Document:

Unassociated Document

    

     

    AGREEMENT FOR EXCLUSIVE
DEALING

     

     AND LETTER OF
INTENT

    

     

    This
AGREEMENT FOR EXCLUSIVE DEALING
AND LETTER OF INTENT (the “LOI”), is effective November
26th, 2009
(the “Effective Date”),
between

     

    SCS
Corporation, an Affiliate of Hyperdynamics Corporation, a company incorporated
under Delaware statutes, United States of America, whose Head Office is located
at: One Sugar Creek Center Blvd, Suite 125, Sugar Land, Texas 77478, USA
(collectively “HDY-SCS”), of the first part, and
Repsol Exploración, S.A. a company incorporated in the Kingdom of Spain whose
Head Office is located at Paseo de la Castellana 280, 28046 Madrid, Spain,
(“REPSOL”)  of
the second part.

     

    HDY and
REPSOL may also be referred to herein individually as a “Party” or collectively as the
“Parties”.

     

    Recitals:

     

    WHEREAS,
HDY owns, through its Affiliate, SCS, certain rights pertaining to the
Hydrocarbon Production Sharing Contract dated September 22, 2006 between the
Republic of Guinea and SCS (the “PSC”); and

     

    WHEREAS,
a Memorandum of Understanding in relation to the PSC has been entered into
between the Republic of Guinea and SCS dated September 11, 2009 (the “MoU”); and

     

    WHEREAS,
REPSOL possesses certain expertise and resources that it believes will be
beneficial in the exploration and development of the area to which the PSC
applies as may be varied pursuant to the MoU (the “Project”); and

     

    WHEREAS,
REPSOL wishes to evaluate its potential participation in the Project on an
exclusive basis; and

     

    WHEREAS,
HDY-SCS has executed an Agreement for Exclusive Dealing and Letter of Intent
with Dana Petroleum (E&P) Ltd, effective October 11, 2009, (“Dana Letter of
Intent”), which, among other things provides that HDY-SCS and its Affiliated
Companies including, without limitation SCS, will negotiate exclusively with
DANA with regard to the prospective acquisition by DANA of an undivided twenty
three percent (23%) participating interest in and under the PSC and the initial
Contract Area (as such term is defined in the PSC) (the “DANA Working
Interest”), and more specifically provides that HDY shall, and shall procure
that its Affiliated Companies including, without limitation, SCS shall not
initiate, or otherwise participate in, directly or indirectly, a solicitation of
any other offer or proposal for the sale, assignment or transfer, directly or
indirectly, through merger, consolidation or otherwise, of the DANA Working
Interest, which means any interest in the PSC and/or the Contract Area that is
or would be inclusive of the DANA Working Interest or continue negotiations or
discussions with other persons that have indicated an interest in acquiring such
an interest; and

     

    
      
         

      

      
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    WHEREAS,
HDY-SCS, represents and warrants that any actions, discussions or negotiations
between them and Repsol proceed in full respect of the Dana Letter of Intent and
do not intend that any actions, discussions or negotiations between the Parties
interfere with such Dana Letter of Intent or include or pertain to the
twenty-three percent (23%) participating interest subject to the Dana Letter of
Intent; and

     

    WHEREAS,
the Parties wish to record in this LOI certain binding and certain non-binding
commercial terms and conditions on which the Parties have agreed to continue
discussions and conduct further mutual evaluation and negotiations with the
possibility of, but not the obligation to, reaching binding definitive
agreement(s) as to REPSOL’s participation in the Project (the “Definitive Agreements” as
defined in Exhibit “A”).

     

    NOW,
THEREFORE, the Parties hereby agree as follows:

     

    Article
I

    Non-Binding
Provisions

    

    1.1           Non-Binding Nature of
Provisions. The Parties have set out in Exhibit “A” attached hereto
and incorporated herein their preliminary and non-binding understanding of
certain commercial terms and conditions which may be addressed in the
prospective Definitive Agreements. The Parties agree that no provision
of this LOI shall obligate either Party to enter into any Definitive Agreements,
and that no commercial terms set out in Exhibit “A” attached hereto shall
be legally binding in any way upon either Party. This LOI reflects only the
preliminary understanding of the Parties with respect to the potential due
diligence and negotiation with respect to a transaction regarding the Project,
and is not intended to, shall not be construed to, and does not constitute an
agreement of either Party to (a) perform due diligence, negotiate, or consummate
any transaction regarding the Project, or (b) enter into any Definitive
Agreements with respect to the Project.

     

    1.2.           Further,
the Parties expressly acknowledge and agree that this Article I of this LOI
(other than this Article 1.2), is not intended to be legally binding and that
neither Party shall have any obligation to the other with respect thereto unless
and until both Parties execute mutually agreed and duly authorized Definitive
Agreements. Further, it is understood that the Definitive Agreements
contemplated in this LOI are subject to review and approval in accordance with
the policies and procedures established by the each Party’s respective board of
directors for transactions of this nature.

     

    1.3           It
is envisaged that the Definitive Agreements will include (i) a sale and purchase
agreement in respect of the transfer of the REPSOL Participating Interest (as
hereinafter defined) (the “SPA”); (ii) an assignment of
the REPSOL Participating Interest, validly transferring title to the REPSOL
Participating Interest to REPSOL (the “Assignment of Participating Interest”);
(iii) a Deed of Assignment to serve as the muniment of the Assignment of
Participating Interest to be forward to the Government of the Republic of Guinea
for approval of the Assignment of Participating Interest pursuant to Article 23
of the PSC (the “Deed of Assignment”); and (iv) a joint operating agreement
based on the 2002 AIPN International Operating Agreement Model Form (the “JOA”) under which REPSOL is to
be designated Operator upon full payment of Consideration for Assignment of
Participating Interest (as defined in Exhibit “A”) and subject to government and
third party approvals and consents as required.  It is also intended
that, subsequent to execution of the Definitive Agreements, the Parties will
enter into a clarification of, an amendment to or restatement of the PSC as
required by, incorporating the relevant terms of, and superseding, the MoU (the
“PSC
Clarification”).  HDY-SCS will provide within seven (7) Working
days of the Effective Date an initial draft of the SPA, the PSC Assignment and
the JOA for review and evaluation by REPSOL.  The Parties will work
jointly in preparing the PSC Clarification to the PSC.  It is further
envisaged that the Parties will work together in a cooperative fashion on all
other technical, commercial and strategic matters and will attempt to
incorporate such cooperation into the relevant provisions of the JOA and the PSC
Clarification.

    
      
         

      

      
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    Article
II

    Binding
Provisions

    

    The
following provisions shall be binding upon the Parties:

     

    2.1.           Exclusive
Dealing.  HDY-SCS agrees that it and its Affiliates including,
without limitation SCS, will negotiate exclusively with REPSOL with regard to
the prospective acquisition by REPSOL of an undivided thirty-seven percent (37%)
participating interest in and under the PSC and the initial Contract Area (as
such term is defined in the PSC) (the “REPSOL Participating
Interest”).  More specifically, HDY-SCS shall, and shall
procure that its Affiliates including, without limitation, SCS shall: (i) not
initiate, or otherwise participate in, directly or indirectly, a solicitation of
any other offer or proposal for the sale, assignment or transfer, directly or
indirectly, through merger, consolidation or otherwise, of the REPSOL
Participating Interest, which means any interest in the PSC and/or the Contract
Area that is or would be inclusive of the REPSOL Participating Interest; and
(ii) cease negotiations and discussions with any other persons that have
indicated an interest in, or have submitted an offer to acquire any interest in
the REPSOL Participating Interest or any interest in the PSC and/or Contract
Area that is or would be inclusive of the REPSOL Participating
Interest.  The obligations of HDY/SCS and its Affiliates including,
without limitation, SCS, to deal exclusively with REPSOL herein will commence on
the Effective Date and continue until the earlier to occur of the Termination
Date or the Parties’ execution of mutually agreed and duly authorized Definitive
Agreements.

     

    After the
signature of this LOI Repsol commits to pay its share of the Seismic Acquisition
Payments, as specified in Exhibit A Seismic
Acquisition Payments.

     

    If the
Definitive Agreements are not executed within the agreed term established in
2.3 Repsol can at its sole option choose between the request of the
reimbursement of the costs of the Seismic Acquisition to HDY/SCS or to legally
own the property of such information.

     

    2.2           Due Diligence; Obligation to
Negotiate in Good Faith.  During the time period commencing on
the Effective Date and continuing until the earlier to occur of the Termination
Date or the Parties’ execution of  mutually agreed and duly authorized
Definitive Agreements, the Parties will conduct due diligence with respect to
the prospective transaction described herein, and shall negotiate in good faith
regarding such prospective transaction.

    
      
         

      

      
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    2.3           Term of this LOI.
Unless otherwise extended by mutual agreement of the Parties in writing, this
LOI shall terminate at midnight local time in Houston, Texas, on 31st January
2010, unless the mutually agreed and duly authorized Definitive Agreements have
been executed whichever occurs first, such date of termination being herein
referred to as the “Termination
Date”.

     

    HDY-SCS
may not unilaterally terminate this LOI prior to the Termination Date. If the
LOI terminates as a result of Definitive Agreements not having been executed
prior to the Termination Date, neither Party shall have any obligation or
liability to the other except to the extent that, prior to the Termination Date,
a Party has breached any of the binding provisions of this LOI.

     

    2.4           Liability. Nothing
contained in this LOI shall create or constitute or be deemed to create or
constitute a partnership between the Parties or any of them. Any liability of
the Parties hereunder shall be several and not joint or collective and each
Party shall be responsible only for its individual obligations
hereunder.

    

    Neither
Party shall be liable in an action initiated by one against the other for
special, indirect or consequential damages resulting from or arising out of this
LOI, including, without limitation, loss of value, loss of production, loss of
financial advantage, loss of profit or business interruptions, however same may
be caused.

     

    2.5           Confidentiality. The
terms and conditions of the Confidentiality Agreement entered into by REPSOL and
SCS on October 5, 2009 (the “CA”), are incorporated by
reference into this LOI and shall apply with regard to all information exchanged
or developed hereunder. Notwithstanding the foregoing, neither Party shall be
prohibited from making any disclosure if it is necessary to do so in order to
comply with the applicable laws, rules, or regulations of any governmental
entity, court, or stock exchange having jurisdiction over such Party or any of
its Affiliated Companies (which term shall have the same meaning herein as
defined in the CA).

     

    2.6           Repsol Participation Prior to
Execution of Definitive Agreements. Notwithstanding any other
provisions hereof, REPSOL shall be entitled to fully participate with HDY-SCS in
the evaluation of technical data leading to direction and interpretation of
geological and geophysical data as well as to participate in any meeting with
the Government of the Republic of Guinea during that interim period between the
LOI and  the execution of Definitive Agreements and, furthermore,
shall fully participate during such period in the preparation for negotiations
with the Ministry of Mines, Energy and Hydraulics of the Republic of Guinea (the
“Ministry”) regarding
the terms of the PSC Clarification; shall be kept fully appraised of the
progress of such negotiations; and, subject to Ministry consent, shall be
entitled to participate in such negotiations.   Such negotiations
shall be commenced as soon as reasonably practicable following the Effective
Date, and HDY/SCS will send a notice to Repsol regarding any meeting to be held
with the Ministry and/or Dana at least five (5) days before.

    
      
         

      

      
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    2.7           Press Releases.
Neither Party may issue press releases, public communications or public
statements regarding the existence or terms of this LOI and matters arising in
relation hereto unless and until the other Party has been furnished with a copy
of such statement in advance and has given written approval, which shall not be
unreasonably withheld and which shall be timely given, in no case exceeding
twenty-four (24) hours.  Notwithstanding the foregoing, neither Party
shall be prohibited from making any disclosure if it is necessary to do so in
order to comply with the applicable laws, rules, or regulations of any
governmental entity, court, or stock exchange having jurisdiction over such
Party or any of its Affiliated Companies.

     

    2.8           Applicable Law. This LOI and the
transactions contemplated herein, and the relationship of the Parties hereto
shall be interpreted and construed in accordance with the laws of England
excluding any conflict of laws principles which would refer the matter to the
laws of another jurisdiction. No Person other than a Party may enforce this LOI
by virtue of the Contracts (Right of Third Parties) Act 1999.

     

    

    Any dispute, controversy or claim
(“Dispute”) arising out of, relating to or in connection with this LOI,
including any question regarding its existence, validity or termination, or
regarding a breach hereof which cannot be resolved by good faith discussions
between the Parties within ninety (90) days (or such longer period as may be
agreed by the claimant Party) shall be referred by any Party to, and shall be
finally settled by, arbitration under and in accordance with the Rules of
Arbitration of the International Chamber of Commerce (the “Rules”).  A
Dispute shall be deemed to have arisen when either Party gives Notice to the
other to that effect.

    

    The place of arbitration shall be
London, England, and the award shall be deemed to have been made there. The
arbitration tribunal shall consist of three (3) arbitrators appointed in
accordance with the Rules. Arbitration shall be in the English language. The
decision of the arbitration tribunal shall include a statement of reasons for
such decision, the award shall be final and binding on the Parties, and judgment
thereon may be entered in any court having jurisdiction for its enforcement. The
Parties hereby expressly agree to exclude all rights to application or appeal
pursuant to Section 45 or Section 69 (as amended or otherwise) of the
Arbitration Act 1996 relating to any questions of law arising in the course of
the arbitration or with respect to any decision or award made.

    

    The costs of the arbitration
proceedings shall be borne according to the arbitration award. However, each
Party to the Dispute shall bear its own costs, including costs regarding its own
witnesses, expert witnesses, translators and attorneys, as well as such expert
witnesses, translators and legal fees, regardless of which Party
prevails.

    

    Without prejudice to the rights and
remedies otherwise available to a Party, the Parties agree that money damages
would not be an adequate remedy for any breach of this LOI and that a Party will
be entitled to specific performance or other equitable relief by way of
injunction if a Party breaches or threatens to breach any provision of this
LOI.

    
      
         

      

      
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    All matters relating to the
arbitration proceeding, the existence of the arbitration proceeding, documents
prepared produced and exchanged in such arbitration proceeding and the arbitral
award itself shall be kept confidential and not disclosed to third parties
unless such disclosure is (i) required in a Party’s efforts to compel
arbitration or in its efforts to enforce an arbitral award, (ii) required by
applicable law or by a governmental order, decree, regulation or rule or by any
stock exchange on which the shares of the disclosing Party or its Affiliates are
listed, or (iii) as otherwise agreed in writing by the Parties.

    

     

    2.9           Costs and Expenses.
Each Party shall be liable for its own legal, accounting and other costs and
expenses incurred by it in connection with the undertakings associated with this
LOI, including, without limitation, the negotiation and execution of Definitive
Agreements.

     

    2.10                      Counterparts.  This
LOI may be executed and delivered by the Parties (in original form or by
facsimile or emailed pdf scan) in counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute the same
instrument, provided that this LOI shall not be effective until each Party has
executed and delivered a counterpart.

     

    2.11                      Entire
Agreement.  This LOI constitutes the entire understanding among
the Parties with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and understandings relating
to such subject matter.

     

    2.12                      Amendments.  This
LOI may not be amended nor any rights hereunder waived except by written mutual
agreement of the Parties.

     

    2.13                      Assignment.  This
LOI and the rights and obligations herein may not be assigned by a Party, in
whole or in part, without the prior written consent of the other
Party.

     

    2.14                      No Third Party
Beneficiaries.  This LOI is intended to benefit only the
Parties hereto and their respective permitted successors and
assigns.

     

    2.15           Notices.  All
notices and communications with respect to this LOI shall be in
writing.  Any communication or delivery hereunder shall be deemed to
have been duly made and the receiving Party charged with notice (i) if
personally delivered, when received, (ii) if sent by telecopy or facsimile
transmission, on the first business day on or after which such facsimile is
successfully transmitted and received, (iii) if mailed, three business days
after mailing, certified mail, return receipt requested, or (iv) if sent by
overnight courier, the first business day on or after such notice is sent by
overnight courier.

    

    All
notices shall be addressed as follows:

    

    If to
REPSOL: Attn. Didier Lluch, West Africa Exploration Director, Repsol
Exploración, S.A., Paseo de la Castellana 280, 4, 28046 Madrid, Tel: +34
91.756.61.06.

    
      
         

      

      
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    If to
HDY-SCS: Attn: Ray Leonard, President and Chief Executive Officer, Hyperdynamics
Corporation, One Sugar Creek Center Blvd., Suite 125, Sugar Land, Texas 77478,
USA Telephone +1 713.353.9400, Facsimile +1 713.353.9421.

    

    Any Party
may, by written notice so delivered to the other Party, change the address or
individual to which delivery shall thereafter be made.

    

    2.16           Compliance With U.S. and
International Laws Governing Sanctions and Corrupt Practices.
Each Party represents that, to the best of its knowledge and belief, it
is not subject to economic or other sanctions imposed under the laws
of the United States or treaties or conventions of the United Nations
and is eligible to receive exports from the United States under the laws of
the United States.

     

    

     

    [Execution
Page Follows]

    
      
         

      

      
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    The
Parties have executed this AGREEMENT FOR EXCLUSIVE DEALING AND
LETTER OF INTENT as of the Effective Date.

     

    

     

    
      
        	
                HYPERDYNAMICS
      CORPORATION

              	
                SCS
      Corporation

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                By:  /s/ Ray
      Leonard                                              
      

              	
                      
                  By:  /s/ Ray
      Leonard                                              
      

                

              
	
                       Ray
      Leonard

              	 
      
	
                       President
      and Chief Executive Officer

              	 
      

      

    

    

     

    REPSOL
EXPLORACIÓN, S.A.

     

    By:   /s/ Marcus E.
Mazetic                                   

    Printed
Name:   Marcus E.
Mazetic                      

    Title:  Exploration
Director                                    

     

    
      
         

      

      
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    EXHIBIT
“A”

     

    Essential
Commercial Terms

     

    This Exhibit sets forth certain
essential business terms for a prospective transaction which is being considered
by the Parties.  These terms are set forth solely for the purpose of
furthering discussions between the Parties, and is not intended to, and shall
not be construed to, create any legally binding obligation enforceable against
either Party.

     

    
      	
              Affiliate

            	
              shall
      mean any person which (a) controls either directly or indirectly a Party,
      or (b) is controlled directly or indirectly by such Party, or (c) is
      directly or indirectly controlled by a person which directly or indirectly
      controls such Party, for which purpose “control” means the right to
      exercise, directly or indirectly, fifty percent (50%) or more of the
      voting rights in the appointment of the directors or similar
      representation of a person, where “person” means any individual,
      corporation, partnership, limited liability company or other legally
      recognized entity.

            

    

     

    

     

    
      	
              Assignor:

            	
              SCS
      Corporation (SCS)- Hyperdinamics Corporation
  (HDY)

            

    

     

    
      	
              Assignee:

            	
              Repsol
      Exploración, S.A.

            

    

     

    
      	
                    
                REPSOL

              

            	
               

            

    

    
      	
                    
                Participating

              

            	
               

            

    

    
      	
              Interest:

            	
              An undivided thirty
      seven percent (37%) Participating interest in the PSC and Contract Area to
      be assigned by the PSC Assignment contemporaneously with execution of the
      JOA, subject to government and third party approvals and consents as
      required, Assignee to be designated Operator upon full payment of
      Consideration for Assignment of Participating Interest set out below and
      subject to government and third party approvals and consents as
      required.

            

    

    

    
      Contract

    

    
      	
               Area:

            	
              Contract
      Area, as such term is defined in the PSC, it being understood and
      acknowledged that such Contract Area is subject to variation pursuant to
      the MoU.

            

    

    

    
      Consideration
for

    

    
      Assignment
of

    

    
      Participating

    

    
      	
              Interest:

            	
              US$31,500,000
      payable upon execution of the PSC Clarification and its entry into full
      legal effect pursuant to the laws of the Republic of
    Guinea.

            

    

    
      
         

      

      
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    Seismic

    Acquisition

    Payments, consist
of:

    

    Repsol to
pay 37% share of BOS seismic program upon signing of Definitive Agreements. This
will include an immediate payment of 37% of payments already made by
Hyperdynamics at time of signing (currently estimated to be net $1.63 MM) and
subsequently 37% of billings of $2.8 MM upon Hyperdynamics receiving the second
and third tranches of 3000 km. Repsol to have the same rights as Hyperdynamics
regarding the data, including cost recovery and resale.

    

    
      	
              Definitive
      Agreements:

            	
              SPA
      to be negotiated and executed by HDY/SCS and REPSOL (or its nominated
      Affiliated Company), in respect of the acquisition by REPSOL of the REPSOL
      Participating Interest as more particularly described
    below.

            

    

    

    PSC
Assignment assigning the REPSOL Participating Interest to REPSOL, such that
REPSOL becomes a party to the PSC, to be negotiated and executed by SCS, REPSOL
(or its nominated Affiliated Company), any third parties to the PSC, and the
Government of the Republic of Guinea, or such alternative means of effecting and
documenting the transfer of the REPSOL Participating Interest to REPSOL as may
be mutually agreed in writing by HDY,/SCS and REPSOL.

    

    JOA
(including Accounting Procedure) in respect of the PSC and Contract Area to be
negotiated and executed by SCS, REPSOL (or its nominated Affiliated Company) and
any third party co-venturers.

    

    The
foregoing agreements constitute the “Definitive Agreements”.

    

    
      	
              PSC Clarification,

            	
              to
      be negotiated by HDY-SCS, REPSOL (or its nominated Affiliated Company),
      any third party co-venturers, and the Government of the Republic of Guinea
      incorporating, inter
      alia, the relevant terms of, and superseding, the MoU, and to be
      executed by all parties to the PSC.

            

    

    

    
      Right
of

    

    
      	
              First
      Refusal:

            	
              The
      right of first refusal applicable to SCS pursuant to Article 2.3 of the
      MoU shall be passed on to REPSOL pro rata to the REPSOL Participating
      Interest.

            

    

     

    
      
         

      

      
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              Indemnity:

            	
              HDY-SCS
      shall indemnify and hold harmless REPSOL in respect of any and all claims
      and liabilities in respect of the period prior to the date of approval by
      the Republic of Guinea of the assignment to REPSOL of the REPSOL
      Participating Interest.

            

    

    

    
      Conditions

    

    
      	
              Precedent:

            	
              All
      necessary approvals and consents by the Government of the Republic of
      Guinea and relevant third parties for the acquisition of the Participating
      Interest by REPSOL including, without limitation, approval of the
      Definitive Agreements, the PSC Clarification, and any and all other
      ancillary documents of transfer and
recordation.

            

    

    

    
      	
              Working
    day

            	
              means
      a Day (other than a Saturday or Sunday) on which banks in Guinea Conakry
      and in Madrid, Spain are customarily open for
  business.

            

    

    
      
         

      

      
        11SUBSCRIPTION
AGREEMENT

     

     

    THIS SUBSCRIPTION
AGREEMENT (this
“Agreement”), is dated as of November ___, 2009, by and between Medical Alarm Concepts Holding,
Inc., a Nevada corporation
(the “Company”), and the subscribers identified on
the signature page hereto (each a “Subscriber” and collectively, the “Subscribers”).

    

    WHEREAS, the Company and each Subscriber 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 such Subscriber shall purchase for up to $580,000 (the “Purchase
Price”) shares of the Company’s Series B
Convertible Preferred Stock, $0.0001 par value (the “Series B Preferred
Stock”) at a per share purchase price of
$0.02 per share (the “Offering”).  The shares of Series B Preferred Stock
issuable upon this Offering (the “Shares” or the “Securities.”); and

     

    WHEREAS, the aggregate proceeds of the Offering
shall be held in escrow pursuant to the terms of a Funds Escrow Agreement to be
executed by the parties substantially in the form attached hereto as
Exhibit
A (the “Escrow
Agreement”).

     

    NOW,
THEREFORE, in consideration
of the mutual covenants and other agreements contained in this Agreement the
Company and the Subscriber 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 Anslow &
Jaclin, LLP, 195 Route 9 South, Suite 204, Manalapan, New Jersey 07726, 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, Subscribers shall
purchase and the Company shall sell to Subscribers shares of the Series B
Preferred Stock in the aggregate Purchase Price of up to $415,000 as described
in Section 2 of this Agreement.

    

    2.           Purchase of
Series B Preferred Stock.

    

    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 Subscriber shares of Series B Preferred Stock in the Principal Amount
designated on the signature page hereto for such Subscriber’s Purchase Price
indicated thereon.

    

    3.           Allocation
of Purchase Price.   The Purchase
Price and number of Shares issued to each Subscriber will be allocated among the
Subscribers pursuant to and in the amounts designated on the signature page
hereto for such Subscriber’s Purchase Price indicated thereon.

    

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

     

    (a)           Organization and Standing of
the Subscriber.   If such Subscriber is an entity, such
Subscriber is a corporation, partnership or other entity duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

     

    
      
        
        

      

      
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    (b)           Authorization and
Power.   Such Subscriber has the requisite power and
authority to enter into and perform this Agreement and the other Transaction
Documents (as defined herein) and to purchase the Notes being sold to it
hereunder.  The execution, delivery and performance of this Agreement
and the other Transaction Documents by such Subscriber and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate or partnership action, and no further consent or
authorization of such Subscriber or its Board of Directors, stockholders,
partners, members, as the case may be, is required.  This Agreement
and the other Transaction Documents have been duly authorized, executed and
delivered by such Subscriber and constitutes, or shall constitute when executed
and delivered, a valid and binding obligation of such Subscriber enforceable
against such 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 such
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Subscriber’s
charter documents or bylaws or other organizational documents or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Subscriber is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such 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 such Subscriber).  Such 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 or to purchase the Securities in accordance with the terms
hereof, provided that for purposes of the representation made in this sentence,
such Subscriber is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.

    

    (d)           Information on
Company.    Such Subscriber has been furnished with
or has had access to the EDGAR Website of the Commission to the Company's Form
10-Q filed on May 20, 2009 for the quarter ended March 31, 2009, together with
all other filings made with the Commission available at the EDGAR website until
five days before the Closing Date (hereinafter referred to collectively as the
"Reports").   In
addition, such Subscriber may have received in writing from the Company such
other information concerning its operations, financial condition and other
matters as such Subscriber has requested in writing, identified thereon as Other
Written Information (such other information is collectively, the "Other Written Information"),
and considered all factors such Subscriber deems material in deciding on the
advisability of investing in the Securities.  Such Subscriber has
relied on the Reports and Other Written Information in making its investment
decision.

    

    (e)           Information on
Subscriber.   Subscriber is, and will be at the time of
the issuance of the Shares, 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 such 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.  Such Subscriber has the
authority and is duly and legally qualified to purchase and own the
Securities.  Such 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 page hereto
regarding such Subscriber is accurate.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (f)           Purchase of Shares of Series
B Preferred Stock.  On the Closing Date, such Subscriber will
purchase the Shares of Series B Preferred Stock 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.   Such 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)           Shares of Preferred Stock
and all shares of Common Stock issuable pursuant to the conversion of the Series
B Preferred Stock Legend.  The Shares shall bear the following
or similar legend:

    

    "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)           Communication
of Offer.  The
offer to sell the Securities was directly communicated to such Subscriber by the
Company.  At no time was such 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.

    

    (j)           Restricted
Securities.   Such Subscriber
understands that the Securities have not been registered under the 1933 Act and
such 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, such 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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    (k)           No
Governmental Review.   Such 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 Shares nor have such authorities passed upon
or endorsed the merits of the offering of the Shares.

    

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

    

    (m)           Acknowledgement
of Going
Concern.  Such
Subscriber recognizes and acknowledges that the Company is a “going concern” as
disclosed in its Reports and Other Written Information and as reported by its
auditor and may be unable to meet its financial obligations over the next twelve
months.

    

    (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 or other entity duly incorporated or organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization 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).

     

    (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 Shares, 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/or Subsidiaries 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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (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 (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 has 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 nor 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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (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 Subscriber 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

     

               (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
Shares.  The Shares 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 Shares, such 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; and

     

    (iv)           will not subject the holders thereof to
personal liability by reason of being such
holders.

     

    (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.  Except as disclosed in
the Reports, 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
Effect 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.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (k)           Defaults.  The Company is not in
violation of its articles 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.

     

    (l)           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.

     

    (m)                      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.

     

    (n)           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,
except as disclosed in the Reports or on Schedule
5(n).

     

    (o)           No
Undisclosed Events or Circumstances.  Since December 31, 2008, except as disclosed in the Reports, 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.

     

    (p)           Banking.   Schedule
5(p) contains a list of all financial
institutions at which the Company and Subsidiaries maintains deposit, checking
and other accounts.  The list includes the accurate addresses of such
financial institution and account numbers of such accounts.

     

    (q)           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 Shares is in the best interests of the
Company.  The Company specifically acknowledges that its obligation to
issue the Shares
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.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (r)           No
Disagreements with Accountants and Lawyers. Other than the opinion regarding the
Company’s ability to continue as a “going concern,” as disclosed in the
Company’s Reports, 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.

    

    (s)           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.

    

    (t)           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.

    

    (u)           Reporting Company/Shell
Company.  The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "1934
Act") and has a class of Common Stock registered pursuant to Section
12(g) of 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, the Company is a “start-up” company
as referred to in Footnote 172 to Rule 144 and, therefore, not considered a
“shell company” as those terms are employed in Rule 144(i) under the 1933
Act.

    

    (v)           Listing.  The
Company's Common Stock is quoted on the Bulletin Board under the symbol
MDHI.  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.  The Company satisfies all the
requirements for the continued quotation of its Common Stock on the Bulletin
Board.

     

    
      (w)           Transfer
Agent.   The
Company’s transfer agent is a participant in 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(w) hereto.

      

      (x)           Company
Predecessor and Subsidiaries.  The Company makes each of
the representations contained in Sections 5(a), (b), (c), (d), (e), (f), (h),
(j), (k), (n), (o), (p), (r), (s) and (t) 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, except as set forth on Schedule
5(a).  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 name for the
prior five years.

      

      (y)           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.

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    (z)           Survival.  The foregoing
representations and warranties shall survive the Closing
Date.

     

    6.           Regulation D
Offering/Legal Opinion.  The offer and issuance of
the Shares 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. The Company will provide, at the Company's
expense, such other legal opinions, if any, as are reasonably necessary in each
Subscriber’s opinion for the issuance and resale of any shares of Common Stock
pursuant to an effective registration statement, Rule 144 under the 1933 Act or
an exemption from registration.

     

    7.           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 Shares upon each
national securities exchange, or automated quotation system upon the Company’s
Common Stock is quoted or listed and upon which such Shares are or become
eligible for quotation or listing (subject to official notice of issuance) and
shall maintain same so long as any Subscriber still owns Shares.  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) two (2) years after the
Closing Date, (ii) until all the Shares have been resold or transferred by the
Subscriber pursuant to a registration statement or pursuant to Rule
144(b)(1)(i), or (iii) the Subscriber no longer owns the Shares (the date of
such latest occurrence being the “End Date”), the Company will
(A) cause its Common Stock to continue to be registered under Section 12(b) or
12(g) of the 1934 Act, (B) comply in all respects with its reporting and filing
obligations under the 1934 Act, (C) 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 (D) 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 each Subscriber promptly after such filing.

     

    
      
        
        

      

      
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    (e)           Use of
Proceeds.   The proceeds of the Offering will be employed
by the Company for expenses of the Offering, and general working
capital.  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 a
Closing Date.  For so long as any Note is outstanding, the Company
will not prepay any financing related debt obligations, except equipment
payments or in the event such payments are made in the ordinary course of
business, nor redeem any equity instruments of the Company without the prior
consent of the Subscribers.

     

    (f)           DTC
Program.  At all
times that the Common Stock
is outstanding, the Company
will employ as the transfer agent for the Common Stock, a participant in the Depository Trust
Company Automated Securities Transfer Program.

     

    (g)           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.

     

    (h)           Insurance.  As reasonably necessary as determined by
the Company, 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.

     

    (i)           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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (j)           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.

     

    (k)           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. Schedule
9(k) hereto identifies all of the
intellectual property owned by the Company and Subsidiaries.

     

    (l)           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.

     

    (m)          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 and
the registration statement or statements regarding the Subscriber’s Securities
or in correspondence with the SEC regarding same, it will not disclose publicly
or privately the identity of the Subscriber unless expressly agreed to in
writing by a Subscriber or only to the extent required by law and then only upon
not less than three days prior notice to Subscriber.  In any event and
subject to the foregoing, the Company undertakes to file a Form 8-K describing
the Offering not later than the fourth (4th)
business day after the Closing Date.  Prior to the Closing Date, such
Form 8-K will be provided to Subscribers for their review and
approval.  In the Form 8-K, the Company will specifically disclose the
nature of the Offering and amount of Common Stock outstanding immediately after
the Closing.  Upon  delivery by the Company to the
Subscribers after the Closing Date of any notice or information, in writing,
electronically or otherwise, and while 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 such Subscriber 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.

     

               (n)           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
Form 8-K described in Section 9(n) above, neither it nor any other person acting
on its behalf will at any time provide any Subscriber or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Subscriber shall have
agreed in writing to accept such information.  The Company understands
and confirms that each Subscriber shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

     

    (o)           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:

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    (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 Subscriber
(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)           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, any such obligations which in management’s good faith,
reasonable judgment must be repaid to avoid disruption of the Company’s
businesses.

     

    The Company agrees to provide
Subscribers not less than ten (10) days notice prior to becoming obligated to or
effectuating a Permitted Lien or Excepted Issuance.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (p)           Offering
Restrictions.   For a period of one year following the
Closing Date, 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”), without the prior written consent of a
majority of the Subscribers.   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).

     

    (q)           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.

     

    (r)          
Transactions With
Insiders.  So long as the Note is 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.

     

    (s)           Blackout.    The Company
undertakes and covenants that without the consent of the Subscribers, until the
end of the Exclusion Period, the Company will not enter into any acquisition,
merger, exchange or sale or other transaction or fail to take any action that
could have the effect of delaying the effectiveness of any pending registration
statement beyond the effective date, or causing an already effective
registration statement to no longer be effective or current for a period of
forty-five or more days in the aggregate during any three hundred and sixty-five
day period.

     

    (t)           Lockup
Agreement.   The Company will
deliver to the Insiders and previous investors and the Insiders and previous
investors will, on or before the Closing Date, agree to and enforce the
provisions of irrevocable
lockup agreement (“Lockup
Agreement”) in the form
annexed hereto as Exhibit B, with the persons identified on
Schedule
9(t).

     

    
      
        
        

      

      
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    8.           Covenants of
the Company Regarding Indemnification.

     

    (a)           The Company agrees to indemnify, hold
harmless, reimburse and defend the Subscribers, the Subscribers’ officers,
directors, agents, 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
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 Securities.

    

    9.           Additional Post-Closing
Obligations.

     

    9.1.        Piggy-Back
Registrations.   If at any time until two years after the
Closing Date there is not an effective registration statement covering all of
the Shares or the Shares are not saleable under Rule 144,  and the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the 1933 Act of any of its
equity securities, but
excluding Forms S-4 or S-8 and similar forms which do not permit such
registration, then the
Company shall send to each holder of any of the Securities written notice of
such determination and, if within fifteen calendar days after receipt of such
notice, any such holder shall so request in writing, the Company shall include
in such registration statement all or any part of the Shares such holder requests to be registered,
subject to customary underwriter cutbacks applicable to all holders of
registration rights and any
cutbacks in  accordance with guidance provided by the Securities and
Exchange Commission (including, but not limited to, Rule 415).  The obligations of the
Company under this Section may be waived by any holder of any of the Securities
entitled to registration rights under this Section 9.1. The holders whose Shares are included or required to be included
in such registration statement are granted the same rights, benefits, liquidated
or other damages and indemnification granted to other holders of securities included in such registration
statement.  Notwithstanding anything to the contrary herein, the
registration rights granted hereunder to the holders of Securities shall not be
applicable for such times as such Shares may be sold by the holder thereof
without restriction pursuant to Section 144(b)(1) of the 1933 Act.  In
no event shall the liability of any holder of Securities or permitted successor
in connection with any Shares included in any such registration
statement be greater in amount than the dollar amount of the net proceeds
actually received by such Subscriber upon the sale of the Shares sold pursuant to such registration or
such lesser amount applicable to other holders of Securities included in such
registration statement. 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
the NASD, 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 the registration
statement under Section 11.  Selling Expenses in connection with each
registration statement under Section 11 shall be borne by the holder and will be
apportioned among such holders in proportion to the number of Shares included
therein for a holder relative to all the Securities included therein for all
selling holders, or as all holders may agree.

     

    
      
        
        

      

      
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    9.2.        Delivery of
Unlegended Shares.

     

    (a)           Within three (3) business days (such third business day being the
“Unlegended Shares
Delivery Date”) after the
business day on which the Company has received (i) 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, and (iv) 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(h) 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
Subscriber, and, if the
Company is DTC and/or DWAC eligible, 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 10 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 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 11.2 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) 120%, 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 9.2 and the Company is required to deliver
such Unlegended Shares pursuant to Section 10.2, 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 are
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.

     

    
      
        
        

      

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

    

                          9.3.      In the event commencing six months after the Closing Date
and ending twenty-four months thereafter, the Subscriber is not
permitted to resell any of the 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
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 an amount equal to two percent (2%) for each thirty days (or such lesser
pro-rata amount for any period less than thirty days) thereafter of the purchase
price of the Shares subject
to such 144 Default during
the pendency of the 144 Default.  Liquidated Damages shall not be payable
pursuant to this Section 9.3 in connection with Shares for such times as such
Shares may be sold by the holder thereof without restriction pursuant to Section
144(b)(1) of the 1933 Act or pursuant to an effective registration
statement.

    

    10.         (a)           Right of
First Refusal.   Other than in
connection with Excepted Issuances, if at any time the Subscriber owns any
Shares, the Subscribers shall be
given not less than ten business days prior written notice of any proposed sale
by the Company of its common stock or other securities or equity linked debt
obligations, except 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 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, and (iv)
securities 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 and described on Schedule 5(d) (collectively
the foregoing are “Excepted
Issuances”).  The Subscribers who exercise their rights
pursuant to this Section
10(a) shall have the right during the ten
business days following receipt of the notice to purchase in the aggregate such
offered common stock, debt or other securities in accordance with the terms and
conditions set forth in the notice of sale in the same proportion to each other as their purchase of
Notes in the Offering.  In the event such terms and conditions are
modified during the notice period, the Subscribers shall be given prompt notice
of such modification and shall have the right during the ten business days following the notice of
modification to exercise such right.

     

    (b)           Most Favored Nations
Provision.   Other than in connection with Excepted
Issuances, if at any time the Subscriber owns any Shares, the Company shall
agree to or issue 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 Per Share Purchase Price
in effect at such time (the “Lower Price Issuance”),
without the consent of the Subscribers, then the Company shall issue, for each
such occasion, additional shares of Series B Preferred Stock to the Subscribers
respecting those Shares that are then still owned by the Subscribers at the time
of the Lower Price Issuance so that the Per Share Purchase Price of the Shares
purchased and owned by the Subscribers on the date of the Lower Price Issuance
is equal to such other lower price per share.  The Per Share Purchase
Price of the Shares shall be calculated separately for each of the
Subscribers.  The delivery to each Subscriber of the additional shares
of Series B Preferred Stock shall be not later than the closing date of the
transaction giving rise to the requirement to issue additional shares of Series
B Preferred Stock.  Subscriber is granted the registration rights
described in Section 9 hereof in connection with such additional shares of
Series B Preferred Stock.  For purposes of the issuance and adjustment
described in this paragraph, the issuance of any security of the Company
carrying the right to convert such security into shares of Common Stock or of
any warrant, right or option to purchase Common Stock shall result in the
issuance of the additional shares of Series B Preferred Stock upon the sooner of
the agreement to or actual issuance of such convertible security, warrant, right
or option and again at any time upon any subsequent issuances of shares of
Common Stock upon exercise of such conversion or purchase rights if such
issuance is at a price lower than the Per Share Purchase Price in effect upon
such issuance.  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 Subscriber set forth in this Section 10
are in addition to any other rights the Subscriber has pursuant to this
Agreement, any Transaction Document, and any other agreement referred to or
entered into in connection herewith or to which Subscriber and Company are
parties.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (c)           Maximum
Exercise of Rights.   In the event the
exercise of the rights described in Sections 10(a) and 10(b) would or could result in the issuance of
an amount of Common Stock of the Company that would exceed the such Subscriber owning more than 4.9% of
the shares of Common Stock issued and outstanding, then the issuance of such additional
shares of Common Stock of the Company to Subscriber will be deferred in whole or
in part until such time as such Subscriber is able to beneficially own
such Common Stock without exceeding 4.9% of the shares of Common Stock
issued and outstanding and notifies the Company accordingly.

     

    11.         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:

    

    If to the
Company, to:

    Medical Alarm Concepts Holding,
Inc.

    Attn: Howard Teicher, CEO and
CFO

    5215-C Militia Hill
Road

    Plymouth Meeting, PA
19462

    facsimile:
(610) 872-9066

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    With a
copy by fax only to (which copy shall not constitute notice):

    Anslow
& Jaclin LLP

    Attn:
Eric Stein, Esq.

    195 Route
9 South, Suite 204

    Manalapan,
NJ 07726

    facsimile:
(732) 577-1188

    

    If to the
Subscribers:

    To each
of the addresses and facsimile numbers listed on the signature pages of this
Agreement

    

     

    (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 Subscriber 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.

     

    (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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (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 Subscriber 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.

     

    (j)           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.

     

    (k)           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.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT

     

    

    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.

     

    
      
        	 	

                MEDICAL ALARM
      CONCEPTS HOLDING, INC.

                a Nevada
      corporation

              	 
	 	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	Dated:
      November ___, 2008	 

      

    

    
 

    

    
      	
              SUBSCRIBER

            	
              PURCHASE

      PRICE

            	
              NUMBER OF

      SHARES

            
	
               

               

               

               

               

               

              ___________________________________________

              By:

              Title:

               

            	 
      	 
      

    

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

    LIST OF
EXHIBITS AND SCHEDULES

     

    
      
        	 
      	
                Exhibit A

              	
                Escrow
      Agreement

              
	 	 	 
	 
      	
                Exhibit B

              	
                Form of Lockup
      Agreement

              
	 	 	 
	
                 

              	
                

                  Schedule
      5(a)

                

              	

                Subsidiaries

              
	 	 	 
	 
      	
                Schedule
    5(d)

              	
                Additional Issuances /
      Capitalization

              
	 	 	 
	 
      	
                Schedule
    5(n)

              	
                Undisclosed
      Liabilities

              
	 	 	 
	 
      	
                Schedule
    5(p)

              	
                Financial
      Institutions

              
	 	 	 
	 
      	
                Schedule
    5(w)

              	
                Transfer
    Agent

              
	 	 	 
	 
      	
                Schedule
    9(e)

              	
                Use of
    Proceeds

              
	 	 	 
	 
      	
                Schedule
    9(k)

              	
                Intellectual
      Property

              
	 	 	 
	 
      	
                Schedule
    9(t)

              	
                Lockup Agreement
      Providers

              

      

    

     

    
      
        
        

      

      
        21

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