SUBSCRIPTION AGREEMENT
 
THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is dated as of __________, 2009,
by and between Mesa Energy Holdings, Inc. (formerly Mesquite Mining, Inc.), a
Delaware corporation (the “Company”), and the subscribers set forth on the
signature pages affixed hereto (the “Subscribers”).

WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “1933 Act”);
 
WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Subscribers, as
provided herein, and the Subscribers shall purchase for an aggregate of a
minimum of $750,000 and a maximum of $2,250,000, at a price of 100% (par) (the
“Purchase Price”) of secured  promissory notes of the Company (“Note” or
“Notes”) in a like “Principal Amount”, a form of which is annexed hereto as
Exhibit A, convertible into shares of the Company’s Common Stock, $0.0001 par
value (the “Common Stock”) at a per share conversion price set forth in the
Notes (“Conversion Price”) (the “Offering”).  The Notes and shares of Common
Stock issuable upon conversion of the Notes (the “Conversion Shares”) are
collectively referred to herein as the “Securities.”; and
 
WHEREAS, the aggregate proceeds of the sale of Notes in the aggregate principal
amount of $750,000 contemplated hereby shall be held in escrow by Grushko &
Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176 (the
“Escrow Agent”) pursuant to the terms of an Escrow Agreement to be executed by
the parties substantially in the form attached hereto as Exhibit B (the “Escrow
Agreement”).
 
NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Subscribers hereby agree as
follows:

1.           Closing Date.   The “Closing Date” shall be the date that the
Purchase Price is transmitted by wire transfer or otherwise credited to or for
the benefit of the Company. The consummation of the transactions contemplated
herein shall take place at the offices of [Grushko & Mittman, P.C., 551 Fifth
Avenue, Suite 1601, New York, New York 10176], upon the satisfaction or waiver
of all conditions to closing set forth in this Agreement.  Subject to the
satisfaction or waiver of the terms and conditions of this Agreement, on the
Closing Date, each Subscriber shall purchase and the Company shall sell to each
such Subscriber a Note in the Principal Amount designated on set forth on the
Subscriber’s signature page attached hereto for such Subscriber’s portion of the
Purchase Price indicated thereon.

2.           Special Conditions.   The Closing hereunder is specifically
conditional on the closing of a reverse triangular merger with Mesa Energy,
Inc., a Nevada corporation, and Mesa Energy Acquisition Corp., a Nevada
corporation, pursuant to which Mesa Energy, Inc. will become a wholly-owned
subsidiary of the Company (the “Reverse Merger”).  The Reverse Merger must close
immediately prior to the Closing and by conducting the Closing and accepting the
Purchase Price from Subscribers, the Company represents the Reverse Merger has
irrevocably closed in accordance with the terms of the Agreement and Plan of
Merger and Reorganization, by and among the Company, Mesa Energy Acquisition
Corp., a Nevada corporation, and Mesa Energy, Inc., a Nevada corporation,
annexed hereto as Exhibit C (the “Merger Documents”).  An additional condition
of Closing is the acquisition by the Company before or contemporaneously with
the Closing of the Java Field Natural Gas Development Project in Western New
York (“Working Interests”) pursuant to the agreements annexed hereto as Exhibit
D (the “Working Interest Documents”).  The Company’s acceptance of the Purchase
Price from Subscribers shall constitute a representation that the Working
Interests will have been acquired by the Company not later than as of the
Closing, pursuant to the terms and conditions of the Working Interest
Documents.  Notwithstanding Sections 9(p) and 9(s) hereof, until October 5,
2009, the Company may issue additional Notes having a Principal Amount of up to
$1,250,000 upon the same terms and conditions as described in this Agreement
(“Additional Offering”) and grant the purchasers of such Notes substantially the
same rights and benefits granted to the Subscribers pursuant to this Agreement
except where otherwise indicated.

 
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3.           Security Interest.   The Subscriber will be granted a security
interest in certain assets of the Company and Subsidiaries (as defined in
Section 5(a) of this Agreement), which security interest will be memorialized in
a “Security Agreement,” a form of which is annexed hereto as Exhibit E.   Each
of the Company’s Subsidiaries will provide a Guaranty (“Guaranty”) in the form
annexed hereto as Exhibit F.  The Company will execute such other agreements,
documents and financing statements reasonably requested by the Subscribers,
which will be filed at the Company’s expense with the jurisdictions, states and
counties designated by the Subscribers.  The Company, Subscribers and Collateral
Agents, LLC (“Collateral Agent”) will enter into a Collateral Agent Agreement,
in the form annexed hereto as Exhibit G.   The Closing may not occur unless each
of the documents and agreements identified on Schedule 3 and annexed hereto as
Exhibit H (“Working Interest Security Documents”), pursuant to which Subscribers
will have been granted a security interest in the Working Interests, have been
delivered to Walter H. Walne, III, Esq. of Winstead P.C., together with the
required filing and recording fees, with such filings to be made by Mr. Walne on
behalf of the Subscribers immediately upon Closing.

4.           Subscriber Representations and Warranties.  Each of the Subscribers
hereby represents and warrants to and agrees with the Company that:

(a)           Organization and Standing of the Subscriber.  Subscriber, to the
extent applicable, is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation.

(b)           Authorization and Power.  Subscriber has the requisite power and
authority to enter into and perform this Agreement and the other Transaction
Documents and to purchase the Note being sold to it hereunder.  The execution,
delivery and performance of this Agreement and the other Transaction Documents
by Subscriber and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action, and no
further consent or authorization of Subscriber or its Board of Directors or
stockholders, if applicable, is required.  This Agreement and the other
Transaction Documents have been duly authorized, executed and when delivered by
Subscriber and constitute, or shall constitute when executed and delivered, a
valid and binding obligation of Subscriber, enforceable against Subscriber in
accordance with the terms thereof.

(c)           No Conflicts.  The execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation by Subscriber
of the transactions contemplated hereby and thereby or relating hereto do not
and will not (i) result in a violation of Subscriber’s charter documents, bylaws
or other organizational documents, if applicable, (ii) conflict with nor
constitute a default (or an event which with notice or lapse of time or both
would become a default) under any agreement to which Subscriber is a party, nor
(iii) result in a violation of any law, rule, or regulation, or any order,
judgment or decree of any court or governmental agency applicable to Subscriber
or its properties (except for such conflicts, defaults and violations as would
not, individually or in the aggregate, have a material adverse effect on
Subscriber).  Subscriber is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement and the other Transaction Documents  nor to purchase the
Securities in accordance with the terms hereof, provided that for purposes of
the representation made in this sentence, Subscriber is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

 
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(d)           Information on Company.   Subscriber has been furnished with or
has had access at the EDGAR Website of the Commission to the Company’s Form 10-K
filed on March 4, 2009 for the Company’s fiscal year ended December 31, 2008, to
the Company's other filings made with the Commission which are available at the
Edgar Website and a draft of the Super Form 8-K described in Section 9(n)
(hereinafter referred to collectively as the "Reports").  In addition,
Subscriber may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as Subscriber
has requested in writing, identified thereon as OTHER WRITTEN INFORMATION (such
other information is collectively, the "Other Written Information"), and
considered all factors Subscriber deems material in deciding on the advisability
of investing in the Securities.

(e)           Information on Subscriber.   Subscriber is, and will be at the
time of the conversion of the Notes, an "accredited investor", as such term is
defined in Regulation D promulgated by the Commission under the 1933 Act, is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable Subscriber to utilize the information made available by the Company to
evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment.  Subscriber has the authority and is duly and legally qualified to
purchase and own the Securities.  Subscriber is able to bear the risk of such
investment for an indefinite period and to afford a complete loss thereof.  The
information set forth on the signature pages hereto regarding Subscriber is
accurate.  Each Subscriber will complete and deliver to the Company a completed
Investor Questionnaire in the form annexed hereto as Exhibit I.

(f)           Purchase of Notes.  On the Closing Date, Subscriber will purchase
its Note as principal for its own account for investment only and not with a
view toward, or for resale in connection with, the public sale or any
distribution thereof.

(g)           Compliance with Securities Act.   Subscriber understands and
agrees that the Securities have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a transaction
that does not require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of the Subscriber contained
herein), and that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration. In any event, and subject to
compliance with applicable securities laws, the Subscriber may enter into lawful
hedging transactions in the course of hedging the position they assume and the
Subscriber may also enter into lawful short positions or other derivative
transactions relating to the Securities, or interests in the Securities, and
deliver the Securities, or interests in the Securities, to close out their short
or other positions or otherwise settle other transactions, or loan or pledge the
Securities, or interests in the Securities, to third parties who in turn may
dispose of these Securities.

(h)           Conversion Shares Legend.  The Conversion Shares and Interest
Shares shall bear the following or similar legend:

 
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"THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES."

(i)           Notes Legend.  The Notes shall bear the following legend:
 
"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE –OR-EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES."
 
 (j)           Communication of Offer.  The offer to sell the Securities was
directly communicated to Subscriber by the Company.  At no time was Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.

(k)           Restricted Securities.   Subscriber understands that the
Securities have not been registered under the 1933 Act and Subscriber will not
sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any of
the Securities unless pursuant to an effective registration statement under the
1933 Act, or unless an exemption from registration is
available.  Notwithstanding anything to the contrary contained in this
Agreement, Subscriber may transfer (without restriction and without the need for
an opinion of counsel) the Securities to its Affiliates (as defined below)
provided that each such Affiliate is an “accredited investor” under Regulation D
and such Affiliate agrees to be bound by the terms and conditions of this
Agreement. For the purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  Affiliate includes each Subsidiary of the Company.  For purposes of
this definition, “control” means the power to direct the management and policies
of such person or firm, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise.

 
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(l)           No Governmental Review.  Subscriber understands that no United
States federal or state agency or any other governmental or state agency has
passed on or made recommendations or endorsement of the Securities or the
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.

(m)          Correctness of Representations.  Subscriber represents that the
foregoing representations and warranties are true and correct as of the date
hereof and, unless Subscriber otherwise notifies the Company prior to the
Closing Date, shall be true and correct as of the Closing Date.

(n)           Survival.  The foregoing representations and warranties shall
survive the Closing Date.
 
5.           Company Representations and Warranties.  The Company represents and
warrants to and agrees with each Subscriber that:
 
(a)           Due Incorporation.  The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power to own
its properties and to carry on its business as presently conducted.  The Company
is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect.  For purposes of this Agreement, a “Material Adverse Effect”
shall mean a material adverse effect on the financial condition, results of
operations, prospects, properties or business of the Company and its
Subsidiaries taken as a whole.  For purposes of this Agreement, “Subsidiary”
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which more than 30% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
entity.  As of the Closing Date, all of the Company’s Subsidiaries and the
Company’s ownership interest therein is set forth on Schedule 5(a).  Member
interests in Subsidiaries which are partnerships or limited liability companies
are not held in certificate form.
 
(b)           Outstanding Stock.  All issued and outstanding shares of capital
stock and equity interests in the Company have been duly authorized and validly
issued and are fully paid and non-assessable.
 
(c)           Authority; Enforceability.  This Agreement, the Notes, Conversion
Shares, Security Agreement, the Working Interest Security Documents, Guaranty,
the Escrow Agreement, and any other agreements delivered together with this
Agreement or in connection herewith (collectively “Transaction Documents”) have
been duly authorized, executed and delivered by the Company and are valid and
binding agreements of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.  The Company
has full corporate power and authority necessary to enter into and deliver the
Transaction Documents and to perform its obligations thereunder.

 
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(d)           Capitalization and Additional Issuances.   The authorized and
outstanding capital stock of the Company and Subsidiaries on a fully diluted
basis as of the date of this Agreement and the Closing Date subsequent to the
closing of the Reverse Merger (not including the Securities) are set forth on
Schedule 5(d).  Except as set forth on Schedule 5(d), there are no options,
warrants, or rights to subscribe to, securities, rights, understandings or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock or other equity interest of the
Company or any of the Subsidiaries.  The only officer, director, employee and
consultant stock option or stock incentive plan or similar plan currently in
effect or contemplated by the Company is described on Schedule 5(d).  There are
no outstanding agreements or preemptive or similar rights affecting the
Company's Common Stock.
 
(e)           Consents.  No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its Affiliates, the OTC Bulletin Board (the “Bulletin Board”)
or the Company's shareholders is required for the execution by the Company of
the Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities.  The Transaction Documents and the
Company’s performance of its obligations thereunder have been unanimously
approved by the Company’s Board of Directors.  No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority in the world, including without
limitation, the United States, or elsewhere is required by the Company or any
Affiliate of the Company in connection with the consummation of the transactions
contemplated by this Agreement, except as would not otherwise have a Material
Adverse Effect or the consummation of any of the other agreements, covenants or
commitments of the Company or any Subsidiary contemplated by the other
Transaction Documents. Any such qualifications and filings will, in the case of
qualifications, be effective on the Closing and will, in the case of filings, be
made within the time prescribed by law.
 
(f)           No Violation or Conflict.  Assuming the representations and
warranties of the Subscriber in Section 4 are true and correct, neither the
issuance and sale of the Securities nor the performance of the Company’s
obligations under this Agreement and all other agreements entered into by the
Company relating thereto by the Company will:
 
(i)           violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a default) under (A) the articles
or certificate of incorporation, charter or bylaws of the Company, (B) to the
Company's knowledge, any decree, judgment, order, law, treaty, rule, regulation
or determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates, (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect; or
 
(ii)           result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company or any of
its Affiliates except in favor of Subscribers as described herein; or
 
(iii)           result in the activation of any anti-dilution rights or a reset
or repricing of any debt, equity or security instrument of any creditor or
equity holder of the Company, or the holder of the right to receive any debt,
equity or security instrument of the Company nor result in the acceleration of
the due date of any obligation of the Company; or
 
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(iv)           result in the triggering of any piggy-back or other registration
rights of any person or entity holding securities of the Company or having the
right to receive securities of the Company.
 
(g)           The Securities.  The Securities upon issuance:
 
(i)            are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject only to restrictions upon transfer under
the 1933 Act and any applicable state securities laws;

(ii)            have been, or will be, duly and validly authorized and on the
dates of issuance of the Conversion Shares upon conversion of the Notes, such
Conversion Shares will be duly and validly issued, fully paid and non-assessable
and if registered pursuant to the 1933 Act and resold pursuant to an effective
registration statement or exempt from registration will be free trading,
unrestricted and unlegended;
 
(iii)           will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the Company or
rights to acquire securities of the Company;
 
(iv)           will not subject the holders thereof to personal liability by
reason of being such holders; and
 
(v)           assuming the representations and warranties of the Subscribers as
set forth in Section 4 hereof are true and correct, will not result in a
violation of Section 5 under the 1933 Act.
 
(h)           Litigation.  There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates that would affect the execution by the Company or the
complete and timely performance by the Company of its obligations under the
Transaction Documents.   There is no pending or, to the best knowledge of the
Company, basis for or threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company, or any of its Affiliates which litigation if adversely
determined would have a Material Adverse Effect.
 
(i)            No Market Manipulation.  The Company and its Affiliates have not
taken, and will not take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Securities or affect the price at which the Securities may be issued or
resold.
 
(j)            Information Concerning Company.  The Reports and Other Written
Information contain all material information relating to the Company and its
operations and financial condition as of their respective dates which
information is required to be disclosed therein.   Since December 31, 2008 and
except as modified in the Reports and Other Written Information or in the
Schedules hereto, there has been no Material Adverse Event relating to the
Company's business, financial condition or affairs. The Reports and Other
Written Information including the financial statements included therein do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, taken
as a whole, not misleading in light of the circumstances and when made.

 
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(k)           Solvency.  Based on the financial condition of the Company as of
the Closing Date, (i) the Company’s fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid.  The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).
 
(l)           Defaults.  The Company is not in violation of its certificate of
incorporation or bylaws.   The Company is (i) not in default under or in
violation of any other material agreement or instrument to which it is a party
or by which it or any of its properties are bound or affected, which default or
violation would have a Material Adverse Effect, (ii) not in default with respect
to any order of any court, arbitrator or governmental body or subject to or
party to any order of any court or governmental authority arising out of any
action, suit or proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters, or (iii)
not in violation of any statute, rule or regulation of any governmental
authority which violation would have a Material Adverse Effect.
 
(m)           No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security of the Company nor solicited
any offers to buy any security of the Company under circumstances that would
cause the offer of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the Bulletin Board.  No prior offering will impair
the exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.  Neither the Company nor any of its
Affiliates will take any action or steps that would cause the offer or issuance
of the Securities to be integrated with other offerings which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.  The Company will not conduct any
offering other than the transactions contemplated hereby that may be integrated
with the offer or issuance of the Securities that would impair the exemptions
relied upon in this Offering or the Company’s ability to timely comply with its
obligations hereunder.
 
(n)           No General Solicitation.  Neither the Company, nor any of its
Affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 1933 Act) in connection with the offer or sale
of the Securities.
 
(o)           No Undisclosed Liabilities.  The Company has no liabilities or
obligations which are material, individually or in the aggregate, other than
those incurred in the ordinary course of the Company businesses since December
31, 2008, and which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
 
(p)           No Undisclosed Events or Circumstances.  Since December 31, 2008,
except as disclosed in the Reports or Other Written Information, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed in the Reports.
 
(q)           Banking.  Schedule 5(q) contains a list of all financial
institutions at which the Company and Subsidiaries maintain deposit, checking
and other accounts. The list includes the accurate addresses of such financial
institutions and account numbers of such accounts.

 
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(r)           Dilution.   The Company's executive officers and directors
understand the nature of the Securities being sold hereby and recognize that the
issuance of the Securities will have a potential dilutive effect on the equity
holdings of other holders of the Company’s equity or rights to receive equity of
the Company.  The board of directors of the Company has concluded, in its good
faith business judgment that the issuance of the Securities is in the best
interests of the Company.  The Company specifically acknowledges that its
obligation to issue the Conversion Shares upon conversion of the Notes is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company or parties entitled to receive equity of the Company.
 
(s)           No Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise between the Company and the accountants and lawyers
previously and presently employed by the Company, including but not limited to
disputes or conflicts over payment owed to such accountants and lawyers, nor
have there been any such disagreements during the two years prior to the Closing
Date.

(t)           Investment Company.   Neither the Company nor any Affiliate of the
Company is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

(u)           Foreign Corrupt Practices.  Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is  in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

(v)           Reporting Company/Shell Company.  The Company is a publicly-held
company that files periodic and other reports pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the "1934 Act").  Pursuant to the
provisions of the 1934 Act, the Company has timely filed all reports and other
materials required to be filed thereunder with the Commission during the
preceding twelve months.  As of the Closing Date, after giving effect to the
Reverse Merger, the Company is not a “shell company” but is a “former shell
company” as those terms are employed in Rule 144 under the 1933 Act.

(w)           Listing.  The Company's Common Stock is quoted on the Bulletin
Board under the symbol MSEH.OB.  The Company has not received any oral or
written notice that its Common Stock is not eligible nor will become ineligible
for quotation on the Bulletin Board nor that its Common Stock does not meet all
requirements for the continuation of such quotation and (ii) the Company
satisfies all the requirements for the continued quotation of its Common Stock
on the Bulletin Board.

(x)           DTC Status.   The Company’s transfer agent is a participant in,
and the Company has made application to make the Common Stock is eligible for
transfer pursuant to, the Depository Trust Company Automated Securities Transfer
Program. The name, address, telephone number, fax number, contact person and
email address of the Company transfer agent is set forth on Schedule 5(x)
hereto.

(y)           Company Predecessor and Subsidiaries.  The Company makes each of
the representations contained in Sections 5(a), (b), (c), (d), (e), (f), (h),
(j), (l), (o), (p), (q), (s), (t) and (u) of this Agreement, as same relate or
could be applicable to each Subsidiary.  All representations made by or relating
to the Company of a historical or prospective nature and all undertakings
described in Sections 9(g) through 9(l) shall relate, apply and refer to the
Company and its predecessors and successors.  The Company represents that it
owns all of the equity of the Subsidiaries and rights to receive equity of the
Subsidiaries identified on Schedule 5(a), free and clear of all liens,
encumbrances and claims.  No person or entity other than the Company has the
right to receive any equity interest in the Subsidiaries.  The Company further
represents that the Subsidiaries have not been known by any other names for the
prior five years.

 
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(z)           Correctness of Representations.  The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects, and, unless the Company otherwise notifies the
Subscribers prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date; provided, that, if such representation or
warranty is made as of a different date, in which case such representation or
warranty shall be true as of such date.
 
(AA)      Survival.  The foregoing representations and warranties shall survive
the Closing Date.
 
6.           Regulation D Offering/Legal Opinion.  The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption from the
registration provisions of the 1933 Act afforded by Section 4(2) or Section 4(6)
of the 1933 Act and/or Rule 506 of Regulation D promulgated thereunder.  On the
Closing Date, the Company will provide an opinion reasonably acceptable to the
Subscribers from the Company's legal counsel opining on the availability of an
exemption from registration under the 1933 Act as it relates to the offer and
issuance of the Securities and other matters reasonably requested by
Subscribers.  A form of the legal opinion is annexed hereto as Exhibit J.  The
Company will provide, at the Company's expense, to the Subscriber, such other
legal opinions, if any, as are reasonably necessary in each Subscriber’s opinion
for the issuance and resale of the Conversion Shares pursuant to an effective
registration statement, Rule 144 under the 1933 Act or an exemption from
registration.
 
7.1.        Conversion of Notes.

(a)           Upon the conversion of a Note or part thereof, the Company shall,
at its own cost and expense, take all necessary action, including obtaining and
delivering an opinion of counsel, to assure that the Company's transfer agent
shall issue stock certificates in the name of a Subscriber (or its permitted
nominee) or such other persons as designated by Subscriber and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion.  The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company's Common Stock and that the certificates
representing such shares shall contain no legend other than the legend set forth
in Section 4(h).  If and when a Subscriber sells the Conversion Shares, assuming
(i) a registration statement including such Conversion Shares for registration
has been filed with the Commission, is effective and the prospectus, as
supplemented or amended, contained therein is current and (ii) Subscriber or its
agent confirms in writing to the transfer agent that Subscriber has complied
with the prospectus delivery requirements, the Company will reissue the
Conversion Shares without restrictive legend and the Conversion Shares will be
free-trading, and freely transferable.  In the event that the Conversion Shares
are sold in a manner that complies with an exemption from registration, the
Company will promptly instruct its counsel to issue to the transfer agent an
opinion permitting removal of the legend indefinitely, if pursuant to Rule
144(b)(1)(i) of the 1933 Act, provided that Subscriber delivers all reasonably
requested representations in support of such opinion.

(b)           Each Subscriber will give notice of its decision to exercise its
right to convert its Note, interest, or part thereof by telecopying or otherwise
delivering a completed Notice of Conversion (a form of which is annexed as
Exhibit A to the Note) to the Company via confirmed telecopier transmission or
otherwise pursuant to Section 13(a) of this Agreement.  Subscriber will not be
required to surrender the Note until the Note has been fully converted or
satisfied.  Each date on which a Notice of Conversion is telecopied to the
Company in accordance with the provisions hereof by 6 PM Eastern Time (“ET”) (or
if received by the Company after 6 PM ET, then the next business day) shall be
deemed a “Conversion Date.”  The Company will itself or cause the Company’s
transfer agent to transmit the Company's Common Stock certificates representing
the Conversion Shares issuable upon conversion of the Note to Subscriber via
express courier for receipt by Subscriber within five (5) business days after
the Conversion Date (such fifth day being the "Delivery Date").  In the event
the Conversion Shares are electronically transferable, then delivery of the
Shares must be made by electronic transfer provided request for such electronic
transfer has been made by the Subscriber.   A Note representing the balance of
the Note not so converted will be provided by the Company to Subscriber if
requested by Subscriber, provided Subscriber delivers the original Note to the
Company.

 
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(c)           The Company understands that a delay in the delivery of the
Conversion Shares in the form required pursuant to Section 7.1 hereof later than
the Delivery Date could result in economic loss to the Subscribers.  As
compensation to Subscribers for such loss, the Company agrees to pay (as
liquidated damages and not as a penalty) to each applicable Subscriber for late
issuance of Conversion Shares in the form required pursuant to Section 7.1
hereof upon Conversion of the Note, the amount of $100 per business day after
the Delivery Date for each $10,000 of Note principal amount and interest (and
proportionately for other amounts) being converted of the corresponding
Conversion Shares which are not timely delivered.  The Company shall pay any
payments incurred under this Section upon demand.  Furthermore, in addition to
any other remedies which may be available to the Subscribers, in the event that
the Company fails for any reason to effect delivery of the Conversion Shares
within five (5) business days after the Delivery Date, the relevant Subscriber
will be entitled to revoke all or part of the relevant Notice of Conversion by
delivery of a notice to such effect to the Company whereupon the Company and
Subscriber shall each be restored to their respective positions immediately
prior to the delivery of such notice, except that the damages payable in
connection with the Company’s default shall be payable through the date notice
of revocation or rescission is given to the Company.

7.2.        Maximum Conversion.  A Subscriber shall not be entitled to convert
on a Conversion Date that amount of a Note nor may the Company make any payment
including principal, interest, or liquidated or other damages by delivery of
Conversion Shares in connection with that number of Conversion Shares which
would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by such Subscriber and its Affiliates on a Conversion Date or
payment date, and (ii) the number of Conversion Shares issuable upon the
conversion of the Note with respect to which the determination of this provision
is being made on a calculation date, which would result in beneficial ownership
by Subscriber and its Affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Company on such Conversion Date.  For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 thereunder.  Subject to the foregoing, the Subscriber
shall not be limited to aggregate conversions of only 4.99% and aggregate
conversions by the Subscriber may exceed 4.99%.  The Subscriber may increase the
permitted beneficial ownership amount up to 9.99% upon and effective after 61
days prior written notice to the Company.  Subscriber may allocate which of the
equity of the Company deemed beneficially owned by Subscriber shall be included
in the 4.99% amount described above and which shall be allocated to the excess
above 4.99%.

7.3.        Injunction Posting of Bond.  In the event a Subscriber shall elect
to convert a Note or part thereof, the Company may not refuse conversion based
on any claim that Subscriber or any one associated or affiliated with Subscriber
has been engaged in any violation of law, or for any other reason, unless, a
final non-appealable injunction from a court made on notice to Subscriber,
restraining and or enjoining conversion of all or part of such Note shall have
been sought and obtained by the Company or the Company has posted a surety bond
for the benefit of Subscriber in the amount of 120% of the outstanding principal
and accrued but unpaid interest of the Note, or aggregate purchase price of the
Conversion Shares which are sought to be subject to the injunction, which bond
shall remain in effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to Subscriber to the extent
the judgment or decision is in Subscriber’s favor.

 
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7.4.        Buy-In.   In addition to any other rights available to Subscribers,
if the Company fails to deliver to a Subscriber Conversion Shares by the
Delivery Date and if after the Delivery Date Subscriber or a broker on
Subscriber’s behalf purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by Subscriber of the
Common Stock which Subscriber was entitled to receive upon such conversion (a
"Buy-In"), then the Company shall pay to Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) Subscriber's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate principal and/or interest
amount of the Note for which such conversion request was not timely honored
together with interest thereon at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty).  For example, if a Subscriber
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of $10,000 of Note
principal and/or interest, the Company shall be required to pay Subscriber
$1,000 plus interest. Subscriber shall provide the Company written notice and
evidence indicating the amounts payable to Subscriber in respect of the Buy-In.

7.5.        Adjustments.   The Conversion Price and amount of Conversion Shares
shall be equitably adjusted and as otherwise described in this Agreement and the
Notes.
 
7.6.        Redemption.    The Note shall not be redeemable or callable by the
Company, except as described in the Note.
 
8.           Fees.

(a)           Broker.   The Company on the one hand, and each Subscriber (for
himself only) on the other hand, agree to indemnify the other against and hold
the other harmless from any and all liabilities to any persons other than the
broker identified on Schedule 8(a) (the “Broker”), claiming brokerage
commissions, finder’s fees or due diligence fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby or in
connection with any investment in the Company at any time, whether or not such
investment was consummated and arising out of such party’s actions.  The Company
represents that there are no parties entitled to receive fees, commissions, due
diligence fees, or similar payments in connection with the Offering except as
described on Schedule 8(a).  The Company is solely responsible for payment of
the fees and the issuance of the warrants described on Schedule 8(a).

(b)           Collateral Agent Fee.   Upon Closing, the Company will pay the
Collateral Agent a fee of $7,000 out of the funds held pursuant to the Escrow
Agreement.

(c)           Subscriber’s Legal Fees.   The Company shall pay to Grushko &
Mittman, P.C., a cash fee of $12,500 (“Legal Fees”) as reimbursement for
services rendered in connection with the transactions described in the
Transaction Documents. The Legal Fees will be payable out of funds held pursuant
to the Escrow Agreement.  Grushko & Mittman, P.C. will be reimbursed at Closing
for all lien searches, filing fees, and printing and shipping costs for the
closing statements to be delivered to Subscribers.

 
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9.           Covenants of the Company.  The Company covenants and agrees with
the Subscribers as follows:
 
(a)           Stop Orders.  Subject to the prior notice requirement described in
Section 9(n), the Company will advise the Subscribers, within twenty-four hours
after it receives notice of issuance by the Commission, any state securities
commission or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any securities of the Company, or of
the suspension of the qualification of the Common Stock of the Company for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.  The Company will not issue any stop transfer order or other
order impeding the sale, resale or delivery of any of the Securities, except as
may be required by any applicable federal or state securities laws and unless
contemporaneous notice of such instruction is given to the Subscribers.
 
(b)           Listing/Quotation.  The Company shall promptly secure the
quotation or listing of the Conversion Shares upon each national securities
exchange, or automated quotation system upon which the Company’s Common Stock is
quoted or listed and upon which such Conversion Shares are or become eligible
for quotation or listing (subject to official notice of issuance) and shall
maintain same so long as any Notes are outstanding.  The Company will maintain
the quotation or listing of its Common Stock on the American Stock Exchange,
Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market,
Bulletin Board, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common Stock (the
“Principal Market”), and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Principal Market, as applicable. The Company will provide Subscribers with
copies of all notices it receives notifying the Company of the threatened and
actual delisting of the Common Stock from any Principal Market.  As of the date
of this Agreement and the Closing Date, the Bulletin Board is and will be the
Principal Market.
 
(c)           Market Regulations.  If required, the Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscribers and promptly provide copies
thereof to the Subscribers.
 
(d)           Filing Requirements.  From the date of this Agreement and until
the last to occur of (i) all the Conversion Shares have been resold or
transferred by the Subscribers pursuant to a registration statement or pursuant
to Rule 144(b)(1)(i), or (ii) the Notes are no longer outstanding (the date of
such latest occurrence being the “End Date”), the Company will (A) comply in all
respects with its reporting and filing obligations under the 1934 Act if its
Common Stock is registered under Section 12(b) or 12(g) of the 1934 Act, (B)
voluntarily comply with all reporting requirements that are applicable to an
issuer with a class of shares registered pursuant to Section 12(g) of the 1934
Act, if the Company is not subject to such reporting requirements, and (C)
comply with all requirements related to any registration statement filed
pursuant to this Agreement.  The Company will use its best efforts not to take
any action or file any document (whether or not permitted by the 1933 Act or the
1934 Act or the rules thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing obligations under said acts
until the End Date.  Until the End Date, the Company will continue the listing
or quotation of the Common Stock on a Principal Market and will comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of the Principal Market.  The Company agrees to timely file a
Form D with respect to the Securities if required under Regulation D and to
provide a copy thereof to Subscribers promptly after such filing.  Not later
than 270 days after the Closing Date, the Company will file a Form 8-A with the
Commission for the purpose of registering the Common Stock under Section 12(g)
of the 1934 Act.  It shall be deemed an Event of Default under the Note if the
Common Stock is not registered under Section 12(g) of the 1934 Act within 300
days after the Closing Date.

 
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(e)           Use of Proceeds.   The proceeds of the Offering will be employed
by the Company substantially for the purposes set forth on Schedule
9(e).  Except as described on Schedule 9(e), the Purchase Price may not and will
not be used for accrued and unpaid officer and director salaries, payment of
financing related debt, redemption of outstanding notes or equity instruments of
the Company nor non-trade obligations outstanding on the Closing Date.  For so
long as any Note is outstanding, the Company will not prepay any financing
related debt obligations, except equipment payments, nor redeem any equity
instruments of the Company without the prior consent of the Subscribers.
 
(f)           Reservation.   Prior to the Closing, the Company undertakes to
reserve on behalf of Subscribers from its authorized but unissued Common Stock,
a number of shares of Common Stock equal to 150% of the amount of Common Stock
necessary to allow Subscribers to be able to convert the entire Notes Principal
Amount (“Required Reservation”).   Failure to have sufficient shares reserved
pursuant to this Section 9(f) at any time shall be a material default of the
Company’s obligations under this Agreement and an Event of Default under the
Notes.  If at any time Notes are outstanding the Company has insufficient Common
Stock reserved on behalf of the Subscribers in an amount less than 125% of the
amount necessary for full conversion of the outstanding Notes principal and
interest at the conversion price that would be in effect on every such date
(“Minimum Required Reservation”), the Company will promptly reserve the Minimum
Required Reservation, or if there are insufficient authorized and available
shares of Common Stock to do so, the Company will take all action necessary to
increase its authorized capital to be able to fully satisfy its reservation
requirements hereunder, including the filing of a preliminary proxy with the
Commission not later than fifteen business days after the first day the Company
has less than the Minimum Required Reservation.  The Company agrees to provide
notice to the Subscribers not later than three business days after the date the
Company has less than the Minimum Required Reservation reserved on behalf of the
Subscriber.
 
(g)           DTC Program.  At all times that Notes are outstanding, the Company
will employ as the transfer agent for the Common Stock and Conversion Shares a
participant in the Depository Trust Company Automated Securities Transfer
Program.
 
(h)           Taxes.  From the date of this Agreement and until the End Date,
the Company will promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of the Company;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefore.
 
(i)           Insurance.  From the date of this Agreement and until the End
Date, the Company will keep its assets which are of an insurable character
insured by financially sound and reputable insurers against loss or damage by
fire, explosion and other risks customarily insured against by companies in the
Company’s line of business and location, in amounts and to the extent and in the
manner customary for companies in similar businesses similarly situated and
located and to the extent available on commercially reasonable terms.
 
(j)           Books and Records.  From the date of this Agreement and until the
End Date, the Company will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.

 
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(k)           Governmental Authorities.   From the date of this Agreement and
until the End Date, the Company shall duly observe and conform in all material
respects to all valid requirements of governmental authorities relating to the
conduct of its business or to its properties or assets.
 
(l)           Intellectual Property.  From the date of this Agreement and until
the End Date, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business, unless it is sold for value.
 
(m)           Properties.  From the date of this Agreement and until the End
Date, the Company will keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company will at all times comply with each provision of all
leases and claims to which it is a party or under which it occupies or has
rights to property if the breach of such provision could reasonably be expected
to have a Material Adverse Effect.  The Company will not abandon any of its
assets except for those assets which have negligible or marginal value or for
which it is prudent to do so under the circumstances.
 
(n)           Confidentiality/Public Announcement.   From the date of this
Agreement and until the End Date, the Company agrees that except in connection
with a Form 8-K, Form 10-Q, Form 10-K and the registration statement or
statements regarding the Subscribers’ Securities or in correspondence with the
Commission regarding same, it will not disclose publicly or privately the
identity of the Subscribers unless expressly agreed to in writing by Subscribers
or only to the extent required by law and then only upon not less than three
business days prior notice to Subscribers.  In any event and subject to the
foregoing, the Company undertakes to file a Form 8-K (the “Super Form 8-K”)
describing the Offering, the Reverse Merger and the transaction described in the
Working Interest Documents not later than the second (2nd) business day after
the Closing Date substantially in the form annexed hereto as Exhibit K.  In the
Form 8-K, the Company will specifically disclose the amount of Common Stock
outstanding immediately after the Closing.  The Company represents that the
Super Form 8-K to be actually filed with the Commission will contain a signed
version of the audit opinion included as Exhibit J hereto.  Upon  delivery by
the Company to the Subscribers after the Closing Date of any notice or
information, in writing, electronically or otherwise, and while a Note or
Conversion Shares are held by Subscribers, unless the  Company has in good faith
determined that the matters relating to such notice do not
constitute material, nonpublic information relating to the Company or
Subsidiaries, the Company  shall within one business day after any such delivery
publicly disclose such  material,  nonpublic  information on a
Report on Form 8-K.  In the event that the Company believes that a notice or
communication to Subscribers contains material, nonpublic information relating
to the Company or Subsidiaries, the Company shall so indicate to Subscribers
prior to delivery of such notice or information.  Subscribers will be granted
sufficient time to notify the Company that Subscribers elects not to receive
such information.   In such case, the Company will not deliver such information
to Subscribers.  In the absence of any such indication, Subscribers shall be
allowed to presume that all matters relating to such notice and information do
not constitute material, nonpublic information relating to the Company or
Subsidiaries.
 
(o)           Non-Public Information.  The Company covenants and agrees that
except for the Reports, Other Written Information and schedules and exhibits to
this Agreement and the Transaction Documents, which information the Company
undertakes to publicly disclose on the Super Form 8-K described in Section 9(n)
above, neither it nor any other person acting on its behalf will at any time
provide Subscribers or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto Subscribers shall have agreed in writing to accept such
information.  The Company understands and confirms that Subscribers shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

 
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(p)           Negative Covenants.   So long as a Note is outstanding, without
the consent of the Subscribers, the Company will not and will not permit any of
its Subsidiaries to directly or indirectly:

(i)           create, incur, assume or suffer to exist any pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, mortgage, security deed or deed of trust, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Uniform Commercial
Code or comparable law of any jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired except for:  (A) the Excepted
Issuances (as defined in Section 12 hereof), and (B) (a) Liens imposed by law
for taxes that are not yet due or are being contested in good faith and for
which adequate reserves have been established in accordance with generally
accepted accounting principles; (b) carriers’, warehousemen’s, mechanics’,
material men’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations; (d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business; (e) Liens created with respect to the financing of
the purchase of new property in the ordinary course of the Company’s business up
to the amount of the purchase price of such property; and (f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property (each of (a) through (f), a “Permitted Lien”);

(ii)           amend its certificate of incorporation, bylaws or its charter
documents so as to materially and adversely affect any rights of the Subscribers
(an increase in the amount of authorized shares and an increase in the number of
directors will not be deemed adverse to the rights of the Subscribers);

(iii)           repay, repurchase or offer to repay, repurchase or otherwise
acquire or make any dividend or distribution in respect of any of its Common
Stock, preferred stock, or other equity securities other than to the extent
permitted or required under the Transaction Documents;

(iv)           except as described on Schedule 9(p)(iv), engage in any
transactions with any officer, director, employee or any Affiliate of the
Company, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $100,000
other than (i) for payment of salary, or fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company, and (iii) for
other employee benefits, including stock option agreements under any stock
option plan of the Company; or

(v)           prepay or redeem any financing related debt or past due
obligations or securities outstanding as of the Closing Date, or past due
obligations (except with respect to vendor obligations, or any such obligations
which in management’s good faith, reasonable judgment must be repaid to avoid
disruption of the Company’s businesses).
 
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(q)           Further Registration Statements.   Except for a registration
statement filed exclusively on behalf of the Subscribers (including in
connection with the Notes issued in the Additional Offering), the Company will
not, without the consent of the Subscribers, file with the Commission or with
state regulatory authorities any registration statements (excluding Forms
S-8) or amend any already filed registration statement to increase the amount of
Common Stock registered therein, or reduce the price of which such company
securities are registered therein, until the expiration of the “Exclusion
Period,” which shall be defined as the sooner of (i) the date all of the
Registrable Securities (as defined in Section 11.1) have been registered in an
effective registration statement, or (ii) until all the Conversion Shares have
been transferable by the Subscribers pursuant to a registration statement or
Rule 144b(1)(i), without regard to volume limitations.  The Exclusion Period
will be tolled or reinstated, as the case may be, during the pendency of an
Event of Default as defined in the Note.

(r)           Offering Restrictions.   For so long as the Notes are outstanding,
the Company will not enter into any Equity Line of Credit or similar agreement,
nor issue nor agree to issue any floating or Variable Priced Equity Linked
Instruments nor any of the foregoing or equity with price reset rights
(collectively, the “Variable Rate Restrictions”).   For purposes hereof, “Equity
Line of Credit” shall include any transaction involving a written agreement
between the Company and an investor or underwriter whereby the Company has the
right to “put” its securities to the investor or underwriter over an agreed
period of time and at an agreed price or price formula, and “Variable Priced
Equity Linked Instruments” shall include: (A) any debt or equity securities
which are convertible into, exercisable or exchangeable for, or carry the right
to receive additional shares of Common Stock either (1) at any conversion,
exercise or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for Common Stock at any time after the
initial issuance of such debt or equity security, or (2) with a fixed
conversion, exercise or exchange price that is subject to being reset at some
future date at any time after the initial issuance of such debt or equity
security due to a change in the market price of the Company’s Common Stock since
date of initial issuance, and (B) any amortizing convertible security which
amortizes prior to its maturity date, where the Company is required or has the
option to (or any investor in such transaction has the option to require the
Company to) make such amortization payments in shares of Common Stock which are
valued at a price that is based upon and/or varies with the trading prices of or
quotations for Common Stock at any time after the initial issuance of such debt
or equity security (whether or not such payments in stock are subject to certain
equity conditions).

(s)           Seniority.   Except for Permitted Liens, until the Notes are fully
satisfied or converted, the Company shall not grant nor allow any security
interest to be taken in any assets of the Company or any Subsidiary or any
Subsidiary’s assets; nor issue any debt, equity or other instrument which would
give the holder thereof directly or indirectly, a right in any assets of the
Company or any Subsidiary or any right to payment equal to or superior to any
right of the Subscribers as holders of the Notes in or to such assets or
payment, nor issue or incur any debt not in the ordinary course of business.

(t)           Notices.   For so long as the Subscribers hold any Securities, the
Company will maintain a United States address and United States fax number for
notice purposes under the Transaction Documents.

(u)           Transactions With Insiders.  So long as the Notes are outstanding,
the Company shall not, and shall cause each of its Subsidiaries not to, enter
into, amend, modify or supplement, or permit any Subsidiary to enter into,
amend, modify or supplement, any agreement, transaction, commitment, or
arrangement relating to the sale, transfer or assignment of any of the Company’s
tangible or intangible assets with any of its Insiders (as defined below)(or any
persons who were Insiders at any time during the previous two (2) years), or any
Affiliates (as defined below) thereof, or with any individual related by blood,
marriage, or adoption to any such individual.  “Affiliate” for purposes of this
Section 9(u) means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity.  “Control” or “Controls”
for purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.  For
purposes hereof, “Insiders” shall mean any officer, director or manager of the
Company, including but not limited to the Company’s president, chief executive
officer, chief financial officer and chief operations officer, and any of their
affiliates or family members.

 
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10.         Covenants of the Company Regarding Indemnification.
 
(a)           The Company agrees to indemnify, hold harmless, reimburse and
defend the Subscribers, the Subscribers’ officers, directors, agents, counsel,
Affiliates, members, managers, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Subscribers or any such person which results, arises out of or is based upon (i)
any material misrepresentation by Company or breach of any material
representation or warranty by Company in this Agreement or in any Exhibits or
Schedules attached hereto in any Transaction Document, or other agreement
delivered pursuant hereto or in connection herewith, now or after the date
hereof; or (ii) after any applicable notice and/or cure periods, any breach or
default in performance by the Company of any covenant or undertaking to be
performed by the Company hereunder, or any other agreement entered into by the
Company and Subscribers relating hereto.
 
 (b)           In no event shall the liability of the Subscribers or permitted
successor hereunder or under any Transaction Document or other agreement
delivered in connection herewith be greater in amount than the dollar amount of
the net proceeds actually received by such Subscriber or successor upon the sale
of Registrable Securities (as defined herein).
 
(c)           The procedures set forth in Section 11.6 shall apply to the
indemnification set forth in Section 10(a).
 
11.1.      Registration Rights.  The Company hereby grants the following
registration rights to holders of the Securities.
 
(i)           On one occasion, commencing 181 days after the Closing Date, but
not later than two years after the Closing Date, upon a written request therefor
from any record holder or holders of more than 50% of the Conversion Shares
issued and issuable upon conversion of the outstanding Notes to the Subscribers
to the Offering (without regard to the Additional Offering), the Company shall
prepare and file with the Commission a registration statement under the 1933 Act
registering the Registrable Securities, as defined in Section 11.1(iv) hereof,
which are the subject of such request for unrestricted public resale by the
holder thereof.  For purposes of Sections 11.1(i) and 11.1(ii), Registrable
Securities shall not include Securities which are (A) registered for resale in
an effective registration statement, (B) included for registration in a pending
registration statement, (C) which have been issued without further transfer
restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act or
(D) which may be resold under Rule 144 without volume limitations.  Registrable
Securities shall not include common stock issuable in connection with the
Additional Offering.  Upon the receipt of such request, the Company shall
promptly give written notice to all other record holders of the Registrable
Securities that such registration statement is to be filed and shall include in
such registration statement Registrable Securities for which it has received
written requests within ten days after the Company gives such written
notice.  Such other requesting record holders shall be deemed to have exercised
their demand registration right under this Section 11.1(i).

 
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(ii)           If the Company at any time proposes to register any of its
securities under the 1933 Act for sale to the public, whether for its own
account or for the account of other security holders or both, except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Registrable Securities for sale to the public,
provided the Registrable Securities are not otherwise registered for resale by
the Subscribers or Holder pursuant to an effective registration statement, each
such time it will give at least ten (10) days' prior written notice to the
record holder of the Registrable Securities of its intention so to do. Upon the
written request of the holder, received by the Company within ten (10) days
after the giving of any such notice by the Company, to register any of the
Registrable Securities not previously registered, the Company will cause such
Registrable Securities as to which registration shall have been so requested to
be included with the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent required to permit the
sale or other disposition of the Registrable Securities so registered by the
holder of such Registrable Securities (the “Seller” or “Sellers”). In the event
that any registration pursuant to this Section 11.1(ii) shall be, in whole or in
part, an underwritten public offering of common stock of the Company, the number
of shares of Registrable Securities to be included in such an underwriting may
be reduced by the managing underwriter if and to the extent that the Company and
the underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that the Company shall notify the Seller in writing
of any such reduction. Notwithstanding the foregoing provisions, or Section 11.4
hereof, the Company may withdraw or delay or suffer a delay of any registration
statement referred to in this Section 11.1(ii) without thereby incurring any
liability to the Seller.
 
(iii)           If, at the time any written request for registration is received
by the Company pursuant to Section 11.1(i), the Company has determined to
proceed with the actual preparation and filing of a registration statement under
the 1933 Act in connection with the proposed offer and sale for cash of any of
its securities for the Company's own account and the Company actually does file
such other registration statement, such written request shall be deemed to have
been given pursuant to Section 11.1(ii) rather than Section 11.1(i), and the
rights of the holders of Registrable Securities covered by such written request
shall be governed by Section 11.1(ii).
 
(iv)           The Company shall file with the Commission a Form S-1
registration statement (the “Registration Statement”) (or such other form that
it is eligible to use) in order to register the Registrable Securities for
resale and distribution under the 1933 Act within 180 calendar days after the
Closing Date (the “Filing Date”), and use its best efforts to cause the
Registration Statement to be declared effective not later than 270 days after
the Closing Date (the “Effective Date”).  The Company will register not less
than a number of shares of common stock in the aforedescribed registration
statement that is equal to 125% of the Conversion Shares issued and issuable
upon conversion of all of the Notes (the “Registrable Securities”). The
Registrable Securities shall be reserved and set aside exclusively for the
benefit of each Subscriber, pro rata, and not issued, employed or reserved for
anyone other than each Subscriber.  The Registration Statement will immediately
be amended or additional registration statements will be immediately filed by
the Company as necessary to register additional shares of Common Stock to allow
the public resale of all Common Stock included in and issuable by virtue of the
Registrable Securities.  Except as set forth on Schedule 11.1 in connection with
the Notes issued in the Additional Offering or with the written consent of the
Subscribers, no securities of the Company other than the Registrable Securities
will be included in the Registration Statement.  It shall be deemed a
Non-Registration Event if at any time after the date the Registration Statement
is declared effective by the Commission (“Actual Effective Date”) the Company
has registered for unrestricted resale on behalf of the Subscribers fewer than
110% of the amount of Common Shares issuable upon full conversion of all sums
due under the Notes (the difference between such 110% and the actual amount of
shares registered being the “Shortfall”).  In such event, the Company shall take
all actions necessary to cause at least 125% of the amount of shares of Common
Stock issuable upon full conversion of all sums due under the Notes to be
registered within ninety (90) days after the first day such Shortfall
exists.  Failure to file the Registration Statement within thirty (30) days
after the first day such Shortfall first exists or failure to cause such
registration to become effective within ninety (90) days after such Shortfall
first exists shall be a Non-Registration Event.
 
(v)           The registration rights granted to the Subscribers hereunder shall
take precedence over and be superior to any registration rights granted in
connection with closings under the Additional Offering that occur more than
forty-five (45) days after the Closing Date.

 
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11.2.      Registration Procedures. If and whenever the Company is required by
the provisions of Section 11.1 to effect the registration of any Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:
 
(a)           subject to the timelines provided in this Agreement, prepare and
file with the Commission a registration statement required by Section 11.1 with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as herein provided), promptly provide to the
holders of the Registrable Securities copies of all filings and Commission
letters of comment and notify the Sellers  (by telecopier and by e-mail
addresses provided by the Subscribers) and Grushko & Mittman, P.C. (by
telecopier and by email to Counslers@aol.com) on or before the second  business
day thereafter that the Company receives notice that (i) the Commission has no
comments or no further comments on the registration statement, and (ii) the
registration statement has been declared effective;
 
(b)           prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until such registration statement has been effective for a period of one (1)
year, and comply with the provisions of the 1933 Act with respect to the
disposition of all of the Registrable Securities covered by such registration
statement in accordance with the Sellers’ intended method of disposition set
forth in such registration statement for such period;
 
(c)           furnish to the Sellers, at the Company’s expense, such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or their disposition of the securities
covered by such registration statement or make them electronically available;
 
(d)           use its reasonable best efforts to register or qualify the
Registrable Securities covered by such registration statement under the
securities or “blue sky” laws of New York and such jurisdictions as the Sellers
shall request in writing, provided, however, that the Company shall not for any
such purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
 
(e)           list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;
 
(f)           notify the Sellers within twenty-four (24) hours of the happening
of any event of which the Company has knowledge as a result of which the
prospectus contained in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing or which becomes subject
to a Commission, state or other governmental order suspending the effectiveness
of the registration statement covering any of the Registrable Securities;
 
(g)           provided same would not be in violation of the provision of
Regulation FD under the 1934 Act, make available for inspection by the Sellers
during reasonable business hours,  and any attorney, accountant or other agent
retained by the Sellers, all publicly available, non-confidential financial and
other records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the Sellers,
attorney, accountant or agent in connection with such registration statement at
such requesting Seller’s expense; and

 
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(h)           provide to the Sellers copies of the Registration Statement and
amendments thereto five (5) business days prior to the filing thereof with the
Commission.  Any Seller’s failure to comment on any registration statement or
other document provided to a Subscriber or its counsel shall not be construed to
constitute approval thereof nor the accuracy thereof.
 
11.3.      Provision of Documents.  In connection with each registration
described in this Section 11, each Seller will furnish to the Company in writing
such information and representation letters with respect to itself and the
proposed distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws. Each Seller agrees
to furnish to the Company a completed questionnaire in the form attached to this
Agreement as Exhibit L (a “Selling Shareholder Questionnaire”) not later than
seven (7) Business Days following the date on which such Seller receives draft
materials of such Registration Statement unless the information provided in the
Investor Questionnaire delivered in connection with this Agreement by the
Subscriber who is a Selling Shareholder continues to be accurate as of the date
the draft materials are received.
 
11.4.      Non-Registration Events.  The Company agrees that the Sellers will
suffer damages if the Registration Statement is not filed by the Filing Date and
not declared effective by the Commission by the Effective Date, and any
registration statement required under Section 11.1(i) or 11.1(ii) is not filed
within 60 days after written request and declared effective by the Commission
within 120 days after such request, and maintained in the manner and within the
time periods contemplated by Section 11 hereof, and it would not be feasible to
ascertain the extent of such damages with precision.  Accordingly, if (A) the
Registration Statement is not filed on or before the Filing Date, (B) the
Registration Statement is not declared effective on or before the required
Effective Date, (C) due to the action or inaction of the Company the
Registration Statement is not declared effective within three (3) business days
after receipt by the Company or its attorneys of a written or oral communication
from the Commission that the Registration Statement will not be reviewed or that
the Commission has no further comments, (D) if the registration statement
described in Section 11.1(i) or 11.1(ii) is not filed within 60 days after such
written request, or is not declared effective within 120 days after such written
request, or (E) any registration statement described in Sections 11.1(i),
11.1(ii) or 11.1(iv) is filed and declared effective but shall thereafter cease
to be effective without being succeeded within twenty-five (25) business days by
an effective replacement or amended registration statement or for a period of
time which shall exceed forty (45) days in the aggregate per year (defined as
every rolling period of 365 consecutive days commencing on the Actual Effective
Date) (each such event referred to in clauses A through E of this Section 11.4
is referred to herein as a "Non-Registration Event"), the Company shall deliver
to the holder of Registrable Securities, as Liquidated Damages, an amount equal
to one percent (1%) for each full thirty (30) days of the principal amount of
the outstanding Notes and purchase price of Conversion Shares issued upon
conversion of Notes held by Subscribers which are subject to such
Non-Registration Event.  The Company must pay the Liquidated Damages in
cash.  The Liquidated Damages must be paid within ten (10) days after the end of
each full thirty (30) day period for which Liquidated Damages are payable.  In
the event a Registration Statement is filed by the Filing Date but is withdrawn
prior to being declared effective by the Commission, then such Registration
Statement will be deemed to have not been filed and Liquidated Damages will be
calculated accordingly.  All oral or written comments received from the
Commission relating to a registration statement must be responded to within ten
(10) business days after receipt of comments from the Commission.  Failure to
timely respond to Commission comments is a Non-Registration Event for which
Liquidated Damages shall accrue and be payable by the Company to the holders of
Registrable Securities at the same rate and amounts set forth above calculated
from the date the response was required to have been made.  Liquidated Damages
shall not be payable pursuant to this Section 11.4 in connection with
Registrable Securities for such times as such Registrable Securities may be sold
by the holder thereof without restriction pursuant to Section 144(b)(1)(i) of
the 1933 Act. To the extent that the registration of any or all of the
Registrable Securities by the Company on a registration statement is prohibited
(the “Non-Registered Shares”) as a result of rules, regulations, positions or
releases issued or actions taken by the Commission pursuant to its authority
with respect to Rule 415 and the Company has registered at such time the maximum
number of Registrable Securities permissible upon consultation with the
Commission (applied on a pro rata basis based on the total number of
unregistered Registrable Securities held by each Seller), then the Liquidated
Damages described in this Section 11.4 shall not be applicable to such
Non-Registered Shares for so long as such Rule 415 related impediment is extant.

 
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11.5.      Expenses.  All expenses incurred by the Company in complying with
Section 11, including, without limitation, all registration and filing fees,
printing expenses (if required), fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or “blue sky” laws, fees of FINRA, transfer taxes, and fees of
transfer agents and registrars, are called “Registration Expenses.” All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called "Selling Expenses."  The Company will pay all
Registration Expenses in connection with any registration statement described in
Section 11.  Selling Expenses in connection with each such registration
statement shall be borne by the Seller and may be apportioned among the Sellers
in proportion to the number of shares included on behalf of the Seller relative
to the aggregate number of shares included under such registration statement for
all Sellers, or as all Sellers thereunder may agree.
 
11.6.      Indemnification and Contribution.
 
(a)           In the event of a registration of any Registrable Securities under
the 1933 Act pursuant to Section 11, the Company will, to the extent permitted
by law, indemnify and hold harmless the Seller, each of the officers, directors,
agents, Affiliates, members, managers, control persons, and principal
shareholders of the Seller, each underwriter of such Registrable Securities
thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 11.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller in
writing specifically for use in such registration statement or prospectus.

 
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(b)           In the event of a registration of any of the Registrable
Securities under the 1933 Act pursuant to Section 11, each Seller severally but
not jointly will, to the extent permitted by law, indemnify and hold harmless
the Company, and each person, if any, who controls the Company within the
meaning of the 1933 Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the 1933 Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the 1933 Act pursuant to Section 11, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Seller, as such, furnished in writing to the Company by such Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the net proceeds actually received by the Seller from the sale of Registrable
Securities pursuant to such registration statement.
 
(c)           Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 11.6(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 11.6(c), except and only if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 11.6(c) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnifying party shall have reasonably concluded that there may be reasonable
defenses available to indemnified party which are different from or additional
to those available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified parties, as a group, shall have the right to
select one separate counsel, reasonably satisfactory to the indemnified and
indemnifying party, and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
 
(d)           In order to provide for just and equitable contribution in the
event of joint liability under the 1933 Act in any case in which either (i) a
Seller, or any controlling person of a Seller, makes a claim for indemnification
pursuant to this Section 11.6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 11.6 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
not provided under this Section 11.6; then, and in each such case, the Company
and the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities sold by it pursuant
to such registration statement; and (z) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation and provided, further, however, that the liability
of the Seller hereunder shall be limited to the net proceeds actually received
by the Seller from the sale of Registrable Securities pursuant to such
registration statement.

 
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11.7.      Delivery of Unlegended Shares.
 
(a)           Within five (5) business days (such fifth business day being the
“Unlegended Shares Delivery Date”) after the business day on which the Company
has received (i) a notice that Conversion Shares or any other Common Stock held
by Subscriber has been sold pursuant to the Registration Statement or Rule 144
under the 1933 Act, (ii) a representation that the prospectus delivery
requirements, or the requirements of Rule 144, as applicable and if required,
have been satisfied, (iii) the original share certificates representing the
shares of Common Stock that have been sold, (iv) complete delivery instructions,
and (v) in the case of sales under Rule 144, customary representation letters of
the Subscriber and, if required, Subscriber’s broker regarding compliance with
the requirements of Rule 144, the Company at its expense, (y) shall deliver, and
shall cause legal counsel selected by the Company to deliver to its transfer
agent (with copies to Subscriber) an appropriate instruction and opinion of such
counsel, directing the delivery of shares of Common Stock without any legends
including the legend set forth in Section 4(i) above (the “Unlegended Shares”);
and (z) cause the transmission of the certificates representing the Unlegended
Shares together with a legended certificate representing the balance of the
submitted Common Stock certificate, if any, to the Subscriber at the address
specified in the notice of sale, via express courier, by electronic transfer or
otherwise on or before the Unlegended Shares Delivery Date.
 
(b)           In lieu of delivering physical certificates representing the
Unlegended Shares, upon request of Subscribers, so long as the certificates
therefor do not bear a legend and the Subscriber is not obligated to return such
certificate for the placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the Unlegended Shares by crediting the
account of Subscriber’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission system, if such transfer agent
participates in such DWAC system.  Such delivery must be made on or before the
Unlegended Shares Delivery Date.

(c)           The Company understands that a delay in the delivery of the
Unlegended Shares pursuant to Section 11.7 hereof later than the Unlegended
Shares Delivery Date could result in economic loss to a Subscriber.  As
compensation to a Subscriber for such loss, the Company agrees to pay late
payment fees (as liquidated damages and not as a penalty) to the Subscriber for
late delivery of Unlegended Shares in the amount of $100 per business day after
the Unlegended Shares Delivery Date for each $10,000 of purchase price of the
Unlegended Shares subject to the delivery default. If during any 360 day period,
the Company fails to deliver Unlegended Shares as required by this Section 11.7
for an aggregate of thirty days, then each Subscriber or assignee holding
Securities subject to such default may, at its option, require the Company to
redeem all or any portion of the Shares subject to such default at a price per
share equal to the greater of (i) 110%, or (ii) a fraction in which the
numerator is the highest closing price of the Common Stock during the
aforedescribed thirty day period and the denominator of which is the lowest
conversion price during such thirty day period, multiplied by the price paid by
Subscriber for such Common Stock (“Unlegended Redemption Amount”).  The Company
shall pay any payments incurred under this Section in immediately available
funds upon demand.

(d)           In the event a Subscriber shall request delivery of Unlegended
Shares as described in Section 11.7 and the Company is required to deliver such
Unlegended Shares pursuant to Section 11.7, the Company may not refuse to
deliver Unlegended Shares based on any claim that such Subscriber or any one
associated or affiliated with such Subscriber has been engaged in any violation
of law, or for any other reason, unless, an injunction or temporary restraining
order from a court, on notice, restraining and or enjoining delivery of such
Unlegended Shares shall have been sought and obtained by the Company and the
Company has posted a surety bond for the benefit of such Subscriber in the
amount of 120% of the amount of the aggregate purchase price of the Common Stock
which is subject to the injunction or temporary restraining order, which bond
shall remain in effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to such Subscriber to the
extent Subscriber obtains judgment in Subscriber’s favor.
 
 
24

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(e)            In addition to any other rights available to Subscriber, if the
Company fails to deliver to a Subscriber Unlegended Shares as required pursuant
to this Agreement and after the Unlegended Shares Delivery Date the Subscriber,
or a broker on the Subscriber’s behalf, purchases (in an open market transaction
or otherwise) shares of common stock to deliver in satisfaction of a sale by
such Subscriber of the shares of Common Stock which the Subscriber was entitled
to receive from the Company (a "Buy-In"), then the Company shall pay in cash to
the Subscriber (in addition to any remedies available to or elected by the
Subscriber) the amount by which (A) the Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of common stock so
purchased exceeds (B) the aggregate purchase price of the shares of Common Stock
delivered to the Company for reissuance as Unlegended Shares together with
interest thereon at a rate of 15% per annum accruing until such amount and any
accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty).  For example, if a Subscriber
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to $10,000 of purchase price of shares of Common
Stock delivered to the Company for reissuance as Unlegended Shares, the Company
shall be required to pay the Subscriber $1,000, plus interest. The Subscriber
shall provide the Company written notice indicating the amounts payable to the
Subscriber in respect of the Buy-In.

11.8.      In the event commencing twelve months  after the Closing Date and
ending twenty-four  (24) months thereafter, the Subscriber is not permitted to
resell any of the Conversion Shares without any restrictive legend or if such
sales are permitted but subject to volume limitations or further restrictions on
resale as a result of the unavailability to Subscriber of Rule 144(b)(1)(i)
under the 1933 Act or any successor rule (a “144 Default”), for any reason
including but not limited to failure by the Company to file quarterly, annual or
any other filings by the required filing dates, except for Subscriber’s status
as an Affiliate or “control person” of the Company or as a result of a change in
current applicable securities laws, then the Company shall pay such Subscriber
as liquidated damages and not as a penalty for each full thirty days an amount
equal to 1% of the purchase price of the Conversion Shares subject to such 144
Default.   Liquidated Damages shall not be payable pursuant to this Section 11.8
in connection with Shares for such times as such Shares may be sold by the
holder thereof without volume or other restrictions  pursuant to Section
144(b)(1)(i) of the 1933 Act or pursuant to an effective registration statement.

12.           (a)           Favored Nations Provision.  Other than in connection
with (i) full or partial consideration in connection with a strategic merger,
acquisition, consolidation or purchase of substantially all of the securities or
assets of a corporation or other entity which holders of such securities or debt
are not at any time granted registration rights, (ii) the Company’s issuance of
securities in connection with strategic license agreements and other partnering
arrangements so long as such issuances are not for the purpose of raising
capital and which holders of such securities or debt are not at any time granted
registration rights, (iii) the Company’s issuance of Common Stock or the
issuances or grants of options to purchase Common Stock to employees, directors,
and consultants, pursuant to plans described on Schedule 5(d) as such plans are
constituted on the Closing Date, (iv) upon the exercise or exchange of or
conversion of any securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date of this Agreement on
the terms in effect on the Closing Date which are described on Schedule 5(d),
and (v) as a result of the conversion of Notes which are granted or issued
pursuant to this Agreement or the Additional Offering (collectively, the
foregoing (i) through (v) are “Excepted Issuances”), if at any time the Notes
are outstanding, the Company shall agree to or issue (the “Lower Price
Issuance”) any Common Stock or securities convertible into or exercisable for
shares of Common Stock (or modify any of the foregoing which may be outstanding)
to any person or entity at a price per share or conversion or exercise price per
share which shall be less than the Conversion Price in effect at such time,
without the consent of the Subscribers, then the Conversion Price shall
automatically be reduced to such other lower price.  Common Stock issued or
issuable by the Company for no consideration or for consideration that cannot be
determined at the time of issue will be deemed issuable or to have been issued
for $0.0001 per share of Common Stock.  The rights of Subscribers set forth in
this Section 12 are in addition to any other rights the Subscribers have
pursuant to this Agreement, the Notes, any Transaction Document, and any other
agreement referred to or entered into in connection herewith or to which
Subscribers and Company are parties.

 
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(b)           Maximum Exercise of Rights.   In the event the exercise of the
rights described in Section 12(a) would or could result in the issuance of an
amount of Common Stock of the Company that would exceed the maximum amount that
may be issued to Subscribers calculated in the manner described in Section 7.3
of this Agreement, then the issuance of such additional shares of Common Stock
of the Company to Subscribers will be deferred in whole or in part until such
time as a Subscriber notifies the Company that such Subscriber is able to
beneficially own such Common Stock without exceeding the applicable maximum
amount set forth calculated in the manner described in Section 7.3 of this
Agreement.
 
13.         Miscellaneous.
 
(a)           Notices.  All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Mesa Energy Holdings,
Inc., 5220 Spring Valley Road, Suite 525, Dallas, TX 75254, Attn: Randy M.
Griffin, CEO, facsimile: (760) ___________, with a copy to: Gottbetter &
Partners, LLP, 488 Madison Avenue, 12th Floor, New York, NY 10022, Attn: Adam S.
Gottbetter, Esq., facsimile: (212) 400-6901, and (ii) if to the Subscribers, to:
the addresses and fax numbers indicated on the signature pages hereto, with an
additional copy by fax only to: Grushko & Mittman, P.C., 551 Fifth Avenue, Suite
1601, New York, New York 10176, facsimile: (212) 697-3575.
 
 (b)           Entire Agreement; Assignment.  This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by both parties.  Neither the Company nor the Subscribers
has relied on any representations not contained or referred to in this Agreement
and the documents delivered herewith.   No right or obligation of the Company
shall be assigned without prior notice to and the written consent of the
Subscribers.
 
(c)           Counterparts/Execution.  This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  This
Agreement may be executed by facsimile signature and delivered by electronic
transmission.

 
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(d)           Law Governing this Agreement.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal courts
located in the state and county of New York.  The parties to this Agreement
hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens.  The parties executing
this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the in personam
jurisdiction of such courts and hereby irrevocably waive trial by jury.  The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.  In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law.  Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.  Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection
with this Agreement or any other Transaction Document by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by
law.
 
(e)           Specific Enforcement, Consent to Jurisdiction.  The Company and
Subscribers acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.  It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or
equity.  Subject to Section 13(d) hereof, the Company hereby irrevocably waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction in New York of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper.  Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
 
(f)           Damages.   In the event the Subscriber is entitled to receive any
liquidated damages pursuant to the Transactions Documents, the Subscriber may
elect to receive the greater of actual damages or such liquidated damages.
 
(g)           Maximum Payments.   Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the rate
of interest or dividends required to be paid or other charges hereunder exceed
the maximum permitted by such law, any payments in excess of such maximum shall
be credited against amounts owed by the Company to the Subscribers and thus
refunded to the Company.
 
(h)           Calendar Days.   All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated.  The terms “business
days” and “trading days” shall mean days that the New York Stock Exchange is
open for trading for three or more hours.  Time periods shall be determined as
if the relevant action, calculation or time period were occurring in New York
City.  Any deadline that falls on a non-business day in any of the Transaction
Documents shall be automatically extended to the next business day and interest,
if any, shall be calculated and payable through such extended period.
 
(i)           Captions: Certain Definitions.  The captions of the various
sections and paragraphs of this Agreement have been inserted only for the
purposes of convenience; such captions are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Agreement.  As used in this Agreement the term “person”
shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.

 
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(j)           Consent.   As used in this Agreement and the Transaction Documents
and any other agreement delivered in connection herewith, “consent of the
Subscribers” or similar language means the consent of holders of not less than
70% of the outstanding principal amount of the Notes on the date consent is
requested which must include the Subscribers to the Offering so long as either
of the name holds not less than $100,000 of Note Principal (such amount being a
“Majority in Interest”).  A Majority in Interest may consent to take or forebear
from any action permitted under or in connection with the Transaction Documents,
modify any Transaction Documents or waive any default or requirement applicable
to the Company, Subsidiaries or Subscribers under the Transaction Documents
provided the effect of such action does not waive any accrued interest or
damages and further provided that the relative rights of the Subscribers to each
other remains unchanged.
 
(k)           Severability.  In the event that any term or provision of this
Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability: (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
 
(l)           Successor Laws.  References in the Transaction Documents to laws,
rules, regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms.  A successor
rule to Rule 144(b)(1)(i) shall include any rule that would be available to a
non-Affiliate of the Company for the sale of Common Stock not subject to volume
restrictions and after a six month holding period.
 
(m)           Omnibus Signature Page.  This Agreement is intended to be read and
construed in conjunction with the Escrow Agreement, the Security Agreement,
Collateral Agent Agreement and the Guaranties.  Accordingly, pursuant to the
terms and conditions of this Agreement and the Escrow Agreement, it is hereby
agreed that the execution by the Subscriber of this Agreement, in the place set
forth herein, shall constitute agreement to be bound by the terms and conditions
hereof and the terms and conditions of the Escrow Agreement, Collateral Agent
Agreement, the Security Agreement and the Guaranties, with the same effect as if
each of such separate but related agreements were separately signed.

[SIGNATURE PAGE FOLLOWS]

 
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (A)
 

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

 
MESA ENERGY HOLDINGS, INC.
 
a Delaware corporation
     
By:
    
   
Name:
   
Title:
      Dated: _______, 2009

SUBSCRIBER
 
PURCHASE PRICE AND NOTE
PRINCIPAL
           
   
     
By:
   

 
 
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 LIST OF EXHIBITS AND SCHEDULES

Exhibit A
Form of Note
   
Exhibit B
Escrow Agreement
   
Exhibit C
Merger Documents
   
Exhibit D
Working Interest Documents
   
Exhibit E
Form of Security Agreement
   
Exhibit F
Form of Guaranty
   
Exhibit G
Form of Collateral Agent Agreement
   
Exhibit H
Working Interest Security Documents
   
Exhibit I
Investor Questionnaire
   
Exhibit J
Form of Legal Opinion
   
Exhibit K
Super Form 8-K
   
Exhibit L
Selling Shareholder Questionnaire
   
Schedule 5(a)
Subsidiaries
   
Schedule 5(d)
Capitalization and Additional Issuances
   
Schedule 5(q)
Banking
   
Schedule 5(x)
Transfer Agent
   
Schedule 8(a)
Brokers
   
Schedule 9(e)
Use of Proceeds
   
Schedule 9(p)(iv)
Exceptions to Negative Covenants
   
Schedule 11.1
Registration Rights

 
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EXHIBIT I

INVESTOR QUESTIONNAIRE
 
All prospective investors in Mesa Energy Holdings, Inc., a Delaware corporation
(the “Company” herein) are required to complete this questionnaire in order to
purchase secured promissory notes. In addition, supplemental information may be
required, at the Company’s discretion, in order to confirm the investor’s
eligibility to invest in the Company as an accredited investor under the
Securities Act of 1933, as amended (the “Act”).
 
Prospective investors must initial those representations applicable to the
investor and hereby represents and warrants that those representations which are
initialed are true and correct.

 
FOR INDIVIDUAL INVESTORS:
     
____________
1.
Investor represents that he or she has an individual net worth, or together with
his or her spouse a combined net worth, in excess of $1,000,000. For purposes of
this representation, “net worth” means the excess of total assets at fair market
value, including, home,1 home furnishings and automobiles, over total
liabilities.
     
____________
2.
Investor represents that he or she had an individual income of more than
$200,000 in each of the last two calendar years or joint income with his or her
spouse in excess of $300,000 in each of those years and reasonably expects to
reach the same income level in the current calendar year.
     
FOR CORPORATIONS, PARTNERSHIPS OR LIMITED LIABILITY COMPANIES:
     
____________
3.
Investor represents that it is a corporation, Massachusetts or similar business
trust, or partnership not formed for the specific purpose of acquiring Units
with total assets in excess of $5,000,000.

 

--------------------------------------------------------------------------------

1
For purposes of determining “net worth,” the principal residence owned by an
individual must be valued either at (A) cost, including the cost of
improvements, net of current encumbrances upon the property, or (B) the
appraised value of the property as determined upon a written appraisal used by
an institutional lender making a loan to the individual secured by the property,
including the cost of subsequent improvements, net of current encumbrances upon
the property. “Institutional lender” means a bank, savings and loan company,
industrial loan company, credit union or personal property broker or a company
whose principal business is as a lender upon loans secured by real property and
that has such loans receivable in the amount of $2,000,000 or more.

 
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____________
4.
Investor represents that all of its equity owners meet the standard set out in
Statement (1) above ($ 1,000,000 net worth) or Statement (2) above ($200,000
individual income or $300,000 joint income). For purposes of this
representation, “net worth” means the excess of total tangible assets at current
value less total liabilities. Please list below the names of all equity owners
of Investor. EACH SUCH EQUITY OWNER MUST COMPLETE AN INVESTOR QUESTIONNAIRE.
     
Name of All Equity Owners
 
  _____________________________________________
 
  _____________________________________________ 
 
  _____________________________________________
     
FOR TRUSTS OTHER THAN EMPLOYEE BENEFIT TRUSTS:
     
____________
5.
Investor represents that it has total assets in excess of $5,000,000, was not
formed for the specific purpose of acquiring Units and that the investment is
being directed by a sophisticated person as defined below. For purposes of this
representation, a “sophisticated person” means a person who has such knowledge
and experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the prospective investment.
     
____________
6.
Investor represents that it is (a) a bank as defined in Section 3(a)(2) of the
Act, (b) acting in its fiduciary capacity as trustee, (c) subscribing for the
purchase of the securities being offered on behalf of a trust.
     
____________
7.
Investor represents that it is a revocable trust that may be amended or revoked
at any time by its grantors and that all of its grantors meet the standard set
out in Statement (1) above ($1,000,000 net worth) or statement (2) (above
$200,000 individual income or $300,000 joint income). Please list below the
names of all grantors. EACH SUCH  GRANTOR MUST COMPLETE AN INVESTOR
QUESTIONNAIRE.
     
Name of Grantors
 
  _____________________________________________
 
  _____________________________________________
 
  _____________________________________________
   

 
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FOR EMPLOYEE BENEFIT PLAN; OR STATE PLANS:
     
____________
8.
Investor represents that it is an employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), with respect to which the decision to invest was made by a plan
fiduciary as defined in Section 3(21) of ERISA that is a bank, savings and loan
association, insurance company or investment adviser registered under the
Investment Advisers Act of 1940, as amended (the “1940 Act”).
     
____________
9.
Investor represents that it is an employee benefit plan within the meaning of
Title I of ERISA and it has total assets in excess of $5,000,000.
     
____________
10.
Investor represents that it is a self-directed plan with respect to which the
decision to invest was made solely by persons who are “accredited investors”
within the meaning of Regulation D under the Act.
     
____________
11.
Investor represents that it is a plan established and maintained by a state, its
political subdivisions, or an agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, and that it has total
assets in excess of $5,000,000.
     
FOR CHARITABLE ORGANIZATIONS:
     
____________
12.
Investor represents that it is an organization described in Section 501(c)(3) of
the Code not formed for the specific purpose of acquiring Units with total
assets in excess of $5,000,000.
     
OTHER ACCREDITED INVESTORS:
     
____________
13.
Investor represents that it is either a non-resident alien of the United States,
a foreign entity (i.e., not formed under the laws of any state of the United
States or its territories) or a bank as defined in Section 3 (a)(2) of the Act
whether acting in its individual or fiduciary capacity.
     
____________
14.
Investor represents that it is a savings and loan association or other
institution specified in Section 3(a)(5)(A) of the Act whether acting in its
individual or fiduciary capacity.
     
____________
15.
Investor represents that it is a broker or dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
     
____________
16.
Investor represents that it is an insurance company as defined in Section 2(13)
of the Act.
     
____________
17.
Investor represents that it is an investment company registered under the 1940
Act.
     
____________
18.
Investor represents that it is a business development company as defined in
Section 2(a)(48) of the 1940 Act.

 
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____________
19.
Investor represents that it is a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended.
     
____________
20.
Investor represents that it is a private business development company as defined
in Section 202(a)(22) of the 1940 Act.

 
A.      Primary Contact Person for General Notices:

 
Name:
     
   
Address:
     
   
     
   
Telephone:
     
   
Fax:
     
   
E-mail:
     
 

 
B.      Contact Person for Financial Information and Reporting (including
quarterly and annual financial reports), Distributions and Tax Matters
(including Form K-1) if different from A, above:

 
Name:
     
   
Address:
     
   
     
   
Telephone:
     
   
Fax:
     
   
E-mail:
     
 

C.     Address of Investor (if different from A, above):

 
     
   
     
   
     
 

 
For distributions of cash, please wire funds to the following bank account:

 
Bank Name:
     
   
Bank Location:
     
   
Account Number:
     
For further credit to (if any):
     
   
Reference:
     
 

 
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For distributions in kind, please credit securities to my brokerage account at
the following firm:

 
Firm Name:
     
   
Address:
     
   
Account Name:
     
   
Account Number:
     
   
DTC Number:
     
 

Dated:  ___________, 2009
   
      
 
Name, if individual
     
      
 
Signature, if individual
     
      
 
Name, if Entity
     
By:
     
     
Title:
     

 
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EXHIBIT L
 
Selling Securityholder Notice and Questionnaire
 
The undersigned beneficial owner of Registrable Common Shares of Mesa Energy
Holdings, Inc., a Delaware corporation (the “Company”), understands that the
Company intends to file with the Securities and Exchange Commission a
registration statement (the “Registration Statement”) for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended, of the
Registrable Common Shares, in accordance with the terms of the Subscription
Agreement to which this document is annexed.  A copy of the Subscription
Agreement is available from the Company upon request at the address set forth
below.  All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Subscription Agreement.
 
Certain legal consequences arise from being named as a selling securityholder in
the Registration Statement and the related prospectus.  Accordingly, holders and
beneficial owners of Registrable Common Shares are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.
 
NOTICE
 
The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Common Shares hereby elects to include the Registrable Common Shares owned by it
in the Registration Statement.
 
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
 
QUESTIONNAIRE
 
1.
Name:

 
 
(a)
Full Legal Name of Selling Securityholder
                       

 
 
(b)
Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Common Shares are held:
                 

 
 
(c)
Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):
                 

 
2.
Address for Notices to Selling Securityholder:

 
   
   
   
   
Telephone: _________________________________                     Fax:
__________________________________________
Email:
____________________________________________________________________________________________
Contact Person:
____________________________________________________________________________________

 
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3.
Broker-Dealer Status:

 
 
(a)
Are you a broker-dealer?

 
Yes   ¨                      No   ¨
 
 
(b)
If “yes” to Section 3(a), did you receive your Registrable Common Shares as
compensation for investment banking services to the Company?

 
Yes   ¨                      No   ¨
 
Note:
If no, the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

 
 
(c)
Are you an affiliate of a broker-dealer?

 
Yes   ¨                      No   ¨
 
 
(d)
If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Common Shares in the ordinary course of business, and at the time of
the purchase of the Registrable Common Shares to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Common Shares?

 
Yes   ¨                      No   ¨
 
Note:
If no, the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

 
4.
Beneficial Ownership of Securities of the Company Owned by the Selling
Securityholder:

 
Except as set forth below in this Item 4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the securities
issuable pursuant to the PPO.
 
 
(a)
Type and Amount of other securities (other than the Registrable Common Shares)
beneficially owned by the Selling Securityholder:
                 

5.
Relationships with the Company:

 
Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% or more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
 
 
State any exceptions here:
           

 
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The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective.
 
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto.  The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
 
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Selling Securityholder Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.
 

Dated:
     
 
Beneficial Owner:
      
         
By:
      
     
Name:
     
Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

Gottbetter & Partners, LLP
488 Madison Avenue, 12th Floor
New York, NY  10022
Attention:  Rachel L. DeGenero
Facsimile:  (212) 400-6901

 
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