Document:

MEDICAL
      DISCOVERIES, INC.

     

    CERTIFICATE
      OF DESIGNATION OF PREFERENCES AND RIGHTS

    OF
      

    SERIES
      B CONVERTIBLE PREFERRED STOCK

     

    
      
        

      

    

     

    Pursuant
      to the authority conferred upon the Board of Directors by the Amended and
      Restated Articles of Incorporation of Medical Discoveries, Inc., a Utah
      corporation (the “Corporation”), and pursuant to the provisions of Section
      16-10a-601 of the Utah Revised Business Corporation Act, said Board of Directors
      pursuant to a unanimous written consent, dated as of November 6,
      2007, adopted a
      resolution establishing the rights, preferences, privileges and restrictions
      of,
      and the number of shares comprising, a new series of the Corporation’s Preferred
      Stock, which resolution is as follows:

     

    WHEREAS,
      the Amended and Restated Articles of Incorporation of the Corporation provide
      for 50,000,000 shares of a class of shares known as “Preferred Stock,” issuable
      from time to time in one or more series; and

     

    WHEREAS,
      the Board of Directors of the Corporation is authorized to create a new series
      of Preferred Stock and to determine the preferences, limitations and relative
      rights granted to or imposed upon any wholly unissued series of Preferred Stock,
      to fix the number of shares constituting any such Series, and to determine
      the
      designation thereof;

     

    WHEREAS,
      the Board of Directors of the Corporation desires, pursuant to its authority
      as
      aforesaid, to determine and fix the powers, preferences voting and other rights
      and restrictions relating to a new series of Preferred Stock and the number
      of
      shares constituting and the designation of said new series;

     

    NOW,
      THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and
      determines number of shares constituting, and the rights, preferences,
      privileges and restrictions relating to a new series of the Corporation’s
      Preferred Stock as follows:

     

    1.  DESIGNATION
      OF SERIES.
      There is
      hereby established a series of preferred stock, no par value per share, of
      the
      Corporation, which new series is designated as “Series B Convertible Preferred
      Stock” (“Series B Preferred Stock”). The number of shares constituting such
      series is 13,000, which number may from time to time be increased or decreased
      (but not below the number then outstanding) by the Board of Directors. The
      Series B Preferred Stock shall have a stated value of $100 per share for the
      purpose of calculating amounts payable upon liquidation, dissolution or winding
      up, and adjustments to the Conversion Price. Shares of Series B Preferred Stock
      may be issued in fractional shares, which fractional shares shall entitle the
      holder, in proportion to such holder’s fractional share, to all rights of a
      holder of a whole share of this series.

     

    
      
         

      

      
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    2.  RANK.
      The
      Series B Preferred Stock shall, with respect to the rights of the Corporation’s
      shareholders upon liquidation, dissolution or winding up of the affairs of
      the
      Corporation, rank (i) senior and prior to the Corporation’s Common Stock, no par
      value per share (the “Common Stock”), and (ii) junior to the Series A
      Convertible Preferred Stock. 

     

    3.  DIVIDENDS.
      No
      dividends are required to be paid to the holders of Series B Preferred Stock.
      However, no dividend shall be declared or paid on the Common Stock, other than
      dividends payable solely in capital stock, unless an equivalent dividend
      (computed in proportion to the number of shares of Common Stock into which
      each
      share of Series B Preferred Stock is then convertible) is paid and declared
      for
      all outstanding shares of Series B Preferred Stock. Each dividend shall be
      paid
      to the holders of record of shares of the Series B Preferred Stock as they
      appear on the stock register of the Corporation on a date determined by the
      Board of Directors (the “Dividend Record Date”). Holders of shares of the Series
      B Preferred Stock converted between the close of business on a Dividend Record
      Date and the close of business on the dividend payment date shall, in lieu
      of
      receiving such dividend on the dividend payment date fixed therefor, receive
      such dividend payment on the date of conversion. The holders of shares of the
      Series B Preferred Stock shall not be entitled to any dividends other than
      the
      dividends provided for in this Paragraph 3. 

     

    4.  LIQUIDATION.

     

    a.  The
      liquidation value per share of shares of the Series B Preferred Stock, in case
      of the voluntary or involuntary liquidation, dissolution or winding-up of the
      affairs of the Corporation, shall be $100 per share, plus an amount equal to
      the
      dividends declared and unpaid with respect to each such share, to the payment
      date (such aggregate amount being hereinafter referred to as the “Liquidation
      Preference”). Whenever the distribution provided for in this Paragraph 4 shall
      be paid in property other than cash, the value of such distribution shall be
      the
      fair market value of such property as determined in good faith by the Board
      of
      Directors of the Corporation.

     

    b.  In
      the
      event of a distribution in connection any voluntary or involuntary liquidation,
      dissolution or winding-up of the Corporation, and subject to the prior rights
      of
      the Corporation’s Series A Convertible Preferred Stock, the holders of shares of
      the Series B Preferred Stock shall be entitled to receive out of the assets
      of
      the Corporation, whether such assets are capital or surplus of any nature,
      an
      amount per share equal to the Liquidation Preference of such shares held by
      them
      in preference to and in priority over any distributions made to the holders
      of
      Common Stock. If, upon the occurrence of a liquidation, dissolution or winding
      up, the assets and funds of the Corporation legally available for distribution
      to shareholders shall be insufficient to permit the payment in full to holders
      of Series B Preferred Stock of the Liquidity Preference, then all of the assets
      and funds of the Corporation legally available for distribution to holders
      of
      the Series B Preferred Stock shall be distributed ratably among the holders
      of
      Series B Preferred Stock in proportion to the preferential amount each such
      holder is otherwise entitled to receive. Upon payment of the Liquidation
      Preference to which the holders of shares of the Series B Preferred Stock are
      entitled in accordance with this paragraph, the Series B Preferred Stock shall
      be cancelled and the holders of shares of the Series B Preferred Stock shall
      not
      thereafter be entitled to any further participation in any distribution of
      assets by the Corporation. 

     

    
      
         

      

      
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    c.  Neither
      a
      consolidation or merger of the Corporation with or into any other entity, nor
      a
      merger of any other entity with or into the Corporation, nor a sale or transfer
      of all or any part of the Corporation’s assets for cash or securities or other
      property shall be considered a liquidation, dissolution or winding-up of the
      Corporation within the meaning of this Paragraph 4. 

     

    d.  Written
      notice of any liquidation, dissolution or winding up of the Corporation, stating
      the payment date or dates when and the place or places where the amounts
      distributable in such circumstances shall be payable, shall be given by first
      class mail, postage prepaid, not less than 30 days prior to any payment date
      stated therein to the holders of shares of the Series B Preferred Stock at
      their
      respective addresses as the same shall appear on the books of the transfer
      agent
      with respect to the Series B Preferred Stock.

     

    5.  VOTING.
      The
      holders of Series B Preferred Stock shall be entitled to vote upon all matters
      presented to the Corporation’s shareholders, together with the holders of the
      Common Stock as one class. Each share of Series B Preferred Stock shall entitle
      the holder thereof to that number of votes equal to the number of shares of
      Common Stock into which each such share of Series B Preferred Stock would have
      been convertible, if such conversion had taken place on the record date set
      for
      determining stockholders entitled to vote at a meeting or the date of the
      consent of stockholders if action is being taken by written
      consent.

     

    6.  CONVERSION.
      The
      holder of any shares of Series B Preferred Stock shall have the right at any
      time commencing from the date of issuance to convert any and all of such
      holder’s shares of Series B Preferred Stock into duly authorized, validly
      issued, fully paid and nonassessable shares of Common Stock of the Corporation
      at the Conversion Price, as defined herein, and upon the terms set forth herein.
      The holder of any shares of the Series B Preferred Stock may exercise such
      holder’s right to voluntarily convert such shares into shares of Common Stock by
      surrendering for such purpose to the Corporation, at its principal office or
      at
      such other office or agency maintained by the Corporation for that purpose,
      a
      certificate or certificates representing the shares of Series B Preferred Stock
      to be converted, accompanied by a written notice stating that such holder elects
      to convert all or a specified whole number of such shares in accordance with
      the
      provisions of this Paragraph 6 and specifying the name or names in which such
      holder wishes the certificate or certificates for shares of Common Stock to
      be
      issued. In case such notice shall specify a name or names other than that of
      such holder, such notice shall be accompanied by (i) payment of any transfer
      taxes payable upon the issuance of shares of Common Stock in such name or names
      and (ii) evidence, satisfactory to the Corporation, that the transfer of such
      shares will not violate any applicable securities or other laws. As promptly
      as
      practicable, and in any event within ten (10) business days after the surrender
      of such certificates and the receipt of such notice relating thereto and, if
      applicable, payment of all transfer taxes, the Corporation shall deliver or
      cause to be delivered (i) certificates representing the number of validly
      issued, fully paid and nonassessable shares of Common Stock to which the holder
      of the Series B Preferred Stock so converted shall be entitled, (ii) any payment
      (in either cash of shares of Series B Preferred Stock) required to be made
      with
      respect to declared but unpaid dividends on the converted shares of Series
      B
      Preferred Stock, and (iii) if less than the full number of shares of the Series
      B Preferred Stock evidenced by the surrendered certificate or certificates
      are
      being converted, a new certificate or certificates, of like tenor, for the
      number of shares evidenced by such surrendered certificate or certificates
      less
      the number of shares converted. Such conversions shall be deemed to have been
      made at the close of business on the date of giving of such notice and of such
      surrender of the certificate or certificates representing the shares of the
      Series B Preferred Stock to be converted so that the rights of the holder
      thereof shall cease except for the right to receive Common Stock and any accrued
      dividend in accordance herewith, and the converting holder shall be treated
      for
      all purposes as having become the record holder of such Common Stock at such
      time.

     

    
      
         

      

      
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    7.  CONVERSION
      PRICE.
      Each
      share of Series B Preferred Stock shall be converted into a number of shares
      of
      Common Stock determined by dividing (i) $100 by (ii) the Conversion Price of
      such shares as in effect on the date of conversion. The initial Conversion
      Price
      shall be $0.11 per share. The initial Conversion Price shall be subject to
      further adjustment as set forth in Paragraph 9 hereof.

     

    8.  CONVERSION
      PROCEDURE.
      Upon any
      conversion of any shares of Series B Preferred Stock under Paragraph 6, the
      holder of the converted Series B Preferred Stock shall be entitled to receive
      (i) shares of Common Stock in exchange for the shares of Series B Preferred
      Stock submitted for, or subject to conversion, and (ii) if applicable, declared
      but unpaid dividends in respect of the shares so converted. 

     

    9.  CONVERSION
      PRICE ADJUSTMENTS.
      The
      initial Conversion Price for each respective issuance of shares of Series B
      Preferred Stock shall be subject to adjustment from time to time upon the
      occurrence of certain events as follows:

     

    a.  Stock
      Dividends, Subdivisions, Reclassifications or Combinations. If
      the
      Corporation shall (i) declare a dividend or make a distribution in shares of
      Common Stock, (ii) subdivide or reclassify the outstanding shares of Common
      Stock into a greater number of shares, or (iii) combine or reclassify the
      outstanding Common Stock into a smaller number of shares, the Conversion Price
      in effect at the time of the record date of such dividend or distribution on
      the
      effective date of such subdivision, combination or reclassification shall be
      proportionately adjusted so that the holder of any shares of Series B Preferred
      Stock surrendered for conversion immediately after such record date shall be
      entitled to receive the number of shares of Common Stock which he or she would
      have owned or been entitled to receive had such Series B Preferred Stock been
      converted immediately prior to such record date. Successive adjustments in
      the
      Conversion Price shall be made whenever any event specified above shall
      occur.

     

    b.  Other
      Distributions. In
      case
      the Corporation shall hereafter fix a record date for the making of a
      distribution to all holders of shares of Common Stock, (i) of shares of any
      class of capital stock of the Corporation other than shares of Common Stock,
      or
      (ii) of evidences of indebtedness of the Corporation, or (iii) of assets
      (excluding cash dividends or distributions, and dividends or distributions
      referred to in subparagraph 9a hereof), or (iv) of rights or warrants entitling
      the holders of Common Stock to subscribe for or purchase shares of Common Stock;
      in each such case, the Conversion Price in effect immediately prior thereto
      shall be reduced immediately thereafter to the price determined by dividing
      (1)
      an amount equal to the difference resulting from (A) the number of shares of
      Common Stock outstanding on such record date multiplied by the Conversion Price
      per share on such record date, less
      (B) the
      fair market value (as determined by the Board of Directors in their reasonable
      discretion) of said shares or evidences of indebtedness or assets or rights
      or
      warrants to be so distributed by (2) the number of shares of Common Stock
      outstanding on such record date. Such adjustment shall be made successively
      whenever such a record date is fixed. In the event that such distribution is
      not
      so made, the Conversion Price then in effect shall be readjusted, effective
      as
      of the date when the Board of Directors determines not to distribute such
      shares, evidences of indebtedness, assets, rights or warrants, as the case
      may
      be, to the Conversion Price which was in effect prior to the fixing of the
      record date (subject to any adjustments made pursuant to this Paragraph 9 since
      such record date).

     

    
      
         

      

      
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    c.  Rounding
      of Calculations; Minimum Adjustment. All
      calculations under this Paragraph 9 shall be made to the nearest cent or to
      the
      nearest one-hundredth of a share, as the case may be. No adjustment in the
      Conversion Price shall be made if the amount of such adjustment would be less
      than $0.01, but any such amount shall be carried forward and an adjustment
      with
      respect thereto shall be made at the time of and together with any subsequent
      adjustment which, together with such amount and any other amount or amounts
      so
      carried forward, shall aggregate $0.01 or more.

     

    d.  Adjustments
      for Consolidation, Merger, etc. In
      case
      the Corporation, (i) shall consolidate with or merge into any other person
      and
      shall not be the continuing or surviving corporation of such consolidation
      or
      merger, (ii) shall permit any other person to consolidate with or merge into
      the
      Corporation and the Corporation shall be the continuing or surviving person,
      but, in connection with such consolidation or merger, the Common Stock shall
      be
      changed into or exchanged for stock or other securities of any other person
      or
      cash or any other property, or (iii) shall effect a capital reorganization
      or
      reclassification of the Common Stock (other than a capital reorganization or
      reclassification resulting in the issue of additional shares of Common stock
      for
      which adjustment is provided in this Paragraph 9); then, and in each such case,
      proper provision shall be made so that each share of Series B Preferred Stock
      then outstanding shall be converted into, or exchanged for, one share of
      preferred stock of the acquiring corporation entitling the holder thereof to
      all
      of the rights (including voting rights), powers, privileges and preferences
      with
      respect to the acquiring corporation to which the holder of a share of Series
      B
      Preferred Stock is entitled with respect to the Corporation, and being subject
      with respect to the acquiring corporation to the qualifications, limitations
      and
      restrictions to which a share
      of
      Series B Preferred Stock is subject with respect to the
      Corporation.

     

    10.  VOLUNTARY
      ADJUSTMENT.
      The
      Corporation may make, but shall not be obligated to make, such decreases in
      the
      Conversion Price so as to increase the number of shares of Common Stock into
      which the Series B Preferred Stock may be converted, in addition to those
      required by Paragraph 9 hereof, as it considers to be advisable in order to
      avoid federal income tax treatment as a dividend of stock or stock
      rights.

     

    11.  NOTICE
      OF ADJUSTMENT OF CONVERSION PRICE.
      Whenever
      the Conversion Price is adjusted as herein provided, the Corporation shall
      forthwith file with any transfer agent or agents for the Series B Preferred
      Stock, if any, and at the principal office of the Corporation, a statement
      signed by the Chief Executive Officer, President or a Vice President and by
      the
      Chief Financial Officer or the Secretary of the Corporation setting forth the
      adjusted Conversion Price. The statement so filed shall be open to inspection
      by
      any holder of record of shares of Series B Preferred Stock. The Corporation
      shall also, at the time of filing any such statement, mail notice to the same
      effect to the holders of shares of Series B Preferred Stock at their addresses
      appearing on the books of the Corporation or supplied by such holder to the
      Corporation for the purpose of notice.

     

    
      
         

      

      
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    12.  FRACTIONAL
      SHARES IN CONVERSION.
      The
      Corporation shall not be required to issue fractions of shares of Common Stock
      on the conversion of Series B Preferred Stock. If any fraction of a share of
      Common Stock would be issuable upon the conversion of a share, except for the
      provisions hereof, the Corporation shall purchase such fraction for an amount
      in
      cash equal to the Conversion Price multiplied by such fraction. If more than
      one
      certificate for shares of Series B Preferred Stock shall be presented for
      conversion at any one time by the same registered holder, the number of shares
      of Common Stock which shall be issuable upon conversion thereof shall be
      computed on the basis of the aggregate number of shares of Common Stock issuable
      upon conversion of the shares so presented. All calculations under this
      Paragraph 13 shall be made to the nearest one-hundredth of a share.

     

    13.  MUTILATED
      OR MISSING PREFERRED STOCK CERTIFICATES.
      If any
      of the Series B Preferred Stock certificates shall be mutilated, lost, stolen
      or
      destroyed, the Corporation shall issue, in exchange and substitution for and
      upon cancellation of the mutilated Series B Preferred Stock certificate, or
      in
      lieu of and in substitution for the Series B Preferred Stock certificate lost,
      stolen or destroyed, a new Series B Preferred Stock certificate of like tenor
      and representing an equivalent amount of shares of Series B Preferred Stock,
      but
      only upon receipt of evidence of such loss, theft or destruction of such Series
      B Preferred Stock certificate and indemnity, if requested by the transfer agent
      for the Series B Preferred Stock or the Corporation.

     

    14.  REISSUANCE
      OF PREFERRED STOCK. Any
      shares of Series B Preferred Stock acquired by the Corporation by reason of
      purchase, conversion or otherwise shall be canceled, retired and eliminated
      from
      the shares of Series B Preferred Stock that the Corporation shall be authorized
      to issue. All such shares shall upon their cancellation become authorized but
      unissued shares of Preferred Stock, and may be reissued as part of a new series
      of Preferred Stock subject to the conditions and restrictions on issuance set
      forth in the Articles of Incorporation or in any Certificate of Designation
      creating a series of Preferred Stock or any similar stock or as otherwise
      required by law.

     

    15.  BUSINESS
      DAY.
      If any
      payment, redemption or exchange shall be required by the terms hereof to be
      made
      on a day that banks are not open in the State of California, such payment,
      redemption or exchange shall be made on the immediately succeeding day on which
      such banks are open.

     

    16.  HEADINGS
      OF SUBDIVISIONS.
      The
      headings of various subdivisions hereof are for convenience of reference only
      and shall not affect the interpretation of any of the provisions
      hereof.

     

    17.  SEVERABILITY
      OF PROVISIONS.
      If any
      right, preference or limitation of the Series B Preferred Stock set forth in
      these resolutions and the Certificate of Designations filed pursuant hereto
      (as
      such resolution may be amended from time to time) is invalid, unlawful or
      incapable of being enforced by reason of any rule of law or public policy,
      all
      other rights, preferences and limitations set forth in this resolution (as
      so
      amended) which can be given effect without the invalid, unlawful or
      unenforceable right, preference or limitation shall, nevertheless, remain in
      full force and effect, and no right, preference or limitation herein set forth
      shall be deemed dependent upon any other such right, preference or limitation
      unless so expressed herein.

     

    
      
         

      

      
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    18.  NOTICE
      TO THE COMPANY. All
      notices and other communications required or permitted to be given to the
      Corporation hereunder shall be made by courier to the Corporation at its
      principal executive offices located at 6033 W. Century Blvd, Suite 1090, Los
      Angeles, 90045, Attention: Chief Executive Officer. Minor imperfections in
      any
      such notice shall not affect the validity thereof.

     

    19.  LIMITATIONS.
      Except
      as
      may otherwise be required by law, the shares of Series B Preferred Stock shall
      not have any powers, preferences or relative, participating, optional or other
      special rights other than those specifically set forth in this Certificate
      of
      Designation or otherwise in the Articles of Incorporation of the
      Corporation.

     

    IN
      WITNESS WHEREOF, Medical Discoveries, Inc. has caused this certificate to be
      executed by David Walker, Chairman of the Board of Directors and Treasurer,
      this
      __th
      of
      November 2007.

     

    
      	 	 	 
	 	MEDICAL
              DISCOVERIES, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              David Walker
	 	
              Title:
                Chairman of the Board of Directors and Treasurer

            

    

     

    
      
         

      

        7Unassociated Document

    

    

    

    SECURITIES
      PURCHASE

    

    AGREEMENT

    

    

    

    

    Dated
      as of November 6, 2007

    

    

    

    

    among

    

    

    

    

    MEDICAL
      DISCOVERIES, INC.

    

    

    

    and

    

    

    

    THE
      PURCHASERS LISTED ON EXHIBIT A

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECURITIES
      PURCHASE AGREEMENT

    

    This
      SECURITIES PURCHASE AGREEMENT this (“Agreement”), dated as of November 6,
      2007, by and among Medical Discoveries, Inc., a Utah corporation (the
“Company”), and the persons and entities listed on Exhibit A
      hereto (each, a “Purchaser” and collectively, the “Purchasers”),
      for the sale by the Company, and the purchase by Purchasers, of shares of the
      Company’s Series B Convertible Preferred Stock, no par value per share (the
“Series B Preferred Stock”). The Company and the Purchasers are
      collectively referred to herein as the “Parties.”

     

    The
      Parties hereto agree as follows:

     

     

    ARTICLE
      I

     

    Purchase
      and Sale of Series B Preferred Stock 

     

    Section
      1.1  Purchase
      and Sale of Series B Preferred Stock.
      Upon
      the following terms and conditions, the Company hereby agrees to issue and
      sell
      to the Purchasers, and each Purchaser, severally but not jointly, hereby agrees
      to purchase from the Company that number of shares of Series B Preferred Stock
      set forth opposite such Purchaser’s name on Exhibit
      A
      hereto
      (the “Preferred
      Shares”),
      for
      the purchase price (the “Purchase
      Price”)
      set
      forth opposite such Purchaser’s name on Exhibit
      A.
      Each
      share of Series B Preferred Stock shall have a stated price of $100 per share,
      shall be convertible into shares of Common Stock of the Company at an initial
      conversion price equal to eleven cents ($0.11) per share, and shall have the
      rights, preferences, privileges and restrictions set forth in the Certificate
      of
      Designation, Preferences and Rights of the Series B Convertible Preferred Stock
      (the “Certificate
      of Designation”),
      the
      form of which is attached hereto as Exhibit
      B.
      The
      Company and the Purchasers are executing and delivering this Agreement in
      accordance with and in reliance upon the exemption from securities registration
      afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended, and
      the
      rules and regulations promulgated thereunder (the “Securities
      Act”),
      including Regulation D (“Regulation
      D”),
      and/or upon such other exemption from the registration requirements of the
      Securities Act as may be available with respect to any or all of the investments
      to be made hereunder.

     

    Section
      1.2  Tranches.
      The
      purchase of the Preferred Shares shall be effected in two tranches. The Company
      hereby agrees to issue and sell to the Purchasers, and the Purchasers, severally
      but not jointly, hereby agree to purchase the number of shares of Series B
      Preferred Stock set forth opposite their respective names on Exhibit
      A
      as
      follows:

     

    (a)  At
      the
      Closing (as defined below), the Company shall issue and sell to the Purchasers,
      and each Purchaser shall acquire from the Company, that number of Preferred
      Shares representing fifty percent (50%) of the number of shares of Series B
      Preferred Stock set forth opposite such Purchaser’s name on Exhibit
      A
      (the
“First
      Tranche”),
      and
      each Purchaser shall pay the Company fifty percent (50%) of the Purchase Price
      set forth opposite such Purchaser’s name on Exhibit
      A;
      and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  On
      or
      before November 23, 2007, the Company shall issue and sell to each Purchaser,
      and each Purchaser shall acquire from the Company, the remaining shares of
      Series B Preferred Stock set forth opposite such Purchaser’s name on
Exhibit
      A
      that
      were not sold to the Purchaser at the Closing (the “Second
      Tranche”),
      and
      each Purchaser shall pay the Company for such shares the balance of the Purchase
      Price set forth opposite such Purchaser’s name on Exhibit
      A.
      

     

    The
      Purchase
      Price payable by each Purchaser
      at each of the First Tranche and Second Tranche shall be payable to the Company
      in cash, in the lawful currency of the United States of America, made by bank
      wire transfer, and paid from readily available funds of each
      Purchaser.

    

    Section
      1.3  Closing.
      The
      closing of the purchase and sale of the Series B Preferred Stock to be acquired
      by the Purchasers from the Company under this Agreement shall take place at
      the
      offices of the Company located at 6033 W. Century Blvd, Suite 1090, Los Angeles,
      CA 90045, (the “Closing”)
      at
      10:00 a.m., Pacific Time (i) on or before November 9, 2007; provided,
      however,
      that
      all of the conditions set forth in Article IV hereof and applicable to the
      Closing shall have been fulfilled or waived in accordance herewith, or (ii)
      at
      such other time and place or on such date as the Purchasers and the Company
      may
      agree upon (the “Closing
      Date”). 

     

    Section
      1.4  Reserved
      Shares of Common Stock.
      The
      Company covenants to authorize, reserve and continue to reserve, free of
      preemptive rights and other similar contractual rights of stockholders, a number
      of its authorized but unissued shares of Common Stock equal to the aggregate
      number of shares of Common Stock issuable upon the conversion of the Preferred
      Shares. Any shares of Common Stock issuable upon the conversion of the Preferred
      Shares (and such shares when issued) are herein referred to as the “Conversion
      Shares.”
The
      Preferred Shares and the Conversion Shares are sometimes collectively referred
      to herein as the “Securities.”

     

     

    ARTICLE
      II

     

    Representations
      and Warranties 

     

    Section
      2.1  Representations
      and Warranties of the Company.
      In
      order to induce the Purchasers to enter into this Agreement and to purchase
      the
      Preferred Shares, the Company hereby makes the following representations and
      warranties to the Purchasers:

     

    (a)  Organization,
      Good Standing and Power.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Utah and has the requisite corporate
      power to own, lease and operate its properties and assets and to conduct its
      business as it is now being conducted. Except as set forth on Schedule
      2.1(g)
      hereto,
      the Company does not have any Subsidiaries (as defined in Section 2.1(g)) or
      own
      securities of any kind in any other entity. The Company and each such Subsidiary
      is duly qualified as a foreign corporation to do business, and is in good
      standing in every jurisdiction in which the nature of the business conducted
      or
      property owned by it makes such qualification necessary, except for any
      jurisdiction(s) (alone or in the aggregate) in which the failure to be so
      qualified will not have a Material Adverse Effect. For the purposes of this
      Agreement, “Material
      Adverse Effect”
means
      any adverse effect on the business, operations, properties, prospects or
      financial condition of the Company or its Subsidiaries, taken as a whole, and
      which is material to such entity or other entities controlling or controlled
      by
      such entity or which is likely to materially hinder the performance by the
      Company of its material obligations hereunder.

     

    
      
        
        

      

      
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    (b)  Authorization;
      Enforcement.
      As of
      the Closing Date, the Company will have authorized the issuance, pursuant to
      the
      terms and conditions of this Agreement, of a number of shares of Series B
      Preferred Stock sufficient to meet its obligations hereunder (up to a maximum
      of
      13,000 Preferred Shares). The Company has the requisite corporate power and
      authority to enter into and perform this Agreement and any other agreement
      contemplated hereby, and to issue and sell the Preferred Shares in accordance
      with the terms hereof. The execution, delivery and performance of this Agreement
      by the Company and the consummation by it of the transactions contemplated
      hereby have been duly and validly authorized by all necessary corporate action,
      and no further consent or authorization of the Company, its Board of Directors
      or its shareholders is required. This Agreement has been duly executed and
      delivered by the Company, and constitutes a valid and binding obligation of
      the
      Company enforceable against the Company in accordance with its terms, except
      as
      such enforceability may be limited by applicable bankruptcy, reorganization,
      moratorium, liquidation, conservatorship, receivership or similar laws relating
      to, or affecting generally the enforcement of, creditor’s rights and remedies or
      by other equitable principles of general application.

     

    (c)  Capitalization.
      The
      authorized capital stock of the Company and the shares thereof currently issued
      and outstanding as of November 6, 2007 are set forth on Schedule
      2.1(c)
      hereto.
      All of the outstanding shares of the Company’s Common Stock and any other
      securities of the Company have been duly and validly authorized. Except as
      set
      forth on Schedule
      2.1(c)
      hereto,
      no shares of Common Stock or any other securities of the Company are entitled
      to
      preemptive rights or registration rights and there are no outstanding options,
      warrants, scrip, rights to subscribe to, call or commitments of any character
      whatsoever relating to, or securities or rights convertible into, any shares
      of
      capital stock of the Company. The Company has furnished or made available to
      the
      Purchasers true and correct copies of the Company’s Amended and Restated
      Articles of Incorporation, as amended and in effect on the date hereof (the
      “Articles
      of Incorporation”),
      and
      the Company’s Amended Bylaws as in effect on the date hereof (the “Bylaws”).

     

    (d)  Issuance
      of Securities.
      The
      Preferred Shares to be issued as contemplated herein have been duly authorized
      by all necessary corporate action and, when paid for or issued in accordance
      with the terms hereof, the Preferred Shares shall be validly issued and
      outstanding, fully paid and nonassessable and free and clear of all liens,
      encumbrances and rights of refusal of any kind and the holders shall be entitled
      to all rights accorded to a holder set forth in the Certificate of Designation.
      When the Conversion Shares are issued upon the conversion the Preferred Shares
      in accordance with the Certificate of Designation, such shares will be duly
      authorized by all necessary corporate action and validly issued and outstanding,
      fully paid and nonassessable, free and clear of all liens, encumbrances and
      rights of refusal of any kind and the holders shall be entitled to all rights
      accorded to a holder of Common Stock.

     

    
      
        
        

      

      
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    (e)  No
      Conflicts.
      Except
      as set forth in Schedule
      2.1(e)
      hereto,
      the execution, delivery and performance of this Agreement by the Company and
      the
      consummation by the Company of the transactions contemplated hereby do not
      (i)
      violate any provision of the Articles of Incorporation or
      Bylaws, (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, mortgage, deed of trust, indenture, note, bond, license, lease
      agreement, instrument or obligation to which the Company is a party or by which
      the Company’s properties or assets are bound, (iii) create or impose a lien,
      mortgage, security interest, charge or encumbrance of any nature on any property
      or asset of the Company under any agreement or any commitment to which the
      Company is a party or by which the Company is bound or by which any of its
      properties or assets are bound, or (iv) result in a violation of any federal,
      state, local or foreign statute, rule, regulation, order, judgment or decree
      (including federal and state securities laws and regulations) applicable to
      the
      Company or by which any property or asset of the Company is bound or affected,
      except, in all cases other than violations pursuant to clauses (i) or (iv)
      (with
      respect to federal and state securities laws) above, for such conflicts,
      defaults, terminations, amendments, acceleration, cancellations and violations
      as would not, individually or in the aggregate, have a Material Adverse Effect.
      The Company is not required under federal, state, foreign or local law, rule
      or
      regulation 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 or
      issue
      and sell the Preferred Shares or the Conversion Shares in accordance with the
      terms hereof or thereof (other than any filings which may be required to be
      made
      by the Company with the Securities and Exchange Commission (the “SEC”)
      and/or
      the any exchange on which the Company’s securities are traded prior to or
      subsequent to the Closing, or state securities administrators subsequent to
      the
      Closing).

     

    (f)  SEC
      Documents.
      The
      Company’s Common Stock is registered pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934, as amended (the “Exchange
      Act”),
      and
      except as disclosed on Schedule
      2.1(f)
      hereto,
      the Company has filed all Form 10-KSBs and Form 10-QSBs required to be filed
      by
      it with the SEC pursuant to the reporting requirements of the Exchange Act
      (collectively, the “SEC
      Documents”).
      

     

    (g)  Subsidiaries.
      Schedule
      2.1(g)
      hereto
      sets forth each Subsidiary of the Company, showing the jurisdiction of its
      incorporation or organization and showing the percentage of each person’s
      ownership of the outstanding stock or other interests of such Subsidiary. For
      the purposes of this Agreement, “Subsidiary”
shall
      mean any corporation or other entity of which at least a majority of the
      securities or other ownership interest having ordinary voting power (absolutely
      or contingently) for the election of directors or other persons performing
      similar functions are at the time owned directly or indirectly by the Company
      and/or any of its other Subsidiaries. All of the outstanding shares of capital
      stock of each Subsidiary have been duly authorized and validly issued, and
      are
      fully paid and nonassessable. Neither the Company nor any Subsidiary is subject
      to any obligation (contingent or otherwise) to repurchase or otherwise acquire
      or retire any shares of the capital stock of any Subsidiary or any convertible
      securities, rights, warrants or options of the type described in the preceding
      sentence except as set forth on Schedule
      2.1(g)
      hereto.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (h)  No
      Undisclosed Events or Circumstances.
      Since
      October 31, 2007, no event or circumstance has occurred or exists with respect
      to the Company or its Subsidiaries or their respective businesses, properties,
      prospects, operations or financial condition, which, under applicable law,
      rule
      or regulation, requires, or will require, public disclosure or announcement
      by
      the Company but which has not yet been so publicly announced or
      disclosed. 

     

    (i)  Litigation.
      There
      is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or other proceeding pending or, to the knowledge of the
      Company, threatened against the Company or any Subsidiary which questions the
      validity of this Agreement or any of the transactions contemplated hereby or
      any
      action taken or to be taken pursuant hereto. Except as set forth on Schedule
      2.1(i)
      hereto,
      there is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or other proceeding pending or, to the knowledge of the
      Company, threatened against or involving the Company, any Subsidiary or any
      of
      their respective properties or assets, which individually or in the aggregate,
      would have a Material Adverse Effect. There are no outstanding orders,
      judgments, injunctions, awards or decrees of any court, arbitrator or
      governmental or regulatory body against the Company or any Subsidiary or any
      officers or directors of the Company or any Subsidiary in their capacities
      as
      such, which individually, or in the aggregate, would have a Material Adverse
      Effect. 

     

    (j)  Compliance
      with Law.
      The
      business of the Company and the Subsidiaries has been and is presently being
      conducted in accordance with all applicable federal, state and local
      governmental laws, rules, regulations and ordinances, except as set forth in
      the
      SEC Documents or such that, individually or in the aggregate, the noncompliance
      therewith would not have a Material Adverse Effect. The Company and each of
      its
      Subsidiaries have all franchises, permits, licenses, consents and other
      governmental or regulatory authorizations and approvals necessary for the
      conduct of its business as now being conducted by it unless the failure to
      possess such franchises, permits, licenses, consents and other governmental
      or
      regulatory authorizations and approvals, individually or in the aggregate,
      could
      not reasonably be expected to have a Material Adverse Effect.

     

    (k)  Taxes.
      Except
      as set forth on Schedule
      2.1(k)
      hereto,
      the Company and each of the Subsidiaries has accurately prepared and filed
      all
      federal, state and other tax returns required by law to be filed by it, has
      paid
      or made provisions for the payment of all taxes shown to be due and all
      additional assessments, and adequate provisions have been and are reflected
      in
      the financial statements of the Company and the Subsidiaries for all current
      taxes and other charges to which the Company or any Subsidiary is subject and
      which are not currently due and payable. None of the federal income tax returns
      of the Company or any Subsidiary have been audited by the Internal Revenue
      Service. The Company has no knowledge of any additional assessments, adjustments
      or contingent tax liability (whether federal or state) of any nature whatsoever,
      whether pending or threatened against the Company or any Subsidiary for any
      period, nor of any basis for any such assessment, adjustment or contingency
      that
      could reasonably be expected to have a Material Adverse Effect.

     

    (l)  Material
      Agreements.
      Except
      for that certain Service Agreement, dated as of October 15, 2007, between the
      Company and Corporativo LODEMO S.A DE CV (the “LODEMO
      Agreement”),
      the
      Company has filed with the SEC all written contracts, instruments, agreements,
      commitments, or obligations entered into by the Company or any Subsidiary since
      July 1, 2007. The Company and each of its Subsidiaries has in all material
      respects performed all the obligations required to be performed by them to
      date
      under all such agreements, have received no notice of default and, to the best
      of the Company’s knowledge, are not in default under any such agreements now in
      effect, the result of which could cause a Material Adverse Effect. 

     

    
      
        
        

      

      
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    (m)  Securities
      Act of 1933.
      The
      Company has complied and will comply with all applicable federal and state
      securities laws in connection with the offer, issuance and sale of the Preferred
      Shares and the Conversion Shares hereunder. Neither the Company nor anyone
      acting on its behalf, directly or indirectly, has or will sell, offer to sell
      or
      solicit offers to buy any of the Securities, or similar securities to, or
      solicit offers with respect thereto from, or enter into any preliminary
      conversations or negotiations relating thereto with, any person, or has taken
      or
      will take any action so as to bring the issuance and sale of any of the
      Securities under the registration provisions of the Securities Act and
      applicable state securities laws. Neither the Company nor any of its affiliates,
      nor 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 Securities Act) in connection with the offer or sale of the Preferred
      Shares.

     

    Section
      2.2  Representations
      and Warranties of the Purchasers.
      Each of
      the Purchasers hereby makes the following representations and warranties to
      the
      Company with respect solely to himself/itself and not with respect to any other
      Purchaser:

     

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

     

    (b)  Authorization
      and Power.
      Such
      Purchaser has the requisite power and authority to enter into and perform this
      Agreement and to purchase the Preferred Shares sold to it hereunder. The
      execution, delivery and performance of this Agreement by such Purchaser and
      the
      consummation by it of the transactions contemplated hereby have been duly
      authorized by all necessary corporate, partnership or other action, if
      applicable, and no further consent or authorization of such Purchaser or its
      Board of Directors, stockholders, or partners, as the case may be, is required.
      This Agreement has been duly authorized, executed and delivered by such
      Purchaser. This Agreement constitutes the valid and binding obligations of
      such
      Purchaser enforceable against such Purchaser in accordance with their terms,
      except as such enforceability may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium, liquidation, conservatorship,
      receivership or similar laws relating to, or affecting generally the enforcement
      of, creditor’s rights and remedies or by other equitable principles of general
      application.

     

    (c)  Acquisition
      for Investment.
      Such
      Purchaser is purchasing the Preferred Shares solely for its own account for
      the
      purpose of investment and not with a view to or for sale in connection with
      the
      distribution thereof. Such Purchaser does not have a present intention to sell
      any of the Securities, nor a present arrangement (whether or not legally
      binding) or intention to effect any distribution of any of the Securities to
      or
      through any person or entity. Such Purchaser acknowledges that it (i) has such
      knowledge and experience in financial and business matters such that such
      Purchaser is capable of evaluating the merits and risks of its investment in
      the
      Company, (ii) is able to bear the financial risks associated with an investment
      in the Securities, and (iii) has been given full access to such records of
      the
      Company and the Subsidiaries and to the officers of the Company and the
      Subsidiaries as it has deemed necessary or appropriate to conduct its due
      diligence investigation.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (d)  Rule
      144.
      Such
      Purchaser understands that the Securities must be held indefinitely unless
      such
      Securities are registered under the Securities Act or an exemption from
      registration is available. Such Purchaser acknowledges that it is familiar
      with
      Rule 144 of the rules and regulations of the SEC, as amended, promulgated
      pursuant to the Securities Act (“Rule
      144”),
      and
      that such Purchaser has been advised that Rule 144 permits resales only under
      certain circumstances. Such Purchaser understands that to the extent that Rule
      144 is not available, such Purchaser will be unable to sell any Securities
      without either registration under the Securities Act or the existence of another
      exemption from such registration requirement.

     

    (e)  General.
      Such
      Purchaser understands that the Securities are being offered and sold in reliance
      on a transactional exemption from the registration requirements of federal
      and
      state securities laws and the Company is relying upon the truth and accuracy
      of
      the representations, warranties, agreements, acknowledgments and understandings
      of such Purchaser set forth herein in order to determine the applicability
      of
      such exemptions and the suitability of such Purchaser to acquire the Securities.
      Such Purchaser understands that no United States federal or state agency or any
      government or governmental agency has passed upon or made any recommendation
      or
      endorsement of the Securities.

     

    (f)  Delinquent
      SEC Documents; Access to Information.
      Such
      Purchaser expressly acknowledges that the Company has disclosed, and it is
      aware
      of the Company’s delinquency in filing certain reports required to be filed by
      the Company pursuant to the reporting requirements of the Exchange Act
      (including, without limitation, the disclosures made under Schedule
      2.1(f)
      hereto)
      (all such delinquent reports, the “Delinquent
      SEC Filings”).
      Such
      Purchaser acknowledges that such Purchaser has had the opportunity to ask
      questions of and receive answers from, or obtain additional information and
      documents from, the executive officers of the Company concerning the financial
      and other affairs of the Company, and to the extent deemed necessary in light
      of
      such Purchaser’s personal knowledge of the Company’s affairs, such Purchaser has
      asked such questions and received answers to the full satisfaction of such
      Purchaser. Notwithstanding the Delinquent SEC Filings, such Purchaser desires
      to
      invest in the Company, execute this Agreement and perform the transactions
      contemplated hereby.

     

    (g)  No
      General Solicitation.
      Such
      Purchaser acknowledges that the Preferred Shares were not offered to such
      Purchaser by means of any form of general or public solicitation or general
      advertising, or publicly disseminated advertisements or sales literature,
      including (i) any advertisement, article, notice or other communication
      published in any newspaper, magazine, or similar media, or broadcast over
      television or radio, or (ii) any seminar or meeting to which such Purchaser
      was
      invited by any of the foregoing means of communications.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (h)  Accredited
      Investor.
      Such
      Purchaser is an accredited investor (as defined in Rule 501 of Regulation D),
      and such Purchaser has such experience in business and financial matters that
      it
      is capable of evaluating the merits and risks of an investment in the
      Securities. Such Purchaser acknowledges that an investment in the Securities
      is
      speculative and involves a high degree of risk.

     

     

    ARTICLE
      III

     

    Covenants

     

    The
      Company covenants with each Purchaser as follows, which covenants are for the
      benefit of each Purchaser and their respective permitted assignees.

     

    Section
      3.1  Securities
      Compliance.
      The
      Company shall notify the SEC, in accordance with its rules and regulations,
      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 Purchasers, or their respective subsequent holders. 

     

    Section
      3.2  Compliance
      with Laws.
      The
      Company shall comply, and cause each Subsidiary to comply, with all applicable
      laws, rules, regulations and orders, the noncompliance with which could have
      a
      Material Adverse Effect.

     

    Section
      3.3  Reporting
      Requirements.
      The
      Company covenants that it shall use its commercially best efforts to file the
      Delinquent SEC Filings as promptly as possible and, thereafter, that it shall
      file, or cause to be filed, in a timely manner as and when due, all reports,
      schedules, forms, statements and other documents required to be filed by it
      with
      the SEC pursuant to the reporting requirements of the Exchange Act or the
      Securities Act, as applicable.

     

    Section
      3.4  Reservation
      of Shares.
      The
      Company covenants that it shall use its commercial best efforts to amend its
      Articles of Incorporation by no later than June 1, 2008 to increase its number
      of authorized shares of Common Stock to a number sufficient to enable the
      issuance, on a fully diluted basis, of the maximum number of shares of Common
      Stock upon the conversion of all Preferred Shares.

     

    Section
      3.5  Delivery
      of Share Certificates.
      At
      Closing or as soon thereafter as reasonably possible (but in any event no later
      than three Business Days immediately following the Closing Date), the Company
      shall deliver to each Purchaser certificates representing the Preferred Shares
      (in such denominations as each Purchaser may request) acquired by such Purchaser
      hereunder.

     

    Section
      3.6  Short
      Sales and Confidentiality.
      From
      the date hereof until the Closing, each Purchaser,
      severally and not jointly with the other Purchasers, covenants that it has
      not,
      nor will it execute any Short Sales (or
      enter into any other similar hedging transaction with respect to) of the
      Preferred Shares or shares of the Company’s Common Stock issuable upon the
      conversion thereof. Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      until such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company, such Purchaser will maintain the confidentiality
      of
      the existence and terms of this Agreement and the transactions contemplated
      hereby.  
      For purposes of this Section 3.6, “Short
      Sales”
means
      all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
      Act (but shall not be deemed to include the location and/or reservation of
      borrowable shares of Common Stock).

     

    
      
        
        

      

      
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    ARTICLE
      IV

     

    Conditions

     

    Section
      4.1  Conditions
      Precedent to the Obligation of the Company to Close and to Sell the Preferred
      Shares.
      The
      obligation hereunder of the Company to close and issue and sell the Preferred
      Shares to the Purchasers as contemplated in this Agreement is subject to the
      satisfaction or waiver, prior to the Closing, of the conditions set forth below.
      These conditions are for the Company’s sole benefit and may be waived by the
      Company at any time in its sole discretion.

     

    (a)  Accuracy
      of the Purchasers’ Representations and Warranties.
      The
      representations and warranties of each Purchaser shall be true and correct
      in
      all material respects as of the date when made and as of the Closing Date as
      though made at that time, except for representations and warranties that are
      expressly made as of a particular date, which shall be true and correct in
      all
      material respects as of such date.

     

    (b)  Performance
      by the Purchasers.
      Each
      Purchaser shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by the Purchasers at or prior to the
      Closing Date.

     

    (c)  No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (d)  Delivery
      of Purchase Price.
      The
      Purchase Price for the Preferred Shares shall have been delivered to the Company
      as contemplated in Section 1.2 of this Agreement. 

     

    (e)  No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and no investigation by any governmental authority
      shall have been threatened, against the Company or any Subsidiary, or any of
      the
      officers, directors or affiliates of the Company or any Subsidiary, seeking
      to
      restrain, prevent or change the transactions contemplated by this Agreement,
      or
      seeking damages in connection with such transactions.

     

    (f)  Filing
      of Certificate of Designation.
      The
      Certificate of Designation shall have been filed with the office of the
      Secretary of State of the State of Utah.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    Section
      4.2  Conditions
      Precedent to the Obligation of the Purchasers to Close and to Purchase the
      Preferred Shares.
      The
      obligation hereunder of the Purchasers to purchase the Preferred Shares and
      consummate the transactions contemplated by this Agreement is subject to the
      satisfaction or waiver, prior to the Closing, of each of the conditions set
      forth below. These conditions are for the Purchasers’ sole benefit and may be
      waived by the Purchasers at any time in their sole discretion.

     

    (a)  Accuracy
      of the Company’s Representations and Warranties.
      Each of
      the representations and warranties of the Company in this Agreement shall be
      true and correct in all material respects as of the Closing Date, except for
      representations and warranties that speak as of a particular date, which shall
      be true and correct in all material respects as of such date.

     

    (b)  No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (c)  No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and no investigation by any governmental authority
      shall have been threatened, against the Company or any Subsidiary, or any of
      the
      officers, directors or affiliates of the Company or any Subsidiary, seeking
      to
      restrain, prevent or change the transactions contemplated by this Agreement,
      or
      seeking damages in connection with such transactions.

     

    (d)  Filing
      of Certificate of Designation.
      The
      Certificate of Designation shall have been filed with the office of the
      Secretary of State of the State of Utah.

     

    (e)  Opinion
      of Counsel.
      The
      Purchasers shall have received an opinion of counsel to the Company, dated
      the
      Closing Date, in the form of Exhibit
      C
      hereto.

     

    (f)  Resolutions.
      The
      Board of Directors of the Company shall have adopted resolutions authorizing
      the
      issuance of the Preferred Shares to the Purchasers (the “Resolutions”).

     

    (g)  Officer’s
      Certificate.
      The
      Company shall have delivered to the Purchasers a certificate of an executive
      officer of the Company, dated as of the Closing Date, as to (i) the Resolutions,
      (ii) the Articles of Incorporation and the Bylaws, each as in effect at the
      Closing, and (iii) confirming the accuracy of the Company’s representations,
      warranties and covenants as of the Closing Date.

     

    
      
        
        

      

      
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    ARTICLE
      V

     

    Certificate
      Legend

     

    Section
      5.1  Legend.
      Each
      certificate representing the Preferred Shares and the Conversion Shares shall
      be
      stamped or otherwise imprinted with a legend substantially in the following
      form
      (in addition to any legend required by applicable state securities or “blue sky”
laws):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
      OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR MEDICAL DISCOVERIES, INC. SHALL HAVE RECEIVED AN
      OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
      ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
      REQUIRED.

     

     

    ARTICLE
      VI

     

    Termination

     

    Section
      6.1  Termination
      by Mutual Consent.
      This
      Agreement may be terminated as follows:

     

    (a)  At
      any
      time prior to the Closing Date by the mutual written consent of the Company
      and
      the Purchasers; or

     

    (b)  By
      either
      the Company or the Purchasers if the Closing does not occur on or before
      November 16, 2007. 

     

    Section
      6.2  Effect
      of Termination.
      In the
      event of termination by the Company or the Purchasers, written notice thereof
      shall forthwith be given to the other party and the transactions contemplated
      by
      this Agreement shall be terminated without further action by any party. If
      this
      Agreement is terminated as provided in Section 6.1 herein, this Agreement shall
      become void and of no further force and effect, except for Sections 8.1 and
      8.2,
      and Article VII herein. Nothing in this Section 6.2 shall be deemed to release
      the Company or any Purchaser from any liability for any breach under this
      Agreement, or to impair the rights of the Company or such Purchaser to compel
      specific performance by the other party of its obligations under this
      Agreement.

     

     

    ARTICLE
      VII

     

    Miscellaneous

     

    Section
      7.1  Fees
      and Expenses.
      Each
      party shall pay the fees and expenses of its advisors, counsel, accountants
      and
      other experts, if any, and all other expenses, incurred by such party incident
      to the negotiation, preparation, execution, delivery and performance of this
      Agreement.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    Section
      7.2  Specific
      Enforcement; Consent to Jurisdiction. 

     

    (a)  The
      Company and the Purchasers 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 an injunction or
      injunctions to prevent or cure breaches of the provisions of this Agreement
      and
      to enforce specifically the terms and provisions hereof or thereof, this being
      in addition to any other remedy to which any of them may be entitled by law
      or
      equity.

     

    (b)  The
      Company and each Purchaser (i) hereby irrevocably submit to the non-exclusive
      jurisdiction of the United States District Court sitting in the Central District
      of California and the courts of the State of California located in the City
      of
      Los Angeles for the purposes of any suit, action or proceeding arising out
      of or
      relating to this Agreement or the transactions contemplated hereby, and (ii)
      hereby waive, and agree not to assert in any such suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction 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. The Company and each
      Purchaser consent to process being served in any such suit, action or proceeding
      by mailing a copy thereof 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 in this Section 7.2
      shall affect or limit any right to serve process in any other manner permitted
      by law. The Company and the Purchasers hereby agree that the prevailing party
      in
      any suit, action or proceeding arising out of or relating to the Preferred
      Shares or this Agreement shall be entitled to reimbursement for reasonable
      legal
      fees from the non-prevailing party.

     

    Section
      7.3  Entire
      Agreement; Amendment.
      This
      Agreement and the Certificate of Designation contain the entire understanding
      and agreement of the parties with respect to the matters covered hereby and,
      except as specifically set forth herein or in the Certificate of Designation,
      neither the Company nor any Purchaser make any representation, warranty,
      covenant or undertaking with respect to such matters, and they supersede all
      prior understandings and agreements with respect to said subject matter, all
      of
      which are merged herein. No provision of this Agreement may be waived or amended
      other than by a written instrument signed by the Company and the holders of
      at
      least a majority in interest of the then-outstanding Preferred Shares. No such
      amendment shall be effective to the extent that it applies to less than all
      of
      the holders of the Preferred Shares then outstanding. No consideration shall
      be
      offered or paid to any person to amend or consent to a waiver or modification
      of
      any provision of any of this Agreement unless the same consideration is also
      offered to all of the parties to this Agreement or holders of Preferred Shares,
      as the case may be. 

     

    Section
      7.4  Notices.
      Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery by telecopy or facsimile 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:

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    
      
        	If to the Company:	 	Medical Discoveries, Inc.
	 	 	6033 W. Century Blvd. Suite 1090
	 	 	Los Angeles, California 90045
	 	 	Attention: Richard Palmer, President
&
                COO
	 	 	 
	
                with
                  copies (which copies 

                shall
                  not constitute notice 

                to
                  the Company) to:

              	 	Troy & Gould Professional
                Corporation
	 	 	1801 Century Park East, 16th
                Floor
	 	 	Los Angeles, California
                90067-2367
	 	 	Attention: Istvan
                Benko, Esq.
	 	 	Telecopier: (310)
                789-1426
	 	 	Telephone: (310)
                789-1226
	 	 	 
	If to any Purchaser:	 	At the address of such Purchaser set
                forth on
                the signature page of this Agreement.
	 	 	 
	 	 	 

      

    

    

    Any
      party
      hereto may from time to time change its address for notices by giving at least
      ten (10) days written notice of such changed address to the other party
      hereto.

     

    Section
      7.5  Waivers.
      No
      waiver by any party of any default with respect to any provision, condition
      or
      requirement of this Agreement shall be deemed to be a continuing waiver in
      the
      future or a waiver of any other provision, condition or requirement hereof,
      nor
      shall any delay or omission of any party to exercise any right hereunder in
      any
      manner impair the exercise of any such right accruing to it
      thereafter.

     

    Section
      7.6  Captions;
      Interpretation.
      The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions hereof.
      The
      interpretation of this Agreement shall not be affected by the party who drafted
      this Agreement, and all parties waive any statute, legal decision, or common
      law
      principle that would require interpretation of any ambiguities in this Agreement
      against the party that drafted this Agreement.

     

    Section
      7.7  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns. After the Closing, the assignment by a party
      to
      this Agreement of any rights hereunder shall not affect the obligations of
      such
party under this Agreement. The Purchasers may not assign the Preferred Shares,
      their rights under this Agreement and any other rights hereto without the prior
      written consent of the Company.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    Section
      7.8  No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    Section
      7.9  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of California, and the United States of America without giving
      effect to the choice of law provisions. This Agreement shall not be interpreted
      or construed with any presumption against the party causing this Agreement
      to be
      drafted.

     

    Section
      7.10  Counterparts.
      This
      Agreement may be executed in any number of counterparts, all of which taken
      together shall constitute one and the same instrument and shall become effective
      when counterparts have been signed by each party and delivered to the other
      parties hereto, it being understood that all parties need not sign the same
      counterpart. 

     

    Section
      7.11  Publicity.
      The
      Company agrees that it will not disclose, and will not include in any public
      announcement, the names of the Purchasers without the consent of the Purchasers,
      which consent shall not be unreasonably withheld or delayed, or unless and
      until
      such disclosure is required by law, rule or applicable regulation, and then
      only
      to the extent of such requirement. 

     

    Section
      7.12  Severability.
      The
      provisions of this Agreement are severable and, in the event that any court
      of
      competent jurisdiction shall determine that any one or more of the provisions
      or
      part of the provisions contained in this Agreement shall, for any reason, be
      held to be invalid, illegal or unenforceable in any respect, such invalidity,
      illegality or unenforceability shall not affect any other provision or part
      of a
      provision of this Agreement and this Agreement shall be reformed and construed
      as if such invalid or illegal or unenforceable provision, or part of such
      provision, had never been contained herein, so that such provisions would be
      valid, legal and enforceable to the maximum extent possible.

     

    Section
      7.13  Further
      Assurances.
      From
      and after the date of this Agreement, upon the request of the Purchasers or
      the
      Company, the Company and each Purchaser shall execute and deliver such
      instruments, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    Section
      8.15  Independent
      Nature of Purchasers’ Obligations and Rights.
      The
      obligations of each Purchaser under this Agreement are several and not joint
      with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under this Agreement. Nothing contained herein, and no action taken
      by
      any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers
      as a
      partnership, an association, a joint venture or any other kind of entity, or
      create a presumption that the Purchasers are in any way acting in concert or
      as
      a group with respect to such obligations or the transactions contemplated by
      this Agreement. Each Purchaser confirms that it has independently participated
      in the negotiation of the transactions contemplated hereby with the advice
      of
      its own counsel and advisors. Each Purchaser shall be entitled to independently
      protect and enforce its rights, including, without limitation, the rights
      arising out of this Agreement, and it shall not be necessary for any other
      Purchaser to be joined as an additional party in any proceeding for such
      purpose.

    

    [Remainder
      of page intentionally left blank. Signature pages to follow.]

     

     

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized officers as of the date first above
      written.

    

      	 	 	 
	 	MEDICAL
              DISCOVERIES, INC.
	 
 	 
 	 
 
	Date: 	By:  	 
	 	
              
Name:
Richard
              Palmer
	 	Title:  
President
              & COO 

    

     

     

    [Signatures
      of Purchasers to follow on next pages.]

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	PURCHASER:
	 
 	 
 	 
 
	 	By:  	 
	 	 	
              
 
	 	Name:	 
	 	 	
              
 
	 	Address:	
               

              
                

              

               

              
                

              

               

              
                

              

                 

            

    

     

    
      
        
        

      

      
        -17-

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