Exhibit 10.5


 


CORGENIX
MEDICAL CORPORATION


 


SECURITIES
PURCHASE AGREEMENT


 


DECEMBER 28,
2005


 





















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  AGREEMENT TO SELL AND PURCHASE

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.

  	
  FEES AND WARRANTS

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CLOSING, DELIVERY, PAYMENT AND
  CERTAIN CONDITIONS

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Closing

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Delivery

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Conversion and Lockup

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Optional Redemption of Principal Amount

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  [Reserved.]

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES
  OF THE COMPANY

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Organization, Good Standing and Qualification

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Subsidiaries

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Capitalization; Voting Rights

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Authorization; Binding Obligations

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Liabilities

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Agreements; Action

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Obligations to Related Parties

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.8

  	
  Changes

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.9

  	
  Title to Properties and Assets; Liens, Etc

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.10

  	
  Intellectual Property

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.11

  	
  Compliance with Other Instruments

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.12

  	
  Litigation

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.13

  	
  Tax Returns and Payments

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.14

  	
  Employees

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.15

  	
  Registration Rights and Voting Rights

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.16

  	
  Compliance with Laws; Permits

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.17

  	
  Environmental and Safety Laws

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.18

  	
  Valid Offering

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.19

  	
  Full Disclosure

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.20

  	
  Insurance

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.21

  	
  SEC Reports

  	
  12

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  4.22

  	
  Listing

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.23

  	
  No Integrated Offering

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.24

  	
  Stop Transfer

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.25

  	
  Dilution

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.26

  	
  Patriot Act

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS AND WARRANTIES
  OF THE PURCHASER

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  No Shorting

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Organization, Good Standing and Qualification

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Requisite Power and Authority

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Investment Representations

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  The Purchasers Bear Economic Risk

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Acquisition for Own Account

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  The Purchasers Can Protect Their Interest

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.8

  	
  Accredited Investor

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9

  	
  Legends

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  COVENANTS OF THE COMPANY

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Stop-Orders

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Authorization and Listing

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Market Regulations

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Reporting Requirements

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5

  	
  Use of Funds

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  Access to Facilities

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.7

  	
  Taxes

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.8

  	
  Insurance

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.9

  	
  Intellectual Property

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.10

  	
  Properties

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.11

  	
  Confidentiality

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.12

  	
  Required Approvals

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.13

  	
  Repayment of Indebtedness

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.14

  	
  Reissuance of Securities

  	
  21

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  6.15

  	
  Opinion

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.16

  	
  Margin Stock

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.17

  	
  [Reserved.]

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.18

  	
  Financing Right of First Refusal

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.19

  	
  [Reserved.]

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.20

  	
  Net Worth

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.21

  	
  Retention of Investor Relations/Public Relations
  Firm and Program

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  COVENANTS OF THE PURCHASERS

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Confidentiality

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Non-Public Information

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Amendment to Articles of Incorporation

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  COVENANTS OF THE COMPANY AND THE
  PURCHASERS REGARDING INDEMNIFICATION

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Company Indemnification

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  The Purchasers’ Indemnification

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  CONVERSION OF CONVERTIBLE TERM
  NOTES

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Mechanics of Conversion

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  REGISTRATION RIGHTS

  	
  25

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Registration Rights Granted

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Offering Restrictions

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  MISCELLANEOUS

  	
  25

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Governing Law

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Survival

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3

  	
  Successors

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4

  	
  Entire Agreement

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  Amendment and Waiver

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.6

  	
  Delays or Omissions

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.7

  	
  Notices

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.8

  	
  Attorneys’ Fees

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.9

  	
  Titles and Subtitles

  	
  28

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  11.10

  	
  Facsimile Signatures; Counterparts

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.11

  	
  Broker’s Fees

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.12

  	
  Construction

  	
  28

  



 


iv





















 


SECURITIES PURCHASE AGREEMENT


 


THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and
entered into as of December 28,
2005, by and among Corgenix Medical Corporation, a Nevada corporation (the “Company”),
and Truk Opportunity Fund, LLC, a Delaware company (“Truk Opportunity”), Truk
International Fund, LP, a Cayman Islands company (“Truk International”), and CAMOFI
Master LDC, a Cayman Islands company, formerly named DCOFI Master LDC, (“CAMOFI”)
(Truk Opportunity, Truk International and CAMOFI, each a “Purchaser” and
together the “Purchasers”).


 


RECITALS


 


WHEREAS, Section 6.19 of that certain Securities Purchase
Agreement between the Purchasers and the Company dated as of May 19, 2005
granted the Purchasers an additional investment right;


 


WHEREAS, the Purchasers wish to exercise such additional investment
right and the Company has authorized the sale to the Purchasers of Convertible
Term Notes in the aggregate principal amount of One Million Five Hundred
Thousand Dollars ($1,500,000) (each as amended, modified or supplemented from
time to time, a “Term Note”), which Term Notes are convertible into shares of
the Company’s common stock, $0.001 par value per share (the “Common Stock”) at
an initial fixed conversion price of $0.30 per share of Common Stock (“Fixed
Conversion Price”);


 


WHEREAS, the Company wishes to issue warrants to the Purchasers to
purchase in the aggregate up to 60% of the number of shares of the Company’s
Common Stock issuable through the conversion of the total amount being invested
by the Purchasers, or One Million Five Hundred Thousand Dollars ($1,500,000)
(the “Total Investment Amount”) (subject to adjustment as set forth therein) in
connection with the Purchasers’ purchase of the Term Notes;


 


WHEREAS, the Purchasers desire to purchase the Term Notes and the
Warrants (as defined in Section 2) on the terms and conditions set forth
herein;


 


WHEREAS, the Company desires to issue and sell the Term Notes and the
Warrants to the Purchasers on the terms and conditions set forth herein; and


 


WHEREAS, the Company has entered into a definitive Preferred Stock
Purchase Agreement and related transaction documents with Barron Partners LP (“Barron”)
and Barron has funded the full consideration owed to the Company thereby into
an escrow account (the “Barron Financing”).


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set
forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 





















 


1.                                       Agreement
to Sell and Purchase.


 


(a)                                  Pursuant to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined in Section 3), the
Company agrees to sell to the Purchasers, and the Purchasers, severally and not
jointly, hereby agree to purchase from the Company, Term Note in the principal
amount and at the purchase price set forth opposite such Purchaser’s name on
Schedule I hereto convertible in accordance with the terms thereof into
shares of the Company’s Common Stock in accordance with the terms of such Term
Note and this Agreement. It is understood and agreed that the purchases by the
Purchasers are to be separate transactions. The purchase of the Term Notes on
the Closing Date shall be known as the “Offering.” A form of the Term Notes are
annexed hereto as Exhibit A. The Term Notes will mature on the Maturity Date
(as defined in the Term Notes). Collectively, the Term Notes, the Warrants and
Common Stock issuable upon conversion of the Term Notes and upon exercise of
the Warrants are referred to as the “Securities.”


 


2.                                       Fees
and Warrants.  On the Closing Date:


 


(a)                                  The Company will issue and deliver to
each Purchaser a Warrant to purchase up to that number of shares of the Company’s
Common Stock set forth opposite the name of such Purchaser on Schedule I
hereto (as amended, modified or supplemented from time to time, a “Warrant”).
The Warrants must be delivered on the Closing Date. A form of Warrant is
annexed hereto as Exhibit B. All the representations, covenants, warranties,
undertakings, and indemnification, and other rights made or granted to or for
the benefit of the Purchasers by the Company are hereby also made and granted
in respect of the Warrants and shares of the Company’s Common Stock issuable
upon exercise of the Warrants (the “Warrant Shares”).


 


(b)                                 The Company shall pay (i) to RAM Capital
Resources, LLC, the manager of Truk Opportunity and Truk International, a
closing payment in an amount equal to three and one half percent (3.5%) of
34.09090909% of the Total Investment Amount and (ii) to Centrecourt Asset
Management LLC, the manager of CAMOFI, a closing payment in an amount equal to
three and one half percent (3.5%) of 65.90909090% of the Total Investment
Amount. The foregoing fees are referred to herein as the “Closing Payment.”


 


(c)                                  The Company shall pay to Ascendiant
Securities, LLC an agent fee of 10%
of the Total Investment Amount.


 


(d)                                 The Company shall reimburse the
Purchasers for their reasonable expenses (including legal fees and expenses)
incurred in connection with the preparation and negotiation of this Agreement
and the Related Agreements (as hereinafter defined), and expenses incurred in
connection with the Purchasers’ due diligence review of the Company and its
Subsidiaries (as defined in Section 4.2) and all related matters. Amounts required
to be paid under this Section 2(d), will be paid on the Closing Date.


 


(e)                                  The Closing Payment and the expenses
referred to in the preceding clauses (c) and (d) (net of deposits previously
paid by the Company) shall be paid at closing out


 


2





















 


of funds held pursuant to an Escrow Agreement (as
defined below) and a disbursement letter (the “Disbursement Letter”).


 


3.                                       Closing,
Delivery, Payment and Certain Conditions.


 


3.1                                 Closing.  Subject to the terms and conditions herein,
the closing of the Offering (the “Closing”), shall take place on the date
hereof, at such time or place as the Company and the Purchasers may mutually
agree (such date is hereinafter referred to as the “Closing Date”).


 


3.2                                 Delivery.  Pursuant to the Escrow Agreement, at the
Closing on the Closing Date, the Company will deliver to the Purchasers, among
other things, Term Notes in the form attached as Exhibit A representing the
aggregate principal amount of $1,500,000 and Warrants in the form attached as
Exhibit B in each Purchaser’s name representing in the aggregate 60% of the
number of shares of the Company’s Common Stock issuable through conversion of
the Total Investment Amount, and each Purchaser will deliver to the Company,
among other things, the amounts set forth to be delivered by it in the
Disbursement Letter by certified funds or wire transfer.


 


3.3                                 Conversion
and Lockup.  Prior to the Closing
Date, the Company shall have caused its directors, controlling shareholders and
certain other persons requested by the Purchasers to agree to “lockup” and not
sell their shares of Common Stock of the Company, pursuant to documentation,
and on terms and conditions, acceptable to the Purchasers.


 


3.4                                 Optional
Redemption of Principal Amount.  The
Company covenants that should it exercise its right of optional redemption of
the principal amounts under the Term Notes and/or those certain secured
convertible term notes dated as of May 19, 2005 (the “May 19th Notes”),
it shall repay the Term Notes in their entirety before it repays the May 19th
Notes.


 


3.5                                 [Reserved.] 


 


4.                                       Representations
and Warranties of the Company.  The
Company hereby represents and warrants to the Purchasers as follows (which
representations and warranties are supplemented by the Company’s filings under
the Securities Exchange Act of 1934, as amended, made prior to the date of this
Agreement (collectively, the “Exchange Act Filings”), copies of which have been
provided to the Purchasers):


 


4.1                                 Organization,
Good Standing and Qualification. 
Each of the Company and each of its Subsidiaries is a corporation,
partnership or limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization.  Each of the Company and
each of its Subsidiaries has the corporate, partnership or limited liability
company, as the case may be, power and authority to own and operate its
properties and assets, to execute and deliver (i) this Agreement,
(ii) the Term Notes and the Warrants to be issued in connection with this
Agreement, (iii) the Registration Rights Agreement relating to the
Securities dated as of the date hereof among the Company and the Purchasers (as
amended, modified or supplemented from time to time, the “Registration Rights
Agreement”), (iv) the Escrow Agreement dated as of the date hereof among
the Company, the Purchasers and the escrow agent referred to therein,
substantially in the form of Exhibit D hereto (as amended,


 


3





















 


modified or
supplemented from time to time, the “Escrow Agreement”), and (v) all other
agreements related to this Agreement and the Term Note and referred to herein
(the preceding clauses (ii) through (iv), the Subsidiary Guaranty dated as of
May 19, 2005 made by certain Subsidiaries of the Company (as amended,
modified or supplemented from time to time, the “Subsidiary Guaranty”), the
Stock Pledge Agreement dated as of May 19, 2005 among the Company, certain
Subsidiaries of the Company and the Purchasers (as amended, modified or
supplemented from time to time, the “Stock Pledge Agreement”), and the
Subordination Agreement dated as of May 19, 2005 among the Purchasers and
the subordinated creditors party thereto, and acknowledged and agreed to by the
Company (as amended, modified or supplemented from time to time, the
Subordination Agreement”), collectively, the “Related Agreements”), to issue
and sell the Term Notes and the shares of Common Stock issuable upon conversion
of the Term Notes (other than the shares of Common Stock issuable upon
conversion of the Term Note that will be issuable upon approval and adoption of
the Share Increase Amendment), as defined below (the “Note Shares”), to issue
and sell the Warrants and the Warrant Shares (other than the Warrant Shares
that will be issuable upon approval and adoption of the Share Increase
Amendment), and to carry out the provisions of this Agreement and the Related
Agreements and to carry on its business as presently conducted.  Each of the Company and each of its
Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign corporation, partnership or limited liability company, as
the case may be, in all jurisdictions in which the nature of its activities and
of its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so has not, or would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, assets, liabilities, condition (financial or
otherwise), properties, operations or prospects of the Company and its
Subsidiaries, taken individually and as a whole (a “Material Adverse Effect”).  Corgenix (UK) Ltd. owns no material assets in
the United States.


 


4.2                                 Subsidiaries.  Each direct and indirect Subsidiary of the
Company, the direct owner of such Subsidiary and its percentage ownership
thereof, is set forth on Schedule 4.2. 
For the purpose of this Agreement, a “Subsidiary” of any person or
entity means (i) a corporation or other entity whose shares of stock or other
ownership interests having ordinary voting power (other than stock or other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
persons or entities performing similar functions for such person or entity, are
owned, directly or indirectly, by such person or entity or (ii) a corporation
or other entity in which such person or entity owns, directly or indirectly,
more than 50% of the equity interests at such time.


 


4.3                                 Capitalization;
Voting Rights.


 


(a)                                  The authorized capital stock of the
Company, as of the date hereof consists of 45,000,000 shares, of which
40,000,000 are shares of Common Stock, par value $0.001 per share, 9,325,305
shares of which are issued and outstanding, and 5,000,000 are shares of
preferred stock, par value $0.001 per share, 2,000,000 of which are issued and
outstanding.  The authorized capital
stock of each Subsidiary of the Company is set forth on Schedule 4.3.


 


(b)                                 Except as disclosed on Schedule 4.3,
other than:  (i) the shares reserved for
issuance under the Company’s stock option plans; and (ii) shares which may be


 


4





















 


granted pursuant to this Agreement and the Related
Agreements, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or arrangements or agreements of any kind for the
purchase or acquisition from the Company of any of its securities. Except as
disclosed on Schedule 4.3, neither the offer, issuance or sale of any of
the Term Notes or the Warrants, or the issuance of any of the Note Shares or
Warrant Shares, nor the consummation of any transaction contemplated hereby
will result in a change in the price or number of any securities of the Company
outstanding, under anti-dilution or other similar provisions contained in or
affecting any such securities.


 


(c)                                  All issued and outstanding shares of the
Company’s Common Stock:  (i) have been
duly authorized and validly issued and are fully paid and nonassessable; and
(ii) were issued in compliance in all material respects with all applicable state
and federal laws concerning the issuance of securities.


 


(d)                                 The rights, preferences, privileges and
restrictions of the shares of the Common Stock are as stated in the Company’s
Articles of Incorporation (the “Charter”). 
The Note Shares and Warrant Shares have been duly and validly reserved
for issuance (other than the Note Shares and Warrant Shares that will be
issuable only after approval, adoption and effectiveness of the Share Increase
Amendment, such Note Shares and Warrant Shares to be duly and validly reserved
for issuance upon effectiveness of the Share Increase Amendment). When issued
in compliance with the provisions of this Agreement and the Company’s Charter
(and to the extent the Note Shares and Warrant Shares are not presently
authorized, subject to and conditioned on the approval, adoption and
effectiveness of the Share Increase Amendment with respect to the Note Shares
and Warrant Shares) the Securities will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided,
however, that the Securities may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time a transfer is proposed.


 


4.4                                 Authorization;
Binding Obligations.  All corporate,
partnership or limited liability company, as the case may be, action on the
part of the Company and each of its Subsidiaries (including the respective
officers and directors) necessary for the authorization of this Agreement and
the Related Agreements, the performance of all obligations of the Company and
its Subsidiaries hereunder and under the other Related Agreements at the
Closing and, the authorization, sale, issuance and delivery of the Term Notes
and the Warrants has been taken or will be taken prior to the Closing except
with respect to the Share Increase Amendment and actions related thereto or
thereunder.  This Agreement and the
Related Agreements, when executed and delivered and to the extent it is a party
thereto, will be valid and binding obligations of each of the Company and each
of its Subsidiaries, enforceable against each such person in accordance with
their terms, except:


 


(a)                                  as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights;


 


5





















 


(b)                                 general principles of equity that
restrict the availability of equitable or legal remedies; and


 


(c)                                  as to that portion of the Note Shares and
the Warrant Shares that is presently not authorized, the issuance of such Note
Shares and such Warrant Shares is subject to and conditioned upon the approval,
adoption and effectiveness of the Share Increase Amendment.


 


The sale of the Term Notes and the subsequent conversion of the Term
Notes into Note Shares are not and will not be subject to any preemptive rights
or rights of first refusal that have not been properly waived or complied with.
The issuance of the Warrants and the subsequent exercise of the Warrants for
Warrant Shares are not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.


 


4.5                                 Liabilities.  Neither the Company nor any of its
Subsidiaries has any contingent liabilities in excess of $25,000, except
current liabilities incurred in the ordinary course of business and liabilities
disclosed in any Exchange Act Filings.


 


4.6                                 Agreements;
Action.  Except as set forth on
Schedule 4.6 or as disclosed in any Exchange Act Filings:


 


(a)                                  there are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees to which the Company or any of its Subsidiaries is a party or by which
it is bound which may involve: (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of $50,000 (other than obligations of, or
payments to, the Company arising from purchase or sale agreements entered into
in the ordinary course of business); or (ii) the transfer or license of any
patent, copyright, trade secret or other proprietary right to or from the
Company (other than licenses arising from the purchase of “off the shelf” or
other standard products); or (iii) provisions restricting the development, manufacture
or distribution of the Company’s products or services; or (iv) indemnification
by the Company with respect to infringements of proprietary rights.


 


(b)                                 Since June 30, 2005, neither the Company
nor any of its Subsidiaries has:  (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock; (ii) incurred any
indebtedness for money borrowed or any other liabilities (other than ordinary
course obligations) individually in excess of $50,000 or, in the case of
indebtedness and/or liabilities individually less than $50,000, in excess of
$100,000 in the aggregate; (iii) made any loans or advances to any person in
excess, individually or in the aggregate, of $100,000, other than ordinary
course advances for travel expenses; or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory
in the ordinary course of business.


 


(c)                                  For the purposes of subsections (a) and
(b) above, all indebtedness, liabilities, agreements, understandings,
instruments, contracts and proposed transactions involving the same person or
entity (including persons or entities the Company has


 


6





















 


reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.


 


4.7                                 Obligations
to Related Parties.  Except as set
forth on Schedule 4.7, there are no obligations of the Company or any of
its Subsidiaries to officers, directors, stockholders or employees of the
Company or any of its Subsidiaries other than:


 


(a)                                  for payment of salary for services
rendered and for bonus payments;


 


(b)                                 reimbursement for reasonable expenses
incurred on behalf of the Company and its Subsidiaries;


 


(c)                                  for other standard employee benefits made
generally available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
the Company); and


 


(d)                                 obligations listed in the Company’s
financial statements or disclosed in any of its Exchange Act Filings.


 


Except as described above or set forth on Schedule 4.7, none of
the officers, directors or, to the best of the Company’s knowledge, key
employees or stockholders of the Company or any members of their immediate
families, are indebted to the Company, individually or in the aggregate, in
excess of $50,000 or have any direct or indirect ownership interest in any firm
or corporation with which the Company is affiliated or with which the Company
has a business relationship, or any firm or corporation which competes with the
Company, other than passive investments in publicly traded companies
(representing less than one percent (1%) of such company) which may compete
with the Company. Except as described above, no officer, director or
stockholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company and no
agreements, understandings or proposed transactions are contemplated between
the Company and any such person.  Except
as set forth on Schedule 4.7, the Company is not a guarantor or indemnitor
of any indebtedness of any other person, firm or corporation.


 


4.8                                 Changes.  Since June 30, 2005, except as disclosed
in any Exchange Act Filing or in any Schedule to this Agreement or in any of
the Related Agreements, there has not been:


 


(a)                                  any change in the business, assets,
liabilities, condition (financial or otherwise), properties, operations or
prospects of the Company or any of its Subsidiaries, which individually or in
the aggregate has had, or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect;


 


(b)                                 any resignation or termination of any
officer, key employee or group of employees of the Company or any of its
Subsidiaries;


 


(c)                                  any material change, except in the
ordinary course of business, in the contingent obligations of the Company or
any of its Subsidiaries by way of guaranty, endorsement, indemnity, warranty or
otherwise;


 


7





















 


(d)                                 any damage, destruction or loss, whether
or not covered by insurance, which has had, or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;


 


(e)                                  any waiver by the Company or any of its
Subsidiaries of a material right under a written contract or of a material debt
owed to it;


 


(f)                                    any direct or indirect loans made by the
Company or any of its Subsidiaries to any stockholder, employee, officer or
director of the Company or any of its Subsidiaries, other than advances made in
the ordinary course of business;


 


(g)                                 any material change in any compensation
arrangement or agreement with any employee, officer, director or stockholder of
the Company or any of its Subsidiaries;


 


(h)                                 any labor organization activity related
to the Company or any of its Subsidiaries;


 


(i)                                     any debt, obligation or liability
incurred, assumed or guaranteed by the Company or any of its Subsidiaries,
except those for immaterial amounts and for current liabilities incurred in the
ordinary course of business;


 


(j)                                     any sale, assignment or transfer of any
patents, trademarks, copyrights, trade secrets or other intangible assets owned
by the Company or any of its Subsidiaries;


 


(k)                                  any change in any material agreement to
which the Company or any of its Subsidiaries is a party or by which either the
Company or any of its Subsidiaries is bound which either individually or in the
aggregate has had, or would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;


 


(l)                                     any other event or condition of any
character that, either individually or in the aggregate, has had, or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; or


 


(m)                               any arrangement or commitment by the
Company or any of its Subsidiaries to do any of the acts described in
subsection (a) through (m) above.


 


4.9                                 Title
to Properties and Assets; Liens, Etc. 
Except as set forth on Schedule 4.9, each of the Company and each
of its Subsidiaries has good and valid title to its properties and assets, and
good title to its leasehold estates, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than:


 


(a)                                  those resulting from taxes which have not
yet become delinquent;


 


(b)                                 minor liens and encumbrances which do not
materially detract from the value of the property subject thereto or materially
impair the operations of the Company or any of its Subsidiaries; and


 


(c)                                  those that have otherwise arisen in the
ordinary course of business.


 


8





















 


All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company and its Subsidiaries are in
good operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. 
Except as set forth on Schedule 4.9, the Company and its
Subsidiaries are in compliance with all material terms of each lease to which
any of them is a party or is otherwise bound.


 


4.10                           Intellectual
Property.


 


Except as set forth on
Schedule 4.10:


 


(a)                                  Each of the Company and each of its
Subsidiaries owns or possesses sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes necessary for its
business as now conducted and to the Company’s knowledge, as presently proposed
to be conducted (the “Intellectual Property”), without any known infringement
of the rights of others.  There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing proprietary rights, nor is the Company or any of its Subsidiaries
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of “off the shelf” or standard products.


 


(b)                                 Neither the Company nor any of its
Subsidiaries has received any communications alleging that the Company or any
of its Subsidiaries has violated any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other person or entity, nor is the Company or any of its Subsidiaries aware of
any basis therefor.


 


(c)                                  The Company does not believe it is or
will be necessary to utilize any inventions, trade secrets or proprietary
information of any of its employees made prior to their employment by the
Company or any of its Subsidiaries, except for inventions, trade secrets or
proprietary information that have been rightfully assigned to the Company or
any of its Subsidiaries.


 


4.11                           Compliance
with Other Instruments.  Neither the
Company nor any of its Subsidiaries is in violation or default of (x) any term
of its Charter or Bylaws, or (y) of any provision of any indebtedness,
mortgage, indenture, contract, agreement or instrument to which it is party or
by which it is bound or of any judgment, decree, order or writ, which violation
or default, in the case of this clause (y), has had, or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.  The execution, delivery and
performance of and compliance with this Agreement and the Related Agreements to
which it is a party, and the issuance and sale of the Term Note by the Company
and the other Securities by the Company each pursuant hereto and thereto, will
not, with or without the passage of time or giving of notice, result in any
such material violation, or be in conflict with or constitute a default under
any such term or provision, or result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the Company
or any of its


 


9





















 


Subsidiaries or
the suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties; provided, that as to those Note
Shares and Warrant Shares that are presently not authorized, the issuance of
such Note Shares and such Warrant Shares is subject to and conditioned upon
approval, adoption and effectiveness of the Share Increase Amendment.


 


4.12                           Litigation.  Except as set forth on Schedule 4.12
hereto, there is no action, suit, proceeding or investigation pending or, to
the Company’s knowledge, currently threatened against the Company or any of its
Subsidiaries that prevents the Company or any of its Subsidiaries from entering
into this Agreement or the other Related Agreements, or from consummating the
transactions contemplated hereby or thereby, or which has had, or would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect or any change in the current equity ownership of the
Company or any of its Subsidiaries, nor is the Company aware that there is any
basis to assert any of the foregoing. Neither the Company nor any of its
Subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality.  There is no action,
suit, proceeding or investigation by the Company or any of its Subsidiaries
currently pending or which the Company or any of its Subsidiaries intends to
initiate.


 


4.13                           Tax
Returns and Payments.  Each of the
Company and its Subsidiaries has timely filed all tax returns (federal, state
and local) required to be filed by it. 
All taxes shown to be due and payable on such returns, any assessments
imposed, and all other taxes due and payable by the Company or any of its
Subsidiaries on or before the Closing, have been paid or will be paid prior to
the time they become delinquent.  Except
as set forth on Schedule 4.13, neither the Company nor any of its
Subsidiaries has been advised:


 


(a)                                  that any of its returns, federal, state
or other, have been or are being audited as of the date hereof; or


 


(b)                                 of any deficiency in assessment or
proposed judgment to its federal, state or other taxes.


 


The Company has no knowledge of any liability for any tax to be imposed
upon its properties or assets as of the date of this Agreement that is not
adequately provided for.


 


4.14                           Employees.  Except as set forth on Schedule 4.14,
neither the Company nor any of its Subsidiaries has any collective bargaining
agreements with any of its employees. 
There is no labor union organizing activity pending or, to the Company’s
knowledge, threatened with respect to the Company or any of its
Subsidiaries.  Except as disclosed in the
Exchange Act Filings or on Schedule 4.14, neither the Company nor any of
its Subsidiaries is a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement.  To the Company’s knowledge,
no employee of the Company or any of its Subsidiaries, nor any consultant with
whom the Company or any of its Subsidiaries has contracted, is in violation of
any term of any employment contract, proprietary information agreement or any
other agreement relating to the right of any such individual to be employed by,
or to contract with, the Company or any of its Subsidiaries because of the
nature of the business


 


10





















 


to be conducted by
the Company or any of its Subsidiaries; and to the Company’s knowledge the
continued employment by the Company or any of its Subsidiaries of its present
employees, and the performance of the Company’s and its Subsidiaries’ contracts
with its independent contractors, will not result in any such violation.  Neither the Company nor any of its
Subsidiaries is aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere in any material respect with their duties to the
Company or any of its Subsidiaries. 
Neither the Company nor any of its Subsidiaries has received any notice
alleging that any such violation has occurred. 
Except for employees who have a current effective employment agreement
with the Company or any of its Subsidiaries, no employee of the Company or any
of its Subsidiaries has been granted the right to continued employment by the
Company or any of its Subsidiaries or to any material compensation following
termination of employment with the Company or any of its Subsidiaries.  Except as set forth on Schedule 4.14,
the Company is not aware that any officer, key employee or group of employees
intends to terminate his, her or their employment with the Company or any of
its Subsidiaries, nor does the Company or any of its Subsidiaries have a
present intention to terminate the employment of any officer, key employee or
group of employees.


 


4.15                           Registration
Rights and Voting Rights.  Except as
set forth on Schedule 4.15 or except as disclosed in Exchange Act Filings,
neither the Company nor any of its Subsidiaries is presently under any
obligation, and neither the Company nor any of its Subsidiaries has granted any
rights, to register any of the Company’s or its Subsidiaries’ presently
outstanding securities or any of its securities that may hereafter be
issued.  Except as set forth on
Schedule 4.15 or except as disclosed in Exchange Act Filings, neither the
Company nor any of its Subsidiaries has entered into any agreement with respect
to the voting of equity securities of the Company or any of its Subsidiaries.


 


4.16                           Compliance
with Laws; Permits.  Neither the
Company nor any of its Subsidiaries is in violation of any applicable statute,
rule, regulation, order or restriction of any domestic or foreign government or
any instrumentality or agency thereof in respect of the conduct of its business
or the ownership of its properties which has had, or would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.  No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection
with the execution and delivery of this Agreement or any other Related
Agreement and the issuance of any of the Securities, except such as has been
duly and validly obtained or filed, or with respect to any filings that must be
made after the Closing, as will be filed in a timely manner.  Each of the Company and its Subsidiaries has
all material franchises, permits, licenses and any similar authority necessary
for the conduct of its business as now being conducted by it, the lack of which
would, either individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.


 


4.17                           Environmental
and Safety Laws.  Neither the Company
nor any of its Subsidiaries is in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and
to its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.


 


11





















 


4.18                           Valid
Offering.  Assuming the accuracy of
the representations and warranties of the Purchasers contained in this
Agreement, the offer, sale and issuance of the Securities will be exempt from
the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.


 


4.19                           Full
Disclosure.  Each of the Company and
each of its Subsidiaries has provided the Purchasers with all information
requested by the Purchasers in connection with their decision to purchase the
Term Note and the Warrant, including all information the Company and its
Subsidiaries believe is reasonably necessary to make such investment
decision.  Neither this Agreement, the
Related Agreements, or the exhibits and schedules hereto and thereto contain
any untrue statement of a material fact nor omit to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances in which they are made, not misleading.  Any financial projections and other estimates
provided to the Purchasers by the Company or any of its Subsidiaries were based
on the Company’s and its Subsidiaries’ experience in the industry and on
assumptions of fact and opinion as to future events which the Company or any of
its Subsidiaries, at the date of the issuance of such projections or estimates,
believed to be reasonable.


 


4.20                           Insurance.  Each of the Company and each of its
Subsidiaries has general commercial, product liability, fire and casualty
insurance policies with coverages which the Company believes are customary for
companies similarly situated to the Company and its Subsidiaries in the same or
similar business.


 


4.21                           SEC
Reports.  Except as set forth on
Schedule 4.21, the Company has filed all reports and other documents
required to be filed by it under the Securities Exchange Act 1934, as amended
(the “Exchange Act”).  The Company has
furnished the Purchasers with copies of: 
(i) its Annual Reports on Form 10-KSB for its fiscal year ended
June 30, 2005; and (ii) its Quarterly Reports on Form 10-QSB for its
fiscal quarter ended September 30, 2005 and the Form 8-K filings which it
has made during the fiscal year 2006 to date (collectively, the “SEC Reports”).
Except as set forth on Schedule 4.21, each SEC Report was, at the time of
its filing, in substantial compliance with the requirements of its respective
form and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.


 


4.22                           Listing.  The Company’s Common Stock is listed for
trading on the Over the Counter Bulletin Board (“OTCBB”) and satisfies all
requirements for the continuation of such trading.  The Company has not received any notice that
its Common Stock will not be eligible to be traded on the OTCBB or that its
Common Stock does not meet all requirements for such trading.


 


4.23                           No
Integrated Offering.  Neither the
Company, nor any of its Subsidiaries or 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


 


12





















 


would cause the
Offering to be integrated with prior offerings by the Company for purposes of
the Securities Act and which would prevent the Company from selling the
Securities pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any
of its affiliates or Subsidiaries take any action or steps that would cause the
offering of the Securities to be integrated with other offerings.


 


4.24                           Stop
Transfer.  The Securities are
restricted securities as of the date of this Agreement.  Neither the Company nor any of its
Subsidiaries will issue any stop transfer order or other order impeding the
sale and delivery of any of the Securities at such time as the Securities are
registered for public sale or an exemption from registration is available,
except as required by state and federal securities laws.


 


4.25                           Dilution.  The Company specifically acknowledges that,
its obligation to issue the shares of Common Stock upon conversion of the Term
Notes and exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company.


 


4.26                           Patriot
Act.  The Company certifies that, to
the best of Company’s knowledge, neither the Company nor any of its
Subsidiaries has been designated, and is not owned or controlled, by a “suspected
terrorist” as defined in Executive Order 13224. 
The Company hereby acknowledges that the Purchasers seek to comply with
all applicable laws concerning money laundering and related activities.  In furtherance of those efforts, the Company
hereby represents, warrants and agrees that: 
(i) none of the cash or property that the Company or any of its
Subsidiaries will pay or will contribute to the Purchasers has been or shall be
derived from, or related to, any activity that is deemed criminal under United
States law; and (ii) no contribution or payment by the Company or any of its
Subsidiaries to the Purchasers, to the extent that they are within the Company’s
and/or its Subsidiaries’ control shall cause the Purchasers to be in violation
of the United States Bank Secrecy Act, the United States International Money
Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001.  The Company shall promptly notify the
Purchasers if any of these representations ceases to be true and accurate
regarding the Company or any of its Subsidiaries.  The Company agrees to provide the Purchasers
any additional information regarding the Company or any of its Subsidiaries
that the Purchasers deem necessary or convenient to ensure compliance with all
applicable laws concerning money laundering and similar activities.  The Company understands and agrees that if at
any time it is discovered that any of the foregoing representations are
incorrect, or if otherwise required by applicable law or regulation related to
money laundering or similar activities, the Purchasers may undertake
appropriate actions to ensure compliance with such applicable law or
regulation, including but not limited to segregation and/or redemption of the
Purchasers’ investment in the Company. 
The Company further understands that the Purchasers may release
confidential information about the Company and its Subsidiaries and, if
applicable, any underlying beneficial owners, to proper authorities if the
Purchasers, in their sole reasonable discretion, after consultation with legal
counsel, determine that it is in the best interests of the Purchasers in light
of relevant rules and regulations under the laws set forth in subsection (ii)
above.


 


5.                                       Representations
and Warranties of the Purchaser. 
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company as follows (such representations and


 


13





















 


warranties do not
lessen or obviate the representations and warranties of the Company set forth
in this Agreement):


 


5.1                                 No
Shorting.  Such Purchaser or any of
its affiliates and investment partners have not, will not and will not cause
any person or entity to directly engage in “short sales” of the Company’s
Common Stock as long as the Term Notes or any Warrants shall be outstanding.


 


5.2                                 Organization,
Good Standing and Qualification. 
Each of the Purchasers is a corporation, partnership, limited duration
company or limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of the Purchasers has the corporate, partnership, limited
duration company or limited liability company, as the case may be, power and
authority to own and operate its properties and assets, to execute and deliver
(i) this Agreement, (ii) the Term Notes and the Warrants to be issued in
connection with this Agreement, (iii) the Registration Rights Agreement
relating to the Securities dated as of the date hereof among the Company and
the Purchasers (as amended, modified or supplemented from time to time, the “Registration
Rights Agreement”), (iv) the Escrow Agreement dated as of the date hereof among
the Company, the Purchasers and the escrow agent referred to therein,
substantially in the form of Exhibit D hereto (as amended, modified or
supplemented from time to time, the “Escrow Agreement”), and (v) all other
agreements related to this Agreement and the Term Note and referred to herein
(the preceding clauses (ii) through (iv), the Subsidiary Guaranty dated as of
May 19, 2005 made by certain Subsidiaries of the Company (as amended,
modified or supplemented from time to time, the “Subsidiary Guaranty”), the
Stock Pledge Agreement dated as of May 19, 2005 among the Company, certain
Subsidiaries of the Company and the Purchasers (as amended, modified or
supplemented from time to time, the “Stock Pledge Agreement”), and the
Subordination Agreement dated as of May 19, 2005 among the Purchasers and
the subordinated creditors party thereto, and acknowledged and agreed to by the
Company (as amended, modified or supplemented from time to time, the
Subordination Agreement”), collectively, the “Related Agreements”), to purchase
the Term Notes and the shares of Common Stock issuable upon conversion of the
Term Notes (the “Note Shares”), to purchase the Warrants and the Warrant
Shares, and, to carry out the provisions of this Agreement and the Related
Agreements.  Each of the Purchasers is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation, partnership, limited duration company or limited liability
company, as the case may be, in such Purchasers jurisdictions of organization.


 


5.3                                 Requisite
Power and Authority.  Such Purchaser
has all necessary power and authority under all applicable provisions of law to
execute and deliver this Agreement and the Related Agreements and to carry out
their provisions.  All company action on
such Purchaser’s part required for the lawful execution and delivery of this
Agreement and the Related Agreements has been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of such Purchaser,
enforceable in accordance with their terms, except:


 


(a)                                  as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights; and


 


14





















 


(b)                                 as limited by general principles of
equity that restrict the availability of equitable and legal remedies.


 


5.4                                 Investment
Representations.  Such Purchaser
understands that the Securities are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
such Purchaser’s representations contained in this Agreement, including,
without limitation, that such Purchaser is an “accredited investor” within the
meaning of Regulation D under the Securities Act. Such Purchaser confirms that
it has received or has had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect
to the Term Note and the Warrant to be purchased by it under this Agreement and
the Note Shares and the Warrant Shares acquired by it upon the conversion of
such Term Note and the exercise of such Warrant, respectively. Such Purchaser
further confirms that it has had an opportunity to ask questions and receive
answers from the Company regarding the Company’s and its Subsidiaries’
business, management and financial affairs and the terms and conditions of the
Offering, the Term Notes, the Warrants and the Securities.


 


5.5                                 The
Purchasers Bear Economic Risk.  Such
Purchaser has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the Company so
that it is capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests. Such Purchaser
acknowledges and agrees that it must bear the economic risk of this investment
until the Securities are sold pursuant to: (i) an effective registration
statement under the Securities Act; or (ii) an applicable exemption from
registration with respect to such sale.


 


5.6                                 Acquisition
for Own Account.  Such Purchaser is
acquiring its Term Notes and Warrant and the Note Shares and the Warrant Shares
for such Purchaser’s own account for investment only, and not as a nominee or
agent and not with a view towards or for resale in connection with their
distribution.


 


5.7                                 The
Purchasers Can Protect Their Interest. 
Such Purchaser represents that by reason of its, or of its management’s,
business and financial experience, such Purchaser has the capacity to evaluate
the merits and risks of its investment in its Term Notes, Warrant and the
Securities and to protect its own interests in connection with the transactions
contemplated in this Agreement and the Related Agreements.  Further, such Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in this Agreement or the Related Agreements.


 


5.8                                 Accredited
Investor.  Such Purchaser represents
that it is an accredited investor within the meaning of Regulation D under the
Securities Act.


 


5.9                                 Legends.


 


(a)                                  The Term Notes shall bear substantially
the following legend:


 


“THIS TERM NOTE AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS TERM NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.


 


15





















 


THIS TERM NOTE AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS TERM NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
TERM NOTE OR SUCH SHARES UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO CORGENIX MEDICAL CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.”


 


(b)                                 The Note Shares and the Warrant Shares,
shall bear a legend which shall be in substantially the following form until
such shares are covered by an effective registration statement filed with the
Securities and Exchange Commission (the “SEC”):


 


“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT AND APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CORGENIX MEDICAL CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.”


 


(c)                                  The Warrant shall bear substantially the
following legend:


 


“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT OR THE UNDERLYING SHARES OF COMMON STOCK UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO CORGENIX MEDICAL CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.”


 


6.                                       Covenants
of the Company.  The Company
covenants and agrees with the Purchasers as follows:


 


6.1                                 Stop-Orders.  The Company will advise the Purchasers,
promptly after it receives notice of issuance by the SEC, any state securities
commission or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any


 


16





















 


securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.


 


6.2                                 Authorization
and Listing.  The Company does not
currently have enough shares of Common Stock authorized to provide in full for
the exercise of the Warrants or the conversion of the Term Notes.  The Company covenants that it shall use its
best efforts to prepare and file a proxy statement with the SEC as soon as
possible after the date of this Agreement, with respect to a special meeting of
its stockholders (the “Special Meeting”) to consider the Share Increase
Amendment (as hereinafter defined).  If
the Company receives any SEC comments on such proxy statement, it will use its
best efforts to resolve all comments as soon as possible after receipt
thereof.  The Company will promptly mail
the proxy statement and notice of meeting to its stockholders as soon as
practicable.  The Company will hold the
Special Meeting as soon as practicable thereafter, but in any event within 90
days after the date of this Agreement, to authorize a sufficient number of
shares to include that number of shares issuable upon conversion of the Term
Notes and upon the exercise of Warrants by voting upon an amendment to the
Articles of Incorporation increasing the number of authorized shares of Common
Stock from the current 40,000,000 to 100,000,000 (the “Share Increase Amendment”).  The proxy statement describing the Share
Increase Amendment will be provided to the Purchasers in advance of filing for
review and comment, and the Company will consider in good faith any reasonable
revisions suggested by the Purchasers. 
The Company’s shares of Common Stock issuable upon conversion of the
Term Notes and upon the exercise of the Warrants will be listed on the OTCBB
(the “Principal Market”) within 90 days after the date of this Agreement and
the Company shall maintain such listing on the Principal Market so long as any
other shares of Common Stock shall be so listed. The Company will maintain the
listing of its Common Stock on the Principal Market, and will comply in all
material respects with its reporting, filing and other obligations.


 


6.3                                 Market
Regulations.  The Company shall
notify the SEC, NASD and applicable state authorities, in accordance with their
requirements, of the transactions contemplated by this Agreement, and shall
take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Purchasers and promptly provide copies
thereof to the Purchasers.


 


6.4                                 Reporting
Requirements.  The Company will
timely file with the SEC all reports required to be filed pursuant to the
Exchange Act and refrain from terminating its status as an issuer required by
the Exchange Act to file reports thereunder even if the Exchange Act or the
rules or regulations thereunder would permit such termination.


 


6.5                                 Use
of Funds.  The Company agrees that it
will use the proceeds of the sale of the Term Notes and the Warrants for the
purposes specified on Schedule 6.5 only.


 


6.6                                 Access
to Facilities.  The Company and each
of its Subsidiaries will permit any representatives designated by any Purchaser
(or any successor of such Purchaser), upon reasonable notice and during normal
business hours, at such person’s expense and accompanied by a representative of
the Company, to:


 


17





















 


(a)                                  visit and inspect any of the properties
of the Company or any of its Subsidiaries;


 


(b)                                 examine the corporate and financial
records of the Company or any of its Subsidiaries (unless such examination is
not permitted by federal, state or local law or by contract) and make copies
thereof or extracts therefrom; and


 


(c)                                  discuss the affairs, finances and
accounts of the Company or any of its Subsidiaries with the directors, officers
and independent accountants of the Company or any of its Subsidiaries.


 


Notwithstanding the foregoing, neither the Company nor any of its
Subsidiaries will provide any material, non-public information to any Purchaser
unless such Purchaser signs a confidentiality agreement and otherwise complies
with Regulation FD under the federal securities laws.


 


6.7                                 Taxes.  Each of the Company and each of its
Subsidiaries will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company and its Subsidiaries; provided, however, that any such
tax, assessment, charge or levy need not be paid if the validity thereof shall
be contested in good faith by appropriate proceedings and if the Company and/or
such Subsidiary shall have set aside on its books adequate reserves with
respect thereto, and provided, further, that the Company and its Subsidiaries
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor.


 


6.8                                 Insurance.  Each of the Company and its Subsidiaries will
keep its assets which are of an insurable character insured by financially
sound and reputable insurers against loss or damage by fire, explosion and
other risks customarily insured against by companies in similar businesses
similarly situated as the Company and its Subsidiaries; and the Company and its
Subsidiaries will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner which the Company reasonably believes is
customary for companies in similar businesses similarly situated as the Company
and its Subsidiaries and to the extent available on commercially reasonable
terms. The Company and each of its Subsidiaries will jointly and severally bear
the full risk of loss from any loss of any nature whatsoever with respect to
the assets pledged to the Purchaser as security for their obligations hereunder
and under the Related Agreements. At the Company’s and each of its Subsidiaries’
joint and several cost and expense in amounts and with carriers reasonably
acceptable to the Purchasers, the Company and each of its Subsidiaries shall
(i) keep all their insurable properties and properties in which they have an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other hazards, and for
such amounts, as is customary in the case of companies engaged in businesses
similar to the Company’s or the respective Subsidiary’s including business
interruption insurance; (ii) maintain a bond in such amounts as is customary in
the case of companies engaged in businesses similar to the Company’s or the
respective Subsidiary’s insuring against larceny, embezzlement or other
criminal misappropriation of insured’s officers and employees who may either
singly or jointly with


 


18





















 


others at any time
have access to the assets or funds of the Company or any of its Subsidiaries
either directly or through governmental authority to draw upon such funds or to
direct generally the disposition of such assets; (iii) maintain public and
product liability insurance against claims for personal injury, death or
property damage suffered by others; (iv) maintain all such worker’s
compensation or similar insurance as may be required under the laws of any
state or jurisdiction in which the Company or the respective Subsidiary is
engaged in business; and (v) furnish the Purchasers with (x) copies of all
policies and evidence of the maintenance of such policies at least thirty (30)
days before any expiration date, (y) excepting the Company’s workers’
compensation policy, endorsements to such policies naming the Purchasers as “co-insured”
or “additional insured” and appropriate loss payable endorsements in form and
substance satisfactory to the Purchasers, naming the Purchasers as loss payees,
and (z) evidence that as to the Purchasers the insurance coverage shall not be
impaired or invalidated by any act or neglect of the Company or any Subsidiary
and the insurer will provide the Purchasers with at least thirty (30) days
notice prior to cancellation.  The
Company and each Subsidiary shall instruct the insurance carriers that in the
event of any loss thereunder, the carriers shall make payment for such loss to
the Company and/or the Subsidiary and the Purchasers jointly.  In the event that as of the date of receipt
of each loss recovery upon any such insurance, the Purchasers have not declared
an event of default with respect to this Agreement or any of the Related
Agreements, then the Company and/or such Subsidiary shall be permitted to
direct the application of such loss recovery proceeds toward investment in
property, plant and equipment that would comprise “Collateral” secured by the
Purchasers’ security interest pursuant to its security agreement, with any
surplus funds to be applied toward payment of the obligations of the Company to
the Purchasers.  In the event that the
Purchasers have properly declared an event of default with respect to this
Agreement or any of the Related Agreements, then all loss recoveries received
by the Purchasers upon any such insurance thereafter may be applied to the
obligations of the Company hereunder and under the Related Agreements, in such
order as the Purchasers may determine. Any surplus (following satisfaction of
all Company obligations to the Purchasers) shall be paid by the Purchasers to
the Company or applied as may be otherwise required by law.  Any deficiency thereon shall be paid by the
Company or the Subsidiary, as applicable, to the Purchasers, on demand.


 


6.9                                 Intellectual
Property.  Each of the Company and
each of its Subsidiaries shall maintain in full force and effect its existence,
rights and franchises and all licenses and other rights to use Intellectual
Property owned or possessed by it and reasonably deemed to be necessary to the
conduct of its business.


 


6.10                           Properties.  Each of the Company and each of its
Subsidiaries will keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and each of the Company and each of its Subsidiaries will at all times
comply with each provision of all leases to which it is a party or under which
it occupies property if the breach of such provision would, either individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


6.11                           Confidentiality.  The Company agrees that it will not disclose,
and will not include in any public announcement, the names of the Purchasers,
unless expressly agreed to by the Purchasers or unless and until such
disclosure is required by law or applicable regulation, and


 


19





















 


then only to the
extent of such requirement.  Notwithstanding
the foregoing, the Company may disclose the Purchasers’ identity and the terms
of this Agreement to its current and prospective debt and equity financing
sources.  Notwithstanding the provisions
of this section, the Purchasers consent to the Company’s filing of this
Agreement and the Related Agreements as exhibits to its Form 8-K.


 


6.12                           Required
Approvals.  For so long as
twenty-five percent (25%) of the aggregate principal amount of the Term Notes
and the Term Notes dated as of May 19, 2005 are outstanding, the Company,
without the prior written consent of the Purchasers, shall not, and shall not
permit any of its Subsidiaries to:


 


(a)                                  (i) directly or indirectly declare or pay
any dividends, other than dividends paid to the Company or any of its wholly-owned
Subsidiaries, (ii) issue any preferred stock that is mandatorily redeemable
prior to the one year anniversary of Maturity Date (as defined in the Term
Notes) or (iii) redeem any of its preferred stock or other equity interests;


 


(b)                                 liquidate, dissolve or effect a material
reorganization (it being understood that in no event shall the Company
dissolve, liquidate or merge with any other person or entity (unless the
Company is the surviving entity);


 


(c)                                  become subject to (including, without
limitation, by way of amendment to or modification of) any agreement or
instrument which by its terms would (under any circumstances) restrict the
Company’s or any of its Subsidiaries’ right to perform the provisions of this
Agreement, any Related Agreement or any of the agreements contemplated hereby
or thereby;


 


(d)                                 materially alter or change the scope of
the business of the Company and its Subsidiaries taken as a whole;


 


(e)                                  (i) create, incur, assume or suffer to
exist any indebtedness (exclusive of debt incurred to finance the purchase of
equipment not in excess of five percent (5%) of the fair market value of the
Company’s and its Subsidiaries’ assets) whether secured or unsecured other than
(x) the Company’s indebtedness to the Purchasers, (y) indebtedness set forth on
Schedule 6.12(e) attached hereto and made a part hereof and any
refinancings or replacements thereof on terms no less favorable to the Company
than the indebtedness being refinanced or replaced, and (z) any debt incurred
in connection with the purchase of assets in the ordinary course of business,
or any refinancings or replacements thereof on terms no less favorable to the
Company than the indebtedness being refinanced or replaced; (ii) cancel any
debt owing to it in excess of $50,000 in the aggregate during any 12 month
period; (iii) assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except the endorsement of negotiable instruments by the Company for deposit or
collection or similar transactions in the ordinary course of business or
guarantees of indebtedness otherwise permitted to be outstanding pursuant to
this clause (e); and


 


20





















 


(f)                                    create or acquire any Subsidiary after
the date hereof unless (i) such Subsidiary is a wholly-owned Subsidiary of the
Company and (ii) such Subsidiary becomes party to the Term Note Security
Agreement, the Stock Pledge Agreement and the Subsidiary Guaranty (either by
executing a counterpart thereof or an assumption or joinder agreement in
respect thereof) and, to the extent required by the Purchasers, satisfies each
condition of this Agreement and the Related Agreements as if such Subsidiary
were a Subsidiary on the Closing Date.


 


6.13                           Repayment
of Indebtedness.  The Company agrees
that if and for so long as it shall have less than $500,000 in cash, it shall
not make any payments of principal or interest on any indebtedness other than
the Company’s indebtedness to the Purchasers.


 


6.14                           Reissuance
of Securities.  The Company agrees to
reissue certificates representing the Securities without the legends set forth
in Section 5.8 above at such time as:


 


(a)                                  the holder thereof is permitted to
dispose of such Securities pursuant to Rule 144(k) under the Securities Act; or


 


(b)                                 upon resale subject to an effective
registration statement after such Securities are registered under the
Securities Act.


 


The Company agrees to cooperate with the Purchasers in connection with
all resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions
necessary to allow such resales provided the Company and its counsel receive
reasonably requested representations from the selling Purchaser and the broker,
if any.


 


6.15                           Opinion.  On the Closing Date, the Company will deliver
to the Purchasers an opinion acceptable to the Purchasers from the Company’s
external legal counsel. The Company will provide, at the Company’s expense,
such other legal opinions in the future as are deemed reasonably necessary by
any Purchaser (and acceptable to such Purchaser) in connection with the
conversion of the Term Notes and exercise of the Warrants.


 


6.16                           Margin
Stock.  The Company will not permit
any of the proceeds of the Term Note or the Warrant to be used directly or indirectly
to “purchase” or “carry” “margin stock” or to repay indebtedness incurred to “purchase”
or “carry” “margin stock” within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect.


 


6.17                           [Reserved.]


 


6.18                           Financing
Right of First Refusal.  (a)  The Company hereby grants to the Purchasers a
right of first refusal to provide any Additional Financing (as defined below)
to be issued by the Company and/or any of its Subsidiaries, subject to the
following terms and conditions. From and after the date hereof, prior to the
incurrence of any additional indebtedness and/or the sale or issuance of any
equity interests of the Company or any of its Subsidiaries (other than pursuant
to employee benefit plans or the exercise or conversion of securities
outstanding on the date hereof) (an “Additional Financing”), the Company and/or
any Subsidiary of the Company, as the case may be, shall notify the Purchasers
of its intention to enter into such


 


21





















 


Additional
Financing. In connection therewith, the Company and/or the applicable
Subsidiary thereof shall submit a term sheet (a “Proposed Term Sheet”) to the Purchasers
setting forth the terms, conditions and pricing of any such Additional
Financing (such financing to be negotiated on “arm’s length” terms and the
terms thereof to be negotiated in good faith) proposed to be entered into by
the Company and/or such Subsidiary. The Purchasers (or one or more thereof)
shall have the right, but not the obligation, to deliver their own proposed
term sheet (the “Purchasers Term Sheet”) setting forth the terms and conditions
upon which the Purchasers (or one or more thereof) would be willing to provide
such Additional Financing to the Company and/or such Subsidiary. The Purchasers
Term Sheet shall contain terms no less favorable to the Company and/or such
Subsidiary than those outlined in the Proposed Term Sheet. The Purchasers (or
one or more thereof) shall deliver such Purchasers Term Sheet within ten
business days of receipt of each such Proposed Term Sheet.  If the provisions of the Purchasers Term
Sheet are at least as favorable to the Company and/or such Subsidiary, as the
case may be, as the provisions of the Proposed Term Sheet, the Company and/or
such Subsidiary shall enter into and consummate the Additional Financing
transaction outlined in the Purchasers Term Sheet.


 


(b)                                 The Company will not, and will not permit
its Subsidiaries to, agree, directly or indirectly, to any restriction with any
person or entity which limits the ability of the Purchasers to consummate an
Additional Financing with the Company or any of its Subsidiaries.


 


6.19                           [Reserved.]


 


6.20                           Net
Worth.  The Company shall maintain a
minimum tangible net worth in accordance with generally accepted accounting
principles in effect from time to time in the United States of America (“GAAP”)
of $0 for so long as it has obligations to the Purchasers under this Agreement
and the Related Agreements.


 


6.21                           Retention
of Investor Relations/Public Relations Firm and Program.  The Company shall retain an investor
relations firm/public relations firm approved by the Purchasers for so long as
the Company has obligations to the Purchasers under this Agreement and the
Related Agreements.  Such investor
relations firm’s/public relations firm’s budget and program must be approved in
advance by the Purchasers for so long as the Company has obligations to the
Purchasers under this Agreement and the Related Agreements.


 


7.                                       Covenants
of the Purchasers.  Each Purchaser,
severally and not jointly, covenants and agrees with the Company as follows:


 


7.1                                 Confidentiality.  Such Purchaser agrees that it will not
disclose, and will not include in any public announcement, the name of the
Company, unless expressly agreed to by the Company or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.


 


7.2                                 Non-Public
Information.  Such Purchaser agrees
not to effect any sales of the shares of the Company’s Common Stock while in
possession of material, non-public information regarding the Company if such
sales would violate applicable securities law.


 


22





















 


7.3                                 Amendment
to Articles of Incorporation.  The
Purchasers hereby agree to vote any shares of capital stock of the Company that
they may own, directly or beneficially, for the Share Increase Amendment
referenced in Section 6.2.  To the extent
that the shares of Common Stock issuable upon a Purchaser’s request to convert
any portion of a Term Note or to exercise any portion of a Warrant would exceed
the number of shares of authorized and unissued Common Stock, until approval,
adoption and effectiveness of the Share Increase Amendment by the Company’s
shareholders, any such attempted conversion or exercise shall be null and void.


 


8.                                       Covenants
of the Company and the Purchasers Regarding Indemnification.


 


8.1                                 Company
Indemnification.  The Company agrees
to indemnify, hold harmless, reimburse and defend the Purchasers and each of
the Purchasers’ officers, directors, agents, affiliates, control persons, and
principal shareholders, against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Purchasers which results, arises out of or is
based upon: (i) any misrepresentation by the Company or any of its Subsidiaries
or breach of any warranty by the Company or any of its Subsidiaries in this
Agreement, any other Related Agreement or in any exhibits or schedules attached
hereto or thereto; or (ii) any breach or default in performance by the Company
or any of its Subsidiaries of any covenant or undertaking to be performed by
the Company or any of its Subsidiaries hereunder, under any other Related
Agreement or any other agreement entered into by the Company and/or any of its
Subsidiaries and the Purchasers relating hereto or thereto.


 


8.2                                 The
Purchasers’ Indemnification.  Each
Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company
and each of the Company’s officers, directors, agents, affiliates, control
persons and principal shareholders, against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company which results, arises out of or is
based upon:  (i) any misrepresentation by
such Purchaser or breach of any warranty by such Purchaser in this Agreement or
in any exhibits or schedules attached hereto or any Related Agreement; or (ii)
any breach or default in performance by such Purchaser of any covenant or
undertaking to be performed by such Purchaser hereunder, or under any other
Related Agreement.


 


9.                                       Conversion
of Convertible Term Notes.


 


9.1                                 Mechanics
of Conversion.


 


(a)                                  Provided any Purchaser has notified the
Company of such Purchaser’s intention to sell the Note Shares and the Note
Shares are included in an effective registration statement or are otherwise
exempt from registration when sold:  (i)
upon the conversion of a Term Note or part thereof, the Company shall, at its
own cost and expense, take all necessary action (including the issuance of an
opinion of counsel reasonably acceptable to such Purchaser following a request
by such Purchaser) to assure that the Company’s transfer agent shall issue
shares of the Company’s Common Stock in the name of such Purchaser (or its
nominee) or such other persons as designated by such Purchaser in accordance
with Section 9.1(b) hereof and in such denominations to be specified
representing the number of Note Shares issuable upon such conversion; and


 


23





















 


(ii) the Company warrants that no instructions other
than these instructions have been or will be given to the transfer agent of the
Company’s Common Stock and that after the Effectiveness Date (as defined in the
Registration Rights Agreement) the Note Shares issued will be freely
transferable subject to the prospectus delivery requirements of the Securities
Act and the provisions of this Agreement, and will not contain a legend
restricting the resale or transferability of the Note Shares.


 


(b)                                 Each Purchaser will give notice of its
decision to exercise its right to convert its Term Note or part thereof by
telecopying or otherwise delivering an executed and completed notice of the
number of shares to be converted to the Company (the “Notice of Conversion”).
Such Purchaser will not be required to surrender its Term Note until such
Purchaser receives a credit to the account of the Purchaser’s prime broker
through the DWAC system (as defined below), representing the Note Shares or
until its Term Note has been fully satisfied. 
Each date on which a Notice of Conversion is telecopied or delivered to
the Company in accordance with the provisions hereof shall be deemed a “Conversion
Date.”  Pursuant to the terms of the
Notice of Conversion, the Company will issue instructions to the transfer agent
accompanied by an opinion of counsel within two (2) business days of the date
of the delivery to the Company of the Notice of Conversion and shall cause the
transfer agent to transmit the certificates representing the Conversion Shares
to the Holder by crediting the account of such Purchaser’s prime broker with
The Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent
Commission (“DWAC”) system within three (3) business days after receipt by the
Company of the Notice of Conversion (the “Delivery Date”).


 


(c)                                  The Company understands that a delay in
the delivery of the Note Shares in the form required pursuant to Section 9
hereof beyond the Delivery Date could result in economic loss to the
Purchasers.  In the event that the
Company fails to direct its transfer agent to deliver the Note Shares to any
Purchaser via the DWAC system within the time frame set forth in Section 9.1(b)
above and the Note Shares are not delivered to such Purchaser by the Delivery
Date, as compensation to such Purchaser for such loss, the Company agrees to
pay late payments to such Purchaser for late issuance of the Note Shares in the
form required pursuant to Section 9 hereof upon conversion of its Term Note in
the amount equal to the greater of:  (i)
$250 per business day after the Delivery Date; or (ii) such Purchaser’s actual
damages from such delayed delivery. Notwithstanding the foregoing, the Company
will not owe a Purchaser any late payments if the delay in the delivery of the
Note Shares beyond the Delivery Date is solely out of the control of the
Company and the Company is actively trying to cure the cause of the delay.  The Company shall pay any payments incurred
under this Section in immediately available funds upon demand and, in the case
of actual damages, accompanied by reasonable documentation of the amount of
such damages.  Such documentation shall
show the number of shares of Common Stock such Purchaser is forced to purchase
(in an open market transaction) which such Purchaser anticipated receiving upon
such conversion, and shall be calculated as the amount by which (A) such
Purchaser’s total purchase price (including customary brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (B) the aggregate
principal and/or interest amount of its Term Note, for which such Conversion
Notice was not timely honored.


 


24





















 


Nothing contained herein or in any document referred to herein or
delivered in connection herewith shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law.  In the
event that the rate of interest or dividends required to be paid or other
charges hereunder exceed the maximum amount permitted by such law, any payments
in excess of such maximum shall be credited against amounts owed by the Company
to the Purchasers and thus refunded to the Company.


 


10.                                 Registration
Rights.


 


10.1                           Registration
Rights Granted.  The Company hereby
grants registration rights to the Purchasers pursuant to the Registration
Rights Agreement dated as of even date herewith among the Company and the
Purchasers.


 


10.2                           Offering
Restrictions.  Except as previously
disclosed in the SEC Reports or in the Exchange Act Filings, or stock or stock
options granted to employees or directors of the Company (these exceptions
hereinafter referred to as the “Excepted Issuances”), neither the Company nor
any of its Subsidiaries will issue any securities with a continuously
variable/floating conversion feature which are or could be (by conversion or
registration) free-trading securities (i.e. common stock subject to a
registration statement) prior to the full repayment or conversion of the Term
Note (together with all accrued and unpaid interest and fees related thereto)
(the “Exclusion Period”).


 


11.                                 Miscellaneous.


 


11.1                           Governing
Law.  THIS AGREEMENT AND EACH RELATED
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION BROUGHT BY EITHER PARTY AGAINST
THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND EACH
RELATED AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN
THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK.  BOTH PARTIES AND THE INDIVIDUALS EXECUTING
THIS AGREEMENT AND THE RELATED AGREEMENTS ON BEHALF OF THE COMPANY AGREE TO
SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY.  IN THE EVENT THAT ANY PROVISION OF THIS
AGREEMENT OR ANY RELATED AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID
OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH
PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT
THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF
LAW.  ANY SUCH PROVISION WHICH MAY PROVE
INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY OR
ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT OR ANY RELATED AGREEMENT.


 


11.2                           Survival.  The representations, warranties, covenants
and agreements made herein shall survive any investigation made by the
Purchasers and the closing of the transactions contemplated hereby to the
extent provided therein. All statements as to factual


 


25





















 


matters contained
in any certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall
be deemed to be representations and warranties by the Company hereunder solely
as of the date of such certificate or instrument.


 


11.3                           Successors.  Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall
be a holder of the Securities from time to time, other than the holders of
Common Stock which has been sold by such Purchaser pursuant to Rule 144 or an
effective registration statement. The Purchasers may not assign their rights
hereunder to a competitor of the Company.


 


11.4                           Entire
Agreement.  This Agreement, the
Related Agreements, the exhibits and schedules hereto and thereto and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically
set forth herein and therein.


 


11.5                           Amendment
and Waiver.


 


(a)                                  This Agreement may be amended or modified
only upon the written consent of the Company and each of the Purchasers.


 


(b)                                 The obligations of the Company and the rights
of the Purchasers under this Agreement may be waived only with the unanimous
written consent of the Purchasers.


 


(c)                                  The obligations of the Purchasers and the
rights of the Company under this Agreement may be waived only with the written
consent of the Company.


 


11.6                           Delays
or Omissions.  It is agreed that no
delay or omission to exercise any right, power or remedy accruing to any party,
upon any breach, default or noncompliance by another party under this Agreement
or the Related Agreements, shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. 
All remedies, either under this Agreement or the Related Agreements, by
law or otherwise afforded to any party, shall be cumulative and not
alternative.


 


11.7                           Notices.  All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given:


 


(a)                                  upon personal delivery to the party to be
notified;


 


(b)                                 when sent by confirmed facsimile if sent
during normal business hours of the recipient, if not, then on the next
business day;


 


(c)                                  three (3) business days after having been
sent by registered or certified mail, return receipt requested, postage
prepaid; or


 


26





















 


(d)                                 one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.


 


All communications shall be sent as follows:


 


	
  If to
  the Company, to:

  	
   

  	
  Corgenix
  Medical Corporation

  12061 Tejon Street

  Westminster, CO 80234

  Attention:  Chief Financial Officer

  Facsimile:

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Otten,
  Johnson, Robinson, Neff & 

  Ragonetti, P.C.

  950 Seventeenth Street, Suite 1600

  Denver, CO80202

  Attention: Robert Attai and Steven Segal

  
	
   

  	
   

  	
   

  
	
  If to
  a Truk Opportunity or Truk International:

  	
   

  	
  c/o
  RAM Capital Resources, LLC

  One East 52nd Street

  Sixth Floor

  New York, NY 10022 

  Facsimile:(212) 888-0334

  
	
   

  	
   

  	
   

  
	
  If to
  CAMOFI:

  	
   

  	
  350
  Madison Avenue

  New York, NY 10017

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  for
  Truk Opportunity, Truk International and

  CAMOFI with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Torys
  LLP

  237 Park Avenue, 20th Floor

  New York, NY 10017

  Attention:Andrew J. Beck, Esq.

  Facsimile:  (212) 682-0200

  E-mail:       abeck@torys.com

  



 


or at such other address as the Company or such Purchaser may designate
by written notice to the other parties hereto given in accordance herewith.


 


11.8                           Attorneys’
Fees.  In the event that any suit or
action is instituted to enforce any provision in this Agreement, the prevailing
party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including, without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.


 


27





















 


11.9                           Titles
and Subtitles.  The titles of the
sections and subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.


 


11.10                     Facsimile
Signatures; Counterparts.  This
Agreement may be executed by facsimile signatures and in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.


 


11.11                     Broker’s
Fees.  Other than Ascendiant, each
party hereto represents and warrants that no agent, broker, investment banker,
person or firm acting on behalf of or under the authority of such party hereto
is or will be entitled to any broker’s or finder’s fee or any other commission
directly or indirectly in connection with the transactions contemplated
herein.  Each party hereto further agrees
to indemnify each other party for any claims, losses or expenses incurred by
such other party as a result of the representation in this Section 11.11
being untrue.


 


11.12                     Construction.  Each party acknowledges that its legal
counsel participated in the preparation of this Agreement and the Related
Agreements and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Agreement to favor any party against the other.


 


[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


 


28





















 


IN WITNESS WHEREOF, the parties hereto have executed this SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.


 


	
  COMPANY:

  	
  PURCHASERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
  CORGENIX MEDICAL CORPORATION

  	
  TRUK
  OPPORTUNITY FUND, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Atoll Asset Management, LLC

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Douglass T. Simpson

  	
   

  	
  By:

  	
    /s/Stephen E. Saltzstein

  	
   

  
	
  Name:

  	
  Douglass T. Simpson

  	
  Name:

  	
  Stephen E. Saltzstein

  
	
  Title

  	
  President & CEO

  	
  Title:

  	
  Principal

  
								



 


 


	
   

  	
  TRUK INTERNATIONAL FUND, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Atoll Asset Management, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/Stephen E. Saltzstein

  	
   

  
	
   

  	
  Name:

  	
  Stephen E. Saltzstein

  
	
   

  	
  Title:

  	
  Principal

  
					



 


 


	
   

  	
  CAMOFI
  MASTER LDC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jeffrey M. Haas

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey M. Haas

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
					



 


29





















 


EXHIBIT
A


 


FORM OF
CONVERTIBLE TERM NOTE


 


A-1





















 


EXHIBIT
B


 


FORM OF
WARRANT


 


B-1





















 


EXHIBIT
C


 


FORM OF
OPINION


 


C-1





















 


EXHIBIT
D


 


FORM OF
ESCROW AGREEMENT


 


D-1





















 


SCHEDULE
I


 


Additional
Investment Rights Term Notes:


 


	
  Purchaser

  	
   

  	
  Principal Amount

  	
   

  	
  Purchase Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Truk
  Opportunity & Truk International

  	
   

  	
  $

  	
  511,364

  	
   

  	
  $

  	
  464,876

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CAMOFI

  	
   

  	
  $

  	
  988,636

  	
   

  	
  $

  	
  898,759

  	
   

  



 


Warrants:


 


	
  Holder

  	
   

  	
  Number of Shares of 

  the Company’s Common Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Truk
  Opportunity & Truk International

  	
   

  	
  1,022,727

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CAMOFI

  	
   

  	
  1,977,273

  	
   

  



 





















 


SCHEDULE
6.5


 


Legal
Fees and Amounts listed on the 

Disbursement Letter to the Escrow Agent