Document:

EXHIBIT
        10.10

      

      Dated:
        August 12, 2005

      

      NEITHER
        THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
        HAVE
        BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
        COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
        THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
        ACT”),
        AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
        EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
        SECURITIES LAWS.

       

      
        	
                No.
                  CCP-1

              	
                $500,000

              

      

       

      IQ
        MEDICAL CORP.

      

      Secured
        Convertible Debenture

      

      Due
        August 12, 2007

      

                This
        Secured Convertible Debenture (the “Debenture”)
        is
        issued by IQ
        MEDICAL CORP., a
        Colorado corporation (the “Obligor”),
        to
CORNELL
        CAPITAL PARTNERS, LP
        (the
“Holder”),
        pursuant to that certain Securities Purchase Agreement (the “Securities
        Purchase Agreement”)
        of
        even date herewith. 

      

                FOR
        VALUE RECEIVED,
        the
        Obligor hereby promises to pay to the Holder or its successors and assigns
        the
        principal sum of Five Hundred Thousand Dollars ($500,000) together with accrued
        but unpaid interest on or before August 12, 2007 (the “Maturity
        Date”)
        in
        accordance with the following terms:

      

      Interest.
        Interest shall accrue on the outstanding principal balance hereof at an annual
        rate equal to eight percent (8%). Interest shall be calculated on the basis
        of a
        360-day year and the actual number of days elapsed, to the extent permitted
        by
        applicable law. Interest hereunder will be paid to the Holder or its assignee
        (as defined in Section
        4)
        in
        whose name this Debenture is registered on the records of the Obligor regarding
        registration and transfers of Debentures (the “Debenture
        Register”).

      

      Right
        of Redemption.
        The
        Obligor at its option shall have the right, with three (3) business days
        advance
        written notice, to redeem a portion or all amounts outstanding under this
        Debenture prior to the Maturity Date. The Obligor shall pay a redemption
        premium
        of twenty percent (20%) (“Redemption
        Premium”)
        of the
        amount redeemed in addition to such redemption, plus accrued interest.

      

      Security
        Agreements.
        This
        Debenture is secured by a Security Agreement (the “Security
        Agreement”)
        of
        even date herewith between the Obligor and the Holder.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Consent
        of Holder to Sell Capital Stock or Grant Security Interests.
        So
        long
        as any of the principal amount or interest on this Debenture remains unpaid
        and
        unconverted, the Obligor shall not, without the prior consent of the Holder,
        (i) issue or sell any common stock or preferred stock with or without
        consideration, (ii) issue or sell any preferred stock, warrant, option,
        right, contract, call, or other security or instrument granting the holder
        thereof the right to acquire common stock with or without consideration,
        (iii)
        enter into any security instrument granting the holder a security interest
        in
        any of the assets of the Obligor, or
        (iv)
        file any
        registration statements on Form S-8.
        The
        foregoing restrictions shall not apply to the issuance of shares of Common
        Stock
        pursuant to a bona fide Employee Stock Option Plan of no more than 15% of
        the
        Obligor’s outstanding shares of Common Stock as of the date hereof provided,
        however, such options are issued not less than the Closing Bid price at the
        date
        of issuance.

      

      This
        Debenture is subject to the following additional provisions:

      

      Section
        1.          This
        Debenture is exchangeable for an equal aggregate principal amount of Debentures
        of different authorized denominations, as requested by the Holder surrendering
        the same. No service charge will be made for such registration of transfer
        or
        exchange.

      

      Section
        2.          Events
        of Default.

      

      (a)          An
        “Event
        of Default”,
        wherever used herein, means any one of the following events (whatever the
        reason
        and whether it shall be voluntary or involuntary or effected by operation
        of law
        or pursuant to any judgment, decree or order of any court, or any order,
        rule or
        regulation of any administrative or governmental body):

      

      (i)          Any
        default in the payment of the principal of, interest on or other charges
        in
        respect of this Debenture, free of any claim of subordination, as and when
        the
        same shall become due and payable (whether on a Conversion Date or the Maturity
        Date or by acceleration or otherwise);

      

      (ii)          The
        Obligor shall fail to observe or perform any other covenant, agreement or
        warranty contained in, or otherwise commit any breach or default of any
        provision of this Debenture (except as may be covered by Section
        2(a)(i)
        hereof)
        or any Transaction Document (as defined in Section
        4)
        which
        is not cured with in the time prescribed;

      

      (iii)          The
        Obligor or any subsidiary of the Obligor shall commence, or there shall be
        commenced against the Obligor or any subsidiary of the Obligor under any
        applicable bankruptcy or insolvency laws as now or hereafter in effect or
        any
        successor thereto, or the Obligor or any subsidiary of the Obligor commences
        any
        other proceeding under any reorganization, arrangement, adjustment of debt,
        relief of debtors, dissolution, insolvency or liquidation or similar law
        of any
        jurisdiction whether now or hereafter in effect relating to the Obligor or
        any
        subsidiary of the Obligor or there is commenced against the Obligor or any
        subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding
        which remains undismissed for a period of 61 days; or the Obligor or any
        subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order
        of
        relief or other order approving any such case or proceeding is entered; or
        the
        Obligor or any subsidiary of the Obligor suffers any appointment of any
        custodian, private or court appointed receiver or the like for it or any
        substantial part of its property which continues undischarged or unstayed
        for a
        period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor
        makes a general assignment for the benefit of creditors; or the Obligor or
        any
        subsidiary of the Obligor shall fail to pay, or shall state that it is unable
        to
        pay, or shall be unable to pay, its debts generally as they become due; or
        the
        Obligor or any subsidiary of the Obligor shall call a meeting of its creditors
        with a view to arranging a composition, adjustment or restructuring of its
        debts; or the Obligor or any subsidiary of the Obligor shall by any act or
        failure to act expressly indicate its consent to, approval of or acquiescence
        in
        any of the foregoing; or any corporate or other action is taken by the Obligor
        or any subsidiary of the Obligor for the purpose of effecting any of the
        foregoing;

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (iv)          The
        Obligor or any subsidiary of the Obligor shall default in any of its obligations
        under any other debenture or any mortgage, credit agreement or other facility,
        indenture agreement, factoring agreement or other instrument under which
        there
        may be issued, or by which there may be secured or evidenced any indebtedness
        for borrowed money or money due under any long term leasing or factoring
        arrangement of the Obligor or any subsidiary of the Obligor in an amount
        exceeding $100,000, whether such indebtedness now exists or shall hereafter
        be
        created and such default shall result in such indebtedness becoming or being
        declared due and payable prior to the date on which it would otherwise become
        due and payable;

      

      (v)          The
        Obligor shall fail to obtain listing for its Common Stock for trading on
        either
        the NASD OTC Bulletin Board (“OTC”),
        Nasdaq SmallCap Market, New York Stock Exchange, American Stock Exchange
        or the
        Nasdaq National Market (each, a “Subsequent
        Market”)
        in
        accordance with Section 4(f) of the Securities Purchase Agreement of even
        date
        herewith; 

      

      (vi)
                  Upon obtaining the
        listing in accordance with Section 4(f) of the Securities Purchase Agreement
        of
        even date herewith, the Common Stock shall cease to be quoted for trading
        or
        listed for trading on either the NASD OTC Bulletin Board (“OTC”),
        Nasdaq SmallCap Market, New York Stock Exchange, American Stock Exchange
        or the
        Nasdaq National Market (each, a “Subsequent
        Market”)
        and
        shall not again be quoted or listed for trading thereon within five (5) Trading
        Days of such delisting;

      

      (vi)          The
        Obligor or any subsidiary of the Obligor shall be a party to any Change of
        Control Transaction (as defined in Section
        4);
        

      

      (vii)          The
        Obligor shall fail to file the Underlying Shares Registration Statement (as
        defined in Section
        4)
        with
        the Commission (as defined in Section
        4),
        or the
        Underlying Shares Registration Statement shall not have been declared effective
        by the Commission, in each case within the time periods set forth in the
        Registration Rights Agreement of even date herewith between the Obligor and
        the
        Holder;

      

      (viii)          If
        the effectiveness of the Underlying Shares Registration Statement lapses
        for any
        reason or the Holder shall not be permitted to resell the shares of Common
        Stock
        underlying this Debenture under the Underlying Shares Registration Statement,
        in
        either case, for more than five (5) consecutive Trading Days or an aggregate
        of
        eight Trading Days (which need not be consecutive Trading Days);

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (ix)          The
        Obligor shall fail for any reason to deliver Common Stock certificates to
        a
        Holder prior to the fifth (5th)
        Trading
        Day after a Conversion Date or the Obligor shall provide notice to the Holder,
        including by way of public announcement, at any time, of its intention not
        to
        comply with requests for conversions of this Debenture in accordance with
        the
        terms hereof; 

      

      (x)          The
        Obligor shall fail for any reason to deliver the payment in cash pursuant
        to a
        Buy-In (as defined herein) within three (3) days after notice is claimed
        delivered hereunder; 

      

      (b)          During
        the time that any portion of this Debenture is outstanding, if any Event
        of
        Default has occurred, the full principal amount of this Debenture, together
        with
        interest and other amounts owing in respect thereof, to the date of acceleration
        shall become at the Holder's election, immediately due and payable in cash,
        provided
        however,
        the
        Holder may request (but shall have no obligation to request) payment of such
        amounts in Common Stock of the Obligor. If an Event of Default occurs and
        remains uncured, the Conversion Price shall be reduced to 20% of the Conversion
        Price. In addition to any other remedies, the Holder shall have the right
        (but
        not the obligation) to convert this Debenture at any time after (x) an Event
        of
        Default or (y) the Maturity Date at the Conversion Price then in-effect.
        The
        Holder need not provide and the Obligor hereby waives any presentment, demand,
        protest or other notice of any kind, and the Holder may immediately and without
        expiration of any grace period enforce any and all of its rights and remedies
        hereunder and all other remedies available to it under applicable law. Such
        declaration may be rescinded and annulled by Holder at any time prior to
        payment
        hereunder. No such rescission or annulment shall affect any subsequent Event
        of
        Default or impair any right consequent thereon. Upon an Event of Default,
        notwithstanding any other provision of this Debenture or any Transaction
        Document, the Holder shall have no obligation to comply with or adhere to
        any
        limitations, if any, on the conversion of this Debenture or the sale of the
        Underlying Shares. 

      

      Section
        3.          Conversion.

      

      (a)          (i)          Conversion
        at Option of Holder.

      

      (A)          This
        Debenture shall be convertible into shares of Common Stock at the option
        of the
        Holder, in whole or in part at any time and from time to time, after the
        Original Issue Date (as defined in Section 4) (subject to the limitations
        on
        conversion set forth in Section
        3(a)(ii)
        hereof).
        The number of shares of Common Stock issuable upon a conversion hereunder
        equals
        the quotient obtained by dividing (x) the outstanding amount of this Debenture
        to be converted by (y) the Conversion Price (as defined in Section
        3(c)(i)).
        The
        Obligor shall deliver Common Stock certificates to the Holder prior to the
        Fifth
        (5th)
        Trading
        Day after a Conversion Date.

      

      (B)          Notwithstanding
        anything to the contrary contained herein, if on any Conversion Date: (1)
        the
        number of shares of Common Stock at the time authorized, unissued and unreserved
        for all purposes, or held as treasury stock, is insufficient to pay principal
        and interest hereunder in shares of Common Stock; (2) the Common Stock is
        not
        listed or quoted for trading on the OTC, the “Pink Sheets” or on a Subsequent
        Market; (3) the Obligor has failed to timely satisfy its conversion; or (4)
        the
        issuance of such shares of Common Stock would result in a violation of
Section
        3(a)(ii),
        then,
        at the option of the Holder, the Obligor, in lieu of delivering shares of
        Common
        Stock pursuant to Section
        3(a)(i)(A),
        shall
        deliver, within three (3) Trading Days of each applicable Conversion Date,
        an
        amount in cash equal to the product of the outstanding principal amount to
        be
        converted plus any interest due therein divided by the Conversion Price and
        multiplied by the highest closing price of the stock from date of the conversion
        notice till the date that such cash payment is made.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Further,
        if the Obligor shall not have delivered any cash due in respect of conversion
        of
        this Debenture or as payment of interest thereon by the fifth (5th)
        Trading
        Day after the Conversion Date, the Holder may, by notice to the Obligor,
        require
        the Obligor to issue shares of Common Stock pursuant to Section
        3(c),
        except
        that for such purpose the Conversion Price applicable thereto shall be the
        lesser of the Conversion Price on the Conversion Date and the Conversion
        Price
        on the date of such Holder demand. Any such shares will be subject to the
        provisions of this Section.

      

      (C)          The
        Holder shall effect conversions by delivering to the Obligor a completed
        notice
        in the form attached hereto as Exhibit A (a “Conversion
        Notice”).
        The
        date on which a Conversion Notice is delivered is the “Conversion
        Date.”
Unless
        the Holder is converting the entire principal amount outstanding under this
        Debenture, the Holder is not required to physically surrender this Debenture
        to
        the Obligor in order to effect conversions. Conversions hereunder shall have
        the
        effect of lowering the outstanding principal amount of this Debenture plus
        all
        accrued and unpaid interest thereon in an amount equal to the applicable
        conversion. The Holder and the Obligor shall maintain records showing the
        principal amount converted and the date of such conversions. In the event
        of any
        dispute or discrepancy, the records of the Holder shall be controlling and
        determinative in the absence of manifest error.

      

      (ii)          Certain
        Conversion Restrictions.

      

      (A)          A
        Holder may not convert this Debenture or receive shares of Common Stock as
        payment of interest hereunder to the extent such conversion or receipt of
        such
        interest payment would result in the Holder, together with any affiliate
        thereof, beneficially owning (as determined in accordance with Section 13(d)
        of
        the Exchange Act and the rules promulgated thereunder) in excess of 4.9%
        of the
        then issued and outstanding shares of Common Stock, including shares issuable
        upon conversion of, and payment of interest on, this Debenture held by such
        Holder after application of this Section. Since the Holder will not be obligated
        to report to the Obligor the number of shares of Common Stock it may hold
        at the
        time of a conversion hereunder, unless the conversion at issue would result
        in
        the issuance of shares of Common Stock in excess of 4.9% of the then outstanding
        shares of Common Stock without regard to any other shares which may be
        beneficially owned by the Holder or an affiliate thereof, the Holder shall
        have
        the authority and obligation to determine whether the restriction contained
        in
        this Section will limit any particular conversion hereunder and to the extent
        that the Holder determines that the limitation contained in this Section
        applies, the determination of which portion of the principal amount of this
        Debenture is convertible shall be the responsibility and obligation of the
        Holder. If the Holder has delivered a Conversion Notice for a principal amount
        of this Debenture that, without regard to any other shares that the Holder
        or
        its affiliates may beneficially own, would result in the issuance in excess
        of
        the permitted amount hereunder, the Obligor shall notify the Holder of this
        fact
        and shall honor the conversion for the maximum principal amount permitted
        to be
        converted on such Conversion Date in accordance with the periods described
        in
Section
        3(a)(i)(A)
        and, at
        the option of the Holder, either retain any principal amount tendered for
        conversion in excess of the permitted amount hereunder for future conversions
        or
        return such excess principal amount to the Holder. The provisions of this
        Section may be waived by a Holder (but only as to itself and not to any other
        Holder) upon not less than 65 days prior notice to the Obligor. Other Holders
        shall be unaffected by any such waiver.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (b)          (i)          Nothing
        herein shall limit a Holder's right to pursue actual damages or declare an
        Event
        of Default pursuant to Section
        2
        herein
        for the Obligor 's failure to deliver certificates representing shares of
        Common
        Stock upon conversion within the period specified herein and such Holder
        shall
        have the right to pursue all remedies available to it at law or in equity
        including, without limitation, a decree of specific performance and/or
        injunctive relief, in each case without the need to post a bond or provide
        other
        security. The exercise of any such rights shall not prohibit the Holder from
        seeking to enforce damages pursuant to any other Section hereof or under
        applicable law. 

      

      (ii)          In
        addition to any other rights available to the Holder, if the Obligor fails
        to
        deliver to the Holder such certificate or certificates pursuant to Section
        3(a)(i)(A)
        by the
        fifth (5th)
        Trading
        Day after the Conversion Date, and if after such fifth (5th)
        Trading
        Day the Holder purchases (in an open market transaction or otherwise) Common
        Stock to deliver in satisfaction of a sale by such Holder of the Underlying
        Shares which the Holder anticipated receiving upon such conversion (a
“Buy-In”),
        then
        the Obligor shall (A) pay in cash to the Holder (in addition to any remedies
        available to or elected by the Holder) the amount by which (x) the Holder's
        total purchase price (including brokerage commissions, if any) for the Common
        Stock so purchased exceeds (y) the product of (1) the aggregate number of
        shares
        of Common Stock that such Holder anticipated receiving from the conversion
        at
        issue multiplied by (2) the market price of the Common Stock at the time
        of the
        sale giving rise to such purchase obligation and (B) at the option of the
        Holder, either reissue a Debenture in the principal amount equal to the
        principal amount of the attempted conversion or deliver to the Holder the
        number
        of shares of Common Stock that would have been issued had the Obligor timely
        complied with its delivery requirements under Section
        3(a)(i)(A).
        For
        example, if the Holder purchases Common Stock having a total purchase price
        of
        $11,000 to cover a Buy-In with respect to an attempted conversion of Debentures
        with respect to which the market price of the Underlying Shares on the date
        of
        conversion was a total of $10,000 under clause (A) of the immediately preceding
        sentence, the Obligor shall be required to pay the Holder $1,000. The Holder
        shall provide the Obligor written notice indicating the amounts payable to
        the
        Holder in respect of the Buy-In. 

      

      (c)          (i)          The
        conversion price in effect on any Conversion Date shall be equal to the lesser
        of (a) an amount equal to one hundred twenty percent (120%) of the average
        closing bid price of the Common Stock, as quoted by Bloomberg L.P., for the
        five
        (5) Trading Days immediately preceding the date hereof, or (b) an amount
        equal to eighty percent (80%) of the lowest Closing Bid Price of the Common
        Stock (on the OTC or on the exchange which the Common Stock is then listed,
        including the “Pink Sheets”), as quoted by Bloomberg, LP (the “VWAP”),
        for
        five (5) Trading Days immediately preceding the Conversion Date (as defined
        herein) (the lesser price of either subparagraph (a) or (b) shall be referred
        to
        as the “Conversion
        Price”).

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (ii)          If
        the Obligor, at any time while this Debenture is outstanding, shall (a) pay
        a stock dividend or otherwise make a distribution or distributions on shares
        of
        its Common Stock or any other equity or equity equivalent securities payable
        in
        shares of Common Stock, (b) subdivide outstanding shares of Common Stock
        into a
        larger number of shares, (c) combine (including by way of reverse stock split)
        outstanding shares of Common Stock into a smaller number of shares, or (d)
        issue
        by reclassification of shares of the Common Stock any shares of capital stock
        of
        the Obligor, then the Conversion Price shall be multiplied by a fraction
        of
        which the numerator shall be the number of shares of Common Stock (excluding
        treasury shares, if any) outstanding before such event and of which the
        denominator shall be the number of shares of Common Stock outstanding after
        such
        event. Any adjustment made pursuant to this Section shall become effective
        immediately after the record date for the determination of stockholders entitled
        to receive such dividend or distribution and shall become effective immediately
        after the effective date in the case of a subdivision, combination or
        re-classification.

      

      (iii)          If
        the Obligor, at any time while this Debenture is outstanding, shall issue
        rights, options or warrants to all holders of Common Stock (and not to the
        Holder) entitling them to subscribe for or purchase shares of Common Stock
        at a
        price per share less than the Closing Bid Price at the record date mentioned
        below, then the Conversion Price shall be multiplied by a fraction, of which
        the
        denominator shall be the number of shares of the Common Stock (excluding
        treasury shares, if any) outstanding on the date of issuance of such rights
        or
        warrants (plus the number of additional shares of Common Stock offered for
        subscription or purchase), and of which the numerator shall be the number
        of
        shares of the Common Stock (excluding treasury shares, if any) outstanding
        on
        the date of issuance of such rights or warrants, plus the number of shares
        which
        the aggregate offering price of the total number of shares so offered would
        purchase at such Closing Bid Price. Such adjustment shall be made whenever
        such
        rights or warrants are issued, and shall become effective immediately after
        the
        record date for the determination of stockholders entitled to receive such
        rights, options or warrants. However, upon the expiration of any such right,
        option or warrant to purchase shares of the Common Stock the issuance of
        which
        resulted in an adjustment in the Conversion Price pursuant to this Section,
        if
        any such right, option or warrant shall expire and shall not have been
        exercised, the Conversion Price shall immediately upon such expiration be
        recomputed and effective immediately upon such expiration be increased to
        the
        price which it would have been (but reflecting any other adjustments in the
        Conversion Price made pursuant to the provisions of this Section after the
        issuance of such rights or warrants) had the adjustment of the Conversion
        Price
        made upon the issuance of such rights, options or warrants been made on the
        basis of offering for subscription or purchase only that number of shares
        of the
        Common Stock actually purchased upon the exercise of such rights, options
        or
        warrants actually exercised.

      

      (iv)          If
        the Obligor or any subsidiary thereof, as applicable, with respect to Common
        Stock Equivalents (as defined below), at any time while this Debenture is
        outstanding, shall issue shares of Common Stock or rights, warrants, options
        or
        other securities or debt that are convertible into or exchangeable for shares
        of
        Common Stock (“Common
        Stock Equivalents”)
        entitling any Person to acquire shares of Common Stock, at a price per share
        less than the Conversion Price (if the holder of the Common Stock or Common
        Stock Equivalent so issued shall at any time, whether by operation of purchase
        price adjustments, reset provisions, floating conversion, exercise or exchange
        prices or otherwise, or due to warrants, options or rights per share which
        is
        issued in connection with such issuance, be entitled to receive shares of
        Common
        Stock at a price per share which is less than the Conversion Price, such
        issuance shall be deemed to have occurred for less than the Conversion Price),
        then, at the sole option of the Holder, the Conversion Price shall be adjusted
        to mirror the conversion, exchange or purchase price for such Common Stock
        or
        Common Stock Equivalents (including any reset provisions thereof) at issue.
        Such
        adjustment shall be made whenever such Common Stock or Common Stock Equivalents
        are issued. The Obligor shall notify the Holder in writing, no later than
        one
        (1) business day following the issuance of any Common Stock or Common Stock
        Equivalent subject to this Section, indicating therein the applicable issuance
        price, or of applicable reset price, exchange price, conversion price and
        other
        pricing terms. No adjustment under this Section shall be made as a result
        of
        issuances and exercises of options to purchase shares of Common Stock issued
        for
        compensatory purposes pursuant to any of the Obligor's stock option or stock
        purchase plans.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (v)          If
        the Obligor, at any time while this Debenture is outstanding, shall distribute
        to all holders of Common Stock (and not to the Holder) evidences of its
        indebtedness or assets or rights or warrants to subscribe for or purchase
        any
        security, then in each such case the Conversion Price at which this Debenture
        shall thereafter be convertible shall be determined by multiplying the
        Conversion Price in effect immediately prior to the record date fixed for
        determination of stockholders entitled to receive such distribution by a
        fraction of which the denominator shall be the Closing Bid Price determined
        as
        of the record date mentioned above, and of which the numerator shall be such
        Closing Bid Price on such record date less the then fair market value at
        such
        record date of the portion of such assets or evidence of indebtedness so
        distributed applicable to one outstanding share of the Common Stock as
        determined by the Board of Directors in good faith. In either case the
        adjustments shall be described in a statement provided to the Holder of the
        portion of assets or evidences of indebtedness so distributed or such
        subscription rights applicable to one share of Common Stock. Such adjustment
        shall be made whenever any such distribution is made and shall become effective
        immediately after the record date mentioned above.

      

      (vi)          In
        case of any reclassification of the Common Stock or any compulsory share
        exchange pursuant to which the Common Stock is converted into other securities,
        cash or property, the Holder shall have the right thereafter to, at its option,
        (A) convert the then outstanding principal amount, together with all accrued
        but
        unpaid interest and any other amounts then owing hereunder in respect of
        this
        Debenture into the shares of stock and other securities, cash and property
        receivable upon or deemed to be held by holders of the Common Stock following
        such reclassification or share exchange, and the Holder of this Debenture
        shall
        be entitled upon such event to receive such amount of securities, cash or
        property as the shares of the Common Stock of the Obligor into which the
        then
        outstanding principal amount, together with all accrued but unpaid interest
        and
        any other amounts then owing hereunder in respect of this Debenture could
        have
        been converted immediately prior to such reclassification or share exchange
        would have been entitled, or (B) require the Obligor to prepay the outstanding
        principal amount of this Debenture, plus all interest and other amounts due
        and
        payable thereon. The entire prepayment price shall be paid in cash. This
        provision shall similarly apply to successive reclassifications or share
        exchanges.

      

      (vii)          The
        Obligor shall maintain a share reserve of not less than 100% of the shares
        of
        Common Stock issuable upon conversion of this Debenture; and within three
        (3)
        Business Days following the receipt by the Obligor of a Holder's notice that
        such minimum number of Underlying Shares is not so reserved, the Obligor
        shall
        promptly reserve a sufficient number of shares of Common Stock to comply
        with
        such requirement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (viii)          All
        calculations under this Section
        3
        shall be
        rounded up to the nearest $0.001 of a share.

      

      (ix)          Whenever
        the Conversion Price is adjusted pursuant to Section
        3
        hereof,
        the Obligor shall promptly mail to the Holder a notice setting forth the
        Conversion Price after such adjustment and setting forth a brief statement
        of
        the facts requiring such adjustment.

      

      (x)          If
        (A) the Obligor shall declare a dividend (or any other distribution) on the
        Common Stock; (B) the Obligor shall declare a special nonrecurring cash dividend
        on or a redemption of the Common Stock; (C) the Obligor shall authorize the
        granting to all holders of the Common Stock rights or warrants to subscribe
        for
        or purchase any shares of capital stock of any class or of any rights; (D)
        the
        approval of any stockholders of the Obligor shall be required in connection
        with
        any reclassification of the Common Stock, any consolidation or merger to
        which
        the Obligor is a party, any sale or transfer of all or substantially all
        of the
        assets of the Obligor, of any compulsory share exchange whereby the Common
        Stock
        is converted into other securities, cash or property; or (E) the Obligor
        shall
        authorize the voluntary or involuntary dissolution, liquidation or winding
        up of
        the affairs of the Obligor; then, in each case, the Obligor shall cause to
        be
        filed at each office or agency maintained for the purpose of conversion of
        this
        Debenture, and shall cause to be mailed to the Holder at its last address
        as it
        shall appear upon the stock books of the Obligor, at least twenty (20) calendar
        days prior to the applicable record or effective date hereinafter specified,
        a
        notice stating (x) the date on which a record is to be taken for the purpose
        of
        such dividend, distribution, redemption, rights or warrants, or if a record
        is
        not to be taken, the date as of which the holders of the Common Stock of
        record
        to be entitled to such dividend, distributions, redemption, rights or warrants
        are to be determined or (y) the date on which such reclassification,
        consolidation, merger, sale, transfer or share exchange is expected to become
        effective or close, and the date as of which it is expected that holders
        of the
        Common Stock of record shall be entitled to exchange their shares of the
        Common
        Stock for securities, cash or other property deliverable upon such
        reclassification, consolidation, merger, sale, transfer or share exchange,
        provided, that the failure to mail such notice or any defect therein or in
        the
        mailing thereof shall not affect the validity of the corporate action required
        to be specified in such notice. The Holder is entitled to convert this Debenture
        during the 20-day calendar period commencing the date of such notice to the
        effective date of the event triggering such notice.

      

      (xi)          In
        case of any (1) merger or consolidation of the Obligor or any subsidiary
        of the
        Obligor with or into another Person, or (2) sale by the Obligor or any
        subsidiary of the Obligor of more than one-half of the assets of the Obligor
        in
        one or a series of related transactions, a Holder shall have the right to
        (A)
        exercise any rights under Section
        2(b),
        (B)
        convert the aggregate amount of this Debenture then outstanding into the
        shares
        of stock and other securities, cash and property receivable upon or deemed
        to be
        held by holders of Common Stock following such merger, consolidation or sale,
        and such Holder shall be entitled upon such event or series of related events
        to
        receive such amount of securities, cash and property as the shares of Common
        Stock into which such aggregate principal amount of this Debenture could
        have
        been converted immediately prior to such merger, consolidation or sales would
        have been entitled, or (C) in the case of a merger or consolidation, require
        the
        surviving entity to issue to the Holder a convertible Debenture with a principal
        amount equal to the aggregate principal amount of this Debenture then held
        by
        such Holder, plus all accrued and unpaid interest and other amounts owing
        thereon, which such newly issued convertible Debenture shall have terms
        identical (including with respect to conversion) to the terms of this Debenture,
        and shall be entitled to all of the rights and privileges of the Holder of
        this
        Debenture set forth herein and the agreements pursuant to which this Debentures
        were issued. In the case of clause (C), the conversion price applicable for
        the
        newly issued shares of convertible preferred stock or convertible Debentures
        shall be based upon the amount of securities, cash and property that each
        share
        of Common Stock would receive in such transaction and the Conversion Price
        in
        effect immediately prior to the effectiveness or closing date for such
        transaction. The terms of any such merger, sale or consolidation shall include
        such terms so as to continue to give the Holder the right to receive the
        securities, cash and property set forth in this Section upon any conversion
        or
        redemption following such event. This provision shall similarly apply to
        successive such events.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (d)          The
        Obligor covenants that it will at all times reserve and keep available out
        of
        its authorized and unissued shares of Common Stock solely for the purpose
        of
        issuance upon conversion of this Debenture and payment of interest on this
        Debenture, each as herein provided, free from preemptive rights or any other
        actual contingent purchase rights of persons other than the Holder, not less
        than such number of shares of the Common Stock as shall (subject to any
        additional requirements of the Obligor as to reservation of such shares set
        forth in this Debenture) be issuable (taking into account the adjustments
        and
        restrictions of Sections
        2(b) and 3(c))
        upon
        the conversion of the outstanding principal amount of this Debenture and
        payment
        of interest hereunder. The Obligor covenants that all shares of Common Stock
        that shall be so issuable shall, upon issue, be duly and validly authorized,
        issued and fully paid, nonassessable and, if the Underlying Shares Registration
        Statement has been declared effective under the Securities Act, registered
        for
        public sale in accordance with such Underlying Shares Registration
        Statement.

      

      (e)          Upon
        a conversion hereunder the Obligor shall not be required to issue stock
        certificates representing fractions of shares of the Common Stock, but may
        if
        otherwise permitted, make a cash payment in respect of any final fraction
        of a
        share based on the Closing Bid Price at such time. If the Obligor elects
        not, or
        is unable, to make such a cash payment, the Holder shall be entitled to receive,
        in lieu of the final fraction of a share, one whole share of Common
        Stock.

      

      (f)          The
        issuance of certificates for shares of the Common Stock on conversion of
        this
        Debenture shall be made without charge to the Holder thereof for any documentary
        stamp or similar taxes that may be payable in respect of the issue or delivery
        of such certificate, provided that the Obligor shall not be required to pay
        any
        tax that may be payable in respect of any transfer involved in the issuance
        and
        delivery of any such certificate upon conversion in a name other than that
        of
        the Holder of such Debenture so converted and the Obligor shall not be required
        to issue or deliver such certificates unless or until the person or persons
        requesting the issuance thereof shall have paid to the Obligor the amount
        of
        such tax or shall have established to the satisfaction of the Obligor that
        such
        tax has been paid.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

                (g)          Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms hereof must be in writing and will be deemed to have
        been
        delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
        when
        sent by facsimile (provided confirmation of transmission is mechanically
        or
        electronically generated and kept on file by the sending party); or (iii)
        one
        (1) trading day after deposit with a nationally recognized overnight delivery
        service, in each case properly addressed to the party to receive the same.
        The
        addresses and facsimile numbers for such communications shall be:

       

      
        	
                If
                  to the Company, to:

              	
                IQ
                  Medical Corp.

              
	 	
                500
                  Australian Avenue South - Suite 700

              
	 	
                West
                  Palm Beach, Florida 33401

              
	 	
                Attention:          Robert
                  V. Rudman

              
	 	
                Telephone:        (561)
                  514-0018

              
	 	
                Facsimile:          (561)
                  514-0195

              
	 	 
	
                With
                  a copy to: 

              	
                Gunster
                  Yoakley & Stewart, P.A.

              
	 	
                Broward
                  Financial Centre - Suite 1400

                 

                500
                  East Broward Blvd.

              
	 	
                Fort
                  Lauderdale, Florida 33394

              
	 	
                Attention:          Robert
                  C. White, Jr. Esq.

              
	 	
                Telephone:        (954)
                  468-1360

              
	 	
                Facsimile:          (954)
                  888-2037

              
	 	 
	
                If
                  to the Holder:

              	
                Cornell
                  Capital Partners, LP

              
	 	
                101
                  Hudson Street, Suite 3700

              
	 	
                Jersey
                  City, NJ 07303

              
	 	
                Attention:          Mark
                  Angelo

              
	 	
                Telephone:        (201)
                  985-8300

              
	 	 
	
                With
                  a copy to:

              	
                Troy
                  Rillo, Esq. 

              
	 	
                101
                  Hudson Street - Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Telephone:        (201)
                  985-8300

              
	 	
                Facsimile:          (201)
                  985-8266

              
	 	 

      

       

      or
        at
        such other address and/or facsimile number and/or to the attention of such
        other
        person as the recipient party has specified by written notice given to each
        other party three (3) business days prior to the effectiveness of such change.
        Written confirmation of receipt (i) given by the recipient of such notice,
        consent, waiver or other communication, (ii) mechanically or electronically
        generated by the sender's facsimile machine containing the time, date, recipient
        facsimile number and an image of the first page of such transmission or (iii)
        provided by a nationally recognized overnight delivery service, shall be
        rebuttable evidence of personal service, receipt by facsimile or receipt
        from a
        nationally recognized overnight delivery service in accordance with clause
        (i),
        (ii) or (iii) above, respectively.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Section
        4.          Definitions.
        For the
        purposes hereof, the following terms shall have the following
        meanings:

      

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

      

      “Change
        of Control Transaction”
means
        the occurrence of (a) an acquisition after the date hereof by an individual
        or
        legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
        Exchange Act) of effective control (whether through legal or beneficial
        ownership of capital stock of the Obligor, by contract or otherwise) of in
        excess of fifty percent (50%) of the voting securities of the Obligor (except
        that the acquisition of voting securities by the Holder shall not constitute
        a
        Change of Control Transaction for purposes hereof), (b) a replacement at
        one
        time or over time of more than one-half of the members of the board of directors
        of the Obligor which is not approved by a majority of those individuals who
        are
        members of the board of directors on the date hereof (or by those individuals
        who are serving as members of the board of directors on any date whose
        nomination to the board of directors was approved by a majority of the members
        of the board of directors who are members on the date hereof), (c) the merger,
        consolidation or sale of fifty percent (50%) or more of the assets of the
        Obligor or any subsidiary of the Obligor in one or a series of related
        transactions with or into another entity, or (d) the execution by the Obligor
        of
        an agreement to which the Obligor is a party or by which it is bound, providing
        for any of the events set forth above in (a), (b) or (c).

      

      “Commission”
means
        the Securities and Exchange Commission.

      

      “Common
        Stock”
means
        the common stock, par value $0.0001, of the Obligor and stock of any other
        class
        into which such shares may hereafter be changed or reclassified.

      

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended.

      

      “Original
        Issue Date”
shall
        mean the date of the first issuance of this Debenture regardless of the number
        of transfers and regardless of the number of instruments, which may be issued
        to
        evidence such Debenture.

      

      “Closing
        Bid Price”
means
        the price per share in the last reported trade of the Common Stock on the
        OTC or
        on the exchange which the Common Stock is then listed as quoted by Bloomberg,
        LP.

      

      “Person”
means
        a
        corporation, an association, a partnership, organization, a business, an
        individual, a government or political subdivision thereof or a governmental
        agency.

      

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

      

      “Trading
        Day”
means
        a
        day on which the shares of Common Stock are quoted on the OTC or quoted or
        traded on such Subsequent Market on which the shares of Common Stock are
        then
        quoted or listed; provided, that in the event that the shares of Common Stock
        are not listed or quoted, then Trading Day shall mean a Business
        Day.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      “Transaction
        Documents”
means
        the Securities Purchase Agreement or any other agreement delivered in connection
        with the Securities Purchase Agreement, including, without limitation, the
        Security Agreement, the Irrevocable Transfer Agent Instructions, and the
        Investor Registration Rights Agreement.

      

      “Underlying
        Shares”
means
        the shares of Common Stock issuable upon conversion of this Debenture or
        as
        payment of interest in accordance with the terms hereof.

      

      “Underlying
        Shares Registration Statement”
means
        a
        registration statement meeting the requirements set forth in the Registration
        Rights Agreement, covering among other things the resale of the Underlying
        Shares and naming the Holder as a “selling stockholder” thereunder.

      

      Section
        5.          Except
        as expressly provided herein, no provision of this Debenture shall alter
        or
        impair the obligations of the Obligor, which are absolute and unconditional,
        to
        pay the principal of, interest and other charges (if any) on, this Debenture
        at
        the time, place, and rate, and in the coin or currency, herein prescribed.
        This
        Debenture is a direct obligation of the Obligor. This Debenture ranks pari
        passu
        with all other Debentures now or hereafter issued under the terms set forth
        herein. As long as this Debenture is outstanding, the Obligor shall not and
        shall cause their subsidiaries not to, without the consent of the Holder,
        (i)
        amend its certificate of incorporation, bylaws or other charter documents
        so as
        to adversely affect any rights of the Holder; (ii) repay, repurchase or offer
        to
        repay, repurchase or otherwise acquire shares of its Common Stock or other
        equity securities other than as to the Underlying Shares to the extent permitted
        or required under the Transaction Documents; or (iii) enter into any agreement
        with respect to any of the foregoing. 

      

      Section
        6.          This
        Debenture shall not entitle the Holder to any of the rights of a stockholder
        of
        the Obligor, including without limitation, the right to vote, to receive
        dividends and other distributions, or to receive any notice of, or to attend,
        meetings of stockholders or any other proceedings of the Obligor, unless
        and to
        the extent converted into shares of Common Stock in accordance with the terms
        hereof.

      

      Section
        7.          If
        this Debenture is mutilated, lost, stolen or destroyed, the Obligor shall
        execute and deliver, in exchange and substitution for and upon cancellation
        of
        the mutilated Debenture, or in lieu of or in substitution for a lost, stolen
        or
        destroyed Debenture, a new Debenture for the principal amount of this Debenture
        so mutilated, lost, stolen or destroyed but only upon receipt of evidence
        of
        such loss, theft or destruction of such Debenture, and of the ownership hereof,
        and indemnity, if requested, all reasonably satisfactory to the
        Obligor.

      

      Section
        8.          No
        indebtedness of the Obligor is senior to this Debenture in right of payment,
        whether with respect to interest, damages or upon liquidation or dissolution
        or
        otherwise. Without the Holder’s consent, the Obligor will not and will not
        permit any of their subsidiaries to, directly or indirectly, enter into,
        create,
        incur, assume or suffer to exist any indebtedness of any kind, on or with
        respect to any of its property or assets now owned or hereafter acquired
        or any
        interest therein or any income or profits there from that is senior in any
        respect to the obligations of the Obligor under this Debenture.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Section
        9.          This
        Debenture shall be governed by and construed in accordance with the laws
        of the
        State of New Jersey, without giving effect to conflicts of laws thereof.
        Each of
        the parties consents to the jurisdiction of the Superior Courts of the State
        of
        New Jersey sitting in Hudson County, New Jersey and the U.S. District Court
        for the District of New Jersey sitting in Newark, New Jersey in connection
        with
        any dispute arising under this Debenture and hereby waives, to the maximum
        extent permitted by law, any objection, including any objection based on
        forum non conveniens
        to the
        bringing of any such proceeding in such jurisdictions. 

      

      Section
        10.          If
        the Obligor fails to strictly comply with the terms of this Debenture, then
        the
        Obligor shall reimburse the Holder promptly for all fees, costs and expenses,
        including, without limitation, attorneys’ fees and expenses incurred by the
        Holder in any action in connection with this Debenture, including, without
        limitation, those incurred: (i) during any workout, attempted workout, and/or
        in
        connection with the rendering of legal advice as to the Holder’s rights,
        remedies and obligations, (ii) collecting any sums which become due to the
        Holder, (iii) defending or prosecuting any proceeding or any counterclaim
        to any
        proceeding or appeal; or (iv) the protection, preservation or enforcement
        of any
        rights or remedies of the Holder.

      

      Section
        11.          Any
        waiver by the Holder of a breach of any provision of this Debenture shall
        not
        operate as or be construed to be a waiver of any other breach of such provision
        or of any breach of any other provision of this Debenture. The failure of
        the
        Holder to insist upon strict adherence to any term of this Debenture on one
        or
        more occasions shall not be considered a waiver or deprive that party of
        the
        right thereafter to insist upon strict adherence to that term or any other
        term
        of this Debenture. Any waiver must be in writing.

      

      Section
        12.          If
        any provision of this Debenture is invalid, illegal or unenforceable, the
        balance of this Debenture shall remain in effect, and if any provision is
        inapplicable to any person or circumstance, it shall nevertheless remain
        applicable to all other persons and circumstances. If it shall be found that
        any
        interest or other amount deemed interest due hereunder shall violate applicable
        laws governing usury, the applicable rate of interest due hereunder shall
        automatically be lowered to equal the maximum permitted rate of interest.
        The
        Obligor covenants (to the extent that it may lawfully do so) that it shall
        not
        at any time insist upon, plead, or in any manner whatsoever claim or take
        the
        benefit or advantage of, any stay, extension or usury law or other law which
        would prohibit or forgive the Obligor from paying all or any portion of the
        principal of or interest on this Debenture as contemplated herein, wherever
        enacted, now or at any time hereafter in force, or which may affect the
        covenants or the performance of this indenture, and the Obligor (to the extent
        it may lawfully do so) hereby expressly waives all benefits or advantage
        of any
        such law, and covenants that it will not, by resort to any such law, hinder,
        delay or impeded the execution of any power herein granted to the Holder,
        but
        will suffer and permit the execution of every such as though no such law
        has
        been enacted.

      

      Section
        13.          Whenever
        any payment or other obligation hereunder shall be due on a day other than
        a
        Business Day, such payment shall be made on the next succeeding Business
        Day.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Section
        14.          THE
        PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY
        OF
        THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
        OR
        ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
        DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
        VERBAL
        OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
        FOR
        THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

      

      [REMAINDER
        OF PAGE INTENTIONLLY LEFT BLANK]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      IN
        WITNESS WHEREOF,
        the
        Obligor has caused this Secured Convertible Debenture to be duly executed
        by a
        duly authorized officer as of the date set forth above.

      
        	 	
                IQ
                  MEDICAL CORP. 

              
	 	 
	 	
                By:/s/
                  Robert V. Rudman

              
	 	
                Name:  Robert
                  V. Rudman

              
	 	
                Title:    CFO

              

      

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      EXHIBIT
        “A”

      

      NOTICE
        OF CONVERSION

      

      (To
        be executed by the Holder in order to convert the
        Debenture)

      

      

      
        	
                TO:

              	 

      

      

      

      The
        undersigned hereby irrevocably elects to convert $                                                  
        of the
        principal amount of the above Debenture into Shares of Common Stock of IQ
        Medical Corp., according to the conditions stated therein, as of the Conversion
        Date written below.

       

      
        	
                Conversion
                  Date:

              	
                                                                                                

              
	
                Applicable
                  Conversion Price:

              	
                                                                                                

              
	
                Signature:

              	
                                                                                                

              
	
                Name:

              	
                                                                                                

              
	
                Address:

              	
                                                                                                

              
	
                Amount
                  to be converted:

              	
                $                                                                                  

              
	
                Amount
                  of Debenture

                unconverted:

              	
                $                                                                                  

              
	
                Conversion
                  Price per share: 

              	
                $                                                                                  

              
	
                Number
                  of shares of Common 

                Stock
                  to be issued:

              	
                                                                                                

              
	
                Please
                  issue the shares of 

                Common
                  Stock in the following 

                name
                  and to the following 

                address:

              	
                                                                                                

              
	
                Issue
                  to:

              	
                                                                                                

              
	
                Authorized
                  Signature:

              	
                                                                                                

              
	
                Name:

              	
                                                                                                

              
	
                Title:

              	
                                                                                                

              
	
                Phone
                  Number:

              	
                                                                                                

              
	
                Broker
                  DTC Participant Code:

              	
                                                                                                

              
	
                Account
                  Number:EXHIBIT
      10.11

    

    SECURITIES
      PURCHASE AGREEMENT

    

    THIS SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of August 12, 2005, by and among IQ
      MEDICAL CORP.,
      a
      Colorado corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

     

    WITNESSETH

    

    WHEREAS,
      the
      Company and the Buyer(s) are executing and delivering this Agreement in reliance
      upon an exemption from securities registration pursuant to Section 4(2) and/or
      Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”);

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase up to Five Hundred Thousand Dollars ($500,000)
      of secured convertible debentures (the “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Company’s common stock, par value
      $0.0001 (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”)
      which
      shall be funded on the fifth (5th)
      business day following the date hereof (the “Closing”),
      for a
      total purchase price of up to Five Hundred Thousand Dollars ($500,000), (the
      “Purchase
      Price”)
      in the
      respective amounts set forth opposite each Buyer(s) name on Schedule I (the
      “Subscription
      Amount”);

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement
      substantially in the form attached hereto as Exhibit
      A
      (the
“Investor
      Registration Rights Agreement”)
      pursuant to which the Company has agreed to provide certain registration rights
      under the Securities Act and the rules and regulations promulgated there under,
      and applicable state securities laws; 

     

    WHEREAS,
      the
      aggregate proceeds of the sale of the Convertible Debentures contemplated hereby
      shall be held in escrow pursuant to the terms of an escrow agreement
      substantially in the form of the Escrow Agreement attached hereto as
Exhibit
      B;

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Security Agreement substantially in the
      form attached hereto as Exhibit
      C
      (the
“Security
      Agreement”)
      pursuant to which the Company has agreed to provide the Buyer a security
      interest in Pledged Collateral (as this term is defined in the Security
      Agreement) to secure the Company’s obligations under this Agreement, the
      Convertible Debenture, the Investor Registration Rights Agreement, the
      Irrevocable Transfer Agent Instructions, the Security Agreement or any other
      obligations of the Company to the Buyer; and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering Irrevocable Transfer Agent Instructions
      substantially in the form attached hereto as Exhibit
      D
      (the
“Irrevocable
      Transfer Agent Instructions”).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Buyer(s) hereby agree as follows:

     

    
      	 	
              1.

            	
              PURCHASE
                AND SALE OF CONVERTIBLE DEBENTURES.

            

    

     

    (a) Purchase
      of Convertible Debentures.
      Subject
      to the satisfaction (or waiver) of the terms and conditions of this Agreement,
      each Buyer agrees, severally and not jointly, to purchase at the Closing and
      the
      Company agrees to sell and issue to each Buyer, severally and not jointly,
      at
      the Closing, Convertible Debentures in amounts corresponding with the
      Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto.
      Upon execution hereof by a Buyer, the Buyer shall wire transfer the Subscription
      Amount set forth opposite his name on Schedule I in same-day funds or a check
      payable to “David Gonzalez, Esq., as Escrow Agent for IQ Medical Corp./Cornell
      Capital Partners, LP”, which Subscription Amount shall be held in escrow
      pursuant to the terms of the Escrow Agreement (as hereinafter defined) and
      disbursed in accordance therewith. Notwithstanding the foregoing, a Buyer may
      withdraw his Subscription Amount and terminate this Agreement as to such Buyer
      at any time after the execution hereof and prior to Closing (as hereinafter
      defined).

     

    (b) Closing
      Date.
      The
      Closing of the purchase and sale of the Convertible Debentures shall take place
      at 10:00 a.m. Eastern Standard Time on the fifth (5th)
      business day following the date hereof, subject to notification of satisfaction
      of the conditions to the Closing set forth herein and in Sections 6 and 7 below
      (or such later date as is mutually agreed to by the Company and the Buyer(s))
      (the “Closing
      Date”).
      The
      Closing shall occur on the Closing Date at the offices of Yorkville Advisors,
      LLC, 101 Hudson Street, Suite 3700, Jersey City, New Jersey 07302 (or such
      other
      place as is mutually agreed to by the Company and the Buyer(s)). 

     

    (c) Escrow
      Arrangements; Form of Payment.
      Upon
      execution hereof by Buyer(s) and pending the Closing, the aggregate proceeds
      of
      the sale of the Convertible Debentures to Buyer(s) pursuant hereto shall be
      deposited in a non-interest bearing escrow account with David Gonzalez, Esq.,
      as
      escrow agent (the “Escrow
      Agent”),
      pursuant to the terms of an escrow agreement between the Company, the Buyer(s)
      and the Escrow Agent in the form attached hereto as Exhibit
      B
      (the
“Escrow
      Agreement”).
      Subject to the satisfaction of the terms and conditions of this Agreement,
      on
      the Closing Date, (i) the Escrow Agent shall deliver to the Company in
      accordance with the terms of the Escrow Agreement such aggregate proceeds for
      the Convertible Debentures to be issued and sold to such Buyer(s), minus the
      unpaid structuring fees and expenses of Yorkville Advisors Management, LLC
      of
      Fifteen Thousand Dollars ($15,000) and the due diligence fee of Five Thousand
      Dollars ($5,000), which shall be paid directly from the gross proceeds held
      in
      escrow of the Closing and (ii) the Company shall deliver to each Buyer,
      Convertible Debentures which such Buyer(s) is purchasing in amounts indicated
      opposite such Buyer’s name on Schedule I, duly executed on behalf of the
      Company.

     

    
      	 	
              2.

            	
              BUYER’S
                REPRESENTATIONS AND WARRANTIES.

            

    

     

    Each
      Buyer represents and warrants, severally and not jointly, that:

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (a) Investment
      Purpose.
      Each
      Buyer is acquiring the Convertible Debentures and, upon conversion of
      Convertible Debentures, the Buyer will acquire the Conversion Shares then
      issuable, for its own account for investment only and not with a view towards,
      or for resale in connection with, the public sale or distribution thereof,
      except pursuant to sales registered or exempted under the Securities Act;
      provided, however, that by making the representations herein, such Buyer
      reserves the right to dispose of the Conversion Shares at any time in accordance
      with or pursuant to an effective registration statement (the “Registration
      Statement”)
      covering such Conversion Shares or an available exemption under the Securities
      Act.

     

    (b) Accredited
      Investor Status.
      Each
      Buyer is an “Accredited
      Investor”
as
      that
      term is defined in Rule 501(a)(3) of Regulation D.

     

    (c) Reliance
      on Exemptions.
      Each
      Buyer understands that the Convertible Debentures are being offered and sold
      to
      it in reliance on specific exemptions from the registration requirements of
      United States federal and state securities laws and that the Company is relying
      in part upon the truth and accuracy of, and such Buyer’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Buyer to acquire such
      securities.

     

    (d) Information.
      Each
      Buyer and its advisors (and his or, its counsel), if any, have been furnished
      with all materials relating to the business, finances and operations of the
      Company and information he deemed material to making an informed investment
      decision regarding his purchase of the Convertible Debentures and the Conversion
      Shares, which have been requested by such Buyer. Each Buyer and its advisors,
      if
      any, have been afforded the opportunity to ask questions of the Company and
      its
      management. Neither such inquiries nor any other due diligence investigations
      conducted by such Buyer or its advisors, if any, or its representatives shall
      modify, amend or affect such Buyer’s right to rely on the Company’s
      representations and warranties contained in Section 3 below. Each Buyer
      understands that its investment in the Convertible Debentures and the Conversion
      Shares involves a high degree of risk. Each Buyer is in a position regarding
      the
      Company, which, based upon employment, family relationship or economic
      bargaining power, enabled and enables such Buyer to obtain information from
      the
      Company in order to evaluate the merits and risks of this investment. Each
      Buyer
      has sought such accounting, legal and tax advice, as it has considered necessary
      to make an informed investment decision with respect to its acquisition of
      the
      Convertible Debentures and the Conversion Shares.

     

    (e) No
      Governmental Review.
      Each
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Convertible Debentures or the Conversion Shares, or the
      fairness or suitability of the investment in the Convertible Debentures or
      the
      Conversion Shares, nor have such authorities passed upon or endorsed the merits
      of the offering of the Convertible Debentures or the Conversion
      Shares.

     

    (f) Transfer
      or Resale.
      Each
      Buyer understands that except as provided in the Investor Registration Rights
      Agreement: (i) the Convertible Debentures have not been and are not being
      registered under the Securities Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, or (B) such Buyer shall have delivered to the Company
      an
      opinion of counsel, in a generally acceptable form, to the effect that such
      securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration requirements; (ii)
      any sale of such securities made in reliance on Rule 144 under the Securities
      Act (or a successor rule thereto) (“Rule 144”)
      may be
      made only in accordance with the terms of Rule 144 and further, if Rule 144
      is
      not applicable, any resale of such securities under circumstances in which
      the
      seller (or the person through whom the sale is made) may be deemed to be an
      underwriter (as that term is defined in the Securities Act) may require
      compliance with some other exemption under the Securities Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      person is under any obligation to register such securities under the Securities
      Act or any state securities laws or to comply with the terms and conditions
      of
      any exemption thereunder. The Company reserves the right to place stop transfer
      instructions against the shares and certificates for the Conversion
      Shares.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (g) Legends.
      Each
      Buyer understands that the certificates or other instruments representing the
      Convertible Debentures and or the Conversion Shares shall bear a restrictive
      legend in substantially the following form (and a stop -transfer order may
      be
      placed against transfer of such stock certificates):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A
      VIEW
      TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
      AN
      OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. 

     

    The
      legend set forth above shall be removed and the Company within two (2) business
      days shall issue a certificate without such legend to the holder of the
      Conversion Shares upon which it is stamped, if, unless otherwise required by
      state securities laws, (i) in connection with a sale transaction, provided
      the
      Conversion Shares are registered under the Securities Act or (ii) in connection
      with a sale transaction, after such holder provides the Company with an opinion
      of counsel, which opinion shall be in form, substance and scope customary for
      opinions of counsel in comparable transactions, to the effect that a public
      sale, assignment or transfer of the Conversion Shares may be made without
      registration under the Securities Act. 

     

    (h) Authorization,
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of such Buyer and is a valid and binding agreement of such Buyer enforceable
      in
      accordance with its terms, except as such enforceability may be limited by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (i) Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein,
      the
      Security Agreement, the Investor Registration Rights Agreement, the Escrow
      Agreement and the Irrevocable Transfer Agent Agreement; (ii) all due diligence
      and other information necessary to verify the accuracy and completeness of
      such
      representations, warranties and covenants; and (iii) answers to all questions
      each Buyer submitted to the Company regarding an investment in the Company;
      and
      each Buyer has relied on the information contained therein and has not been
      furnished any other documents, literature, memorandum or
      prospectus.

     

    (j) Due
      Formation of Corporate and Other Buyers.
      If the
      Buyer(s) is a corporation, trust, partnership or other entity that is not an
      individual person, it has been formed and validly exists and has not been
      organized for the specific purpose of purchasing the Convertible Debentures
      and
      is not prohibited from doing so.

     

    (k) No
      Legal Advice From the Company.
      Each
      Buyer acknowledges, that it had the opportunity to review this Agreement and
      the
      transactions contemplated by this Agreement with his or its own legal counsel
      and investment and tax advisors. Each Buyer is relying solely on such counsel
      and advisors and not on any statements or representations of the Company or
      any
      of its representatives or agents for legal, tax or investment advice with
      respect to this investment, the transactions contemplated by this Agreement
      or
      the securities laws of any jurisdiction. 

     

    
      	 	
              3.

            	
              REPRESENTATIONS
                AND WARRANTIES OF THE COMPANY.

            

    

     

    The
      Company represents and warrants to each of the Buyers that, except as set forth
      in the Disclosure Schedule (the “Disclosure
      Schedule”)
      attached hereto as Exhibit “E” herein:

     

    (a) Organization
      and Qualification.
      The
      Company and its subsidiaries are corporations duly organized and validly
      existing in good standing under the laws of the jurisdiction in which they
      are
      incorporated, and have the requisite corporate power to own their properties
      and
      to carry on their business as now being conducted. Each of the Company and
      its
      subsidiaries is duly qualified as a foreign corporation to do business and
      is in
      good standing in every jurisdiction in which the nature of the business
      conducted by it makes such qualification necessary, except to the extent that
      the failure to be so qualified or be in good standing would not have a material
      adverse effect on the Company and its subsidiaries taken as a
      whole.

     

    (b) Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The Company has the requisite corporate power and authority to enter
      into and perform this Agreement, the Security Agreement, the Investor
      Registration Rights Agreement, the Irrevocable Transfer Agent Agreement, the
      Escrow Agreement, and any related agreements (collectively the “Transaction
      Documents”)
      and to
      issue the Convertible Debentures and the Conversion Shares in accordance with
      the terms hereof and thereof, (ii) the execution and delivery of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby, including, without limitation, the issuance
      of
      the Convertible Debentures the Conversion Shares and the reservation for
      issuance and the issuance of the Conversion Shares issuable upon conversion
      or
      exercise thereof, have been duly authorized by the Company’s Board of Directors
      and no further consent or authorization is required by the Company, its Board
      of
      Directors or its stockholders, (iii) the Transaction Documents have been duly
      executed and delivered by the Company, (iv) the Transaction Documents constitute
      the valid and binding obligations of the Company enforceable against the Company
      in accordance with their terms, except as such enforceability may be limited
      by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors’ rights and remedies. The
      authorized officer of the Company executing the Transaction Documents knows
      of
      no reason why the Company cannot file the registration statement as required
      under the Investor Registration Rights Agreement or perform any of the Company’s
      other obligations under such documents. 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c) Capitalization.
      As of
      the date hereof the authorized capital stock of the Company consists of
      300,000,000 shares of Common Stock, par value $0.0001 and 25,000,000 shares
      of
      Preferred Stock, par value $0.0001 (“Preferred
      Stock”)
      of
      which 50,199,500 shares of Common Stock and no shares of Preferred Stock are
      issued and outstanding.. All of such outstanding shares have been validly issued
      and are fully paid and nonassessable. Except as disclosed in the Disclosure
      Schedule, no shares of Common Stock are subject to preemptive rights or any
      other similar rights or any liens or encumbrances suffered or permitted by
      the
      Company. Except as disclosed in the Disclosure Schedule, as of the date of
      this
      Agreement, (i) there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, or contracts, commitments, understandings
      or
      arrangements by which the Company or any of its subsidiaries is or may become
      bound to issue additional shares of capital stock of the Company or any of
      its
      subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, (ii) there are no outstanding debt securities and (iii) there
      are
      no agreements or arrangements under which the Company or any of its subsidiaries
      is obligated to register the sale of any of their securities under the
      Securities Act (except pursuant to the Registration Rights Agreement) and (iv)
      there are no outstanding registration statements and there are no outstanding
      comment letters from the SEC or any other regulatory agency. There are no
      securities or instruments containing anti-dilution or similar provisions that
      will be triggered by the issuance of the Convertible Debentures as described
      in
      this Agreement. The Company has furnished to the Buyer true and correct copies
      of the Company’s Articles of Incorporation, as amended and as in effect on the
      date hereof (the “Articles
      of Incorporation”),
      and
      the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants. 

     

    (d) Issuance
      of Securities.
      The
      Convertible Debentures are duly authorized and, upon issuance in accordance
      with
      the terms hereof, shall be duly issued, fully paid and nonassessable, are free
      from all taxes, liens and charges with respect to the issue thereof. The
      Conversion Shares issuable upon conversion of the Convertible Debentures have
      been duly authorized and reserved for issuance. Upon conversion or exercise
      in
      accordance with the Convertible Debentures the Conversion Shares will be duly
      issued, fully paid and nonassessable.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (e) No
      Conflicts.
      Except
      as disclosed in the Disclosure Schedule, the execution, delivery and performance
      of the Transaction Documents by the Company and the consummation by the Company
      of the transactions contemplated hereby will not (i) result in a violation
      of
      the Articles of Incorporation, any certificate of designations of any
      outstanding series of preferred stock of the Company or the By-laws or (ii)
      conflict with or constitute a default (or an event which with notice or lapse
      of
      time or both would become a default) under, or give to others any rights of
      termination, amendment, acceleration or cancellation of, any agreement,
      indenture or instrument to which the Company or any of its subsidiaries is
      a
      party, or result in a violation of any law, rule, regulation, order, judgment
      or
      decree (including federal and state securities laws and regulations) applicable
      to the Company or any of its subsidiaries or by which any property or asset
      of
      the Company or any of its subsidiaries is bound or affected. Except as disclosed
      in the Disclosure Schedule, neither the Company nor its subsidiaries is in
      violation of any term of or in default under its Articles of Incorporation
      or
      By-laws or their organizational charter or by-laws, respectively, or any
      material contract, agreement, mortgage, indebtedness, indenture, instrument,
      judgment, decree or order or any statute, rule or regulation applicable to
      the
      Company or its subsidiaries. The business of the Company and its subsidiaries
      is
      not being conducted, and shall not be conducted in violation of any material
      law, ordinance, or regulation of any governmental entity. Except as specifically
      contemplated by this Agreement and as required under the Securities Act and
      any
      applicable state securities laws, the Company is not required to obtain any
      consent, authorization or order of, or make any filing or registration with,
      any
      court or governmental agency in order for it to execute, deliver or perform
      any
      of its obligations under or contemplated by this Agreement or the Registration
      Rights Agreement in accordance with the terms hereof or thereof. Except as
      disclosed in the Disclosure Schedule, all consents, authorizations, orders,
      filings and registrations which the Company is required to obtain pursuant
      to
      the preceding sentence have been obtained or effected on or prior to the date
      hereof. The Company and its subsidiaries are unaware of any facts or
      circumstance, which might give rise to any of the foregoing.

     

    (f) Financial
      Statements.
      As of
      their respective dates, the financial statements of the Company disclosed in
      the
      Disclosure Schedule (the “Financial
      Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto. Such financial statements have been prepared in accordance with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such Financial
      Statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and, fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyer which is not
      included in the Disclosure Schedule, including, without limitation, information
      referred to in this Agreement, contains any untrue statement of a material
      fact
      or omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (g) 10(b)-5.
      The
      Financial Statements do not include any untrue statements of material fact,
      nor
      do they omit to state any material fact required to be stated therein necessary
      to make the statements made, in light of the circumstances under which they
      were
      made, not misleading.

     

    (h) Absence
      of Litigation.
      Except
      as disclosed in the Disclosure Schedule, there is no action, suit, proceeding,
      inquiry or investigation before or by any court, public board, government
      agency, self-regulatory organization or body pending against or affecting the
      Company, the Common Stock or any of the Company’s subsidiaries, wherein an
      unfavorable decision, ruling or finding would (i) have a material adverse effect
      on the transactions contemplated hereby (ii) adversely affect the validity
      or
      enforceability of, or the authority or ability of the Company to perform its
      obligations under, this Agreement or any of the documents contemplated herein,
      or (iii) except as expressly disclosed in the Disclosure Schedule, have a
      material adverse effect on the business, operations, properties, financial
      condition or results of operations of the Company and its subsidiaries taken
      as
      a whole.

     

    (i) Acknowledgment
      Regarding Buyer’s Purchase of the Convertible Debentures.
      The
      Company acknowledges and agrees that the Buyer(s) is acting solely in the
      capacity of an arm’s length purchaser with respect to this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that the
      Buyer(s) is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any advice given by the Buyer(s) or any of their
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is merely incidental to such Buyer’s purchase
      of the Convertible Debentures or the Conversion Shares. The Company further
      represents to the Buyer that the Company’s decision to enter into this Agreement
      has been based solely on the independent evaluation by the Company and its
      representatives.

     

    (j) No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D under the Securities Act) in connection
      with
      the offer or sale of the Convertible Debentures or the Conversion
      Shares.

     

    (k) No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would require
      registration of the Convertible Debentures or the Conversion Shares under the
      Securities Act or cause this offering of the Convertible Debentures or the
      Conversion Shares to be integrated with prior offerings by the Company for
      purposes of the Securities Act.

     

    (l) Employee
      Relations.
      Neither
      the Company nor any of its subsidiaries is involved in any labor dispute nor,
      to
      the knowledge of the Company or any of its subsidiaries, is any such dispute
      threatened. None of the Company’s or its subsidiaries’ employees is a member of
      a union and the Company and its subsidiaries believe that their relations with
      their employees are good.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (m) Intellectual
      Property Rights.
      The
      Company and its subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and rights necessary to conduct
      their
      respective businesses as now conducted. The Company and its subsidiaries do
      not
      have any knowledge of any infringement by the Company or its subsidiaries of
      trademark, trade name rights, patents, patent rights, copyrights, inventions,
      licenses, service names, service marks, service mark registrations, trade secret
      or other similar rights of others, and, to the knowledge of the Company there
      is
      no claim, action or proceeding being made or brought against, or to the
      Company’s knowledge, being threatened against, the Company or its subsidiaries
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Company and its subsidiaries are unaware of
      any
      facts or circumstances which might give rise to any of the
      foregoing.

     

    (n) Environmental
      Laws.
      The
      Company and its subsidiaries are (i) in compliance with any and all applicable
      foreign, federal, state and local laws and regulations relating to the
      protection of human health and safety, the environment or hazardous or toxic
      substances or wastes, pollutants or contaminants (“Environmental
      Laws”),
      (ii)
      have received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and (iii)
      are in compliance with all terms and conditions of any such permit, license
      or
      approval.

     

    (o) Title.
      Any
      real property and facilities held under lease by the Company and its
      subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      subsidiaries.

     

    (p) Insurance.
      The
      Company and each of its subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its subsidiaries are engaged. Neither the Company
      nor
      any such subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

     

    (q) Regulatory
      Permits.
      The
      Company and its subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (r) Internal
      Accounting Controls.
      The
      Company and each of its subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset accountability, and (iii) the recorded amounts for assets is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences.

     

    (s) No
      Material Adverse Breaches, etc.
      Except
      as set forth in the Disclosure Schedule, neither the Company nor any of its
      subsidiaries is subject to any charter, corporate or other legal restriction,
      or
      any judgment, decree, order, rule or regulation which in the judgment of the
      Company’s officers has or is expected in the future to have a material adverse
      effect on the business, properties, operations, financial condition, results
      of
      operations or prospects of the Company or its subsidiaries. Except as set forth
      in the Disclosure Schedule, neither the Company nor any of its subsidiaries
      is
      in breach of any contract or agreement which breach, in the judgment of the
      Company’s officers, has or is expected to have a material adverse effect on the
      business, properties, operations, financial condition, results of operations
      or
      prospects of the Company or its subsidiaries.

     

    (t) Tax
      Status.
      Except
      as set forth in the Disclosure Schedule, the Company and each of its
      subsidiaries has made and filed all federal and state income and all other
      tax
      returns, reports and declarations required by any jurisdiction to which it
      is
      subject and (unless and only to the extent that the Company and each of its
      subsidiaries has set aside on its books provisions reasonably adequate for
      the
      payment of all unpaid and unreported taxes) has paid all taxes and other
      governmental assessments and charges that are material in amount, shown or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith and has set aside on its books provision
      reasonably adequate for the payment of all taxes for periods subsequent to
      the
      periods to which such returns, reports or declarations apply. There are no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for any
      such
      claim.

     

    (u) Certain
      Transactions.
      Except
      as set forth in the Disclosure Schedule, and except for arm’s length
      transactions pursuant to which the Company makes payments in the ordinary course
      of business upon terms no less favorable than the Company could obtain from
      third parties and other than the grant of stock options disclosed in the
      Disclosure Schedule, none of the officers, directors, or employees of the
      Company is presently a party to any transaction with the Company (other than
      for
      services as employees, officers and directors), including any contract,
      agreement or other arrangement providing for the furnishing of services to
      or
      by, providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or such employee or, to
      the
      knowledge of the Company, any corporation, partnership, trust or other entity
      in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

     

    (v) Fees
      and Rights of First Refusal.
      The
      Company is not obligated to offer the securities offered hereunder on a right
      of
      first refusal basis or otherwise to any third parties including, but not limited
      to, current or former shareholders of the Company, underwriters, brokers, agents
      or other third parties.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.

            	
              COVENANTS.

            

    

     

    (a) Best
      Efforts.
      Each
      party shall use its best efforts to timely satisfy each of the conditions to
      be
      satisfied by it as provided in Sections 6 and 7 of this Agreement.

     

    (b) Form
      D.
      The
      Company agrees to file a Form D with respect to the Conversion Shares as
      required under Regulation D and to provide a copy thereof to each Buyer promptly
      after such filing. The Company shall, on or before the Closing Date, take such
      action as the Company shall reasonably determine is necessary to qualify the
      Conversion Shares, or obtain an exemption for the Conversion Shares for sale
      to
      the Buyers at the Closing pursuant to this Agreement under applicable securities
      or “Blue Sky” laws of the states of the United States, and shall provide
      evidence of any such action so taken to the Buyers on or prior to the Closing
      Date.

     

    (c) Reporting
      Status.
      Until
      the earlier of (i) the date as of which the Buyer(s) may sell all of the
      Conversion Shares without restriction pursuant to Rule 144(k) promulgated under
      the Securities Act (or successor thereto), or (ii) the date on which (A) the
      Buyer(s) shall have sold all the Conversion Shares and (B) none of the
      Convertible Debentures are outstanding (the “Registration
      Period”),
      the
      Company shall (upon securing listing and quotation on the OTCBB) file in a
      timely manner all reports required to be filed with the SEC pursuant to the
      Exchange Act and the regulations of the SEC thereunder, and the Company shall
      not terminate its status as an issuer required to file reports under the
      Exchange Act even if the Exchange Act or the rules and regulations thereunder
      would otherwise permit such termination.

     

    (d) Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Convertible Debentures for
      general corporate and working capital purposes.

     

    (e) Reservation
      of Shares.
      The
      Company shall take all action reasonably necessary to at all times have
      authorized, and reserved for the purpose of issuance, such number of shares
      of
      Common Stock as shall be necessary to effect the issuance of the Conversion
      Shares. If at any time the Company does not have available such shares of Common
      Stock as shall from time to time be sufficient to effect the conversion of
      all
      of the Conversion Shares, the Company shall call and hold a special meeting
      of
      the shareholders within thirty (30) days of such occurrence, for the sole
      purpose of increasing the number of shares authorized. The Company’s management
      shall recommend to the shareholders to vote in favor of increasing the number
      of
      shares of Common Stock authorized. Management shall also vote all of its shares
      in favor of increasing the number of authorized shares of Common
      Stock.

     

    (f) Listings
      or Quotation.
      The
      Company shall promptly secure the listing or quotation of the Conversion Shares
      upon each national securities exchange, automated quotation system or The
      National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
      Board (“OTCBB”)
      or
      other market, if any, upon which shares of Common Stock are then listed or
      quoted (subject to official notice of issuance) and shall use its best efforts
      to maintain, so long as any other shares of Common Stock shall be so listed,
      such listing of all Conversion Shares from time to time issuable under the
      terms
      of this Agreement. The Company shall maintain the Common Stock’s authorization
      for quotation on the OTCBB.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (g) Fees
      and Expenses.
      

     

    (i) Each
      of
      the Company and the Buyer(s) shall pay all costs and expenses incurred by such
      party in connection with the negotiation, investigation, preparation, execution
      and delivery of the Transaction Documents. The Company shall pay Yorkville
      Advisors Management LLC a fee equal to ten percent (10%) of the Purchase Price.
      

     

    (ii) The
      Company shall pay a structuring fee to Yorkville Advisors Management, LLC of
      Fifteen Thousand Dollars ($15,000), which shall be paid directly from the
      proceeds of the Closing. 

     

    (iii) The
      Company shall pay the Buyers a non-refundable due diligence fee of Five Thousand
      Hundred Dollars ($5,000) which shall be paid directly from the proceeds of
      the
      Closing.

     

    (iv) The
      Company shall issue to the Buyer a warrant to purchase One Hundred Thousand
      (100,000) shares of the Company’s Common Stock (the “Warrant
      Shares”)
      for a
      period of three (3) years at an exercise price of $0.001 per share. The Warrant
      Shares shall be registered in accordance with the Investor Registration Rights
      Agreement of even date herewith. 

     

    (h) Corporate
      Existence.
      So long
      as any of the Convertible Debentures remain outstanding, the Company shall
      not
      directly or indirectly consummate any merger, reorganization, restructuring,
      reverse stock split consolidation, sale of all or substantially all of the
      Company’s assets or any similar transaction or related transactions (each such
      transaction, an “Organizational
      Change”)
      unless, prior to the consummation an Organizational Change, the Company obtains
      the written consent of each Buyer. In any such case, the Company will make
      appropriate provision with respect to such holders’ rights and interests to
      insure that the provisions of this Section 4(h) will thereafter be applicable
      to
      the Convertible Debentures.

     

    (i) Transactions
      With Affiliates.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, and shall
      cause each of its subsidiaries not to, enter into, amend, modify or supplement,
      or permit any subsidiary to enter into, amend, modify or supplement any
      agreement, transaction, commitment, or arrangement with any of its or any
      subsidiary’s officers, directors, person who were officers or directors at any
      time during the previous two (2) years, stockholders who beneficially own five
      percent (5%) or more of the Common Stock, or Affiliates (as defined below)
      or
      with any individual related by blood, marriage, or adoption to any such
      individual or with any entity in which any such entity or individual owns a
      five
      percent (5%) or more beneficial interest (each a “Related
      Party”),
      except for (a) customary employment arrangements and benefit programs on
      reasonable terms, (b) any investment in an Affiliate of the Company, (c) any
      agreement, transaction, commitment, or arrangement on an arms-length basis
      on
      terms no less favorable than terms which would have been obtainable from a
      person other than such Related Party, (d) any agreement, transaction,
      commitment, or arrangement which is approved by a majority of the disinterested
      directors of the Company; for purposes hereof, any director who is also an
      officer of the Company or any subsidiary of the Company shall not be a
      disinterested director with respect to any such agreement, transaction,
      commitment, or arrangement. “Affiliate”
for
      purposes hereof means, with respect to any person or entity, another person
      or
      entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
      interest in that person or entity, (ii) has ten percent (10%) or more common
      ownership with that person or entity, (iii) controls that person or entity,
      or
      (iv) shares common control with that person or entity. “Control”
or
      “controls”
for
      purposes hereof means that a person or entity has the power, direct or indirect,
      to conduct or govern the policies of another person or entity.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (j) Transfer
      Agent.
      The
      Company covenants and agrees that, in the event that the Company’s agency
      relationship with the transfer agent should be terminated for any reason prior
      to a date which is two (2) years after the Closing Date, the Company shall
      immediately appoint a new transfer agent and shall require that the new transfer
      agent execute and agree to be bound by the terms of the Irrevocable Transfer
      Agent Instructions (as defined herein).

     

    (k) Restriction
      on Issuance of the Capital Stock.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, without
      the prior written consent of the Buyer(s), (i) issue or sell shares of Common
      Stock or Preferred Stock with or without consideration, (ii) issue any warrant,
      option, right, contract, call, or other security instrument granting the holder
      thereof, the right to acquire Common Stock with or without consideration, (iii)
      enter into any security instrument granting the holder a security interest
      in
      any and all assets of the Company, or (iv) file any registration statement
      on
      Form S-8.
      The
      foregoing restrictions shall not apply to the issuance of shares of Common
      Stock
      pursuant to a bona fide Employee Stock Option Plan of no more than 15% of the
      Company’s outstanding shares of Common Stock as of the date hereof provided,
      however, such options are issued not less than the closing bid price of the
      Company’s Common Stock
      on the
      OTCBB or on the exchange which the Common Stock is then listed as quoted by
      Bloomberg, LP
      at the
      date of issuance.

     

    (l) Neither
      the Buyer(s) nor any of its affiliates have an open short position in the Common
      Stock of the Company, and the Buyer(s) agrees that it shall not, and that it
      will cause its affiliates not to, engage in any short sales of or hedging
      transactions with respect to the Common Stock as long as any Convertible
      Debenture or warrants to purchase the Warrant Shares shall remain outstanding.
      

     

    
      	 	
              5.

            	
              TRANSFER
                AGENT INSTRUCTIONS.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (a) The
      Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
      agent irrevocably appointing David Gonzalez, Esq. as the Company’s agent for
      purpose of having certificates issued, registered in the name of the Buyer(s)
      or
      its respective nominee(s), for the Conversion Shares representing such amounts
      of Convertible Debentures as specified from time to time by the Buyer(s) to
      the
      Company upon conversion of the Convertible Debentures, for interest owed
      pursuant to the Convertible Debenture, and for any and all Liquidated Damages
      (as this term is defined in the Investor Registration Rights Agreement). David
      Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50) for every
      occasion they act pursuant to the Irrevocable Transfer Agent Instructions.
      The
      Company shall not change its transfer agent without the express written consent
      of the Buyer(s), which may be withheld by the Buyer(s) in its sole discretion.
      Prior to registration of the Conversion Shares under the Securities Act, all
      such certificates shall bear the restrictive legend specified in Section 2(g)
      of
      this Agreement. The Company warrants that no instruction other than the
      Irrevocable Transfer Agent Instructions referred to in this Section 5, and
      stop
      transfer instructions to give effect to Section 2(g) hereof (in the case of
      the
      Conversion Shares prior to registration of such shares under the Securities
      Act)
      will be given by the Company to its transfer agent and that the Conversion
      Shares shall otherwise be freely transferable on the books and records of the
      Company as and to the extent provided in this Agreement and the Investor
      Registration Rights Agreement. Nothing in this Section 5 shall affect in any
      way
      the Buyer’s obligations and agreement to comply with all applicable securities
      laws upon resale of Conversion Shares. If the Buyer(s) provides the Company
      with
      an opinion of counsel, in form, scope and substance customary for opinions
      of
      counsel in comparable transactions to the effect that registration of a resale
      by the Buyer(s) of any of the Conversion Shares is not required under the
      Securities Act, the Company shall within two (2) business days instruct its
      transfer agent to issue one or more certificates in such name and in such
      denominations as specified by the Buyer. The Company acknowledges that a breach
      by it of its obligations hereunder will cause irreparable harm to the Buyer
      by
      vitiating the intent and purpose of the transaction contemplated hereby.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5 will be inadequate and agrees, in the event
      of
      a breach or threatened breach by the Company of the provisions of this
      Section 5, that the Buyer(s) shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    
      	 	
              6.

            	
              CONDITIONS
                TO THE COMPANY’S OBLIGATION TO SELL.

            

    

     

    The
      obligation of the Company hereunder to issue and sell the Convertible Debentures
      to the Buyer(s) at the Closing is subject to the satisfaction, at or before
      the
      Closing Date, of each of the following conditions, provided that these
      conditions are for the Company’s sole benefit and may be waived by the Company
      at any time in its sole discretion:

     

    (a) Each
      Buyer shall have executed the Transaction Documents and delivered them to the
      Company.

     

    (b) The
      Buyer(s) shall have delivered to the Escrow Agent the Purchase Price for
      Convertible Debentures in respective amounts as set forth next to each Buyer
      as
      outlined on Schedule I attached hereto and the Escrow Agent shall have delivered
      the net proceeds to the Company by wire transfer of immediately available U.S.
      funds pursuant to the wire instructions provided by the Company.

     

    (c) The
      representations and warranties of the Buyer(s) shall be true and correct in
      all
      material respects as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and the Buyer(s) shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      this Agreement to be performed, satisfied or complied with by the Buyer(s)
      at or
      prior to the Closing Date. 

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	 	
              7.

            	
              CONDITIONS
                TO THE BUYER’S OBLIGATION TO PURCHASE.

            

    

     

    (a) The
      obligation of the Buyer(s) hereunder to Purchase the Convertible Debentures
      at
      the Closing is subject to the satisfaction, at or before the Closing Date,
      of
      each of the following conditions:

     

    (i) The
      Company shall have executed the Transaction Documents and delivered the same
      to
      the Buyer(s).

     

    (ii) The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date) and the Company shall have performed, satisfied and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the Closing Date. If requested by the Buyer, the Buyer
      shall have received a certificate, executed by the President of the Company,
      dated as of the Closing Date, to the foregoing effect and as to such other
      matters as may be reasonably requested by the Buyer including, without
      limitation an update as of the Closing Date regarding the representation
      contained in Section 3(c) above.

     

    (iii) The
      Company shall have executed and delivered to the Buyer(s) the Convertible
      Debentures in the respective amounts set forth opposite each Buyer(s) name
      on
      Schedule I attached hereto.

     

    (iv) The
      Buyer(s) shall have received an opinion of counsel from Gunster Yoakley &
Stewart, P.A. in a form satisfactory to the Buyer(s).

     

    (v) The
      Company shall have provided to the Buyer(s) a certificate of good standing
      from
      the secretary of state from the state in which the company is
      incorporated.

     

    (vi) The
      Company shall have filed a form UCC-1 or such other forms as may be required
      to
      perfect the Buyer’s interest in the Pledged Property as detailed in the Security
      Agreement dated the date hereof and provided proof of such filing to the
      Buyer(s).

     

    (vii) The
      Company shall have provided to the Buyer an acknowledgement, to the satisfaction
      of the Buyer, from the Company’s independent certified public accountants as to
      its ability to provide all consents required in order to file a registration
      statement in connection with this transaction.

     

    (viii) The
      Company shall have reserved out of its authorized and unissued Common Stock,
      solely for the purpose of effecting the conversion of the Convertible
      Debentures, shares of Common Stock to effect the conversion of all of the
      Conversion Shares then outstanding. 

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (ix) The
      Irrevocable Transfer Agent Instructions, in form and substance satisfactory
      to
      the Buyer, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    
      	 	
              8.

            	
              INDEMNIFICATION.

            

    

     

    (a) In
      consideration of the Buyer’s execution and delivery of this Agreement and
      acquiring the Convertible Debentures and the Conversion Shares hereunder, and
      in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Buyer(s) and
      each
      other holder of the Convertible Debentures and the Conversion Shares, and all
      of
      their officers, directors, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Buyer
      Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Buyer Indemnitee is a party to the action
      for
      which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by the Buyer Indemnitees or any of them as a result of, or arising
      out
      of, or relating to (a) any misrepresentation or breach of any representation
      or
      warranty made by the Company in this Agreement, the Convertible Debentures
      or
      the Investor Registration Rights Agreement or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in this Agreement, or the
      Investor Registration Rights Agreement or any other certificate, instrument
      or
      document contemplated hereby or thereby, or (c) any cause of action, suit or
      claim brought or made against such Indemnitee and arising out of or resulting
      from the execution, delivery, performance or enforcement of this Agreement
      or
      any other instrument, document or agreement executed pursuant hereto by any
      of
      the parties hereto, any transaction financed or to be financed in whole or
      in
      part, directly or indirectly, with the proceeds of the issuance of the
      Convertible Debentures or the status of the Buyer or holder of the Convertible
      Debentures the Conversion Shares, as a Buyer of Convertible Debentures in the
      Company. To the extent that the foregoing undertaking by the Company may be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified Liabilities, which
      is
      permissible under applicable law.

     

    (b) In
      consideration of the Company’s execution and delivery of this Agreement, and in
      addition to all of the Buyer’s other obligations under this Agreement, the Buyer
      shall defend, protect, indemnify and hold harmless the Company and all of its
      officers, directors, employees and agents (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the “Company
      Indemnitees”)
      from
      and against any and all Indemnified Liabilities incurred by the Indemnitees
      or
      any of them as a result of, or arising out of, or relating to (a) any
      misrepresentation or breach of any representation or warranty made by the
      Buyer(s) in this Agreement, instrument or document contemplated hereby or
      thereby executed by the Buyer, (b) any breach of any covenant, agreement or
      obligation of the Buyer(s) contained in this Agreement, the Investor
      Registration Rights Agreement or any other certificate, instrument or document
      contemplated hereby or thereby executed by the Buyer, or (c) any cause of
      action, suit or claim brought or made against such Company Indemnitee based
      on
      material misrepresentations or due to a material breach and arising out of
      or
      resulting from the execution, delivery, performance or enforcement of this
      Agreement, the Investor Registration Rights Agreement or any other instrument,
      document or agreement executed pursuant hereto by any of the parties hereto.
      To
      the extent that the foregoing undertaking by each Buyer may be unenforceable
      for
      any reason, each Buyer shall make the maximum contribution to the payment and
      satisfaction of each of the Indemnified Liabilities, which is permissible under
      applicable law.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.

            	
              GOVERNING
                LAW: MISCELLANEOUS.

            

    

     

    (a) Governing
      Law.
      This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of New Jersey without regard to the principles of conflict of laws.
      The parties further agree that any action between them shall be heard in Hudson
      County, New Jersey, and expressly consent to the jurisdiction and venue of
      the
      Superior Court of New Jersey, sitting in Hudson County and the United States
      District Court for the District of New Jersey sitting in Newark, New Jersey
      for
      the adjudication of any civil action asserted pursuant to this
      Paragraph.

     

    (b) Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause four (4) additional original executed
      signature pages to be physically delivered to the other party within five (5)
      days of the execution and delivery hereof.

     

    (c) Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d) Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    (e) Entire
      Agreement, Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Buyer(s), the Company, their affiliates and persons acting on their behalf
      with
      respect to the matters discussed herein, and this Agreement and the instruments
      referenced herein contain the entire understanding of the parties with respect
      to the matters covered herein and therein and, except as specifically set forth
      herein or therein, neither the Company nor any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be waived or amended other than by an instrument in writing
      signed by the party to be charged with enforcement.

     

    (f) Notices.
      Any
      notices, consents, waivers, or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered (i) upon receipt, when delivered personally; (ii) upon
      confirmation of receipt, when sent by facsimile; (iii) three (3) days after
      being sent by U.S. certified mail, return receipt requested, or (iv) one (1)
      day
      after deposit with a nationally recognized overnight delivery service, in each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Company, to:

            	
              IQ
                Medical Corp.

            
	 	
              500
                Australian Avenue South - Suite 700

            
	 	
              West
                Palm Beach, Florida 33401

            
	 	
              Attention:   
                Robert
                V. Rudman

            
	 	
              Telephone:  
                (561)
                514-0018

            
	 	
              Facsimile:     
                (561)
                514-0195

            
	 	 
	
              With
                a copy to:

            	
              Gunster
                Yoakley & Stewart, P.A.

            
	 	
              Broward
                Financial Centre - Suite 1400

              500
                East Broward Blvd.

            
	 	
              Fort
                Lauderdale, Florida 33394

            
	 	
              Attention:   
                Robert
                C. White, Jr. Esq.

            
	 	
              Telephone:  
                (954)
                468-1360

            
	 	
              Facsimile:     
                (954)
                888-2037

            
	 	 
	 	 

    

    If
      to the
      Buyer(s), to its address and facsimile number on Schedule I, with copies to
      the
      Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
      days’ prior written notice to the other party of any change in address or
      facsimile number.

     

    (g) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns. Neither the Company nor any Buyer
      shall
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of the other party hereto.

     

    (h) No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    (i) Survival.
      Unless
      this Agreement is terminated under Section 9(l), the representations and
      warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
      agreements and covenants set forth in Sections 4, 5 and 9, and the
      indemnification provisions set forth in Section 8, shall survive the Closing
      for
      a period of two (2) years following the date on which the Convertible Debentures
      are converted in full. The Buyer(s) shall be responsible only for its own
      representations, warranties, agreements and covenants hereunder.

     

    (j) Publicity.
      The
      Company and the Buyer(s) shall have the right to approve, before issuance any
      press release or any other public statement with respect to the transactions
      contemplated hereby made by any party; provided, however, that the Company
      shall
      be entitled, without the prior approval of the Buyer(s), to issue any press
      release or other public disclosure with respect to such transactions required
      under applicable securities or other laws or regulations (the Company shall
      use
      its best efforts to consult the Buyer(s) in connection with any such press
      release or other public disclosure prior to its release and Buyer(s) shall
      be
      provided with a copy thereof upon release thereof).

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (k) Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (l) Termination.
      In the
      event that the Closing shall not have occurred with respect to the Buyers on
      or
      before five (5) business days from the date hereof due to the Company’s or the
      Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above
      (and the non-breaching party’s failure to waive such unsatisfied condition(s)),
      the non-breaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on such date without
      liability of any party to any other party; provided, however, that if this
      Agreement is terminated by the Company pursuant to this Section 9(l), the
      Company shall remain obligated to reimburse the Buyer(s) for the fees and
      expenses of Yorkville Advisors Management, LLC described in Section 4(g)
      above.

     

    (m) No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    

    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      Buyers and the Company have caused this Securities Purchase Agreement to be
      duly
      executed as of the date first written above.

     

    

    
      	 	
              COMPANY:

            
	 	
              IQ
                MEDICAL CORP. 

            
	 	 
	 	
              By: /s/
                Robert V. Rudman   

            
	 	
              Name: Robert
                V. Rudman

            
	 	
              Title: CFO

            
	 	 

    

    

    

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

     

    FORM
      OF INVESTOR REGISTRATION RIGHTS AGREEMENT

     

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      B

     

    FORM
      OF ESCROW AGREEMENT

     

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      C

     

    SECURITY
      AGREEMENT

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

    

    IRREVOCABLE
      TRANSFER AGENT INSTRUCTIONS

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      E

    

    DISCLOSURE
      SCHEDULE

     

    Pursuant
      to the Securities Purchase Agreement dated August __, 2005 (the “Agreement”) by
      and among the Company and the Buyers, each as defined in the Agreement, the
      following information and disclosures (the “Disclosures”) are being provided to
      the Buyers by the Company. The Disclosures are intended to qualify and limit
      any
      covenants, representations and warranties made by the Company in the Agreement.
      Any Disclosure contained in this Disclosure Schedule that relates to a possible
      breach or violation of any agreement, statute, rule or regulation shall not
      be
      construed as an admission or indication that such breach or violation exists
      or
      has actually occurred. Any matter disclosed herein shall be deemed by all
      parties to the Agreement to be disclosed with respect to the specific provision
      described and also to all other provisions of the Agreement (including, without
      limitation, any schedules or exhibits to the Agreement) to which such Disclosure
      reasonably relates. All descriptions of agreements or other matters appearing
      herein are summary in nature. Capitalized terms used herein and not otherwise
      defined shall have the meanings ascribed to such terms in the
      Agreement.

     

    SECTION
      3(a)

    

    (i) Organization
      and Qualification

     

    The
      Company is not qualified to transact business in any jurisdiction other than
      Colorado (the state of its incorporation). The Company has no material assets
      of
      any kind (except as discussed in Section 3(m) below). The Company has not
      conducted any business operations for a prolonged period of time.

     

    SECTION
      3(f)

    

    Financial
      Statements

     

    The
      Financial Statements of the Company are as of and for the years ended on
      December 31, 2003 and December 31, 2004. The Financial Statements were audited
      by the accounting firm of Lawrence Sharfman & Co. CPA, PA. These time
      periods were prior to the transactions described in Section 3(m) below and
      prior
      to the involvement of the Company’s current Board of Directors or
      officers.

    

    SECTION
      3(m)

    

    Intellectual
      Property Rights

     

    The
      Company owns certain license rights (the “Technology License Rights”) to certain
      technology (the “Technology”) owned by Osmotex A/S, a Norwegian corporation
      (“Osmotex”). Osmotex assigned the Technology License Rights to Osmotex USA, Inc.
      (“Osmotex USA”), a wholly owned subsidiary of Osmotex. Osmotex USA then
      contributed the Technology License Rights to the Company in exchange for 85.0%
      of the Company’s outstanding Common Stock, and Osmotex USA is currently the
      holder of 85.0% of the Company’s Common Stock. The Technology License Rights are
      the Company’s only material asset as of the date of the Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SECTION
      3(r)

    

    Internal
      Accounting Controls

     

    The
      Company has not conducted any business operations or activity for a substantial
      period of time and accordingly does not have internal accounting controls in
      place. The Company has engaged a new auditing firm (Daszkal Bolton LLP) and
      intends to work closely with Daszkal Bolton LLP to promptly develop and
      implement an acceptable accounting control system.

    

    SECTION
      3(u)

    

    Certain
      Transactions

     

    The
      Disclosures made in this Section 3(u) also apply in their entirety to Section
      4(i) of the Agreement (Transactions
      with Affiliates).
      In
      connection with this Section 3(u), please also refer to the discussion under
      Section 3(m) above relating to the ownership structure of the Company as it
      also
      applies to this Section 3(u).

    

    Some
      of
      the members of the Company’s Board of Directors and some of the Company’s
      officers and employees are also either members of the Board of Directors,
      officers and/or employees of Osmotex and/or Osmotex USA. The Company anticipates
      that these various relationships will continue and that other similar
      relationships will result as the Company develops its structure and its business
      plan and organization. In some of these relationships the Company may pay
      compensation or other benefits to such parties who are also affiliated with
      Osmotex and/or Osmotex USA.

    

    The
      Company has also determined that it is in the best interests of the Company
      and
      its shareholders for the Company to provide funding assistance in connection
      with Osmotex’s continued research and development of the Technology. The Company
      may also provide such funding assistance to Osmotex for other technologies
      or
      other items. The Company has not yet finally determined the method in which
      such
      funding assistance will be provided to Osmotex, but this will represent cash
      expenditures by the Company. This funding assistance will involve the
      expenditure of the Company’s cash, and such cash expenditures will not be
      classified as debt owed to the Company by Osmotex or as capital contributions
      in
      exchange for the equity of Osmotex. The Company has determined that this
      situation is advantageous to the Company and its shareholders because of the
      existence of the Technology License Rights and the benefits that the Company
      believes that it can derive as the Technology is further developed and improved,
      but these payments will also be advantageous and beneficial to Osmotex. A
      portion of the proceeds of received by the Company pursuant to the transactions
      contemplated in the Agreement will be used in this manner and will benefit
      Osmotex.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS 

    

    
      	
              Name

            	 	
              Signature

            	 	
              Address/Facsimile
                

              Number
                of Buyer

            	 	
              Amount
                of Subscription

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
              Cornell
                Capital Partners, LP

            	 	
              By: Yorkville
                Advisors, LLC

            	 	
              101
                Hudson Street - Suite 3700

            	 	
              $500,000

            
	 	 	
              Its: General
                Partner

            	 	
              Jersey
                City, NJ 07303

            	 	 
	 	 	 	 	
              Facsimile: (201)
                985-8266

            	 	 
	 	 	 	 	 	 	 
	 	 	
              By:
                /s/
                Mark Angelo

            	 	 	 	 
	 	 	
              Name: Mark
                Angelo

            	 	 	 	 
	 	 	
              Its: Portfolio
                Manager

            	 	 	 	 
	 	 	 	 	 	 	 
	
              With
                a copy to: 

            	 	
              Troy
                Rillo, Esq.

            	 	
              101
                Hudson Street - Suite 3700

            	 	 
	 	 	 	 	
              Jersey
                City, NJ 07302

            	 	 
	 	 	 	 	
              Facsimile:
                (201) 985-8266

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