Unassociated Document


    EXHIBIT
      10.1


    POSITRON
      CORPORATION

    NOTE
      PURCHASE AGREEMENT

     

    THIS
      NOTE
      PURCHASE AGREEMENT (the "Agreement")
      is
      made as of August 8, 2005 by and between Positron Corporation, a Texas
      corporation (the "Company"),
      and
      Imagin Diagnostic Centers, Inc. ("Investor").
      All
      numbers expressed herein as "$" or "dollars" are in United States
      dollars.

     

    R
      E C
      I T A L S :

     

    WHEREAS,
      the Company desires to issue Convertible Promissory Notes in the aggregate
      principal amount of $400,000, subject to the terms and conditions set forth
      in
      this Agreement.

     

    WHEREAS,
      the Investor desires to purchase the Convertible Promissory Notes, subject
      to
      the terms and conditions set forth in this Agreement.

     

    NOW,
      THEREFORE, in consideration of the respective undertakings, covenants and
      agreements of the parties set forth herein, the parties hereby agree as
      follows:

     

    
      SECTION
        1  PURCHASE
        AND SALE OF THE NOTES.

    

     

    1.1  Issuance
      of the Notes.
      The
      Company has authorized the issuance and sale to the Investor of, and, subject
      to
      and in reliance upon the representations, warranties, terms and conditions
      of
      this Agreement, the Investor the have agreed to purchase, the Company's
      Convertible Promissory Notes (individually, a "Note,"
      and
      collectively, the "Notes"),
      in
      the aggregate principal amount of $400,000. Each Note shall be substantially
      in
      the form set forth in Exhibit A
      hereto.

     

    1.2  Closing.
      The
      Company agrees to issue and sell to the Investor, and, subject to and in
      reliance upon the representations, warranties, terms and conditions of this
      Agreement, the Investor agrees to purchase, the Notes for the aggregate purchase
      price of $400,000 (the "Aggregate Purchase Price"). Such purchase and sale
      shall
      take place (a) at the initial closing (the "Closing") to be held at the offices
      of the Company on August 8, 2005, at 10:00 A.M., or such other date as the
      parties shall agree (the "First
      Closing Date"),
      and
      at subsequent closings ("Subsequent
      Closings")
      which
      shall occur upon 30 days written notice to Investor by the Company. At each
      Subsequent Closing Investor shall purchase a Note in a principal amount
      determined by the Company of not more than $200,000. Subsequent Closings shall
      be held not more frequently than every 30 days. At the Closings, the Company
      will issue a Note, dated the such date, payable to the order of Investor, in
      the
      principal amount of $200,000 in the case of the First Closing and in an amount
      specified in the Company's notice in the case of the Subsequent Closings in
      exchange for cash. In the event the Company shall not have sold and issued
      to
      Investor pursuant to the notices provided for herein the full amount of the
      Aggregate Purchase Price on or before July 21, 2006, the right of the Company
      to
      sell any additional Notes and the obligation of the Investor to purchase any
      additional Notes shall terminate. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.3  Payments
      and Endorsements.
      Payments of principal, interest and premium, if any, on the Notes, shall be
      made
      directly by wire transfer or by checks duly mailed or delivered to the Investor
      at address specified in the Notes without any presentment or notation of
      payment, except that prior to any transfer of any Note, the holder of record
      shall endorse on such Note a record of the date to which interest has been
      paid
      and all payments made on account of principal of such Note.

     

    1.4  Payment
      on Non-Business Days.
      Whenever any payment to be made shall be due on a day which is not a Business
      Day, such payment may be made on the next succeeding Business Day, and such
      extension of time shall in such case be included in the computation of payment
      of interest due.

     

    1.5  Registration,
      etc.
      The
      Company shall maintain at its principal office a register of the Notes and
      shall
      record therein the name and address of the registered holder of the Notes,
      the
      address to which notices are to be sent and the address to which payments are
      to
      be made as designated by the registered holder if other than the address of
      the
      holder, and the particulars of all transfers, exchanges and replacements of
      the
      Notes. No transfer of a Note shall be valid unless made on such register for
      the
      registered holder or his executors or administrators or his or their duly
      appointed attorney, upon surrender therefor for exchange as hereinafter
      provided, accompanied by an instrument in writing, in form and execution
      reasonably satisfactory to the Company. Each Note issued hereunder, whether
      originally or upon transfer, exchange or replacement of a Note or Notes, shall
      be registered on the date of execution thereof by the Company and shall be
      dated
      the date to which interest has been paid on such Note or Notes. The registered
      holder of the Note shall be that Person in whose name the Note has been so
      registered by the Company. A registered holder shall be deemed the owner of
      a
      Note for all purposes of this Agreement and, subject to the provisions hereof,
      shall be entitled to the principal, premium, if any, and interest evidenced
      by
      such Note free from all equities or rights of set-off or counterclaim among
      the
      Company and the transferor of such registered holder or any previous registered
      holder of such Note.

     

    1.6  Limitations
      on Transferability.
      The
      Investor covenants that in no event will it dispose of any Note or any shares
      of
      capital stock into which such Note is convertible unless and until Investor
      shall have complied with Sections 4.7 and 4.8 hereof and (a) the
      Investor shall have notified the Company of the proposed disposition and shall
      have furnished the Company with a statement of the circumstances surrounding
      the
      proposed disposition, and (b) if requested by the Company, the Investor
      shall have furnished the Company with an opinion of counsel satisfactory in
      form
      and substance to the Company and the Company's counsel to the effect that
      (x) such disposition will not require registration under the Securities
      Act
      and (y) appropriate action necessary for compliance with the Securities
      Act
      and any applicable state, local, or foreign law has been taken.

     

    1.7  Replacement
      of Notes.
      Upon
      receipt of evidence satisfactory to the Company of the loss, theft, destruction
      or mutilation of any Note and, if requested in the case of any such loss, theft
      or destruction, upon delivery of an indemnity bond or other agreement or
      security reasonably satisfactory to the Company, or, in the case of any such
      mutilation, upon surrender and cancellation of such Note, the Company will
      issue
      a new Note, of like tenor and amount and dated the date to which interest has
      been paid, in lieu of such lost, stolen, destroyed or mutilated Note;
provided,
      however,
      if any
      Note of which an Investor, its nominee, or any of its partners or affiliates
      is
      the registered holder is lost, stolen or destroyed, the affidavit of the
      registered holder setting forth the circumstances with respect to such loss,
      theft or destruction shall be accepted as satisfactory evidence thereof, and
      no
      indemnification bond or other security shall be required as a condition to
      the
      execution and delivery by the Company of a new Note in replacement of such
      lost,
      stolen or destroyed Note other
      than
      the
      registered holder's written agreement to indemnify the Company.

     

    
      
        
        

      

      
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    1.8  Conversion
      of Note.
      All or
      any portion of the principal amounts of the Notes, may be converted at the
      option of the Investor, into shares of Common Stock (as defined herein) at
      a
      conversion price and on such terms as are provided in the Notes.

     

    
      SECTION
        2  DEFINITIONS.

    

     

    For
      purposes of this Agreement the following terms shall have the following
      meanings:

     

    2.1  "Articles"
      shall
      mean the Company's Articles of Incorporation, as amended, as of the First
      Closing, and including the Series A Statement, Series C Statement,
      Series D Statement, Series E Statement and Series F Statement
      thereto.

     

    2.2  "Business
      Day"
      shall
      mean a day other than Saturday, Sunday or a public holiday under the laws of
      the
      State of Texas.

     

    2.3  "Commission"
      shall
      mean the Securities and Exchange Commission.

     

    2.4  "Common
      Stock"
      shall
      mean the Common Stock of the Company, par value $0.01 per share.

     

    2.5  "GAAP"
      shall
      mean United States generally accepted accounting principles.

     

    2.6  "Intellectual
      Property"
      shall
      mean patents, patent applications, trademarks, service marks, mask works, trade
      names, copyrights, trade secrets, information, proprietary rights and
      processes.

     

    2.7  "Material
      Adverse Event"
      shall
      mean any change, event or effect that is materially adverse to the general
      affairs, business, operations, assets, condition (financial or otherwise) or
      results of operations of the Company and its subsidiaries taken as a whole;
      provided, however, that the following shall not be taken into account in
      determining a "Material
      Adverse Event":
      (a) any adverse change, event or effect that is directly attributable
      to
      conditions affecting the United States economy generally unless such conditions
      adversely affect the Company in a materially disproportionate manner, and
      (b) any adverse change, event or effect that is directly attributable
      to
      conditions affecting the Company's industry generally, unless such conditions
      adversely affect the Company in a materially disproportionate manner.


     

    2.8  "Person"
      shall
      mean an individual, corporation, partnership, joint venture, limited liability
      company, trust, or unincorporated organization, or a government or any agency
      or
      political subdivision thereof, or any other entity or business
      form.

     

    
      
        
        

      

      
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    2.9  "Preferred
      Stock"
      shall
      mean the Company's Series A Preferred Stock, Series C Preferred Stock,
      Series D Preferred Stock, Series E Preferred Stock and Series
      F
      Preferred Stock.

     

    2.10  "Registration
      Rights Agreement"
      shall
      mean the Registration Rights Agreement dated as of the First Closing by and
      between the Company and the Investor in the form attached hereto as Exhibit B.

     

    2.11  "Securities
      Act"
      shall
      mean the Securities Act of 1933, as amended and the rules and regulations of
      the
      Commission promulgated thereunder.

     

    2.12  "Series
      A Preferred Stock"
      shall
      mean the Series A Preferred Stock of the Company, par value $1.00 per
      share.

     

    2.13  "Series
      A Statement"
      shall
      mean the Statement of Designation Establishing Series A 8% Cumulative
      Convertible Redeemable Preferred Stock of Position Corporation, filed with
      the
      Texas Secretary of State on February 29, 1996.

     

    2.14  "Series
      C Preferred Stock"
      shall
      mean the Series C Preferred Stock of the Company, par value $1.00 per
      share.

     

    2.15  "Series
      C Statement"
      shall
      mean the Statement of Designation Establishing Series C Preferred Stock
      of
      Positron Corporation, filed with the Texas Secretary of State on May 21,
      2004.

     

    2.16  "Series
      D Preferred Stock"
      shall
      mean the Series D Preferred Stock of the Company, par value $1.00 per
      share.

     

    2.17  "Series
      D Statement"
      shall
      mean the Statement of Designation Establishing Series D Preferred Stock
      of
      Positron Corporation, filed with the Texas Secretary of State on May 21,
      2004.

     

    2.18  "Series
      E Preferred Stock"
      shall
      mean the Series E Preferred Stock of the Company, par value $1.00 per
      share.

     

    2.19  "Series
      E Statement"
      shall
      mean the Statement of Designation Establishing Series E Preferred Stock
      of
      Positron Corporation, to be filed with the Texas Secretary of State following
      the Closing. 

     

    2.20  "Series
      F Preferred Stock"
      shall
      mean the Series F Preferred Stock of the Company, par value $1.00 per
      share.

     

    2.21  "Series
      F Statement"
      shall
      mean the Statement of Designation Establishing Series F Preferred Stock of
      Positron corporation to be filed with the Texas Secretary of State following
      the
      Closing.

     

    2.22  "Subsidiary"
      shall
      mean any corporation, partnership or other entity, more than 50% of whose equity
      interests (measured by virtue of voting rights) in the aggregate is owned by
      the
      Company.

     

    
      
        
        

      

      
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    2.23  "Transactional
      Agreements"
      shall
      mean this Agreement, the Notes, and the Registration Rights
      Agreement.

     

    
      SECTION
        3  REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

    

     

    The
      Company hereby represents and warrants to the Investor that:

     

    3.1  Corporate
      Organization and Authority.
      The
      Company:

     

    3.1.1  is
      a
      corporation duly organized, validly existing, authorized to exercise all its
      corporate powers, rights and privileges, and in good standing in the State
      of
      Texas;

     

    3.1.2  has
      the
      corporate power and corporate authority to own and operate its properties and
      to
      carry on its business as now conducted and as proposed to be
      conducted;

     

    3.1.3  has
      made
      available to the Investor or their counsel a copy of the minute books of the
      Company, and said copies are true, correct, and complete and contain all
      amendments and all minutes of meetings and actions taken by the shareholders
      and
      directors of the Company through the date of this Agreement.

     

    3.2  Subsidiaries.
      The
      Company does not presently own, have any equity interest or investment in,
      or
      control, directly or indirectly, any other corporation, partnership or entity.
      The Company is not a participant in any joint venture or
      partnership.

     

    3.3  SEC
      Filings; Financial Statements.
      The
      Company has filed (i) its Annual Report on Form 10-K for the
      fiscal
      year ended December 31, 2004 (the "Company
      Current 10-K"),
      and
      (ii) its Quarterly Reports on Form 10-Q for the fiscal quarter ended
      March 31, 2005, (the "Company
      Current 10-Q"
      and,
      together with the Company Current 10-K and the "Company
      SEC Reports"),
      all
      of which complied when filed in all material respects with all applicable
      requirements of the Securities Act and the Exchange Act of 1934, as amended.
      The
      audited financial statements and unaudited interim financial statements
      of the Company included or incorporated by reference in such Company SEC Reports
      were prepared in accordance with GAAP applied on a consistent basis during
      the
      periods involved (except as may be indicated in the notes thereto) and present
      fairly, in all material respects, the financial position and results of
      operations and cash flows of the Company at the respective dates and for the
      respective periods indicated (and in the case of all such financial statements
      that are interim financial statements, contain all adjustments so to present
      fairly). Except to the extent that information contained in any Company SEC
      Report was revised or superseded by a later filed report, none of the Company
      SEC Reports contained any untrue statement of a material fact or omitted to
      state any material fact required to be stated therein or necessary in order
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading.

     

    3.4  Corporate
      Power.
      The
      Company will have at the Closing Date all requisite legal and corporate power
      and authority to execute and deliver the Transactional Agreements, to sell
      and
      issue the Notes hereunder, to issue the Common Stock upon conversion of the
      Notes (subject to stockholder approval as set forth in Section 7.1 hereof),
      and to carry out and perform its obligations under the terms of the
      Transactional Agreements.

     

    
      
        
        

      

      
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    3.5  Authorization.
      All
      corporate action on the part of the Company, its officers, directors, and
      stockholders necessary for the authorization, execution, delivery, and
      performance of all obligations under the Transactional Agreements, and for
      the
      authorization, issuance, and delivery of the Notes, and of the Common Stock
      (subject to stockholder approval as set forth in Section 7.1 hereof)
      issuable upon conversion of the Notes has been taken. The Transactional
      Agreements constitute legally binding and valid obligations of the Company
      enforceable in accordance with their respective terms, except to the extent
      that
      such enforcement may be subject to applicable bankruptcy, insolvency,
      reorganization, moratorium, or other laws of general application relating to
      or
      affecting enforcement of creditors' rights and laws concerning equitable
      remedies.

     

    3.6  Validity
      of Shares.
      Subject
      to stockholder approval, as set forth in Section 7.1 hereof, the Common
      Stock issuable upon conversion of the Notes has been duly and validly reserved
      and, assuming such Common Stock is issued in accordance with the Articles,
      will
      be duly and validly issued (including, without limitation, issued in compliance
      with applicable federal and state securities laws) and non-assessable and will
      be free of any liens or encumbrances other than any liens or encumbrances
      created by or imposed thereon by the holders; provided, however, that the Common
      Stock shall be subject to restrictions on transfer under state and/or federal
      securities laws. Except as set forth in the Articles and the Notes, the Common
      Stock issuable upon conversion of the Notes is not subject to any preemptive
      or
      other similar statutory or contractual rights and will not conflict with any
      provisions of any agreement or instrument to which the Company is a party or
      by
      which it is bound. 

     

    
      SECTION
        4  REPRESENTATIONS
        AND WARRANTIES OF THE INVESTOR.

    

     

    The
      Investor represents and warrants to the Company as follows:

     

    4.1  Authorization.
      When
      executed and delivered by the Investor, and assuming execution and delivery
      by
      the Company, the Transactional Agreements will each constitute a valid
      obligation of the Investor, enforceable in accordance with its terms, except
      to
      the extent that such enforcement may be subject to applicable bankruptcy,
      insolvency, reorganization, moratorium, or other laws of general application
      relating to or affecting enforcement of creditors' rights and laws concerning
      equitable remedies.

     

    4.2  Brokers
      and Finders.
      The
      Investor has not retained any investment banker, broker, or finder in connection
      with the transactions contemplated by this Agreement.

     

    4.3  Investment.
      This
      Agreement is made with the Investor in reliance upon the Investor's
      representation to the Company, which by the Investor's execution of this
      Agreement the Investor hereby confirms, that the Notes (including capital stock
      issuable upon conversion thereof) to be received by the Investor will be
      acquired for investment for the Investor's own account, not as a nominee or
      agent, and not with a view to the sale or distribution of any part thereof,
      and
      that the Investor has no present intention of selling, granting any
      participation in, or otherwise distributing any of the Notes (including capital
      stock issuable upon conversion thereof). By executing this Agreement, the
      Investor further represents that it has no contract, undertaking, agreement,
      or
      arrangement with any person to sell, transfer, or grant participation to such
      person or to any third person, with respect to any of the Notes (including
      capital stock issuable upon conversion thereof).

     

    
      
        
        

      

      
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    4.4  No
      Public Market.
      The
      Investor understands that no public market now exists for the Notes and that
      the
      Company has given no assurances that a public market will ever exist for the
      Notes. The investor understands that the Company's Common Stock is currently
      quoted by the Nasdaq OTC Bulletin Board and that although the Company will
      use
      its best efforts to obtain listing on the Nasdaq SmallCap Market and Toronto
      Street Exchange, no assurance can be given that the Company's securities will
      be
      approved for listing on such exchanges. 

     

    4.5  Experience.
      The
      Investor represents that: (a) it has such knowledge and experience in
      financial and business matters as to be capable of evaluating the merits and
      risks of its prospective investment in the Notes; (b) it believes it
      has
      received all the information it has requested from the Company and considers
      necessary or appropriate for deciding whether to obtain the Notes; (c) it
      has had the opportunity to discuss the Company's business, management, and
      financial affairs with the Company's management; (d) it understands the economic
      implications of the transactions contemplated by this Agreement and confronting
      the Company; (e) it has had the full opportunity to seek advice of counsel
      and
      any other appropriate advice with respect to the transactions contemplated
      by
      this Agreement; (f) it has the ability to bear the economic risks of
      its
      prospective investment; and (g) it is able, without materially impairing
      its financial condition, to hold the Notes for an indefinite period of time
      and
      to suffer a complete loss on its investment.

     

    4.6  Accredited
      Investor.
      The
      Investor presently qualifies and will as of the Closing qualify as an
      "accredited investor" within the meaning of Regulation D of the rules and
      regulations promulgated under the Securities Act.

     

    4.7  Limitations
      on Transferability.
      The
      Investor covenants that in no event will it dispose of the Notes (other than
      pursuant to Rule 144 promulgated by Securities and Exchange Commission under
      the
      Securities Act ("Rule
      144")
      or any
      similar or analogous rule) unless and until (a) the Investor shall have
      notified the Company of the proposed disposition and shall have furnished the
      Company with a statement of the circumstances surrounding the proposed
      disposition, and (b) if requested by the Company, the Investor shall
      have
      furnished the Company with an opinion of counsel satisfactory in form and
      substance to the Company and the Company's counsel to the effect that
      (x) such disposition will not require registration under the Securities
      Act
      and (y) appropriate action necessary for compliance with the Securities
      Act
      and any applicable state, local, or foreign law has been taken. Notwithstanding
      the limitations set forth in the foregoing sentence, if the Investor is a
      partnership or limited liability company it may transfer Notes (or portions
      thereof) to its constituent partners or a retired partner of such partnership
      who retires after the date hereof, or its constituent members or retired members
      of such limited liability company who retires after the date hereof, as the
      case
      may be, or to the estate of any such partner, member or retired partner or
      member or transfer by gift, will, or intestate succession to any such partner's
      or member's spouse or lineal descendants or ancestors without the necessity
      of
      registration or opinion of counsel if the transferee agrees in writing to be
      subject to the terms of this Agreement to the same extent if such transferee
      were an Investor; provided, however, that Investor hereby covenants not to
      effect such transfer if such transfer either would invalidate the securities
      laws exemptions pursuant to which the Notes were originally offered and sold
      or
      would itself require registration and/or qualification under the Securities
      Act
      or applicable state securities laws. Each Note transferred as above provided
      shall bear the appropriate restrictive legend set forth in Section 5
      below,
      except that such Note shall not bear such legend if the transfer was made in
      compliance with subsection (k) of Rule 144 or if the opinion of counsel
      referred to above is to the further effect that such legend is not required
      in
      order to establish compliance with any provisions of the Securities
      Act.

     

    
      
        
        

      

      
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    4.8  Ownership
      Change Under Section 382 of the Internal Revenue Code; Special Restrictions
      Upon
      Transfer.
      

     

    4.8.1  Special
      Restrictions Upon Transfer.
      The
      following restrictions shall apply to the transfer of shares of Common Stock,
      issuable directly or indirectly upon the conversion of any Note.

     

    4.8.2  Definitions.
      For
      purposes of this Section 4.8 the following terms shall have the following
      meanings:

     

                                              
      "Board"
      means
      the Company's Board of Directors.

     

                                              
      "Common
      Stock"
      shall
      mean the Common Stock of the Company, par value $0.01 per share.

     

                                              
      "Section
      382"
      means
      Section 382 of the Internal Revenue Code of 1986, as amended, and the
      regulations thereunder.

                                              
      

                                              
      "Special
      Board Approval"
      shall
      mean the approval by the Board of Directors of the Company acting in accordance
      with applicable law.

     

    4.8.3  Purported
      Transfers Not Effective.
      Unless
      such transfer shall have been preceded by Special Board Approval, any purported
      transfer of Common Stock into which any Note is directly or indirectly
      convertible in excess of the number of shares that can be transferred without
      increasing the transferee's ownership interest percentage above 4.5% is not
      effective to transfer ownership of such excess shares (the "Prohibited
      Shares")
      from
      the transferor (the "Initial
      Transferor")
      to the
      purported acquiror (the "Purported
      Acquiror").
      For
      this purpose a transferee's ownership interest percentage shall be calculated
      pursuant to Section 382. By way of explanation, a transferees ownership interest
      is generally the sum of the transferee's direct ownership interest percentage
      as
      calculated pursuant to Section 382 and the transferee's indirect ownership
      interest as calculated pursuant to Section 382, with adjustments made to include
      ownership interests that, under ordinary circumstances, are not included in
      measuring ownership interests. In the event a Initial Transferor seeks a Special
      Board Approval, to the extent that the transaction reflected in the proposed
      request for a Special Board Approval does not result in an "ownership shift"
      in
      excess of 40% and does not result in an "ownership change" as those terms are
      used in Section 382, the approval of the Board will not be unreasonably
      withheld. Moreover, to the extent that the proceeds of any "ownership shift"
      of
      up to 40% results directly or indirectly in the receipt of cash by the Company,
      the transaction will be presumed to be in the interest of the Company unless
      it
      results in an "ownership change".

     

    
      
        
        

      

      
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    4.8.4  Transfer
      to Agent of Prohibited Shares; Sale by Agent; Payment of
      Proceeds.
      On
      demand by the Company (which demand must be made within 30 days of the time
      Company learns of the transfer of Prohibited Shares), a Purported Acquiror
      must
      transfer any certificate or other evidence of ownership of the Prohibited Shares
      within the Purported Acquiror's possession or control, together with any
      dividends or other distributions that were received by the Purported Acquiror
      from Company with respect to the Prohibited Shares ("Prohibited
      Distributions"),
      to an
      agent designated by Company (the "Agent").
      The
      Agent will sell the Prohibited Shares in an arms-length transaction (over a
      public exchange, if reasonable possible), and the Purported Acquiror will
      receive an amount of sales proceeds not in excess of the price paid or
      consideration surrendered by the Purported Acquiror for the Prohibited Shares
      (or the fair market value of the Prohibited Shares at the time of an attempted
      transfer to the Purported Acquiror by gift, inheritance, or a similar transfer).
      If the Purported Acquiror has resold the Prohibited Shares prior to receiving
      the Company's demand to surrender the Prohibited Shares to the Agent, the
      Purported Acquiror shall be deemed to have sold the Prohibited Shares as agent
      for the Initial Transferor and shall be required to transfer to the Agent any
      Prohibited Distributions and the proceeds of such sale, except to the extent
      that the Agent grants written permission to the Purported Acquiror to retain
      a
      portion of such sales proceeds not exceeding the amount that the Purported
      Acquiror would have received from the Agent if the Agent rather than the
      Purported Acquiror had resold the Prohibited Shares. If the Initial Transferor
      can be identified, the Agent will pay to the Initial Transferor any sales
      proceeds in excess of those due to the Purported Acquiror, together with any
      amounts received by the Agent from the Purported Acquiror that are attributable
      to Prohibited Distributions. If the Initial Transferor cannot be identified
      within 90 days, the Agent may pay any amounts due to the Initial Transferor
      into
      a court or governmental agency, if applicable law permits, and otherwise must
      transfer such amounts to a charity designated by Company. In no event shall
      amounts due to the Initial Transferor pursuant to Article inure to the benefit
      of Company or the Agent, but such amounts may be used to cover expenses incurred
      by Agent in attempting to identify the initial Transferor. If the Purported
      Acquiror fails to surrender the Prohibited Shares within the next 30 business
      days from demand by Company, then the Company will institute legal proceedings
      to compel the surrender.

     

    4.8.5  Legend.
      The
      Investor understands and agrees that each certificate held by the Investor
      representing the Notes and the Common Stock issuable upon conversion thereof,
      or
      any other securities issued in respect of the Notes and Common Stock issuable
      upon conversion thereof upon any stock split, stock dividend, recapitalization,
      merger, consolidation or similar event, shall bear the following legend (in
      addition to any legend required by this Agreement, the other Agreements or
      under
      applicable state securities laws):

     

    "THE
      SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF, AND
      ARE
      SUBJECT TO RESTRICTIONS ON TRANSFER AND RIGHTS OF SALE AS PROVIDED IN A NOTE
      PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE HOLDER HEREOF, OR ITS SUCCESSOR,
      A COPY OF WHICH IS AVAILABLE FROM THE COMPANY."

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
       

      SECTION
        5  CONDITIONS
        OF INVESTOR'S OBLIGATIONS AT CLOSING.

    

     

    The
      obligations of the Investor under Section 1 of this Agreement are subject
      to the fulfillment at or before each of the Closings of the following
      conditions, any of which may be waived in writing by such Investor:

     

    5.1  Representations
      and Warranties.
      The
      representations and warranties of the Company contained in Section 3
      shall
      be true in all respects on and as of the Closing with the same effect as if
      made
      on and as of the Closing.

     

    5.2  Performance.
      The
      Company shall have performed or fulfilled in all material respects all
      agreements, obligations, and conditions contained herein required to be
      performed or fulfilled by the Company before the Closing.

     

    5.3  Qualifications.
      All
      authorizations, approvals, or permits, if any, of any governmental authority
      or
      regulatory body of the United States or any state that are required in
      connection with the lawful issuance and sale of the Notes pursuant to this
      Agreement shall be duly obtained effective as of the Closing.

     

    5.4  Compliance
      Certificate.
      Upon
      request by the Investor the Company shall deliver to the Investor a certificate
      dated as of the Closing, signed by the Company's Secretary, certifying as to
      (a) the Company's Articles, (b) the Company's Bylaws, (c) the
      resolutions adopted by, and other consents and approvals of, the Company's
      Board
      of Directors and stockholders in connection with the Transactional Agreements
      and the transactions contemplated hereby and thereby, and (d) the names
      of
      the officers of the Company authorized to sign the Transactional Agreements
      and
      the other documents or certificates to be delivered pursuant to this Agreement
      by the Company, or any of its officers, together with the true signatures of
      such officers. Upon request by the Investor, the Company shall deliver to the
      Investor a certificate dated as of the Closing, signed by the Company's
      President, certifying that the conditions set forth in Sections 5.1,
      5.2
      and 5.3 have been satisfied.

     

    5.5  Notes.
      The
      Company shall have executed and delivered to Investor the original
      Notes.

     

    5.6  Registration
      Rights Agreement.
      The
      Company shall have executed and delivered to Investor the Registration Rights
      Agreement.

     

    
      SECTION
        6  CONDITIONS
        OF THE COMPANY'S OBLIGATIONS AT CLOSING.

    

     

    The
      obligations of the Company under Section 1 of this Agreement are subject
      to
      the fulfillment at or before the Closing of the following conditions, any of
      which may be waived in writing by the Company:

     

    6.1  Representations
      and Warranties.
      The
      representations and warranties of the Investor contained in Section 4
      shall
      be true in all respects on and as of the Closing with the same effect as though
      said representations and warranties had been made on and as of the
      Closing.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    6.2  Blue
      Sky Compliance.
      The
      Company shall have complied with the securities laws of the State of Texas
      and
      any other applicable states as necessary to offer and sell the Notes to the
      Investor.

     

    6.3  Legal
      Matters.
      All
      material matters of a legal nature which pertain to the Transactional Agreements
      and the transactions contemplated hereby and thereby shall have been reasonably
      approved by counsel to the Company.

     

    6.4  Registration
      Rights Agreement.
      Investor shall have executed and delivered to the Company the Registration
      Rights Agreement.

     

    
      SECTION
        7  POST-CLOSING
        COVENANTS OF THE COMPANY.

    

     

    7.1  Stockholder
      Approval.
      The
      Company shall use reasonable efforts to obtain all required stockholder approval
      of the transactions contemplated by the Transactional Agreements, including
      amending the Articles to increase the number of shares of authorized Common
      Stock to account for conversion of the Notes and all other series of Preferred
      Stock.

     

    7.2  Securities
      Laws Compliance.
      Within
      15 days after the Closing the Company shall make any filings necessary under
      the
      securities or blue sky laws of any applicable jurisdiction.

     

    7.3  Private
      Offering.
      The
      Company agrees that neither the Company nor anyone acting on its behalf will
      offer the Notes or any similar securities for issuance or sale to, or solicit
      any offer to acquire any of the same from, anyone or take any other action
      so as
      to make the issuance and sale of the Notes subject to the registration
      requirements of Section 5 of the Securities Act.

     

    7.4  Properties,
      Business, Insurance.
      The
      Company shall maintain, and cause each of its subsidiaries to maintain, as
      to
      their respective properties and business, insurance against such casualties
      and
      contingencies and of such types and in such amounts as is customary for
      companies similarly situated, of similar size, scope and financial condition,
      which insurance shall be deemed by the Company to be sufficient. 

     

    7.5  Restrictive
      Agreements Prohibited.
      Neither
      the Company nor any of its subsidiaries shall become a party to any agreement
      which by its terms restricts the Company's performance of the Transactional
      Agreements or the Articles.

     

    7.6  Use
      of
      Proceeds.
      The
      Company agrees to use the proceeds from the sale of the Notes for (i) payment
      of
      expenses related to the transactions contemplated by the Transactional
      Agreements, (ii) payment of outstanding accounts payable, and (iii) current
      operating, capital and investment expenses.

     

    7.7  Material
      Changes and Litigation.
      The
      Company shall promptly notify the Investor of any Material Adverse Event and
      of
      any litigation or governmental proceeding or investigation brought or, to the
      Company's knowledge, threatened in writing against the Company, officer,
      director, key employee or principal stockholder of the Company which, if
      adversely determined, would result in a Material Adverse Event.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    7.8  Punctual
      Payment.
      The
      Company shall pay the principal of, premium, if any, and interest on the Notes
      at the times and place and in the manner provided in the Notes and
      herein.

     

    7.9  Preservation
      of Corporate Existence.
      The
      Company shall preserve and maintain its corporate existence and all rights,
      franchises and privileges in the jurisdiction of its organization, and qualify
      and remain qualified as a foreign corporation in each jurisdiction in which
      such
      qualification is necessary or desirable in view of its business and operations
      or the ownership of its properties, except where the failure to qualify would
      not constitute a Material Adverse Event. The Company shall preserve and maintain
      all licenses and other rights to use patents, processes, licenses, trademarks,
      trade names, inventions, Intellectual Property rights or copyrights owned or
      possessed by it, and material to the conduct of its business.

     

    7.10  Compliance
      with Laws.
      The
      Company shall comply, and cause each Subsidiary to comply, with all applicable
      laws, rules, regulations and orders of any governmental authority, noncompliance
      with which could materially adversely affect its business or condition,
      financial or other.

     

    7.11  Keeping
      of Records and Books of Account.
      The
      Company shall keep adequate records and books of account, in which complete
      entries will be made in accordance with GAAP consistently applied, reflecting
      all material financial transactions of the Company and in which, for each fiscal
      year, are proper reserves for depreciation, depletion, obsolescence,
      amortization, taxes, bad debts and other purposes in connection with its
      business shall be made.

     

    7.12  Compliance
      with ERISA.
      The
      Company shall comply with all minimum funding requirements applicable to any
      pension or other employee benefit or employee contribution plans which are
      subject to ERISA or to the Code, and comply in all material respects with the
      provisions of ERISA and the Code, and the rules and regulations thereunder,
      which are applicable to any such plan. The Company will not permit any event
      or
      condition to exist which could permit any such plan to be terminated under
      circumstances which would cause the lien provided for in Section 4068
      of
      ERISA to attach to the assets of the Company.

     

    7.13  Foreign
      Corrupt Practices Act.
      The
      Company shall comply and cause each officer, director, partner, employee and
      agent of the Company, each Subsidiary to comply, at all times with the
      prohibitions on certain acts and practices set forth in the Foreign Corrupt
      Practices Act of 1977, and any rules or regulations promulgated
      thereunder.

     

    7.14  Exchange
      Relisting.
      The
      Company shall use its best efforts to obtain listing of its Common Stock on
      the
      Nasdaq SmallCap Market and the Toronto Stock Exchange.

     

    
      SECTION
        8  MISCELLANEOUS.

    

     

    8.1  Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Texas, excluding those laws that direct the application of the
      laws
      of another jurisdiction.

     

    8.2  Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    8.3  Headings.
      The
      headings of the sections of this Agreement are for convenience and shall not
      by
      themselves determine the interpretation of this Agreement.

     

    8.4  Notices.
      Any
      notice required or permitted hereunder shall be given in writing and shall
      be
      conclusively deemed effectively given upon personal delivery or delivery by
      courier, or on the first business day after transmission if sent by confirmed
      facsimile transmission or electronic mail transmission, or five days after
      deposit in the United States mail, by registered or certified mail, postage
      prepaid, addressed (i) if to the Company, as set forth below the Company's
      name on the signature page of this Agreement, and (ii) if to an Investor,
      at such Investor's address as set forth on the Signature page of this Agreement,
      or at such other address as the Company or such Investor may designate by 10
      days' advance written notice to the other parties hereto.

     

    8.5  Survival
      of Warranties.
      The
      warranties and representations of the parties contained in or made pursuant
      to
      this Agreement shall survive for two years after the execution and delivery
      of
      this Agreement and the First Closing; provided, however, that such
      representations and warranties need only be accurate as of the date of such
      execution and delivery and as of the Closing.

     

    8.6  Amendments,
      Waivers and Consent.
      Any
      provision in this Agreement or the Notes to the contrary notwithstanding,
      changes in or additions to this Agreement may be made, and compliance with
      any
      covenant or provision herein or therein set forth may be omitted or waived,
      if
      the Company shall obtain consent thereto in writing from the holder of the
      Notes; provided
      that no
      such consent shall be effective to reduce or to postpone the date fixed for
      the
      payment of the principal (including any required redemption) or interest payable
      on the Notes, without the consent of the holder thereof. Any waiver or consent
      may be given subject to satisfaction of conditions stated therein and any waiver
      or consent shall be effective only in the specific instance and for the specific
      purpose for which given. Written notice of any waiver or consent effected under
      this subsection shall promptly be delivered by the Company to any holder who
      did
      not execute the same. No failure or delay on the part of the Investor, or any
      other holder of the Notes in exercising any right, power or remedy hereunder
      shall operate as a waiver thereof, nor shall any single or partial exercise
      of
      any such right, power or remedy preclude any other or further exercise thereof
      or the exercise of any other right, power or remedy hereunder. The remedies
      herein provided are cumulative and not exclusive of any remedies provided by
      law.

     

    8.7  Finders'
      Fees.
      The
      Company and the Investor will indemnify the other against all liabilities
      incurred by the indemnifying party with respect to claims related to investment
      banking or finders' fees in connection with the transactions contemplated by
      this Agreement, arising out of arrangements between the party asserting such
      claims and the indemnifying party, and all costs and expenses (including
      reasonable fees of counsel) of investigating and defending such
      claims.

     

    8.8  Expenses.
      The
      Company and the Investor will bear their respective legal and other fees and
      expenses with respect to this Agreement and the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    8.9  Confidentiality.
      Each
      party hereto agrees that, except with the prior written permission of the
      Company, it shall at all times keep confidential and not divulge or furnish
      or
      make accessible to anyone any confidential information concerning or relating
      to
      the business or financial affairs of the Company to which such party has become
      privy by reason of this Agreement, discussions or negotiations relating to
      this
      Agreement or the exhibits to this Agreement, provided that an Investor may
      disclose confidential information if (i) the information is publicly
      known
      through publication or otherwise through no wrongful act of the Investor;
      (ii) the information is received from a third party who rightfully
      discloses it to the Investor without restriction on its subsequent disclosure;
      (iii) the information is disclosed pursuant to the lawful requirement
      of a
      governmental agency or by order of court of competent jurisdiction, provided
      that in such event, Investor will provide prior written notice of such proposed
      disclosure to the Company; or (iv) the information is reasonably required
      to be disclosed in order for the Investor or their transferee to market an
      interest in the capital stock of the Company, provided that in such instance
      the
      person to whom the information is provided shall be required to hold such
      information in confidence.

     

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

     

    8.11  Jury
      Waiver.
      THE
      COMPANY AND THE INVESTOR AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR
      SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
      COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT
      OR ANY OF THE OTHER TRANSACTIONAL AGREEMENTS, ANY RELATED INSTRUMENTS, ANY
      COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM,
      OR
      (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
      A
      JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; PROVIDED, HOWEVER, THAT THE
      FOREGOING SHALL NOT PRECLUDE ANY PARTY OR ITS SUCCESSORS FROM ASSERTING ANY
      COUNTERCLAIM WHICH WOULD OTHERWISE BE BARRED OR FORFEITED. EXCEPT AS STATED
      IN
      THE PRECEDING SENTENCE, THE PROVISIONS OF THIS SECTION SHALL BE SUBJECT TO
      NO
      EXCEPTIONS. NEITHER THE COMPANY NOR ANY OF THE INVESTOR HAS AGREED WITH OR
      REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY
      ENFORCED IN ALL INSTANCES.

     

    8.12  Entire
      Agreement; Successors and Assigns.
      This
      Agreement (and the exhibits hereto) constitutes the entire contract between
      the
      Company and the Investor relative to the subject matter hereof. Any prior and
      contemporaneous agreement, discussion, understanding or correspondence between
      the Company and the Investor regarding the purchase of the Notes is superseded
      by this Agreement. Subject to the exceptions specifically set forth in this
      Agreement, the terms and conditions of this Agreement shall inure to the benefit
      of and be binding upon the respective executors, administrators, heirs,
      successors, and assigns of the parties. All subsequent transferees or assigns
      of
      the Notes shall be deemed a party to this Agreement and bound by the obligations
      imposed upon Investor herein.

    


    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Note Purchase Agreement
      as of the date first above written.

     

    
      	 	 	 
	 COMPANY: 	POSITRON
              CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/
              Gary H. Brooks
	 	
              Gary
                H. Brooks, President

              Address: 1304
                Langham Creek Drive, #300, 
                                 
                  Houston, Texas 77084

              

            


    

     

     

    
      	 	 	 
	 INVESTOR: 	
              IMAGIN
                DIAGNOSTIC CENTRES, INC.

            
	 
 	 
 	 
 
	Date: 	By:  	/s/ Cynthia
              R. Jordan
	 	
              Name:
                Cynthia R. Jordan

              Its: President

              
                Address:
                   1835
                  Yonge St., Suite 500

                                  
                  Toronto, Ontario, Canada M4S 

              

            


    

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    SCHEDULES
      AND EXHIBITS

     

    Exhibit A     Convertible
      Promissory Note

     

    Exhibit B     Registration
      Rights Agreement

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

     

    CONVERTIBLE
      PROMISSORY NOTE

     

     

     

     

    EXHIBIT
      A

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

     

    REGISTRATION
      RIGHTS AGREEMENT

     

     

     

     

    EXHIBIT
      B

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    
      
        

      

       

    

    
      

    

     

    POSITRON
      CORPORATION

     

    NOTE
      PURCHASE AGREEMENT

     

    
      

    

     

    
      
        

      

    

     

     

     

     

    August
      8,
      2005