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.


      
        
           


        

        
          8

          
            

          

        

        
           


        

      

       

      (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.


      
        
           


        

        
          9

          
            

          

        

        
           


        

      

      


      (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.


      
        
           


        

        
          10

          
            

          

        

        
           


        

      

      


      (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.


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

      


      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.


      
        
           


        

        
          12

          
            

          

        

        
           


        

      

      


      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.


      
        
           


        

        
          13

          
            

          

        

        
           


        

      

       

      (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.


      
        
           


        

        
          14

          
            

          

        

        
           


        

      

       

      (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.


      
        
           


        

        
          23

          
            

          

        

        
           


        

      

       

      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

          
            

          

        

        
           


        

      


      (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.


      
        
           


        

        
          25

          
            

          

        

        
           


        

      

      


      (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.


      
        
           


        

        
          26

          
            

          

        

        
           


        

      

      


      (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.


      
        
           


        

        
          27

          
            

          

        

        
           


        

      

       

      (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]


      
        
           


        

        
          28

          
            

          

        

        
           


        

      

       

      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:

                	 
      	 
      


        

      

       

      
        
           


        

        
          29

          
            

          

        

        
           


        

      


       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

              


      


      
        
           


        

        
          30

          
            

          

        

        
           


        

      

       

      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.

              


      

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                	
                                                                                                        ____________

                                                                                                      	
                                                                                                        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

                                                                                                      
	 
      	
                                                                                                         
      _____________________________________________

                                                                                                      
	
                                                                                                         
      

                                                                                                      	
                                                                                                         
      _____________________________________________

                                                                                                      
	 
      	
                                                                                                         
      _____________________________________________

                                                                                                      
	 	 


                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  	 
      	
                                                                                          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.

                                                                                        


                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              	
                                                                                                                                      ____________

                                                                                                                                    	
                                                                                                                                      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:

                  	
                         

                  	 
      


          

        

      

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      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:

              	
                     

              


      

      



      
        
           


        

        
          35

          
            

          

        

        
           


        

      


      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:
      ____________________________________________________________________________________

                


        

      

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      
        	
                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:

                                

                              
	 	 
	 	 
	 	 


                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      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


      
        
           


        

        
          38