exhibit10-96.htm


    
      

      

    

    Exhibit
10.96

    


    EXHIBIT
D

    


    [Letterhead
of Carlton Fields, P.A.]

    
      	
              Robert
      B. Macaulay

              305.530.0500

              rmacaulay@carltonfields.com

               

            


    

    


    


    


    


    November
20, 2008

    


    


    Whalehaven
Capital Fund Limited

    560
Sylvan Avenue, 3rd
Floor

    Englewood
Cliffs, New Jersey 07632

    


    Ref.:
Imaging Diagnostic
Systems, Inc., a Florida corporation (the “Company”)

    


    Ladies
and Gentlemen,

    


    We have acted as counsel to the
Company, in connection with the execution and delivery by the Company of the
Securities Purchase Agreement, dated as of November 20, 2008 (the “Purchase Agreement”),
by and among the Company and the purchasers identified on the signature pages
thereto (the “Purchasers”).  This
opinion is given to you pursuant to Section 2.2(a)(ii) of the Purchase
Agreement. Unless otherwise defined herein, capitalized terms used herein have
the meanings ascribed to such terms in the Purchase Agreement.

    


    In connection with the opinions
expressed below, we have examined and relied upon originals or copies, certified
or otherwise identified to our satisfaction, of various documents, including,
without limitation, the following:

    


    
      	
               
      

            	
              (i) 
      the Purchase Agreement;

            


    

    


    
      	
               
      

            	
              (ii)
       the Security Agreement entered into by and among the Company and the
      Purchasers and the Security Documents (as defined in the Purchase
      Agreement), dated November 20,
2008;

            


    

    


    
      	
               
      

            	
              (iii)
      the Registration Rights Agreement entered into by and among the Company
      and the Purchasers, dated as of November 20,
  2008;

            


    

    


    
      	
               
      

            	
              (iv)
       the 8% Senior Secured Convertible Debentures Due November 20, 2009,
      issued by the Company in favor of the Purchasers, dated as of November 20,
      2008;

            


    

    


    
      	
               
      

            	
              (v) 
      Certificate of Allan L. Schwartz, Executive Vice President and Chief
      Financial Officer of the Company, dated as of November 20, 2008, regarding
      certain factual matters (the “Officer’s
  Certificate”).

            


    

     

    The
documents listed in clauses (i) to (iv) above may be referred to collectively as
the “Transaction
Documents.”  In addition, we also have examined originals or
copies, certified or otherwise identified to our satisfaction, of such other
documents, certificates, 

    


    
      
        
           


        

        
          
          

          
            

          

        

        
           


          
            Whalehaven
Capital Fund Limited

            November
20, 2008

            Page of
2 of 6 

            


          

        

      

    

    


     

    and
records of the Company, public officials and other persons, and have examined
such matters of law, as we have deemed necessary or appropriate as a basis for
the opinions expressed below.

    


      As
to any facts material to our opinions expressed below, you have specifically
authorized us to rely upon, and assume as accurate and complete, and we
therefore have relied upon and assumed to be accurate and complete, the
following, without any independent verification, investigation, or research of
any kind: certificates of public officials, statutes and published rules and
regulations, the Officer’s Certificate, statements and representations of the
officers and other representatives of the Company as they relate to any facts
material to the opinions expressed below, and the accuracy of the facts,
information, covenants, and representations in the Transaction Documents and
other documents listed or described above.

     

    We have
not, except as specifically identified herein, been retained or engaged to
perform and, accordingly, have not performed, any independent review or
investigation of any statutes, ordinances, laws or regulations, other than those
related to the corporate laws of the State of Florida, or agreements, contracts,
instruments, or corporate records (other than as indicated above) or, orders,
writs, judgments, rules or decrees to which the Company may be a party or to
which the Company or any property thereof may be bound.

     

    In our
examination, you also have authorized us to assume, and we therefore have
assumed, without undertaking any independent investigation, research, or
verification of any kind that:

     

    1.  all natural persons
executing the Transaction Documents on behalf of all parties thereto have the
legal capacity to execute such documents;

     

    2.  all parties, other than
the Company or persons acting on the Company’s behalf (collectively, the “Other
Parties”) to the Transaction Documents, are duly organized and validly
existing;

     

    3.  all copies of
instruments examined by us are true and correct copies of the originals thereof,
all documents submitted to us as originals are authentic, all documents
submitted to us as certified or photostatic copies conform to the original
documents, and all signatures thereon are genuine;

     

    4.  the power and full
authority (corporate or otherwise) of each of the Other Parties to execute,
deliver and perform its obligations under each of the Transaction Documents to
which it is stated to be a party;

     

    5.  each of the Transaction
Documents has been duly authorized, executed, and delivered by, and constitutes
legal, valid and binding obligations of, the Other Parties thereto, enforceable
against each of the Other Parties thereto in accordance with its
terms;

     

    6.  there are no other
agreements or understandings among the parties that would modify the terms of
the Transaction Documents or the respective rights or obligations of the parties
to the Transaction Documents;

     

    


    
      
        
           


        

        
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            Whalehaven
Capital Fund Limited

            November
20, 2008

            Page of 3
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    7.  the laws of any
jurisdiction, other than the State of Florida, which govern the Transaction
Documents are identical to the laws of the State of Florida in all respects
material to the opinion as to the enforceability of the Transaction
Documents.

     

    Whenever
any of our opinions herein is stated to be “to our knowledge”, or words or
phrases of similar meaning, it shall mean that there is nothing in the current
conscious awareness of Robert B. Macaulay, who constitutes the only attorney of
this firm who has had substantial participation in our firm’s representation of
the Company in connection with the Agreement and the transactions contemplated
thereby, that would lead such attorney to conclude that such opinion is not
correct.  Except to the extent expressly set forth herein, neither
this firm nor such attorney has undertaken any independent verification,
investigation, or research of any kind to determine the existence or absence of
such facts, and no inference as to this firm’s or such attorney’s knowledge of
the existence or absence of such facts should be or may be drawn from such
representation of the Company.

     

    Based
solely upon the foregoing, and in reliance thereon, and subject to the foregoing
and the exclusions, assumptions and qualifications contained below, we are of
the opinion that:

     

    1. 
The Company is a corporation duly organized, validly existing and in good
standing under the laws of Florida. The Company has all requisite power and
authority, and is in possession of all material governmental licenses,
authorizations, consents and approvals, that are required to own and operate its
properties and assets and to carry on its business as now conducted and as
proposed to be conducted (all as described in the Company’s Annual Report on
Form 10-K for its fiscal year ended June 30, 2008). The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to qualify could have a Material Adverse Effect.

     

    2.  The Company has the
corporate power and authority (i) to execute, deliver and perform the
Transaction Documents, (ii) to issue, sell and deliver the Debentures and the
Underlying Shares pursuant to the Transaction Documents and (iii) to carry out
and perform its obligations under, and to consummate the transactions
contemplated by, the Transaction Documents.

     

    3.  All action on the part
of the Company, its directors and its stockholders necessary for the
authorization, execution and delivery by the Company of the Transaction
Documents, the authorization, issuance, sale and delivery of the Debentures
pursuant to the Agreement, the issuance and delivery of the Underlying Shares
and the consummation by the Company of the transactions contemplated by the
Transaction Documents has been duly taken.  The Transaction Documents
have been duly and validly executed and delivered by the Company and constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.

     

    4.  After giving effect to
the transactions contemplated by the Agreement, and immediately after the
Closing, the authorized capital stock of the Company will consist of: an
aggregate of 450,000,000 shares of Common Stock, of which 383,470,710 shares
will be issued and outstanding and 41,419,729 shares will be reserved for
issuance upon conversion of issued and outstanding options, warrants and other
derivative securities, and 21,764,082 shares will be reserved for issuance to
employees, officers and directors under the Company’s 1995, 2000
and  2002 Stock Option Plans and 2004 and 2007 Non-Statutory Stock
Option Plans, of which 8,878,847 shares are subject to currently

     

    


    
      
        
           


        

        
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            Whalehaven
Capital Fund Limited

            November
20, 2008

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    outstanding
incentive stock option grants.  The Company has informed us that,
immediately upon receipt of the Authorized Share Approval and filing of the
Amendment, it will reserve 22,750,000 shares for issuance upon conversion of the
Debentures.  All presently issued and outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable and free of any preemptive or similar rights, and have been issued
in compliance with applicable securities laws and regulations.  The
Debentures which are being issued on the date hereof pursuant to the Agreement
have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive or similar rights, and have been issued in
compliance with applicable securities laws, rules and
regulations.  Upon receipt of the Authorized Share Approval and filing
of the Amendment, the Underlying Shares will be duly and validly authorized and
reserved for issuance, and when issued upon the conversion of the Debentures in
accordance with the respective terms therein, will be validly issued, fully paid
and nonassessable, and free of any preemptive or similar rights.  To
our knowledge, except for rights described in Schedule 3.1(g) of the Agreement,
there are no other options, warrants, conversion privileges or other rights
presently outstanding to purchase or otherwise acquire from the Company any
capital stock or other securities of the Company, or any other agreements to
issue any such securities or rights.  The rights, privileges and
preferences of the Common Stock are as stated in the Company’s Articles of
Incorporation, as amended.

     

    5.  To our knowledge, the
Company has filed all reports (the “SEC Reports”)
required to be filed by it under Sections 13(a) and 15(d) of the Exchange Act of
1934, as amended (the “Exchange Act”). As of
their respective filing dates, the SEC Reports complied in all material respects
as to form with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder.

     

    6.  Based in part upon the
representations of the Purchasers contained in the Agreement, the Debentures and
the Underlying Shares may be issued to the Purchasers without registration under
the Securities Act of 1933, as amended.

     

    7.  The execution, delivery
and performance by the Company of, and the compliance by the Company with the
terms of, the Transaction Documents and the issuance, sale and delivery of the
Debentures and the Underlying Shares pursuant to the Agreement do not (a)
conflict with or result in a violation of any provision of law, rule or
regulation applicable to the Company or of the articles of incorporation or
by-laws or other similar organizational documents of the Company, (b) conflict
with, result in a breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or result in or
permit the termination or modification of, any material agreement, instrument,
order, writ, judgment or decree known to us to which the Company is a party or
is subject or (c) other than as set forth in the Transaction Documents, result
in the creation or imposition of any lien, claim or encumbrance on any of the
assets or properties of the Company. 

     

    8.  To our knowledge,
except as set forth in the Disclosure Schedule to the Agreement, there is no
claim, action, suit, proceeding, arbitration, investigation or inquiry, pending
or threatened, before any court or governmental or administrative body or
agency, or any private arbitration tribunal, against the Company, or any of the
officers, directors or employees (in connection with the discharge of their
duties as officers, directors and employees) of the Company, or affecting any of
its properties or assets that could have a Material Adverse Effect.

     

    


    
      
        
           


        

        
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            Whalehaven
Capital Fund Limited

            November
20, 2008

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    9.  In connection with the
execution, delivery and performance by the Company of the Transaction Documents,
or the offer, sale, issuance or delivery of the Debentures and the
Underlying Shares or the consummation of the transactions contemplated thereby,
no consent, license, permit, waiver, approval or authorization of, or
designation, declaration, registration or filing with, any court, governmental
or regulatory authority, or self-regulatory organization, is
required.

     

    10.  The Company is not,
and after the consummation of the transactions contemplated by the Transaction
Documents shall not be, an Investment Company within the meaning of the
Investment Company Act of 1940, as amended.

     

    11. 
The Security Agreement is sufficient to grant the Purchasers a security
interest in the Company’s assets specified therein, and upon filing the UCC-1 in
the office of the Secretary of State of the State of Florida, such security
interest shall be perfected as to those items of collateral which can be
perfected by the filing of such UCC-1.

     

    The
opinions set forth above are subject to the following exceptions:

    


    A. 
We are not licensed to practice law in any jurisdiction other than the State of
Florida.  In rendering this opinion letter, we do not express any
opinion concerning any law other than the law of the State of Florida and the
federal law of the United States of America.  To the extent the
opinions expressed above concern the laws of any jurisdiction other than the
State of Florida, as they relate to the enforceability of contracts, as
indicated previously, we have assumed such law is substantially similar to the
laws of the State of Florida.

    


    B. 
Without limiting the generality of the foregoing, we express no opinion as to
the applicability of any bankruptcy or insolvency laws or regulations, or
environmental laws or regulations of the United States or any state or other
jurisdiction.

    


    C. 
To the extent that we express an opinion as to the enforceability of any
contracts or agreements, such opinion is subject to the following
exceptions:  (i) that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or other similar laws, now or hereafter in
effect, affecting creditors’ rights generally, and general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity), (ii) that the remedies of specific performance and injunctive relief
and other forms of equitable remedies are subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefore may be
brought, (iii) that rights to indemnity and contribution may be limited by
federal or state securities laws or the public policy underlying such laws, and
that the enforceability of rights to indemnification and contribution under such
agreements may be limited by applicable securities laws or the public policy
underlying such laws, (iv) that we express no opinion as to the enforceability
of any liquidated damages provisions, and (v) that enforceability may be limited
by an implied covenant of fair dealing and good faith.

    


    This opinion is limited to the laws in
effect as of the date hereof and we assume no obligation to advise you of any
changes in the foregoing subsequent to the delivery of this opinion
letter.  This opinion letter is rendered only to you and can be relied
upon solely by you.  This opinion letter may not be relied upon by you
for any other purpose, and may not

    


    
      
        
           


        

        
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            Whalehaven
Capital Fund Limited

            November
20, 2008

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    be
furnished, quoted, or referenced to anyone else, including without limitation,
any governmental agency, without the prior written consent of this
firm.

    


                                         
 Sincerely,

    


                                          
CARLTON FIELDS, P.A.

    


    


                                          
By: /s/ Robert B.
Macaulay

    


                                        
  Robert B. Macaulay

    


     

     

     

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