Exhibit 10.2

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is made and entered into
as of January 13, 2012, by and between PositiveID Corporation, a Delaware
corporation (the “Company”), and Ironridge Technology Co., a division of
Ironridge Global IV, Ltd., a British Virgin Islands business company (the
“Purchaser”). Capitalized terms used in this Agreement and not otherwise defined
shall have the meanings ascribed to them in Article I.

Recitals

A.

The parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall have the right to issue and sell to Purchaser from
time to time as provided herein, and Purchaser shall be obligated to purchase
from the Company up to $10,000,000.00 worth of shares of Common Stock on a
private placement basis pursuant to an exemption from registration under Section
4(2) of the Securities Act of 1933; and

B.

The Purchaser shall be entitled to resell shares of Common Stock acquired
hereunder pursuant to a resale registration statement established by the Company
pursuant to the terms of the Registration Rights Agreement between the Company
and the Purchaser which shall be declared effective by the Commission prior to
the first Draw Down.

Agreement

In consideration of the foregoing, and the promises and covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged by the
parties hereto, the Company and Purchaser, intending to be legally bound, hereby
agree as follows:

ARTICLE I.
DEFINITIONS

1.1

Definitions.  In addition to the terms defined elsewhere in this Agreement and
the Transaction Documents, capitalized terms that are not otherwise defined
herein have the meanings set forth in the Glossary of Defined Terms attached as
Exhibit A, incorporated herein by reference.

ARTICLE II.
PURCHASE AND SALE

2.1

Purchase and Sale of Draw Down Shares.  Upon the terms and subject to the
conditions of this Agreement, the Company may sell and issue to the Purchaser
and the Purchaser shall be obligated to purchase from the Company, up to an
aggregate of $10,000,000.00 of shares of Common Stock (the “Commitment Amount”).

2.2

Initial Closing.  The execution and delivery of this Agreement and the other
agreements referred to herein (the “Initial Closing”) shall take place on the
date hereof, or at such other date as the Purchaser and the Company may agree
upon in writing (the “Initial Closing Date”).  Each party shall deliver the
following documents, instruments and writings at or prior to the Initial
Closing:

(a)

the Company shall deliver or cause to be delivered to the Purchaser the
following:

(i)

this Agreement duly executed by the Company;

(ii)

a legal opinion of Company Counsel, in the form of Exhibit B attached hereto;
and

(iii)

the Registration Rights Agreement duly executed by the Company.

(b)

the Purchaser shall deliver or cause to be delivered to the Company the
following:

(i)

this Agreement duly executed by the Purchaser; and

(ii)

the Registration Rights Agreement duly executed by the Purchaser.

2.3

Delivery of Commitment Shares and Success Fee Shares.

(a)

Commitment Shares. On the Effective Date, the Company shall deliver to the
Purchaser 1,500,000 shares of Common Stock (the “Commitment Shares”). Such
Commitment Shares shall be delivered via DWAC to the account designated by
Purchaser.

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(b)

Success Fee Shares.  Within three Trading Days after the earlier of (i) the
Settlement Date on which Purchaser shall have purchased an aggregate of
$9,000,000.00 or more Shares from the Company pursuant to this Agreement, (ii)
an aggregate of 60 Trading Days during which Draw Downs have been suspended has
elapsed, or (iii) the end of the term of this Agreement, the Company shall
deliver to the Purchaser such number of registered shares of Common Stock as
shall equal $500,000.00 divided by the lesser of (x) the Closing Price on the
Trading Day immediately prior to the Effective Date or (y) the Closing Price on
the Trading Day prior to the date Purchaser receives the shares (the “Success
Fee Shares”); provided, however, that in the case of Subsection (iii), the
$500,000.00 amount shall be pro rated by the portion of $9,000,000.00 that was
actually purchased by Purchaser.  Such Success Fee Shares shall be delivered via
DWAC to the account designated by Purchaser.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties Regarding the Transactions Contemplated Herein.
 Except as set forth under the corresponding section of the Disclosure
Schedules, if any, which will be deemed a part hereof and which will not contain
any material non-public information, Company hereby represents and warrants to,
and as applicable covenants with, Purchaser as of each Closing Date:

(a)

Organization and Qualification.  Company and each Subsidiary is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, as
applicable, with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted.  Neither Company
nor any Subsidiary is in violation or default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents.  Each of Company and each Subsidiary is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not have or reasonably be expected to result in a Material Adverse
Effect and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.

(b)

Authorization; Enforcement.  Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder or thereunder.  The execution and delivery of each of the Transaction
Documents by Company and the consummation by it of the transactions contemplated
hereby or thereby have been duly authorized by all necessary action on the part
of Company and no further consent or action is required by Company.  Each of the
Transaction Documents has been, or upon delivery will be, duly executed by
Company and, when delivered in accordance with the terms hereof, will constitute
the valid and binding obligation of Company, enforceable against Company in
accordance with its terms, except (a) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally, (b)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (c) insofar as indemnification
and contribution provisions may be limited by applicable law.  Neither Company
nor any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, by-laws or other organizational or
charter documents .

(c)

No Conflicts.  The execution, delivery and performance of the Transaction
Documents by Company, the issuance and sale of the Securities and the
consummation by Company of the other transactions contemplated thereby do not
and will not (a) conflict with or violate any provision of Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, (b) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which Company or any Subsidiary is a party or by which any property or asset of
Company or any Subsidiary is bound or affected, (c) conflict with or result in a
violation of any material law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of Company or a Subsidiary
is bound or affected, or (d) conflict with or violate the terms of any material
agreement by which Company or any Subsidiary is bound or to which any property
or asset of Company or any Subsidiary is bound or affected; except in the case
of each of clauses (b), (c) and (d), such as could not have or reasonably be
expected to result in a Material Adverse Effect.

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(d)

Litigation.  T here is no action, suit, inquiry, notice of violation, Proceeding
or investigation pending or, to the knowledge of Company, threatened against or
affecting Company, any Subsidiary or any of their respective properties before
or by any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an
“Action”), which could adversely affect or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Shares.  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by Company or any Subsidiary
under the Exchange Act or the Securities Act.

(e)

Filings, Consents and Approvals.  Neither Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by Company of the Transaction Documents,
other than the required federal and state securities filings and such filings
and approvals as are required to be made or obtained under the applicable
Trading Market rules in connection with the transactions contemplated hereby,
each of which has been, or if not yet required to be filed will be, timely
filed.

(f)

Issuance of the Securities.  The Securities are duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens.  Upon Stockholder Approval, Company will reserve from its duly authorized
capital stock a number of shares of Common Stock for issuance of the Securities
at least equal to the number of Securities which could be issued pursuant to the
terms of the Transaction Documents.

(g)

Disclosure; Non-Public Information.  Except with respect to the information that
will be, and to the extent that it actually is timely publicly disclosed by
Company pursuant to Section 4.4, and notwithstanding any other provision in this
Agreement or the other Transaction Documents, neither Company nor any other
Person acting on its behalf has provided Purchaser or its agents or counsel with
any information that constitutes or might constitute material, non-public
information, including without limitation this Agreement and the Exhibits and
Disclosure Schedules hereto.  No information contained in the Disclosure
Schedules constitutes material non-public information.  There is no adverse
material information regarding Company that has not been publicly disclosed
prior to the date of this Agreement.  Company understands and confirms that
Purchaser will rely on the foregoing representations and covenants in effecting
transactions in securities of Company.  All disclosure provided to Purchaser
regarding Company, its business and the transactions contemplated hereby,
including the Disclosure Schedules to this Agreement, furnished by or on behalf
of Company with respect to the representations and warranties made herein are
true and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading

(h)

No Integrated Offering.   Neither Company, nor any of its Affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Shares to be
integrated with prior offerings by Company that cause a violation of the
Securities Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of the Trading Market.

(i)

Financial Condition. Based on the financial condition of Company and its
projected capital requirements, effective as of the date of this Agreement, the
Company will require additional capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted.  Company does not
intend to incur debts beyond its ability to pay such debts as they mature,
taking into account the timing and amounts of cash to be payable on or in
respect of its debt.   The SEC Reports set forth as of the dates thereof all
outstanding secured and unsecured Indebtedness of Company or any Subsidiary, or
for which Company or any Subsidiary has commitments, and any default with
respect to any Indebtedness.

(j)

Private Placement. Assuming the accuracy of the Purchaser representations and
warranties set forth in Section 3.3, no registration under the Securities Act is
required for the offer and sale of the Securities by the Company to the
Purchaser as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading Market.

(k)

No General Solicitation.  Neither the Company nor any person acting on behalf of
the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising.  The Company has offered the Securities for
sale only to the Purchaser.

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(l)

Investment Company.  Company is not, and is not an Affiliate of, and immediately
after receipt of payment for the Shares, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.  Company will conduct its business in a manner so that it will not
become subject to the Investment Company Act.

3.2

Representations and Warranties Regarding the Company.  Except as set forth in
any current or future SEC Reports or under the corresponding section of the
Disclosure Schedules, if any, which will be deemed a part hereof and which will
not contain any material non-public information, Company hereby represents and
warrants to, and as applicable covenants with, Purchaser as of each Closing
Date:

(a)

Capitalization.  The capitalization of Company is as described in Company’s most
recently filed SEC Report and Company has not issued any capital stock since
such filing.  No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents which has not been waived or
satisfied.  Except as a result of the purchase and sale of the Securities, there
are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which Company or any Subsidiary
is or may become bound to issue additional shares of Common Stock or securities
convertible into or exercisable for shares of Common Stock.  The issuance and
sale of the Securities will not obligate Company to issue shares of Common Stock
or other securities to any Person, other than Purchaser, and will not result in
a right of any holder of Company securities to adjust the exercise, conversion,
exchange, or reset price under such securities.  All of the outstanding shares
of capital stock of Company are validly issued, fully paid and nonassessable,
have been issued in material compliance with all federal and state securities
laws, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities.  
No further approval or authorization of any stockholder, the Board of Directors
of Company or others is required for the issuance and sale of the Securities.
 There are no stockholders agreements, voting agreements or other similar
agreements with respect to Company’s capital stock to which Company is a party
or, to the knowledge of Company, between or among any of Company’s stockholders.

(b)

Subsidiaries.  All of the direct and indirect subsidiaries of Company are set
forth in the corresponding section of the Disclosure Schedules.   Company owns,
directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary, and all of such directly or indirectly owned capital stock or
other equity interests are owned free and clear of any Liens.  All the issued
and outstanding shares of capital stock of each Subsidiary are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.

(c)

SEC Reports; Financial Statements.   Company has filed all required SEC Reports
for the one year preceding the date of this Agreement.   As of their respective
dates or as subsequently amended, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, as
applicable, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The financial
statements of Company included in the SEC Reports, as amended, comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance with GAAP,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of Company and its consolidated subsidiaries 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.

(d)

Material Changes.  Except as specifically disclosed in the SEC Reports, (a)
there has been no event, occurrence or development that has had, or that could
reasonably be expected to result in, a Material Adverse Effect, (b) Company has
not incurred any liabilities (contingent or otherwise) other than (i) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice, and (ii) liabilities not required to be reflected
in Company’s financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission, (c) Company has not altered its method of
accounting, (d) Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock, and (e)
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company equity incentive plans.  Company
does not have pending before the Commission any request for confidential
treatment of information.

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(e)

Litigation.  There is no Action which could reasonably be expected to result in
a Material Adverse Effect.  Neither Company nor any Subsidiary, nor to the
knowledge of Company any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty.  There has not
been, and to the knowledge of Company, there is not pending or contemplated, any
investigation by the Commission involving Company or any current or former
director or officer of Company.  

(f)

Labor Relations.   No material labor dispute exists or, to the knowledge of
Company, is imminent with respect to any of the employees of Company, which
could reasonably be expected to result in a Material Adverse Effect.

(g)

Compliance.   Neither Company nor any Subsidiary (a) is in material default
under or in material violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
Company or any Subsidiary under), nor has Company or any Subsidiary received
notice of a claim that it is in material default under or that it is in material
violation of, any indenture, loan or credit agreement or any other similar
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(b) is in violation of any order of any court, arbitrator or governmental body,
or (c) is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business except in each case as could not have
a Material Adverse Effect.

(h)

Regulatory Permits.  Company and each Subsidiary possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports, except where the failure to possess such
permits could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect (“Material Permits”), and
neither Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.

(i)

Title to Assets.  Company and each Subsidiary have good and marketable title in
fee simple to all real property owned by them that is material to the business
of Company and each Subsidiary and good and marketable title in all personal
property owned by them that is material to the business of Company and each
Subsidiary, in each case free and clear of all Liens, except for Liens that do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by Company and each
Subsidiary and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties.  Any real
property and facilities held under lease by Company and each Subsidiary are held
by them under valid, subsisting and enforceable leases of which Company and each
Subsidiary are in compliance.

(j)

Patents and Trademarks.   Company and each Subsidiary have, or have rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar rights that
are necessary or material for use in connection with their respective businesses
as described in the SEC Reports and which the failure to so have could have a
Material Adverse Effect (collectively, “Intellectual Property Rights”).  Neither
Company nor any Subsidiary has received a written notice that the Intellectual
Property Rights used by Company or any Subsidiary violates or infringes upon the
rights of any Person. To the knowledge of Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights of Company or each Subsidiary.

(k)

Insurance.  Company and each Subsidiary are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which Company and each Subsidiary
are engaged, including but not limited to directors and officers insurance
coverage of at least $5,000,000.  To Company’s knowledge, such insurance
contracts and policies are accurate and complete in all material respects.
 Neither Company nor any Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.

(l)

Transactions With Affiliates and Employees.  Except as set forth in the SEC
Reports, none of the officers or directors of Company and, to the knowledge of
Company, none of the employees of Company is presently a party to any
transaction with Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $120,000 other than (i) for payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of Company and (iii) for other employee benefits, including stock option
agreements under any equity incentive plan of Company.

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(m)

Sarbanes-Oxley; Internal Accounting Controls.  Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002, which are applicable to
it as of the date of the Initial Closing.  Company presented in its most
recently filed periodic report under the Exchange Act the conclusions of the
certifying officers about the effectiveness of Company’s disclosure controls and
procedures based on their evaluations as of the evaluation date.  Since such
date, there have been no significant changes in Company’s internal accounting
controls or its disclosure controls and procedures or, to Company’s knowledge,
in other factors that could materially affect Company’s internal accounting
controls or its disclosure controls and procedures.

(n)

Certain Fees.  No brokerage or finder’s fees or commissions are or will be
payable by Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement.  Purchaser will have no obligation
with respect to any fees or with respect to any claims made by or on behalf of
other Persons for fees of a type contemplated in this section that may be due in
connection with the transactions contemplated by this Agreement or the other
Transaction Documents.

(o)

Registration Rights.  Other than the Purchaser, no Person has any right to cause
Company to effect the registration under the Securities Act of any securities of
Company.

(p)

Listing and Maintenance Requirements.  The Common Stock is registered pursuant
to Section 12 of the Exchange Act, and Company has taken no action designed to,
or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has Company received
any notification that the Commission is contemplating terminating such
registration.  Company has not, in the 12 months preceding the date of this
Agreement, received notice from any Trading Market on which the Common Stock is
or has been listed or quoted to the effect that Company is not in compliance
with the listing or maintenance requirements of such Trading Market. Company is,
and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements .

(q)

Application of Takeover Protections.  Company and its Board of Directors have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti takeover provision under
Company’s Certificate of Incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become applicable to
Purchaser as a result of Purchaser and Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation Company’s issuance of the Securities and Purchaser’s ownership of the
Securities.

(r)

Tax Status.  Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

(s)

Foreign Corrupt Practices.  Neither Company, nor to the knowledge of Company,
any agent or other person acting on behalf of Company, has (a) directly or
indirectly, used any corrupt funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (c) failed to disclose fully any
contribution made by Company, or made by any person acting on its behalf of
which Company is aware, which is  in violation of law, or (d) violated in any
material respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended.

(t)

Accountants.  Company’s accountants are set forth in the SEC Reports and such
accountants are an independent registered public accounting firm as required by
the Securities Act.

(u)

No Disagreements with Accountants or Lawyers.  There are no material
disagreements presently existing, or reasonably anticipated by Company to arise,
between Company and the accountants or lawyers formerly or presently employed by
Company.

(v)

Acknowledgments Regarding Purchaser.  Company’s decision to enter into this
Agreement has been based solely on the independent evaluation of Company and its
representatives, and Company acknowledges and agrees that (i) Purchaser is
acting solely in the capacity of arm’s length purchaser with respect to this
Agreement and the transactions contemplated hereby; (ii) Purchaser does not make
or has not made any representations or warranties with respect to the

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transactions contemplated hereby other than those specifically set forth in
Section 3.3 below; and (iii) Purchaser is not acting as a legal, financial,
accounting or tax advisor to Company, or fiduciary of Company, or in any similar
capacity, with respect to this Agreement and the transactions contemplated
hereby.  Any statement made by Purchaser or any of its representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
not advice or a recommendation, and is merely incidental to Purchaser’s purchase
of the Shares.

3.3

Representations and Warranties of the Purchaser.  Purchaser hereby represents
and warrants as of the date hereof and as of each Closing Date to the Company as
follows:

(a)

Organization; Authority.  Purchaser is an entity validly existing and in good
standing under the laws of the jurisdiction of its organization with full right,
company power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder.  The execution, delivery and performance by Purchaser of
the transactions contemplated by this Agreement have been duly authorized by all
necessary company or similar action on the part of Purchaser.  Each Transaction
Document, to which it is a party has been, or will be, duly executed by
Purchaser, and when delivered by Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of Purchaser,
enforceable against it in accordance with its terms, except (a) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (c) insofar as indemnification and contribution provisions may be
limited by applicable law.

(b)

Own Account.  Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
(this representation and warranty not limiting the Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws) in violation of the
Securities Act or any applicable state securities law.  Purchaser is acquiring
the Securities hereunder in the ordinary course of its business.

(c)

Purchaser Status.  At the time the Purchaser was offered the Securities, it was,
and on the date hereof it is, either: (i) an “accredited investor” as defined in
Rule 501(a) under the Securities Act or (ii) a “qualified institutional buyer”
as defined in Rule 144A(a) under the Securities Act.  Purchaser is not required
to be registered as a broker-dealer under Section 15 of the Exchange Act.  

(d)

Experience of Purchaser.  Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.

(e)

General Solicitation.  Purchaser is not purchasing the Securities as a result of
any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.

(f)

Short Sales and Confidentiality Prior To The Date Hereof.  Other than the
transaction contemplated hereunder or any other transaction between Purchaser
and Company, the Purchaser has not directly or indirectly, nor has any Person
acting on behalf of or pursuant to any understanding with the Purchaser,
executed any transaction in the securities of the Company during the period
commencing from the time that the Purchaser first received a term sheet (written
or oral) from the Company or any other Person setting forth the material terms
of the transactions contemplated hereunder until the date hereof.  The Purchaser
has never maintained a short position in the Common Stock and does not currently
maintain a short position in the Common Stock.  During the term of this
Agreement and for a period of 90 days thereafter, the Purchaser will not effect
any Short Sale that would create a net short position for the Purchaser. Other
than to other Persons party to this Agreement, the Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect short sales or similar transactions in the
future.

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ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

4.1

Transfer Restrictions.  

(a)

The Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company or
in connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act.  As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of the Purchaser under this Agreement and
the Registration Rights Agreement, as to issued Securities only.

(b)

The Purchaser agrees to the imprinting, so long as is required by this Section
4.1, of a legend on any of the Securities in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that the Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, the Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties.  Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith.  Further, no
notice shall be required of such pledge.  At the Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or
secured party of Securities may reasonably request in connection with a pledge
or transfer of the Securities, including, if the Securities are subject to
registration pursuant to the Registration Rights Agreement, the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling stockholders thereunder.

(c)

Certificates evidencing the Shares, the Commitment Shares and the Success Fee
Shares shall not contain any legend (including the legend set forth in Section
4.1(b)), (i) while a registration statement (including the Registration
Statement) covering the resale of such security is effective under the
Securities Act, or (ii) following any sale of such Shares, the Commitment Shares
or the Success Fee Shares pursuant to Rule 144, or (iii) if such Shares, the
Commitment Shares or the Success Fee Shares are eligible for sale under Rule 144
by a non-Affiliate of the Company without restriction, or (iv) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
Commission).  The Company shall cause its counsel to issue a legal opinion to
the Company’s transfer agent promptly after the Effective Date if required by
the Company’s transfer agent to effect the removal of the legend hereunder.  The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 4.1(c), it will, no later than 3
Trading Days following the delivery by the Purchaser to the Company or the
Company’s transfer agent of a certificate representing Shares, Commitment Shares
or Success Fee Shares, as the case may be, issued with a restrictive legend
(such third Trading Day, the “Legend Removal Date”), deliver or cause to be
delivered to the Purchaser a certificate representing such shares that is free
from all restrictive and other legends. All Shares shall be delivered without
any restrictive legends. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in this Section.  Certificates for Securities
subject to legend removal hereunder shall be transmitted by the transfer agent
of the Company to the Purchaser by crediting the account of the Purchaser’s
prime broker with the DTC system.

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(d)

In addition to the Purchaser’s other available remedies, the Company shall pay
to the Purchaser, in cash, as partial liquidated damages and not as a penalty,
for each $1,000 of Shares, Commitment Shares or Success Fee Shares (based on the
Closing Price of the Common Stock on the date such Securities are submitted to
the Company’s transfer agent) delivered for removal of the restrictive legend
and subject to Section 4.1(c), the lesser of (i) $10 per Trading Day (increasing
to $20 per Trading Day, 5 Trading Days after such damages have begun to accrue)
for each Trading Day after the Legend Removal Date until such certificate is
delivered without a legend, and (ii)  the difference in the VWAP of the Common
Stock on the Legend Removal Date and on the date the certificate is delivered
without a legend; provided, however, that such delay in the legend removal is
the direct result of the actions of the Company and provided further, that the
VWAP of the Common Stock has decreased from the Legend Removal Date to the date
the certificate is delivered without the legend.  Nothing herein shall limit the
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and the Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

(e)

Purchaser agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance that the Purchaser will sell any Securities pursuant to
either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, and that
if Securities are sold pursuant to a Registration Statement, they will be sold
in compliance with the plan of distribution set forth therein.

4.2

Furnishing of Information.  As long as Purchaser owns any Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act.  As long as the
Purchaser owns any Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchaser to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, to the extent required from time to time to
enable such Person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule 144.

4.3

Integration.  The Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchaser or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market such that it would require stockholder
approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.

4.4

Securities Laws Disclosure; Publicity.  On the date of this Agreement, the
Company shall issue a Current Report on Form 8-K, including the Transaction
Documents as exhibits thereto.  The Company and the Purchaser shall consult with
each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor the Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of the Purchaser, or
without the prior consent of the Purchaser, with respect to any press release of
the Company, which consent shall not unreasonably be withheld or delayed, except
if such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication.  

4.5

Shareholder Rights Plan.  No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that the Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that the Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the Purchaser.

4.6

Non-Public Information.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information.  The Company understands and
confirms that the Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

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4.7

Indemnification of Purchaser.   Subject to the provisions of this Section 4.7,
the Company will indemnify and hold the Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any the Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against the
Purchaser, or any of its Affiliates, by any stockholder of the Company who is
not an Affiliate of the Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of the Purchaser’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings the Purchaser may have
with any such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by the Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance).  If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, the Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Purchaser Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of the Purchaser
Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel.  The Company will not be
liable to any Purchaser Party under this Agreement (i) for any settlement by the
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) to the extent, but only
to the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by the Purchaser Party in this Agreement or in the other
Transaction Documents.

4.8

Reservation of Common Stock. Upon Stockholder Approval, the Company will reserve
and the Company shall continue to reserve and keep available at all times, free
of preemptive rights, a sufficient number of shares of Common Stock for the
purpose of enabling the Company to issue the Shares, Commitment Shares and
Success Fee Shares pursuant to this Agreement.

4.9

Listing of Common Stock.The Company hereby agrees to use best efforts to
maintain the listing or quotation of the Common Stock on a Trading Market, and
as soon as reasonably practicable following the Initial Closing (but not later
than the Effective Date) to list or quote all of the Shares, the Commitment
Shares and the Success Fee Shares on such Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Trading Market, it will include in such application all of the Shares, the
Commitment Shares and the Success Fee Shares, and will take such other action as
is necessary to cause all of the Shares, the Commitment Shares and the Success
Fee Shares to be listed or quoted on such other Trading Market as promptly as
possible.  The Company will take all action reasonably necessary to continue the
listing and trading of its Common Stock on a Trading Market and will comply in
all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market.

4.10

Form D; Blue Sky Filings.  The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the Purchaser at the
Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of Purchaser.

4.11

Purchaser’s Beneficial Ownership Limitation.  The Company shall not effect any
Draw Down to the extent that, after giving effect to such issuance of Draw Down
Shares, the Purchaser (together with the Purchaser’s Affiliates, and any other
Persons acting as a group together with the Purchaser or any of the Purchaser’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below).  For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Purchaser and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of the applicable Draw Down with respect to which such determination is
being made.  Except as set forth in the preceding sentence, for

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purposes of this Section 4.11, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.   In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.  For purposes
of this Section 4.11, in determining the number of outstanding shares of Common
Stock, the Purchaser may rely on the number of outstanding shares of Common
Stock as reflected in (A) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by the Company
or the transfer agent setting forth the number of shares of Common Stock
outstanding.  The “Beneficial Ownership Limitation” shall be 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon issuance of the applicable Draw
Down Shares.  The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 4.11 to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation.

4.12

Accuracy of Registration Statement.

On each Settlement Date, the Registration Statement and the prospectus therein
(including any prospectus supplement) shall not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement and the prospectus
therein in reliance upon and in conformity with the information furnished in
writing to the Company by the Purchaser specifically for inclusion in the
Registration Statement and the prospectus therein.

4.13

Notice of Certain Events Affecting Registration; Suspension of Right to Request
a Draw Down.  The Company will promptly notify the Purchaser in writing upon the
occurrence of any of the events set forth in Section 3(d) of the Registration
Rights Agreement. The Company shall deliver to the Purchaser a Suspension Notice
during the continuation of any of the foregoing events.  The Company shall
promptly make available to the Purchaser any such supplements or amendments to
the related prospectus, at which time, provided that the registration statement
and any supplements and amendments thereto are then effective, the Company may
deliver a Recommencement Notice.

4.14

 Variable Rate Transaction.  During the term of this Agreement, except for
Exempt Issuances, Company and each Subsidiary shall be prohibited from
discussing, negotiating, effecting or entering into an agreement, plan,
arrangement or understanding to effect any transaction with a third party other
than Purchaser or its Affiliates in which the Company or any Subsidiary (i)
issues or sells, agrees to issue or sell, or may issue or sell, any Common Stock
or security convertible or exchangeable into Common Stock, either (a) at a
conversion, exercise or exchange rate or other price that is based upon or
varies with the trading prices of, or quotations for, the shares of Common Stock
at any time after the initial issuance of such securities, or (b) with a
conversion, exercise or exchange price that is subject to being reset after the
initial issuance of such securities, or (ii) enters into any agreement
(including, without limitation, an “equity line of credit” or an “at the market
offering”) whereby the Company or any Subsidiary issues or sells, agrees to
issue or sell, or may issue or sell, any Common Stock or other security at a
future determined price.  “Exempt Issuance” means (A) the issuance of securities
upon the exercise or exchange of or conversion of any securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this
Agreement, (B) rights of the former Chief Executive Officer of the Company to
acquire shares of Common Stock pursuant to an employment agreement, dated
December 8, 2011, which was duly adopted by a majority of the non-employee
members of the Board of Directors, and (C) securities issued pursuant to
acquisitions of another company’s capital stock or assets, approved by a
majority of the disinterested directors of the Company and that are entered into
one year following the date of this Agreement.

ARTICLE V.
CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS

5.1

Conditions Precedent to the Obligation of the Company to Sell the Shares.  The
obligation hereunder of the Company to proceed to close this Agreement and to
issue and sell the Shares to the Purchaser is subject to the satisfaction or
waiver, at or before the Initial Closing, and as of each Settlement Date of each
of the conditions set forth below.  These conditions are for the Company's sole
benefit and may be waived by the Company in writing at any time in its sole
discretion.

(a)

Accuracy of the Purchaser's Representations and Warranties.  The representations
and warranties of the Purchaser shall be true and correct in all material
respects as of the date when made and as of the Initial Closing and as of each
Settlement Date as though made at that time (except for representations and
warranties that speak as of a particular date, which shall be true and correct
in all material respects as of such dates).

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(b)

Performance by the Purchaser.  The Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchaser at or prior to the Initial Closing and as of each Settlement Date.

(c)

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

(d)

No Proceedings or Litigation.  No material Action shall have been commenced
against the Purchaser or the Company or any Subsidiary, or any of the officers,
directors or affiliates of the Company or any Subsidiary, seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.

(e)

Initial Closing Deliveries.  The delivery by the Purchaser of the items set
forth in Section 2.2(b) of this Agreement.

5.2

Conditions Precedent to the Obligation of the Purchaser to Close.  The
obligation hereunder of the Purchaser to perform its obligations under this
Agreement and to purchase the Shares is subject to the satisfaction, at or
before the Initial Closing, of each of the conditions set forth below.  

(a)

Accuracy of the Company's Representations and Warranties.  Each of the
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Initial Closing as
though made at that time (except for representations and warranties that speak
as of a particular date, which shall be true and correct in all material
respects as of such date).

(b)

Performance by the Company.  The Company shall have performed, satisfied and
complied in all material respects with all material covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Initial Closing.

(c)

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

(d)

No Proceedings or Litigation.  No material Action shall have been commenced,
against the Purchaser or the Company or any Subsidiary, or any of the officers,
directors or affiliates of the Company or any Subsidiary seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.

(e)

Initial Closing Deliveries.  The delivery by the Company of the items set forth
in Section 2.2(a) of this Agreement.

5.3

Conditions Precedent to the Obligation of the Purchaser to Accept a Draw Down
and Purchase the Shares.  The obligation hereunder of the Purchaser to accept a
Draw Down and to acquire and pay for the Shares is subject to the satisfaction
at or before each Settlement Date, of each of the conditions set forth below.

(a)

Satisfaction of Conditions to Initial Closing and Delivery of Commitment Shares.
 The Company shall have satisfied at the Initial Closing the conditions set
forth in Section 5.2 hereof and the Company shall have delivered to the
Purchaser the Commitment Shares.

(b)

No Suspension.  Trading in the Common Stock shall not have been suspended by the
Commission or the principal Trading Market, and, at any time prior to the next
scheduled Settlement Date, trading in securities generally as reported on the
principal Trading Market shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
on the principal Trading Market unless the general suspension or limitation
shall have been terminated prior to the commencement of any given Draw Down
Pricing Period.

(c)

Material Adverse Effect.  No Material Adverse Effect has occurred.

(d)

Opinion of Counsel.  If requested by the Purchaser as to a Draw Down, the
Purchaser shall have received a legal opinion from Company Counsel, in the form
of Exhibit B hereto.

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(e)

Equity Conditions.  During the Draw Down Pricing Period, through and including
the Settlement Date, all of the Equity Conditions shall have been met.

(f)

Recommencement After a Suspension Notice. If the Company delivers a Suspension
Notice and thereafter gives notice to the Purchaser to recommence Draw Downs,
the Purchaser may request an Officers’ Certificate in customary form prior to
the commencement of the next Draw Down Pricing Period.

ARTICLE VI.
DRAW DOWN TERMS

6.1

Draw Down Terms.  Subject to the satisfaction of the conditions set forth in
this Agreement, the parties agree as follows:

(a)

 Commencing 15 Trading Days after the Effective Date, there shall be automatic
consecutive draw downs against the Commitment Amount (each a “Draw Down”) during
the Commitment Period, at which, subject to the terms and conditions of this
Agreement, the Company shall be obligated to sell, issue and deliver, and  the
Purchaser shall be obligated to accept  registered Shares in the Purchase Amount
(defined below).  Thereafter, there shall be one additional Draw Down per
consecutive Draw Down Pricing Period on a continuous basis until either (i) the
entire Commitment Amount has been purchased or (ii) the Company delivers to the
Purchaser a Suspension Notice.  Before the commencement of any Draw Down Pricing
Period, the Company shall have caused a sufficient number of shares of Common
Stock to be registered to cover the resale of the Draw Down Shares to be issued
in connection with such Draw Down.  On or before the Trading Day on which a Draw
Down Pricing Period commences, the Company shall have filed with the Commission
a prospectus supplement pursuant to Rule 424 under the Securities Act setting
forth the terms of the Draw Down or notice to recommence Draw Downs after a
Suspension Notice.

(b)

Only one Draw Down shall be allowed for each Draw Down Pricing Period.  The
number of shares of Common Stock purchased by the Purchaser with respect to each
Draw Down shall be 1,000,000 shares (subject to adjustment for any subsequent
stock splits, reverse splits and similar capital adjustments) (such number of
shares, the “Purchase Amount”) and settled on the third Trading Day immediately
after the end of the Draw Down Pricing Period (each such settlement date
referred to as a “Settlement Date).  In no event shall the Purchaser be required
to purchase more than the maximum Purchase Amount for a given Draw Down.

(c)

  The Draw Downs shall be continuous, until such time that the Company elects to
suspend future Draw Downs.  If the Company wishes to suspend future Draw Downs,
the Company must inform the Purchaser by delivering a suspension notice, in the
form of Exhibit C hereto (the “Suspension Notice”), via facsimile transmission
in accordance with Section 8.3.  In the event of a suspension, the Company must
give at least 2 Trading Days’ written notice of suspension to the Purchaser and
in no event shall a suspension of a Draw Down occur prior to the end of any
pending Draw Down Pricing Period.      

(d)

 If the Company wishes to recommence Draw Downs following a Suspension Notice,
the Company must inform the Purchaser by delivering a recommencement notice, in
the form of Exhibit D hereto (the “Recommencement Notice”), via facsimile
transmission in accordance with Section 8.3. The Recommencement Notice shall
also inform the Purchaser of the first Trading Day of the first Draw Down
Pricing Period (the “Recommencement Date”); provided, however, that, if the
Recommencement Date is the date on which the Recommencement Notice is delivered,
the Company must advise Purchaser to expect a notice the prior Business Day and
the Recommencement Notice must be delivered to the Purchaser at least 1 hour
before trading commences on such Trading Day.    

(e)

On the Trading Day immediately following the last day of each Draw Down Pricing
Period, the Company shall deliver and the Purchaser shall acknowledge a
settlement statement (the “Settlement Statement”) setting forth the number of
Draw Down Shares issuable and the aggregate and per share Purchase Price to be
paid on the applicable Settlement Date.  On the Settlement Date as to such Draw
Down, the Draw Down Shares purchased pursuant to such Settlement Statement shall
be delivered to the DTC account of the Purchaser, or its designees, as
designated by the Purchaser in the Settlement Statement, via DWAC.  Upon the
Company electronically delivering such Draw Down Shares to the DTC account of
the Purchaser, or its designees, via DWAC by 1:00 pm (New York time), the
Purchaser shall, on the same day (or the next Business Day if such day is not a
Business Day) wire transfer immediately available funds to the Company’s bank
account, as designated by the Company in the Settlement Statement, for the
amount of the aggregate Purchase Price of such Draw Down Shares.

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(f)

The Company understands that a delay in the delivery of the Shares to the
Purchaser beyond the Settlement Date could result in economic loss to the
Purchaser.  In addition to the Purchaser’s other available remedies, the Company
shall pay to the Purchaser, in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Shares (based on the Closing Price of the Common
Stock on the applicable Settlement Date) required to be delivered on the
Settlement Date, $10 per Trading Day (increasing to $20 per Trading Day 5
Trading Days after such damages have begun to accrue) for each Trading Day after
the Settlement Date until such Shares are delivered pursuant to this Article VI;
provided, however, that such delay in the delivery of the Shares is the direct
result of the actions of the Company, and provided further, that the Closing
Price of the Common Stock has decreased from the Settlement Date to the date the
Shares are delivered to the Purchaser.  Nothing herein shall limit the
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and the Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

ARTICLE VII.
TERMINATION

7.1

Term.  The term of this Agreement shall begin on the date hereof and shall end
24 months from the Effective Date or as otherwise set forth in Section 7.2.

7.2

Other Termination.

(a)

This Agreement shall terminate if (i) the Common Stock is de-listed from the
principal Trading Market unless such de-listing is in connection with a
subsequent listing on another Trading Market, (ii) a Bankruptcy Event occurs or
is publicly announced, or (iii) the Registration Statement is not declared
effective by the Commission by the 90th calendar day following Stockholder
Approval.

(b)

The Company may terminate this Agreement upon 3 Trading Days notice if the
Purchaser shall fail to fund a properly noticed Draw Down within 5 Trading Days
of the applicable Settlement Date, if the conditions set forth in Section 5.2
hereof were timely met.

7.3

Effect of Termination.  In the event of termination of this Agreement pursuant
to Section 7.2 herein, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party.  If this Agreement is
terminated pursuant to Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further force and effect, except for Section 4.7 and Article 8
herein, which shall survive the termination of this Agreement.  Nothing in this
Section 7.3 shall be deemed to release the Company or the Purchaser from any
liability for any breach under this Agreement, or to impair the rights of the
Company or the Purchaser to compel specific performance by the other party of
its obligations under this Agreement.

ARTICLE VIII.

MISCELLANEOUS

8.1

Fees and Expenses.  At the Initial Closing, the Company has agreed to reimburse
the Purchaser reasonable fees up to $15,000 for its legal fees and expenses,
$10,000 of which has been paid prior to the Initial Closing.  Except as
otherwise provided in this Agreement, each party will pay the fees and expenses
of its own advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of the Transaction Documents.  Company
acknowledges and agrees that Purchaser’s counsel solely represents Purchaser,
and does not represent Company or its interests in connection with the
Transaction Documents or the transactions contemplated thereby.  Company will
pay all stamp and other taxes and duties levied in connection with the sale of
the Shares, if any.

8.2

Notice.  Unless a different time of day or method of delivery is set forth in
the Transaction Documents, any and all notices or other communications or
deliveries required or permitted to be provided hereunder will be in writing and
will be deemed given and effective on the earliest of:  (a) the date of
transmission, if such notice or communication is delivered via facsimile prior
to 5:00 pm (New York time) on a Trading Day and an electronic confirmation of
delivery is received by the sender, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered later than 5:00 pm
(New York time) or on a day that is not a Trading Day, (c) the next Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given.  The addresses for such notices and communications are
those set below, or such other address as may be designated in writing
hereafter, in the same manner, by such Person.

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If to Purchaser:

If to Company:

 

 

Ironridge Technology Co.

PositiveID Corporation

Harbour House, Waterfront Drive

1690 South Congress Avenue

PO Box 972, Road Town

Suite 200

Tortola, British Virgin Islands

Delray Beach, Florida 33445

Attn:  David Sims

Attn:  William J. Caragol

Facsimile: 284-494-4771

Facsimile:  561-805-8001

With a copy, respectively, to (which shall not constitute notice):

Ellenoff Grossman & Schole LLP

Holland & Knight LLP

150 East 42nd Street

515 East Las Olas Boulevard, Suite 1200

New York, New York 10017

Fort Lauderdale, Florida 33301

Attn:  Joseph A. Smith, Esq.

Attn:  Tammy Knight, Esq.

Facsimile:  212-370-7889

Facsimile:  954-463-2030

8.3

Amendments; Waivers.  No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment or waiver, by
Company and Purchaser.  No waiver of any default with respect to any provision,
condition or requirement of this Agreement will be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor will any delay or omission
of either party to exercise any right hereunder in any manner impair the
exercise of any such right.

8.4

Headings.  The headings herein are for convenience only, do not constitute a
part of this Agreement and will not be deemed to limit or affect any of the
provisions hereof.

8.5

Successors and Assigns.  This Agreement will be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. Company may
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of Purchaser, which consent will not be unreasonably
withheld.  Purchaser may not assign its rights under this Agreement.

8.6

No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.7.

8.7

Governing Law.  All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents will be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law that would require or
permit the application of the laws of any other jurisdiction.  The parties
hereby waive all rights to a trial by jury.  If either party will commence an
action or Proceeding to enforce any provisions of the Transaction Documents,
then the prevailing party in such action or proceeding will be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses
reasonably incurred in connection with the investigation, preparation and
prosecution of such action or proceeding.

8.8

Survival.  The representations and warranties contained herein shall survive
each Closing and the delivery of the Shares, Commitment Shares or Success Fee
Shares for a period of one (1) year.

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8.9

Execution.  This Agreement may be executed in two or more counterparts, all of
which when taken together will be considered one and the same agreement and will
become effective when counterparts have been signed by each party and delivered
to the other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by portable document
format, facsimile or electronic transmission, such signature will create a valid
and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such signature page were an
original thereof.

8.10

Severability.  If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement will not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, will incorporate such substitute provision in this Agreement.

8.11

Replacement of Securities.  If any certificate or instrument evidencing any
Shares is mutilated, lost, stolen or destroyed, Company will issue or cause to
be issued in exchange and substitution for and upon cancellation thereof, or in
lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to Company of such loss, theft
or destruction and customary and reasonable indemnity, if requested.  The
applicants for a new certificate or instrument under such circumstances will
also pay any reasonable third-party costs associated with the issuance of such
replacement certificates.

8.12

Arbitration.  Any dispute, controversy, claim or action of any kind arising out
of or relating to this Agreement, or in any way involving Company and Purchaser
or their respective Affiliates, will be resolved by final and binding
arbitration before a retired judge at JAMS (www.jamsadr.com), or its successor,
in New York, New York, pursuant to its most Streamlined Arbitration Rules and
Procedures and the Final Offer (or Baseball) Arbitration Option.  Any interim or
final award may be entered and enforced by any court of competent jurisdiction.
 The final award will include the prevailing party’s reasonable arbitration,
expert witness and attorney fees, costs and expenses.

8.13

Remedies.  In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of Purchaser and Company
will be entitled to specific performance under the Transaction Documents, and
injunctive relief to prevent any actual or threatened breach under the
Transaction Documents, to the full extent permitted under federal and state
securities laws.

8.14

Payment Set Aside.  To the extent that Company makes a payment or payments to
Purchaser pursuant to any Transaction Document or Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to Company, a
trustee, receiver or any other person under any law, including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action, then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied will be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

8.15

Time of the Essence.  Time is of the essence with respect to all provisions of
the Transaction Documents that specify a time for performance.

8.16

Liquidated Damages.  The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

8.17

Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party will not be employed
in the interpretation of the Transaction Documents or any amendments hereto. The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will
be applied against any party.

8.18

Entire Agreement.  This Agreement, together with the Exhibits hereto which are
incorporated herein by reference, contains the entire agreement and
understanding of the parties, and supersedes all prior and contemporaneous
agreements, term sheets, letters, discussions, communications and
understandings, both oral and written, which the parties acknowledge have been
merged into this Agreement.  No party, representative, attorney or agent has
relied upon any collateral contract, agreement, assurance, promise,
understanding or representation not expressly set forth hereinabove.  The
parties hereby expressly waive all rights and remedies, at law and in equity,
directly or indirectly arising out of or relating to, or which may arise as a
result of, any Person’s reliance on any such assurance.

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

Company:

POSITIVEID CORPORATION

By:

/s/ WJ Caragol

Name:

WJ Caragol

Title:

CEO

Purchaser:

IRONRIDGE TECHNOLOGY CO.,

a division of IRONRIDGE GLOBAL IV, LTD.

By:

/s/ Peter Cooper

Name:

Peter Cooper

Title:

Director

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Exhibit A

Glossary of Defined Terms

“Action” shall have the meaning ascribed to such term in Section 3.1(d).

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 144 under the
Securities Act.  With respect to the Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as the Purchaser will be deemed to be an Affiliate of the Purchaser.

“Agreement” shall have the meaning ascribed to such term in the preamble.

“Bankruptcy Event” means any of the following events: (a) the Company or any
Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
S-X) thereof commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is commenced against
the Company or any Significant Subsidiary thereof any such case or proceeding
that is not dismissed within 60 days after commencement, (c) the Company or any
Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order
of relief or other order approving any such case or proceeding is entered, (d)
the Company or any Significant Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such appointment, (e) the
Company or any Significant Subsidiary thereof makes a general assignment for the
benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts or (g) the Company or any Significant
Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the foregoing.

“Business Day” means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

“Closing Date” means, as applicable, the Initial Closing Date and each
Settlement Date.

“Closing Price” means on any particular date (a) the last reported closing bid
price per share of Common Stock on such date on the Trading Market (as reported
by Bloomberg L.P. at 4:15 pm (New York time)), or (b) if there is no such price
on such date, then the closing bid price on the Trading Market on the date
nearest preceding such date (as reported by Bloomberg L.P. at 4:15 pm (New York
time)), or (c)  if the Common Stock is not then listed or quoted on the Trading
Market and if prices for the Common Stock are then reported in the “pink sheets”
published by OTC Markets Inc. (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) if the shares of Common Stock are not then
publicly traded the fair market value of a share of Common Stock as determined
by an appraiser selected in good faith by the Purchaser of a majority in
interest of the Shares then outstanding and reasonably acceptable to the
Company.

“Commission” means the U.S. Securities and Exchange Commission.

“Commencement Date” means, (a) with respect to the first Draw Down only, the
Trading Day after the Effective Date, (b) with respect to continuous Draw Downs,
the Trading Day immediately following the end of the prior Draw Down Pricing
Period, and (c) with respect to the first Draw Down after a Recommencement
Notice, the Recommencement Date.  

“Commitment Amount” shall have the meaning assigned to such term in Section 2.1
hereof.

“Commitment Period” shall mean the period of 24 consecutive months commencing 15
Trading Days after the Effective Date.

“Commitment Shares” shall have the meaning set forth in Section 2.3(a).

“Common Stock” means the common stock of the Company, par value $0.01 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed into.

“Company Counsel” means Holland & Knight LLP, 515 East Las Olas Boulevard, Suite
1200, Fort Lauderdale, Florida 33301.

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“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

“Draw Down” shall have the meaning assigned to such term in Section 6.1(a)
hereof.

“Draw Down Pricing Period” means such number of Trading Days in which the
initial Trading Day is the Commencement Date and the final Trading Day is the
Trading Day on which the aggregate trading volume of the Common Stock on the
Trading Market, as reported by Bloomberg, from the Commencement Date to such
final Trading Day equals 3,000,000 shares (adjusted for any subsequent stock
splits, reverse splits or similar capital adjustments). Provided, however, that
for purposes of the first Draw Down, Draw Down Pricing Period shall mean the 15
consecutive Trading Days after the Effective Date.

“Draw Down Shares” shall mean the shares of Common Stock issuable pursuant to a
Draw Down.

“DTC” means the Depository Trust Company.

“DWAC” means DTC’s Deposit/Withdrawal at Custodian system.

“Effective Date” means the date that the initial Registration Statement filed by
the Company pursuant to the Registration Rights Agreement is first declared
effective by the Commission.

“Equity Conditions” shall mean, during the period in question, (i) there is an
effective Registration Statement pursuant to which the Purchaser is permitted to
utilize the prospectus thereunder to resell all of the Draw Down Shares (issued
and to be issued pursuant to the applicable Draw Down), the Commitment Shares
and the Success Fee Shares (and the Company believes, in good faith, that such
effectiveness will continue uninterrupted for the foreseeable future), (ii) the
Common Stock is trading on the Trading Market or a senior market to the Trading
Market and all of the shares issuable pursuant to the Transaction Documents are
listed or quoted (if applicable) for trading on such Trading Market (and the
Company believes, in good faith, that trading of the Common Stock on a Trading
Market will continue uninterrupted for the foreseeable future), (iii) there is a
sufficient number of authorized but unissued and otherwise unreserved shares of
Common Stock for the issuance of all of the Draw Down Shares (issued and to be
issued pursuant to the applicable Draw Down), the Commitment Shares and the
Success Fee Shares, (iv) the issuance of the Draw Down Shares subject to the
applicable Draw Down would not violate the limitations set forth in Section
4.11, (vi) all previous Shares, Commitment Shares and the Success Fee Shares
have been issued in accordance with the terms of this Agreement, (vii) all
closing conditions to be performed or satisfied by the Company with respect to
all prior Draw Downs shall have been satisfied, and (viii) the Company, directly
or indirectly, has not provided the Purchaser with any material, non-public
information that has not been made publicly available in a widely disseminated
release.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“GAAP” means U.S. generally accepted accounting principles applied on a
consistent basis during the periods involved.

“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in
excess of $100,000, other than trade accounts payable incurred in the ordinary
course of business, (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in Company’s balance sheet, or the notes thereto, except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of $100,000 due under leases required to
be capitalized in accordance with GAAP.

“Initial Closing” shall have the meaning assigned to such term in Section 2.2
hereof.

“Initial Closing Date” shall have the meaning assigned to such term in Section
2.2 hereof.

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.2(j).

“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

“Material Adverse Effect” means any material adverse effect on (a) the legality,
validity or enforceability of any Transaction Document, (b) the results of
operations, assets, business, prospects or financial condition of Company and
the Subsidiaries, taken as a whole, which is not disclosed in the SEC Reports,
or (c) a Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document; provided, however, that none of
the following, individually or in the aggregate, shall be

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taken into account in determining whether a Material Adverse Effect has occurred
or insofar as reasonably can be foreseen would likely occur: (a) changes in
conditions in the U.S. or global capital, credit or financial markets generally,
including changes in the availability of capital or currency exchange rates,
provided such changes shall not have affected the Company in a materially
disproportionate manner as compared to other similarly situated companies;
(b) any effect of the announcement of, or the consummation of the transactions
contemplated by, this Agreement and the other Transaction Documents on the
Company’s relationships, contractual or otherwise, with customers, suppliers,
vendors, bank lenders, strategic venture partners or employees; and (c) the
receipt of any notice that the Common Stock may be ineligible to continue
listing or quotation on the Trading Market, other than a final and
non-appealable notice that the listing or quotation of the Common Stock on the
Trading Market shall be terminated on a date certain.

“Material Permits” shall have the meaning ascribed to such term in Section
3.2(h).

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

“Purchase Amount” shall have the meaning assigned to such term in Section 6.1(b)
hereof.

“Purchase Price” shall mean, with respect to Draw Down Shares purchased in
connection with the applicable Draw Down, 90% of the average of the daily VWAPs
on each Trading Day during the Draw Down Pricing Period preceding such current
Draw Down Pricing Period, not to exceed the arithmetic average of any three
daily VWAPs during the Draw Down Pricing Period preceding such current Draw Down
Pricing Period.  Provided, however, that for purposes of the first Draw Down
after a Recommencement Notice, Purchase Price shall mean the lower of the
foregoing and the Closing Price on the Trading Day prior to the recommencement
date specified in the Recommencement Notice; and for purposes of the first Draw
Down after the Effective Date, Purchase Price shall mean the VWAP for the 15
consecutive Trading Days after the Effective Date.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

“Registration Rights Agreement” means the Registration Rights Agreement, dated
the date hereof, between the Company and the Purchaser, in the form of Exhibit E
attached hereto.

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchaser of the Shares, the Commitment Shares and the Success Fee Shares.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“SEC Reports” includes all reports required to be filed by Company under the
Securities Act or the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date of this Agreement and thereafter.

“Securities” means the Shares, the Commitment Shares and the Success Fee Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Settlement” shall mean the delivery of the Draw Down Shares into the
Purchaser’s DTC account via DTC’s DWAC system and the Purchaser’s delivery of
payment therefor.

“Settlement Date” shall have the meaning assigned to such term in Section
6.1(b).

“Shares” shall mean the Draw Down Shares.

 “Short Sales” shall include all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act. 

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“Stockholder Approval” shall mean the required vote of the Company’s
stockholders to amend the Company’s Certificate of Incorporation to increase the
authorized number of shares of Common Stock issuable by the Company from 75
million shares, of which 70 million shares are Common Sock, to 180 million
shares, of which 175 million shares will be Common Stock.

 “Subsidiary” means the subsidiaries set forth on Schedule 3.2(b).

“Success Fee Shares” shall have the meaning set forth in Section 2.3(b).

 “Trading Day” means a day on which the Common Stock is traded on a Trading
Market.

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the Nasdaq
Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq National
Market, the OTC Bulletin Board, or the Pink Sheets QB or QX inter-dealer
electronic quotation and trading system.

“Transaction Documents” means this Agreement and the Registration Rights
Agreement and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted for trading as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 am (New York time) to 4:02 pm
(New York time) as queried to exclude block trades of 100,000 shares or more;
(b) if the Common Stock is not then quoted for trading on the OTC Bulletin Board
and if prices for the Common Stock are then reported in the “Pink Sheets”
published by OTC Markets, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported; or (c) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Purchaser and reasonably acceptable to the Company.

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Exhibit B

Form of Legal Opinion

1.

Company is a corporation validly existing and in good standing under the laws of
the State of Delaware.

2.

The Securities are duly authorized and, when issued in accordance with the terms
and conditions of the Agreement will be, legally and validly issued, fully paid
and non-assessable.  The issuance of the Securities will not be subject to any
statutory or, to our knowledge, contractual preemptive rights of any stockholder
of Company.

3.

Company has the corporate power and authority to (a) execute, deliver and
perform all of its obligations under the Agreement and the Transaction
Documents, and (b) issue, sell and deliver the Securities.

4.

The execution, delivery and performance of the Agreement and the Transaction
Documents have been duly authorized by all necessary corporate action on the
part of Company, and have been duly executed and delivered by Company.

5.

Upon execution and delivery of the Agreement, the Agreement will constitute the
legal, valid and binding obligation of Company, enforceable against Company in
accordance with its terms.

6.

The execution and delivery of the Transaction Documents by Company does not, and
Company’s performance of its obligations thereunder will not (a) violate the
Second Amended and Restated Certificate of Incorporation or the Amended and
Restated By-Laws of Company, as in effect on the date hereof, (b) violate in any
material respect any federal or state law, rule or regulation, or judgment,
order or decree of any state or federal court or governmental or administrative
authority, in each case that, to our knowledge, is applicable to Company or its
properties or assets and which could have a material adverse effect on Company’s
business, properties, assets, financial condition or results of operations or
prevent the performance by Company of any material obligation under the
Agreement, or (c) to our knowledge, require the authorization, consent, approval
of or other action of, notice to or filing or qualification with, any state or
federal governmental authority, except (i) as have been, or will be prior to the
Closing, duly obtained or made, or (ii) to the extent failure to be so obtained
or made would not have a material adverse effect on Company or its ability to
consummate the transactions contemplated under the Agreement.

7.

To our knowledge, there is no claim, action, suit, proceeding, arbitration,
investigation or inquiry, pending or threatened, before any court or
governmental or administrative body or agency, or any private arbitration
tribunal, against Company that challenges the validity or enforceability of, or
seeks to enjoin the performance of, the Agreement.

8.

Company is not, and immediately after the consummation of the transactions
contemplated by the Agreement will not be, an investment company within the
meaning of Investment Company Act of 1940, as amended.

9.

[AS TO TAKEDOWN CLOSINGS ONLY] The Registration Statement filed with the
Commission which registers the resale of the Securities to Purchaser was
effective on [________], 2012 and is effective as of the date hereof.

In addition to the opinions above, nothing has come to our attention that has
caused us to believe that the Registration Statement, as of its effective date,
or the Prospectus Supplement, as of its date or the date of its letter (in each
case, except as to the financial statements, schedules, notes, other financial
and accounting data, and statistical data, included therein or derived
therefrom, as to which we express no opinion or belief), contained any untrue
statement of material fact, or failed to state a material fact necessary in
order to make the facts stated therein, in light of the circumstances in which
they were made, not misleading.

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Exhibit C

Suspension Notice

PositiveID Corporation

The undersigned hereby certifies, with respect to shares of Common Stock of
PositiveID Corporation (the “Company”) issuable in connection with the
Securities Purchase Agreement dated as of January 13, 2012 (the “Agreement”), as
follows:

1.

The undersigned is the duly appointed Chief Executive Officer or Chief Financial
Officer of the Company.

2.

The Company desires to suspend Draw Downs under the Agreement.

3.

The Draw Downs shall be suspended immediately following the end of the current
Draw Down Pricing period on ________, ____, _____.

The undersigned has executed this Certificate this ____ day of ________, _____.

 

POSITIVEID CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

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Exhibit D

Recommencement Notice

PositiveID Corporation

The undersigned hereby certifies, with respect to shares of Common Stock of
PositiveID Corporation (the “Company”) issuable in connection with this
Recommencement Notice and Compliance Certificate dated _____________ (the
“Notice”), delivered pursuant to the Securities Purchase Agreement dated as of
January 13, 2012 (the “Agreement”), as follows:

1.

The undersigned is the duly appointed Chief Executive Officer or Chief Financial
Officer of the Company.

2.

Except as set forth on the schedules attached to the Agreement or in the SEC
Reports (as defined in the Agreement), the representations and warranties of the
Company set forth in the Agreement are true and correct in all material respects
as though made on and as of the date hereof, except for representations and
warranties are expressly made as of a particular date.

3.

The Company has performed in all material respects all covenants and agreements
and conditions required under the Agreement to be performed by the Company on or
prior to the date of this Recommencement Notice.

4.

The Draw Down Pricing Period shall recommence on ________, ____, _____.

The undersigned has executed this Certificate this ____ day of ________, _____.

 

POSITIVEID CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

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DISCLOSURE SCHEDULE

TO

SECURITIES PURCHASE AGREEMENT

BETWEEN

POSITIVEID CORPORATION

AND

IRONRIDGE TECHNOLOGY CO., A DIVISION OF IRONRIDGE GLOBAL IV, LTD.

DATED AS OF JANUARY 13, 2012

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DISCLOSURE SCHEDULE

This Disclosure Schedule is delivered pursuant to the Securities Purchase
Agreement, dated as of January 13, 2012 (the “Agreement”), by and between
PositiveID Corporation, a Delaware corporation (“Company”) and Ironridge
Technology Co., a division of Ironridge Global IV, Ltd., a British Virgin
Islands business company (“Purchaser”).  Unless otherwise defined, capitalized
terms have the meanings set forth in the Agreement.  

No reference to or disclosure of any item or other matter in this Disclosure
Schedule shall be construed as an admission or indication that such item or
other matter is material or that such item or other matter is required to be
referred to or disclosed in this Disclosure Schedule.  No disclosure in this
Disclosure Schedule relating to any possible breach or violation of any
agreement, law, or regulation shall be construed as an admission or indication
that any such breach or violation exists or has actually occurred.  If and to
the extent any information required to be furnished in any particular schedule
is contained in any other schedule, such information shall also be deemed to be
included in such particular schedule (without the need for a specific cross
reference) to the extent the applicability of such furnished information to such
schedule is reasonably apparent.

This Disclosure Schedule and the information and disclosures contained in this
Disclosure Schedule are intended only to qualify and limit the representations
and warranties contained in the Agreement and shall not be deemed to expand in
any way the scope or effect of any such representations and warranties.

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Schedule B.1.

Capitalization

The authorized capital stock of the Company consists of 75,000,000 shares of
capital stock, of which 70,000,000 shares are designated as Company Common
Stock, $0.01 par value per share, and 5,000,000 shares of Preferred Shares,
$0.001 par value per share. As of January 13, 2012, (a) 56,470,897 shares of
Company Common Stock were issued and outstanding, (b) no shares of Series C
Preferred Stock were issued and outstanding, (c) 1,500 shares of Series F
Preferred Stock were issued and outstanding,  (d) 3,830,870 shares of Company
Common Stock were reserved for issuance upon the exercise of options issued or
issuable under the Company’s equity compensation plans, and 313,122 shares of
Company Common Stock were reserved for issuance upon the exercise of stock
options issued outside of the Company’s equity compensation plans, (e) 304,000
warrants to purchase shares of Company Common Stock were outstanding, and (f) no
shares of Company Common Stock were held in treasury.

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Schedule B.2.

Subsidiaries

VeriGreen Energy Corporation

Steel Vault Corporation

IFTH NY Sub, Inc.

IFTH NJ Sub, Inc.

MicroFluidic Systems

Steel Vault Security, LLC

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Schedule B.4.

Material Changes

On January 11, 2012, the Company entered into a Contribution, Assignment and
Assumption Agreement (the “Contribution Agreement”) with its wholly-owned
subsidiary, PositiveID Animal Health Corporation (“Animal Health”), whereby the
Company contributed certain assets and liabilities relating to its implantable
passive radio-frequency identification microchip business (the “VeriChip
Business”), as well as, all of its assets and liabilities relating to its Health
Link business which is a patient-controlled, online repository to store personal
health information (the “Health Link Business”). The term “VeriChip Business”
does not include the GlucoChip or any product or application involving blood
glucose detection or diabetes management (the “Restricted Applications”).

On January 11, 2012, the Company entered into a Stock Purchase Agreement with
VeriTeQ Acquisition Corporation (“VeriTeQ”), a Florida corporation owned and
controlled by Scott R. Silverman, the Company’s former chairman and chief
executive officer (the “Stock Purchase Agreement”), whereby VeriTeQ purchased
all of the outstanding capital stock of Animal Health to VeriTeQ in exchange for
a secured promissory note in the amount of $200,000 (the “Note”) and four (4)
million shares of common stock of VeriTeQ.  The promissory note accrues interest
at 5% per annum.  Payments under the Note begin January 11, 2013 and are due and
payable monthly. The Note matures on January 11, 2015. The Note is secured by
substantially all of the assets of Animal Health pursuant to a Security
Agreement dated January 11, 2012.

In connection with the Stock Purchase Agreement, the Company entered into a
License Agreement with VeriTeQ dated January 11, 2012 (the “License Agreement”),
whereby the Company granted VeriTeQ a non-exclusive, perpetual,
non-transferable, license to utilize the Company’s bio-sensor implantable radio
frequency identification (RFID) device that is protected under United States
Patent No. 7,125,382, “Embedded Bio Sensor System” (the “Patent”) for the
purpose of designing and constructing, using, selling and offering to sell
products or services related to the VeriChip Business but excluding the
Restricted Applications.  The Company will receive royalties in the amount of
ten percent (10%) on all gross revenues arising out of or relating to VeriTeQ’s
sale of products, whether by license or otherwise, specifically relating to the
Patent, and a royalty of twenty percent (20%) on gross revenues that are
generated under that certain Development and Supply Agreement between the
Company and Medical Components, Inc. (“Medcomp”) dated April 2, 2009.  The
Company’s right to the Medcomp royalty payments terminate three (3) years
following written clearance by the United States Food and Drug Administration of
the Medcomp product that incorporates the VeriChip product.

The Company also entered into a Shared Services Agreement with VeriTeQ on
January 11, 2012, whereby the Company will provide certain services to VeriTeQ
in exchange for $30,000 per month.  The term of the Shared Services Agreement
commences on the earlier of (i) commencement of due diligence by VeriTeQ on a
merger or public shell target or (ii) February 1, 2012.  The first payment for
such services is not payable until VeriTeQ receives gross proceeds of a
financing of at least $500,000.

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Schedule B.14.

Certain Fees

In connection with the transactions contemplated by this Agreement, the Company
will owe a fee to C.K. Cooper and Company, Inc. for its services as financial
advisor.

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Schedule B.15.

Registration Rights

Persons/Entities with Registration Rights

 

Number of Shares

 

 

 

Scott R. Silverman

 

18,112,182*

 

 

 

R & R Consulting Partners LLC

 

2,729,452  

 

 

 

William J. Caragol

 

700,000  

 

 

 

Focus Securities

 

460,150  

*  The registration rights noted above were provided for in the Amended and
Restated Employment, Consulting and Non-Compete Agreement, dated December 8,
2011, between the Company and Scott R. Silverman