Document:

Exhibit
      10.5

     

    ESCROW
      AGREEMENT

     

    This
      Agreement is dated as of the 12th
      day of
      September, 2007 Virtualscopics, Inc., a Delaware corporation (the "Company"),
      the
      Buyers identified on Schedule A hereto (each a “Buyer”
      and
      collectively “Buyers”),
      and
      the law firm of Woods Oviatt Gilman LLP (the "Escrow
      Agent"):

     

    WITNESSETH:

     

    WHEREAS,
      the Company and Buyers have entered into a Securities Purchase Agreement (the
      “Securities
      Purchase Agreement”)
      as of a
      date even herewith, calling for the sale by the Company to the Buyer of Series
      B
      Preferred Stock (“Preferred
      Stock”)
      and
      Warrants for a minimum aggregate purchase price of $4,000,000 and a maximum
      of
      $6,000,000 in the amounts set forth on Schedule A hereto; and

     

    WHEREAS,
      the parties hereto require the Company to deliver the Preferred Stock and
      Warrants against payment therefor, with such Preferred Stock, Warrants and
      the
      Escrowed Funds to be delivered to the Escrow Agent to be held in escrow and
      released by the Escrow Agent in accordance with the terms and conditions of
      this
      Agreement; and

     

    WHEREAS,
      the Escrow Agent is willing to serve as escrow agent pursuant to the terms
      and
      conditions of this Agreement;

     

    NOW
      THEREFORE, the parties agree as follows:

     

    ARTICLE
      I

     

    INTERPRETATION

     

    1.1. Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Securities Purchase Agreement shall have the meanings given to such terms in
      the
      Securities Purchase Agreement. Whenever used in this Agreement, the following
      terms shall have the following respective meanings:

     

    ·  "Agreement"
      means this Agreement and all amendments made hereto and thereto by written
      agreement between the parties;

     

    · 
      “Buyer’s
      Pro Rata Portion,” as to each Buyer, the Purchase Price of the Buyer’s Preferred
      Stock divided by the aggregate Purchase Price of all Preferred Stock issued
      in
      the Offering.

     

    
      ·  “Closing
        Date” shall have the meaning set forth in Section 1(b)(iii) of the Securities
        Purchase Agreement;

    

     

    
      ·  “Irrevocable
        Written Consents” shall have the meaning set forth in the Securities Purchase
        Agreement.

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      ·  “Lead
        Investor Fee” means the $35,000 fee to the Lead Investor described in Section
        4(q) of the Securities Purchase Agreement;

    

     

    
      ·  "Escrowed
        Payment" means an aggregate cash payment of up to $6,000,000 which is the
        purchase price for the Preferred Stock and accompanying
        Warrants;

    

     

    
      ·  "Initial
        Conversion Price" shall have the meaning set forth in the Certificate of
        Designation of Rights and Preferences of Series B Convertible Preferred
        Stock.

    

     

    
      ·  "Initial
        Warrant Exercise Price" shall have the same meaning as in the Securities
        Purchase Agreement.

    

     

    
      · 
        “Lead
        Investor” shall mean BridgePointe Master Funds Ltd.

    

     

    
      · 
        “Legal
        Opinion” means the original signed legal opinion referred to in Section 6 of the
        Securities Purchase Agreement;

    

     

    
      · 
        “Preferred
        Stock” shall have the meaning set forth in the Securities Purchase
        Agreement;

    

     

    
      ·  “Purchase
        Price” shall mean the amount invested by each Buyer, which amount is delivered
        against the purchase and delivery of a corresponding Stated Value of Preferred
        Stock and accompanying Warrants;

       

    

    
      "Securities
        Purchase Agreement" shall have the meaning set forth in the Recitals to this
        Agreement;

    

    
       

      ·  “Shareholder
        Approval Holdback Amount” shall have the meaning set forth in Section 1(b)(iii)
        of the Securities Purchase Agreement.

    

    

    
      · 
        “Reduced
        Shareholder Approval Holdback Amount” shall have the meaning set forth in
        Section 1(b)(iii) of the Securities Purchase Agreement.

    

    

    
      ·  “Related
        Preferred Stock and Warrants” shall have the meaning set forth in Section
        1(b)(iii) of the Securities Purchase Agreement.

    

     

    
      · 
“Warrants”
        shall have the meaning set forth in Section 3 of the Securities Purchase
        Agreement;

    

     

    1.2. Entire
      Agreement.
      This
      Agreement along with the Company Documents and the Buyer Documents constitute
      the entire agreement between the parties hereto pertaining to the Company
      Documents and Buyer Documents and supersedes all prior agreements,
      understandings, negotiations and discussions, whether oral or written, of the
      parties. There are no warranties, representations and other agreements made
      by
      the parties in connection with the subject matter hereof except as specifically
      set forth in this Agreement, the Company Documents and the Buyer
      Documents.

     

    1.3. Extended
      Meanings.
      In this
      Agreement words importing the singular number include the plural and vice versa;
      words importing the masculine gender include the feminine and neuter genders.
      The word "person" includes an individual, body corporate, partnership, trustee
      or trust or unincorporated association, executor, administrator or legal
      representative.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.4. Waivers
      and Amendments.
      This
      Agreement may be amended, modified, superseded, cancelled, renewed or extended,
      and the terms and conditions hereof may be waived, only by a written instrument
      signed by all parties, or, in the case of a waiver, by the party waiving
      compliance. Except as expressly stated herein, no delay on the part of any
      party
      in exercising any right, power or privilege hereunder shall operate as a waiver
      thereof, nor shall any waiver on the part of any party of any right, power
      or
      privilege hereunder preclude any other or future exercise of any other right,
      power or privilege hereunder.

     

    1.5. Headings.
      The
      division of this Agreement into articles, sections, subsections and paragraphs
      and the insertion of headings are for convenience of reference only and shall
      not affect the construction or interpretation of this Agreement.

     

    1.6. 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 conflicts
      of laws
      principles that would result in the application of the substantive laws of
      another jurisdiction. 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
      of
      New York. Both parties and the individuals executing this Agreement and other
      agreements on behalf of the Company agree to submit to the jurisdiction of
      such
      courts and waive trial by jury. The prevailing party (which shall be the party
      which receives an award most closely resembling the remedy or action sought)
      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.

     

    1.7. Specific
      Enforcement, Consent to Jurisdiction.
      The
      Company and Buyer 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 injuction 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. Subject to Section 1.6 hereof, each of the Company and Buyer hereby
      waives, and agrees 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. Nothing in this Section
      shall affect or limit any right to serve process in any other manner permitted
      by law.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

     

    DELIVERIES
      TO THE ESCROW AGENT

     

    2.1. Company
      Deliveries.
      On or
      before the Closing Date, the Company shall deliver documents the Company is
      required to deliver at Closing pursuant to Section 1(b)(v) of the Securities
      Purchase Agreement (the “Company Documents”) to the Escrow Agent. 

     

    2.2. Buyer
      Deliveries.
      On or
      before the Closing Date, each Buyer shall deliver to the Escrow Agent such
      Buyer’s Purchase Price and the executed Securities Purchase Agreement and
      Registration Rights Agreement and Form W-9, as required pursuant to Section
      1(b)(v) of the Securities Purchase Agreement (“Buyer Documents”). The Escrowed
      Payment will be delivered pursuant to the following wire transfer
      instructions:

     

    M&T
      Bank

     

    One
      M&T Plaza

     

    Buffalo,
      NY 14240

     

    For
      Credit to: Woods Oviatt Gilman LLP (Trust Account)

     

    Account
      Number: 7200016526

     

    ABA
      Number: 022000046

     

    2.3. Intention
      to Create Escrow Over Company Documents and Buyer Documents.
      The
      Buyer and Company intend that the Company Documents and Buyer Documents shall
      be
      held in escrow by the Escrow Agent pursuant to this Agreement for their benefit
      as set forth herein.

     

    2.4. Escrow
      Agent to Deliver Company Documents and Buyer Documents.
      The
      Escrow Agent shall hold and release the Company Documents and Buyer Documents
      only in accordance with the terms and conditions of this Agreement.

     

    ARTICLE
      III

     

    RELEASE
      OF COMPANY DOCUMENTS AND BUYER DOCUMENTS

     

    3.1. Release
      of Escrow.
      Subject
      to the provisions of Section 4.2, the Escrow Agent shall release the Company
      Documents and Buyer’s Purchase Price and Buyer Documents following the Closing
      as follows:

     

    (a) On
      the
      Closing Date, subject to the satisfaction or waiver of the terms and conditions
      of this Agreement and the Securities Purchase Agreement, the Closing with
      respect to all Buyers shall occur when Buyer funds representing the Minimum
      Amount are transmitted by wire transfer of immediately available funds by all
      Buyers to the Escrow Agent. The Escrow Agent will simultaneously release the
      Company Documents to the Buyer and release the Buyer Documents and the Buyer’s
      Purchase Price to the Company except that: (i) the Lead Investor Fee will be
      released to the Lead Investor, and (ii) an amount of each Buyer’s Purchase Price
      equal to the Buyer’s Pro Rata Portion of the Shareholder Approval Holdback
      Amount (the “Withheld
      Cash”)
      and a
      number of shares of Preferred Stock having an aggregate Stated Value equal
      to
      the Buyer’s Pro Rata Portion of the Shareholder Approval Holdback Amount, along
      with a corresponding number of Warrants, subject to Section 3.1(h) based upon
      the Warrant Amount corresponding to the withheld shares of Preferred Stock,
      as
      described in the Securities Purchase Agreement (the “Withheld
      Securities”),
      shall
      be held back by the Escrow Agent following the Closing. If the Closing as to
      at
      least the Minimum Amount has not occurred by September 13, 2007, then within
      three (3) Business Days thereafter, the Escrow Agent shall return the Buyer’s
      Purchase Price and Buyer Documents to the Buyer, and shall return the Company
      Documents to the Company.  

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b) If,
      anytime following the Closing and prior to the Shareholder Approval Deadline,
      the Escrow Agent receives (and the Lead Investor confirms receipt of) copies
      of
      Irrevocable Written Consents of stockholders of the Company representing a
      majority of the Company’s outstanding voting shares as of the Trading Day
      immediately preceding the Original Issue Date, then within three (3) Business
      Days thereafter, the Escrow Agent shall (x) release to the Company the balance
      of the Shareholder Approval Holdback Amount, except for the Reduced Shareholder
      Approval Holdback Amount, which the Escrow Agent shall continue to retain,
      and
      (y) subject to Section 3.1(h), release to the Buyer the Related Preferred Stock
      Certificates and Warrants (a “First
      Partial Release”);
      

     

    (c) If,
      anytime following the Closing and prior to the Shareholder Approval Deadline,
      the Escrow Agent receives (and the Lead Investor confirms receipt of) written
      notice from the Company that the shareholders of the Company affirmatively
      approved of the Offering (“Shareholder
      Approval Notification”),
      then
      within three (3) Business Days thereafter, the Escrow Agent shall deliver all
      of
      the remaining Withheld Cash to the Company and all of the Withheld Securities
      to
      the Buyer.

     

    (d) If,
      as of
      the Shareholder Approval Deadline, the Escrow Agent has not received Shareholder
      Approval Notification (notwithstanding whether or not the Escrow Agent has
      received copies of the Irrevocable Written Consents referred to above), then
      within five (5) Business Days thereafter, the Escrow Agent shall deliver all
      of
      Buyer’s remaining Withheld Cash to the Buyer, toward the redemption price for an
      Exchange Cap Redemption, and shall return the corresponding Withheld Securities
      to the Company.  

     

    (e) All
      funds
      to be delivered to the Company shall be delivered pursuant to the wire
      instructions to be provided in writing by the Company to the Escrow Agent.
      

     

    (f) Notwithstanding
      the above, upon receipt by the Escrow Agent of joint written instructions
      ("Joint
      Instructions")
      signed
      by the Company and the Buyer, it shall deliver the Company Documents and Buyer
      Documents in accordance with the terms of the Joint Instructions.

     

    (g) Notwithstanding
      the above, upon receipt by the Escrow Agent of a final and non-appealable
      judgment, order, decree or award of a court of competent jurisdiction (a
      "Court
      Order"),
      the
      Escrow Agent shall deliver the Company Documents and Buyer Documents in
      accordance with the Court Order. Any Court Order shall be accompanied by an
      opinion of counsel for the party presenting the Court Order to the Escrow Agent
      (which opinion shall be satisfactory to the Escrow Agent) to the effect that
      the
      court issuing the Court Order has competent jurisdiction and that the Court
      Order is final and non-appealable. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (h) Whenever
      the release of Warrants is to be made under this Agreement, if less than all
      of
      Buyer's Warrants are to be released, half of the Warrants to be released shall
      have an Initial Exercise Price of 100% of the Initial Conversion Price, and
      the
      remaining half shall have an Initial Exercise Price of 115% of the Initial
      Conversion Price.

     

    3.2. Acknowledgement
      of Company and Buyer; Disputes.
      The
      Company and the Buyer acknowledge that the only terms and conditions upon which
      the Company Documents and Buyer Documents are to be released are set forth
      in
      Sections 3 and 4 of this Agreement. The Company and the Buyer reaffirm their
      agreement to abide by the terms and conditions of this Agreement with respect
      to
      the release of the Company Documents and Buyer Documents. Any dispute with
      respect to the release of the Company Documents and Buyer Documents shall be
      resolved pursuant to Section 4.2 or by agreement between the Company and
      Buyer.

     

    ARTICLE
      IV

     

    CONCERNING
      THE ESCROW AGENT

     

    4.1. Duties
      and Responsibilities of the Escrow Agent.
      The
      Escrow Agent's duties and responsibilities shall be subject to the following
      terms and conditions:

     

    (a) The
      Buyer
      and Company acknowledge and agree that the Escrow Agent (i) shall not be
      responsible for or bound by, and shall not be required to inquire into whether
      either the Buyer or Company is entitled to receipt of the Company Documents
      and
      Buyer Documents pursuant to, any other agreement or otherwise; (ii) shall be
      obligated only for the performance of such duties as are specifically assumed
      by
      the Escrow Agent pursuant to this Agreement; (iii) may rely on and shall be
      protected in acting or refraining from acting upon any written notice,
      instruction, instrument, statement, request or document furnished to it
      hereunder and believed by the Escrow Agent in good faith to be genuine and
      to
      have been signed or presented by the proper person or party, without being
      required to determine the authenticity or correctness of any fact stated therein
      or the propriety or validity or the service thereof; (iv) may assume that any
      person believed by the Escrow Agent in good faith to be authorized to give
      notice or make any statement or execute any document in connection with the
      provisions hereof is so authorized; (v) shall not be under any duty to give
      the
      property held by Escrow Agent hereunder any greater degree of care than Escrow
      Agent gives its own similar property; and (vi) may consult counsel satisfactory
      to Escrow Agent, the opinion of such counsel to be full and complete
      authorization and protection in respect of any action taken, suffered or omitted
      by Escrow Agent hereunder in good faith and in accordance with the opinion
      of
      such counsel.

     

    (b) The
      Buyer
      and Company acknowledge that the Escrow Agent is acting solely as a stakeholder
      at their request and that the Escrow Agent shall not be liable for any action
      taken by Escrow Agent in good faith and reasonably believed by Escrow Agent
      to
      be authorized or within the rights or powers conferred upon Escrow Agent by
      this
      Agreement. The Buyer and Company, jointly and severally, agree to indemnify
      and
      hold harmless the Escrow Agent and any of Escrow Agent's partners, employees,
      agents and representatives for any action taken or omitted to be taken by Escrow
      Agent or any of them hereunder, including the fees of outside counsel and other
      costs and expenses of defending itself against any claim or liability under
      this
      Agreement, except in the case of gross negligence or willful misconduct on
      Escrow Agent's part committed in its capacity as Escrow Agent under this
      Agreement. The Escrow Agent shall owe a duty only to the Buyer and Company
      under
      this Agreement and to no other person.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) The
      Buyer
      and Company jointly and severally agree to reimburse the Escrow Agent for
      outside counsel fees, to the extent authorized hereunder and incurred in
      connection with the performance of its duties and responsibilities
      hereunder.

     

    (d) The
      Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
      (5)
      days prior written notice of resignation to the Buyer and the Company. Prior
      to
      the effective date of the resignation as specified in such notice, the Buyer
      and
      Company will issue to the Escrow Agent a Joint Instruction authorizing delivery
      of the Company Documents and Buyer Documents to a substitute Escrow Agent
      selected by the Buyer and Company. If no successor Escrow Agent is named by
      the
      Buyer and Company, the Escrow Agent may apply to a court of competent
      jurisdiction in the State of New York for appointment of a successor Escrow
      Agent, and to deposit the Company Documents and Buyer Documents with the clerk
      of any such court.

     

    (e) The
      Escrow Agent does not have and will not have any interest in the Company
      Documents and Buyer Documents, but is serving only as escrow agent, having
      only
      possession thereof. The Escrow Agent shall not be liable for any loss resulting
      from the making or retention of any investment in accordance with this Escrow
      Agreement.

     

    (f) This
      Agreement sets forth exclusively the duties of the Escrow Agent with respect
      to
      any and all matters pertinent thereto and no implied duties or obligations
      shall
      be read into this Agreement.

     

    (g) The
      Escrow Agent shall be permitted to act as counsel for the Company in any dispute
      as to the disposition of the Company Documents and Buyer Documents, in any
      other
      dispute between the Buyer and Company, whether or not the Escrow Agent is then
      holding the Company Documents and Buyer Documents and continues to act as the
      Escrow Agent hereunder.

     

    (h) The
      provisions of this Section 4.1 shall survive the resignation of the Escrow
      Agent
      or the termination of this Agreement.

     

    4.2. Dispute
      Resolution: Judgments.
      Resolution of disputes arising under this Agreement shall be subject to the
      following terms and conditions:

     

    (a) If
      any
      dispute shall arise with respect to the delivery, ownership, right of possession
      or disposition of the Company Documents and Buyer Documents, or if the Escrow
      Agent shall in good faith be uncertain as to its duties or rights hereunder,
      the
      Escrow Agent shall be authorized, without liability to anyone, to (i) refrain
      from taking any action other than to continue to hold the Company Documents
      and
      Buyer Documents pending receipt of a Joint Instruction from the Buyer and
      Company, or (ii) deposit the Company Documents and Buyer Documents with any
      court of competent jurisdiction in the State of New York, in which event the
      Escrow Agent shall give written notice thereof to the Buyer and the Company
      and
      shall thereupon be relieved and discharged from all further obligations pursuant
      to this Agreement. The Escrow Agent may, but shall be under no duty to,
      institute or defend any legal proceedings which relate to the Company Documents
      and Buyer Documents. The Escrow Agent shall have the right to retain counsel
      if
      it becomes involved in any disagreement, dispute or litigation on account of
      this Agreement or otherwise determines that it is necessary to consult
      counsel.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b) The
      Escrow Agent is hereby expressly authorized to comply with and obey any Court
      Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow
      Agent shall not be liable to the Buyer and Company or to any other person,
      firm,
      corporation or entity by reason of such compliance.

     

    ARTICLE
      V

     

    GENERAL
      MATTERS

     

    5.1. Termination.
      This
      escrow shall terminate upon the release of all of the Company Documents and
      Buyer Documents or at any time upon the agreement in writing of the Buyer and
      Company.

     

    5.2. 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: 

     

    
      	
            	(a)	
              If
                to the Company, to:

            

    

    

    Attn:
      Molly Henderson, CFO

    VirtualScopics,
      Inc.

    500
      Linden Oaks

    Rochester,
      NY 14625

    Phone:
      585-249-6231

    Fax:
      585-218-7350

    

    With
      copy by telecopier only to:

    

    Attn:
      Gregory W. Gribben, Esq.

    Woods
      Oviatt Gilman LLP

    700
      Crossroads Building, 2 State Street

    Rochester,
      New York 14614

    Phone:
      (585) 987-2800

    Fax:
      (585) 987-2975

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	(b)	
              If
                to the Buyers, to: the addresses and fax numbers listed on Schedule
                A
                hereto

            

    

     

    
      	(c)	
              If
                to the Escrow Agent, to:

            

    

     

    Attn:
      Gregory W. Gribben, Esq.

    Woods
      Oviatt Gilman LLP

    700
      Crossroads Building, 2 State Street

    Rochester,
      New York 14614

    Phone:
      (585) 987-2800

    Fax:
      (585) 987-2975

     

    or
      to
      such other address as any of them shall give to the others by notice made
      pursuant to this Section 5.2.

     

    5.3. Interest.
      The
      Escrowed Payment shall be deposited in an interest bearing account within a
      reasonable time after the Closing. In the event any portion of a Buyer's
      Purchase Price is released to the Company pursuant to Section 3.1, any accrued
      interest thereon shall be paid to the Company, minus any expenses in maintaining
      such account. In the event, any portion of the Buyer's Purchase Price is
      released to such Buyer pursuant to Section 3.1, any accrued interest thereon
      shall be paid to the Buyer, but only if the Escrow Agent receives from such
      Buyer the Buyer’s United States taxpayer identification number and other
      requested information and forms. 

     

    5.4. Assignment;
      Binding Agreement.
      Neither
      this Agreement nor any right or obligation hereunder shall be assignable by
      any
      party without the prior written consent of the other parties hereto. This
      Agreement shall enure to the benefit of and be binding upon the parties hereto
      and their respective legal representatives, successors and assigns.

     

    5.5. Invalidity.
      In the
      event that any one or more of the provisions contained herein, or the
      application thereof in any circumstance, is held invalid, illegal, or
      unenforceable in any respect for any reason, the validity, legality and
      enforceability of any such provision in every other respect and of the remaining
      provisions contained herein shall not be in any way impaired thereby, it being
      intended that all of the rights and privileges of the parties hereto shall
      be
      enforceable to the fullest extent permitted by law.

     

    5.6. Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by 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
      transmission and delivered by facsimile transmission.

     

    5.7. Agreement.
      Each of
      the undersigned states that he has read the foregoing Escrow Agreement and
      understands and agrees to it.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the undersigned have executed this Funds Escrow Agreement
      as of
      the date first written above.

     

    
      	 COMPANY:
               

              VirtualScopics,
                Inc.

            	 	 	
              BUYER:

               

              
                

              

            
	 	 	 	 
	
              By:
                /s/
                Molly Henderson 

              
                

              

               Name:
                Molly Henderson

              Title:
                Chief Financial Officer

            	 	 	
              By:

              
                

              

              Name:

              
                

              

              Title:

              
                
 

            
	
              ADDRESS:

               

            	 	 	
              ADDRESS:

            
	
              VirtualScopics,
                Inc.

              500
                Linden Oaks

              Rochester,
                New York 14625

              Phone:
                (585) 249-6231

              Fax:
                (585) 218-7350

            	 	 	
              
                

              

              
                

                

              

              Phone:

              
                

              

              Fax:  

              
                
 

            
	 	 	 	 
	
              ESCROW
                AGENT:

              Woods
                Oviatt Gilman LLP

            	 	 	 
	 	 	 	 
	
            	 	 	 
	
              /s/
                Gregory W. Gribben  

                

              

              Print
                Name: Gregory
                W. Gribben 

              Title:
                Partner

            	 	 	 

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

       

    

    SCHEDULE
      A TO FUNDS ESCROW AGREEMENT

    

    
      	
               Buyer

            	
               

            	
              Buyer’s
                Subscription Amount

            	 	
              Address
                and

              Facsimile
                Number

            	
               

            	
               

            	
              Legal
                Representative’s

              Address
                and

              Facsimile
                Number

            
	 	 	 	 	 	 	 	 
	
              Bridgepointe
                Master Fund Ltd.

            	 	
              $2,000,000

            	 	
              1120
                Sanctuary Parkway

              Suite
                325

              Alpharetta,
                GA 30004

              Facsimile:
                770-777-5844

            	 	 	
              P.
                Bradford Hathorn, Esq.

              Roswell
                Capital Partners, LLC

              1120
                Sanctuary Parkway, Suite 325

              Alpharetta,
                GA 30004

              Facsimile:
                770-777-5844

            
	 	 	 	 	 	 	 	 
	
              BayStar
                Capital III Investment Fund, L.P..

            	 	
              $500,000

            	 	
              c/o
                Nathan Randel

              80
                E. Sir Francis Drake Blvd.

              Suite
                2B

              Larkspur,
                CA 94939

              Facsimile:
                415-834-4601

            	 	 	
              John
                O’Neill, Esq.

              Collette,
                Erickson, Farmer & O’Neill

              235
                Pine Stree

              Suite
                1300

              San
                Francisco, CA 94104

              Facsimile:
                415-788-6929

            
	 	 	 	 	 	 	 	 
	
              Crescent
                International, Ltd.

            	 	
              $400,000

            	 	
              c/o
                Cantara (Switzerland) S.A.

              84
                Avenue Louis-Casal

              CH-1216
                Cointrin/Geneva

              Switzerland

              Facsimile:
                +41 22 7917171

            	 	 	
              Feldman
                Weinstein & Smith LLP

              The
                Graybar Building

              420
                Lexington Avenue

              New
                York, New York

              10170-0002

              Facsimile:
                (212) 401-4741

            
	 	 	 	 	 	 	 	 
	
              Gemini
                Master Fund, Ltd.

            	 	
              $400,000

            	 	
              c/o
                Gemini Strategies, LLC

              12220
                El Camino Real

              Suite
                400

              San
                Diego, CA 92130

              Facsimile:
                (858) 505-8808

            	 	 	
              Steven
                Winters

              c/o
                Gemini Strategies, LLC

              12220
                El Camino Real

              Suite
                400

              San
                Diego, CA 92130

              Facsimile:
                (858) 505-8808

            
	 	 	 	 	 	 	 	 
	
              Bristol
                Investment Fund, Ltd.

            	 	
              $350,000

            	 	
              c/o
                Bristol Capital Advisors, LLC

              10990
                Wilshire Boulevard, Suite 1410

              Los
                Angeles, CA 90024

              Facsimile:
                (310) 696.0334

            	 	 	
              Amy
                Wang, Esq.

              c/o
                Bristol Capital Advisors, LLC

              10990
                Wilshire Boulevard, Suite 1410

              Los
                Angeles, CA 90024

              Facsimile:
                (310) 696.0334

            
	 	 	 	 	 	 	 	 
	
              Robert
                G. Klimasewski

            	 	
              $100,000

            	 	
              19
                Junction Road

              Honeoye
                Falls, NY 14472

            	 	 	
              19
                Junction Road

              Honeoye
                Falls, NY 14472

            
	 	 	 	 	 	 	 	 
	
              SRK
                Management Co.

            	 	
              $500,000

            	 	
              810
                Seventh Avenue 

              41st
                Floor

              New
                York, New York 10019

            	 	 	
              810
                Seventh Avenue 

              41st
                Floor

              New
                York, New York 10019

            
	 	 	 	 	 	 	 	 
	
              EGATNIV,
                LLC

            	 	
              $100,000

            	 	
              150
                West 46th Street

              6th
                Floor

              New
                York, New York 10036

              Facsimile:
                (212) 730-4306

            	 	 	
              Joshua
                Greenberg

              150
                West 46th Street

              6th
                Floor

              New
                York, New York 10036

              Facsimile:
                (212) 730-4306

            
	 	 	 	 	 	 	 	 
	
              Total:

            	 	
              $4,350,000

            	 	 	 	 	 

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    AMENDMENT
      AND WAIVER

    

    This
      Amendment and Waiver to that certain Escrow Agreement dated as of the
      12th
      day of
      September, 2007 between VirtualScopics, Inc., a Delaware corporation (the
"Company"),
      the
      Buyers identified on Schedule A thereto (each a “Buyer”
      and
      collectively “Buyers”),
      and
      the law firm of Woods Oviatt Gilman LLP (the "Escrow
      Agent")
      is made
      as of the 13th
      day of
      September, 2007. Capitalized terms not otherwise defined herein shall have
      the
      meanings ascribed thereto in the Escrow Agreement.

    

    WHEREAS,
      Section
      3.1(a) of the Escrow Agreement provides that if the Closing as to at least
      the
      Minimum Amount has not occurred by September 13, 2007, then within three (3)
      Business Days thereafter, the Escrow Agent shall return the Buyer’s Purchase
      Price and Buyer Documents to the Buyer, and shall return the Company Documents
      to the Company; and 

    

    WHEREAS,
      the
      undersigned parties to the Escrow Agreement now contemplate that the Closing
      will take place on September 14, 2007, and wish to amend the Escrow Agreement
      to
      extend the date required for the Closing to occur.

    

    NOW
      THEREFORE,
      for
      good and valuable consideration, receipt of which is hereby acknowledged, the
      parties agree as follows:

    

    1. The
      last
      sentence of Section 3.1(a) of the Escrow Agreement is hereby amended to provide
      as follows: “If the Closing as to at least the Minimum Amount has not occurred
      by September 14, 2007, then within three (3) Business Days thereafter, the
      Escrow Agent shall return the Buyer’s Purchase Price and Buyer Documents to the
      Buyer, and shall return the Company Documents to the Company.”

    

    2. The
      undersigned hereby waives compliance with Section 3.1(a) as in effect prior
      to
      this Amendment and Waiver, insofar as it requires that the Escrow Agent return
      the Buyer’s Purchase Price and Buyer Documents to the Buyer, and return the
      Company Documents to the Company, if the Closing has not occurred by September
      13, 2007.

    

    3. This
      Amendment and Waiver may be executed in any number of counterparts and by
      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 transmission and delivered by facsimile transmission. This Waiver
      and
      Amendment shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to conflicts of laws principles that would
      result in the application of the substantive laws of another jurisdiction.
      

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    [SIGNATURE
      PAGE TO AMENDMENT AND WAIVER TO ESCROW AGREEMENT]

    

    IN
      WITNESS WHEREOF, the undersigned have executed this Amendment and Waiver as
      of
      the date first written above.

     

    
      	
              COMPANY:

               

              VirtualScopics,
                Inc.

            	 	 	
              BUYER:

               

              
                

              

            
	 	 	 	 
	
              By:
                /s/
                Molly Henderson 

              
                

              

              Name:
                Molly Henderson

              Title:
                Chief Financial Officer

            	 	 	
              By:

              
                

              

              Name:

              
                

              

              Title:

              
                
 

            
	
              
                ESCROW
                  AGENT:

                Woods
                  Oviatt Gilman LLP

                 

              

            	 	 	
               

            
	
              
                /s/
                  Gregory W. Gribben

                
                  
Print
                  Name: Gregory
                  W. Gribben 

                Title:
                  Partner

              

            	 	 	
               

            

    
      
         

      

      
        13Exhibit
        10.1 

       

    

    LOAN
      AND SECURITY AGREEMENT

     

    By
      and
      Between

     

    MERCATOR
      MOMENTUM FUND III, LP

     

    As
      Lender

     

    And

     

    MEDICAL
      DISCOVERIES, INC.,

     

    As
      Borrower

     

    Dated
      as
      of September 7, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      

        LOAN
          AND SECURITY AGREEMENT

         

        This
          LOAN
          AND SECURITY AGREEMENT is made as of September 7, 2007 (the "Loan
          Agreement"),
          by
          and Mercator Momentum Fund III, LP, a California limited partnership (together
          with each of its successors, assigns and designees, the "Lender"),
          as
          lender, and MEDICAL DISCOVERIES, INC., a Utah corporation ("Borrower"),
          as
          borrower, with reference to the following facts and circumstances:

         

        RECITALS

         

        A. Borrower
          desires that Lender make available to Borrower a secured term credit facility
          (the "Loan")
          in the
          amount of One Million Dollars ($1,000,000) (the "Loan
          Amount").

         

        B. The
          Loan
          shall be evidenced by, among other things, secured promissory notes, in
          the form
          of Exhibit
          A
          attached
          hereto, in the aggregate principal amount not to exceed One Million Dollars
          ($1,000,000) and executed by Borrower in favor of Lender (together with
          all
          renewals, rearrangements, replacements, modifications, substitutions, and
          extensions thereof, each, a “Note”
and,
          collectively, the “Notes”).

         

        C. Borrower
          may draw on the Loan at such times as specified in the draw-down schedule
          attached hereto as Exhibit
          C
          in
          accordance with that certain letter agreement entitled the Permitted Payments
          by
          Medical Discoveries, Inc., dated of even date herewith (the “Letter
          Agreement”)
          attached hereto as Exhibit
          B
          among
          Lender, Borrower and the Emmes Group Consulting LLC, a California limited
          liability company (the “Advisors”).
          

         

        D. As
          a
          condition precedent to making the Loan to Borrower, Lender requires, among
          other
          things, that Borrower grant to Lender a first priority fully perfected
          security
          interest in the Collateral (as defined in Section 6) of Borrower.

         

        E. Lender
          has agreed to advance the Loan Amount to Borrower, and Borrower has agreed
          to
          borrow the Loan Amount from Lender, on the terms and conditions contained
          in
          this Loan Agreement, the Note and the Letter Agreement (collectively, the
          “Loan
          Documents”).

         

        AGREEMENT

         

        NOW,
          THEREFORE, for good and valuable consideration, the receipt and sufficiency
          of
          which are hereby acknowledged by the parties, the parties agree as
          follows:

         

        Section
          1.   The
          Loan.

         

        1.1  Agreement
          to Lend.
          In
          reliance upon the representations and warranties contained herein and subject
          to
          compliance by Borrower with the terms and conditions of this Loan Agreement,
          Lender hereby agrees to loan to Borrower an amount not to exceed the Loan
          Amount, evidenced by the Notes, on the terms and conditions set forth
          herein.

         

        1.2  Interest
          on the Principal Indebtedness.
          Interest on the outstanding principal indebtedness of the Loan shall accrue
          at
          the rate and be payable in the manner and at the times set forth in the
          Notes.

         

        
          
            
            

          

          
            -
              2
              -

            
              

            

          

          
            
            

          

        

         

        1.3  Manner
          of Payment.
          All
          payments hereunder or any other Loan Document shall be made in accordance
          with
          the provisions hereof or thereof without setoff or counterclaim as against
          the
          Lender, in lawful money of the United States of America,
          free and clear of and without deduction for any taxes, fees or other charges
          of
          any nature whatsoever imposed by any taxing authority.

         

        1.4    
          Consideration
          for Loan.
          Lender
          and two affiliated investment funds currently own warrants to purchase
          the
          following number of shares of Common Stock: (i) Lender owns warrants to
          purchase
          9,360,701 shares of Common Stock; (ii) Mercator Momentum Fund, L.P. owns
          warrants to purchase up to 13,516,777 shares of Common Stock; and (iii)
          Monarch
          Pointe Fund, Ltd. owns warrants to purchase up to 4,575,495 shares of Common
          Stock (the foregoing warrants are herein collectively referred to as the
          “Outstanding Warrants”). Each of the Outstanding Warrants has an exercise price
          of $0.1967 per share. In consideration for agreeing to make the Loan and
          for the
          other agreements made by Lender hereunder, Borrower and Lender agree that,
          concurrently with the execution of this Agreement and the funding of the
          first
          $250,000 advance under the Loan, (a) all of the Outstanding Warrants are
          being
          returned to Borrower and cancelled by Borrower, and (b) Borrower is issuing
          to
          the holders of the Outstanding Warrants new warrants (the “New Warrants”) to
          purchase the same number of shares as the Outstanding Warrants. The New
          Warrants
          have an exercise price of $0.01 per share, permit the holder to exercise
          the New
          Warrants on a “cash-less” exercise basis, and have an expiration date of
          September 30, 2013. The form of the New Warrants is attached hereto as
          Exhibit
          D.

         

        Section
          2.   Disbursement
          of Loan Proceeds.

         

        2.1  Funding
          of Disbursement. Upon
          the
          fulfillment of all the conditions set forth in this Section 2 to the
          disbursement of the proceeds of the Loan, or the waiver of any such conditions
          in writing, and the delivery of an executed Borrowing Certificate (as defined
          in
          and pursuant to the terms of the Letter Agreement) and executed Note in
          conformity with the draw-down limit amounts set forth in Exhibit B,
          Lender shall make disbursements to or at the direction of Borrower up to
          the
          Loan Amount.

         

        2.2  Conditions
          Precedent to Disbursement of Loan Proceeds.
          The
          obligation of Lender to disburse to Borrower the proceeds of the Loan pursuant
          to the terms hereof shall be subject to the fulfillment of the following
          conditions precedent: 

         

        (a)  The
          representations and warranties contained in Section 3 of this Agreement
          or
          otherwise made on behalf of Borrower in connection with the Loan shall
          be true
          and correct in all material respects. 

         

        (b)  A
          Note,
          duly executed and delivered by Borrower;

         

        (c)  A
          Borrowing Certificate, duly executed and delivered by Borrower, and approved
          in
          accordance with the Letter Agreement;

         

        
          
            
            

          

          
            -
              3
              -

            
              

            

          

          
            
            

          

        

         

        (d)  One
          or
          more UCC-1 Financing Statements covering the Collateral duly executed by
          Borrower, and the assignment and delivery of such Collateral as Lender
          may
          reasonably request;
          and

         

        (e)  Such
          other documents, instruments and assurances as Lender may request in its
          reasonable discretion in order to effect fully the purposes of this Loan
          Agreement.

         

        (f)  Trading
          in Borrower’s common stock (the “Common
          Stock”)
          shall
          not have been suspended by the Securities and Exchange Commission (the
          “Commission”),
          the
          Common Stock shall be listed for trading on a public securities trading
          system
          or exchange, including the Pink Sheets, the Over-the-Counter Bulletin Board
          (the
“OTCBB”),
          the
          Nasdaq Capital Market, the Nasdaq Global Market, or any exchange.

         

        (g)  The
          warrants issued in 2004 to the purchasers of Borrower’s currently issued and
          outstanding shares of Series A Convertible Preferred Stock Offering (the
          “2004
          PIPE Investors”)
          shall
          have received from Borrower duly executed amended warrants to purchase
          shares of
          Common Stock, which amended warrants lower the exercise price to $0.01
          per share
          and extend the expiration date to September 30, 2013.

         

        (h)  Lender
          shall have received from Borrower (i) a copy of the executed certain Share
          Exchange Agreement between Borrower, Richard
          Palmer, and Mobius Risk Group LLC, regarding the purchase by Borrower of
          all of
          the outstanding equity interests of Global Clean Energy Holdings, LLC,
          a
          Delaware limited liability company (“Global”),
          (ii)
          written confirmation that the transactions contemplated by the Share Exchange
          Agreement have been consummated, (iii) written confirmation that Borrower
          has
          commenced a
          financial audit by its certified public accountant for the fiscal year
          ended
          December 31, 2006 and the preparation of Borrower’s financial statements for the
          fiscal year ended December 31, 2006 in accordance with general accepted
          accounting principles (“GAAP”),
          and
          (iv) written confirmation that Borrower has commenced the preparation of
          the
          delinquent annual and quarterly reports required to be filed by it under
          the
          Securities Exchange Act of 1934, as amended (the “Exchange
          Act”),
          including pursuant to Sections 13(a) or 15(d) of the Exchange Act (the
          “SEC
          Reports”).
          

         

        Section
          3.   Representations
          and Warranties of Borrower.
          As an
          inducement to the Lender to enter into the Loan Documents and to make the
          Loan
          as provided herein, Borrower represents and warrants to the Lender that
          as of
          the Closing Date, each of the following representations and warranties
          shall be
          true and correct in all material respects:

         

        3.1  Due
          Authorization; Organizational Documents.

         

        (a)  Borrower
          (i) is a corporation duly formed, validly existing, in good standing and
          qualified to do business under the laws of the State of Utah, and is duly
          qualified and in good standing in each jurisdiction in which the character
          of
          its business makes such qualification necessary, or, if not so qualified,
          the
          failure to so qualify will not have a materially adverse effect upon its
          financial condition, operation
          or business (a “Material
          Adverse Effect”);
          (ii)
          Borrower has the requisite corporate power and authority to own its properties
          and to carry on its businesses as now conducted; and (iii) Borrower has
          the
          requisite corporate power and authority to make and carry out this Loan
          Agreement, and each of the Loan Documents.

         

        
          
            
            

          

          
            -
              4
              -

            
              

            

          

          
            
            

          

        

         

        (b)  True,
          correct and complete copies of the organizational documents of Borrower,
          including any and all amendments thereto, have been delivered by Borrower
          to
          Lender.

         

        3.2  Loan
          Agreement, Note and Loan Documents Authorized.
          The
          execution, delivery and performance of the Loan Documents by Borrower,
          are duly
          authorized and do not require the consent or approval of any governmental
          body
          or other regulatory authority; are not in contravention of or conflict
          with any
          law or regulation or any term or provision of its organizational documents;
          and
          the Loan Documents are valid and binding obligations of Borrower enforceable
          in
          accordance with their terms.

         

        3.3  Collateral.
          

         

        (a)  Borrower
          is the sole owner of its rights in the Collateral, free and clear of any
          liens
          and is fully authorized to grant the Security Interest in and to pledge
          the
          Collateral. There is not on file in any governmental or regulatory authority,
          agency or recording office an effective financing statement, security agreement
          or transfer or any notice of any of the foregoing covering or affecting
          any of
          the Collateral. So long as this Loan Agreement and Note shall be in effect,
          Borrower shall not execute and shall not authorize the filing of in any
          such
          office or agency any such financing statement or other document or instrument
          (except to the extent filed or recorded in favor of Lender pursuant to
          the terms
          of this Loan Agreement) without the prior written consent of
          Lender.

         

        (b)  Borrower
          represents and warrants that it has no place of business or offices where
          its
          respective books of account and records are kept (other than temporarily
          at the
          offices of its attorneys or accountants) or places where the Collateral
          is
          stored or located, other than at its offices at (i) 1388 South Foothill
          Drive,
          #266 Salt Lake City, Utah 84108 and (ii) 30103 West Gwinn Road Prosser,
          Washington 99350.

         

        (c)  Borrower
          shall at all times maintain its books of account and records relating to
          the
          Collateral at its principal place of business in Utah and may not relocate
          such
          books of account and records unless it delivers to Lender at least 30 days
          prior
          to such relocation (i) written notice of such relocation and the new location
          thereof (which must be within the United States) and (ii) evidence that
          appropriate financing statements and other necessary documents have been
          filed
          and recorded and other steps have been taken to perfect the Security Interest
          to
          create in favor of each of Lender a valid, perfected and continuing first
          priority lien in the Collateral.

         

        (d)  Borrower
          has no knowledge of any claim that any of the Collateral or Borrower’s use of
          any Collateral violates the rights of any third party. There has been no
          adverse
          decision of which Borrower is aware as to Borrower’s exclusive (or nonexclusive,
          as the case may be) rights to use the Collateral in any jurisdiction, and,
          to
          the knowledge of Borrower there is no proceeding involving said rights
          pending
          or threatened before any court, judicial body, administrative or regulatory
          agency, arbitrator or other governmental authority.

         

        (e)  This
          Loan
          Agreement creates in favor of the Lender a valid security interest in the
          Collateral, securing the payment and satisfaction of the Obligations (as
          defined
          in Section 6), and, upon making all applicable filings,
          a
          perfected first priority security interest in the Collateral. No
          authorization or approval of or filing (other than the filings referred
          to in
          the immediately preceding sentence) with or notice to any governmental
          authority
          or regulatory body is required either: (i) for the grant by Borrower of,
          or the
          effectiveness of, the Security Interest granted hereby or for the execution,
          delivery and performance of this Loan Agreement by Borrower or (ii) for
          the
          perfection of or exercise by Lender of its rights and remedies
          hereunder.

         

        
          
            
            

          

          
            -
              5
              -

            
              

            

          

          
            
            

          

        

         

        (f)  On
          the
          date of execution of this Loan Agreement, Borrower authorizes each Lender
          to
          file one or more financing statements under the UCC with respect to the
          Security
          Interest for filing in the States of Utah, Washington and Texas, and in
          such
          other jurisdictions as Lender deem necessary.
          

         

        (g)  Borrower
          shall at all times maintain the Security Interest provided for hereunder
          as a
          valid and perfected first priority security interest in the Collateral
          in favor
          of Lender and insure that such Security Interest remains senior to all
          existing
          and hereafter created security interests and liens. Borrower shall safeguard
          and
          protect all Collateral. Borrower hereby agrees to defend the same against
          any
          and all persons. 

         

        (h)  Borrower
          will not
          sell, transfer, lease or otherwise dispose of any of the Collateral without
          the
          prior written consent of Lender. Notwithstanding the foregoing, Lender
          here
          authorize Borrower to complete the sale of its rights to that certain topical
          aromatase inhibitor cream that is has agreed to sell Eucodis Pharmaceuticals
          Forschungs - und Entwicklungs GmbH, an Austrian company, pursuant to the
          July 6,
          2007 Sale and Asset Purchase Agreement (the “Eucodis
          Sale”).

         

        (i)  Borrower
          shall keep and preserve the tangible Collateral in good condition, repair
          and
          order, and shall not knowingly operate or locate any such Collateral (or
          cause
          to be operated or located) in any area excluded from insurance coverage
          unless,
          in each case, where the failure to comply with the foregoing provisions
          does not
          result in an adverse
          effect on the value of the Collateral or on Lender’s security interest
          therein.
          

         

        (j)  Borrower
          shall, within 10 days of obtaining knowledge thereof, advise Lender, in
          sufficient detail, of any substantial change in all or any material portion
          of
          the Collateral, and of the occurrence of any event which would have a material
          adverse effect on the value of the Collateral or on Lender’s security interest
          therein.

         

        (k)  Borrower
          shall permit Lender and its representatives and agents upon prior written
          consent to inspect the Collateral at any time during normal business hours,
          and
          to make copies of records pertaining to any material item of Collateral
          as may
          be reasonably requested by Lender from time to time.

         

        (l)  Borrower
          shall promptly notify Lender in sufficient detail upon becoming aware of
          any
          attachment, garnishment, execution or other legal process levied against
          any
          Collateral and of any other information received by Borrower that reasonably
          would be expected to have an adverse effect on the value of the Collateral,
          the
          Security Interest or the rights and remedies of Lender hereunder.

         

        
          
            
            

          

          
            -
              6
              -

            
              

            

          

          
            
            

          

        

         

        (m)  Borrower
          shall not use or permit any Collateral to be used unlawfully or in violation
          of
          any provision of this Agreement or
          any
          applicable statute, regulation or ordinance or any policy of insurance
          covering
          the Collateral where violation is reasonably likely to have a material
          adverse
          effect on Lender’s rights in the Collateral or Lender’s ability to foreclose on
          the Collateral. 

         

        (n)  Borrower
          shall not grant to any person or entity any rights or interest in or to
          any of
          the Collateral.

         

        3.4  Change
          in Name.
          Borrower shall notify Lender of any change in Borrower’s name or identity within
          30 days of such change.

         

        3.5  No
          Conflict.
          The
          execution, delivery and performance of the Loan Documents will not breach
          or
          constitute a default under any agreement, indenture, undertaking or other
          instrument to which Borrower is a party or by which it or any of its properties
          may be bound or affected, and, other than in favor of Lender, such execution,
          delivery and performance will not result in the creation or imposition of (or
          the obligation to create or impose) any lien, charge or encumbrance on,
          or
          security interest in, any of its properties pursuant to any of the
          foregoing.

         

        3.6  No
          Litigation.
          Except
          as
          disclosed to Lender in writing, there is no litigation or other proceedings
          pending or, to the knowledge of Borrower, threatened against or
          affecting it, or its properties or the Collateral and
          Borrower is not in default with respect to any order, writ, injunction,
          decree
          or demand of any court or other governmental or regulatory
          authority.

         

        3.7  Consents.
          Except
          for the filing of the UCC-1 Financing Statements, no consents, approvals,
          filings, permits or notices of, from,
          with or to any person or entity are required on the part of Borrower in
          connection with the execution
          of this Loan Agreement or any of the transactions contemplated hereby that
          have
          not been duly obtained, made or given, as the case may be.

         

        3.8  Solvency.
          None of
          the transactions contemplated hereby or by any other Loan Document will
          be or
          have been made with an actual intent to hinder, delay or defraud any present
          or
          future creditors of Borrower. After giving effect to the transactions
          contemplated hereby and by each of the Loan Documents, Borrower will not
          be
          left with an unreasonably small capital for the business or transactions
          in
          which it is engaged or about to be engaged. 

         

        3.9  No
          Bankruptcy Filing.
          Borrower is not contemplating either the filing of a petition by it under
          any
          state or federal bankruptcy or insolvency laws or the liquidation of all
          or a
          major portion of its assets or property, and Borrower has no knowledge
          of any
          person or entity contemplating the filing of any such petition against
          it.

         

        3.10  Tax
          Filing.
          Borrower has paid or made adequate provision for the payment of all federal,
          state and local taxes, charges and assessments payable by Borrower, if
          any.
          Borrower believes that its tax returns properly reflect the income and
          credits
          and losses of Borrower for the periods covered thereby, subject only to
          reasonable adjustments required by the Internal Revenue Service or other
          applicable tax authority upon audit. 

         

        
          
            
            

          

          
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              7
              -

            
              

            

          

          
            
            

          

        

         

        3.11  Defenses.
          The
          Loan Documents are not subject to any valid right of rescission, setoff,
          abatement, diminution, counterclaim or defense as against the Lender and
          its
          successors and assigns in interest, including the defense of usury, and
          the
          operation of any of the terms of the Loan Documents, or the exercise of
          any
          right thereunder, will not render
          the Loan unenforceable, in whole or in part, or subject to any right of
          rescission, setoff, abatement, diminution, counterclaim or defense, including
          the defense of usury, and Borrower has not taken any action which would
          give
          rise to the assertion of any of the foregoing and no such right of rescission,
          setoff, abatement, diminution, counterclaim or defense, including the defense
          of
          usury, has been asserted with respect thereto.

         

        3.12  Enforceability.
          The
          Loan Documents executed by Borrower have been duly and validly authorized,
          executed and delivered by Borrower, and are valid, legal,
          binding and enforceable obligations of Borrower, subject as to enforcement
          to
          bankruptcy, insolvency or other similar laws of general application affecting
          the enforcement of creditor's rights and to general principles of equity
          limiting the availability of equitable remedies, to the extent the effect
          of
          such laws and principles are not waivable under law or in equity.

         

        3.13  ERISA.

         

        (a)  Borrower
          is not an employee benefit plan subject to Title IV of the Employee Retirement
          Income Security Act of 1974 (as amended from time to time,
          "ERISA");

         

        (b)  Neither
          Borrower nor any ERISA Affiliate (as hereinafter defined) of Borrower maintains,
          sponsors, contributes to or is obligated to contribute to, or during the
          5 years
          ending on the date of the execution and delivery of this Loan Agreement
          has
          maintained, sponsored, contributed to or was obligated to contribute to,
          any
          employee pension benefit plan (as defined in Section 3(2) of ERISA) (a
          "Plan")
          which
          is subject to Title IV of ERISA or section 302 of ERISA or section 412
          of the
          Internal Revenue Code of 1986, as amended (the “Code”).
          "ERISA
          Affiliate"
          means
          Borrower and all other entities (whether or not incorporated) which, together
          with Borrower, would be treated as a single employer under any or all of
          Sections 414(b), (c) or (m) of the Code; and

         

        (c)  No
          employee welfare benefit plan (as defined in Section 3(1) of ERISA
          ("Welfare
          Plan"))
          which
          Borrower or any ERISA Affiliate maintains, sponsors, contributes to or
          is
          obligated to contribute to, provides benefits, including, without limitation,
          death or medical benefits (whether or not insured), with respect to any
          current
          or former employee of Borrower beyond their retirement or other termination
          of
          service other than (a) coverage mandated by applicable law, (b) retirement
          or
          death benefits under any Plan or (c) disability benefits under any Welfare
          Plan
          that have been fully provided for by insurance or otherwise.

         

        3.14  Investment
          Company.
          Borrower
          is not now required and will not be required to register under the Investment
          Company Act of 1940, as amended.

         

        
          
            
            

          

          
            -
              8
              -

            
              

            

          

          
            
            

          

        

         

        3.15  Financial
          Information.
          The
          historical financial data concerning Borrower that has been delivered by
          Borrower to the Lender,
          consisting of the unaudited, internally prepared balance sheet and income
          statement for the period ending September 30, 2006, is true, complete and
          correct in all material respects and fairly presents the financial condition
          of
          the persons or entities covered thereby as of the date of such reports.
          Since
          the delivery of such data, except as otherwise disclosed in writing to
          the
          Lender, there has been no material adverse change in the assets, liabilities
          or
          financial position of Borrower or in the results of operations of Borrower.
          Borrower has not incurred any obligation or liability, contingent or otherwise,
          not reflected in such financial data which could reasonably be expected
          to cause
          a Material Adverse Effect.

         

        3.16  Use
          of
          Funds. The
          Loan
          Amount is to be used by Borrower as set forth on that certain Use of Proceeds
          Plan, attached hereto as Schedule 3.16, and for no other
          purpose.

         

        Section
          4.   Affirmative
          Covenants.
          Borrower hereby covenants and agrees that, so long as any portion of the
          Loan
          Amount remains unpaid or any other amount is owing to the Lender under
          any of
          the Loan Documents:

         

        4.1  Maintenance
          of Existence and Properties.
          Borrower shall preserve and maintain its existence and all rights, privileges
          and franchises necessary in the normal conduct of its business, except
          those
          rights, privileges and franchises the failure of which to maintain will
          not
          result in a Material Adverse Effect, and keep
          the
          property that is useful or necessary in its business in good working order
          and
          condition, and from time to time make or cause to be made all needed repairs,
          renewals and replacements thereto. Borrower shall at all times comply in
          all
          material respects with, and shall cause Borrower’s properties to comply in all
          material respects with applicable law. 

         

        4.2  SEC
          Reports; Financial Statements. Borrower will file
          all
          delinquent SEC Reports by October 31, 2007. Borrower will file
          all
          other SEC Reports on a timely basis or will timely file a valid extension
          of
          such time of filing and will file any such SEC Reports prior to the expiration
          of any such extension. All of the financial statements included in the
          delinquent SEC Reports and any registration statement will be prepared
          in
          accordance with GAAP applied on a consistent basis during the periods involved,
          except as may be otherwise specified in such financial statements or the
          notes
          thereto, and will fairly present in all material respects the financial
          position
          of Borrower as of and for the dates thereof and the results of operations
          and
          cash flows for the periods then ended, subject, in the case of unaudited
          statements, to normal, immaterial, year-end audit adjustments. 

         

        4.3  Registration
          Statement. Within
          30
          days after filing all delinquent SEC Reports, Borrower will file a
          post-effective amendment Registration Statement on Form SB-2 (Registration
          No.
          0333-121635) that registers for
          the
          resale certain shares of Common Stock issuable upon conversion of the Series
          A
          Convertible Preferred Stock (the “Registrable
          Securities”)
          on a
          continuous basis pursuant to Rule 415 (the “Registration
          Statement”),
          and
          after such post-effective amendment has been declared effective, will until
          the
          earlier of (i) the date that all of the Registrable Securities have been
          sold,
          or (ii) the date that Borrower receives an opinion of counsel to Borrower
          that
          all of the Registrable Securities may be freely traded without registration
          under the Securities Act, under Rule 144 promulgated under the Securities
          Act or
          otherwise, shall amend the Registration Statement or supplement the prospectus
          to the Registration Statement, as may be required, to cause the Registration
          Statement to include sufficient Registrable Securities. 

         

        
          
            
            

          

          
            -
              9
              -

            
              

            

          

          
            
            

          

        

         

        4.4  Proxy
          Statement; Amendment of Articles of Incorporation. By no later than October
          30, 2007, Borrower shall
          prepare and mail to the shareholders of Borrower proxy materials or other
          applicable materials requesting authorization to amend Borrower’s articles of
          incorporation or other organizational document to increase
          the
          number of shares of Common Stock which Borrower is authorized to issue
          to
          350,000,000 shares of Common Stock in order to have available a sufficient
          number of authorized but unissued shares of Common Stock to comply with
          its
          obligations to issue shares of Common Stock upon the conversion of the
          outstanding shares of Series A Convertible Preferred Stock and upon the
          exercise
          of the Warrants owned by the 2004 PIPE Investors. In connection therewith,
          Borrower’s board of directors shall (a) adopt proper resolutions authorizing
          such increase, (b) recommend to and otherwise use its best efforts to promptly
          and duly obtain shareholder approval to carry out such resolutions (and
          hold a
          special meeting of the shareholders as soon as practicable, but in any
          event not
          later than the 60th
          day
          after delivery of the proxy or other applicable materials relating to such
          meeting) and (c) within five business days of obtaining such shareholder
          authorization, file an appropriate amendment to Borrower’s articles of
          incorporation or other organizational document to evidence such
          increase.

         

        4.5  OTCBB.
          Within 10 business days after Borrower has filed all delinquent SEC Reports,
          Borrower will apply to be quoted on the OTCBB, and after such listing is
          granted, will comply with all rules of, and satisfy all requirements to
          maintain
          quotation on, the OTCBB.

         

        4.6  Inspection
          of Financial Records; Discussions.
          Borrower shall (i) keep proper books of records and accounts in which full,
          true
          and correct entries in conformity with GAAP or as otherwise required under
          any
          Loan Document and under all applicable law shall be made of all dealings
          and
          transactions in relation to its business and activities, and (ii) upon
          reasonable notice to permit representatives of the Lender and its agents
          and
          regulatory authorities to examine
          and make copies of, or abstracts from, any of its financial records at
          any
          reasonable time during normal business hours and as often as may reasonably
          be
          desired by the Lender and to discuss the business, operations, properties
          and financial and other conditions of Borrower with officers of Borrower
          and
          with its independent
          certified public accountants. After the occurrence and during the continuance
          of
          an Event of Default, Borrower shall pay any reasonable costs and expenses
          incurred by the Lender to examine Borrower's accounting records, as the
          Lender
          shall reasonably determine to be necessary or appropriate in the protection
          of
          the Lender’s interest. 

         

        4.7  Notices.
          Promptly upon becoming aware thereof, Borrower shall give written notice
          to the
          Lender of (i) any claims, proceedings or disputes (whether or not purportedly
          on
          behalf of Borrower) against, or to Borrower's knowledge, threatened or
          affecting
          Borrower which, if adversely determined, could reasonably be expected to
          have a
          Material Adverse Effect or which involve in the aggregate monetary amounts
          in excess
          of
          $50,000, (ii) the occurrence of any Event of Default hereunder, or (iii)
          any
          Material Adverse Effect. If requested by the Lender, Borrower shall deliver
          an
          Officer's Certificate of Borrower specifying the nature and details of
          any of
          the foregoing
          matters and the actions taken and proposed to be taken by Borrower in response
          thereto.

         

        
          
            
            

          

          
            -
              10
              -

            
              

            

          

          
            
            

          

        

         

        4.8  Expenses.
          Borrower shall pay, indemnify and save harmless the Lender with respect
          to all
          taxes (other than income or franchise taxes or taxes caused by actions
          or elections of the Lender) and all reasonable out-of-pocket expenses
          (including, without limitation, reasonable fees and disbursements of counsel
          and
          special local counsel) incident to enforcement and administration of the
          Loan
          Documents and the negotiation and preparation of any amendments, waivers
          and
          renewals relating to any thereof and the protection
          of the rights of the Lender under the Loan Documents whether by judicial
          proceedings or otherwise, including, without limitation, in connection
          with
          bankruptcy, insolvency, liquidation, reorganization, moratorium or other
          similar
          proceedings involving Borrower or a "workout" of the Loan. The Loan shall
          not be
          considered to have been paid in full unless all obligations under this
          Section
          4.8 shall have been fully performed (except for contingent indemnification
          obligations for which no claim has actually been made). Reasonable expenses
          incurred by Lender in connection with considering any request by Borrower
          for
          approval, modification or waiver shall be paid or reimbursed to Lender
          by
          Borrower regardless of whether approved by Lender.

         

        4.9  Loan
          Documents.
          Borrower shall comply with and observe all terms and conditions of the
          Loan
          Documents.

         

        4.10  Taxes.
          Borrower shall promptly pay or cause to be paid all lawful taxes and
          governmental charges or levies imposed upon Borrower or upon any property,
          either real, personal or mixed, except for those which are immaterial in
          amount
          or are being contested in good faith by appropriate proceedings and as
          to which
          contested charges or levies Borrower has notified the Lender and as to
          which, if
          required by the Lender in its reasonable discretion, Borrower has posted
          good
          and sufficient security without recourse to the Collateral.

         

        4.11  Qualification
          to do Business.
          Borrower will continue to be in good standing and qualified to do business
          in
          Utah and in each jurisdiction where it is required to be qualified in order
          to
          conduct its business, except where failure to be so qualified would not
          have a
          Material Adverse Effect. 

         

        4.12  ERISA.
          Borrower shall comply with any applicable provisions of ERISA, the noncompliance
          with which would have a Material Adverse Effect, and not be an "employee
          benefit
          plan" as defined in ERISA or a "plan" as defined in Section 4975 of the
          Code,
          nor will Borrower hold "plan assets" as that term is defined in the Regulation
          issued by the United States Department of Labor at 29 C.F.R.
          2510.3-101.

         

        
          
            
            

          

          
            -
              11
              -

            
              

            

          

          
            
            

          

        

         

        4.13  Further
          Assurances.
          Borrower shall at Borrower's sole cost and expense:

         

        (a)  furnish
          to the Lender all instruments, documents, certificates, and agreements
          required
          to be furnished pursuant to the terms of the Loan Documents or reasonably
          requested by the Lender in connection therewith;

         

        (b)  execute
          and deliver to the Lender such documents, instruments, certificates, assignments
          and other writings, and do such other acts necessary or desirable, to evidence,
          preserve and/or protect the Collateral at any time securing or intended
          to
          secure the Note, as the Lender may reasonably require; and

         

        (c)  do
          and
          execute all and such further lawful and reasonable acts, documents, conveyances
          and assurances for the better and more effective carrying out of the intents
          and
          purposes of this Loan Agreement and the other Loan Documents, as the Lender
          shall reasonably require from time to time including, without limitation,
          timely
          filing or refiling continuations and any assignments of any UCC-1 Financing
          Statements in the appropriate filing offices.

         

        Section
          5.   Negative
          Covenants. Borrower
          hereby agrees that, so long as the Loan remains unpaid, Borrower has any
          Obligation to Lender or any other amount is owing to the Lender under any
          of the
          Loan Documents, Borrower shall not, without Lender’s written consent, directly
          or indirectly:

         

        5.1  Pay
          declare or set apart for such payment, any dividend or other
          distribution;

         

        5.2  Redeem,
          repurchase or otherwise acquire capital stock of Borrower;

         

        5.3  Create,
          incur, assume or suffer to exist any liability for borrowed money (other
          than
          trade creditors in the ordinary course of business);

         

        5.4  Lend
          money, give credit or make advances to any person, firm, joint venture
          or
          corporation, including, without limitation, officers, directors, employees,
          subsidiaries and affiliates of Borrower (except for in the ordinary course
          of
          business);

         

        5.5  Assume,
          guarantee, endorse, contingently agree to purchase or otherwise become
          liable
          upon the obligation of any person, firm, partnership, joint venture or
          corporation, except by the endorsement of negotiable instruments for deposit
          or
          collection; 

         

        5.6  Use
          any
          of the proceeds received form this Loan Agreement in a manner other than
          as set
          forth in the Use of Proceeds Plan or to repay debt obligations owed to
          current
          or former officers, directors, employees, or shareholders of Borrower (except
          that Borrower may pay Dave Walker his accrued directors’ fee of $30,000 and
          $90,000 of accrued fees of Advisors, the consulting company affiliated
          with
          Martin Schroeder);

         

        5.7  Liquidate
          or dissolve or enter into any consolidation, merger, partnership, joint
          venture,
          syndicate or other combination;

         

        
          
            
            

          

          
            -
              12
              -

            
              

            

          

          
            
            

          

        

         

        5.8  Purchase,
          acquire or lease any property from, or sell, transfer or lease any property
          to,
          or lend or advance any money to, or borrow any money from, or guarantee
          any
          obligation of, or acquire any stock, obligations or securities of, or enter
          into
          any merger or consolidation agreement, or any management or similar
          agreement with, any affiliate of Borrower, or enter into any other transaction
          or arrangement or make any payment to (including, without limitation, on
          account
          of any management fees, service fees, office charges, consulting fees,
          technical
          services charges or tax sharing charges) or otherwise deal with, in the
          ordinary
          course of business or otherwise, any
          affiliate of Borrower;

         

        5.9  Without
          the consent of Lender, conduct any business activity that would violate
          any of
          the provisions of Borrower's organizational documents, or amend Borrower's
          organizational documents in a manner which would cause
          any
          representation set forth in the Loan Agreement to become untrue;
          or

         

        5.10  Change
          its fiscal year.

         

        Section
          6.   Security
          Agreement.
          As
          security for the payment or performance, as the case may be, in full of
          the
          Obligations (as defined herein), Borrower hereby bargains, sells, conveys,
          assigns, sets over, mortgages, pledges, hypothecates and transfers to Lender,
          its successors and assigns, and hereby grants to Lender, its successors
          and
          assigns, a security interest in and lien on (the “Security
          Interest”),
          all of
          Borrower’s right, title and interest in, to and under the Collateral (as defined
          herein). As used herein, the term “Obligations”
shall
          mean and refer to (a) the due and punctual payment by Borrower of (i) the
          principal of and interest (including interest accruing during the pendency
          of
          any bankruptcy, insolvency, receivership or other similar proceeding, regardless
          of whether such interest is allowed or allowable as a claim in such proceeding)
          on the Loan, when and as due, whether at maturity, by acceleration, upon
          one or
          more dates set for prepayment or otherwise, (ii) all other monetary obligations,
          including fees, costs, expenses and indemnities, whether primary, secondary,
          direct, contingent, fixed or otherwise (including monetary obligations
          incurred
          during the pendency of any bankruptcy, insolvency, receivership or other
          similar
          proceeding, regardless of whether such monetary obligations are allowed
          or
          allowable as a claim in such proceeding), of Borrower to the Lender under
          the
          Loan Documents, and (b) the due and punctual performance of all covenants,
          agreements, obligations and liabilities of Borrower under or pursuant to
          the
          Loan Documents. As used herein, the term “Collateral”
shall
          mean and refer to Borrower’s right, title and interest in, to and under all of
          the following (a) accounts,
          (b) chattel paper, (c) documents, (d) equipment, (e) general intangibles,
          (f)
          goods, (g) instruments, (h) insurance relating to the Collateral, (i)
          intellectual property (including all inventions, designs, patents, copyrights
          and trademarks), (j) inventory, (k) other goods and other personal property
          of
          Borrower, whether tangible or intangible, (l) records, and (m) proceeds,
          products, substitutions, accessions, rents and profits of or in respect
          of any
          of the foregoing,
          in each
          case as
          defined under the Uniform Commercial Code, as in effect in any relevant
          jurisdiction (the “UCC”),
          and
whether
          now owned or hereafter created or acquired and wherever located.

         

        6.1  Duty
          To Hold In Trust.
          Upon
          the occurrence and during the continuation of any Event of Default, Borrower
          shall, upon receipt by it of any revenue, income or other sums subject
          to the
          Security Interest, or of any check, draft, note, trade acceptance or other
          instrument evidencing an obligation to pay any such sum, hold the same
          in trust
          for Lender and shall upon request by Lender forthwith endorse and transfer
          any
          such sums or instruments, or both, to Lender for application to the satisfaction
          of the Obligations.

         

        
          
            
            

          

          
            -
              13
              -

            
              

            

          

          
            
            

          

        

         

        6.2  Rights
          and Remedies Upon Default. Upon the occurrence and during the continuation
          of any Event of Default, Lender shall have the right to exercise all of
          the
          remedies conferred hereunder and under the Notes, and Lender shall have
          all the
          rights and remedies of a secured party under the UCC. Without limitation,
          Lender
          shall have the following rights and powers upon and during the continuance
          of an
          Event of Default:

         

        (a)  Lender
          shall have the right to take possession of all tangible manifestations
          or
          embodiments of the Collateral and, for that purpose, without breaching
          the peace
          enter, with the aid and assistance of any person previously identified
          to, and
          approved in writing by, Borrower, any premises where the Collateral, or
          any part
          thereof, is placed and remove the same, and Borrower shall assemble the
          Collateral and make it available to Lender at Borrower’s premises.

         

        (b)  Lender
          shall have the right to assign, sell, or otherwise dispose of and deliver
          all or
          any part of the Collateral, at public or private sale or otherwise, either
          with
          or without special conditions or stipulations, for cash or on credit (for
          United
          States Dollars or such other currency as it may choose) or for future delivery,
          in such parcel or parcels and at such time or times and at such place or
          places,
          and upon such terms and conditions as Lender may deem commercially reasonable,
          all without (except as shall be required by applicable statute and cannot
          be
          waived) advertisement or demand upon or notice to Borrower or right of
          redemption of Borrower, which are hereby expressly waived. Upon each such
          sale,
          assignment or other transfer of Collateral, Lender may, unless prohibited
          by
          applicable law which cannot be waived, purchase all or any part of the
          Collateral being sold, free from and discharged of all trusts, claims,
          right of
          redemption and equities of Borrower, which are hereby waived and
          released.

         

        (c)  Lender
          may sublicense, to the same extent Borrower is permitted by law and contract
          to
          do so, whether on an exclusive or non-exclusive basis, any of the Collateral
          throughout the world for such period, on such conditions and in such manner
          as
          Lender shall, in its reasonable discretion, determine.

         

        (d)  Lender
          may (without assuming any obligations or liabilities thereunder), at any
          time,
          enforce (and shall have the exclusive right to enforce) against licensee
          or
          sublicensee all rights and remedies of Borrower in, to and under any license
          agreement with respect to such Collateral, and take or refrain from taking
          any
          action thereunder.

         

        (e)  Lender
          may, in order to implement the assignment, license, sale or other disposition
          of
          any of the Collateral pursuant to this Section, execute and deliver on
          behalf of
          Borrower one or more instruments of assignment of the Collateral in form
          suitable for filing, recording or registration in any jurisdictions as
          Lender
          may determine advisable.

         

        (f)  In
          the
          event that any Lender shall recover from Borrower or the Collateral more
          than
          its pro rata share of the Obligations owed to all Lender hereunder, whether
          by
          agreement, understanding or arrangement with Borrower or any other person,
          set
          off or other means, such Lender shall immediately deliver or pay over to
          the
          other Lender its pro rata portion of any such recovery in the form
          received.

         

        
          
            
            

          

          
            -
              14
              -

            
              

            

          

          
            
            

          

        

         

        6.3  Applications
          of Proceeds; Expenses.
          

         

        (a)  The
          proceeds of any such sale, sublicense or other disposition of the Collateral
          hereunder shall be applied first, to the expenses of retaking, holding,
          storing,
          processing and preparing for sale, selling, and the like (including, without
          limitation, any taxes, fees and other costs incurred in connection therewith)
          of
          the Collateral, to the reasonable attorneys’ fees and expenses incurred by
          Lender in enforcing its rights hereunder and in connection with collecting,
          storing and disposing of the Collateral, and then to satisfaction of the
          Obligations, and to the payment of any other amounts required by applicable
          law,
          after which Lender shall pay to Borrower any surplus proceeds. If, upon
          the
          sale, license or other disposition of the Collateral, the proceeds thereof
          are
          insufficient to pay all amounts to which Lender is legally entitled, Borrower
          will be liable for the deficiency. To the extent permitted by applicable
          law,
          Borrower waives all claims, damages and demands against Lender arising
          out of
          the repossession, removal, retention or sale of the Collateral, unless
          due to
          the gross negligence or willful misconduct of Lender.

         

        (b)  Borrower
          agrees to pay all out-of-pocket fees, costs and expenses reasonably incurred
          in
          connection with any filing required hereunder, including, without limitation,
          any financing statements, continuation statements, partial releases and/or
          termination statements related thereto or any expenses of any searches
          reasonably required by Lender. Borrower shall also pay all other claims
          and
          charges which in the reasonable opinion of Lender would reasonably be expected
          to prejudice, imperil or otherwise affect the Collateral or the Security
          Interest therein. Borrower will also, upon demand, pay to the Lender the
          amount
          of any and all reasonable expenses, including the reasonable fees and expenses
          of counsel and of any experts and agents, which Lender may incur in connection
          with the custody or preservation of, or the sale of, collection from, or
          other
          realization upon, any of the Collateral. 

         

        6.4  Responsibility
          for Collateral.
          Borrower assumes all liabilities and responsibility in connection with
          all
          Collateral, and the obligations of Borrower hereunder or under the Notes
          shall
          in no way be affected or diminished by reason of the loss, destruction,
          damage
          or theft of any of the Collateral or its unenforceability or unavailability
          for
          any reason.

         

        6.5  Security
          Interest Absolute. In the event that at any time any transfer of any
          Collateral or any payment received by Lender hereunder shall be deemed
          by final
          order of a court of competent jurisdiction to have been a voidable preference
          or
          fraudulent conveyance under the bankruptcy or insolvency laws of the United
          States, or shall be deemed to be otherwise due to any party other than
          Lender,
          then, in any such event, Borrower’s obligations hereunder shall survive, and
          shall not be discharged or satisfied by any prior payment thereof, but
          shall
          remain a valid and binding obligation enforceable in accordance with the
          terms
          and provisions hereof. Borrower waives all right to require Lender to proceed
          against any other person or to apply any Collateral which Lender may hold
          at any
          time, or to marshal assets, or to pursue any other remedy. To the extent
          permitted by applicable law, Borrower waives any defense arising by reason
          of
          the application of the statute of limitations to any obligation secured
          hereby.

         

        
          
            
            

          

          
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              15
              -

            
              

            

          

          
            
            

          

        

         

        6.6  Term
          of Security Interest. The Security Interest shall terminate on the date on
          which all payments under the Notes have been made in full and all other
          Obligations have been paid or discharged in full. Upon such termination,
          Lender,
          at the request and at the expense of Borrower, will join in executing any
          termination statement and other filings with respect to any financing statement
          executed and filed pursuant to this Agreement or required for evidencing
          termination of the Security Interest.

         

        6.7  Power
          of Attorney; Further Assurances. Borrower
          authorizes Lender, and does hereby make, constitute and appoint the Lender,
          and
          its officers, agents, successors or assigns with full power of substitution,
          as
          Borrower’s true and lawful attorney-in-fact, with power, in its own name or in
          the name of Borrower, to, after the occurrence and during the continuance
          of an
          Event of Default, (i) endorse any notes, checks, drafts, money orders,
          or other
          instruments of payment (including payments payable under or in respect
          of any
          policy of insurance) in respect of the Collateral that may come into possession
          of Lender; (ii) to sign and endorse any UCC financing statement or any
          invoice,
          freight or express bill, bill of lading, storage or warehouse receipts,
          drafts
          against Borrower, assignments, verifications and notices in connection
          with
          accounts, and other documents relating to the Collateral; (iii) to pay
          or
          discharge taxes, liens, security interests or other encumbrances at any
          time
          levied or placed on or threatened against the Collateral; (iv) to demand,
          collect, receipt for, compromise, settle and sue for monies due in respect
          of
          the Collateral; and (v) generally, to do, at the option of Lender, and
          at
          Borrower’s expense, at any time, or from time to time, all acts and things which
          Lender deem necessary to protect, preserve and realize upon the Collateral
          and
          the Security Interest granted therein, in order to effect the intent of
          this
          Loan Agreement and the Notes, all as fully and effectually as Borrower
          might or
          could do; and Borrower hereby ratifies all that said attorney shall lawfully
          do
          or cause to be done by virtue hereof. This power of attorney is coupled
          with an
          interest and shall be irrevocable for the term of this Loan
          Agreement.

         

        (a)  On
          a
          continuing basis, Borrower will make, execute, acknowledge, deliver, file
          and
          record, as the case may be, with the proper filing and recording places
          in any
          jurisdiction, including, without limitation, the State of Utah, all such
          instruments, and take all such action as necessary to perfect the Security
          Interest granted hereunder and otherwise to carry out the intent and purposes
          of
          this Loan Agreement, or for assuring and confirming to Lender the grant
          or
          perfection of a first priority security interest in all the
          Collateral.

         

        (b)  Borrower
          hereby irrevocably appoints Lender as Borrower’s attorney-in-fact, with full
          authority in the place and stead of Borrower and in the name of Borrower,
          from
          time to time in Lender’s discretion, to file, in its sole discretion, one or
          more financing or continuation statements and amendments thereto, relative
          to
          any of the Collateral.

         

        6.8  Termination
          and Release.
          The
          Security Interest shall terminate when all Obligations have been finally
          and
          indefeasibly paid in full. Upon the effectiveness of any written consent
          to the
          release of the Security Interest in any Collateral, the Security Interest
          in
          such Collateral shall be automatically released. Upon any sale, transfer
          or
          other disposition of Collateral permitted by the Loan Documents and Section
          3(j)
          hereof, the Security Interest in such Collateral shall be automatically
          released
          (other than to the extent any such sale, transfer or other disposition
          of such
          Collateral would, immediately after giving effect thereto, result in the
          receipt
          by Borrower of any other property (whether in the form of Proceeds or otherwise)
          that would, but for the release of the Security Interest therein pursuant
          to
          this clause, constitute Collateral, in which event the Lien created hereunder
          shall continue in such property). In connection with any termination or
          release
          pursuant to this Section, Lender shall execute and deliver to Borrower,
          at
          Borrower’s own cost and expense, all UCC termination statements and similar
          documents that Borrower may reasonably request to evidence such termination
          or
          release.  Any execution and delivery of documents pursuant to this Section
          shall be without recourse to or warranty by Lender. 

         

        
          
            
            

          

          
            -
              16
              -

            
              

            

          

          
            
            

          

        

         

        Section
          7.   Defaults
          and Remedies.

         

        7.1  Events
          of Default.
          The
          occurrence of any of the following events shall be an “Event of Default”
hereunder:

         

        (a)  Borrower
          fails to make any payment to Lender of principal, interest or any other
          amount
          due under the Note, this Loan Agreement, or any other Loan Document (other
          than
          payments described in (b) below), or fails to deliver or deposit funds
          with
          Lender as required under the Note, this Loan Agreement, or any other Loan
          Document, and any such failure remains uncured for three (3) business days
          following delivery to Borrower by Lender of written notice thereof.

         

        (b)  The
          occurrence of an Event of Default (subject to any applicable notice or
          cure
          periods set forth therein) under the Note or any other Loan Document (as
“Event
          of Default” is defined in the Note).

         

        (c)  Lender
          fails to have a legal, valid, binding and enforceable first priority lien
          on the
          Collateral or any portion thereof.

         

        (d)  Any
          written representation, warranty, certification, declaration or disclosure
          made
          to Lender by Borrower was intentionally false or misleading on the date
          as of
          which made, whether or not that representation, warranty, certification,
          declaration or disclosure appears in this Loan Agreement or any other Loan
          Document; or any such written representation,
          warranty, certification, declaration or disclosure made to Lender proves
          to be
          false or misleading on the date on which made, and such false or misleading
          representation, warranty, certification, declaration or disclosure involves,
          concerns or results in acts, circumstances or the change of circumstances
          constituting a Material Adverse Effect.

         

        (e)  Borrower
          fails to perform, observe or comply with any obligation, covenant or agreement
          of Borrower under this Loan Agreement or under any other Loan Document
          and such
          failure remains uncured 5 business days following delivery to
          Borrower of written notice of such failure from Lender.

         

        (f)  Any
          one
          or more of the following occurs:

         

        (i)  A
          general
          assignment for the benefit of creditors by Borrower; or

         

        
          
            
            

          

          
            -
              17
              -

            
              

            

          

          
            
            

          

        

         

        (ii)  The
          filing of a voluntary petition by Borrower in bankruptcy, insolvency,
          reorganization or liquidation, or any other petition under any section
          or
          chapter of the Bankruptcy Code or any similar law, whether state, federal,
          foreign, or otherwise, for the relief of debtors; or

         

        (iii)  The
          filing of any involuntary petition or any other petition against Borrower
          under
          any section or chapter of the Bankruptcy Code, or any similar law, whether
          state, federal or otherwise, relating to insolvency, reorganization, or
          liquidation, or for the relief of debtors, by the creditors of Borrower,
          said
          petition remaining undischarged for a period of sixty (60) days; or

         

        (iv)  The
          application by Borrower or the consent or acquiescence by Borrower to an
          application for the appointment of a custodian, receiver, conservator,
          trustee,
          or similar official for Borrower or for a substantial part of the property
          or
          business of Borrower; or

         

        (v)  Attachment,
          execution or judicial seizure (whether by enforcement of money judgment,
          by writ
          or warrant of attachment, or by any other process) of all or any part of
          the
          assets of Borrower, such attachment, execution or other seizure remaining
          undismissed or undischarged for a period of sixty (60) days after the levy
          thereof, or, in any event, later than five days prior to the date of any
          proposed sale thereunder; or

         

        (vi)  The
          admission in writing by Borrower of its inability to pay its debts or perform
          its obligations as they become due.

         

        (g)  Borrower
          fails to own good title to the Collateral
          or any
          portion thereof.

         

        7.2  Remedies.
          At any
          time after the occurrence of an Event of Default, Lender shall, in addition
          to
          the rights and remedies set forth in Section 7,
          have
          the right to
          declare
          any or all of the outstanding Loan Amount to be due and payable
          immediately.

         

        7.3  Remedies
          are Cumulative. All remedies contained in the Loan Documents are cumulative
          and not exclusive, and Lender shall also have all other remedies provided
          by law
          or in any other agreement between Borrower and Lender. No delay or failure
          by
          Lender to exercise any right or remedy will be construed to be a waiver
          of that
          right or remedy or of any default or Event of Default by Borrower. Lender
          may
          exercise any
          one
          or more of its rights and remedies at its option without regard to the
          adequacy
          of its security.

         

        Section
          8.   Miscellaneous
          Provisions.

         

        8.1  Assignment.
          This
          Loan Agreement shall inure to the benefit of and be binding upon Borrower,
          Lender and its respective successors, assigns and designees. Borrower may
          not
          assign its rights or interest hereunder or under the other Loan Documents.
          Any
          Lender may assign any or all of its rights under this Loan Agreement to
          any
          person to whom such Lender assigns or transfers any Notes. 

         

        
          
            
            

          

          
            -
              18
              -

            
              

            

          

          
            
            

          

        

         

        8.2  Agents.
          The
          Lender may use one or more agents or servicers to perform its obligations
          hereunder or under the other Loan Documents.

         

        8.3  Cumulative
          Rights; No Waiver.
          The
          rights, powers and remedies of the Lender hereunder are cumulative and
          in
          addition to all rights, powers and remedies provided under any and all
          agreements between Borrower and the Lender relating hereto, at law, in
          equity or
          otherwise. Any delay or failure by Lender to exercise any right, power
          or remedy
          shall not constitute a waiver thereof by the Lender, and no single or partial
          exercise by the Lender of any right, power or remedy shall preclude other
          or
          further exercise thereof or any exercise of any other rights, powers or
          remedies. No delay or omission of the Lender to exercise any right or remedy
          accruing upon any Event of Default shall impair any such right or remedy
          or
          constitute a waiver of any such Event of Default or an acquiescence therein.
          In
          particular, and not by way of limitation, by accepting payment after the
          due
          date of any amount payable under this Loan Agreement, the Note or any other
          Loan
          Document, the Lender shall not be deemed to have waived any right either
          to
          require prompt payment when due of all other amounts due under this Loan
          Agreement, the Note or the other Loan Documents, or to declare a default
          for
          failure to effect prompt payment of any such other amount. Every right
          and
          remedy given by this Section or by law to the Lender may be exercised from
          time
          to time, and as often as may be deemed expedient by the Lender and may
          be
          pursued singly, concurrently or otherwise, at such time and in such order
          as the
          Lender may determine in the Lender's sole discretion. 

         

        8.4  Survival
          of Representations.
          Borrower agrees that all of the representations and warranties, covenants
          and
          agreements of Borrower set forth herein and in the other Loan Documents
          are made
          as of the date hereof (except as expressly otherwise provided) and shall
          survive
          the delivery of the Note and the making of the Loan and continue for as
          long as
          any amount remains owing to the Lender under any Loan Documents. All
          representations, warranties, covenants and agreements made in the Loan
          Documents shall
          be
          deemed to have been relied upon by the Lender notwithstanding any investigation
          heretofore or hereafter made by the Lender or on its behalf.

         

        8.5  Notices
          to Parties.
          All
          notices or other communications hereunder or under any other Loan Document
          by
          any
          party to any other party shall be in writing unless otherwise provided
          for
          herein and shall be served by hand, certified or registered mail, postage
          prepaid, return receipt requested, or facsimile transmission confirmed
          by
          certified or registered
          mail. All such notices or other communications shall be deemed to have
          been
          sufficiently given for all purposes hereof on the date of receipt or refusal
          to
          accept delivery. Addresses for notices are as listed below. Any party may
          change
          the address to which notices are to be sent by notice of such change to
          the
          other parties given as provided herein.

         

        (i) if
          to
          Lender:

         

        Mercator
          Momentum Fund III, LP

        555
          South
          Flower Street, Suite 4200

        Los
          Angeles, CA 90071

        Attention:
          David F. Firestone

        Telephone:
          (213) 533-8288

        Telecopier:
          (213) 533-8285

         

        
          
            
            

          

          
            -
              19
              -

            
              

            

          

          
            
            

          

        

         

        with
          a
          copy to:

         

        Paula
          Winner Barnett, Esq.

        17967
          Boris Drive

        Encino,
          CA 91316

        Attention:
          Paula Winner Barnett, Esq.

        Telephone:
          (818) 776-9881

        Telecopier:
          (818) 743-7491

         

        (ii) if
          to
          Borrower:

         

        Medical
          Discoveries, Inc.

        c/o
          Sunhaven Farms

        30103
          West Gwinn Road

        Prosser,
          WA 99350

        Attention:
          David R. Walker

        Telephone:
          (509) 786-1013 

        Telecopier:
          (509) 786-1020

         

        with
          a
          copy to:

         

        Troy
          Gould PC

        1801
          Century Park East, Suite 1600

        Los
          Angeles, CA 90067

        Attention:
          Istvan Benko, Esq.

        Telephone:
          (310) 789-1226

        Telecopier:
          (310) 789-142 

         

        8.6  Jurisdiction.
          Any
          legal suit, action or proceeding against the Lender or Borrower arising
          out of
          or relating to this Agreement or the other Loan Documents shall be instituted
          in
          any federal or state court in Los Angeles County, California.
          Borrower hereby
          waives any objection which it may now or hereafter have to the laying of
          venue
          of any such suit, action or proceeding, and Borrower hereby irrevocably
          submits
          to the jurisdiction of any such court in any suit, action or
          proceeding. 

         

        8.7  Headings.
          The
          Section headings used in this agreement are for convenience of reference
          only
          and shall not affect the construction of this Loan Agreement.

         

        8.8  Modifications
          in Writing.
          No
          amendment, modification, supplement, termination or waiver of or to any
          provision of this Loan Agreement, or consent to any departure by the Lender
          therefrom, shall be effective unless in writing and signed by the Lender
          and
          Borrower. Any amendment, modification or supplement of or to any provision
          of
          this Loan Agreement, any waiver of any provision of this Loan Agreement,
          and any
          consent to any departure by the Lender from the terms of any provision
          of this
          Loan Agreement shall be effective only in the specific instance and for
          the
          specific purpose for which made or given.

         

        
          
            
            

          

          
            -
              20
              -

            
              

            

          

          
            
            

          

        

         

        8.9  Execution
          in Counterparts.
          This
          Loan Agreement and any amendments, waivers, consents or supplements hereto
          may
          be executed in any number of counterparts and by different parties hereto
          in
          separate counterparts, each of which when so executed
          and delivered shall be deemed to be an original, but all such counterparts
          shall
          constitute one and the same agreement.

         

        8.10  Severability
          of Provisions.
          Any
          provision of this Loan Agreement which is prohibited or unenforceable shall
          be
          ineffective to the extent of such prohibition or unenforceability without
          invalidating the remaining provisions hereof.

         

        8.11  WAIVER
          OF JURY TRIAL.
          THE
          PARTIES HERETO HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
          OR
          PROCEEDING BASED UPON, OR RELATED TO, THIS LOAN AGREEMENT, ANY OTHER
          LOAN DOCUMENT,
          OR THE TRANSACTIONS. NO PARTY SHALL SEEK TO CONSOLIDATE ANY SUCH ACTION
          IN WHICH
          A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
          CANNOT
          OR HAS NOT BEEN WAIVED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
          MADE BY THE PARTIES, AND EACH PARTY ACKNOWLEDGES THAT NEITHER THE OTHER
          PARTY
          NOR ANY PERSON ACTING ON BEHALF OF THE OTHER PARTY HAS MADE ANY REPRESENTATIONS
          OF FACT TO INDUCE THIS WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES
          THAT
          (1) IT BARGAINED AT ARM'S LENGTH AND IN GOOD FAITH, WITHOUT DURESS, (2)
          THAT THE
          PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS WHATEVER, (3) THAT
          IT HAS
          BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
          SIGNING
          OF THIS LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS AND IN THE MAKING OF THIS
          WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL AND
          (4) THAT
          IT HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. EACH PARTY
          HERETO
          SPECIFICALLY ACKNOWLEDGES THAT NO OTHER PARTY
          HAS
          IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS
          OF
          THIS SECTION 6.11 WILL NOT BE FULLY ENFORCED
          IN ALL INSTANCES. EACH PARTY HERETO FURTHER
          ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS
          OF
          THIS WAIVER PROVISION AND AS EVIDENCE OF THIS FACT SIGNS ITS INITIALS BELOW.
          THE
          PARTIES AGREE THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH OF THEM
          TO ENTER
          INTO THE TRANSACTIONS AND THAT THIS WAIVER SHALL BE EFFECTIVE AS TO ALL
          OF THE
          LOAN DOCUMENTS AND THE ENVIRONMENTAL INDEMNITIES AS IF FULLY INCORPORATED
          THEREIN.

         

        INITIALS:
          _______BORROWER:
          ______LENDER:
          ______

         

        8.12  Governing
          Law.
          This
          Loan Agreement, the other Loan Documents and the obligations arising hereunder
          and thereunder shall be governed by, and construed in accordance with,
          the laws
          of the State of California applicable to contracts made and performed in
          such
          state; specifically, without limitation, the law of the State of California
          shall govern with respect to usury, the charging or collection of interest,
          and
          the contracting for or receipt of interest or any other sums for the use,
          loan
          or forbearance of the Loan or any other money as provided herein or in
          any other
          Loan Documents.

         

        
          
            
            

          

          
            -
              21
              -

            
              

            

          

          
            
            

          

        

         

        8.13  Brokers
          and Financial Advisors.
          Borrower and the Lender hereby represent that they have dealt with no financial
          advisors, brokers, underwriters, placement agents, agents or finders in
          connection with the transactions contemplated by this Loan Agreement. Borrower
          and the Lender hereby agree to indemnify and hold the other harmless from
          and
          against any and all claims, liabilities, costs and expenses of any kind
          in any
          way relating to or arising from a claim by any person or entity of the
          type
          specified above that such person or entity acted on behalf of the indemnifying
          party in connection with the transactions contemplated herein. The provisions
          of
          this Section 8.13 shall survive the expiration and termination of this
          Loan
          Agreement and the repayment of the Loan Amount.

         

        8.14  No
          Joint Venture or Partnership.
          Borrower and the Lender intend that the relationship created hereunder
          be solely
          that of borrower and lender. Nothing herein is intended to create a joint
          venture, partnership, tenancy-in-common, or joint tenancy relationship
          between Borrower and the Lender.

         

        8.15  Conflict;
          Construction of Documents; Entire Agreement.
          The
          parties hereto acknowledge that they were each represented by counsel in
          connection with the negotiation and drafting of the Loan Documents and
          that the
          Loan Documents shall not be subject to the principle of construing their
          meaning
          against the party which drafted the same. This
          Loan
          Agreement, the Note, the other Loan Documents, including any attachments,
          exhibits and schedules referred to therein, constitute the entire agreement
          between the parties pertaining to the subject matter
          thereof and supersede any and all prior agreements, representations and
          understandings of the parties, written or oral. Except as otherwise expressly
          provided in any Loan Document, to the extent of any conflict or inconsistency
          between the terms of this Loan Agreement and the terms of any other Loan
          Document, the terms hereof shall prevail.

         

        8.16  Waiver
          of Notice.
          Borrower shall not be entitled to any notices of any nature whatsoever
          from the
          Lender except with respect to matters for which this Loan Agreement or
          the other
          Loan Documents specifically and expressly provide for the giving of notice
          by
          the Lender to Borrower and except with respect to matters for which Borrower
          is
          not, pursuant to applicable law, permitted to waive the giving of
          notice. 

         

        8.17  Fee
          and Expense Reimbursement and Direct Payment. 

         

        (a)  Upon
          execution of this Loan Agreement, in accordance with the Letter Agreement,
          Lender shall deposit $250,000 (the “Initial
          Draw-Down”)
          into
          Advisors’ client trust account. Advisors shall pay the following from the
          Initial Draw-Down: legal fees to Paula Winner Barnett, Esq., consulting
          fees to
          the Advisors, and legal fees to Troy Gould PC, as reimbursement in full
          of
          Lender’s costs and expenses incurred in connection with the Loan and other
          transactions related to Borrower. The remaining Initial Draw-Down amount
          shall
          be delivered to Borrower,
          less any customary bank charges. 

         

        
          
            
            

          

          
            -
              22
              -

            
              

            

          

          
            
            

          

        

         

        (b)  Following
          the execution of this Loan Agreement, Borrower shall from time to time,
          on
          demand, reimburse Lender for, and hereby agrees to indemnify Lender against,
          all
          liabilities, claims, debts, losses, demands, actions, suits,
          charges, reasonable
          attorneys' fees, reasonable consultants' fees and other expenses incurred
          by
          Lender in the exercise of its powers, rights and duties hereunder and in
          enforcement and administration of the Loan, including, without limitation,
          protecting Lender's security for the Loan, and payment of obligations of
          Borrower which Lender may make, and in connection with any refinancing
          of or
          restructuring of the Loan, including, but not limited to, extensions, renewals,
          revisions or “workouts,” or if any bankruptcy, insolvency or debtor-relief
          proceeding is commenced by or against Borrower, the fees and expenses of
          legal
          counsel for Lender incurred in connection therewith, including, but not
          limited
          to, attendance of such counsel at meetings of creditors for the consideration
          of
          such proceedings, shall be recoverable from Borrower upon demand; provided,
          however,
          that
          Borrower shall be under no obligation to indemnify Lender against any
          liabilities, claims, debts,
          losses, demands, actions, suits, charges, attorneys' fees, consultant's
          fees,
          and other expenses resulting from gross negligence or willful misconduct
          on the
          part of the Lender.

         

        (c)  In
          the
          event that Borrower fails, within thirty (30) days after Lender's demand
          to pay
          to Lender any sum advanced or expenses incurred by Lender pursuant this
          Loan
          Agreement or under the other Loan Documents which is reimbursable by Borrower
          under the terms of this Loan Agreement or any other Loan Document, the
          amount of
          such advance or expense shall bear interest from the 31st day after such
          Lender's demand at the Default Rate (as defined in the Note); provided,
          however,
          that this provision shall be in addition to all other rights and remedies
          of
          Lender hereunder and under the other Loan Documents and shall not be deemed
          to
          limit Lender's right to compel prompt performance hereunder or
          thereunder.

        

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

        

          
            	 	
                    LENDER:

                  
	 	
                    MERCATOR
                      MOMENTUM FUND III, LP,

                  
	 	
                    a
                      California limited partnership

                  
	 	 	 
	 	
                    By:
                      

                  	
                     

                    
                      

                    

                  
	 	
                    Name:
                      David Firestone

                  
	 	Title:
                    General Partner
	 	 	 
	 	
                    BORROWER:

                  
	 	
                    MEDICAL
                      DISCOVERIES, INC., 

                  
	 	
                    a
                      Utah corporation

                  
	 	 	 
	 	
                    By:

                  	
                     

                    
                      

                    

                  
	 	
                    Name:
                      David R. Walker

                  
	 	Title:
                    Chairman of the Board of Directors

          

        

         

        
          
            
            

          

          
            -
              23
              -

            
              

            

          

          
            
            

          

        

      

    

    EXHIBIT
      A

    

    FORM
      OF SECURED PROMISSORY NOTE

    

      
        	
                $[xxxx.00]

              	
                SEPTEMBER
                  __, 2007

              

      

    

     

    FOR
      VALUE RECEIVED,
      the
      undersigned, MEDICAL
      DISCOVERIES, INC.,
      a Utah
      corporation, having its place of business at ("Maker"),
      hereby promises to pay to the order of Mercator
      Momentum Fund III LP,
      a
      California limited liability partnership, having its principal place of business
      at 555 South Flower Street, Suite 4200, Los Angeles, CA 90071 (together with
      their successors, assigns and designees, the "Payee"),
      the
      principal sum of _____________ DOLLARS ($xxxx.00) or the lesser amount advanced
      pursuant hereto, together with interest accrued thereon, on or before December
      14, 2007 (the "Maturity
      Date").
      Unless otherwise defined herein, capitalized terms used herein shall have the
      meanings ascribed to such terms in that certain Loan and Security Agreement
      of
      even date herewith between Maker and Payee (the "Loan Agreement").

     

    Section
      1.

     

    RATE
      OF
      INTEREST AND REPAYMENT TERMS

     

    
      	1.1	
              Payments
                During Term.

            

    

     

    (a)  Interest
      accruing under this Note shall become payable on a monthly basis, and the
      principal shall be due on the on the Maturity Date. 

     

    (b)  Unless
      Maker shall prepay the entire outstanding balance of this Note in the manner
      permitted by Section 1.03 below, then on or before 5:00PM. Pacific Time on
      the
      Maturity Date, the entire outstanding balance of principal, all accrued interest
      and all other amounts owed and unpaid hereunder shall be due and
      payable.

     

    
      	1.2	
              Rate
                of Interest.

            

    

     

    The
      principal balance of this Secured Promissory Note (this "Note")
      from
      time to time outstanding shall bear interest at a per annum rate of twelve
      percent (12%) (the "Contract
      Rate").

     

    
      	1.3	
              Prepayment
                During Term. 

            

    

     

    Maker
      may, from time to time, repay or prepay this Note, in whole or in part, without
      penalty. Any prepayment of principal of this Note shall include accrued
      interest. Any prepayment shall be applied first to satisfaction of any accrued
      and unpaid interest and the balance shall be applied against the principal
      balance hereof. Notwithstanding the stated Maturity Date, upon Payee’s written
      request therefor, Maker shall prepay this Note on and as of the date of the
      closing of the Eucodis Sale.

     

    
      
        
        

      

      
        -
          24
          -

        
          

        

      

      
        
        

      

    

     

    
      	1.4	
              Payments
                and Computations.

            

    

     

    (a)  Maker
      shall make payment under this Note by bank wire transfer of immediately
      available funds for the amount of such payment in lawful money of the United
      States to Payee in accordance with the instructions given on Schedule
      I,
      attached, or in such other manner and to such other address as Payee may from
      time to time designate to Maker in writing.

     

    (b)  Interest
      on the principal sum of the Note shall be computed on the basis of a year of
      three hundred sixty (360) days and a month of thirty (30) days.

     

    (c)  Whenever
      any payment to be made hereunder is stated to be due on a day other than a
      Business Day (as hereinafter defined), such payment shall be made on the next
      succeeding Business Day, and there shall be no additional charge for such
      extension of time, which shall be deemed to be included in the computation
      of
      interest at the Contract Rate. "Business
      Day"
      means a
      day other than a Saturday or Sunday or a public or bank holiday on which state
      chartered banks generally are closed in the State of California.

     

    
      	1.5	
              Default
                Rate of Interest.

            

    

     

    Following
      the maturity of the indebtedness evidenced hereby, whether by acceleration
      or
      otherwise, and following any Event of Default hereunder or under any other
      Loan
      Document, after the delivery of any required notices and the expiration of
      any
      applicable cure period, the unpaid principal amount hereof, all unpaid interest
      thereon and other charges shall thereafter bear interest at a rate equal to
      the
      lesser of the Contract Rate plus six percent (6%) per annum, or the maximum
      rate
      permitted by law (hereafter referred to as the "Default
      Rate").
      The
      Default Rate shall also accrue upon any sums which Payee advances hereunder
      or
      under the terms of the Loan Documents to protect its security for this Note
      or
      otherwise assert or protect any of its rights and benefits under the Loan
      Agreement. Interest at the Default Rate will be due from and including the
      due
      date for such amounts and to, but excluding, the date Payee receives the past
      due amount, any late charges and Default Rate interest in immediately available
      funds. For purposes of this Note, the term "Event
      of Default"
      shall
      have the same meaning ascribed to such term in, and shall include any event
      which would constitute an Event of Default under, the Loan Agreement, and shall
      include, without limitation, a breach under this Note, subject to any applicable
      notice requirements and cure periods specified in the Loan
      Agreement.

     

    Section
      2.

     

    SECURITY

     

    
      	2.1	
              Loan
                Documents.

            

    

     

    This
      Note
      and Maker's obligations hereunder are secured by the Collateral (as defined
      in
      the Loan Agreement). The Loan Agreement and all documents, certificates, and
      instruments supporting, securing, evidencing or relating to the indebtedness
      evidenced by this Note may be referred to herein collectively as the
      "Loan
      Documents"
      and
      individually as a "Loan
      Document."

     

    
      
        
        

      

      
        -
          25
          -

        
          

        

      

      
        
        

      

    

     

    Section
      3.

     

    GENERAL
      PROVISIONS

     

    
      	3.1	
              Acceleration
                on Default.

            

    

     

    Following
      an Event of Default, the entire outstanding principal balance, all accrued
      but
      unpaid interest hereunder, and all late charges and other amounts owing
      hereunder but unpaid shall, at the option of Payee, become immediately due
      and
      payable. Failure by the Payee to exercise such option shall not be a waiver
      of
      the right to do so at any future time for the certain Event of Default giving
      rise to Payee's right to accelerate or for any other Event of
      Default.

     

    
      	3.2	
              No
                Offset; Waiver of Notice, Etc.

            

    

     

    All
      payments under this Note shall be made by Maker without deduction, offset,
      abatement, suspension, deferment, diminution or reduction of any kind
      whatsoever. Maker and all other persons, partnerships, corporations or other
      legal entities liable now or at any time for the payment of the indebtedness
      evidenced hereby expressly waive all notice, demand for payment, presentment
      for
      payment, protest and notice of protest, notice of intent to accelerate, notice
      of acceleration and diligence in collection and agree that the time of said
      payment or any part thereof may be extended by Payee, and further agree that
      the
      real or personal property security or any part thereof may be released by Payee
      without in any way modifying, altering, releasing, affecting or limiting any
      liens or security interests arising under any of the Loan Documents. The
      nonexercise by Payee of any of the rights under this Note in any particular
      instance shall not constitute a waiver of such rights in that or in any
      subsequent instances.

     

    
      	3.3	
              Compliance
                with Usury Laws.

            

    

     

    All
      agreements in this Note and in the Loan Documents are expressly limited so
      that
      in no contingency or event whatsoever, whether by reason of advancement or
      acceleration of maturity of the indebtedness evidenced hereby, or otherwise,
      shall the amount paid or agreed to be paid hereunder or under the Loan Documents
      for the use, forbearance or detention of money exceed the highest lawful rate
      permitted under applicable usury laws. If, from any circumstance whatsoever,
      fulfillment of any provisions of this Note or of any of the Loan Documents,
      at
      the time performance of such provision shall be due, shall involve transcending
      the limit of validity prescribed by law which a court of competent jurisdiction
      may deem applicable to the indebtedness evidenced hereby, then, the obligation
      to be fulfilled shall be reduced to the limit of such validity and if, from
      any
      circumstance whatsoever, Payee or any holder of this Note shall ever receive
      as
      interest an amount which would exceed the highest lawful rate, the receipt
      of
      such excess shall be credited against the principal amount of the indebtedness
      evidenced hereby to which the same may lawfully be credited, and any portion
      of
      such excess not capable of being so credited shall be rebated to
      Maker.

     

    
      
        
        

      

      
        -
          26
          -

        
          

        

      

      
        
        

      

    

     

    
      	3.4	
              Governing
                Law.

            

    

     

    This
      Note
      is to be governed by and construed in accordance with the laws of the State
      of
      California applicable
      to agreements made and to be performed wholly within the State of
      California.

     

    
      	3.5	
              Waiver
                of Jury Trial.

            

    

     

    Maker
      hereby waives the right to a trial by jury in any action or proceeding based
      upon, or related to, the subject matter of this Note. Maker shall not seek
      to
      consolidate any such action in which a jury trial has been waived, with any
      other action in which a jury trial cannot or has not been waived. This waiver
      is
      knowingly, intentionally and voluntarily made by Maker, and Maker acknowledges
      that neither Payee nor any person acting on behalf of Payee has made any
      representations of fact to induce this waiver of jury trial. Maker acknowledges
      that 1) it bargained at arm's length and in good faith, without duress, 2)
      that
      the provisions hereof shall be subject to no exceptions whatever, 3) that it
      has
      been represented (or has had the opportunity to be represented) in the signing
      of this Note and in the making of this waiver by independent legal counsel,
      selected of its own free will and 4) that it had the opportunity to discuss
      this
      waiver with counsel. Maker specifically acknowledges that no party has in any
      way agreed with or represented to any other party that the provisions of this
      Section 3.05 will not be fully enforced in all instances. Maker further
      acknowledges that it has read and understands the meaning and ramifications
      of
      this waiver provision and as evidence of this fact signs its
      initials.

     

    ______
      ______ ______

     

    Maker's
      Initials

     

    
      	3.6	
              Payee.

            

    

     

    All
      references to "Payee"
      in this
      Note shall be deemed to refer to and include the original Payee under this
      Note,
      and any heirs, administrators or assigns, other successors in interest to the
      original Payee or any other holder of this Note, which successors and assigns
      are permitted pursuant to the terms of the Agreement.

     

    
      	3.7	
              Costs
                of Enforcement.

            

    

     

    On
      demand, Maker shall pay or reimburse Payee for the payment of any costs or
      expenses (including in-house and reasonable outside attorneys' fees and
      disbursements) incurred or expended by Payee in connection with or incidental
      to
      (i) any Event of Default by Maker, or (ii) the exercise or enforcement by or
      on
      behalf of Payee of any of its rights or remedies or Maker's obligations under
      this Note, the Agreement or the other Loan Documents, including (x) the
      enforcement, compromise or settlement of the obligations of this Note, (y)
      if
      prompted by an act or omission of Maker, all actions taken by Payee to protect
      its security under this Note, the Agreement and the other Loan Documents,
      including but not limited to consultation with an attorney whether or not the
      matter prompting such consultation is eventually involved in litigation, and
      (z)
      the defense or assertion of the rights or claims of any Payee hereunder, whether
      by litigation (including litigation in a United States Bankruptcy Court) or
      otherwise.

     

    
      
        
        

      

      
        -
          27
          -

        
          

        

      

      
        
        

      

    

     

    
      	3.8	
              Assignment
                of this Note.

            

    

     

    Maker
      hereby acknowledges and agrees that Payee may assign or otherwise transfer
      all
      or any portion of its rights under this Note to one or more institutional
      investors or the affiliates thereof or to one or more of its affiliates or
      wholly-owned subsidiaries. Any assignee shall have the same rights and
      privileges under this Note as if said assignee were the original payee
      hereof.

     

    
      	3.9	
              No
                Oral Modification.

            

    

     

    This
      Note
      may not be amended, cancelled, discharged, extended or modified except in
      writing.

    
      	 	 	 
	 	MAKER:
	 	 
	 	MEDICAL
              DISCOVERIES, INC., a Utah corporation
	 	 	
 
	 	By:  	
               

              
                

              
  
	 	Name: 
              David R. Walker
	 	 
	 	Title: 
              Chairman of the Board of Directors

    

     

     

    ****************************

    

    SCHEDULE
      I

    PAYEE
      PAYMENT INSTRUCTIONS

    

    
      
        
        

      

      
        -
          28
          -

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    

    LETTER
      AGREEMENT

     

    Dated
      as
      of September __, 2007

    

    Emmes
      Group Consulting LLC

    92
      Natoma
      Street, Suite 200

    San
      Francisco, CA 94105 

    

    Re: PERMITTED
      PAYMENTS BY MEDICAL DISCOVERIES, INC. UNDER $1,000,000 CREDIT FACILITY

     

    Ladies
      and Gentlemen:

     

    Reference
      hereby is made to (i) that certain credit facility (the “Loan
      Agreement”)
      and
      corresponding promissory note dated as of the date hereof (the “Note”),
      made
      by Medical Discoveries, Inc., a Utah corporation (hereinafter “Borrower”),
      payable to the order of Mercator Momentum Fund III, LP, a California limited
      partnership (together with its successors, assigns, and designees, hereinafter
      “Lender”).
      Capitalized terms used herein, and not otherwise defined herein, have their
      respective meanings given them in the Note.

    

    Whereas,
      (i) in accordance with the terms and conditions of the Loan Agreement and Note,
      the Lender wishes to advance certain amounts in favor of Borrower to the Emmes
      Group’s client trust account established at Bank of America NT&SA,
      Market-New Montgomery Branch, San Francisco, California, (ii) in accordance
      with
      such terms and conditions, in order to obtain a loan advance under the Loan
      Agreement and Note, Borrower shall from time to time deliver a borrowing
      certificate (each a “Borrowing
      Certificate”),
      and
      (iii) the Lender and Borrower wish to engage Emmes Group Consulting LLC, a
      California limited liability company (“Advisors”),
      to
      receive each such Borrowing Certificate and such information and to disburse
      the
      loan advances in the manner set forth in this Letter Agreement (this
“Agreement”),
      and
      Advisors wish to accept such engagement. Each Borrowing Certificate shall
      contain the following information and statements: (a) The amount of the advance
      that Borrower desires to borrow under the Loan; (ii) The purpose for which
      the
      advances will be used; (iii) A representation that the Borrower is not in
      default under the Note and that all of the representations and warranties in
      the
      Loan Agreement are, as of the date of the Borrowing Certificate, true and
      correct.

    

    NOW,
      THEREFORE, for and in consideration of the foregoing, and for other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto hereby agrees as follows:

     

    1.  Term.
      The
      term of this Agreement (the “Term”)
      shall
      commence on the date hereof under the Note and shall continue thereafter until
      10 calendar days following the Maturity Date of the Note, unless terminated
      earlier by (a) Advisors upon written notice to Lender and Borrower, or (b)
      by
      mutual agreement by and among Advisors and the Lender and Borrower.

     

    2.  Engagement
      and Duties.
      The
      Lender and Borrower hereby engages Advisors to perform the following services
      (the “Services”):
      (a)
      Lender agrees to deliver to Advisors a total of $1,000,000 (the “Loan
      Amount”),
      to be
      delivered on the schedule set forth in Exhibit C of the Loan Agreement; (b)
      Advisors shall deposit all funds received from the Lender hereunder in the
      Emmes
      Group’s client trust account established at Bank of America NT&SA,
      Market-New Montgomery Branch, San Francisco, California; (c) Advisors shall
      take
      delivery of each Borrowing Certificate delivered, from time to time, pursuant
      to
      the Note from Borrower and any other information delivered in connection
      therewith; (d) Advisors shall review each such Borrowing Certificate and such
      information and, if the Release Conditions are met, shall thereafter promptly
      release the amount loan proceeds specified under the Borrowing Certificate
      to
      the Borrower; and (e) on December 15, 2007, Advisors shall return to Lender
      any
      portion of the Loan Amount that has not been disbursed to Borrower prior to
      that
      date. For the purposes hereof, the “Release
      Conditions”
shall
      mean the satisfaction of both of the following conditions: (i) The amounts
      requested under the Borrowing Certificate matches or is less than, in the
      aggregate, the amounts set forth in the Use of Proceeds Plan attached to the
      Loan Agreement as Schedule 3.16; and (ii) the Borrower’s intended use of
      proceeds as described in the Borrowing Certificate is listed on Schedule 3.16
      as
      an approved use of the Loan advances. Advisor’s duties under this Agreement
      shall be performed in such manner as Advisors deem necessary or appropriate
      in
      their reasonable judgment. In providing this service, the Lender and Borrower
      both agree that Advisor is in no way serving as an executive officer of the
      Borrower or in any way managing the business of the Borrower. 

     

    
      
        
        

      

      
        -
          29
          -

        
          

        

      

      
        
        

      

    

     

    3.  Expenses
      and Indemnification.
      During
      the Term, the Borrower, shall reimburse Advisors for all reasonable business
      expenses incurred in connection with the provision of the Services in accordance
      herewith. The Lender and Borrower, jointly and severally, shall indemnify and
      hold Advisors, its principals, officers, shareholders, members, employees,
      consultants, and agents harmless from and against any and all liability,
      demands, claims, actions, losses, interest, costs of defense and expenses
      (including, without limitation, reasonable attorneys’ fees and any claims by the
      Borrower or the Lender) (collectively, the “Liabilities”), which arise out of or
      in connection with this Agreement or any of the Note, including without
      limitation the acceptance of this Agreement and Advisor’s performance of any of
      the Services or any other duties hereunder, except such Liabilities as may
      directly result from the willful misconduct or gross negligence of Advisors.
      Promptly after receipt by Advisors of notice of any demand or claim or the
      commencement of any action, suit or proceeding relating to this Agreement,
      Advisors shall promptly notify Lender and Borrower thereof in writing. IT IS
      EXPRESSLY THE INTENT OF THE LENDER AND BORROWER TO JOINTLY AND SEVERALLY
      INDEMNIFY ADVISORS AND ITS PRINCIPALS, DIRECTORS, OFFICERS, SHAREHOLDERS,
      MEMBERS AND EMPLOYEES AND CONSULTANTS AND AGENTS FROM ERRORS IN JUDGMENT OR
      OTHER ACTS OR OMISSIONS NOT AMOUNTING TO WILLFUL MISCONDUCT OR GROSS
      NEGLIGENCE.

     

    4.  Representations
      and Warranties.
      Each
      party to this Agreement represents and warrants to the other party as follows:
      (a) it is a legal entity duly organized and validly existing under the laws
      of
      the jurisdiction in which it was organized and has all requisite corporate
      or
      limited liability company power to enter into this Agreement; (b) neither the
      execution and delivery of this Agreement nor the consummation of the
      transactions contemplated herein nor compliance by it with any of the provisions
      hereof will: (i) violate any order, writ, injunction, decree, law, statute,
      rule
      or regulation applicable to it or (ii) require the consent, approval, permission
      or other authorization of, or qualification or filing with or notice to, any
      court, arbitrator or other tribunal or any governmental, administrative,
      regulatory or self-regulatory agency or any other third party; (c) this
      Agreement has been duly authorized, executed and delivered by it and constitutes
      its legal, valid and binding agreement.

     

    5.  Survival
      of Agreement.
      The
      Lender’s and Borrower’s obligations set forth in this Agreement shall survive
      the expiration, termination, or supersession of this Agreement.

     

    6.  Choice
      of Law; Counterparts.
      THE
      VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
      HEREOF, AND THE RIGHTS OF LENDER AND ADVISORS WITH RESPECT TO ALL MATTERS
      ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
      AND
      CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
      REFERENCE TO CONFLICTS OF LAW PRINCIPLES EXCEPT TO THE EXTENT NECESSARY TO
      ENFORCE THIS CHOICE OF LAW PROVISION.
      This
      Agreement may be executed in any number of counterparts and by different parties
      on separate counterparts. Each of such counterparts shall be deemed to be an
      original, and all of such counterparts, taken together, shall constitute but
      one
      and the same agreement. Delivery of an executed counterpart of this letter
      by
      telefacsimile shall be equally effective as delivery of a manually executed
      counterpart.

     

    
      
        
        

      

      
        -
          30
          -

        
          

        

      

      
        
        

      

    

     

     7.  Assignment;
      Entire Agreement.
      Except
      as specifically stated in this Agreement, neither this Agreement nor any of
      the
      rights, interests or obligations of any party hereunder shall be assigned or
      delegated by either party without the prior written consent of the other party,
      not to be unreasonably withheld. Any unauthorized assignment or delegation
      shall
      be null and void. This Agreement constitutes the full and entire understanding
      and agreement among the parties hereto with regard to the subjects hereof and
      thereof and no party shall be liable or bound to any other in any manner by
      any
      representations, warranties, covenants and agreements except as specifically
      set
      forth herein and therein

     

    Please
      acknowledge your acceptance and agreement to the terms of this Agreement by
      returning a duly executed counterpart of this Agreement to us.

    

     

    Very
      truly yours,

    
      	 	 	 
	 	MERCATOR
              MOMENTUM FUND III, LP,
              as a Lender
	 	 	
 
	 	By:  	
               

              
                

              

            
	 	Name:
               David Firestone
	 	
              Title: 
                General Partner

            

    

    
      	
            	 	 
	 	MEDICAL
              DISCOVERIES, INC.,
              as a Borrower
	 	 	
 
	 	By:  	
               

              
                

              

            
	 	Name:
              David R. Walker
	 	
              
                Title:
                  Chairman of the Board of
                  Directors

              

            

    

     

    

    Accepted
      and agreed to, as Advisors

    as
      of the
      date first above written:

    

    EMMES
      GROUP CONSULTING LLC

    

    

      
        	
                By:

              	 	 
	
                Name:
                  Martin F. Schroeder

              
	
                Title:
                  EVP & Managing Director

              

      

    

     

    
      
        
        

      

      
        -
          31
          -

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

    

    DRAW-DOWN
      SCHEDULE

    

    
      
        
        

      

      
        -
          32
          -

        
          

        

      

      
        
        

      

    

     

    
      WARRANT
        TO PURCHASE COMMON STOCK

    

    

    EXHIBIT
      D

    

    FORM
      OF NEW WARRANT

    

    THIS
      WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY
      NOT
      BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE
      OF AN
      EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER
      SUCH
      ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    
      	
              Number
                of Shares:

            	
              Up
                to _____ shares (subject to adjustment)

            
	 	 
	
              Warrant
                Price:

            	
              $0.01
                per share

            
	 	 
	
              Issuance
                Date:

            	
              September
                7, 2007

            
	 	 
	
              Expiration
                Date:

            	
              September
                30, 2013

            

    

     

    THIS
      WARRANT CERTIFIES THAT
      for
      value received, _______________ or its registered assigns (hereinafter called
      the “Holder”)
      is
      entitled to purchase from Medical Discoveris, Inc., a Utah corporation
      (hereinafter called the “Company”),
      the
      above referenced number of fully paid and nonassessable shares (the
“Shares”)
      of
      common stock, par value $0.01 per share (the “Common
      Stock”)
      of
      Company, at the Warrant Price per Share referenced above; the number of shares
      purchasable upon exercise of this Warrant referenced above being subject to
      adjustment from time to time as described herein. This Warrant is issued in
      connection with that certain Loan Agreement dated as of September 7, 2007,
      by
      and among the Company, Holder and the other parties therein named (the
“Loan
      Agreement”).
      The
      exercise of this Warrant shall be subject to the provisions, limitations and
      restrictions contained herein.

     

    Section
      1.   Term
      and Exercise.

     

    1.1  Term.
      This
      Warrant is exercisable in whole or in part (but not as to any fractional share
      of Common Stock), at any time and from time to time after the date hereof prior
      to 6:00 p.m. on the Expiration Date set forth above. 

     

    1.2  Warrant
      Price. The
      Warrant shall be exercisable at the Warrant Price described above.

     

    1.3  Maximum
      Number of Shares.
      The
      maximum number of Shares of Common Stock exercisable pursuant to this Warrant
      is
      ______________ Shares. However, notwithstanding anything herein to the contrary,
      in no event shall the Holder be permitted to exercise this Warrant for a number
      of Shares greater than the number that would cause the aggregate beneficial
      ownership of the Company’s Common Stock (calculated pursuant to Rule 13d-3 of
      the Securities Exchange Act of 1934, as amended) of the Holder and all persons
      affiliated with the Holder to equal 9.99% of
      the
      Company’s Common Stock then outstanding. 

     

    1.4  Procedure
      for Exercise of Warrant.
      Holder
      may exercise this Warrant by delivering the following to the principal office
      of
      the Company in accordance with Section 5.1 hereof: (i) a duly executed
      Notice of Exercise in substantially the form attached as Schedule A,
      (ii) payment of the Warrant Price then in effect for each of the Shares
      being purchased, as designated in the Notice of Exercise, and (iii) this
      Warrant. Payment of the Warrant Price may be in cash, certified or official
      bank
      check payable to the order of the Company, or wire transfer of funds to the
      Company’s account (or any combination of any of the foregoing) in the amount of
      the Warrant Price for each share being purchased. 

     

    1.5  Delivery
      of Certificate and New Warrant.
      In the
      event of any exercise of the rights represented by this Warrant, a certificate
      or certificates for the shares of Common Stock so purchased, registered in
      the
      name of the Holder or such other name or names as may be designated by the
      Holder, together with any other securities or other property which the Holder
      is
      entitled to receive upon exercise of this Warrant, shall be delivered to the
      Holder hereof, at the Company’s expense, within a reasonable time, not exceeding
      fifteen (15) calendar days, after the rights represented by this Warrant shall
      have been so exercised; and, unless this Warrant has expired, a new Warrant
      representing the number of Shares (except a remaining fractional share), if
      any,
      with respect to which this Warrant shall not then have been exercised shall
      also
      be issued to the Holder hereof within such time. The person in whose name any
      certificate for shares of Common Stock is issued upon exercise of this Warrant
      shall for all purposes be deemed to have become the holder of record of such
      shares on the date on which the Warrant was surrendered and payment of the
      Warrant Price was received by the Company, irrespective of the date of delivery
      of such certificate, except that, if the date of such surrender and payment
      is
      on a date when the stock transfer books of the Company are closed, such person
      shall be deemed to have become the holder of such Shares at the close of
      business on the next succeeding date on which the stock transfer books are
      open.

     

    1.6  Restrictive
      Legend.
      Each
      certificate for Shares shall bear a restrictive legend in substantially the
      form
      as follows, together with any additional legend required by (i) any
      applicable state securities laws and (ii) any securities exchange upon
      which such Shares may, at the time of such exercise, be listed:

     

    “The
      shares of stock evidenced by this certificate have not been registered under
      the
      U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged
      or otherwise transferred ("transferred") in the absence of such registration
      or
      an applicable exemption therefrom. In the absence of such registration, such
      shares may not be transferred unless, if the Company requests, the Company
      has
      received a written opinion from counsel in form and substance satisfactory
      to
      the Company stating that such transfer is being made in compliance with all
      applicable federal and state securities laws.”

     

    Any
      certificate issued at any time in exchange or substitution for any certificate
      bearing such legend shall also bear such legend unless, in the opinion of
      counsel for the Holder thereof (which counsel shall be reasonably satisfactory
      to the Company), the securities represented thereby are not, at such time,
      required by law to bear such legend.

     

    
      
        
        

      

      
        -
          33
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    1.7  Fractional
      Shares.
      No
      fractional Shares shall be issuable upon exercise or conversion of the Warrant
      and the number of Shares to be issued shall be rounded down to the nearest
      whole
      Share. If a fractional share interest arises upon any exercise or conversion
      of
      the Warrant, the Company shall eliminate such fractional share interest by
      paying to Holder an amount computed by multiplying the fractional interest
      by
      the Warrant Price of a full Share then in effect.

     

    1.8  Cashless
      Exercise.

     

    (a)  Holder
      may, at its option, in lieu of paying the Warrant Price upon exercise of this
      Warrant pursuant to Section 1.4 hereof, elect to instead to receive a number
      of
      Shares computed using the following formula:

     

    X=Y(A-B)

       A

    

    Where
      X=
      the number of Shares issuable to Holder upon exercise of this Warrant under
      this
      Section 1.8, Y=the number of Shares issuable to Holder upon exercise of this
      Warrant under Section 1.4 herof, A=the Fair Market Value (as defined below)
      of
      one Share of Common Stock as of the exercise date; and B=the Warrant Price
      of
      one Share of Common Stock.

     

    (b)  For
      purposes of this Section 1.8, "Fair
      Market Value"
      of one
      Share of Common Stock as of a particular date shall be determined as follows:
      (i) if traded on a national securities exchange or through the Nasdaq Stock
      Market, the Fair Market Value shall be deemed to be the volume weighted average
      closing price of the Common Stock on such exchange as of five business days
      immediately prior to such date (or if no reported sales took place on such
      day,
      the last date on which any such sales took place prior to the date of exercise);
      (ii) if
      traded
      over-the-counter or the Pink Sheets but not on the Nasdaq Stock Market, the
      "Fair Market Value" shall be deemed to be the average of the closing price
      as of
      five business days immediately prior to such date;
      and
      (iii) if there is no active market public market, the "Fair Market Value' shall
      the fair market, as mutually determined by the Holder and the Company or, if
      the
      Holder and the Company are unable to reach such agreement, as determined by
      a
      nationally recognized independent investment banker or valuation consultant
      (which has not been retained by the Company or any of its affiliates for the
      past two years preceding such determination) mutually acceptable to Holder
      and
      Company.

     

    Section
      2.  Representations,
      Warranties and Covenants.

     

    2.1  Representations
      and Warranties.

     

    (a)  The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of its state of incorporation and has all necessary power and
      authority to perform its obligations under this Warrant;

     

    (b)  The
      execution, delivery and performance of this Warrant has been duly authorized
      by
      all necessary actions on the part of the Company and constitutes the legal,
      valid and binding obligation of the Company, enforceable against the Company
      in
      accordance with its terms; and

     

    (c)  This
      Warrant does not violate and is not in conflict with any of the provisions
      of
      the Company’s Articles of Incorporation, Bylaws and any resolutions of the
      Company’s Board of Directors or stockholders, or any agreement of the Company,
      and no event has occurred and no condition or circumstance exists that might
      (with or without notice or lapse of time) constitute or result directly or
      indirectly in such a violation or conflict.

     

    2.2  Issuance
      of Shares.
      The
      Company covenants and agrees that all shares of Common Stock that may be issued
      upon the exercise of the rights represented by this Warrant will, upon issuance,
      be validly issued, fully paid and nonassessable, and free from all taxes, liens
      and charges with respect to the issue thereof. The Company further covenants
      and
      agrees that it will pay when due and payable any and all federal and state
      taxes
      which may be payable in respect of the issue of this Warrant or any Common
      Stock
      or certificates therefor issuable upon the exercise of this Warrant excluding
      the Holder's income and other taxes not directly relating to the issuance of
      the
      Warrant or Common Stock. The Company further covenants and agrees that the
      Company will at all times have authorized and reserved, free from preemptive
      rights, a sufficient number of shares of Common Stock to provide for the
      exercise in full of the rights represented by this Warrant. If at any time
      the
      number of authorized but unissued shares of Common Stock of the Company shall
      not be sufficient to effect the exercise of the Warrant in full, subject to
      the
      limitations set forth in Section 1.3 hereto, then the Company will take all
      such
      corporate action as may, in the opinion of counsel to the Company, be necessary
      or advisable to increase the number of its authorized shares of Common Stock
      as
      shall be sufficient to permit the exercise of the Warrant in full, subject
      to
      the limitations set forth in Section 1.3 hereto, including without limitation,
      using its best efforts to obtain any necessary stockholder approval of such
      increase. The Company further covenants and agrees that if any shares of capital
      stock to be reserved for the purpose of the issuance of shares upon the exercise
      of this Warrant require registration with or approval of any governmental
      authority under any federal or state law before such shares may be validly
      issued or delivered upon exercise, then the Company will in good faith and
      as
      expeditiously as possible endeavor to secure such registration or approval,
      as
      the case may be. If and so long as the Common Stock issuable upon the exercise
      of this Warrant is listed on any national securities exchange or the Nasdaq
      Stock Market, the Company will, if permitted by the rules of such exchange
      or
      market, list and keep listed on such exchange or market, upon official notice
      of
      issuance, all shares of such Common Stock issuable upon exercise of this
      Warrant.

     

    Section
      3.  Other
      Adjustments.

     

    3.1  Subdivision
      or Combination of Shares.
      In case
      the Company shall at any time subdivide its outstanding Common Stock into a
      greater number of shares, the Warrant Price in effect immediately prior to
      such
      subdivision shall be proportionately reduced, and the number of Shares subject
      to this Warrant shall be proportionately increased, and conversely, in case
      the
      outstanding Common Stock of the Company shall be combined into a smaller number
      of shares, the Warrant Price in effect immediately prior to such combination
      shall be proportionately increased, and the number of Shares subject to this
      Warrant shall be proportionately decreased.

     

    3.2  Dividends
      in Common Stock, Other Stock or Property.
      If at
      any time or from time to time the holders of Common Stock (or any shares of
      stock or other securities at the time receivable upon the exercise of this
      Warrant) shall have received or become entitled to receive, without payment
      therefor:

     

    (a)  Common
      Stock, Options or any shares or other securities which are at any time directly
      or indirectly convertible into or exchangeable for Common Stock, or any rights
      or options to subscribe for, purchase or otherwise acquire any of the foregoing
      by way of dividend or other distribution;

     

    (b)  any
      cash
      paid or payable otherwise than as a regular cash dividend; or

     

    (c)  Common
      Stock or additional shares or other securities or property (including cash)
      by
      way of spin-off, split-up, reclassification, combination of shares or similar
      corporate rearrangement (other than Common Stock issued as a stock split or
      adjustments in respect of which shall be covered by the terms of Section 3.1
      above) or additional shares, other securities or property issued in connection
      with a Change (as defined below) (which shall be covered by the terms of Section
      3.3 below), then and in each such case, the Holder hereof shall, upon the
      exercise of this Warrant, be entitled to receive, in addition to the number
      of
      shares of Common Stock receivable thereupon, and without payment of any
      additional consideration therefor, the amount of stock and other securities
      and
      property (including cash in the cases referred to in clause (b) above and this
      clause (c)) which such Holder would hold on the date of such exercise had such
      Holder been the holder of record of such Common Stock as of the date on which
      holders of Common Stock received or became entitled to receive such shares
      or
      all other additional stock and other securities and property.

     

    3.3  Reorganization,
      Reclassification, Consolidation, Merger or Sale. If
      any
      recapitalization, reclassification or reorganization of the share capital of
      the
      Company, or any consolidation or merger of the Company with another corporation,
      or the sale of all or substantially all of its shares and/or assets or other
      transaction (including, without limitation, a sale of substantially all of
      its
      assets followed by a liquidation) shall be effected in such a way that holders
      of Common Stock shall be entitled to receive shares, securities or other assets
      or property (a “Change”),
      then,
      as a condition of such Change, lawful and adequate provisions shall be made
      by
      the Company whereby the Holder hereof shall thereafter have the right to
      purchase and receive (in lieu of the Common Stock of the Company immediately
      theretofore purchasable and receivable upon the exercise of the rights
      represented hereby) such shares, securities or other assets or property as
      may
      be issued or payable with respect to or in exchange for the number of
      outstanding Common Stock which such Holder would have been entitled to receive
      had such Holder exercised this Warrant immediately prior to the consummation
      of
      such Change. The Company or its successor shall promptly issue to Holder a
      new
      Warrant for such new securities or other property. The new Warrant shall provide
      for adjustments which shall be as nearly equivalent as may be practicable to
      give effect to the adjustments provided for in this Section 3 including, without
      limitation, adjustments to the Warrant Price and to the number of securities
      or
      property issuable upon exercise of the new Warrant. The provisions of this
      Section 3.3 shall similarly apply to successive Changes.

     

    
      
        
        

      

      
        -
          34
          -

        
          

        

      

      
        
        

      

    

     

    Section
      4.  Ownership
      and Transfer.

     

    4.1  Ownership
      of This Warrant.
      The
      Company may deem and treat the person in whose name this Warrant is registered
      as the holder and owner hereof (notwithstanding any notations of ownership
      or
      writing hereon made by anyone other than the Company) for all purposes and
      shall
      not be affected by any notice to the contrary until presentation of this Warrant
      for registration of transfer as provided in this Section 4.

     

    4.2  Transfer
      and Replacement.
      This
      Warrant and all rights hereunder are transferable in whole or in part upon
      the
      books of the Company by the Holder hereof in person or by duly authorized
      attorney, and a new Warrant or Warrants, of the same tenor as this Warrant
      but
      registered in the name of the transferee or transferees (and in the name of
      the
      Holder, if a partial transfer is effected) shall be made and delivered by the
      Company upon surrender of this Warrant duly endorsed, at the office of the
      Company in accordance with Section 5.1 hereof. Upon receipt by the Company
      of
      evidence reasonably satisfactory to it of the loss, theft or destruction, and,
      in such case, of indemnity or security reasonably satisfactory to it, and upon
      surrender of this Warrant if mutilated, the Company will make and deliver a
      new
      Warrant of like tenor, in lieu of this Warrant; provided that if the Holder
      hereof is an instrumentality of a state or local government or an institutional
      holder or a nominee for such an instrumentality or institutional holder an
      irrevocable agreement of indemnity by such Holder shall be sufficient for all
      purposes of this Warrant, and no evidence of loss or theft or destruction shall
      be necessary. This Warrant shall be promptly cancelled by the Company upon
      the
      surrender hereof in connection with any transfer or replacement. Except as
      otherwise provided above, in the case of the loss, theft or destruction of
      a
      Warrant, the Company shall pay all expenses, taxes and other charges payable
      in
      connection with any transfer or replacement of this Warrant, other than income
      taxes and stock transfer taxes (if any) payable in connection with a transfer
      of
      this Warrant, which shall be payable by the Holder. Holder will not transfer
      this Warrant and the rights hereunder except in compliance with federal and
      state securities laws and except after providing evidence of such compliance
      reasonably satisfactory to the Company.

     

    Section
      5.  Miscellaneous
      Provisions.

     

    5.1  Notices.
      Any
      notice or other document required or permitted to be given or delivered to
      the
      Holder shall be delivered or forwarded to the Holder at c/o M.A.G. Capital,
      LLC,
      555 South Flower Street, Suite 4200, Los Angeles, California 90071, Attention:
      David F. Firestone (Facsimile No. 213/553-8285), or to such other address
      or number as shall have been furnished to the Company in writing by the Holder,
      with a copy to Paula Winner Barnett, Esq., 17967 Boris Drive, Encio, CA 91316
      (Facsimile No. 818/743-7491). Any notice or other document required or permitted
      to be given or delivered to the Company shall be delivered or forwarded to
      the
      Company at Medical Discoveries, Inc. c/o Sunhaven Farms 30103 West Gwinn Road,
      Prosser, WA 99350 (Facsimile No. 509/786-2010), or to such other address or
      number as shall have been furnished to Holder in writing by the Company or
      to
      the Company by Holder, with copy to Troy Gould PC, 1801 Century Park East,
      Suite
      1600, Los Angeles, CA 90067, Attention: Istvan Benko, Esq. (Facsimile No.
      310/789-1426).

     

    5.2  All
      notices, requests and approvals required by this Warrant shall be in writing
      and
      shall be conclusively deemed to be given (i) when hand-delivered to the other
      party, (ii) when received if sent by facsimile at the address and number set
      forth above; provided that notices given by facsimile shall not be effective,
      unless either (a) a duplicate copy of such facsimile notice is promptly given
      by
      depositing the same in the mail, postage prepaid and addressed to the party
      as
      set forth below or (b) the receiving party delivers a written confirmation
      of
      receipt for such notice by any other method permitted under this paragraph;
      and
      further provided that any notice given by facsimile received after 5:00 p.m.
      (recipient’s time) or on a non-business day shall be deemed received on the next
      business day; (iii) five (5) business days after deposit in the United States
      mail, certified, return receipt requested, postage prepaid, and addressed to
      the
      party as set forth below; or (iv) the next business day after deposit with
      an
      international overnight delivery service, postage prepaid, addressed to the
      party as set forth below with next business day delivery guaranteed; provided
      that the sending party receives confirmation of delivery from the delivery
      service provider.

     

    5.3  No
      Rights as Shareholder; Limitation of Liability.
      This
      Warrant shall not entitle the Holder to any of the rights of a shareholder
      of
      the Company except upon exercise in accordance with the terms hereof. No
      provision hereof, in the absence of affirmative action by the Holder to purchase
      shares of Common Stock, and no mere enumeration herein of the rights or
      privileges of the Holder, shall give rise to any liability of the Holder for
      the
      Warrant Price hereunder or as a shareholder of the Company, whether such
      liability is asserted by the Company or by creditors of the
      Company.

     

    5.4  Governing
      Law.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of California as applied to agreements among California residents made
      and
      to be performed entirely within the State of California, without giving effect
      to the conflict of law principles thereof.

     

    5.5  Binding
      Effect on Successors.
      This
      Warrant shall be binding upon any corporation succeeding the Company by merger,
      consolidation or acquisition of all or substantially all of the Company’s assets
      and/or securities. All of the obligations of the Company relating to the Shares
      issuable upon the exercise of this Warrant shall survive the exercise and
      termination of this Warrant. All of the covenants and agreements of the Company
      shall inure to the benefit of the successors and assigns of the
      Holder.

     

    5.6  Waiver,
      Amendments and Headings.
      This
      Warrant and any provision hereof may be changed, waived, discharged or
      terminated only by an instrument in writing signed by both parties (either
      generally or in a particular instance and either retroactively or
      prospectively). The headings in this Warrant are for purposes of reference
      only
      and shall not affect the meaning or construction of any of the provisions
      hereof. 

     

    5.7  Jurisdiction.
      Each of
      the parties irrevocably agrees that any and all suits or proceedings based
      on or
      arising under this Agreement may be brought only in and shall be resolved in
      the
      federal or state courts located in the City of Los Angeles, California and
      consents to the jurisdiction of such courts for such purpose. Each of the
      parties irrevocably waives the defense of an inconvenient forum to the
      maintenance of such suit or proceeding in any such court. Each of the parties
      further agrees that service of process upon such party mailed by first class
      mail to the address set forth in Section 5.1 shall be deemed in every respect
      effective service of process upon such party in any such suit or proceeding.
      Nothing herein shall affect the right of a Holder to serve process in any other
      manner permitted by law. Each of the parties agrees that a final non-appealable
      judgment in any such suit or proceeding shall be conclusive and may be enforced
      in other jurisdictions by suit on such judgment or in any other lawful
      manner.

     

    5.8  Attorneys'
      Fees and Disbursements.
      If any
      action at law or in equity is necessary to enforce or interpret the terms of
      this Agreement, the prevailing party or parties shall be entitled to receive
      from the other party or parties reasonable attorneys’ fees and disbursements in
      addition to any other relief to which the prevailing party or parties may be
      entitled. 

     

    
      
        
        

      

      
        -
          35
          -

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be signed by its duly authorized officer
      this
      7th
      day of
      September, 2007.

    
      	
            	 	 
	
              COMPANY:

            	 
	 	MEDICAL
              DISCOVERIES, INC. 
	 	 	
 
	 	By  	
               

              
                

              

            
	 	 
	 	Print
              Name: David R. Walker
	 	 
	 	
              
                Title:
                  Chairman of the Board of
                  Directors

              

            

      
      

       

      
        
          
          

        

        
          -
            36
            -

          
            

          

        

        
          
          

        

      

       

    

    SCHEDULE
      A

     

    FORM
      OF NOTICE OF EXERCISE

    

    [To
      be signed only upon exercise of the Warrant]

    

    TO
      BE EXECUTED BY THE REGISTERED HOLDER

    TO
      EXERCISE THE WITHIN WARRANT

    

    The
      undersigned hereby elects to purchase _____________ shares of Common Stock
      (the
“Shares”)
      of
      MultiCell Technologies, Inc. under the Warrant to Purchase Common Stock dated
      September 7, 2007, which the undersigned is entitled to purchase pursuant to
      the
      terms of such Warrant. The undersigned has delivered $________________, the
      aggregate Warrant Price for _____________ Shares purchased herewith, in full
      in
      cash or by certified or official bank check or wire transfer. 

    

    Please
      issue a certificate or certificates representing such shares of Common Stock
      in
      the name of the undersigned or in such other name as is specified below and
      in
      the denominations as is set forth below:

    

      
        	 	 
	
                [Type
                  Name of Holder as it should appear on the stock
                  certificate]

              	 
	 
	 
	
                [Requested
                  Denominations - if no denomination is specified, a single certificate
                  will
                  be issued]

              	 
	 	 
	
                The
                  initial address of such Holder to be entered on the books of Company
                  shall
                  be:

              	 
	 
	
              	 
	 
	
              	 
	 
	
              	 

      

    

     

    The
      undersigned hereby represents and warrants that the undersigned is acquiring
      such shares for his own account for investment purposes only, and not for resale
      or with a view to distribution of such shares or any part thereof.

    

      
        	 	
                By:

              	  

	 	
                Print Name:

              	 

	 	
                Title:

              	 
	 

	 	
                Dated:

              	 
	 

      

    

     

    
      
        
          
          

        

        
          -
            37
            -

          
            

          

        

        
          
          

        

      

    

    

    FORM
      OF ASSIGNMENT

    (ENTIRE)

    

    [To
      be signed only upon transfer of entire Warrant]

    

    TO
      BE EXECUTED BY THE REGISTERED HOLDER

    TO
      TRANSFER THE WITHIN WARRANT

     

    FOR
      VALUE RECEIVED
      ___________________________ hereby sells, assigns and transfers unto
      _______________________________ all rights of the undersigned under and pursuant
      to the within Warrant, and the undersigned does hereby irrevocably constitute
      and appoint _____________________ Attorney to transfer the said Warrant on
      the
      books of ________ _________, with full power of substitution.

     

     

    
      
        

      

    

    [Type
      Name of Holder]

    
 

    
      
        
          	
                  By:
                    

                
	
                  
                    

                  

                
	
                  Title:

                
	
                  
                    

                  

                
	 
	
                  Dated:

                  
                    
                      

                    

                  

                

        

      

    

     

    NOTICE

     

    The
      signature to the foregoing Assignment must correspond exactly to the name as
      written upon the face of the within Warrant, without alteration or enlargement
      or any change whatsoever.

    

    
      
        
        

      

      
        -
          38
          -

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