JOSEPH GUNNAR SHARE ISSUANCE AND WAIVER AGREEMENT

This Share Issuance and Waiver Agreement (“Agreement”) is entered into as of August 20, 2008, by and between you, Joseph Gunnar & Co., LLC (“Gunnar” or “you”) and Morlex, Inc. (“Morlex”, and together with Gunnar, the “Parties”) with reference to the following recitals of facts:

A.    You have acted as a placement agent (the “Placement Agent”) in connection with the private placement of common stock, par value .001 per share (the “Common Stock”) of Morlex pursuant to that certain Placement Agent Agreement, dated as of April 11, 2008, between Morlex and Gunnar (the “Placement Agent Agreement”).

B.    On or about April 11, 2008, Morlex acquired from Iakona, Inc. (“Iakona”) all of the capital stock of Ad Authority, Inc. (“Ad Authority”) pursuant to that certain Stock Purchase Agreement dated as of November 14, 2008, as amended from time to time, among Morlex, Iakona, Jason Kulpa (“Kulpa”) and, solely with respect to Section 9.3 thereof, Duncan Capital Partners, LLC (the “Purchase Agreement”).

C.    In connection with the Purchase Agreement: (i) Iakona received $5.0 million cash, a secured promissory note which as of the date of the Separation Agreement (as defined below) had a principal amount of $3.0 million (the “Note”) and 6,400,000 shares of Common Stock of Morlex (the “Stock”), (ii) Kulpa was elected to serve on the Board of Directors of Morlex, and (iii) Kulpa was appointed as the CEO of Morlex.

D.    Subsequent thereto a dispute arose between Morlex and Kulpa relative to the transactions contemplated by the Purchase Agreement, Morlex’s fund-raising efforts and the operation of Morlex and Ad Authority (the “Dispute”).

E.    On June 29, 2008, Kulpa resigned as the CEO of Morlex and Ad Authority. On July 17, 2008, Kulpa resigned as a Director of Morlex and Ad Authority (collectively, the “Resignation”).

F.    In settlement of the Dispute, Morlex, Kulpa and others entered into a Separation and Release agreement dated as of August 20, 2008 (“Separation Agreement”). Pursuant to the Separation Agreement, (i) Kulpa surrendered all of his Morlex Common Stock, (ii) provisions were made to reduce the amount of the Note to $480,000 and (iii) Morlex and Kulpa each unconditionally released the other from all claims relating to the Dispute.

G.    In connection with the Separation Agreement, Morlex desires to issue 1,000,000 additional shares of Common Stock to you (“Additional Shares”) in consideration of the Settlement Agreement and your unconditional release of Morlex and Kulpa from all claims relating to the Dispute, all on terms and conditions as set forth in this Agreement.

NOW, THEREFORE, in recognition of the foregoing, and of the conditions, covenants, representations, warranties, payments, releases and other obligations contained in this Agreement, the Parties agree:

1.    Issuance of Shares . Within two (2) business days following receipt of your signature to this Agreement by the Company, the Company shall give notice to the transfer agent to issue 1,000,000 Additional Shares to you, and shall cause the transfer agent to issue such Additional Shares to you promptly. The Additional Shares shall be restricted shares, and shall be subject to the First Amended and Restated Registration Rights Agreement of the Company, dated as of April 15, 2008, and shall be afforded the same rights and privileges as the shares held by the Morlex shareholders that purchased Common Stock in the private placement.

2.    Unconditional General Release of Kulpa and Morlex Parties . For and in consideration of the Settlement Agreement, the promises set forth herein and the issuance of the Additional Shares to you, you, on behalf of yourself, your parents, affiliates and subsidiaries, trusts and companies, and each of them, and each of their shareholders, directors, officers, trustees, members, managers, partners, agents, representatives, attorneys, insurers, servants, employees, spouses, predecessors, successors, assignors, assignees, heirs, executors and representatives, past and present, do hereby absolutely, fully and forever, release, covenant not to sue, and discharge Morlex, Kulpa, and each of their respective parents, subsidiaries, affiliates, entities under common control, trusts, beneficiaries of the companies, and related entities, and each of their shareholders, directors, officers, trustees, members, partners, agents, investment bankers, advisors, managers, property managers, representatives, attorneys, insurers, servants, employees, spouses, predecessors, successors, assignors, and assignees, past and present, (collectively, the “Releasees”), from any and all actions, causes of action, arbitrations, debts, guarantees, warranties, express or implied, balances, liabilities, demands, claims, agreements, contracts, covenants, suits, controversies, judgments, administrative or criminal complaints, citations, or proceedings, orders and liabilities, obligations, costs, expenses, damages and liens of every kind or nature whatsoever, in law, equity or otherwise (hereinafter referred to as the “Claims”), whether known or unknown, suspected or unsuspected, fixed or contingent, liquidated or unliquidated, asserted or not asserted, in law or equity, which have existed, or may have existed, or which do exist, on or prior to the date hereof, including, but not limited to those based on, arising from, or related to your role as the Placement Agent, the Placement Agent Agreement, the Purchase Agreement, the Dispute, the Resignation, fundraising by Morlex and/or Iakona and/or Kulpa, and/or operation of Ad Authority or Morlex.

3.    Release of Unknown Claims and Binding Nature of Releases .

(a)    Waiver of Civil Code section 1542 . With respect to all Claims released under Paragraph 2 herein, the Parties hereto agree that, notwithstanding Section 1542 of the California Civil Code, which presently provides that

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR”

this release shall constitute a full release in accordance with its terms. With respect to all Claims released under Paragraph 2 herein the Parties hereto, and each of them, knowingly, intelligently and voluntarily waive the provisions of Section 1542, and any successor provision, and acknowledge and agree that this waiver is an essential and material term of this Agreement, and that without such waiver the settlement would not have been entered into. The Parties hereto acknowledge the significance and consequences of the Release and of the specific waiver of Section 1542.

(b)    No Change in the Law or Facts Will Affect the Agreement . It is the intent of the Parties that this Agreement be binding and effective without regard to future events. Each of the Parties to this Agreement has made such investigation of the facts pertaining to this Agreement, and all matters pertaining thereto, as it deems necessary. Each of the Parties is aware that it may hereafter discover claims or facts in addition to or different from those it now knows or believes to be true with respect to the matters related herein. Nevertheless, it is the intention of the Parties to fully,