, issued
      or
      sold. For purposes of this Section 2(a)(iii), if the terms of any Option or
      Convertible Security that was outstanding as of the date of issuance of this
      Warrant are increased or decreased in the manner described in the immediately
      preceding sentence, then such Option or Convertible Security and the shares
      of
      Common Stock deemed issuable upon exercise, conversion or exchange thereof
      shall
      be deemed to have been issued as of the date of such increase or decrease.
      No
      adjustment pursuant to this Section 2(a) shall be made if such adjustment
      would result in an increase of the Exercise Price then in effect or a decrease
      in the number of Warrant Shares. A change that permits the holder of an Option
      or Convertible Security to utilize a cashless exercise feature shall not be
      deemed to decrease the consideration payable by the holder solely by reason
      of
      the fact that the cashless exercise feature would result in a reduction in
      cash
      consideration receivable by the Company.

     

    (iv) Calculation
      of Consideration Received.
      If any
      Option is issued in connection with the issue or sale of other securities of
      the
      Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration of $0.01. If any Common
      Stock, Options or Convertible Securities are issued or sold or deemed to have
      been issued or sold for cash, the consideration received therefor will be deemed
      to be the gross amount paid by the purchaser of such Common Stock, Options,
      or
      Convertible Securities, before any commissions, discounts, fees or expenses.
      If
      any Common Stock, Options or Convertible Securities are issued to the owners
      of
      the non-surviving entity in connection with any merger in which the Company
      is
      the surviving entity, the amount of consideration therefor will be deemed to
      be
      the fair value of such portion of the net assets and business of the
      non-surviving entity as is attributable to such Common Stock, Options or
      Convertible Securities, as the case may be. If any Common Stock, Options or
      Convertible Securities are issued or sold or deemed to have been issued or
      sold
      for non-cash consideration, the consideration received therefore will be deemed
      to be the fair value of such non-cash consideration as determined in good faith
      by the Board of Directors of the Company. 

     

    (v) Record
      Date.
      If the
      Company takes a record of the holders of shares of Common Stock for the purpose
      of entitling them (A) to receive a dividend or other distribution payable in
      shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
      for or purchase shares of Common Stock, Options or Convertible Securities,
      then
      such record date will be deemed to be the date of the issue or sale of the
      shares of Common Stock deemed to have been issued or sold upon the declaration
      of such dividend or the making of such other distribution or the date of the
      granting of such right of subscription or purchase, as the case may
      be.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b) Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding, (i) pays a stock
      dividend on its Common Stock or otherwise makes a distribution on any class
      of
      capital stock that is payable in shares of Common Stock, (ii) subdivides
      outstanding shares of Common Stock into a larger number of shares, or (iii)
      combines outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction
      of
      which the numerator shall be the number of shares of Common Stock outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to clause (i) of this paragraph shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution, and any adjustment pursuant to clause
      (ii) or (iii) of this paragraph shall become effective immediately after the
      effective date of such subdivision or combination.

     

    (c) Fundamental
      Transactions.
      If, at
      any time while this Warrant is outstanding there is a Fundamental Transaction,
      then the Holder shall have the right thereafter to receive, upon exercise of
      this Warrant, the same amount and kind of securities, cash or property as it
      would have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of the number of shares of Common Stock then issuable upon exercise
      in full of this Warrant (the “ALTERNATE CONSIDERATION”). For purposes of any
      such conversion, the determination of the Exercise Price shall be appropriately
      adjusted to apply to such Alternate Consideration based on the amount of
      Alternate Consideration issuable in respect of one share of Common Stock in
      such
      Fundamental Transaction, and the Company shall apportion the Exercise Price
      among the Alternate Consideration in a reasonable manner reflecting the relative
      value of any different components of the Alternate Consideration. If holders
      of
      Common Stock are given any choice as to the securities, cash or property to
      be
      received in a Fundamental Transaction, then the Holder shall be given the same
      choice as to the Alternate Consideration it receives upon any exercise of
      Warrant following such Fundamental Transaction. The terms of any agreement
      pursuant to which a Fundamental Transaction is effected shall include terms
      requiring any such successor or surviving entity to comply with the provisions
      of this paragraph (c) and insuring that the Series B Preferred Stock (or any
      such replacement security) will be similarly adjusted upon any subsequent
      transaction analogous to a Fundamental Transaction.

     

    (d) Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 2
      but not expressly provided for by such provisions (including, without
      limitation, the granting of stock appreciation rights, phantom stock rights
      or
      other rights with equity features), then the Company’s Board of Directors in
      good faith will make an appropriate adjustment in the Conversion Price so as
      to
      be equitable under the circumstances and otherwise protect the rights of the
      Holder; provided that no such adjustment will increase the Exercise Price as
      otherwise determined pursuant to this Section 7.3.

     

    3. RIGHTS
      UPON DISTRIBUTION OF ASSETS.

     

    If
      the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of shares of Common Stock, by
      way
      of return of capital or otherwise (including, without limitation, any
      distribution of cash, stock or other securities, property or options by way
      of a
      dividend, spin off, reclassification, corporate rearrangement, scheme of
      arrangement or other similar transaction) (a “DISTRIBUTION”), at any time after
      the issuance of this Warrant, then, in each such case, the Exercise Price in
      effect immediately prior to the close of business on the record date fixed
      for
      the determination of holders of shares of Common Stock entitled to receive
      the
      Distribution shall be reduced, effective as of the close of business on such
      record date, to a price determined by multiplying such Exercise Price by a
      fraction of which (i) the numerator shall be the Exercise Price on such record
      date minus the value of the Distribution (as determined in good faith by the
      Company’s Board of Directors) applicable to one share of Common Stock, and (ii)
      the denominator shall be the Exercise Price on such record date.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    4. PURCHASE
      RIGHTS; FUNDAMENTAL TRANSACTIONS.

     

    (a) Purchase
      Rights.
      In
      addition to any adjustments pursuant to Section 2 above, if at any time the
      Company grants, issues or sells any Options, Convertible Securities or rights
      to
      purchase stock, warrants, securities or other property pro rata to the record
      holders of any class of shares of Common Stock (the “PURCHASE RIGHTS”), then the
      Holder will be entitled to acquire, upon the terms applicable to such Purchase
      Rights, the aggregate Purchase Rights which the Holder could have acquired
      if
      the Holder had held the proportionate number of shares of Common Stock
      acquirable upon complete exercise of this Warrant (without regard to any
      limitations on the exercise of this Warrant) immediately before the date on
      which a record is taken for the grant, issuance or sale of such Purchase Rights,
      or, if no such record is taken, the date as of which the record holders of
      shares of Common Stock are to be determined for the grant, issue or sale of
      such
      Purchase Rights.

     

    (b) Redemption
      Right.
      No
      sooner than fifteen (15) days nor later than ten (10) days prior to the
      consummation of a Change of Control, but not prior to the public announcement
      of
      such Change of Control, the Company shall deliver written notice thereof via
      facsimile and overnight courier to the Holder (a “CHANGE IN CONTROL NOTICE”). At
      any time during the period beginning after the Holder’s receipt of a Change of
      Control Notice and ending ten (10) Trading Days after the consummation of such
      Change of Control, the Holder may require the Company to redeem all or any
      portion of this Warrant by delivering written notice thereof (“CHANGE IN CONTROL
      REDEMPTION NOTICE”) to the Company, which Change of Control Redemption Notice
      shall indicate the amount the Holder is electing to be redeemed. Any such
      redemption shall be in cash in the amount equal to the value of the remaining
      unexercised portion of this Warrant on the date of such consummation, which
      value shall be determined by use of the Black Scholes Option Pricing Model
      reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury
      rate
      for a period equal to the remaining term of this Warrant as of such date of
      request and (B) an expected volatility equal to the greater of 60% and the
      100
      day volatility obtained from the HVT function on Bloomberg.

     

    5. NONCIRCUMVENTION.

     

    The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Certificate of Incorporation, Bylaws or through any reorganization, transfer
      of assets, consolidation, merger, scheme of arrangement, dissolution, issue
      or
      sale of securities, or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      action as may be required to protect the rights of the Holder. Without limiting
      the generality of the foregoing, the Company (i) shall not increase the par
      value of any shares of Common Stock receivable upon the exercise of this Warrant
      above the Exercise Price then in effect, (ii) shall take all such actions as
      may
      be necessary or appropriate in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock upon the exercise
      of
      this Warrant, and (iii) shall, so long as any of the Warrants are outstanding,
      take all action necessary to reserve and keep available out of its authorized
      and unissued shares of Common Stock, solely for the purpose of effecting the
      exercise of the Warrants, 100% of the number of shares of Common Stock as shall
      from time to time be necessary to effect the exercise of the Warrants then
      outstanding (without regard to any limitations on exercise).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    6. WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.

     

    Except
      as
      otherwise specifically provided herein, the Holder, solely in such Person’s
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
      any of the rights of a stockholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a stockholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section 6, the Company shall provide the Holder with
      copies of the same notices and other information given to the stockholders
      of
      the Company generally, contemporaneously with the giving thereof to the
      stockholders.

     

    7. REISSUANCE
      OF WARRANTS.

     

    (a) Transfer
      of Warrant.
      If this
      Warrant is to be transferred, the Holder shall surrender this Warrant to the
      Company, whereupon the Company will issue promptly following satisfaction of
      the
      transfer provisions contained in the Securities Purchase Agreement and deliver
      upon the order of the Holder a new Warrant (in accordance with
      Section 7(d)), in the name of the validly registered assignee or
      transferee, representing the right to purchase the number of Warrant Shares
      being transferred by the Holder and, if less then the total number of Warrant
      Shares then underlying this Warrant is being transferred, a new Warrant (in
      accordance with Section 7(d)) to the Holder representing the right to
      purchase the number of Warrant Shares not being transferred.

     

    (b) Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the Holder
      to
      the Company in customary form and, in the case of mutilation, upon surrender
      and
      cancellation of this Warrant, the Company shall execute and deliver to the
      Holder a new Warrant (in accordance with Section 7(d)) representing the
      right to purchase the Warrant Shares then underlying this Warrant.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (c) Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section 7(d)) representing in the aggregate the right to purchase the
      number of Warrant Shares then underlying this Warrant, and each such new Warrant
      will represent the right to purchase such portion of such Warrant Shares as
      is
      designated by the Holder at the time of such surrender; provided, however,
      that
      no Warrants for fractional shares of Common Stock shall be given.

     

    (d) Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section 7(a) or Section 7(c), the
      Warrant Shares designated by the Holder which, when added to the number of
      shares of Common Stock underlying the other new Warrants issued in connection
      with such issuance, does not exceed the number of Warrant Shares then underlying
      this Warrant), (iii) shall have an issuance date, as indicated on the face
      of
      such new Warrant which is the same as the Issuance Date, and (iv) shall have
      the
      same rights and conditions as this Warrant.

     

    8. NOTICES.

     

    Whenever
      notice is required to be given under this Warrant, unless otherwise provided
      herein, such notice shall be given in accordance with Section 9(f) of the
      Securities Purchase Agreement. The Company shall provide the Holder with prompt
      written notice of all actions taken pursuant to this Warrant, including in
      reasonable detail a description of such action and the reason therefore. Without
      limiting the generality of the foregoing, the Company will give written notice
      to the Holder (i) immediately upon any adjustment of the Exercise Price, setting
      forth in reasonable detail, and certifying, the calculation of such adjustment
      and (ii) at least fifteen (15) days prior to the date on which the Company
      closes its books or takes a record (A) with respect to any dividend or
      distribution upon the shares of Common Stock, (B) with respect to any grants,
      issuances or sales of any Options, Convertible Securities or rights to purchase
      stock, warrants, securities or other property to holders of shares of Common
      Stock or (C) for determining rights to vote with respect to any Fundamental
      Transaction, dissolution or liquidation, provided in each case that such
      information shall be made known to the public prior to or in conjunction with
      such notice being provided to the Holder.

     

    9. AMENDMENT
      AND WAIVER.

     

    Except
      as
      otherwise provided herein, the provisions of this Warrant may be amended and
      the
      Company may take any action herein prohibited, or omit to perform any act herein
      required to be performed by it, only if the Company has obtained the written
      consent of the Holder; provided that no such action may increase the exercise
      price of any Warrant or decrease the number of shares or class of stock
      obtainable upon exercise of any Warrant without the written consent of the
      Holder. No such amendment shall be effective to the extent that it applies
      to
      less than all of the holders of the Warrants then outstanding.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    10. GOVERNING
      LAW.

     

    This
      Warrant shall be governed by and construed and enforced in accordance with,
      and
      all questions concerning the construction, validity, interpretation and
      performance of this Warrant shall be governed by, the internal laws of the
      State
      of New York, without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of New York or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of New York.

     

    11. CONSTRUCTION;
      HEADINGS.

     

    This
      Warrant shall be deemed to be jointly drafted by the Company and all the Buyers
      and shall not be construed against any person as the drafter hereof. The
      headings of this Warrant are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Warrant.

     

    12. DISPUTE
      RESOLUTION.

     

    In
      the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two Business Days submit via facsimile (a) the disputed determination
      of
      the Exercise Price to an independent, reputable investment bank selected by
      the
      Company and approved by the Holder (such approval not to be unreasonably
      withheld or delayed) or (b) the disputed arithmetic calculation of the Warrant
      Shares to the Company’s independent, outside accountant. The Company shall cause
      at its expense the investment bank or the accountant, as the case may be, to
      perform the determinations or calculations and notify the Company and the Holder
      of the results no later than ten Business Days from the time it receives the
      disputed determinations or calculations. Such investment bank’s or accountant’s
      determination or calculation, as the case may be, shall be binding upon all
      parties absent demonstrable error.

     

    13. REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.

     

    The
      remedies provided in this Warrant shall be cumulative and in addition to all
      other remedies available under this Warrant and the other Transaction Documents,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      right
      to pursue actual damages for any failure by the Company to comply with the
      terms
      of this Warrant. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the holder of this Warrant shall
      be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    14. TRANSFER.

     

    This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by the Securities
      Purchase Agreement.

     

    15. CERTAIN
      DEFINITIONS.

     

    For
      purposes of this Warrant, the following terms shall have the following
      meanings:

     

    (a) “APPROVED
      STOCK PLAN” means any employee benefit plan which has been approved by the Board
      of Directors of the Company, pursuant to which the Company’s securities may be
      issued to any employee, consultant, officer or director for services provided
      to
      the Company.

     

    (b) “BLOOMBERG”
      means Bloomberg Financial Markets.

     

    (c) “BUSINESS
      DAY” means any day other than Saturday, Sunday or other day on which commercial
      banks in The City of New York are authorized or required by law to remain
      closed.

     

    (d) “CLOSING
      BID PRICE” and “CLOSING SALE PRICE” means, for any security as of any date, the
      last closing bid price and last closing trade price, respectively, for such
      security on the Principal Market, as reported by Bloomberg, or, if the Principal
      Market begins to operate on an extended hours basis and does not designate
      the
      closing bid price or the closing trade price, as the case may be, then the
      last
      bid price or last trade price, respectively, of such security prior to 4:00:00
      p.m., New York Time, as reported by Bloomberg, or, if the Principal Market
      is
      not the principal securities exchange or trading market for such security,
      the
      last closing bid price or last trade price, respectively, of such security
      on
      the principal securities exchange or trading market where such security is
      listed or traded as reported by Bloomberg, or if the foregoing do not apply,
      the
      last closing bid price or last trade price, respectively, of such security
      in
      the over-the-counter market on the electronic bulletin board for such security
      as reported by Bloomberg, or, if no closing bid price or last trade price,
      respectively, is reported for such security by Bloomberg, the average of the
      bid
      prices, or the ask prices, respectively, of any market makers for such security
      as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
      cannot be calculated for a security on a particular date on any of the foregoing
      bases, the Closing Bid Price or the Closing Sale Price, as the case may be,
      of
      such security on such date shall be the fair market value as mutually determined
      by the Company and the Holder. If the Company and the Holder are unable to
      agree
      upon the fair market value of such security, then such dispute shall be resolved
      pursuant to Section 12. All such determinations to be appropriately
      adjusted for any stock dividend, stock split, stock combination or other similar
      transaction during the applicable calculation period.

     

    (e) “COMMON
      STOCK” means (i) the Company’s shares of Common Stock, par value $0.001 per
      share, and (ii) any share capital into which such Common Stock shall have been
      changed or any share capital resulting from a reclassification of such Common
      Stock.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

    (g) “ELIGIBLE
      MARKET” means the Principal Market, The New York Stock Exchange, Inc., the
      Nasdaq National Market, the Nasdaq Capital Market or the American Stock
      Exchange.

     

    (h) “EXCLUDED
      SECURITIES” means means any Common Stock and/or Options, (and the Common Stock
      issuable pursuant to such Options) issued or issuable: (i) in connection
      with any Approved Stock Plan up to a maximum of ten percent (10%) of the
      outstanding Common Stock (provided that securities issued in connection with
      an
      Approved Stock Plan that are outstanding as of the Issuance Date and shares
      of
      Common Stock issuable pursuant to exercise or conversion of such outstanding
      securities shall not be included for purposes of calculating the maximum of
      ten
      percent (10%)); (ii) upon conversion or exercise of any Options or
      Convertible Securities which are outstanding on the day immediately preceding
      the Issuance Date, provided that the terms of such Options or Convertible
      Securities are not amended, modified or changed on or after the Issuance Date
      to
      lower the conversion or exercise price thereof and so long as the number of
      shares of Common Stock underlying such securities is not otherwise increased;
      (iii) shares of Common Stock issued in an underwritten public offering in
      which the gross cash proceeds to the Company (before underwriting discounts,
      commissions and fees) are at least $10,000,000; (iv) Options issued to
      medical practices that are customers of the Company in good standing to acquire
      up to a maximum of 250,000 shares of Common Stock per practice with an exercise
      or conversion price at or above the Closing Sale Price on the day of issuance;
      (v) up to 250,000 shares of Common Stock (or securities convertible into 250,000
      shares of Common Stock with an exercise or conversion price at or above the
      Closing Sale price on the day of issuance) as consideration for strategic
      acquisitions up to a maximum of 250,000 shares of Common Stock per acquisition;
      (vi) up to 250,000 shares of Common Stock (or securities convertible into
      250,000 shares of Common Stock with an exercise or conversion price at or above
      the Closing Sale Price on the day of issuance) per year to third parties in
      connection with investor relations and public relations efforts of the Company;
      (vii) up to 250,000 shares of Common Stock, options, or warrants to be issued
      to
      Rodman & Renshaw (or their designees) as consideration for securing a line
      of credit or similar financing for the Company or its subsidiaries; (viii)
      the
      issuance to Gottbetter Capital Master, Ltd. of a Series D Warrant of the Company
      to purchase 500,000 shares of stock of the Company at an exercise price of
      $2.25
      per share;
      and
      (ix) the amendments to that certain Series E Warrant of the Company issued
      to
      Gottbetter Capital Master, Ltd. to reduce the exercise price of such warrant
      to
      $2.25 per share and increase the number of shares of Common Stock for which
      such
      warrants may be exercised to 541,666 and 2/3 shares.
      

     

    (i) “EXPIRATION
      DATE” means the date eight-four months after the Issuance Date or, if such date
      falls on a day other than a Business Day or on which trading does not take
      place
      on the Principal Market (a “HOLIDAY”), the next date that is not a
      Holiday.

     

    (j) “FUNDAMENTAL
      TRANSACTION” means that the Company shall, directly or indirectly, in one or
      more related transactions, (i) consolidate or merge with or into (whether or
      not
      the Company is the surviving corporation) another Person, or (ii) sell, assign,
      transfer, convey or otherwise dispose of all or substantially all of the
      properties or assets of the Company to another Person, or (iii) allow another
      Person to make a purchase, tender or exchange offer that is accepted by the
      holders of more than the 50% of either the outstanding shares of Common Stock
      (not including any shares of Common Stock held by the Person or Persons making
      or party to, or associated or affiliated with the Persons making or party to,
      such purchase, tender or exchange offer), or (iv) consummate a stock purchase
      agreement or other business combination (including, without limitation, a
      reorganization, recapitalization, spin-off or scheme of arrangement) with
      another Person whereby such other Person acquires more than the 50% of the
      outstanding shares of Common Stock (not including any shares of Common Stock
      held by the other Person or other Persons making or party to, or associated
      or
      affiliated with the other Persons making or party to, such stock purchase
      agreement or other business combination), (v) reorganize, recapitalize or
      reclassify its Common Stock (other than a forward or reverse stock split),
      or
      (vi) any “person” or “group” (as these terms are used for purposes of Sections
      13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
      of
      50% of the aggregate ordinary voting power represented by issued and outstanding
      Common Stock.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (k) “OPTIONS”
      means any rights, warrants or options to subscribe for or purchase shares of
      Common Stock or Convertible Securities.

     

    (l) “PARENT
      ENTITY” of a Person means an entity that, directly or indirectly, controls the
      applicable Person and whose common stock or equivalent equity security is quoted
      or listed on an Eligible Market, or, if there is more than one such Person
      or
      Parent Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

    (m) “PERSON”
      means an individual, a limited liability company, a partnership, a joint
      venture, a corporation, a trust, an unincorporated organization, any other
      entity and a government or any department or agency thereof.

     

    (n) “PRINCIPAL
      MARKET” means the Over-the-Counter Bulletin Board.

     

    (o) “REGISTRATION
      RIGHTS AGREEMENT” means that certain registration rights agreement by and among
      the Company and the Buyers.

     

    (p) “SUCCESSOR
      ENTITY” means the Person (or, if so elected by the Holder, the Parent Entity)
      formed by, resulting from or surviving any Fundamental Transaction or the Person
      (or, if so elected by the Holder, the Parent Entity) with which such Fundamental
      Transaction shall have been entered into.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Series F Warrant to Purchase Common
      Stock to be duly executed as of the Issuance Date set out above.

    
      	 	 	 
	 	
              MDWERKS,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Vincent Colangelo
	 	
              

              Name:
                Vincent Colangelo

              Title:
                Chief Financial Officer

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    MDWERKS,
      INC.

     

    FORM
      OF EXERCISE NOTICE

     

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

     

    
      	Dated:
              _________________	 	
              Signature
                ______________________________

               

            
	 	 	
              Address 
                ______________________________

                          
                _________________________

                          
                _________________________

               

            

    

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

     

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

     

    Cash
      Exercise         _______
      

     

    Cashless
      Exercise _______

     

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

     

    If
      the
      Holder has elected a Cashless Exercise, a certificate shall be issued to the
      Holder for the number of shares equal to the whole number portion of the product
      of the calculation set forth below, which is ______________.
      The
      Company shall pay a cash adjustment in respect of the fractional portion of
      the
      product of the calculation set forth below in an amount equal to the product
      of
      the fractional portion of such product and the Closing Sale Price of the shares
      of Common Stock (as reported by Bloomberg) on the date prior to exercise, which
      product is ____________________.

     

    
      	
               Net
                Number =

            	 	
              (A
                x B) - (A x C)

              ___________

                          
                B

            
	 	 	 

    

     

    For
      purposes of the foregoing formula:

     

    
      	 	
              A
                =

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              B
                =

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

            

    

     

    
      	 	
              C
                =

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

            

    

     

    ASSIGNMENT

     

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

     

    
      	Dated:
              _________________	 	
              Signature
                ______________________________

               

            
	 	 	
              Address 
                ______________________________

                          
                _________________________

                          
                _________________________

               

            

    

    PARTIAL
      ASSIGNMENT

     

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

     

    
      	Dated:
              _________________	 	
              Signature
                ______________________________

               

            
	 	 	
              Address 
                ______________________________

                          
                _________________________

                          
                _________________________

               

            

    

    FOR
      USE
      BY THE ISSUER ONLY:

     

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

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