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    <title>
      Form S8
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________________________________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      S-8</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REGISTRATION
      STATEMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>under</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      SECURITIES ACT OF 1933</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________________________________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>PaperFree
      Medical Solutions , Inc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Nevada</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
      or
      other jurisdiction of incorporation or organization)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 324pt; TEXT-INDENT: -324pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>98-0375957</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 324pt; TEXT-INDENT: -324pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
      Employer Identification Number)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>121
      West Sycamore Street</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Kokomo,
      Indiana 46901</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
      of principal executive offices)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stephen
      Hawksworth, CEO</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PaperFree
      Medical Solutions, Inc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>121
      West Sycamore Street</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Kokomo,
      Indiana 46901</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Name
      and
      address of agent for service)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(765)
      456-1089</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Telephone
      number, including area code of agent for service)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2006
      DIRECTORS, OFFICERS, EMPLOYEES AND CONSULTANTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>STOCK
      OPTION, STOCK WARRANT AND STOCK AWARD PLAN</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Full
      title of the Plans)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">_____________________________________________________________</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: white" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CALCULATION
      OF REGISTRATION FEE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>
      <table border="1" bordercolor="black" cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Title
                of securities to</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>be
                registered</strong></font></div>
            </td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amount
                to be </strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Registered</strong></font></div>
            </td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Proposed
                maximum</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Offering
                price per </strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Share</strong></font></div>
            </td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Proposed
                maximum</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>aggregate
                offering </strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>price(1)</strong></font></div>
            </td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amount
                of </strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>registration
                fee(1)</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="17%">&#160;</td>
            <td valign="top" width="16%">&#160;</td>
            <td valign="top" width="16%">&#160;</td>
            <td valign="top" width="16%">&#160;</td>
            <td valign="top" width="16%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
                Stock,</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$.001
                par value</font></div>
            </td>
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10,000,000</font></div>
            </td>
            <td align="right" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 33.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$0.02</font></div>
            </td>
            <td align="right" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 33.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$200,000</font></div>
            </td>
            <td align="right" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 33.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$25.34</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="17%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TOTAL</font></div>
            </td>
            <td valign="top" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10,000,000</font></div>
            </td>
            <td align="right" valign="top" width="16%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="top" width="16%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="top" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 33.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$25.34</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 234pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                offering price is based upon the exercise price of the warrants pursuant
                to Rule 457(f)(2).</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      I</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      documents containing the information specified in this Part I will be sent
      or
      given to participants in the 2006 Directors, Officers, Employees and Consultants
      Stock Option, Stock Warrant and Stock Award Plan (the &#8220;Plan) as specified by
      Rule 428(b)(1). Pursuant to the instructions for Form S-8, such documents need
      not be filed with the Commission either as part of the Registration Statement
      or
      as prospectuses or prospectus supplements pursuant to Rule 424. These documents
      and the documents incorporated by reference in this Registration Statement
      pursuant to Item 3 of Part II of this Registration Statement, taken together,
      constitute a prospectus that meets the requirements of Section 10(a) of the
      Securities Act of 1933, as amended. See Rule 428(a)(1).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      II</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INFORMATION
      REQUIRED IN THE REGISTRATION STATEMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Incorporation
      of Documents by Reference</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      documents listed in (a) and (b) below have been filed by the Registrant,
      PaperFree Medical Solutions, Inc., Inc., a Nevada corporation (the &#8220;Company&#8221;),
      with the Securities and Exchange Commission (the &#8220;Commission&#8221;) and are
      incorporated by reference in this Registration Statement. All documents
      subsequently filed by the Registrant pursuant to Section 13(a), 13(c), 14 and
      15(d) of the Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;),
      prior to the filing of a post-effective amendment which indicates that all
      securities offered have been sold or which deregisters all securities then
      remaining unsold shall be deemed to be incorporated by reference in the
      Registration Statement and to be part thereof from the date of filing of such
      documents.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      10-KSB for the year ended February 28, 2006 and filed on July 18, 2006. The
      above referenced reports, which were previously filed with the Commission,
      are
      incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      other
      reports filed pursuant to Section 13 or 15(d) of the Exchange Act since the
      end
      of the fiscal year covered by the Registrant&#8217;s Form 10-KSB for the period ended
      February 28, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      above
      referenced reports, which were previously filed with the Commission, are
      incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      4:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Description
      of Securities</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
      Applicable</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      5:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Interests
      of Named Experts and Counsel</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      6:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Indemnification
      of Directors and Officers</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">78.7502
      of the Nevada Revised Statutes provides:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Discretionary
      and mandatory indemnification of officers, directors, employees and agents:
      General provisions.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.
      A
      corporation may indemnify any person who was or is a party or is threatened
      to
      be made a party to any threatened, pending or completed action, suit or
      proceeding, whether civil, criminal, administrative or investigative, except
      an
      action by or in the right of the corporation, by reason of the fact that he
      is
      or was a director, officer, employee or agent of the corporation, or is or
      was
      serving at the request of the corporation as a director, officer, employee
      or
      agent of another corporation, partnership, joint venture, trust or other
      enterprise, against expenses, including attorneys&#8217; fees, judgments, fines and
      amounts paid in settlement actually and reasonably incurred by him in connection
      with the action, suit or proceeding if he acted in good faith and in a manner
      which he reasonably believed to be in or not opposed to the best interests
      of
      the corporation, and, with respect to any criminal action or proceeding, had
      no
      reasonable cause to believe his conduct was unlawful. The termination of any
      action, suit or proceeding by judgment, order, settlement, conviction or upon
      a
      plea of nolo contendere or its equivalent, does not, of itself, create a
      presumption that the person did not act in good faith and in a manner which
      he
      reasonably believed to be in or not opposed to the best interests of the
      corporation, and that, with respect to any criminal action or proceeding, he
      had
      reasonable cause to believe that his conduct was unlawful. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.
      A
      corporation may indemnify any person who was or is a party or is threatened
      to
      be made a party to any threatened, pending or completed action or suit by or
      in
      the right of the corporation to procure a judgment in its favor by reason of
      the
      fact that he is or was a director, officer, employee or agent of the
      corporation, or is or was serving at the request of the corporation as a
      director, officer, employee or agent of another corporation, partnership, joint
      venture, trust or other enterprise against expenses, including amounts paid
      in
      settlement and attorneys&#8217; fees actually and reasonably incurred by him in
      connection with the defense or settlement of the action or suit if he acted
      in
      good faith and in a manner which he reasonably believed to be in or not opposed
      to the best interests of the corporation. Indemnification may not be made for
      any claim, issue or matter as to which such a person has been adjudged by a
      court of competent jurisdiction, after exhaustion of all appeals therefrom,
      to
      be liable to the corporation or for amounts paid in settlement to the
      corporation, unless and only to the extent that the court in which the action
      or
      suit was brought or other court of competent jurisdiction determines upon
      application that in view of all the circumstances of the case, the person is
      fairly and reasonably entitled to indemnity for such expenses as the court
      deems
      proper. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.
      To the
      extent that a director, officer, employee or agent of a corporation has been
      successful on the merits or otherwise in defense of any action, suit or
      proceeding referred to in subsections 1 and 2, or in defense of any claim,
      issue
      or matter therein, the corporation shall indemnify him against expenses,
      including attorneys&#8217; fees, actually and reasonably incurred by him in connection
      with the defense. </font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exemption
      From Registration Claimed.</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
      Applicable</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      8:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibits</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following documents are filed as Exhibits to this Registration
      Statement:</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: -90pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 22.5pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">--</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 18pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
          Directors, Officers, Employees and Consultants Stock Option, Stock Warrant
          and
          Stock Award Plan</font></div>
        <div>&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: -90pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 22.5pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">--</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 18pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Opinion
          of Sonfield &amp; Sonfield as to the authorization and issuance of the shares
          being registered.</font></div>
        <div>&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 22.5pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">--</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 18pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
          of Sonfield &amp; Sonfield (included in Exhibit 5)</font></div>
        <div>&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24.2</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 22.5pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">--</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 18pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
          of Malone &amp; Bailey, PC, Registered Public Accountants</font></div>
        <div><br>&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      9:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Undertakings</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      undersigned registrant hereby undertakes:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 108pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
                file, during any period in which offers or sales are being made,
                a
                post-effective amendment to this registration statement to include
                any
                material information with respect to the plan of distribution not
                previously disclosed in the registration statement or any material
                change
                to such information in the registration
                statement;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 108pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that,
                for the purpose of determining any liability under the Securities
                Act of
                1933, each such post-effective amendment shall be deemed to be a
                new
                registration statement relating to the securities offered therein,
                and the
                offering of such securities at that time shall be deemed to be the
                initial
                bona fide offering thereof; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 108pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
                remove from registration by means of a post-effective amendment any
                of the
                securities being registered which remain unsold at the termination
                of the
                offering.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: white" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>THE
      REGISTRANT</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      Pursuant to the requirements of the Securities Act of 1933, the registrant
      certifies that it has reasonable grounds to believe that it meets all of the
      requirements for filing on Form S-8, and has duly caused this registration
      statement to be signed on its behalf by the undersigned, thereunto duly
      authorized, in Kokomo, IN, on the 21st day of December, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PAPERFREE
      MEDICAL SOLUTIONS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
      <u>/s/ Stephen Hawksworth</u></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stephen
      Hawksworth, President and Principal Executive Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
      <u>/s/ Craig S Barrow</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Craig
      S
      Barrow, Principal Accounting Officer and Principal Financial
      Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>THE
      PLAN</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      Pursuant to the requirements of the Securities Act of 1933, the Board of
      Directors who administer the 2006 Directors, Officers, Employees and Consultants
      Stock Option, Stock Warrant and Stock Award Plan have duly caused this
      registration statement to be signed on its behalf by the undersigned, thereunto
      duly authorized, in Kokomo, Indiana on the 21st day of December,
      2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                  /s/ Stephen Hawksworth</font></div>
              </td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
                  </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  David Bailey</font></div>
              </td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stephen
                  Hawksworth, Director</font></div>
              </td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
                  Bailey, Director</font></div>
              </td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%">&#160;</td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
                  </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  T. Marshall Wilde</font></div>
              </td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                  /s/ Richard Paver</font></div>
              </td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">T.
                  Marshall Wilde, Director</font></div>
              </td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Richard
                  Paver Director</font></div>
              </td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%">&#160;</td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
                  </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  William L. Sklar</font></div>
              </td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%">&#160;</td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">William
                  L. Sklar, Director</font></div>
              </td>
              <td align="justify" valign="top" width="13%">&#160;</td>
              <td align="justify" valign="top" width="24%">&#160;</td>
              <td align="justify" valign="top" width="12%">&#160;</td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: white" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      4.1</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PAPERFREE
      MEDICAL SOLUTIONS, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2006
      DIRECTORS, OFFICERS, EMPLOYEES AND CONSULTANTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>STOCK
      OPTION, STOCK WARRANT AND STOCK AWARD PLAN</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      1. PURPOSE OF THE PLAN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      purpose of the 2006 Directors, Officers, Employees and Consultants Stock Option,
      Stock Warrant and Stock Award Plan (&#8220;Plan&#8221;) is to maintain the ability of
      PaperFree Medical Solutions,, Inc., a Nevada corporation (the &#8220;Company&#8221;) and its
      subsidiaries to attract and retain highly qualified and experienced directors,
      employees and consultants and to give such directors, employees and consultants
      a continued proprietary interest in the success of the Company and its
      subsidiaries. In addition the Plan is intended to encourage ownership of common
      stock, $.001 par value (&#8220;Common Stock&#8221;), of the Company by the directors,
      employees and consultants of the Company and its Affiliates (as defined below)
      and to provide increased incentive for such persons to render services and
      to
      exert maximum effort for the success of the Company&#8217;s business. The Plan
      provides eligible employees and consultants the opportunity to participate
      in
      the enhancement of shareholder value by the grants of warrants, options,
      restricted common or convertible preferred stock, unrestricted common or
      convertible preferred stock and other awards under this Plan and to have their
      bonuses and/or consulting fees payable in warrants, restricted common or
      convertible preferred stock, unrestricted common or convertible preferred stock
      and other awards, or any combination thereof. In addition, the Company expects
      that the Plan will further strengthen the identification of the directors,
      employees and consultants with the stockholders. Certain options and warrants
      to
      be granted under this Plan are intended to qualify as Incentive Stock Options
      (&#8220;ISOs&#8221;) pursuant to Section 422 of the Internal Revenue Code of 1986, as
      amended (&#8220;Code&#8221;), while other options and warrants and preferred stock granted
      under this Plan will be nonqualified options or warrants which are not intended
      to qualify as ISOs (&#8220;Nonqualified Options&#8221;), either or both as provided in the
      agreements evidencing the options or warrants described in Section 5 hereof
      and
      shares of preferred stock. As provided in the designation described in Section
      5. Employees, consultants and directors who participate or become eligible
      to
      participate in this Plan from time to time are referred to collectively herein
      as &#8220;Participants&#8221;. As used in this Plan, the term &#8220;Affiliates&#8221; means any &#8220;parent
      corporation&#8221; of the Company and any &#8220;subsidiary corporation&#8221; of the Company
      within the meaning of Code Sections 424(e) and (f), respectively.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      2. ADMINISTRATION OF THE PLAN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Composition
      of Committee</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Plan shall be administered by the Board of Directors of the Company (the
&#8220;Board&#8221;). When acting in such capacity the Board is herein referred to as the
&#8220;Committee,&#8221; which shall also designate the Chairman of the Committee. If the
      Company is governed by Rule 16b-3 promulgated by the Securities and Exchange
      Commission (&#8220;Commission&#8221;) pursuant to the Securities Exchange Act of 1934, as
      amended (&#8220;Exchange Act&#8221;), no director shall serve as a member of the Committee
      unless he or she is a &#8220;disinterested person&#8221; within the meaning of such Rule
      16b-3.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Committee
      Action</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Committee shall hold its meetings at such times and places as it may determine.
      A majority of its members shall constitute a quorum, and all determinations
      of
      the Committee shall be made by not less than a majority of its members. Any
      decision or determination reduced to writing and signed by a majority of the
      members shall be fully as effective as if it had been made by a majority vote
      of
      its members at a meeting duly called and held. The Committee may designate
      the
      Secretary of the Company or other Company employees to assist the Committee
      in
      the administration of the Plan, and may grant authority to such persons to
      execute award agreements or other documents on behalf of the Committee and
      the
      Company. Any duly constituted committee of the Board satisfying the
      qualifications of this Section 2 may be appointed as the Committee.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Committee
      Expenses</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      All
      expenses and liabilities incurred by the Committee in the administration of
      the
      Plan shall be borne by the Company. The Committee may employ attorneys,
      consultants, accountants or other persons.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      3. STOCK RESERVED FOR THE PLAN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Subject
      to adjustment as provided in Section 5(d)(xiii) hereof, the aggregate number
      of
      shares that may be optioned, subject to conversion or issued under the Plan
      is
      10,000,000 shares of Common Stock, warrants, options, preferred stock or any
      combination thereof. The shares subject to the Plan shall consist of authorized
      but unissued shares of Common Stock and such number of shares shall be and
      is
      hereby reserved for sale for such purpose. Any of such shares which may remain
      unsold and which are not subject to issuance upon exercise of outstanding
      options or warrants or conversion of outstanding shares of preferred stock
      at
      the termination of the Plan shall cease to be reserved for the purpose of the
      Plan, but until termination of the Plan or the termination of the last of the
      options or warrants granted under the Plan, whichever last occurs, the Company
      shall at all times reserve a sufficient number of shares to meet the
      requirements of the Plan. Should any option or warrant expire or be cancelled
      prior to its exercise in full, the shares theretofore subject to such option
      or
      warrant may again be made subject to an option, warrant or shares of convertible
      preferred stock under the Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      upon the grant of any option, warrant, shares of preferred stock or award,
      the
      number of shares of Common Stock that may be issued or optioned under the Plan
      will be increased. The number of shares of such increase shall be an amount
      such
      that immediately after such increase the total number of shares issuable under
      the Plan and reserved for issuance upon exercise of outstanding options,
      warrants or conversion of shares of preferred stock will equal 15% of the total
      number of issued and outstanding shares of Common Stock of the Company. Such
      increase in the number of shares subject to the Plan shall occur without the
      necessity of any further corporate action of any kind or character.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      4. ELIGIBILITY</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Participants shall include directors, employees, including officers, of the
      Company and its divisions and subsidiaries, and consultants and attorneys who
      provide bona fide services to the Company. Participants are eligible to be
      granted warrants, options, restricted common or convertible preferred stock,
      unrestricted common or convertible preferred stock and other awards under this
      Plan and to have their bonuses and/or consulting fees payable in warrants,
      restricted common or convertible preferred stock, unrestricted common or
      convertible preferred stock and other awards. A Participant who has been granted
      an option, warrant or preferred stock hereunder may be granted an additional
      option, warrant options, warrants or preferred stock, if the Committee shall
      so
      determine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      5. GRANT OF OPTIONS OR WARRANTS</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Committee
      Discretion</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Committee shall have sole and absolute discretionary authority (i) to determine,
      authorize, and designate those persons pursuant to this Plan who are to receive
      warrants, options, restricted common or convertible preferred stock, or
      unrestricted common or convertible preferred stock under the Plan, (ii) to
      determine the number of shares of Common Stock to be covered by such grant
      or
      such options or warrants and the terms thereof, (iii) to determine the type
      of
      Common Stock granted: restricted common or convertible preferred stock,
      unrestricted common or convertible preferred stock or a combination of
      restricted and unrestricted common or convertible preferred stock, and (iv)
      to
      determine the type of option or warrant granted: ISO, Nonqualified Option or
      a
      combination of ISO and Nonqualified Options. The Committee shall thereupon
      grant
      options or warrants in accordance with such determinations as evidenced by
      a
      written option or warrant agreement. Subject to the express provisions of the
      Plan, the Committee shall have discretionary authority to prescribe, amend
      and
      rescind rules and regulations relating to the Plan, to interpret the Plan,
      to
      prescribe and amend the terms of the option or warrant agreements (which need
      not be identical) and to make all other determinations deemed necessary or
      advisable for the administration of the Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Stockholder
      Approval</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      All
      ISOs granted under this Plan are subject to, and may not be exercised before,
      the approval of this Plan by the stockholders prior to the first anniversary
      date of the Board meeting held to approve the Plan, by the affirmative vote
      of
      the holders of a majority of the outstanding shares of the Company present,
      or
      represented by proxy, and entitled to vote thereat, or by written consent in
      accordance with the laws of the State of Nevada, provided that if such approval
      by the stockholders of the Company is not forthcoming, all options or warrants
      and stock awards previously granted under this Plan other than ISOs shall be
      valid in all respects.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Limitation
      on Incentive Stock Options and Warrants</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      aggregate fair market value (determined in accordance with Section 5(d)(ii)
      of
      this Plan at the time the option or warrant is granted) of the Common Stock
      with
      respect to which ISOs may be exercisable for the first time by any Participant
      during any calendar year under all such plans of the Company and its Affiliates
      shall not exceed $3,000,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Terms
      and Conditions</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Each
      option or warrant granted under the Plan shall be evidenced by an agreement,
      in
      a form approved by the Committee, which shall be subject to the following
      express terms and conditions and to such other terms and conditions as the
      Committee may deem appropriate:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Option
      or Warrant Period</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Committee shall promptly notify the Participant of the option or warrant grant
      and a written agreement shall promptly be executed and delivered by and on
      behalf of the Company and the Participant, provided that the option or warrant
      grant shall expire if a written agreement is not signed by said Participant
      (or
      his agent or attorney) and returned to the Company within 60 days from date
      of
      receipt by the Participant of such agreement. The date of grant shall be the
      date the option or warrant is actually granted by the Committee, even though
      the
      written agreement may be executed and delivered by the Company and the
      Participant after that date. Each option or warrant agreement shall specify
      the
      period for which the option or warrant thereunder is granted (which in no event
      shall exceed ten years from the date of grant) and shall provide that the option
      or warrant shall expire at the end of such period. If the original term of
      an
      option or warrant is less than ten years from the date of grant, the option
      or
      warrant may be amended prior to its expiration, with the approval of the
      Committee and the Participant, to extend the term so that the term as amended
      is
      not more than ten years from the date of grant. However, in the case of an
      ISO
      granted to an individual who, at the time of grant, owns stock possessing more
      than 10 percent of the total combined voting power of all classes of stock
      of
      the Company or its Affiliate (&#8220;Ten Percent Stockholder&#8221;), such period shall not
      exceed five years from the date of grant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Option
      or Warrant Price</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      purchase price of each share of Common Stock subject to each option or warrant
      granted pursuant to the Plan shall be determined by the Committee at the time
      the option or warrant is granted and, in the case of ISOs, shall not be less
      than 100% of the fair market value of a share of Common Stock on the date the
      option or warrant is granted, as determined by the Committee. In the case of
      an
      ISO granted to a Ten Percent Stockholder, the option or warrant price shall
      not
      be less than 110% of the fair market value of a share of Common Stock on the
      date the option or warrant is granted. The purchase price of each share of
      Common Stock subject to a Nonqualified Option or Warrant under this Plan shall
      be determined by the Committee prior to granting the option or warrant. The
      Committee shall set the purchase price for each share subject to a Nonqualified
      Option or Warrant at either the fair market value of each share on the date
      the
      option or warrant is granted, or at such other price as the Committee in its
      sole discretion shall determine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      time a determination of the fair market value of a share of Common Stock is
      required to be made hereunder, the determination of its fair market value shall
      be made by the Committee in such manner as it deems appropriate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exercise
      Period</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Committee may provide in the option or warrant agreement that an option or
      warrant may be exercised in whole, immediately, or is to be exercisable in
      increments. In addition, the Committee may provide that the exercise of all
      or
      part of an option or warrant is subject to specified performance by the
      Participant. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iv)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Procedure
      for Exercise</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Options
      or warrants shall be exercised in the manner specified in the option or warrant
      agreement. The notice of exercise shall specify the address to which the
      certificates for such shares are to be mailed. A Participant shall be deemed
      to
      be a stockholder with respect to shares covered by an option or warrant on
      the
      date specified in the option or warrant agreement . As promptly as practicable,
      the Company shall deliver to the Participant or other holder of the warrant,
      certificates for the number of shares with respect to which such option or
      warrant has been so exercised, issued in the holder&#8217;s name or such other name as
      holder directs; provided, however, that such delivery shall be deemed effected
      for all purposes when a stock transfer agent of the Company shall have deposited
      such certificates with a carrier for overnight delivery, addressed to the holder
      at the address specified pursuant to this Section 6(d).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(v)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Termination
      of Employment</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      If an
      executive officer to whom an option or warrant is granted ceases to be employed
      by the Company for any reason other than death or disability, any option or
      warrant which is exercisable on the date of such termination of employment
      may
      be exercised during a period beginning on such date and ending at the time
      set
      forth in the option or warrant agreement; provided, however, that if a
      Participant&#8217;s employment is terminated because of the Participant&#8217;s theft or
      embezzlement from the Company, disclosure of trade secrets of the Company or
      the
      commission of a willful, felonious act while in the employment of the Company
      (such reasons shall hereinafter be collectively referred to as &#8220;for cause&#8221;),
      then any option or warrant or unexercised portion thereof granted to said
      Participant shall expire upon such termination of employment. Notwithstanding
      the foregoing, no ISO may be exercised later than three months after an
      employee&#8217;s termination of employment for any reason other than death or
      disability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(vi)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Disability
      or Death of Participant</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      In the
      event of the determination of disability or death of a Participant under the
      Plan while he or she is employed by the Company, the options or warrants
      previously granted to him may be exercised (to the extent he or she would have
      been entitled to do so at the date of the determination of disability or death)
      at any time and from time to time, within a period beginning on the date of
      such
      determination of disability or death and ending at the time set forth in the
      option or warrant agreement, by the former employee, the guardian of his estate,
      the executor or administrator of his estate or by the person or persons to
      whom
      his rights under the option or warrant shall pass by will or the laws of descent
      and distribution, but in no event may the option or warrant be exercised after
      its expiration under the terms of the option or warrant agreement.
      Notwithstanding the foregoing, no ISO may be exercised later than one year
      after
      the determination of disability or death. A Participant shall be deemed to
      be
      disabled if, in the opinion of a physician selected by the Committee, he or
      she
      is incapable of performing services for the Company of the kind he or she was
      performing at the time the disability occurred by reason of any medically
      determinable physical or mental impairment which can be expected to result
      in
      death or to be of long, continued and indefinite duration. The date of
      determination of disability for purposes hereof shall be the date of such
      determination by such physician.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(vii)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Assignability</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      An
      option or warrant shall be assignable or otherwise transferable, in whole or
      in
      part, by a Participant as provided in the option, warrant or designation of
      the
      series of preferred stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(viii)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Incentive
      Stock Options</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Each
      option or warrant agreement may contain such terms and provisions as the
      Committee may determine to be necessary or desirable in order to qualify an
      option or warrant designated as an incentive stock option.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ix)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Restricted
      Stock Awards</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Awards
      of restricted stock under this Plan shall be subject to all the applicable
      provisions of this Plan, including the following terms and conditions, and
      to
      such other terms and conditions not inconsistent therewith, as the Committee
      shall determine:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A)
      Awards of restricted stock may be in addition to or in lieu of option or warrant
      grants. Awards may be conditioned on the attainment of particular performance
      goals based on criteria established by the Committee at the time of each award
      of restricted stock. During a period set forth in the agreement (the
&#8220;Restriction Period&#8221;), the recipient shall not be permitted to sell, transfer,
      pledge, or otherwise encumber the shares of restricted stock; except that such
      shares may be used, if the agreement permits, to pay the option or warrant
      price
      pursuant to any option or warrant granted under this Plan, provided an equal
      number of shares delivered to the Participant shall carry the same restrictions
      as the shares so used. Shares of restricted stock shall become free of all
      restrictions if during the Restriction Period, (i) the recipient dies, (ii)
      the
      recipient&#8217;s directorship, employment, or consultancy terminates by reason of
      permanent disability, as determined by the Committee, (iii) the recipient
      retires after attaining both 59 1/2 years of age and five years of continuous
      service with the Company and/or a division or subsidiary, or (iv) if provided
      in
      the agreement, there is a &#8220;change in control&#8221; of the Company (as defined in such
      agreement). The Committee may require medical evidence of permanent disability,
      including medical examinations by physicians selected by it. Unless and to
      the
      extent otherwise provided in the agreement, shares of restricted stock shall
      be
      forfeited and revert to the Company upon the recipient&#8217;s termination of
      directorship, employment or consultancy during the Restriction Period for any
      reason other than death, permanent disability, as determined by the Committee,
      retirement after attaining both 59 1/2 years of age and five years of continuous
      service with the Company and/or a subsidiary or division, or, to the extent
      provided in the agreement, a &#8220;change in control&#8221; of the Company (as defined in
      such agreement), except to the extent the Committee, in its sole discretion,
      finds that such forfeiture might not be in the best interests of the Company
      and, therefore, waives all or part of the application of this provision to
      the
      restricted stock held by such recipient. Certificates for restricted stock
      shall
      be registered in the name of the recipient but shall be imprinted with the
      appropriate legend and returned to the Company by the recipient, together with
      a
      stock power endorsed in blank by the recipient. The recipient shall be entitled
      to vote shares of restricted stock and shall be entitled to all dividends paid
      thereon, except that dividends paid in Common Stock or other property shall
      also
      be subject to the same restrictions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(B)
      Restricted Stock shall become free of the foregoing restrictions upon expiration
      of the applicable Restriction Period and the Company shall then deliver to
      the
      recipient Common Stock certificates evidencing such stock. Restricted stock
      and
      any Common Stock received upon the expiration of the restriction period shall
      be
      subject to such other transfer restrictions and/or legend requirements as are
      specified in the applicable agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(x)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Bonuses
      and Past Salaries and Fees Payable in Unrestricted Stock</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A)
      In
      lieu of cash bonuses otherwise payable under the Company&#8217;s or applicable
      division&#8217;s or subsidiary&#8217;s compensation practices to employees and consultants
      eligible to participate in this Plan, the Committee, in its sole discretion,
      may
      determine that such bonuses shall be payable in unrestricted Common Stock or
      partly in unrestricted Common Stock and partly in cash. Such bonuses shall
      be in
      consideration of services previously performed and as an incentive toward future
      services and shall consist of shares of unrestricted Common Stock subject to
      such terms as the Committee may determine in its sole discretion. The number
      of
      shares of unrestricted Common Stock payable in lieu of a bonus otherwise payable
      shall be determined by dividing such bonus amount by the fair market value
      of
      one share of Common Stock on the date the bonus is payable, with fair market
      value determined as of such date in accordance with Section
      5(d)(ii).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(B)
      In
      lieu of salaries and fees otherwise payable by the Company to employees,
      attorneys and consultants eligible to participate in this Plan that were
      incurred for services rendered during, prior or after the year of 2004, the
      Committee, in its sole discretion, may determine that such unpaid salaries
      and
      fees shall be payable in unrestricted Common Stock or partly in unrestricted
      Common Stock and partly in cash. Such awards shall be in consideration of
      services previously performed and as an incentive toward future services and
      shall consist of shares of unrestricted Common Stock subject to such terms
      as
      the Committee may determine in its sole discretion. The number of shares of
      unrestricted Common Stock payable in lieu of a salaries and fees otherwise
      payable shall be determined by dividing each calendar month&#8217;s of unpaid salary
      or fee amount by the average trading value of the Common Stock for the calendar
      month during which the subject services were provided.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(xi)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>No
      Rights as Stockholder</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      No
      Participant shall have any rights as a stockholder with respect to shares
      covered by an option or warrant until the option or warrant is exercised as
      provided in clause (d) above.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(xii)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Extraordinary
      Corporate Transactions</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      existence of outstanding options or warrants shall not affect in any way the
      right or power of the Company or its stockholders to make or authorize any
      or
      all adjustments, recapitalizations, reorganizations, exchanges, or other changes
      in the Company&#8217;s capital structure or its business, or any merger or
      consolidation of the Company, or any issuance of Common Stock or other
      securities or subscription rights thereto, or any issuance of bonds, debentures,
      preferred or prior preference stock ahead of or affecting the Common Stock
      or
      the rights thereof, or the dissolution or liquidation of the Company, or any
      sale or transfer of all or any part of its assets or business, or any other
      corporate act or proceeding, whether of a similar character or otherwise. If
      the
      Company recapitalizes or otherwise changes its capital structure, or merges,
      consolidates, sells all of its assets or dissolves (each of the foregoing a
      &#8220;Fundamental Change&#8221;), then thereafter upon any exercise of an option or warrant
      theretofore granted the Participant shall be entitled to purchase under such
      option or warrant, in lieu of the number of shares of Common Stock as to which
      option or warrant shall then be exercisable, the number and class of shares
      of
      stock and securities to which the Participant would have been entitled pursuant
      to the terms of the Fundamental Change if, immediately prior to such Fundamental
      Change, the Participant had been the holder of record of the number of shares
      of
      Common Stock as to which such option or warrant is then exercisable. If (i)
      the
      Company shall not be the surviving entity in any merger or consolidation (or
      survives only as a subsidiary of another entity), (ii) the Company sells all
      or
      substantially all of its assets to any other person or entity (other than a
      wholly-owned subsidiary), (iii) any person or entity (including a &#8220;group&#8221; as
      contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains
      ownership or control of (including, without limitation, power to vote) more
      than
      50% of the outstanding shares of Common Stock, (iv) the Company is to be
      dissolved and liquidated, or (v) as a result of or in connection with a
      contested election of directors, the persons who were directors of the Company
      before such election shall cease to constitute a majority of the Board (each
      such event in clauses (i) through (v) above is referred to herein as a
&#8220;Corporate Change&#8221;), the Committee, in its sole discretion, may accelerate the
      time at which all or a portion of a Participant&#8217;s option or warrants may be
      exercised for a limited period of time before or after a specified
      date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(xiii)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Changes
      in Company&#8217;s Capital Structure</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      If the
      outstanding shares of Common Stock or other securities of the Company, or both,
      for which the option or warrant is then exercisable at any time be changed
      or
      exchanged by declaration of a stock dividend, stock split, combination of
      shares, recapitalization, or reorganization, the number and kind of shares
      of
      Common Stock or other securities which are subject to the Plan or subject to
      any
      options or warrants theretofore granted, and the option or warrant prices,
      shall
      be adjusted only as provided in the option or warrant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(xiv)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Acceleration
      of Options and Warrants</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Except
      as hereinbefore expressly provided, (i) the issuance by the Company of shares
      of
      stock or any class of securities convertible into shares of stock of any class,
      for cash, property, labor or services, upon direct sale, upon the exercise
      of
      rights or warrants to subscribe therefor, or upon conversion of shares or
      obligations of the Company convertible into such shares or other securities,
      (ii) the payment of a dividend in property other than Common Stock or (iii)
      the
      occurrence of any similar transaction, and in any case whether or not for fair
      value, shall not affect, and no adjustment by reason thereof shall be made
      with
      respect to, the number of shares of Common Stock subject to options or warrants
      theretofore granted or the purchase price per share, unless the Committee shall
      determine, in its sole discretion, that an adjustment is necessary to provide
      equitable treatment to Participant. Notwithstanding anything to the contrary
      contained in this Plan, the Committee may, in its sole discretion, accelerate
      the time at which any option or warrant may be exercised, including, but not
      limited to, upon the occurrence of the events specified in this Section 5,
      and
      is authorized at any time (with the consent of the Participant) to purchase
      options or warrants pursuant to Section 6.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      6. RELINQUISHMENT OF OPTIONS OR WARRANTS.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      The
      Committee, in granting options or warrants hereunder, shall have discretion
      to
      determine whether or not options or warrants shall include a right of
      relinquishment as hereinafter provided by this Section 6. The Committee shall
      also have discretion to determine whether an option or warrant agreement
      evidencing an option or warrant initially granted by the Committee without
      a
      right of relinquishment shall be amended or supplemented to include such a
      right
      of relinquishment. Neither the Committee nor the Company shall be under any
      obligation or incur any liability to any person by reason of the Committee&#8217;s
      refusal to grant or include a right of relinquishment in any option or warrant
      granted hereunder or in any option or warrant agreement evidencing the same.
      Subject to the Committee&#8217;s determination in any case that the grant by it of a
      right of relinquishment is consistent with Section 1 hereof, any option or
      warrant granted under this Plan, and the option or warrant agreement evidencing
      such option or warrant, may provide:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)
      That
      the Participant, or his or her heirs or other legal representatives to the
      extent entitled to exercise the option or warrant under the terms thereof,
      in
      lieu of purchasing the entire number of shares subject to purchase thereunder,
      shall have the right to relinquish all or any part of the then unexercised
      portion of the option or warrant (to the extent then exercisable) for a number
      of shares of Common Stock to be determined in accordance with the following
      provisions of this clause (i):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A)
      The
      written notice of exercise of such right of relinquishment shall state the
      percentage of the total number of shares of Common Stock issuable pursuant
      to
      such relinquishment (as defined below) that the Participant elects to
      receive;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(B)
      The
      number of shares of Common Stock, if any, issuable pursuant to such
      relinquishment shall be the number of such shares, rounded to the next greater
      number of full shares, as shall be equal to the quotient obtained by dividing
      (i) the Appreciated Value by (ii) the purchase price for each of such shares
      specified in such option or warrant;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(C)
      For
      the purpose of this clause (C), &#8220;Appreciated Value&#8221; means the excess, if any, of
      (x) the total current market value of the shares of Common Stock covered by
      the
      option or warrant or the portion thereof to be relinquished over (y) the total
      purchase price for such shares specified in such option or warrant;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)
      That
      such right of relinquishment may be exercised only upon receipt by the Company
      of a written notice of such relinquishment which shall be dated the date of
      election to make such relinquishment; and that, for the purposes of this Plan,
      such date of election shall be deemed to be the date when such notice is sent
      by
      registered or certified mail, or when receipt is acknowledged by the Company,
      if
      mailed by other than registered or certified mail or if delivered by hand or
      by
      any telegraphic communications equipment of the sender or otherwise delivered;
      provided, that, in the event the method just described for determining such
      date
      of election shall not be or remain consistent with the provisions of Section
      16(b) of the Exchange Act or the rules and regulations adopted by the Commission
      thereunder, as presently existing or as may be hereafter amended, which
      regulations exempt from the operation of Section 16(b) of the Exchange Act
      in
      whole or in part any such relinquishment transaction, then such date of election
      shall be determined by such other method consistent with Section 16(b) of the
      Exchange Act or the rules and regulations thereunder as the Committee shall
      in
      its discretion select and apply;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)
      That the &#8220;current market value&#8221; of a share of Common Stock on a particular date
      shall be deemed to be its fair market value on that date as determined in
      accordance with Paragraph 5(d)(ii); and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iv)
      That
      the option or warrant, or any portion thereof, may be relinquished only to
      the
      extent that (A) it is exercisable on the date written notice of relinquishment
      is received by the Company, and (B) the holder of such option or warrant pays,
      or makes provision satisfactory to the Company for the payment of, any taxes
      which the Company is obligated to collect with respect to such
      relinquishment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
      The
      Committee shall have sole discretion to consent to or disapprove, and neither
      the Committee nor the Company shall be under any liability by reason of the
      Committee&#8217;s disapproval of, any election by a holder of preferred stock to
      relinquish such preferred stock in whole or in part as provided in Paragraph
      7(a), except that no such consent to or approval of a relinquishment shall
      be
      required under the following circumstances. Each Participant who is subject
      to
      the short-swing profits recapture provisions of Section 16(b) of the Exchange
      Act (&#8220;Covered Participant&#8221;) shall not be entitled to receive shares of Common
      Stock when options or warrants are relinquished during any window period
      commencing on the third business day following the Company&#8217;s release of a
      quarterly or annual summary statement of sales and earnings and ending on the
      twelfth business day following such release (&#8220;Window Period&#8221;). A Covered
      Participant shall be entitled to receive shares of Common Stock upon the
      relinquishment of options or warrants outside a Window Period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
      The
      Committee, in granting options or warrants hereunder, shall have discretion
      to
      determine the terms upon which such options or warrants shall be relinquishable,
      subject to the applicable provisions of this Plan, and including such provisions
      as are deemed advisable to permit the exemption from the operation from Section
      16(b) of the Exchange Act of any such relinquishment transaction, and options
      or
      warrants outstanding, and option agreements evidencing such options, may be
      amended, if necessary, to permit such exemption. If options or warrants are
      relinquished, such option or warrant shall be deemed to have been exercised
      to
      the extent of the number of shares of Common Stock covered by the option or
      warrant or part thereof which is relinquished, and no further options or
      warrants may be granted covering such shares of Common Stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)
      Any
      options or warrants or any right to relinquish the same to the Company as
      contemplated by this Paragraph 6 shall be assignable by the Participant,
      provided the transaction complies with any applicable securities
      laws.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)
      Except as provided in Section 6(f) below, no right of relinquishment may be
      exercised within the first six months after the initial award of any option
      or
      warrant containing, or the amendment or supplementation of any existing option
      or warrant agreement adding, the right of relinquishment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)
      No
      right of relinquishment may be exercised after the initial award of any option
      or warrant containing, or the amendment or supplementation of any existing
      option or warrant agreement adding the right of relinquishment, unless such
      right of relinquishment is effective upon the Participant&#8217;s death, disability or
      termination of his relationship with the Company for a reason other than &#8220;for
      cause.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      7. ANTIDILUTION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Antidilution
      Provisions</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
                the Exercise Period, the Exercise Price and the number of Option
                or
                Warrant Shares shall be subject to adjustment from time to time as
                provided in this Section 7.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      event that any adjustment of the Exercise Price as required herein results
      in a
      fraction of a cent, such Exercise Price shall be rounded up to the nearest
      cent.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>a)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Adjustment
                of Exercise Price and Number of Shares upon Issuance of Common
                Stock</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                Except as otherwise provided in Section 7(c) and 7(e) hereof, if
                and
                whenever on or after the date of the creation of this plan,, the
                Company
                issues or sells, or in accordance with Section 7(b) hereof is deemed
                to
                have issued or sold, any shares of Common Stock for no consideration
                or
                for a consideration per share (before deduction of reasonable expenses
                or
                commissions or underwriting discounts or allowances in connection
                therewith) less than the Market Price on the date of issuance (a
&#8220;Dilutive
                Issuance&#8221;), then immediately upon the Dilutive Issuance, the Exercise
                Price will be reduced to a price determined by multiplying the Exercise
                Price in effect immediately prior to the Dilutive Issuance by a fraction,
                (i) the numerator of which is an amount equal to the sum of (x) the
                number
                of shares of Common Stock actually outstanding immediately prior
                to the
                Dilutive Issuance, plus (y) the quotient of the aggregate consideration,
                calculated as set forth in Section 7(b) hereof, received by the Company
                upon such Dilutive Issuance divided by the Market Price in effect
                immediately prior to the Dilutive Issuance, and (ii) the denominator
                of
                which is the total number of shares of Common Stock Deemed Outstanding
                (as
                defined below) immediately after the Dilutive Issuance.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>b)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Effect
                on Exercise Price of Certain Events</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                For purposes of determining the adjusted Exercise Price under Section
                7(a)
                hereof, the following will be
                applicable:</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>i)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Issuance
                of Rights or Options</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                If
                the Company in any manner issues or grants any warrants, rights or
                options, whether or not immediately exercisable, to subscribe for
                or to
                purchase Common Stock or other securities convertible into or exchangeable
                for Common Stock (&#8220;Convertible Securities&#8221;) (such warrants, rights and
                options to purchase Common Stock or Convertible Securities are hereinafter
                referred to as &#8220;Options&#8221;) and the price per share for which Common Stock
                is issuable upon the exercise of such Options is less than the Market
                Price on the date of issuance or grant of such Options, then the
                maximum
                total number of shares of Common Stock issuable upon the exercise
                of all
                such Options will, as of the date of the issuance or grant of such
                Options, be deemed to be outstanding and to have been issued and
                sold by
                the Company for such price per share. For purposes of the preceding
                sentence, the &#8220;price per share for which Common Stock is issuable upon the
                exercise of such Options&#8221; is determined by dividing (i) the total amount,
                if any, received or receivable by the Company as consideration for
                the
                issuance or granting of all such Options, plus the minimum aggregate
                amount of additional consideration, if any, payable to the Company
                upon
                the exercise of all such Options, plus, in the case of Convertible
                Securities issuable upon the exercise of such Options, the minimum
                aggregate amount of additional consideration payable upon the conversion
                or exchange thereof at the time such Convertible Securities first
                become
                convertible or exchangeable, by (ii) the maximum total number of
                shares of
                Common Stock issuable upon the exercise of all such Options (assuming
                full
                conversion of Convertible Securities, if applicable). No further
                adjustment to the Exercise Price will be made upon the actual issuance
                of
                such Common Stock upon the exercise of such Options or upon the conversion
                or exchange of Convertible Securities issuable upon exercise of such
                Options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ii)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Issuance
                of Convertible Securities</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                If
                the Company in any manner issues or sells any Convertible Securities,
                whether or not immediately convertible (other than where the same
                are
                issuable upon the exercise of Options) and the price per share for
                which
                Common Stock is issuable upon such conversion or exchange is less
                than the
                Market Price on the date of issuance, then the maximum total number
                of
                shares of Common Stock issuable upon the conversion or exchange of
                all
                such Convertible Securities will, as of the date of the issuance
                of such
                Convertible Securities, be deemed to be outstanding and to have been
                issued and sold by the Company for such price per share. For the
                purposes
                of the preceding sentence, the &#8220;price per share for which Common Stock is
                issuable upon such conversion or exchange&#8221; is determined by dividing (i)
                the total amount, if any, received or receivable by the Company as
                consideration for the issuance or sale of all such Convertible Securities,
                plus the minimum aggregate amount of additional consideration, if
                any,
                payable to the Company upon the conversion or exchange thereof at
                the time
                such Convertible Securities first become convertible or exchangeable,
                by
                (ii) the maximum total number of shares of Common Stock issuable
                upon the
                conversion or exchange of all such Convertible Securities. No further
                adjustment to the Exercise Price will be made upon the actual issuance
                of
                such Common Stock upon conversion or exchange of such Convertible
                Securities.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>iii)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Change
                in Option Price or Conversion Rate</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                If
                there is a change at any time in (i) the amount of additional
                consideration payable to the Company upon the exercise of any Options;
                (ii) the amount of additional consideration, if any, payable to the
                Company upon the conversion or exchange of any Convertible Securities;
                or
                (iii) the rate at which any Convertible Securities are convertible
                into or
                exchangeable for Common Stock (other than under or by reason of provisions
                designed to protect against dilution), the Exercise Price in effect
                at the
                time of such change will be readjusted to the Exercise Price which
                would
                have been in effect at such time had such Options or Convertible
                Securities still outstanding provided for such changed additional
                consideration or changed conversion rate, as the case may be, at
                the time
                initially granted, issued or sold.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>iv)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Treatment
                of Expired Options and Unexercised Convertible
                Securities</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                If, in any case, the total number of shares of Common Stock issuable
                upon
                exercise of any Option or upon conversion or exchange of any Convertible
                Securities is not, in fact, issued and the rights to exercise such
                Option
                or to convert or exchange such Convertible Securities shall have
                expired
                or terminated, the Exercise Price then in effect will be readjusted
                to the
                Exercise Price which would have been in effect at the time of such
                expiration or termination had such Option or Convertible Securities,
                to
                the extent outstanding immediately prior to such expiration or termination
                (other than in respect of the actual number of shares of Common Stock
                issued upon exercise or conversion thereof), never been
                issued.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>v)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Calculation
                of Consideration Received</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                If
                any Common Stock, Options or Convertible Securities are issued, granted
                or
                sold for cash, the consideration received therefor for purposes of
                this
                Plan will be the amount received by the Company therefor, before
                deduction
                of reasonable commissions, underwriting discounts or allowances or
                other
                reasonable expenses paid or incurred by the Company in connection
                with
                such issuance, grant or sale. In case any Common Stock, Options or
                Convertible Securities are issued or sold for a consideration part
                or all
                of which shall be other than cash, the amount of the consideration
                other
                than cash received by the Company will be the fair value of such
                consideration, except where such consideration consists of securities,
                in
                which case the amount of consideration received by the Company will
                be the
                Market Price thereof as of the date of receipt. In case any Common
                Stock,
                Options or Convertible Securities are issued in connection with any
                acquisition, merger or consolidation in which the Company is the
                surviving
                corporation, 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 corporation as is attributable to such Common Stock,
                Options
                or Convertible Securities, as the case may be. The fair value of
                any
                consideration other than cash or securities will be determined in
                good
                faith by the Board of Directors of the
                Company.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>vi)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Exceptions
                to Adjustment of Exercise Price</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                No
                adjustment to the Exercise Price will be made (i) upon the exercise
                of any
                warrants, options or convertible securities granted, issued and
                outstanding on the date of issuance of this Warrant; (ii) upon the
                grant
                or exercise of any stock or options which may hereafter be granted
                or
                exercised under any employee benefit plan, stock option plan or restricted
                stock plan of the Company now existing or to be implemented in the
                future,
                so long as the issuance of such stock or options is approved by a
                majority
                of the independent members of the Board of Directors of the Company
                or a
                majority of the members of a committee of independent directors
                established for such purpose; or (iii) upon the exercise of the
                Warrants.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>c)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Subdivision
                or Combination of Common Stock</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                If
                the Company at any time subdivides (by any stock split, stock dividend,
                recapitalization, reorganization, reclassification or otherwise)
                the
                shares of Common Stock acquirable hereunder into a greater number
                of
                shares, then, after the date of record for effecting such subdivision,
                the
                Exercise Price in effect immediately prior to such subdivision will
                be
                proportionately reduced. If the Company at any time combines (by
                reverse
                stock split, recapitalization, reorganization, reclassification or
                otherwise) the shares of Common Stock acquirable hereunder into a
                smaller
                number of shares, then, after the date of record for effecting such
                combination, the Exercise Price in effect immediately prior to such
                combination will be proportionately
                increased.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>d)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Adjustment
                in Number of Shares</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                Upon each adjustment of the Exercise Price pursuant to the provisions
                of
                this Section 7, the number of shares of Common Stock issuable pursuant
                to
                this Plan shall be adjusted by multiplying a number equal to the
                Exercise
                Price in effect immediately prior to such adjustment by the number
                of
                shares of Common Stock issuable upon exercise of warrants or options
                governed by this Plan immediately prior to such adjustment and dividing
                the product so obtained by the adjusted Exercise
                Price.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>e)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Consolidation,
                Merger or Sale</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                In
                case of any consolidation of the Company with, or merger of the Company
                into any other corporation, or in case of any sale or conveyance
                of all or
                substantially all of the assets of the Company other than in connection
                with a plan of complete liquidation of the Company, then as a condition
                of
                such consolidation, merger or sale or conveyance, adequate provision
                will
                be made whereby the holder of this Warrant will have the right to
                acquire
                and receive upon exercise of this Warrant in lieu of the shares of
                Common
                Stock immediately theretofore acquirable upon the exercise of this
                Warrant, such shares of stock, securities or assets as may be issued
                or
                payable with respect to or in exchange for the number of shares of
                Common
                Stock immediately theretofore acquirable and receivable upon exercise
                of
                this Warrant had such consolidation, merger or sale or conveyance
                not
                taken place. In any such case, the Company will make appropriate
                provision
                to insure that the provisions of this Section 7 hereof will thereafter
                be
                applicable as nearly as may be in relation to any shares of stock
                or
                securities thereafter deliverable upon the exercise of this Warrant.
                The
                Company will not effect any consolidation, merger or sale or conveyance
                unless prior to the consummation thereof, the successor corporation
                (if
                other than the Company) assumes by written instrument the obligations
                under this Section 7 and the obligations to deliver to this Plan
                participants such shares of stock, securities or assets as, in accordance
                with the foregoing provisions, the holder may be entitled to
                acquire.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>f)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Distribution
                of Assets</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                In
                case the Company shall declare or make any distribution of its assets
                (including cash) to holders of Common Stock as a partial liquidating
                dividend, by way of return of capital or otherwise, then, after the
                date
                of record for determining shareholders entitled to such distribution,
                but
                prior to the date of distribution, the holder of this Warrant shall
                be
                entitled upon exercise of warrants or options governed by this Plan
                for
                the purchase of any or all of the shares of Common Stock subject
                hereto,
                to receive the amount of such assets which would have been payable
                to the
                holder had such holder been the holder of such shares of Common Stock
                on
                the record date for the determination of shareholders entitled to
                such
                distribution.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>g)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Notice
                of Adjustment</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                Upon the occurrence of any event which requires any adjustment of
                the
                Exercise Price, then, and in each such case, the Company shall give
                notice
                thereof to the holder of any options or warrants issued pursuant
                to this
                plan,, which notice shall state the Exercise Price resulting from
                such
                adjustment and the increase or decrease in the number of Warrant
                Shares
                purchasable at such price upon exercise, setting forth in reasonable
                detail the method of calculation and the facts upon which such calculation
                is based. Such calculation shall be certified by the Chief Financial
                Officer of the Company.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>h)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Minimum
                Adjustment of Exercise Price</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                No
                adjustment of the Exercise Price shall be made in an amount of less
                than
                1% of the Exercise Price in effect at the time such adjustment is
                otherwise required to be made, but any such lesser adjustment shall
                be
                carried forward and shall be made at the time and together with the
                next
                subsequent adjustment which, together with any adjustments so carried
                forward, shall amount to not less than 1% of such Exercise
                Price.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>i)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>No
                Fractional Shares</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                No
                fractional shares of Common Stock are to be issued upon the exercise
                of
                options or warrants issued pursuant to this plan,, but the Company
                shall
                pay a cash adjustment in respect of any fractional share which would
                otherwise be issuable in an amount equal to the same fraction of
                the
                Market Price of a share of Common Stock on the date of such
                exercise.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>j)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Other
                Notices</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                In
                case at any time:</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                Company shall declare any dividend upon the Common Stock payable
                in shares
                of stock of any class or make any other distribution (including dividends
                or distributions payable in cash out of retained earnings) to the
                holders
                of the Common Stock; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ii)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                Company shall offer for subscription pro rata to the holders of the
                Common
                Stock any additional shares of stock of any class or other rights;
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">iii)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">there
                shall be any capital reorganiza-tion of the Company, or reclassification
                of the Common Stock, or consolidation or merger of the Company with
                or
                into, or sale of all or substan-tially all its assets to, another
                corporation or entity; or </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">iv)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">there
                shall be a voluntary or involun-tary dissolution, liquidation or
                winding
                up of the Company;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">v)&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">then,
                in each such case, the Company shall give to the holder of this Warrant
                (a) notice of the date on which the books of the Company shall close
                or a
                record shall be taken for determining the holders of Common Stock
                entitled
                to receive any such divi-dend, distribution, or subscription rights
                or for
                determining the holders of Common Stock entitled to vote in respect
                of any
                such reorganization, reclassification, consolidation, merger, sale,
                dissolution, liquidation or winding-up and (b) in the case of any
                such
                reorganization, reclassification, consolidation, merger, sale,
                dissolution, liquidation or winding-up, notice of the date (or, if
                not
                then known, a reasonable approximation thereof by the Company) when
                the
                same shall take place. Such notice shall also specify the date on
                which
                the holders of Common Stock shall be entitled to receive such dividend,
                distribution, or subscription rights or to exchange their Common
                Stock for
                stock or other securities or property deliverable upon such
                reorganization, re-classification, consolidation, merger, sale,
                dissolution, liquidation, or winding-up, as the case may be. Such
                notice
                shall be given at least 30 days prior to the record date or the date
                on
                which the Company&#8217;s books are closed in respect thereto. Failure to give
                any such notice or any defect therein shall not affect the validity
                of the
                proceedings referred to in clauses (i), (ii), (iii) and (iv)
                above.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>k)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Certain
                Events</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                If
                any event occurs of the type contemplated by the adjustment provisions
                of
                this Section 7 but not expressly provided for by such provisions,
                the
                Company will give notice of such event as provided in Section 7(g)
                hereof,
                and the Company&#8217;s Board of Directors will make an appropriate adjustment
                in the Exercise Price and the number of shares of Common Stock acquirable
                upon exercise of options or warrnts pursuant to this Plan so that
                the
                rights of the holder shall be neither enhanced nor diminished by
                such
                event.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>l)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Certain
                Definitions</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>i)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8220;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Common
                Stock Deemed Outstanding</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                shall mean the number of shares of Common Stock actually outstanding
                (not
                including shares of Common Stock held in the treasury of the Company),
                plus (x) pursuant to Section 7(b)(i) hereof, the maximum total number
                of
                shares of Common Stock issuable upon the exercise of Options, as
                of the
                date of such issuance or grant of such Options, if any, and (y) pursuant
                to Section 7(b)(ii) hereof, the maximum total number of shares of
                Common
                Stock issuable upon conversion or exchange of Convertible Securities,
                as
                of the date of issuance of such Convertible Securities, if any.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ii)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8220;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Market
                Price</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>,&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                as
                of any date, (i) means the average of the last reported sale prices
                for
                the shares of Common Stock on the OTCBB for the five (5) Trading
                Days
                immediately preceding such date as reported by Bloomberg, or (ii)
                if the
                OTCBB is not the principal trading market for the shares of Common
                Stock,
                the average of the last reported sale prices on the principal trading
                market for the Common Stock during the same period as reported by
                Bloomberg, or (iii) if market value cannot be calculated as of such
                date
                on any of the foregoing bases, the Market Price shall be the fair
                market
                value as reasonably determined in good faith by (a) the Board of
                Directors
                of the Company or, at the option of a majority-in-interest of the
                holders
                of the outstanding Warrants by (b) an independent investment bank
                of
                nationally recognized standing in the valuation of businesses similar
                to
                the business of the corporation. The manner of determining the Market
                Price of the Common Stock set forth in the foregoing definition shall
                apply with respect to any other security in respect of which a
                determination as to market value must be made
                hereunder.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>iii)&#160;&#160;</strong></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8220;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Common
                Stock</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>,&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                for purposes of this Section 7, includes the Common Stock, par value
                $.001
                per share, and any additional class of stock of the Company having
                no
                preference as to dividends or distributions on liquidation, provided
                that
                the shares purchasable pursuant to this Warrant shall include only
                shares
                of Common Stock, par value $.001 per share, in respect of which this
                Warrant is exercisable, or shares resulting from any subdivision
                or
                combination of such Common Stock, or in the case of any reorganization,
                reclassification, consolidation, merger, or sale of the character
                referred
                to in Section 7(e) hereof, the stock or other securities or property
                provided for in such Section.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      8. AMENDMENTS OR TERMINATION</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Board may amend, alter or discontinue the Plan, but no amendment or alteration
      shall be made which would impair the rights of any Participant, without his
      consent, under any option, warrant or preferred stock theretofore
      granted.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Plan, the grant and exercise of options or warrants and grant and conversion
      of
      preferred stock thereunder, and the obligation of the Company to sell and
      deliver shares under such options, warrants or preferred stock, shall be subject
      to all applicable federal and state laws, rules and regulations and to such
      approvals by any governmental or regulatory agency as may be required. The
      Company shall not be required to issue or deliver any certificates for shares
      of
      Common Stock prior to the completion of any registration or qualification of
      such shares under any federal or state law or issuance of any ruling or
      regulation of any government body which the Company shall, in its sole
      discretion, determine to be necessary or advisable. Any adjustments provided
      for
      in subparagraphs 5(d)(xii), (xiii) and (xiv) shall be subject to any shareholder
      action required by the corporate law of the state of incorporation of the
      Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      10. PURCHASE FOR INVESTMENT</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Unless
      the options, warrants, shares of convertible preferred stock and shares of
      Common Stock covered by this Plan have been registered under the Securities
      Act
      of 1933, as amended, or the Company has determined that such registration is
      unnecessary, each person acquiring or exercising an option or warrant under
      this
      Plan or converting shares of preferred stock may be required by the Company
      to
      give a representation in writing that he or she is acquiring such option or
      warrant or such shares for his own account for investment and not with a view
      to, or for sale in connection with, the distribution of any part
      thereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      11. TAXES</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      The
      Company may make such provisions as it may deem appropriate for the withholding
      of any taxes which it determines is required in connection with any options,
      warrants or preferred stock granted under this Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
      Notwithstanding the terms of Paragraph 11 (a), any Participant may pay all
      or
      any portion of the taxes required to be withheld by the Company or paid by
      him
      or her in connection with the exercise of a nonqualified option or warrant
      or
      conversion of preferred stock by electing to have the Company withhold shares
      of
      Common Stock, or by delivering previously owned shares of Common Stock, having
      a
      fair market value, determined in accordance with Paragraph 5(d)(ii), equal
      to
      the amount required to be withheld or paid. A Participant must make the
      foregoing election on or before the date that the amount of tax to be withheld
      is determined (&#8220;Tax Date&#8221;). All such elections are irrevocable and subject to
      disapproval by the Committee. Elections by Covered Participants are subject
      to
      the following additional restrictions: (i) such election may not be made within
      six months of the grant of an option or warrant, provided that this limitation
      shall not apply in the event of death or disability, and (ii) such election
      must
      be made either six months or more prior to the Tax Date or in a Window Period.
      Where the Tax Date in respect of an option or warrant is deferred until six
      months after exercise and the Covered Participant elects share withholding,
      the
      full amount of shares of Common Stock will be issued or transferred to him
      upon
      exercise of the option or warrant, but he or she shall be unconditionally
      obligated to tender back to the Company the number of shares necessary to
      discharge the Company&#8217;s withholding obligation or his estimated tax obligation
      on the Tax Date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      12. REPLACEMENT OF OPTIONS, WARRANTS AND PREFERRED STOCK</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Committee from time to time may permit a Participant under the Plan to surrender
      for cancellation any unexercised outstanding option or warrant or unconverted
      Preferred stock and receive from the Company in exchange an option, warrant
      or
      preferred stock for such number of shares of Common Stock as may be designated
      by the Committee. The Committee may, with the consent of the holder of any
      outstanding option, warrant or preferred stock, amend such option, warrant
      or
      preferred stock, including reducing the exercise price of any option or warrant
      to not less than the fair market value of the Common Stock at the time of the
      amendment, increasing the conversion ratio of any preferred stock and extending
      the exercise or conversion term of and warrant, option or preferred
      stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      13. NO RIGHT TO COMPANY EMPLOYMENT</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Nothing
      in this Plan or as a result of any option or warrant granted pursuant to this
      Plan shall confer on any individual any right to continue in the employ of
      the
      Company or interfere in any way with the right of the Company to terminate
      an
      individual&#8217;s employment at any time. The option, warrant or preferred stock
      agreements may contain such provisions as the Committee may approve with
      reference to the effect of approved leaves of absence.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      14. LIABILITY OF COMPANY</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Company and any Affiliate which is in existence or hereafter comes into
      existence shall not be liable to a Participant or other persons as
      to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      Non-Issuance of Shares</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      non-issuance or sale of shares as to which the Company has been unable to obtain
      from any regulatory body having jurisdiction the authority deemed by the
      Company&#8217;s counsel to be necessary to the lawful issuance and sale of any shares
      hereunder; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Tax
      Consequences</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Any tax
      consequence expected, but not realized, by any Participant or other person
      due
      to the exercise of any option or warrant or the conversion of any preferred
      stock granted hereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      15. EFFECTIVENESS AND EXPIRATION OF PLAN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Plan shall be effective on the date the Board adopts the Plan. The Plan shall
      expire ten years after the date the Board approves the Plan and thereafter
      no
      option, warrant or preferred stock shall be granted pursuant to the
      Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      16. NON-EXCLUSIVITY OF THE PLAN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Neither
      the adoption by the Board nor the submission of the Plan to the stockholders
      of
      the Company for approval shall be construed as creating any limitations on
      the
      power of the Board to adopt such other incentive arrangements as it may deem
      desirable, including without limitation, the granting of restricted stock or
      stock options, warrants or preferred stock otherwise than under the Plan, and
      such arrangements may be either generally applicable or applicable only in
      specific cases.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      17. GOVERNING LAW</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      This
      Plan and any agreements hereunder shall be interpreted and construed in
      accordance with the laws of the state of incorporation of the Company and
      applicable federal law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      18. CASHLESS EXERCISE</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Committee also may allow cashless exercises as permitted under Federal Reserve
      Board&#8217;s Regulation T, subject to applicable securities law restrictions. or by
      any other means which the Committee determines to be consistent with the Plan&#8217;s
      purpose and applicable law. The proceeds from such a payment shall be added
      to
      the general funds of the Company and shall be used for general corporate
      purposes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: white" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      5 &amp; 24.1</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>S</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
      O N F I E L D &amp; </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>S</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
      O N F I E L D</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>A
      Professional Corporation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="29%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEON
                SONFIELD (1865-1934)</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>GEORGE
                M. SONFIELD (1899-1967)</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ROBERT
                L. SONFIELD (1893-1972)</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>____________________</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FRANKLIN
                D. ROOSEVELT, JR. (1914-1988)</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -17.7pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -17.7pt" align="justify">&#160;</div>
            </td>
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ATTORNEYS
                AT LAW</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>770
                SOUTH POST OAK LANE</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>HOUSTON,
                TEXAS 77056-1913</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>WWW.SONFIELD.COM</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Telecopier
                (713) 877-1547</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>____</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Telephone
                (713) 877-8333</strong></font></div>
            </td>
            <td align="right" valign="top" width="25%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ROBERT
                L. SONFIELD, JR.</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Managing
                Director</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>robert@sonfield.com</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">December
      20</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Board
      of
      Directors</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PaperFree
      Medical Solutions, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">121
      West
      Sycamore Street </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kokomo,
      IN 46901</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gentlemen:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      our
      capacity as counsel for PaperFree Medical Solutions, Inc., a Nevada corporation
      (the &#8220;Company&#8221;), we have participated in the corporate proceedings relative to
      the authorization and issuance by the Company of a maximum of ,10,000000 shares
      of common stock pursuant to the Plan as set out and described in the Company&#8217;s
      Registration Statement on Form S-8 (File No. 000-30782) under the Securities
      Act
      of 1933 (the &#8220;Registration Statement&#8221;). We have also participated in the
      preparation and filing of the Registration Statement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      upon the foregoing and upon our examination of originals (or copies certified
      to
      our satisfaction) of such corporate records of the Company and other documents
      as we have deemed necessary as a basis for the opinions hereinafter expressed,
      and assuming the accuracy and completeness of all information supplied us by
      the
      Company, having regard for the legal considerations which we deem relevant,
      we
      are of the opinion that:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company is a corporation duly organized and validly existing under the laws
      of
      the State of Nevada;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has taken all requisite corporate action and all action required by
      the
      laws of the State of Nevada with respect to the authorization, issuance and
      sale
      of warrants and shares of common stock to be issued pursuant to the Registration
      Statement;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      10,000,000 shares of common stock, when issued, delivered and paid for as the
      case may be, in accordance with their respective terms, will be validly issued,
      fully paid and nonassessable;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Yours
      very truly,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>/s/SONFIELD
      &amp; SONFIELD</u></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 148.5pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SONFIELD
      &amp; SONFIELD</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: white" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      24.2</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONSENT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      the
      Board of Directors of</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Paperfree
      Medical Solutions, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kokomo,
      Indiana</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><br></font>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
        hereby
        consent to the incorporation by reference into this Registration Statement
        on
        Form S-8 of our report dated day&#160;30, 2006, relating to the consolidated
        financial statements of PaperFree Medical Solutions, Inc. as of February
        28,
        2006 and for the two years then ended.</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Malone
      &amp; Bailey, PC</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">www.malone-bailey.com</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Houston,
      Texas</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">December
      21, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: -27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: -27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
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[{"type": "S-8", "sequence": "1", "filename": "forms8.htm", "description": "FORM S8", "secsgml_size_bytes": 204061}]
{"company-data": {"conformed-name": "PaperFree Medical Solutions, Inc.", "cik": "0001171546", "assigned-sic": "7389", "irs-number": "980375957", "fiscal-year-end": "0229"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-139571", "film-number": "061293861"}, "business-address": {"street1": "121 WEST SYCAMORE ST", "city": "KOKOMO", "state": "IN", "zip": "46901", "phone": "765-456-1089"}, "mail-address": {"street1": "121 WEST SYCAMORE ST", "city": "KOKOMO", "state": "IN", "zip": "46901"}, "former-company": [{"former-conformed-name": "CROWN MEDICAL SYSTEMS INC", "date-changed": "20031223"}, {"former-conformed-name": "LINK MEDIA PUBLISHING LTD", "date-changed": "20020418"}]}
Form S8
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
____________________________________________________
FORM
      S-8
REGISTRATION
      STATEMENT
under
THE
      SECURITIES ACT OF 1933
____________________________________________________
PaperFree
      Medical Solutions , Inc.
(Exact
      name of registrant as specified in its charter)
Nevada
(State
      or
      other jurisdiction of incorporation or organization)
98-0375957
(IRS
      Employer Identification Number)
121
      West Sycamore Street
Kokomo,
      Indiana 46901
(Address
      of principal executive offices)
Stephen
      Hawksworth, CEO
PaperFree
      Medical Solutions, Inc.
121
      West Sycamore Street
Kokomo,
      Indiana 46901
(Name
      and
      address of agent for service)
(765)
      456-1089
(Telephone
      number, including area code of agent for service)
2006
      DIRECTORS, OFFICERS, EMPLOYEES AND CONSULTANTS
STOCK
      OPTION, STOCK WARRANT AND STOCK AWARD PLAN
(Full
      title of the Plans)
_____________________________________________________________
CALCULATION
      OF REGISTRATION FEE
Title
                of securities to
be
                registered
Amount
                to be
Registered
Proposed
                maximum
Offering
                price per
Share
Proposed
                maximum
aggregate
                offering
price(1)
Amount
                of
registration
                fee(1)
Common
                Stock,
$.001
                par value
10,000,000
$0.02
$200,000
$25.34
TOTAL
10,000,000
$25.34
(1)
The
                offering price is based upon the exercise price of the warrants pursuant
                to Rule 457(f)(2).
PART
      I
The
      documents containing the information specified in this Part I will be sent
      or
      given to participants in the 2006 Directors, Officers, Employees and Consultants
      Stock Option, Stock Warrant and Stock Award Plan (the "Plan) as specified by
      Rule 428(b)(1). Pursuant to the instructions for Form S-8, such documents need
      not be filed with the Commission either as part of the Registration Statement
      or
      as prospectuses or prospectus supplements pursuant to Rule 424. These documents
      and the documents incorporated by reference in this Registration Statement
      pursuant to Item 3 of Part II of this Registration Statement, taken together,
      constitute a prospectus that meets the requirements of Section 10(a) of the
      Securities Act of 1933, as amended. See Rule 428(a)(1).
PART
      II
INFORMATION
      REQUIRED IN THE REGISTRATION STATEMENT
Item
      3.
Incorporation
      of Documents by Reference
The
      documents listed in (a) and (b) below have been filed by the Registrant,
      PaperFree Medical Solutions, Inc., Inc., a Nevada corporation (the "Company"),
      with the Securities and Exchange Commission (the "Commission") and are
      incorporated by reference in this Registration Statement. All documents
      subsequently filed by the Registrant pursuant to Section 13(a), 13(c), 14 and
      15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
      prior to the filing of a post-effective amendment which indicates that all
      securities offered have been sold or which deregisters all securities then
      remaining unsold shall be deemed to be incorporated by reference in the
      Registration Statement and to be part thereof from the date of filing of such
      documents.
(a)
Form
      10-KSB for the year ended February 28, 2006 and filed on July 18, 2006. The
      above referenced reports, which were previously filed with the Commission,
      are
      incorporated herein by reference.
(b)
All
      other
      reports filed pursuant to Section 13 or 15(d) of the Exchange Act since the
      end
      of the fiscal year covered by the Registrant's Form 10-KSB for the period ended
      February 28, 2006.
The
      above
      referenced reports, which were previously filed with the Commission, are
      incorporated herein by reference.
Item
      4:
Description
      of Securities
Not
      Applicable
Item
      5:
Interests
      of Named Experts and Counsel
.
None
Item
      6:
Indemnification
      of Directors and Officers
.
Section
78.7502
      of the Nevada Revised Statutes provides:
Discretionary
      and mandatory indemnification of officers, directors, employees and agents:
      General provisions.
1.
      A
      corporation may indemnify any person who was or is a party or is threatened
      to
      be made a party to any threatened, pending or completed action, suit or
      proceeding, whether civil, criminal, administrative or investigative, except
      an
      action by or in the right of the corporation, by reason of the fact that he
      is
      or was a director, officer, employee or agent of the corporation, or is or
      was
      serving at the request of the corporation as a director, officer, employee
      or
      agent of another corporation, partnership, joint venture, trust or other
      enterprise, against expenses, including attorneys' fees, judgments, fines and
      amounts paid in settlement actually and reasonably incurred by him in connection
      with the action, suit or proceeding if he acted in good faith and in a manner
      which he reasonably believed to be in or not opposed to the best interests
      of
      the corporation, and, with respect to any criminal action or proceeding, had
      no
      reasonable cause to believe his conduct was unlawful. The termination of any
      action, suit or proceeding by judgment, order, settlement, conviction or upon
      a
      plea of nolo contendere or its equivalent, does not, of itself, create a
      presumption that the person did not act in good faith and in a manner which
      he
      reasonably believed to be in or not opposed to the best interests of the
      corporation, and that, with respect to any criminal action or proceeding, he
      had
      reasonable cause to believe that his conduct was unlawful.
2.
      A
      corporation may indemnify any person who was or is a party or is threatened
      to
      be made a party to any threatened, pending or completed action or suit by or
      in
      the right of the corporation to procure a judgment in its favor by reason of
      the
      fact that he is or was a director, officer, employee or agent of the
      corporation, or is or was serving at the request of the corporation as a
      director, officer, employee or agent of another corporation, partnership, joint
      venture, trust or other enterprise against expenses, including amounts paid
      in
      settlement and attorneys' fees actually and reasonably incurred by him in
      connection with the defense or settlement of the action or suit if he acted
      in
      good faith and in a manner which he reasonably believed to be in or not opposed
      to the best interests of the corporation. Indemnification may not be made for
      any claim, issue or matter as to which such a person has been adjudged by a
      court of competent jurisdiction, after exhaustion of all appeals therefrom,
      to
      be liable to the corporation or for amounts paid in settlement to the
      corporation, unless and only to the extent that the court in which the action
      or
      suit was brought or other court of competent jurisdiction determines upon
      application that in view of all the circumstances of the case, the person is
      fairly and reasonably entitled to indemnity for such expenses as the court
      deems
      proper.
3.
      To the
      extent that a director, officer, employee or agent of a corporation has been
      successful on the merits or otherwise in defense of any action, suit or
      proceeding referred to in subsections 1 and 2, or in defense of any claim,
      issue
      or matter therein, the corporation shall indemnify him against expenses,
      including attorneys' fees, actually and reasonably incurred by him in connection
      with the defense.
Item
      7.
Exemption
      From Registration Claimed.
Not
      Applicable
Item
      8:
Exhibits
The
      following documents are filed as Exhibits to this Registration
      Statement:
4.1
--
2006
          Directors, Officers, Employees and Consultants Stock Option, Stock Warrant
          and
          Stock Award Plan
5
--
Opinion
          of Sonfield & Sonfield as to the authorization and issuance of the shares
          being registered.
24.1
--
Consent
          of Sonfield & Sonfield (included in Exhibit 5)
24.2
--
Consent
          of Malone & Bailey, PC, Registered Public Accountants
Item
      9:
Undertakings
The
      undersigned registrant hereby undertakes:
(a)
to
                file, during any period in which offers or sales are being made,
                a
                post-effective amendment to this registration statement to include
                any
                material information with respect to the plan of distribution not
                previously disclosed in the registration statement or any material
                change
                to such information in the registration
                statement;
(b)
that,
                for the purpose of determining any liability under the Securities
                Act of
                1933, each such post-effective amendment shall be deemed to be a
                new
                registration statement relating to the securities offered therein,
                and the
                offering of such securities at that time shall be deemed to be the
                initial
                bona fide offering thereof; and
(c)
to
                remove from registration by means of a post-effective amendment any
                of the
                securities being registered which remain unsold at the termination
                of the
                offering.
SIGNATURES
THE
      REGISTRANT
:
      Pursuant to the requirements of the Securities Act of 1933, the registrant
      certifies that it has reasonable grounds to believe that it meets all of the
      requirements for filing on Form S-8, and has duly caused this registration
      statement to be signed on its behalf by the undersigned, thereunto duly
      authorized, in Kokomo, IN, on the 21st day of December, 2006.
PAPERFREE
      MEDICAL SOLUTIONS, INC.
By:
/s/ Stephen Hawksworth
Stephen
      Hawksworth, President and Principal Executive Officer
By:
/s/ Craig S Barrow
Craig
      S
      Barrow, Principal Accounting Officer and Principal Financial
      Officer
THE
      PLAN
:
      Pursuant to the requirements of the Securities Act of 1933, the Board of
      Directors who administer the 2006 Directors, Officers, Employees and Consultants
      Stock Option, Stock Warrant and Stock Award Plan have duly caused this
      registration statement to be signed on its behalf by the undersigned, thereunto
      duly authorized, in Kokomo, Indiana on the 21st day of December,
      2006.
By:
/s/ Stephen Hawksworth
By:
/s/
                  David Bailey
Stephen
                  Hawksworth, Director
David
                  Bailey, Director
By:
/s/
                  T. Marshall Wilde
By:
/s/ Richard Paver
T.
                  Marshall Wilde, Director
Richard
                  Paver Director
By:
/s/
                  William L. Sklar
William
                  L. Sklar, Director
EXHIBIT
      4.1
PAPERFREE
      MEDICAL SOLUTIONS, INC.
2006
      DIRECTORS, OFFICERS, EMPLOYEES AND CONSULTANTS
STOCK
      OPTION, STOCK WARRANT AND STOCK AWARD PLAN
SECTION
      1. PURPOSE OF THE PLAN
.
      The
      purpose of the 2006 Directors, Officers, Employees and Consultants Stock Option,
      Stock Warrant and Stock Award Plan ("Plan") is to maintain the ability of
      PaperFree Medical Solutions,, Inc., a Nevada corporation (the "Company") and its
      subsidiaries to attract and retain highly qualified and experienced directors,
      employees and consultants and to give such directors, employees and consultants
      a continued proprietary interest in the success of the Company and its
      subsidiaries. In addition the Plan is intended to encourage ownership of common
      stock, $.001 par value ("Common Stock"), of the Company by the directors,
      employees and consultants of the Company and its Affiliates (as defined below)
      and to provide increased incentive for such persons to render services and
      to
      exert maximum effort for the success of the Company's business. The Plan
      provides eligible employees and consultants the opportunity to participate
      in
      the enhancement of shareholder value by the grants of warrants, options,
      restricted common or convertible preferred stock, unrestricted common or
      convertible preferred stock and other awards under this Plan and to have their
      bonuses and/or consulting fees payable in warrants, restricted common or
      convertible preferred stock, unrestricted common or convertible preferred stock
      and other awards, or any combination thereof. In addition, the Company expects
      that the Plan will further strengthen the identification of the directors,
      employees and consultants with the stockholders. Certain options and warrants
      to
      be granted under this Plan are intended to qualify as Incentive Stock Options
      ("ISOs") pursuant to Section 422 of the Internal Revenue Code of 1986, as
      amended ("Code"), while other options and warrants and preferred stock granted
      under this Plan will be nonqualified options or warrants which are not intended
      to qualify as ISOs ("Nonqualified Options"), either or both as provided in the
      agreements evidencing the options or warrants described in Section 5 hereof
      and
      shares of preferred stock. As provided in the designation described in Section
      5. Employees, consultants and directors who participate or become eligible
      to
      participate in this Plan from time to time are referred to collectively herein
      as "Participants". As used in this Plan, the term "Affiliates" means any "parent
      corporation" of the Company and any "subsidiary corporation" of the Company
      within the meaning of Code Sections 424(e) and (f), respectively.
SECTION
      2. ADMINISTRATION OF THE PLAN
.
(a)
Composition
      of Committee
.
      The
      Plan shall be administered by the Board of Directors of the Company (the
"Board"). When acting in such capacity the Board is herein referred to as the
"Committee," which shall also designate the Chairman of the Committee. If the
      Company is governed by Rule 16b-3 promulgated by the Securities and Exchange
      Commission ("Commission") pursuant to the Securities Exchange Act of 1934, as
      amended ("Exchange Act"), no director shall serve as a member of the Committee
      unless he or she is a "disinterested person" within the meaning of such Rule
      16b-3.
(b)
Committee
      Action
.
      The
      Committee shall hold its meetings at such times and places as it may determine.
      A majority of its members shall constitute a quorum, and all determinations
      of
      the Committee shall be made by not less than a majority of its members. Any
      decision or determination reduced to writing and signed by a majority of the
      members shall be fully as effective as if it had been made by a majority vote
      of
      its members at a meeting duly called and held. The Committee may designate
      the
      Secretary of the Company or other Company employees to assist the Committee
      in
      the administration of the Plan, and may grant authority to such persons to
      execute award agreements or other documents on behalf of the Committee and
      the
      Company. Any duly constituted committee of the Board satisfying the
      qualifications of this Section 2 may be appointed as the Committee.
(c)
Committee
      Expenses
.
      All
      expenses and liabilities incurred by the Committee in the administration of
      the
      Plan shall be borne by the Company. The Committee may employ attorneys,
      consultants, accountants or other persons.
SECTION
      3. STOCK RESERVED FOR THE PLAN
.
      Subject
      to adjustment as provided in Section 5(d)(xiii) hereof, the aggregate number
      of
      shares that may be optioned, subject to conversion or issued under the Plan
      is
      10,000,000 shares of Common Stock, warrants, options, preferred stock or any
      combination thereof. The shares subject to the Plan shall consist of authorized
      but unissued shares of Common Stock and such number of shares shall be and
      is
      hereby reserved for sale for such purpose. Any of such shares which may remain
      unsold and which are not subject to issuance upon exercise of outstanding
      options or warrants or conversion of outstanding shares of preferred stock
      at
      the termination of the Plan shall cease to be reserved for the purpose of the
      Plan, but until termination of the Plan or the termination of the last of the
      options or warrants granted under the Plan, whichever last occurs, the Company
      shall at all times reserve a sufficient number of shares to meet the
      requirements of the Plan. Should any option or warrant expire or be cancelled
      prior to its exercise in full, the shares theretofore subject to such option
      or
      warrant may again be made subject to an option, warrant or shares of convertible
      preferred stock under the Plan.
Immediately
      upon the grant of any option, warrant, shares of preferred stock or award,
      the
      number of shares of Common Stock that may be issued or optioned under the Plan
      will be increased. The number of shares of such increase shall be an amount
      such
      that immediately after such increase the total number of shares issuable under
      the Plan and reserved for issuance upon exercise of outstanding options,
      warrants or conversion of shares of preferred stock will equal 15% of the total
      number of issued and outstanding shares of Common Stock of the Company. Such
      increase in the number of shares subject to the Plan shall occur without the
      necessity of any further corporate action of any kind or character.
SECTION
      4. ELIGIBILITY
.
      The
      Participants shall include directors, employees, including officers, of the
      Company and its divisions and subsidiaries, and consultants and attorneys who
      provide bona fide services to the Company. Participants are eligible to be
      granted warrants, options, restricted common or convertible preferred stock,
      unrestricted common or convertible preferred stock and other awards under this
      Plan and to have their bonuses and/or consulting fees payable in warrants,
      restricted common or convertible preferred stock, unrestricted common or
      convertible preferred stock and other awards. A Participant who has been granted
      an option, warrant or preferred stock hereunder may be granted an additional
      option, warrant options, warrants or preferred stock, if the Committee shall
      so
      determine.
SECTION
      5. GRANT OF OPTIONS OR WARRANTS
.
(a)
Committee
      Discretion
.
      The
      Committee shall have sole and absolute discretionary authority (i) to determine,
      authorize, and designate those persons pursuant to this Plan who are to receive
      warrants, options, restricted common or convertible preferred stock, or
      unrestricted common or convertible preferred stock under the Plan, (ii) to
      determine the number of shares of Common Stock to be covered by such grant
      or
      such options or warrants and the terms thereof, (iii) to determine the type
      of
      Common Stock granted: restricted common or convertible preferred stock,
      unrestricted common or convertible preferred stock or a combination of
      restricted and unrestricted common or convertible preferred stock, and (iv)
      to
      determine the type of option or warrant granted: ISO, Nonqualified Option or
      a
      combination of ISO and Nonqualified Options. The Committee shall thereupon
      grant
      options or warrants in accordance with such determinations as evidenced by
      a
      written option or warrant agreement. Subject to the express provisions of the
      Plan, the Committee shall have discretionary authority to prescribe, amend
      and
      rescind rules and regulations relating to the Plan, to interpret the Plan,
      to
      prescribe and amend the terms of the option or warrant agreements (which need
      not be identical) and to make all other determinations deemed necessary or
      advisable for the administration of the Plan.
(b)
Stockholder
      Approval
.
      All
      ISOs granted under this Plan are subject to, and may not be exercised before,
      the approval of this Plan by the stockholders prior to the first anniversary
      date of the Board meeting held to approve the Plan, by the affirmative vote
      of
      the holders of a majority of the outstanding shares of the Company present,
      or
      represented by proxy, and entitled to vote thereat, or by written consent in
      accordance with the laws of the State of Nevada, provided that if such approval
      by the stockholders of the Company is not forthcoming, all options or warrants
      and stock awards previously granted under this Plan other than ISOs shall be
      valid in all respects.
(c)
Limitation
      on Incentive Stock Options and Warrants
.
      The
      aggregate fair market value (determined in accordance with Section 5(d)(ii)
      of
      this Plan at the time the option or warrant is granted) of the Common Stock
      with
      respect to which ISOs may be exercisable for the first time by any Participant
      during any calendar year under all such plans of the Company and its Affiliates
      shall not exceed $3,000,000.
(d)
Terms
      and Conditions
.
      Each
      option or warrant granted under the Plan shall be evidenced by an agreement,
      in
      a form approved by the Committee, which shall be subject to the following
      express terms and conditions and to such other terms and conditions as the
      Committee may deem appropriate:
(i)
Option
      or Warrant Period
.
      The
      Committee shall promptly notify the Participant of the option or warrant grant
      and a written agreement shall promptly be executed and delivered by and on
      behalf of the Company and the Participant, provided that the option or warrant
      grant shall expire if a written agreement is not signed by said Participant
      (or
      his agent or attorney) and returned to the Company within 60 days from date
      of
      receipt by the Participant of such agreement. The date of grant shall be the
      date the option or warrant is actually granted by the Committee, even though
      the
      written agreement may be executed and delivered by the Company and the
      Participant after that date. Each option or warrant agreement shall specify
      the
      period for which the option or warrant thereunder is granted (which in no event
      shall exceed ten years from the date of grant) and shall provide that the option
      or warrant shall expire at the end of such period. If the original term of
      an
      option or warrant is less than ten years from the date of grant, the option
      or
      warrant may be amended prior to its expiration, with the approval of the
      Committee and the Participant, to extend the term so that the term as amended
      is
      not more than ten years from the date of grant. However, in the case of an
      ISO
      granted to an individual who, at the time of grant, owns stock possessing more
      than 10 percent of the total combined voting power of all classes of stock
      of
      the Company or its Affiliate ("Ten Percent Stockholder"), such period shall not
      exceed five years from the date of grant.
(ii)
Option
      or Warrant Price
.
      The
      purchase price of each share of Common Stock subject to each option or warrant
      granted pursuant to the Plan shall be determined by the Committee at the time
      the option or warrant is granted and, in the case of ISOs, shall not be less
      than 100% of the fair market value of a share of Common Stock on the date the
      option or warrant is granted, as determined by the Committee. In the case of
      an
      ISO granted to a Ten Percent Stockholder, the option or warrant price shall
      not
      be less than 110% of the fair market value of a share of Common Stock on the
      date the option or warrant is granted. The purchase price of each share of
      Common Stock subject to a Nonqualified Option or Warrant under this Plan shall
      be determined by the Committee prior to granting the option or warrant. The
      Committee shall set the purchase price for each share subject to a Nonqualified
      Option or Warrant at either the fair market value of each share on the date
      the
      option or warrant is granted, or at such other price as the Committee in its
      sole discretion shall determine.
At
      the
      time a determination of the fair market value of a share of Common Stock is
      required to be made hereunder, the determination of its fair market value shall
      be made by the Committee in such manner as it deems appropriate.
(iii)
Exercise
      Period
.
      The
      Committee may provide in the option or warrant agreement that an option or
      warrant may be exercised in whole, immediately, or is to be exercisable in
      increments. In addition, the Committee may provide that the exercise of all
      or
      part of an option or warrant is subject to specified performance by the
      Participant.
(iv)
Procedure
      for Exercise
.
      Options
      or warrants shall be exercised in the manner specified in the option or warrant
      agreement. The notice of exercise shall specify the address to which the
      certificates for such shares are to be mailed. A Participant shall be deemed
      to
      be a stockholder with respect to shares covered by an option or warrant on
      the
      date specified in the option or warrant agreement . As promptly as practicable,
      the Company shall deliver to the Participant or other holder of the warrant,
      certificates for the number of shares with respect to which such option or
      warrant has been so exercised, issued in the holder's name or such other name as
      holder directs; provided, however, that such delivery shall be deemed effected
      for all purposes when a stock transfer agent of the Company shall have deposited
      such certificates with a carrier for overnight delivery, addressed to the holder
      at the address specified pursuant to this Section 6(d).
(v)
Termination
      of Employment
.
      If an
      executive officer to whom an option or warrant is granted ceases to be employed
      by the Company for any reason other than death or disability, any option or
      warrant which is exercisable on the date of such termination of employment
      may
      be exercised during a period beginning on such date and ending at the time
      set
      forth in the option or warrant agreement; provided, however, that if a
      Participant's employment is terminated because of the Participant's theft or
      embezzlement from the Company, disclosure of trade secrets of the Company or
      the
      commission of a willful, felonious act while in the employment of the Company
      (such reasons shall hereinafter be collectively referred to as "for cause"),
      then any option or warrant or unexercised portion thereof granted to said
      Participant shall expire upon such termination of employment. Notwithstanding
      the foregoing, no ISO may be exercised later than three months after an
      employee's termination of employment for any reason other than death or
      disability.
(vi)
Disability
      or Death of Participant
.
      In the
      event of the determination of disability or death of a Participant under the
      Plan while he or she is employed by the Company, the options or warrants
      previously granted to him may be exercised (to the extent he or she would have
      been entitled to do so at the date of the determination of disability or death)
      at any time and from time to time, within a period beginning on the date of
      such
      determination of disability or death and ending at the time set forth in the
      option or warrant agreement, by the former employee, the guardian of his estate,
      the executor or administrator of his estate or by the person or persons to
      whom
      his rights under the option or warrant shall pass by will or the laws of descent
      and distribution, but in no event may the option or warrant be exercised after
      its expiration under the terms of the option or warrant agreement.
      Notwithstanding the foregoing, no ISO may be exercised later than one year
      after
      the determination of disability or death. A Participant shall be deemed to
      be
      disabled if, in the opinion of a physician selected by the Committee, he or
      she
      is incapable of performing services for the Company of the kind he or she was
      performing at the time the disability occurred by reason of any medically
      determinable physical or mental impairment which can be expected to result
      in
      death or to be of long, continued and indefinite duration. The date of
      determination of disability for purposes hereof shall be the date of such
      determination by such physician.
(vii)
Assignability
.
      An
      option or warrant shall be assignable or otherwise transferable, in whole or
      in
      part, by a Participant as provided in the option, warrant or designation of
      the
      series of preferred stock.
(viii)
Incentive
      Stock Options
.
      Each
      option or warrant agreement may contain such terms and provisions as the
      Committee may determine to be necessary or desirable in order to qualify an
      option or warrant designated as an incentive stock option.
(ix)
Restricted
      Stock Awards
.
      Awards
      of restricted stock under this Plan shall be subject to all the applicable
      provisions of this Plan, including the following terms and conditions, and
      to
      such other terms and conditions not inconsistent therewith, as the Committee
      shall determine:
(A)
      Awards of restricted stock may be in addition to or in lieu of option or warrant
      grants. Awards may be conditioned on the attainment of particular performance
      goals based on criteria established by the Committee at the time of each award
      of restricted stock. During a period set forth in the agreement (the
"Restriction Period"), the recipient shall not be permitted to sell, transfer,
      pledge, or otherwise encumber the shares of restricted stock; except that such
      shares may be used, if the agreement permits, to pay the option or warrant
      price
      pursuant to any option or warrant granted under this Plan, provided an equal
      number of shares delivered to the Participant shall carry the same restrictions
      as the shares so used. Shares of restricted stock shall become free of all
      restrictions if during the Restriction Period, (i) the recipient dies, (ii)
      the
      recipient's directorship, employment, or consultancy terminates by reason of
      permanent disability, as determined by the Committee, (iii) the recipient
      retires after attaining both 59 1/2 years of age and five years of continuous
      service with the Company and/or a division or subsidiary, or (iv) if provided
      in
      the agreement, there is a "change in control" of the Company (as defined in such
      agreement). The Committee may require medical evidence of permanent disability,
      including medical examinations by physicians selected by it. Unless and to
      the
      extent otherwise provided in the agreement, shares of restricted stock shall
      be
      forfeited and revert to the Company upon the recipient's termination of
      directorship, employment or consultancy during the Restriction Period for any
      reason other than death, permanent disability, as determined by the Committee,
      retirement after attaining both 59 1/2 years of age and five years of continuous
      service with the Company and/or a subsidiary or division, or, to the extent
      provided in the agreement, a "change in control" of the Company (as defined in
      such agreement), except to the extent the Committee, in its sole discretion,
      finds that such forfeiture might not be in the best interests of the Company
      and, therefore, waives all or part of the application of this provision to
      the
      restricted stock held by such recipient. Certificates for restricted stock
      shall
      be registered in the name of the recipient but shall be imprinted with the
      appropriate legend and returned to the Company by the recipient, together with
      a
      stock power endorsed in blank by the recipient. The recipient shall be entitled
      to vote shares of restricted stock and shall be entitled to all dividends paid
      thereon, except that dividends paid in Common Stock or other property shall
      also
      be subject to the same restrictions.
(B)
      Restricted Stock shall become free of the foregoing restrictions upon expiration
      of the applicable Restriction Period and the Company shall then deliver to
      the
      recipient Common Stock certificates evidencing such stock. Restricted stock
      and
      any Common Stock received upon the expiration of the restriction period shall
      be
      subject to such other transfer restrictions and/or legend requirements as are
      specified in the applicable agreement.
(x)
Bonuses
      and Past Salaries and Fees Payable in Unrestricted Stock
.
(A)
      In
      lieu of cash bonuses otherwise payable under the Company's or applicable
      division's or subsidiary's compensation practices to employees and consultants
      eligible to participate in this Plan, the Committee, in its sole discretion,
      may
      determine that such bonuses shall be payable in unrestricted Common Stock or
      partly in unrestricted Common Stock and partly in cash. Such bonuses shall
      be in
      consideration of services previously performed and as an incentive toward future
      services and shall consist of shares of unrestricted Common Stock subject to
      such terms as the Committee may determine in its sole discretion. The number
      of
      shares of unrestricted Common Stock payable in lieu of a bonus otherwise payable
      shall be determined by dividing such bonus amount by the fair market value
      of
      one share of Common Stock on the date the bonus is payable, with fair market
      value determined as of such date in accordance with Section
      5(d)(ii).
(B)
      In
      lieu of salaries and fees otherwise payable by the Company to employees,
      attorneys and consultants eligible to participate in this Plan that were
      incurred for services rendered during, prior or after the year of 2004, the
      Committee, in its sole discretion, may determine that such unpaid salaries
      and
      fees shall be payable in unrestricted Common Stock or partly in unrestricted
      Common Stock and partly in cash. Such awards shall be in consideration of
      services previously performed and as an incentive toward future services and
      shall consist of shares of unrestricted Common Stock subject to such terms
      as
      the Committee may determine in its sole discretion. The number of shares of
      unrestricted Common Stock payable in lieu of a salaries and fees otherwise
      payable shall be determined by dividing each calendar month's of unpaid salary
      or fee amount by the average trading value of the Common Stock for the calendar
      month during which the subject services were provided.
(xi)
No
      Rights as Stockholder
.
      No
      Participant shall have any rights as a stockholder with respect to shares
      covered by an option or warrant until the option or warrant is exercised as
      provided in clause (d) above.
(xii)
Extraordinary
      Corporate Transactions
.
      The
      existence of outstanding options or warrants shall not affect in any way the
      right or power of the Company or its stockholders to make or authorize any
      or
      all adjustments, recapitalizations, reorganizations, exchanges, or other changes
      in the Company's capital structure or its business, or any merger or
      consolidation of the Company, or any issuance of Common Stock or other
      securities or subscription rights thereto, or any issuance of bonds, debentures,
      preferred or prior preference stock ahead of or affecting the Common Stock
      or
      the rights thereof, or the dissolution or liquidation of the Company, or any
      sale or transfer of all or any part of its assets or business, or any other
      corporate act or proceeding, whether of a similar character or otherwise. If
      the
      Company recapitalizes or otherwise changes its capital structure, or merges,
      consolidates, sells all of its assets or dissolves (each of the foregoing a
      "Fundamental Change"), then thereafter upon any exercise of an option or warrant
      theretofore granted the Participant shall be entitled to purchase under such
      option or warrant, in lieu of the number of shares of Common Stock as to which
      option or warrant shall then be exercisable, the number and class of shares
      of
      stock and securities to which the Participant would have been entitled pursuant
      to the terms of the Fundamental Change if, immediately prior to such Fundamental
      Change, the Participant had been the holder of record of the number of shares
      of
      Common Stock as to which such option or warrant is then exercisable. If (i)
      the
      Company shall not be the surviving entity in any merger or consolidation (or
      survives only as a subsidiary of another entity), (ii) the Company sells all
      or
      substantially all of its assets to any other person or entity (other than a
      wholly-owned subsidiary), (iii) any person or entity (including a "group" as
      contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains
      ownership or control of (including, without limitation, power to vote) more
      than
      50% of the outstanding shares of Common Stock, (iv) the Company is to be
      dissolved and liquidated, or (v) as a result of or in connection with a
      contested election of directors, the persons who were directors of the Company
      before such election shall cease to constitute a majority of the Board (each
      such event in clauses (i) through (v) above is referred to herein as a
"Corporate Change"), the Committee, in its sole discretion, may accelerate the
      time at which all or a portion of a Participant's option or warrants may be
      exercised for a limited period of time before or after a specified
      date.
(xiii)
Changes
      in Company's Capital Structure
.
      If the
      outstanding shares of Common Stock or other securities of the Company, or both,
      for which the option or warrant is then exercisable at any time be changed
      or
      exchanged by declaration of a stock dividend, stock split, combination of
      shares, recapitalization, or reorganization, the number and kind of shares
      of
      Common Stock or other securities which are subject to the Plan or subject to
      any
      options or warrants theretofore granted, and the option or warrant prices,
      shall
      be adjusted only as provided in the option or warrant.
(xiv)
Acceleration
      of Options and Warrants
.
      Except
      as hereinbefore expressly provided, (i) the issuance by the Company of shares
      of
      stock or any class of securities convertible into shares of stock of any class,
      for cash, property, labor or services, upon direct sale, upon the exercise
      of
      rights or warrants to subscribe therefor, or upon conversion of shares or
      obligations of the Company convertible into such shares or other securities,
      (ii) the payment of a dividend in property other than Common Stock or (iii)
      the
      occurrence of any similar transaction, and in any case whether or not for fair
      value, shall not affect, and no adjustment by reason thereof shall be made
      with
      respect to, the number of shares of Common Stock subject to options or warrants
      theretofore granted or the purchase price per share, unless the Committee shall
      determine, in its sole discretion, that an adjustment is necessary to provide
      equitable treatment to Participant. Notwithstanding anything to the contrary
      contained in this Plan, the Committee may, in its sole discretion, accelerate
      the time at which any option or warrant may be exercised, including, but not
      limited to, upon the occurrence of the events specified in this Section 5,
      and
      is authorized at any time (with the consent of the Participant) to purchase
      options or warrants pursuant to Section 6.
SECTION
      6. RELINQUISHMENT OF OPTIONS OR WARRANTS.
(a)
      The
      Committee, in granting options or warrants hereunder, shall have discretion
      to
      determine whether or not options or warrants shall include a right of
      relinquishment as hereinafter provided by this Section 6. The Committee shall
      also have discretion to determine whether an option or warrant agreement
      evidencing an option or warrant initially granted by the Committee without
      a
      right of relinquishment shall be amended or supplemented to include such a
      right
      of relinquishment. Neither the Committee nor the Company shall be under any
      obligation or incur any liability to any person by reason of the Committee's
      refusal to grant or include a right of relinquishment in any option or warrant
      granted hereunder or in any option or warrant agreement evidencing the same.
      Subject to the Committee's determination in any case that the grant by it of a
      right of relinquishment is consistent with Section 1 hereof, any option or
      warrant granted under this Plan, and the option or warrant agreement evidencing
      such option or warrant, may provide:
(i)
      That
      the Participant, or his or her heirs or other legal representatives to the
      extent entitled to exercise the option or warrant under the terms thereof,
      in
      lieu of purchasing the entire number of shares subject to purchase thereunder,
      shall have the right to relinquish all or any part of the then unexercised
      portion of the option or warrant (to the extent then exercisable) for a number
      of shares of Common Stock to be determined in accordance with the following
      provisions of this clause (i):
(A)
      The
      written notice of exercise of such right of relinquishment shall state the
      percentage of the total number of shares of Common Stock issuable pursuant
      to
      such relinquishment (as defined below) that the Participant elects to
      receive;
(B)
      The
      number of shares of Common Stock, if any, issuable pursuant to such
      relinquishment shall be the number of such shares, rounded to the next greater
      number of full shares, as shall be equal to the quotient obtained by dividing
      (i) the Appreciated Value by (ii) the purchase price for each of such shares
      specified in such option or warrant;
(C)
      For
      the purpose of this clause (C), "Appreciated Value" means the excess, if any, of
      (x) the total current market value of the shares of Common Stock covered by
      the
      option or warrant or the portion thereof to be relinquished over (y) the total
      purchase price for such shares specified in such option or warrant;
(ii)
      That
      such right of relinquishment may be exercised only upon receipt by the Company
      of a written notice of such relinquishment which shall be dated the date of
      election to make such relinquishment; and that, for the purposes of this Plan,
      such date of election shall be deemed to be the date when such notice is sent
      by
      registered or certified mail, or when receipt is acknowledged by the Company,
      if
      mailed by other than registered or certified mail or if delivered by hand or
      by
      any telegraphic communications equipment of the sender or otherwise delivered;
      provided, that, in the event the method just described for determining such
      date
      of election shall not be or remain consistent with the provisions of Section
      16(b) of the Exchange Act or the rules and regulations adopted by the Commission
      thereunder, as presently existing or as may be hereafter amended, which
      regulations exempt from the operation of Section 16(b) of the Exchange Act
      in
      whole or in part any such relinquishment transaction, then such date of election
      shall be determined by such other method consistent with Section 16(b) of the
      Exchange Act or the rules and regulations thereunder as the Committee shall
      in
      its discretion select and apply;
(iii)
      That the "current market value" of a share of Common Stock on a particular date
      shall be deemed to be its fair market value on that date as determined in
      accordance with Paragraph 5(d)(ii); and
(iv)
      That
      the option or warrant, or any portion thereof, may be relinquished only to
      the
      extent that (A) it is exercisable on the date written notice of relinquishment
      is received by the Company, and (B) the holder of such option or warrant pays,
      or makes provision satisfactory to the Company for the payment of, any taxes
      which the Company is obligated to collect with respect to such
      relinquishment.
(b)
      The
      Committee shall have sole discretion to consent to or disapprove, and neither
      the Committee nor the Company shall be under any liability by reason of the
      Committee's disapproval of, any election by a holder of preferred stock to
      relinquish such preferred stock in whole or in part as provided in Paragraph
      7(a), except that no such consent to or approval of a relinquishment shall
      be
      required under the following circumstances. Each Participant who is subject
      to
      the short-swing profits recapture provisions of Section 16(b) of the Exchange
      Act ("Covered Participant") shall not be entitled to receive shares of Common
      Stock when options or warrants are relinquished during any window period
      commencing on the third business day following the Company's release of a
      quarterly or annual summary statement of sales and earnings and ending on the
      twelfth business day following such release ("Window Period"). A Covered
      Participant shall be entitled to receive shares of Common Stock upon the
      relinquishment of options or warrants outside a Window Period.
(c)
      The
      Committee, in granting options or warrants hereunder, shall have discretion
      to
      determine the terms upon which such options or warrants shall be relinquishable,
      subject to the applicable provisions of this Plan, and including such provisions
      as are deemed advisable to permit the exemption from the operation from Section
      16(b) of the Exchange Act of any such relinquishment transaction, and options
      or
      warrants outstanding, and option agreements evidencing such options, may be
      amended, if necessary, to permit such exemption. If options or warrants are
      relinquished, such option or warrant shall be deemed to have been exercised
      to
      the extent of the number of shares of Common Stock covered by the option or
      warrant or part thereof which is relinquished, and no further options or
      warrants may be granted covering such shares of Common Stock.
(d)
      Any
      options or warrants or any right to relinquish the same to the Company as
      contemplated by this Paragraph 6 shall be assignable by the Participant,
      provided the transaction complies with any applicable securities
      laws.
(e)
      Except as provided in Section 6(f) below, no right of relinquishment may be
      exercised within the first six months after the initial award of any option
      or
      warrant containing, or the amendment or supplementation of any existing option
      or warrant agreement adding, the right of relinquishment.
(f)
      No
      right of relinquishment may be exercised after the initial award of any option
      or warrant containing, or the amendment or supplementation of any existing
      option or warrant agreement adding the right of relinquishment, unless such
      right of relinquishment is effective upon the Participant's death, disability or
      termination of his relationship with the Company for a reason other than "for
      cause."
SECTION
      7. ANTIDILUTION
Antidilution
      Provisions
.
a)
During
                the Exercise Period, the Exercise Price and the number of Option
                or
                Warrant Shares shall be subject to adjustment from time to time as
                provided in this Section 7.
In
      the
      event that any adjustment of the Exercise Price as required herein results
      in a
      fraction of a cent, such Exercise Price shall be rounded up to the nearest
      cent.
a)
Adjustment
                of Exercise Price and Number of Shares upon Issuance of Common
                Stock
.
Except as otherwise provided in Section 7(c) and 7(e) hereof, if
                and
                whenever on or after the date of the creation of this plan,, the
                Company
                issues or sells, or in accordance with Section 7(b) hereof is deemed
                to
                have issued or sold, any shares of Common Stock for no consideration
                or
                for a consideration per share (before deduction of reasonable expenses
                or
                commissions or underwriting discounts or allowances in connection
                therewith) less than the Market Price on the date of issuance (a
"Dilutive
                Issuance"), then immediately upon the Dilutive Issuance, the Exercise
                Price will be reduced to a price determined by multiplying the Exercise
                Price in effect immediately prior to the Dilutive Issuance by a fraction,
                (i) the numerator of which is an amount equal to the sum of (x) the
                number
                of shares of Common Stock actually outstanding immediately prior
                to the
                Dilutive Issuance, plus (y) the quotient of the aggregate consideration,
                calculated as set forth in Section 7(b) hereof, received by the Company
                upon such Dilutive Issuance divided by the Market Price in effect
                immediately prior to the Dilutive Issuance, and (ii) the denominator
                of
                which is the total number of shares of Common Stock Deemed Outstanding
                (as
                defined below) immediately after the Dilutive Issuance.
b)
Effect
                on Exercise Price of Certain Events
.
For purposes of determining the adjusted Exercise Price under Section
                7(a)
                hereof, the following will be
                applicable:
i)
Issuance
                of Rights or Options
.
If
                the Company in any manner issues or grants any warrants, rights or
                options, whether or not immediately exercisable, to subscribe for
                or to
                purchase Common Stock or other securities convertible into or exchangeable
                for Common Stock ("Convertible Securities") (such warrants, rights and
                options to purchase Common Stock or Convertible Securities are hereinafter
                referred to as "Options") and the price per share for which Common Stock
                is issuable upon the exercise of such Options is less than the Market
                Price on the date of issuance or grant of such Options, then the
                maximum
                total number of shares of Common Stock issuable upon the exercise
                of all
                such Options will, as of the date of the issuance or grant of such
                Options, be deemed to be outstanding and to have been issued and
                sold by
                the Company for such price per share. For purposes of the preceding
                sentence, the "price per share for which Common Stock is issuable upon the
                exercise of such Options" is determined by dividing (i) the total amount,
                if any, received or receivable by the Company as consideration for
                the
                issuance or granting of all such Options, plus the minimum aggregate
                amount of additional consideration, if any, payable to the Company
                upon
                the exercise of all such Options, plus, in the case of Convertible
                Securities issuable upon the exercise of such Options, the minimum
                aggregate amount of additional consideration payable upon the conversion
                or exchange thereof at the time such Convertible Securities first
                become
                convertible or exchangeable, by (ii) the maximum total number of
                shares of
                Common Stock issuable upon the exercise of all such Options (assuming
                full
                conversion of Convertible Securities, if applicable). No further
                adjustment to the Exercise Price will be made upon the actual issuance
                of
                such Common Stock upon the exercise of such Options or upon the conversion
                or exchange of Convertible Securities issuable upon exercise of such
                Options.
ii)
Issuance
                of Convertible Securities
.
If
                the Company in any manner issues or sells any Convertible Securities,
                whether or not immediately convertible (other than where the same
                are
                issuable upon the exercise of Options) and the price per share for
                which
                Common Stock is issuable upon such conversion or exchange is less
                than the
                Market Price on the date of issuance, then the maximum total number
                of
                shares of Common Stock issuable upon the conversion or exchange of
                all
                such Convertible Securities will, as of the date of the issuance
                of such
                Convertible Securities, be deemed to be outstanding and to have been
                issued and sold by the Company for such price per share. For the
                purposes
                of the preceding sentence, the "price per share for which Common Stock is
                issuable upon such conversion or exchange" is determined by dividing (i)
                the total amount, if any, received or receivable by the Company as
                consideration for the issuance or sale of all such Convertible Securities,
                plus the minimum aggregate amount of additional consideration, if
                any,
                payable to the Company upon the conversion or exchange thereof at
                the time
                such Convertible Securities first become convertible or exchangeable,
                by
                (ii) the maximum total number of shares of Common Stock issuable
                upon the
                conversion or exchange of all such Convertible Securities. No further
                adjustment to the Exercise Price will be made upon the actual issuance
                of
                such Common Stock upon conversion or exchange of such Convertible
                Securities.
iii)
Change
                in Option Price or Conversion Rate
.
If
                there is a change at any time in (i) the amount of additional
                consideration payable to the Company upon the exercise of any Options;
                (ii) the amount of additional consideration, if any, payable to the
                Company upon the conversion or exchange of any Convertible Securities;
                or
                (iii) the rate at which any Convertible Securities are convertible
                into or
                exchangeable for Common Stock (other than under or by reason of provisions
                designed to protect against dilution), the Exercise Price in effect
                at the
                time of such change will be readjusted to the Exercise Price which
                would
                have been in effect at such time had such Options or Convertible
                Securities still outstanding provided for such changed additional
                consideration or changed conversion rate, as the case may be, at
                the time
                initially granted, issued or sold.
iv)
Treatment
                of Expired Options and Unexercised Convertible
                Securities
.
If, in any case, the total number of shares of Common Stock issuable
                upon
                exercise of any Option or upon conversion or exchange of any Convertible
                Securities is not, in fact, issued and the rights to exercise such
                Option
                or to convert or exchange such Convertible Securities shall have
                expired
                or terminated, the Exercise Price then in effect will be readjusted
                to the
                Exercise Price which would have been in effect at the time of such
                expiration or termination had such Option or Convertible Securities,
                to
                the extent outstanding immediately prior to such expiration or termination
                (other than in respect of the actual number of shares of Common Stock
                issued upon exercise or conversion thereof), never been
                issued.
v)
Calculation
                of Consideration Received
.
If
                any Common Stock, Options or Convertible Securities are issued, granted
                or
                sold for cash, the consideration received therefor for purposes of
                this
                Plan will be the amount received by the Company therefor, before
                deduction
                of reasonable commissions, underwriting discounts or allowances or
                other
                reasonable expenses paid or incurred by the Company in connection
                with
                such issuance, grant or sale. In case any Common Stock, Options or
                Convertible Securities are issued or sold for a consideration part
                or all
                of which shall be other than cash, the amount of the consideration
                other
                than cash received by the Company will be the fair value of such
                consideration, except where such consideration consists of securities,
                in
                which case the amount of consideration received by the Company will
                be the
                Market Price thereof as of the date of receipt. In case any Common
                Stock,
                Options or Convertible Securities are issued in connection with any
                acquisition, merger or consolidation in which the Company is the
                surviving
                corporation, 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 corporation as is attributable to such Common Stock,
                Options
                or Convertible Securities, as the case may be. The fair value of
                any
                consideration other than cash or securities will be determined in
                good
                faith by the Board of Directors of the
                Company.
vi)
Exceptions
                to Adjustment of Exercise Price
.
No
                adjustment to the Exercise Price will be made (i) upon the exercise
                of any
                warrants, options or convertible securities granted, issued and
                outstanding on the date of issuance of this Warrant; (ii) upon the
                grant
                or exercise of any stock or options which may hereafter be granted
                or
                exercised under any employee benefit plan, stock option plan or restricted
                stock plan of the Company now existing or to be implemented in the
                future,
                so long as the issuance of such stock or options is approved by a
                majority
                of the independent members of the Board of Directors of the Company
                or a
                majority of the members of a committee of independent directors
                established for such purpose; or (iii) upon the exercise of the
                Warrants.
c)
Subdivision
                or Combination of Common Stock
.
If
                the Company at any time subdivides (by any stock split, stock dividend,
                recapitalization, reorganization, reclassification or otherwise)
                the
                shares of Common Stock acquirable hereunder into a greater number
                of
                shares, then, after the date of record for effecting such subdivision,
                the
                Exercise Price in effect immediately prior to such subdivision will
                be
                proportionately reduced. If the Company at any time combines (by
                reverse
                stock split, recapitalization, reorganization, reclassification or
                otherwise) the shares of Common Stock acquirable hereunder into a
                smaller
                number of shares, then, after the date of record for effecting such
                combination, the Exercise Price in effect immediately prior to such
                combination will be proportionately
                increased.
d)
Adjustment
                in Number of Shares
.
Upon each adjustment of the Exercise Price pursuant to the provisions
                of
                this Section 7, the number of shares of Common Stock issuable pursuant
                to
                this Plan shall be adjusted by multiplying a number equal to the
                Exercise
                Price in effect immediately prior to such adjustment by the number
                of
                shares of Common Stock issuable upon exercise of warrants or options
                governed by this Plan immediately prior to such adjustment and dividing
                the product so obtained by the adjusted Exercise
                Price.
e)
Consolidation,
                Merger or Sale
.
In
                case of any consolidation of the Company with, or merger of the Company
                into any other corporation, or in case of any sale or conveyance
                of all or
                substantially all of the assets of the Company other than in connection
                with a plan of complete liquidation of the Company, then as a condition
                of
                such consolidation, merger or sale or conveyance, adequate provision
                will
                be made whereby the holder of this Warrant will have the right to
                acquire
                and receive upon exercise of this Warrant in lieu of the shares of
                Common
                Stock immediately theretofore acquirable upon the exercise of this
                Warrant, such shares of stock, securities or assets as may be issued
                or
                payable with respect to or in exchange for the number of shares of
                Common
                Stock immediately theretofore acquirable and receivable upon exercise
                of
                this Warrant had such consolidation, merger or sale or conveyance
                not
                taken place. In any such case, the Company will make appropriate
                provision
                to insure that the provisions of this Section 7 hereof will thereafter
                be
                applicable as nearly as may be in relation to any shares of stock
                or
                securities thereafter deliverable upon the exercise of this Warrant.
                The
                Company will not effect any consolidation, merger or sale or conveyance
                unless prior to the consummation thereof, the successor corporation
                (if
                other than the Company) assumes by written instrument the obligations
                under this Section 7 and the obligations to deliver to this Plan
                participants such shares of stock, securities or assets as, in accordance
                with the foregoing provisions, the holder may be entitled to
                acquire.
f)
Distribution
                of Assets
.
In
                case the Company shall declare or make any distribution of its assets
                (including cash) to holders of Common Stock as a partial liquidating
                dividend, by way of return of capital or otherwise, then, after the
                date
                of record for determining shareholders entitled to such distribution,
                but
                prior to the date of distribution, the holder of this Warrant shall
                be
                entitled upon exercise of warrants or options governed by this Plan
                for
                the purchase of any or all of the shares of Common Stock subject
                hereto,
                to receive the amount of such assets which would have been payable
                to the
                holder had such holder been the holder of such shares of Common Stock
                on
                the record date for the determination of shareholders entitled to
                such
                distribution.
g)
Notice
                of Adjustment
.
Upon the occurrence of any event which requires any adjustment of
                the
                Exercise Price, then, and in each such case, the Company shall give
                notice
                thereof to the holder of any options or warrants issued pursuant
                to this
                plan,, which notice shall state the Exercise Price resulting from
                such
                adjustment and the increase or decrease in the number of Warrant
                Shares
                purchasable at such price upon exercise, setting forth in reasonable
                detail the method of calculation and the facts upon which such calculation
                is based. Such calculation shall be certified by the Chief Financial
                Officer of the Company.
h)
Minimum
                Adjustment of Exercise Price
.
No
                adjustment of the Exercise Price shall be made in an amount of less
                than
                1% of the Exercise Price in effect at the time such adjustment is
                otherwise required to be made, but any such lesser adjustment shall
                be
                carried forward and shall be made at the time and together with the
                next
                subsequent adjustment which, together with any adjustments so carried
                forward, shall amount to not less than 1% of such Exercise
                Price.
i)
No
                Fractional Shares
.
No
                fractional shares of Common Stock are to be issued upon the exercise
                of
                options or warrants issued pursuant to this plan,, but the Company
                shall
                pay a cash adjustment in respect of any fractional share which would
                otherwise be issuable in an amount equal to the same fraction of
                the
                Market Price of a share of Common Stock on the date of such
                exercise.
j)
Other
                Notices
.
In
                case at any time:
i)
the
                Company shall declare any dividend upon the Common Stock payable
                in shares
                of stock of any class or make any other distribution (including dividends
                or distributions payable in cash out of retained earnings) to the
                holders
                of the Common Stock;
ii)
the
                Company shall offer for subscription pro rata to the holders of the
                Common
                Stock any additional shares of stock of any class or other rights;
iii)
there
                shall be any capital reorganiza-tion of the Company, or reclassification
                of the Common Stock, or consolidation or merger of the Company with
                or
                into, or sale of all or substan-tially all its assets to, another
                corporation or entity; or
iv)
there
                shall be a voluntary or involun-tary dissolution, liquidation or
                winding
                up of the Company;
v)
then,
                in each such case, the Company shall give to the holder of this Warrant
                (a) notice of the date on which the books of the Company shall close
                or a
                record shall be taken for determining the holders of Common Stock
                entitled
                to receive any such divi-dend, distribution, or subscription rights
                or for
                determining the holders of Common Stock entitled to vote in respect
                of any
                such reorganization, reclassification, consolidation, merger, sale,
                dissolution, liquidation or winding-up and (b) in the case of any
                such
                reorganization, reclassification, consolidation, merger, sale,
                dissolution, liquidation or winding-up, notice of the date (or, if
                not
                then known, a reasonable approximation thereof by the Company) when
                the
                same shall take place. Such notice shall also specify the date on
                which
                the holders of Common Stock shall be entitled to receive such dividend,
                distribution, or subscription rights or to exchange their Common
                Stock for
                stock or other securities or property deliverable upon such
                reorganization, re-classification, consolidation, merger, sale,
                dissolution, liquidation, or winding-up, as the case may be. Such
                notice
                shall be given at least 30 days prior to the record date or the date
                on
                which the Company's books are closed in respect thereto. Failure to give
                any such notice or any defect therein shall not affect the validity
                of the
                proceedings referred to in clauses (i), (ii), (iii) and (iv)
                above.
k)
Certain
                Events
.
If
                any event occurs of the type contemplated by the adjustment provisions
                of
                this Section 7 but not expressly provided for by such provisions,
                the
                Company will give notice of such event as provided in Section 7(g)
                hereof,
                and the Company's Board of Directors will make an appropriate adjustment
                in the Exercise Price and the number of shares of Common Stock acquirable
                upon exercise of options or warrnts pursuant to this Plan so that
                the
                rights of the holder shall be neither enhanced nor diminished by
                such
                event.
l)
Certain
                Definitions
.
i)
"
Common
                Stock Deemed Outstanding
"
shall mean the number of shares of Common Stock actually outstanding
                (not
                including shares of Common Stock held in the treasury of the Company),
                plus (x) pursuant to Section 7(b)(i) hereof, the maximum total number
                of
                shares of Common Stock issuable upon the exercise of Options, as
                of the
                date of such issuance or grant of such Options, if any, and (y) pursuant
                to Section 7(b)(ii) hereof, the maximum total number of shares of
                Common
                Stock issuable upon conversion or exchange of Convertible Securities,
                as
                of the date of issuance of such Convertible Securities, if any.
ii)
"
Market
                Price
,"
as
                of any date, (i) means the average of the last reported sale prices
                for
                the shares of Common Stock on the OTCBB for the five (5) Trading
                Days
                immediately preceding such date as reported by Bloomberg, or (ii)
                if the
                OTCBB is not the principal trading market for the shares of Common
                Stock,
                the average of the last reported sale prices on the principal trading
                market for the Common Stock during the same period as reported by
                Bloomberg, or (iii) if market value cannot be calculated as of such
                date
                on any of the foregoing bases, the Market Price shall be the fair
                market
                value as reasonably determined in good faith by (a) the Board of
                Directors
                of the Company or, at the option of a majority-in-interest of the
                holders
                of the outstanding Warrants by (b) an independent investment bank
                of
                nationally recognized standing in the valuation of businesses similar
                to
                the business of the corporation. The manner of determining the Market
                Price of the Common Stock set forth in the foregoing definition shall
                apply with respect to any other security in respect of which a
                determination as to market value must be made
                hereunder.
iii)
"
Common
                Stock
,"
for purposes of this Section 7, includes the Common Stock, par value
                $.001
                per share, and any additional class of stock of the Company having
                no
                preference as to dividends or distributions on liquidation, provided
                that
                the shares purchasable pursuant to this Warrant shall include only
                shares
                of Common Stock, par value $.001 per share, in respect of which this
                Warrant is exercisable, or shares resulting from any subdivision
                or
                combination of such Common Stock, or in the case of any reorganization,
                reclassification, consolidation, merger, or sale of the character
                referred
                to in Section 7(e) hereof, the stock or other securities or property
                provided for in such Section.
SECTION
      8. AMENDMENTS OR TERMINATION
.
      The
      Board may amend, alter or discontinue the Plan, but no amendment or alteration
      shall be made which would impair the rights of any Participant, without his
      consent, under any option, warrant or preferred stock theretofore
      granted.
SECTION
      9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS
.
      The
      Plan, the grant and exercise of options or warrants and grant and conversion
      of
      preferred stock thereunder, and the obligation of the Company to sell and
      deliver shares under such options, warrants or preferred stock, shall be subject
      to all applicable federal and state laws, rules and regulations and to such
      approvals by any governmental or regulatory agency as may be required. The
      Company shall not be required to issue or deliver any certificates for shares
      of
      Common Stock prior to the completion of any registration or qualification of
      such shares under any federal or state law or issuance of any ruling or
      regulation of any government body which the Company shall, in its sole
      discretion, determine to be necessary or advisable. Any adjustments provided
      for
      in subparagraphs 5(d)(xii), (xiii) and (xiv) shall be subject to any shareholder
      action required by the corporate law of the state of incorporation of the
      Company.
SECTION
      10. PURCHASE FOR INVESTMENT
.
      Unless
      the options, warrants, shares of convertible preferred stock and shares of
      Common Stock covered by this Plan have been registered under the Securities
      Act
      of 1933, as amended, or the Company has determined that such registration is
      unnecessary, each person acquiring or exercising an option or warrant under
      this
      Plan or converting shares of preferred stock may be required by the Company
      to
      give a representation in writing that he or she is acquiring such option or
      warrant or such shares for his own account for investment and not with a view
      to, or for sale in connection with, the distribution of any part
      thereof.
SECTION
      11. TAXES
.
(a)
      The
      Company may make such provisions as it may deem appropriate for the withholding
      of any taxes which it determines is required in connection with any options,
      warrants or preferred stock granted under this Plan.
(b)
      Notwithstanding the terms of Paragraph 11 (a), any Participant may pay all
      or
      any portion of the taxes required to be withheld by the Company or paid by
      him
      or her in connection with the exercise of a nonqualified option or warrant
      or
      conversion of preferred stock by electing to have the Company withhold shares
      of
      Common Stock, or by delivering previously owned shares of Common Stock, having
      a
      fair market value, determined in accordance with Paragraph 5(d)(ii), equal
      to
      the amount required to be withheld or paid. A Participant must make the
      foregoing election on or before the date that the amount of tax to be withheld
      is determined ("Tax Date"). All such elections are irrevocable and subject to
      disapproval by the Committee. Elections by Covered Participants are subject
      to
      the following additional restrictions: (i) such election may not be made within
      six months of the grant of an option or warrant, provided that this limitation
      shall not apply in the event of death or disability, and (ii) such election
      must
      be made either six months or more prior to the Tax Date or in a Window Period.
      Where the Tax Date in respect of an option or warrant is deferred until six
      months after exercise and the Covered Participant elects share withholding,
      the
      full amount of shares of Common Stock will be issued or transferred to him
      upon
      exercise of the option or warrant, but he or she shall be unconditionally
      obligated to tender back to the Company the number of shares necessary to
      discharge the Company's withholding obligation or his estimated tax obligation
      on the Tax Date.
SECTION
      12. REPLACEMENT OF OPTIONS, WARRANTS AND PREFERRED STOCK
.
      The
      Committee from time to time may permit a Participant under the Plan to surrender
      for cancellation any unexercised outstanding option or warrant or unconverted
      Preferred stock and receive from the Company in exchange an option, warrant
      or
      preferred stock for such number of shares of Common Stock as may be designated
      by the Committee. The Committee may, with the consent of the holder of any
      outstanding option, warrant or preferred stock, amend such option, warrant
      or
      preferred stock, including reducing the exercise price of any option or warrant
      to not less than the fair market value of the Common Stock at the time of the
      amendment, increasing the conversion ratio of any preferred stock and extending
      the exercise or conversion term of and warrant, option or preferred
      stock.
SECTION
      13. NO RIGHT TO COMPANY EMPLOYMENT
.
      Nothing
      in this Plan or as a result of any option or warrant granted pursuant to this
      Plan shall confer on any individual any right to continue in the employ of
      the
      Company or interfere in any way with the right of the Company to terminate
      an
      individual's employment at any time. The option, warrant or preferred stock
      agreements may contain such provisions as the Committee may approve with
      reference to the effect of approved leaves of absence.
SECTION
      14. LIABILITY OF COMPANY
.
      The
      Company and any Affiliate which is in existence or hereafter comes into
      existence shall not be liable to a Participant or other persons as
      to:
(a)
The
      Non-Issuance of Shares
.
      The
      non-issuance or sale of shares as to which the Company has been unable to obtain
      from any regulatory body having jurisdiction the authority deemed by the
      Company's counsel to be necessary to the lawful issuance and sale of any shares
      hereunder; and
(b)
Tax
      Consequences
.
      Any tax
      consequence expected, but not realized, by any Participant or other person
      due
      to the exercise of any option or warrant or the conversion of any preferred
      stock granted hereunder.
SECTION
      15. EFFECTIVENESS AND EXPIRATION OF PLAN
.
      The
      Plan shall be effective on the date the Board adopts the Plan. The Plan shall
      expire ten years after the date the Board approves the Plan and thereafter
      no
      option, warrant or preferred stock shall be granted pursuant to the
      Plan.
SECTION
      16. NON-EXCLUSIVITY OF THE PLAN
.
      Neither
      the adoption by the Board nor the submission of the Plan to the stockholders
      of
      the Company for approval shall be construed as creating any limitations on
      the
      power of the Board to adopt such other incentive arrangements as it may deem
      desirable, including without limitation, the granting of restricted stock or
      stock options, warrants or preferred stock otherwise than under the Plan, and
      such arrangements may be either generally applicable or applicable only in
      specific cases.
SECTION
      17. GOVERNING LAW
.
      This
      Plan and any agreements hereunder shall be interpreted and construed in
      accordance with the laws of the state of incorporation of the Company and
      applicable federal law.
SECTION
      18. CASHLESS EXERCISE
.
      The
      Committee also may allow cashless exercises as permitted under Federal Reserve
      Board's Regulation T, subject to applicable securities law restrictions. or by
      any other means which the Committee determines to be consistent with the Plan's
      purpose and applicable law. The proceeds from such a payment shall be added
      to
      the general funds of the Company and shall be used for general corporate
      purposes.
EXHIBIT
      5 & 24.1
S
O N F I E L D &
S
O N F I E L D
A
      Professional Corporation
LEON
                SONFIELD (1865-1934)
GEORGE
                M. SONFIELD (1899-1967)
ROBERT
                L. SONFIELD (1893-1972)
____________________
FRANKLIN
                D. ROOSEVELT, JR. (1914-1988)
ATTORNEYS
                AT LAW
770
                SOUTH POST OAK LANE
HOUSTON,
                TEXAS 77056-1913
WWW.SONFIELD.COM
Telecopier
                (713) 877-1547
____
Telephone
                (713) 877-8333
ROBERT
                L. SONFIELD, JR.
Managing
                Director
robert@sonfield.com
December
      20
,
      2006
Board
      of
      Directors
PaperFree
      Medical Solutions, Inc.
121
      West
      Sycamore Street
Kokomo,
      IN 46901
Gentlemen:
In
      our
      capacity as counsel for PaperFree Medical Solutions, Inc., a Nevada corporation
      (the "Company"), we have participated in the corporate proceedings relative to
      the authorization and issuance by the Company of a maximum of ,10,000000 shares
      of common stock pursuant to the Plan as set out and described in the Company's
      Registration Statement on Form S-8 (File No. 000-30782) under the Securities
      Act
      of 1933 (the "Registration Statement"). We have also participated in the
      preparation and filing of the Registration Statement.
Based
      upon the foregoing and upon our examination of originals (or copies certified
      to
      our satisfaction) of such corporate records of the Company and other documents
      as we have deemed necessary as a basis for the opinions hereinafter expressed,
      and assuming the accuracy and completeness of all information supplied us by
      the
      Company, having regard for the legal considerations which we deem relevant,
      we
      are of the opinion that:
(1)
The
      Company is a corporation duly organized and validly existing under the laws
      of
      the State of Nevada;
(2)
The
      Company has taken all requisite corporate action and all action required by
      the
      laws of the State of Nevada with respect to the authorization, issuance and
      sale
      of warrants and shares of common stock to be issued pursuant to the Registration
      Statement;
(3)
The
      10,000,000 shares of common stock, when issued, delivered and paid for as the
      case may be, in accordance with their respective terms, will be validly issued,
      fully paid and nonassessable;
Yours
      very truly,
/s/SONFIELD
      & SONFIELD
SONFIELD
      & SONFIELD
EXHIBIT
      24.2
CONSENT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
      the
      Board of Directors of
Paperfree
      Medical Solutions, Inc.
Kokomo,
      Indiana
We
        hereby
        consent to the incorporation by reference into this Registration Statement
        on
        Form S-8 of our report dated day 30, 2006, relating to the consolidated
        financial statements of PaperFree Medical Solutions, Inc. as of February
        28,
        2006 and for the two years then ended.
Malone
      & Bailey, PC
www.malone-bailey.com
Houston,
      Texas
December
      21, 2006