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Unassociated Document

    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-2

     

    Number
      of
      Shares of Common Stock: 375,000

     

    Date
      of
      Issuance: January 18, 2008 (“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), Three Hundred Seventy-Five Thousand (375,000) 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 January 18, 2008 (the “SUBSCRIPTION DATE”),
      between the Company and the Purchaser referred to therein (the “SECURITIES
      PURCHASE AGREEMENT”).

     

    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. 

    
       

      
        
          
          

        

        
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    (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.

     

    
      
        
        

      

      
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    (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.

     

    
      
        
        

      

      
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    (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 Company 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.

     

    
      
        
        

      

      
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    (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.

     

    
      
        
        

      

      
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    (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.

     

    
      
        
        

      

      
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    (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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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).

     

    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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (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.

     

    (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 12.6 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) “CHANGE
      OF CONTROL” means any Fundamental Transaction other than (i) any reorganization,
      recapitalization or reclassification of the Common Stock in which holders of
      the
      Company’s voting power immediately prior to such reorganization,
      recapitalization or reclassification continue after such reorganization,
      recapitalization or reclassification to hold publicly-traded securities and,
      directly or indirectly, the voting power of the surviving entity or entities
      necessary to elect a majority of the members of the board of directors (or
      their
      equivalent if other than a corporation) of such entity or entities, or (ii)
      pursuant to a migratory merger effected solely for the purpose of changing
      the
      jurisdiction of incorporation of the Company or (iii) any transaction that
      might
      otherwise be a Fundamental Transaction but which the Holder agrees in writing
      shall not be deemed to be a Fundamental Transaction for purposes of this
      Warrant.

     

    (e) “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
      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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (f) “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.

     

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

     

    (h) “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.

     

    (i) “EXCLUDED
      SECURITIES” means (i) any Common Stock and/or Options (and the Common Stock
      issuable pursuant to such Options) issued or issuable: (A) in connection
      with any Approved Stock Plan up to a maximum of ten percent (10%) of the Common
      Stock outstanding at the time of issuance of such Common Stock and/or Options
      (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%)) or
      (B) upon conversion or exercise of any Options or Convertible Securities
      which are outstanding on 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; (ii) any 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;
      (iii) Options (and the Common Stock issuable pursuant thereto) 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;
      (iv) up to 250,000 shares of Common Stock (or securities convertible into up
      to
      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;
      (v) up to 250,000 shares of Common Stock (or securities convertible into up
      to
      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;
      (vi) 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; (vii)
      the
      Series D Warrant of the Company(and the Common Stock issuable pursuant thereto)
      to purchase 500,000 shares of Common Stock of the Company at an exercise price
      of $2.25 per share issued to Gottbetter Capital Master, Ltd.;
      (viii)
      the amendments to those certain Series E Warrants of the Company issued to
      Gottbetter Capital Master, Ltd., to reduce the exercise price of such warrant
      to
      $2.25 per share of Common Stock and increase the number of shares of Common
      Stock for which such warrants may be exercised to 541,666 and 2/3
      shares;
      and (ix)
      up to 35,000,000 shares of Common Stock (or securities convertible into up
      to
      35,000,000 shares of Common Stock) to be issued to Medical Solutions Management
      Inc. and/or Orthosupply Management, Inc., their respective affiliates or
      designees in connection with the acquisition by the Company of that certain
      Management Agreement, dated April 30, 2007, by and between Orthosupply
      Management, Inc. and Deutsche Medical Services, Inc. (the “DMSI Contract
      Acquisition”). 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (j) “EXPIRATION
      DATE” means the date eighty-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.

     

    (k) “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. For purposes of the Warrant, the issuance by the Company of up
      to
      an aggregate of 35,000,000 shares of Common Stock (or securities convertible
      into up to an aggregate of 35,000,000 shares of Common Stock) to Medical
      Solutions Management Inc. and/or Orthosupply Management, Inc., their respective
      affiliates or designees in connection with the DMSI Contract Acquisition shall
      not be deemed to be a Fundamental Transaction, and the subsequent assignment,
      sale, transfer or conveyance of such shares of Common Stock (or securities
      convertible into shares of Common Stock) by Medical Solutions Management Inc.,
      Orthosupply Management, Inc., their respective affiliates, designees,
      successors, assigns or subsequent transferees shall not be deemed to be a
      Fundamental Transaction.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    (m) “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.

     

    (n) “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.

     

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

     

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

     

    (q) “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.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    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/ Howard
              B.
              Katz
	 	
              

              Name:
                Howard B. Katz

              Title:
                Chief Executive Officer

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    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 _______________.Unassociated Document

    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
      G WARRANT TO PURCHASE COMMON STOCK

     

    Warrant
      No.: W-G-2

     

    Number
      of
      Shares of Common Stock: 250,000

     

    Date
      of
      Issuance: January 18, 2008 (“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), Two Hundred Fifty Thousand (250,000) 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 January 18, 2008 (the “SUBSCRIPTION DATE”),
      by and between the Company and the Purchaser referred to therein (the
“SECURITIES PURCHASE AGREEMENT”).

     

    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 $2.50 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 Company 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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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).

     

    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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (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.

     

    (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 12.6 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) “CHANGE
      OF CONTROL” means any Fundamental Transaction other than (i)  any
      reorganization, recapitalization or reclassification of the Common Stock in
      which holders of the Company’s voting power immediately prior to such
      reorganization, recapitalization or reclassification continue after such
      reorganization, recapitalization or reclassification to hold publicly-traded
      securities and, directly or indirectly, the voting power of the surviving entity
      or entities necessary to elect a majority of the members of the board of
      directors (or their equivalent if other than a corporation) of such entity
      or
      entities, or (ii) pursuant to a migratory merger effected solely for the
      purpose of changing the jurisdiction of incorporation of the Company or (iii)
      any transaction that might otherwise be a Fundamental Transaction but which
      the
      Holder agrees shall not be deemed to be a Fundamental Transaction for purposes
      of this Warrant.

     

    (e) “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
      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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (f) “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.

     

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

     

    (h) “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.

     

    (i) “EXCLUDED
      SECURITIES” means (i) any Common Stock and/or Options (and the Common Stock
      issuable pursuant to such Options) issued or issuable: (A) in connection
      with any Approved Stock Plan up to a maximum of ten percent (10%) of the Common
      Stock outstanding at the time of issuance of such Common Stock and/or Options
      (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%)) or
      (B) upon conversion or exercise of any Options or Convertible Securities
      which are outstanding on 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; (ii) any 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;
      (iii) Options (and the Common Stock issuable pursuant thereto) 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;
      (iv) up to 250,000 shares of Common Stock (or securities convertible into up
      to
      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;
      (v) up to 250,000 shares of Common Stock (or securities convertible into up
      to
      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;
      (vi) 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; (vii)
      the
      Series D Warrant of the Company (and the Common Stock issuable pursuant thereto)
      to purchase 500,000 shares of Common Stock of the Company at an exercise price
      of $2.25 per share issued to Gottbetter Capital Master, Ltd.;
      (viii)
      the amendments to those certain Series E Warrants of the Company issued to
      Gottbetter Capital Master, Ltd., to reduce the exercise price of such warrant
      to
      $2.25 per share of Common Stock and increase the number of shares of Common
      Stock for which such warrants may be exercised to 541,666 and 2/3
      shares;
      and (ix)
      up to 35,000,000 shares of Common Stock (or securities convertible into up
      to
      35,000,000 shares of Common Stock) to be issued to Medical Solutions Management
      Inc. and/or Orthosupply Management, Inc., their respective affiliates or
      designees in connection with the acquisition by the Company of that certain
      Management Agreement, dated April 30, 2007, by and between Orthosupply
      Management, Inc. and Deutsche Medical Services, Inc. (the “DMSI Contract
      Acquisition”). 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (j) “EXPIRATION
      DATE” means the date eighty-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.

     

    (k) “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. For purposes of the Warrant, the issuance by the Company of up
      to
      an aggregate of 35,000,000 shares of Common Stock (or securities convertible
      into up to an aggregate of 35,000,000 shares of Common Stock) to Medical
      Solutions Management Inc. and/or Orthosupply Management, Inc., their respective
      affiliates or designees in connection with the DMSI Contract Acquisition shall
      not be deemed to be a Fundamental Transaction, and the subsequent assignment,
      sale, transfer or conveyance of such shares of Common Stock (or securities
      convertible into shares of Common Stock) by Medical Solutions Management Inc.,
      Orthosupply Management, Inc., their respective affiliates, designees,
      successors, assigns or subsequent transferees shall not be deemed to be a
      Fundamental Transaction.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    (m) “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.

     

    (n) “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.

     

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

     

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

     

    (q) “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.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

    
      	 	 	 
	 	
              MDWERKS,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Howard B. Katz
	 	
              

              Name:
                Howard B. Katz

            
	 	Title:
              Chief Executive Officer

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    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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