EXHIBIT 10.1
 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of June 27,
2014, between Imaging Diagnostic Systems, Inc., a Florida corporation (the
“Company”); Viable International Investments, LLC, a Florida limited liability
company, and assigns (“Purchaser”); and Allan Schwartz, a Florida resident
(“Schwartz”), Richard Grable, a Florida resident (“R. Grable”), and Linda
Grable, a Florida resident (“L. Grable,” together with R. Grable and Schwartz,
are herein referred to collectively as “Company Representatives” and singularly
as “Company Representative”).
 
WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to Purchaser, and Purchaser desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Purchaser agree as
follows:
 
ARTICLE I.
DEFINITIONS
 
1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Certificate of Designation (as defined
herein), and (b) the following terms have the meanings set forth in this Section
1.1:
 
“Acquiring Person” shall have the meaning ascribed to such term in Section 4.7.
 
“Action” shall have the meaning ascribed to such term in Section 3.1(j).
 
“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 405 under the
Securities Act.
 
“Board of Directors” means the board of directors of the Company.
 
 “Business Day” means any day except any Saturday, any Sunday, any day which is
a federal legal holiday in the United States or any day on which banking
institutions in the State of Florida are authorized or required by law or other
governmental action to close.
 
“Certificate of Designation” means the Certificate of Designation to be filed
prior to the Closing by the Company with the Secretary of State of Florida, in
the form of Exhibit A attached hereto.
 
 
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“Closing(s)” means one or more closing(s) of the purchase and sale of the
Securities pursuant to Section 2.1.
 
“Closing Date” means the Trading Day of each Closing as identified in Section
2.1 below on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchaser’s obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities, in each case, have been
satisfied or waived.
 
“Closing Statement” means the Closing Statement in the form on Annex A attached
hereto.
 
“Commission” means the United States Securities and Exchange Commission.
 
“Common Stock” means the common stock of the Company, no par value per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed.
 
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
“Company Counsel” means Carlton Fields Jorden Burt P.A., with its office located
at 4200 International Place, 100 SE 2nd Street, Miami, FL 33131.
 
 “Conversion Price” shall have the meaning ascribed to such term in the
Certificate of Designation.
 
“Conversion Shares” shall have the meaning ascribed to such term in the
Certificate of Designation.
 
“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.
 
“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(r).

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

“Exempt Issuance” means 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, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise price, exchange price
or conversion price of such securities.
 
 
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“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“FDA” shall have the meaning ascribed to such term in Section 3.1(kk).
 
“FDCA” shall have the meaning ascribed to such term in Section 3.1(kk).
 
“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

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

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

“Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).

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

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

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

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

“Medical Device” shall have the meaning ascribed to such term in Section
3.1(kk).

“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.

 “Preferred Stock” means the 600 shares of the Company’s Series M Convertible
Preferred Stock, no par value per share, issued hereunder having the rights,
preferences and privileges set forth in the Certificate of Designation, in the
form of Exhibit A hereto.  The Preferred Stock are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities and shall, at all times that any share of Preferred Stock
is outstanding, represent (a) Ninety Percent (90%) of all issued and authorized
voting capital stock of the Company, and (b) Ninety Percent (90%) of all issued
and authorized capital stock of the Company, based on the Company’s capital
stock outstanding as of the First Closing Date.  Notwithstanding any provision
of this Agreement to the contrary, in the event that, after the First Closing
Date, any shares of Common Stock are issued based on exercise or conversion of
an option, warrant, convertible note, convertible preferred stock or other
derivative security issued and outstanding as of the First Closing Date, then
immediately upon such issuance the Company shall issue to Purchaser or its
assigns nine shares of Common Stock for each share of Common Stock issued based
on such exercise or conversion in order to prevent dilution of Purchaser’s 90%
equity interest in the Company.
 
 
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“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

“Public Information Failure Payments” shall have the meaning ascribed to such
term in Section 4.3(b).
 
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.10.

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).

“Required Minimum” means, as of any date, the maximum aggregate number of shares
of Common Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable upon
conversion in full of all shares of Preferred Stock, ignoring any conversion or
exercise limits set forth therein, and assuming that any previously unconverted
shares of Preferred Stock are held until the five year anniversary of the
applicable Closing Date and all dividends are paid in shares of Common Stock
until such five year anniversary.
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities” means the Preferred Stock and the Underlying Shares.

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

 “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

“Stated Value” means, with respect to the aggregate 600 shares of Preferred
Stock that may be purchased by Purchaser in this Agreement, $10,000 per share of
Preferred Stock.

“Subscription Amount” shall mean the aggregate amount to be paid for the
Preferred Stock purchased at each Closing hereunder, in United States dollars
and in immediately available funds.
 
 
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“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)
and shall, where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the principal Trading Market is open for
trading.

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any
successors to any of the foregoing).

“Transaction Documents” means this Agreement, the Certificate of Designation,
the Lock-Up Agreements, all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the transactions
contemplated hereunder.

“Transfer Agent” means Jersey Stock Transfer LLC, the current transfer agent of
the Company, with a mailing address of 201 Bloomfield Avenue, Verona, New Jersey
07044 and a facsimile number of 973-215-2740, and any successor transfer agent
of the Company.

“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion of the Preferred Stock in accordance with the terms of the
Certificate of Designation.
 
ARTICLE II.
PURCHASE AND SALE
 
2.1           Closings; Deposit.  A non-refundable deposit in the amount of
$100,000 (“Deposit”) will be paid by Purchaser to the Company immediately upon
the execution of this Agreement, in accordance with the terms hereof.  If the
First Closing occurs, the Deposit shall be applied to the Purchase Price on the
First Closing Date.  The aggregate number of shares of the Preferred Stock that
shall be purchased by Purchaser hereunder is 600, in accordance with the terms
and conditions set forth herein.  Delivery of the shares of the Preferred Stock
to be purchased by the Purchaser hereunder shall be made, free and clear of all
Liens, in the form of one or more stock certificates, registered in the name of
Purchaser or such affiliates of Purchaser as Purchaser may specify, and in each
case dated as of each applicable closing date, and any such closing date being
referred to herein as a “Closing Date.”  The Company and Company Representatives
represent and warrant to Purchaser that the contemplated purchase and
acquisition of the Securities herein shall not violate any laws or regulations
governing “anti-takeovers” or “control acquisitions” including, without
limitation, the Florida Statute relating to “control-share acquisitions”,
specifically Florida Statutes Section 607.0902. Prior to the First Closing, and
each subsequent Closing thereafter, the Company and Company Representatives
shall have obtained the necessary and required approval and consent from the
Board of Directors, as required by Florida Statutes Section 607.0902(2)(d)7 (the
“Control Acquisition Board Consent”).
 
 
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(a)           Subject to the representations and warranties made by the Company
and the Company Representatives herein continuing to be accurate, true and
correct in all material respects, on July 31, 2014 (the “First Closing Date”),
upon the terms and subject to the conditions set forth herein, the Company
agrees to sell to the Purchaser (or its Affiliate or assign), and the Purchaser
(or its Affiliate or assign) shall purchase, an aggregate of 250 shares of
Preferred Stock (the “First Closing Purchased Preferred Stock”), free and clear
of any Liens (the “First Closing”).  The Company and Company Representatives
represent, warrant and agree that the First Closing Purchased Preferred Stock
shall at all times represent (i) 78.9% of all issued and authorized voting
capital stock of the Company and shall permit Purchaser to retain voting control
of the Company, and (ii) upon conversion, 78.9% of all issued and authorized
capital stock of the Company, based on the Company’s capital stock outstanding
as of the First Closing Date.  The purchase price to be paid by Purchaser in
exchange for the First Closing Purchased Preferred Stock shall be $2,500,000 USD
(the “First Closing Purchase Price”).  Following the First Closing, and subject
to the terms and conditions set forth herein, Purchaser shall purchase an
additional 350 shares of Preferred Stock in exchange for the purchase price of
$3,500,000 USD, in two separate tranches, as set forth below.

(b)           Subject to the representations and warranties made by the Company
and the Company Representatives herein continuing to be accurate, true and
correct in all material respects as of the First Closing Date, on July 31, 2015
(the “Second Closing Date”), upon the terms and subject to the conditions set
forth herein, the Company agrees to sell to the Purchaser (or its Affiliate or
assign), and the Purchaser (or its Affiliate or assign) shall purchase, an
aggregate of 200 shares of Preferred Stock (the “Second Closing Purchased
Preferred Stock”), free and clear of any Liens (the “Second Closing”). The
purchase price to be paid by Purchaser in exchange for the Second Closing
Purchased Preferred Stock shall be $2,000,000 USD (the “Second Closing Purchase
Price”).

(c)           Subject to the representations and warranties made by the Company
and the Company Representatives herein continuing to be accurate, true and
correct in all material respects as of the First Closing Date, on a date within
14 days after the Company receives FDA Pre-Market Approval (“PMA”) for its CTLM®
system and the Company provides written notice to the Purchaser thereof (the
“Third Closing Date”), upon the terms and subject to the conditions set forth
herein, the Company agrees to sell to the Purchaser (or its Affiliate or
assign), and the Purchaser (or its Affiliate or assign) shall purchase, an
aggregate of 150 shares of Preferred Stock (the “Third Closing Purchased
Preferred Stock”), free and clear of any Liens (the “Third Closing”, together
with the First Closing and the Second Closing, are herein referred to
collectively as the “Closings”). The purchase price to be paid by Purchaser in
exchange for the Third Closing Purchased Preferred Stock shall be $1,500,000 USD
(the “Third Closing Purchase Price”).

Notwithstanding anything in this Agreement to the contrary, the Purchaser shall
have no obligation to consummate the Second Closing or the Third Closing if, as
of the time scheduled for each such Closing, the Company has sufficient
available cash to service its debts and pay its operating expenses in the
ordinary course of business, as determined by the Company’s Board of Directors
in its good faith business judgment.
 
 
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The Company and Company Representatives represent, warrant and agree that the
600 shares of Preferred Stock shall at all times represent (i) 90% of all issued
and authorized voting capital stock of the Company, and (ii) upon conversion,
90% of all issued and authorized capital stock of the Company, based on the
Company’s capital stock outstanding as of the First Closing
Date.  Notwithstanding any provision of this Agreement to the contrary, in the
event that, after the First Closing Date, any shares of Common Stock are issued
based on exercise or conversion of an option, warrant, convertible note,
convertible preferred stock or other derivative security issued and outstanding
as of the First Closing Date, then immediately upon such issuance the Company
shall issue to Purchaser or its assigns nine shares of Common Stock for each
share of Common Stock issued based on such exercise or conversion in order to
prevent dilution of Purchaser’s 90% equity interest in the Company.
 
Purchaser shall deliver to the Company, via wire transfer, immediately available
funds equal to its Subscription Amount and the Company shall deliver to
Purchaser the shares of Preferred Stock as determined pursuant to Section
2.2(a), Section 2.2(b),  or Section 2.2(c), as the case may be, and the Company
and Purchaser shall deliver the other items set forth in Section 2.2 deliverable
at the Closing.  Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of Foley & Lardner
LLP, 111 North Orange Avenue, Suite 1800, Orlando, Florida 32801, or such other
location as the parties shall mutually agree.
 
2.2          Deliveries.
 
(a)           The Company shall deliver or cause to be delivered to Purchaser
the following:
 
(i)               on the date hereof, this Agreement duly executed by the
Company;
 
(ii)            on or prior to the First Closing Date, a legal opinion of
Company Counsel, substantially in the form of Exhibit B attached hereto;
 
(iii)           on each applicable Closing Date, a certificate evidencing the
number of shares of Preferred Stock required to be delivered by the Company at
such Closing, registered in the name of Purchaser and evidence of the filing and
acceptance of the Certificate of Designation from the Secretary of State of
Florida;
 
(iv)           on or prior to the First Closing Date, the Control Acquisition
Board Consent in form and substance reasonably satisfactory to Purchaser; and
 
(v)            on or prior to the First Closing Date, the appointment of
Purchaser’s designees to the Board of Directors pursuant to Section 4.19.
 
 
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(b)          Purchaser shall deliver or cause to be delivered to the Company the
following:
 
(i)              on the date hereof, this Agreement duly executed by Purchaser;
and
 
(ii)            on the applicable Closing Date, Purchaser’s Subscription Amount
by wire transfer to the account specified in writing by the Company.
 
2.3          Closing Conditions.
 
(a)           The obligations of the Company hereunder in connection with the
Closing(s) are subject to the following conditions being met:
 
(i)             the accuracy in all material respects when made and on the
applicable Closing Date of the representations and warranties of the Purchaser
contained herein (unless as of a specific date therein in which case they shall
be accurate as of such date);
 
(ii)            all material obligations, covenants and agreements of Purchaser
required to be performed at or prior to the applicable Closing Date shall have
been performed; and
 
(iii)           the delivery by Purchaser of the items set forth in Section
2.2(b) of this Agreement.
 
(b)           The obligations of the Purchaser hereunder in connection with the
Closing(s) are subject to the following conditions being met:
 
(i)             the accuracy in all material respects when made and as of the
First Closing Date of the representations and warranties of the Company and the
Company Representatives contained herein (unless as of a specific date therein);
 
(ii)            all obligations, covenants and agreements of the Company and the
Company Representatives required to be performed at or prior to the applicable
Closing Date shall have been performed;
 
(iii)           the delivery by the Company and the Company Representatives of
the items set forth in Section 2.2(a) of this Agreement;
 
(iv)           the Board of Directors Appointment (as defined in Section 4.19
below);
 
(v)            As of the First Closing Date, the Company’s Common Stock shall
not have been deregistered by the United States Securities and Exchange
Commission (“SEC”);
 
(vi)           As of the First Closing Date, the SEC shall have agreed not to
deregister the Company’s Common Stock and to provide the Company with a
reasonable time to file its delinquent reports before deregistration would
occur;
 
 
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(vii)          As of the First Closing Date, the Company’s auditors shall have
completed their audit of the Company’s financial statements for the year ended
June 30, 2013; and
 
(viii)         there shall have been no material changes in the business of the
Company or any of its Subsidiaries or any Material Adverse Effect with respect
to the Company or any of its Subsidiaries from the date hereof to the First
Closing Date.
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
3.1           Representations and Warranties of the Company and Company
Representatives.  Except as set forth in the Disclosure Schedules, the Company
and Company Representatives, jointly and severally, hereby make the following
representations and warranties as of the date hereof and as of each Closing Date
to Purchaser:
 
(a)           Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3.1(a).  The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.  If the Company has no subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction Documents shall
be disregarded.
 
(b)           Organization and Qualification.  The Company and each of the
Subsidiaries 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, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation nor default
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and the Subsidiaries 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: (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
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.
 
 
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(c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder.  The execution
and delivery of this Agreement and each of the other Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals.  This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
 
(d)           No Conflicts.  The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) 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 the 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 the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
 
(e)           Filings, Consents and Approvals.  The Company is not 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 the Company of the Transaction Documents,
other than: (i) the filings required pursuant to Section 4.6 of this Agreement,
(ii) the filing with the Commission pursuant to the Registration Rights
Agreement, (iii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities and the listing of the
Conversion Shares for trading thereon in the time and manner required thereby,
and (iv) the filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws (collectively, the
“Required Approvals”).
 
 
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(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 imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents.  The Underlying Shares, when
issued in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents.
 
The Company does not have sufficient shares of Common Stock available for
issuance upon conversion of the Preferred Stock.  The Company and Company
Representatives represent that 9,818,848,208 shares of Common Stock are
outstanding as of the date hereof, which does not include shares reserved for
conversion of the Company’s outstanding Series L Convertible Preferred Stock,
the exercise of outstanding options and shares reserved for conversion of
promissory notes as set forth on the attached Schedule 3.1(g).  The Company and
Company Representatives represent and warrant that Purchaser will not be able to
convert its shares of Preferred Stock until a majority of the Company’s
shareholders approves an increase in the authorized shares of Common Stock to
provide sufficient shares for such conversions.   The Company and Company
Representatives represent and warrant that upon Purchaser obtaining 78.9% of the
issued and outstanding shares of voting capital stock through the purchase at
the First Closing of the Preferred Stock which has immediate majority voting
rights, an amendment to the Company’s articles of incorporation to increase the
authorized shares of Common Stock can be accomplished by a majority shareholder
written consent executed by Purchaser followed by the filing of an Information
Statement.  The Company and Company Representatives represent and warrant that
no annual or special meeting of shareholders will be required for the increase
of the authorized shares of Common Stock.  All of the 51 shares of Series Q
Preferred Stock held by Linda Grable (the sole holder of all authorized Series Q
Preferred Stock) shall be irrevocably cancelled simultaneously with the First
Closing Date.
 
(g)           Capitalization.  The authorized capital stock of Company consists
of 20,000,000,000 shares of Common Stock and 2,000,000 shares of preferred
stock.  As of the Closing Date, Company has 9,818,848,208 shares of Common Stock
issued and outstanding and 71 shares of preferred stock issued and outstanding
(specifically, 20 shares of Series L; and 51 shares of Series Q). All of the
outstanding shares of capital stock of Company are validly issued, fully paid
and nonassessable, have been issued in compliance with all federal and state
securities laws and none of such outstanding shares were issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities.   As of the Closing Date, no shares of Company’s capital stock are
subject to preemptive rights or any other similar rights or any liens, claims or
encumbrances suffered or permitted by Company. The Common Stock is currently
quoted by the OTCBB under the trading symbol “IMDS”. The capitalization of the
Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also
include the number of shares of Common Stock owned beneficially, and of record,
by Affiliates of the Company as of the date hereof. Except as set forth in
Schedule 3.1(g), the Company has not issued any capital stock since its last
filed periodic report under the Exchange Act filed on May 15, 2013, for the
quarter ended March 1, 2013.    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.  Except as set forth
in Schedule 3.1(g) or as a result of the purchase and sale of the Securities,
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable 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 the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents.  Except as set forth in Schedule 3.1(g), the
issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchaser) and will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under any of such
securities. All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and nonassessable, have been issued
in 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 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 the
Company’s capital stock to which the Company is a party or, to the best
knowledge of the Company and Company Representatives, between or among any of
the Company’s stockholders. Schedule A-1 is a complete list of all officers,
directors and 5% or more shareholders of the Company that beneficially own any
voting securities of the Company. Schedule A-2 is a complete list of all holders
of the Company’s warrants and options that have full ratchet anti-dilution or,
could otherwise have a reduction in exercise price less than the Conversion
Price.
 
 
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Except as set forth in Schedule 3.1(g) attached hereto and except for the
securities to be issued pursuant to this Agreement, as of the Closing Date: (i)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of any Credit Party, or contracts,
commitments, understandings or arrangements by which any of the Company or its
Subsidiaries is or may become bound to issue additional shares of capital stock
of any of the Company or its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of any of the
Company or its Subsidiaries; (ii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other contracts or instruments
evidencing indebtedness of the Company and its Subsidiaries, or by which the
Company and its Subsidiaries is or may become bound; (iii) there are no
financing statements filed with any governmental authority securing any
obligations of the Company and its Subsidiaries, or filed in connection with any
assets or properties of the Company and its Subsidiaries; (iii) there are no
outstanding registration statements with respect to Company or any of its
securities and there are no outstanding comment letters from the SEC, the
Trading Market, or any other governmental authority with respect to any
securities of any of the Company or its Subsidiaries; (iv) there are no
agreements or arrangements under which any of the Company or its Subsidiaries is
obligated to register the sale of any of its securities under the Securities
Act; (v) there are no financing statements filed with any governmental authority
securing any obligations of any of the Company or its Subsidiaries, or filed in
connection with any assets or properties of any of the Company or its
Subsidiaries; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by this Agreement or
any related agreement or the consummation of the transactions described herein
or therein; and (vii) there are no outstanding securities or instruments of any
of the Company or its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts or agreements by which any of the Company
or its Subsidiaries is or may become bound to redeem a security of any of the
Company or its Subsidiaries (except pursuant to this Agreement).  Each of the
Company and its Subsidiaries has furnished to the Purchaser true, complete and
correct copies of, as applicable: Certificate of Incorporation, as amended and
as in effect on each Closing Date and Bylaws, as in effect on each Closing Date,
and any other governing or organizational documents. Except for the documents
delivered to Purchaser in accordance with the immediately preceding sentence,
there are no other shareholder agreements, voting agreements, operating
agreements, or other contracts or agreements of any nature or kind that
restrict, limit or in any manner impose obligations, restrictions or limitations
on the governance of each of the Company or its Subsidiaries.
 
 
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(h)           SEC Reports; Financial Statements.  The Company's Common Stock is
registered under Section 12(g) of the Exchange Act and the Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for periods through March 31, 2013 (the
foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension; provided, however, the Company has not timely filed SEC Reports since
the filing of its Quarterly Report on Form 10-Q for the period ending March 31,
2013.  As of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act, 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 the
light of the circumstances under which they were made, not misleading. The
financial statements of the Company through March 31, 2013, 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 United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“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 the 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.
 
 
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(i)            Material Changes; Undisclosed Events, Liabilities or
Developments. Since the date of the latest audited financial statements, June
30, 2012: (i) except as set forth in Schedule 3.1(i), there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) except as set forth in Schedule
3.1(i), the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the 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 (v) except as set forth in Schedule 3.1(i), the Company
has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans.  The Company does not
have pending before the Commission any request for confidential treatment of
information.  Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3.1(i), no event, liability, fact,
circumstance, occurrence or development has occurred or exists or is reasonably
expected to occur or exist with respect to the Company or its Subsidiaries or
their respective businesses, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one Trading Day prior to the
date that this representation is made.
 
(j)            Litigation.  Except as set forth in Schedule 3.1(j), there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the best knowledge of the Company and the Company Representatives,
threatened against or affecting the 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 (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect.  Neither the
Company nor any Subsidiary, nor 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.  Except
as set forth on Schedule 3.1(j), there has not been, and to the best knowledge
of the Company and Company Representatives, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current director or officer of the Company, and the Company and Company
Representatives do not have any knowledge that any former director or officer
that served the Company has been investigated by the Commission, except with
respect to the SEC Judgment (as described in Section 4.21 below).  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
 
 
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(k)            Labor Relations.  No labor dispute exists or, to the best
knowledge of the Company and Company Representatives, is imminent with respect
to any of the employees of the Company.  None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their
employees are good.  To the best knowledge of the Company and Company
Representatives, no executive officer of the Company or any Subsidiary, is, or
is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.  The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
 
(l)            Compliance.  Except as set forth in Schedule 3.1(l), neither the
Company nor any Subsidiary: (i) is in default under or in 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 the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other 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), (ii) is in violation of any judgment, decree or
order of any court, arbitrator or other governmental authority or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.
 
(m)           Regulatory Permits.  The Company and the Subsidiaries 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 reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
 
 
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(n)           Title to Assets.  Schedule 3.1(n) is a complete and detailed list
of all assets and property owned and leased by the Company and its
Subsidiaries.  The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them and good and marketable title
in all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens, except
for (i) Liens as 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 the Company and the Subsidiaries and (ii) Liens for the payment of federal,
state or other taxes, for which appropriate reserves have been made therefor in
accordance with GAAP and, the payment of which is neither delinquent nor subject
to penalties.  Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases with which the Company and the Subsidiaries are in compliance.
 
(o)           Intellectual Property.  The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or required for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”).  Set forth on
Schedule 3.1(o) is a complete and detailed list of all Intellectual Property
Rights of the Company and its Subsidiaries.  None of, and neither the Company
nor any Subsidiary has received a notice (written or otherwise) that any of, the
Intellectual Property Rights has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned, within two (2) years from the
date of this Agreement.  Neither the Company nor any Subsidiary has received,
since the date of the latest audited financial statements, June 30, 2012, a
written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person.  To the best
knowledge of the Company and Company Representatives, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights.  The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.  The parties
hereto agree that legal title to all core and material Intellectual Property
Rights of the Company or used in connection with the businesses of the Company
or its Subsidiaries shall be held by the Company, and where applicable, as
evidenced by proper assignments and registrations, to the satisfaction of
Purchaser, at its sole and absolute discretion.  Company Representatives and the
Company shall cooperate in good faith with Purchaser to complete the required
transfers and assignments of such Intellectual Property Rights.
 
(p)           Insurance.  The Company and the Subsidiaries 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 the
Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the aggregate
Subscription Amount.  Neither the 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.
 
 
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(q)           Transactions With Affiliates and Employees.  None of the officers
or directors of the Company or any Subsidiary and, to the best knowledge of the
Company and the Company Representatives, none of the employees of the Company or
any Subsidiary is presently a party to any transaction with the 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, providing for the borrowing of money from or lending of
money too or otherwise requiring payments to or from any officer, director or
such employee or, to the best knowledge of the Company and the Company
Representatives, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee, stockholder,
member or partner, in each case in excess of $10,000 other than for: (i) payment
of salary or consulting fees for services rendered, (ii) reimbursement for
expenses incurred on behalf of the Company and (iii) other employee benefits,
including stock option agreements under any stock option plan of the Company.
 
(r)            Sarbanes-Oxley; Internal Accounting Controls.  The Company and
the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any
and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of each Closing
Date.  The Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company and the Subsidiaries have
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms.  The Company’s certifying
officers have evaluated the effectiveness of the disclosure controls and
procedures of the Company and the Subsidiaries as of June 27, 2014 (such date,
the “Evaluation Date”).  The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation Date,
there have been no changes in the internal control over financial reporting (as
such term is defined in the Exchange Act) of the Company and its Subsidiaries
that have materially affected, or is reasonably likely to materially affect, the
internal control over financial reporting of the Company and its Subsidiaries.
 
 
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(s)           Certain Fees.  No brokerage or finder’s fees or commissions are or
will be payable by the Company or any Subsidiary to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by the Transaction
Documents.  The Purchaser shall 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 the Transaction Documents.
 
(t)           Private Placement. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, 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.
 
(u)           Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.
 
(v)           Registration Rights.  Other than Purchaser, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary.
 
(w)           Listing and Maintenance Requirements.  The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to the best knowledge of the
Company and the Company Representatives, is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act.  Except
as set forth on Schedule 3.1(w), the Company has not received any notification
that the Commission is contemplating terminating such registration.  Except as
set forth on Schedule 3.1(w), the Company has not, in the 12 months preceding
the date hereof, received notice from the Trading Market on which the Common
Stock is listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market.
 
(x)           Application of Takeover Protections.  The Company and the 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 the Company’s articles of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchaser’s ownership of the Securities.
 
 
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(y)           Disclosure.  All of the disclosure furnished by or on behalf of
the Company and Company Representatives to the Purchaser regarding the Company
and its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does 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.   The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement taken as a whole do not contain any
untrue statement of a material fact or omit 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 and when made, not
misleading.  The Company acknowledges and agrees that Purchaser does not make
and has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof.
 
(z)            No Integrated Offering. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.
 
(aa)          Indebtedness.  Schedule 3.1(aa) sets forth as of the date hereof
all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments.  For the
purposes of this Agreement, “Indebtedness” means (x) any liabilities for
borrowed money or amounts owed in excess of $10,000 (other than trade accounts
payable incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s
consolidated 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 (z) the present value of
any lease payments in excess of $10,000 due under leases required to be
capitalized in accordance with GAAP.  Except as set forth in Schedule 3.1(aa),
neither the Company nor any Subsidiary is in default with respect to any
Indebtedness.
 
(bb)         Tax Status.  Except as expressly set forth hereinbelow, the Company
and its Subsidiaries each (i) has made or filed all United States federal, state
and local income and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations
and (iii) has set aside on its books provision reasonably adequate for the
payment of all material taxes for periods subsequent to the periods to which
such returns, reports or declarations apply.  Except as expressly set forth
hereinbelow, there are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.  As of December 23, 2013,
the Company owes accrued payroll taxes of $1,396,691 to the Internal Revenue
Service (“IRS”) which is subject to further interest and penalties in the
amount(s) of $177,402 if not settled and paid to the IRS.  The IRS has filed a
lien against the Company in Broward County, Florida.
 
 
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(cc)          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 and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
 
(dd)         Foreign Corrupt Practices.  Neither the Company nor any Subsidiary,
nor to the best knowledge of the Company Representatives, the Company or any
Subsidiary, any agent or other person acting on behalf of the Company or any
Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is  in
violation of law or (iv) violated in any material respect any provision of FCPA.
 
(ee)          Accountants.  The Company’s accounting firm is set forth on
Schedule 3.1(ee) of the Disclosure Schedules.  To the best knowledge and belief
of the Company and Company Representatives, such accounting firm: (i) is a
registered public accounting firm as required by the Exchange Act and (ii) shall
express its opinion with respect to the financial statements to be included in
the Company’s Annual Report for the fiscal year ending June 30, 2012.
 
(ff)           Seniority.  As of the First Closing Date, except as set forth in
Schedule 3.1(ff), no Indebtedness or other claim against the Company is senior
to the Preferred Stock in right of payment, whether with respect to interest or
upon liquidation or dissolution, or otherwise, other than indebtedness secured
by purchase money security interests (which is senior only as to underlying
assets covered thereby) and capital lease obligations (which is senior only as
to the property covered thereby).
 
(gg)         No Disagreements with Accountants and Lawyers.  There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction
Documents.
 
 
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(hh)         Acknowledgment Regarding Purchaser’s Purchase of Securities.  The
Company acknowledges and agrees that Purchaser is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby.  The Company further acknowledges that
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by Purchaser or any of
their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchaser’s purchase of the Securities.  The Company and Company Representatives
further represent to Purchaser that the Company’s decision to enter into this
Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
 
(ii)            Acknowledgment Regarding Purchaser’s Trading Activity.  Anything
in this Agreement or elsewhere herein to the contrary notwithstanding, except as
otherwise provided in Sections 3.2(f) and/or 4.15 hereof, it is understood and
acknowledged by the Company and Company Representatives that: (i) Purchaser has
not been asked by the Company to agree, nor has Purchaser agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Securities for any specified term, (ii) past or future open market or other
transactions by Purchaser, specifically including, without limitation, Short
Sales or “derivative” transactions, before or after the closing of this or
future private placement transactions, may negatively impact the market price of
the Company’s publicly-traded securities, (iii) Purchaser, and counter-parties
in “derivative” transactions to which Purchaser is a party, directly or
indirectly, may presently have a “short” position in the Common Stock and (iv)
Purchaser shall not be deemed to have any affiliation with or control over any
arm’s length counter-party in any “derivative” transaction.  The Company further
understands and acknowledges that, except as otherwise provided in Section 4.15
hereof, (y) Purchaser may engage in hedging activities at various times during
the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Underlying Shares deliverable with
respect to Securities are being determined, and (z) such hedging activities (if
any) could reduce the value of the existing stockholders’ equity interests in
the Company at and after the time that the hedging activities are being
conducted.  The Company acknowledges that such aforementioned hedging activities
if done in compliance with Section 4.14 hereof will not constitute a breach of
any of the Transaction Documents.
 
(jj)            Regulation M Compliance.  The Company has not, and to the best
knowledge of the Company or the Company Representatives, no one acting on its
behalf has, (i) taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), except as set forth
on Schedule 3.1(jj), compensation paid to the Company’s placement agent in
connection with the placement of the Securities.
 
 
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(kk)          FDA.  As to each product subject to the jurisdiction of the U.S.
Food and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic
Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured,
packaged, labeled, tested, distributed, sold, and/or marketed by the Company or
any of its Subsidiaries (each such product, a “Medical Device”), such Medical
Device is being manufactured, packaged, labeled, tested, distributed, sold
and/or marketed by the Company in compliance with all applicable requirements
under FDCA and similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application approval,
good manufacturing practices, good laboratory practices, good clinical
practices, product listing, quotas, labeling, advertising, record keeping and
filing of reports.  There is no pending, completed or, to the Company's best
knowledge and the Company Representatives’ best knowledge, threatened, action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or any of
its Subsidiaries, and none of the Company or any of its Subsidiaries has
received any notice, warning letter or other communication from the FDA or any
other governmental entity, which (i) contests the premarket clearance,
licensure, registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Medical Device, (ii) withdraws its approval of, requests the
recall, suspension, or seizure of, or withdraws or orders the withdrawal of
advertising or sales promotional materials relating to, any Medical Device,
(iii) imposes a clinical hold on any clinical investigation by the Company or
any of its Subsidiaries, (iv) enjoins production at any facility of the Company
or any of its Subsidiaries, (v) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its Subsidiaries, or
(vi) otherwise alleges any violation of any laws, rules or regulations by the
Company or any of its Subsidiaries.  The properties, business and operations of
the Company have been and are being conducted in all material respects in
accordance with all applicable laws, rules and regulations of the FDA.  The
Company has not been informed by the FDA that the FDA will prohibit the
marketing, sale, license or use in the United States of any product proposed to
be developed, produced or marketed by the Company nor has the FDA expressed any
concern as to approving or clearing for marketing any product being developed or
proposed to be developed by the Company.
 
(ll)            Stock Option Plans. Schedule 3.1(ll) is a complete and detailed
list of all stock option plans of the Company and its Subsidiaries.  Each stock
option granted by the Company under the Company’s stock option plan was granted
(i) in accordance with the terms of the Company’s stock option plan and (ii)
with an exercise price at least equal to the fair market value of the Common
Stock on the date such stock option would be considered granted under GAAP and
applicable law. No stock option granted under the Company’s stock option plan
has been backdated.  The Company has not knowingly granted, and there is no and
has been no Company policy or practice to knowingly grant, stock options prior
to, or otherwise knowingly coordinate the grant of stock options with, the
release or other public announcement of material information regarding the
Company or its Subsidiaries or their financial results or prospects.
 
 
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(mm)        Office of Foreign Assets Control.  Neither the Company nor any
Subsidiary nor, to the Company's best knowledge and the Company Representatives’
best knowledge, any director, officer, agent, employee or affiliate of the
Company or any Subsidiary is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”).
 
(nn)         U.S. Real Property Holding Corporation.  The Company is not and has
never been a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s request.
 
(oo)         Bank Holding Company Act.  Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”).  Neither the Company nor any of
its Subsidiaries or Affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent or more of the total equity of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.  Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.
 
(pp)         Money Laundering.  The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company and any Subsidiary with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company
Representatives, the Company or any Subsidiary, threatened.
 
(qq)        Contracts.

 
(i)
Except for agreements, contracts, plans, leases, arrangements or commitments
disclosed in Schedule 3.1(qq) to this Agreement, neither the Company nor any of
its Subsidiary is a party to or subject to any lease, license, contract,
agreement or understanding, whether written or oral.

 
(ii)
Each agreement, contract, plan, lease, arrangement and commitment disclosed in
any Schedule to this Agreement or required to be disclosed pursuant to Section
3.1(qq) is a valid and binding agreement of the Company and each Subsidiary,
enforceable in accordance with its terms, and is in full force and effect, and
neither the Company nor any of its Subsidiary, nor, to the best knowledge of the
Company and Company Representatives, any other party thereto is in default under
the terms of any such agreement, contract, plan, lease, arrangement or
commitment.

 
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(rr)           Subsidiaries and Other Equity Investments.  Neither the Company
nor any Company Representative owns, directly or indirectly, any shares of
capital stock of any corporation or any equity investment in any partnership,
limited liability company, association or other business organization, and
neither the Company nor any Company Representative has any obligation to make
any such investment.

(ss)          Relationships with Related Persons.  To the best knowledge of the
Company or any Company Representative, neither the Company, its Subsidiaries nor
any Company Representative, employee or stockholder of the Company, or any
officer or Affiliate of the Company, or any Affiliate of any Company
Representative (A) is or has owned (of record or as a beneficial owner) an
equity interest of 5% or more, (B) has or has had any material financial or
profit interest in, or (C) is an employee, owner, officer, or director of a
Person that has or has had (i) material business dealings or a material
financial interest in any transaction with the Company or its Subsidiaries, or
(ii) engaged in competition with the Company or its Subsidiaries with respect to
any line of the services or products of the Company (a “Competing Business”) in
any market presently served by the Company or its Subsidiaries (except for
ownership of less than five percent (5%) of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market).

(tt)           Intercompany Arrangements.  Neither the Company or any of its
Subsidiaries owns any note, bond, debenture or other indebtedness for borrowed
money, of the other(s), any Company Representative, stockholder, director,
partner, manager, officer or employee of Company, its Subsidiaries or any of
their respective Affiliates.  Since the June 30, 2012, Balance Sheet, there has
not been any payment by the Company or any of its Subsidiary to any such Person,
charge by any such Person to the Company or its Subsidiaries, or other
transaction between the Company, any of the Company’s Subsidiary and any such
Person.

(uu)         Warranty and Related Matters.  The standard forms of license,
maintenance, service and other agreements setting forth the terms of outstanding
product and service warranties and guarantees on all products sold, marketed or
distributed by Company and its Subsidiaries (collectively, the “Company
Products”) are attached hereto as Schedule 3.1 (uu).  Schedule 3.1 (uu) also
sets forth a list of all outstanding product and service warranties and
guarantees related to the Company Products set forth in agreements listed on
Schedule 3.1 (uu) and that are substantially different from the product and
service warranties and guarantees set forth in the standard form agreements of
Company and its Subsidiaries.  There are not existing or, to the best knowledge
of the Company and Company Representatives, threatened product liability,
warranty or other similar claims against the Company or any of its Subsidiaries
alleging that any Company Product is defective in any respect or fails to meet
any product or service warranty, except as set forth in Schedule 3.1 (uu) hereto
and to the extent of warranty reserves.  To the best knowledge of the Company
and each of the Company Representatives, there are (i) no inherent design
defects or systemic or chronic problems in any Company Product that prevents its
continued commercial usage; and (ii) no material liabilities for warranty or
other claims or returns with respect to any such material defects or problems.
 
 
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(vv)         Solvency.  Neither the Company nor any of its Subsidiaries has: (i)
made a general assignment for the benefit of creditors; (ii) filed any voluntary
petition in bankruptcy or suffered the filing of any involuntary petition by its
creditors; (iii) suffered the appointment of a receiver to take possession of
all, or substantially all, of its assets; (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of its assets; (v) admitted in
writing its inability to pay its debts as they come due; or (vi) made an offer
of settlement, extension or composition to its creditors generally.

The foregoing representations and warranties made in this Section 3.1,
including, without limitation, Section 3.1(g), shall survive the Closing and
shall not be deemed merged into any instrument or conveyance delivered at the
Closing.  Each Company Representative has carefully reviewed each
representation, warranty and schedule provided under this Section 3.1.
 
SCHWARTZ’ INITIALS:
 
L. GRABLE'S INITIALS:
 
/s/ALS
 
/s/LBG
         
R. GRABLE'S INITIALS:
     
/s/RJG
     

 
3.2           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 (unless as of a specific date therein):
 
(a)           Organization; Authority.  Purchaser is an entity duly incorporated
or formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate action and on the part of
Purchaser.  Each Transaction Document to which it is a party has been 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: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
 
 
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(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
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws).
 
 (c)           Purchaser Status and No Financing Contingency.  At the time
Purchaser was offered the Securities, it was, and as of the date hereof it is,
and on each Closing Date, it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act. Purchaser represents and warrants to the Company that
Purchaser has all the readily available funds in its possession which are
necessary to close the transactions described in this Agreement.
 
(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.
 
The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect Purchaser’s right to rely on the
Company’s and Company Representatives’ representations and warranties contained
in this Agreement or any representations and warranties contained in any other
Transaction Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of the
transaction contemplated hereby.  This Agreement, the exhibits and schedules
hereto and all other documents and information furnished to Purchaser and its
representatives by the Company and Company Representatives do not and will not,
as of each applicable Closing Date, include any known untrue statement of a
material fact or omit to state any known material fact necessary to make such
statements made and to be made not misleading or necessary to provide a
prospective purchaser of the Securities with full and complete information as to
the Company, and the Company's properties, assets, liabilities, business and
prospects and the condition thereof (financial and otherwise).  The Company and
Company Representatives have disclosed to Purchaser in writing or on schedules
attached hereto all adverse facts known to them relating to the Company and the
Securities and operation of the Company’s and its Subsidiaries’ business.  The
performance of due diligence shall not limit the indemnification obligations of
the Company and Company Representatives hereunder.
 
 
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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 to an Affiliate of Purchaser 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 fees and expenses of which shall be
borne by 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 the Registration Rights Agreement and shall have
the rights and obligations of Purchaser under this Agreement and the
Registration Rights Agreement.
 
(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:
 
 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE OR CONVERTIBLE HAS 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.
 
4.2           Acknowledgment of Dilution.  The Company and Company
Representatives acknowledge that the issuance of the Securities will result in
dilution of the outstanding shares of Common Stock, which dilution will be
substantial.  The Company further acknowledges that its obligations under the
Transaction Documents, including, without limitation, its obligation to issue
the Underlying Shares pursuant to the Transaction Documents, are unconditional
and absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim the
Company may have against Purchaser and regardless of the dilutive effect that
such issuance may have on the ownership of the other stockholders of the
Company.
 
 
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4.3           [Intentionally Deleted]
 
4.4           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 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 shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.
 
4.5           Conversion and Exercise Procedures.  The form of Notice of
Conversion included in the Certificate of Designation sets forth the totality of
the procedures required of the Purchaser in order to convert the Preferred
Stock.  Without limiting the preceding sentences, no ink-original Notice of
Conversion shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Conversion form be required in
order to convert the Preferred Stock.  No additional legal opinion, other
information or instructions shall be required of the Purchaser to convert
Purchaser’s Preferred Stock.  The Company shall honor conversions of the
Preferred Stock and shall deliver Underlying Shares in accordance with the
terms, conditions and time periods set forth in the Transaction Documents.
 
4.6           Securities Laws Disclosure; Publicity.  The Company shall, by
5:00 p.m. (New York City time) on the fourth Trading Day immediately following
the date hereof, file a Current Report on Form 8-K and press release disclosing
the material terms of the transactions contemplated hereby, including the
Transaction Documents as exhibits thereto.  The Company and Purchaser shall
consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor Purchaser shall
issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any such press release
of Purchaser, which consent shall not unreasonably be withheld or delayed, or
without the prior consent of Purchaser, with respect to any such press release
of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, rule or regulation, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.
 
4.7           Shareholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that 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 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.
 
 
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4.8           Non-Public Information.  Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents and
certain material non-public information which the Company has already provided
to the Purchaser (which is the information subject the Disclosure Date
obligations in Section 4.6), the Company covenants and agrees that neither it,
nor any other Person acting on its behalf, will provide Purchaser or its agents
or counsel with any additional information that the Company believes constitutes
material non-public information, unless prior thereto Purchaser shall have
entered into a written agreement with the Company regarding the confidentiality
and use of such information.  The Company understands and confirms that
Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.
 
4.9           Use of Proceeds.  The Company shall use the net proceeds from the
sale of the Securities hereunder for debt service of debt existing as of the
date hereof, obtaining FDA pre-market approval for its Products and working
capital purposes as set forth in Schedule 4.9 attached hereto, and shall not use
such proceeds: (a) for the satisfaction of any other portion of the Company’s
debt other than as set forth on Schedule 4.9 hereto (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices),
(b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC
regulations.  Certain purchase funds may, in Purchaser’s reasonable discretion,
be placed in escrow with an escrow agent selected by Purchaser in order to
facilitate direct payments consistent with Schedule 4.9 to creditors and
suppliers of the Company.
 
4.10         Indemnification of Purchaser.  The Company and Company
Representatives shall jointly and severally indemnify and hold 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 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
(collectively, the “Purchaser Parties”, and 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 such Purchaser Party may suffer or incur as a result of or
relating to (a) any misrepresentation or any breach of any of the
representations, warranties, covenants or agreements made by the Company or any
Company Representative in this Agreement or in the other Transaction Documents
or (b) any action instituted against the Purchaser Parties in any capacity, or
any of them or their respective Affiliates, with respect to any of the
transactions contemplated by this Agreement or any of the Transaction
Documents.  If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this Agreement, such
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 such 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 counsel, a material conflict on any material issue between
the position of the Company and the position of such 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 (y) for any settlement by Purchaser Party
effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) 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 such Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification required by this Section 4.10 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or are incurred. The indemnity
agreements contained herein shall be in addition to any cause of action or
similar right of any Purchaser Party against the Company or others and any
liabilities the Company may be subject to pursuant to law.  Notwithstanding
anything stated to the contrary (including, without limitation, any
indemnification agreement, instrument or document), the Company and Company
Representatives represent, warrant and covenant with Purchaser that no Company
Representative shall be held harmless or indemnified by the Company with respect
to any representation or warranty made by any Company Representative under this
Agreement; it being expressly agreed by the Company and Company Representatives
that a Purchaser Party shall have the right, at such Purchaser Party’s sole
discretion, to seek indemnification and/or recourse directly against any or all
Company Representatives without undertaking the same against the Company.
 
 
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4.11         Reservation and Listing of Securities.
 
The Company shall maintain a reserve from its duly authorized shares of Common
Stock for issuance pursuant to the Transaction Documents in such amount as may
then be required to fulfill its obligations to the maximum extent possible under
the Transaction Documents; provided,:
 
(a)            If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than (i) the Required
Minimum on such date, minus (ii) the number of shares of Common Stock previously
issued pursuant to the Transaction Documents, then the Board of Directors shall
use commercially reasonable efforts to amend the Company’s certificate or
articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Required Minimum at such time (minus the
number of shares of Common Stock previously issued pursuant to the Transaction
Documents), as soon as possible and in any event not later than the 30th day
after such date.
 
(b)            The Company shall, if applicable: (i) in the time and manner
required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of
Common Stock at least equal to the Required Minimum on the date of such
application, (ii) take all steps necessary to cause such shares of Common Stock
to be approved for listing or quotation on such Trading Market as soon as
possible thereafter, (iii) provide to the Purchaser evidence of such listing or
quotation and (iv) maintain the listing or quotation of such Common Stock on any
date at least equal to the Required Minimum on such date on such Trading Market
or another Trading Market.
 
 
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4.12         [Intentionally Deleted]
 
4.13          Subsequent Equity Sales.
 
From the date hereof, neither the Company nor any Subsidiary shall issue, enter
into any agreement to issue or announce the issuance or proposed issuance of any
shares of Common Stock or Common Stock Equivalents except as expressly provided
in this Agreement.
 
4.14          Investigation by Purchaser. From the date of this Agreement and
through the First Closing Date, the Purchaser shall, through its authorized
officers, employees, agents and representatives (including, without limitation,
its counsel and accountants), have reasonable access during normal business
hours to all premises and personnel of the Company and its businesses and shall
be entitled to make such reasonable investigation of the properties, business
and operations of the Company and its Subsidiaries and such examination of the
books, records and financial condition of the Company and its Subsidiaries as
they request and to make extracts and copies to the extent necessary of such
books and records; provided that investigation pursuant to this Section
4.14  shall not affect any representations or warranties made by the Company and
Company Representatives herein or the conditions to the obligations of the
respective parties to consummate the transactions contemplated by this
Agreement.
 
4.15         Certain Transactions.  The Company expressly acknowledges and
agrees that (i) Purchaser makes no representation, warranty or covenant hereby
that it will not engage in effecting transactions in any securities of the
Company after the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in
Section 4.6, and (ii) Purchaser shall not be restricted or prohibited from
effecting any transactions in any securities of the Company in accordance with
applicable securities laws from and after the time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.6. 
 
4.16          Blue Sky Filings.  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.
 
4.17          No Capital Changes; Sale; Merger.  The Company shall not sell all
or substantially all of its assets or undertake a business combination, merger,
a reverse or forward stock split or reclassification of the Common Stock without
the prior written consent of the Purchaser, which consent may be withheld,
conditioned or delayed at Purchaser’s sole and absolute discretion.
 
4.18          Employment; Personnel.  After the Closing, Purchaser shall have
the right at its sole discretion to establish the terms of the Company’s and its
Subsidiaries’ employees (the “Employees”) and consultants, and Purchaser shall
not be obligated to employ the Employees on the same terms and conditions
(including without limitation compensation, salary, employee benefits, job
responsibility and descriptions, location, seniority and deemed length of
service) as those provided to such Employees by the Company or its Subsidiary on
the day immediately preceding the First Closing Date.
 
 
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4.19         Change of Board Composition.  The Company and Company
Representatives agree that, simultaneous with the First Closing, Purchaser shall
have the right to appoint its designees as members of the Board of Directors
(constituting at a minimum the majority of the Board of Directors) and remove
current members of the Board of Directors, at Purchaser’s sole and absolute
discretion.  Prior to the First Closing, the Company and Company Representatives
shall obtain the necessary and required directors’ consent to appoint the
Purchaser’s designees as the sole members of the Board of Directors
simultaneously with the consummation of the First Closing (the “Board of
Directors Appointment”).  The provisions of this Section 4.19 shall survive the
First Closing.
 
4.20         Business Plan.  The Company and Company Representatives agree that,
prior to the First Closing, the Company, the Company Representatives and
Purchaser shall cooperate and develop a business plan for the Company that is
subject to Purchaser’s approval, which approval may be withheld or conditioned
at Purchaser’s sole and absolute discretion (the “Approved Business Plan”).
 
4.21         SEC Judgment.  The Company and Company Representatives acknowledge
that a Final Judgment of Permanent Injunction and Other Relief Against Defendant
Imaging Diagnostic Systems, Inc. was entered on March 17, 2014 in the United
States District Court, Southern District of Florida, (Case Styled Securities and
Exchange Commission v. Imaging Diagnostic Systems, Inc., Linda Grable and Allan
Schwartz; Case No. 13-62025-CIV-Rosenbaum/Hunt) (the “SEC Judgment”).  The
Company and Company Representatives represent and warrant to Purchaser that
since March 17, 2014, and as of the date hereof, the Company and all defendants
named in the SEC Judgment have timely and strictly complied with, and performed,
all requirements and obligations contained in the SEC Judgment.  Further, the
Company and Company Representatives agree and warrant to Purchaser that the
Company and the defendants shall at all times on the date hereof and after the
date of this Agreement timely and strictly comply with, and perform, all
requirements and obligations contained in the SEC Judgment.
 
4.22         Acquisition Proposals.  The Company shall not, and the Company and
Company Representatives shall cause the Company and its Subsidiaries not to,
directly or indirectly, through any officer, director, agent, representative
(including, without limitation, investment bankers, attorneys and accountants)
or otherwise, (i) solicit, initiate or encourage submission of inquiries,
proposals or offers from any Person or group other than Purchaser (a “Third
Party”), relating to any acquisition or purchase of all or a portion of the
Securities, or any equity interest in, the Company or its Subsidiaries; or (ii)
participate in any discussions or negotiations regarding, or furnish to any
Third Party any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any Third Party to do or seek any of the foregoing.  The Company and
Company Representatives shall promptly notify Purchaser if any such proposal or
offer, or any inquiry or contact with any Third Party with respect thereto, is
made, and shall in any such notice set forth in reasonable detail the identity
of the Third Party and the terms and conditions of such inquiry, proposal or
offer.
 
 
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ARTICLE V.
MISCELLANEOUS
 
5.1           Termination.  This Agreement may be terminated by either party or
the Company by written notice to the other, if the First Closing has not been
consummated on or before July 31, 2014; provided, however, that such termination
will not affect the right of any party to sue for any breach by any other party
(or parties).  Notwithstanding the foregoing, in the event that this Agreement
is terminated due to Purchaser’s breach for failure to timely consummate the
First Closing or any other Closing, the Company’s sole remedy shall be to retain
Purchaser’s Deposit as liquidated damages.  In the event of termination for any
reason other than a breach by Purchaser (including, without limitation, any
misrepresentation or breach of warranty or covenant under this Agreement by the
Company or any Company Representative), the Deposit shall be immediately
refunded to Purchaser.
 
5.2           Fees and Expenses.  The Company shall deliver to Purchaser, prior
to the Closing, a completed and executed copy of the Closing Statement, attached
hereto as Annex A.  Except as expressly set forth in the Transaction Documents
to the contrary, each party shall pay the fees and expenses of its 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 this Agreement.  The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any conversion delivered by
Purchaser), stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchaser.  All costs and expenses of the
Company shall be subject to Purchaser’s prior written approval, which approval
may be withheld at Purchaser’s sole and absolute discretion.
 
5.3           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.
 
5.4           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto at or prior to
5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (c) the second 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 address for such notices and communications shall be as set forth on
the signature pages attached hereto.
 
 
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5.5           Amendments; Waivers.  No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchaser or, in the case of
a waiver, by the party against whom enforcement of any such waived provision is
sought.  No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.
 
5.6           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
5.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  The Company and Company Representatives may not assign this Agreement
or any rights or obligations hereunder without the prior written consent of
Purchaser.  Purchaser may assign any or all of its rights under this Agreement
to any Person to whom Purchaser assigns or transfers any Securities, provided
that (i) such transferee is an “accredited investor” as defined under the
Securities Act and (ii) such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchaser.”
 
5.8           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 4.10 and this
Section 5.8.
 
5.9           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Florida, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in Broward County, State of Florida.  Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the Broward County, State of Florida for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an  inconvenient venue for
such proceeding.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by
law.  If either party shall commence an action, suit or proceeding to enforce
any provisions of the Transaction Documents, then, in addition to the
obligations of the Company under Section 4.10, the prevailing party in such
action, suit  or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
 
 
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5.10         Survival.  The representations and warranties of the Company and
Company Representatives contained herein shall survive the Closing(s) and the
delivery of the Securities.
 
5.11         Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall 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 facsimile or “.pdf” signature page were an original
thereof.
 
5.12         Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
 
5.13         Rescission and Withdrawal Right.  Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of a conversion of the Preferred
Stock, the Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded conversion concurrently with the return to
Purchaser of the aggregate exercise price paid to the Company for such shares.
 
5.14         Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
 
 
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5.15         Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
and the Company will be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
 
5.16         Payment Set Aside. To the extent that the 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 the 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 shall 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.
 
5.17         Usury.  To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by Purchaser
in order to enforce any right or remedy under any Transaction
Document.  Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate.  It
is agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date thereof forward, unless such
application is precluded by applicable law.  If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by Purchaser to the unpaid principal balance of any
such indebtedness or be refunded to the Company, the manner of handling such
excess to be at Purchaser’s election.
 
5.18         [Intentionally Deleted]
 
5.19         Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.
 
 
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5.20         Construction. The parties agree that each of them and/or their
respective counsel have 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 shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices and
shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
 
5.21         Exculpation of Purchaser.  Notwithstanding anything to the contrary
contained herein, the Purchaser’s Affiliates, partners, the partners or members
of such partners, the shareholders of such partners or members, and the
trustees, officers, directors, employees, agents and security holders of the
Purchaser and the partners or stockholders of the Purchaser assume no personal
liability for any obligations entered into on behalf of the Purchaser and its
individual assets shall not be subject to any claims of any person relating to
such obligations.  The provisions of this Section 5.21 shall survive each
Closing and any termination of this Agreement.
 
5.22          WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.
 
5.23          Drafting.  The parties hereto acknowledge and confirm that each of
their respective attorneys has participated jointly in the review and revision
of this Agreement and that it has not been written solely by counsel for one
party.  The parties hereto therefore stipulate and agree that the rule of
construction to the effect that any ambiguities are to be or may be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement to favor any party against another.
 
 
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IN WITNESS WHEREOF, the parties hereto have executed, or as the case may be,
have caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.
 
THE COMPANY:

IMAGING DIAGNOSTIC SYSTEMS, INC.,  
A FLORIDA CORPORATION
Address for Notice:
 
1291-B NW 65TH PLACE
FORT LAUDERDALE, FL 33309
 
By: /s/ Richard J. Grable II                    
       Name: Richard J. Grable II
       Title: President
 
With a copy to (which shall not constitute notice):
Fax:  954-979-2420
 
Carlton Fields Jorden Burt P.A.
4200 International Place
100 SE 2nd Street
Miami, FL 33131
Attention: Robert B. Macaulay, Esq.
Telephone: 305-530-4026 305-530-0050
Fax: 305-530-0055
 
PURCHASER:
 
 
VIABLE INTERNATIONAL INVESTMENTS, LLC,
A FLORIDA LIMITED LIABILITY COMPANY
Address for Notice:
 
1221 E. ROBINSON STREET
ORLANDO, FL 32801
 
By: /s/ Lixin Yang                                  
      Name: Lixin Yang
      Title: Manager
Fax: 407-706-1378
 
With a copy to (which shall not constitute notice):
 
 
Robert Q. Lee, Esq.
Foley & Lardner LLP
111 North Orange Avenue, Suite 1800
Orlando, Florida 32801
Telephone: 407-423-7656
Fax: 407-648-1743
 

 
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COMPANY REPRESENTATIVES:

 
Address for Notice:
 
1291-B NW 65TH PLACE
FORT LAUDERDALE, FL 33309
 
/s/ Allan L. Schwartz                              
Allan L. Schwartz, Individually
With a copy to (which shall not constitute notice):
Fax: 954-979-2420
 
Carlton Fields Jorden Burt P.A.
4200 International Place
100 SE 2nd Street
Miami, FL 33131
Attention: Robert B. Macaulay, Esq.
Telephone: 305-530-4026 305-530-0050
Fax: 305-530-0055
   
Address for Notice:
 
1291-B NW 65TH PLACE
FORT LAUDERDALE, FL 33309
 
/s/ Linda B. Grable                                 
Linda B. Grable, Individually
 
With a copy to (which shall not constitute notice):
Fax: 954-979-2420
 
Carlton Fields Jorden Burt P.A.
4200 International Place
100 SE 2nd Street
Miami, FL 33131
Attention: Robert B. Macaulay, Esq.
Telephone: 305-530-4026 305-530-0050
Fax: 305-530-0055
 

 
 
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Address for Notice:
 
1291-B NW 65TH PLACE
FORT LAUDERDALE, FL 33309
 
/s/ Richard J. Grable II                          
Richard J. Grable II, Individually
 
With a copy to (which shall not constitute notice):
Fax: 954-979-2420
 
Carlton Fields Jorden Burt P.A.
4200 International Place
100 SE 2nd Street
Miami, FL 33131
Attention: Robert B. Macaulay, Esq.
Telephone: 305-530-4026 305-530-0050
Fax: 305-530-0055
 

 
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