Document:

EXHIBIT 4.1

                         SECURITIES PURCHASE AGREEMENT
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     SECURITIES  PURCHASE AGREEMENT dated as of June 21, 2007 (this "Agreement")
by and between Vasomedical,  Inc., a Delaware  corporation (the "Company"),  and
Kerns Manufacturing Corp., a New York corporation (the "Purchaser").

     WHEREAS,  representatives  of the  Purchaser  and  Living  Data  Technology
Corporation,  a New York corporation  ("Living Data"),  on the one hand, and the
Company,  on the other hand,  have been  parties to  discussions  regarding  the
future of the Company and the relationship of the parties;

     WHEREAS,  in furtherance of those discussions,  Living Data and the Company
are,  concurrently  with the execution and delivery of this Agreement,  entering
into a  distribution  agreement  in the form of  Exhibit A annexed  hereto  (the
"Distribution Agreement");

     WHEREAS,  in furtherance of those discussions,  Living Data and the Company
are,  concurrently  with the execution and delivery of this Agreement,  entering
into a supplier agreement in the form of Exhibit B annexed hereto (the "Supplier
Agreement");

     WHEREAS,  in furtherance of those discussions,  the Purchaser has agreed to
buy, and the Company  desires to sell to the Purchaser,  shares of the Company's
common stock, par value $.001 per share (the "Common Stock"),  and a warrant (in
the form attached  hereto as Exhibit C), to purchase  shares of the Common Stock
equal to twenty (20%) percent of the number of shares purchased (the "Warrant"),
all upon the terms and conditions set forth in this Agreement; and

     WHEREAS,  subject to the  provisions  set forth  herein,  the Purchaser has
agreed to give to the Company the right to put  additional  shares of the Common
Stock to the Purchaser;

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and  of the  mutual
premises,  covenants,  representations  and warranties herein  contained,  it is
hereby agreed as follows:

1.   Purchase and Sale of Units/Closing.

     1.1. Issuance and Sale of Common Stock and Warrants.

          1.1.1.  Subject to the terms and  conditions  of this  Agreement,  the
               Purchaser  agrees to  purchase  at the  Closing  (as  hereinafter
               defined),  and  the  Company  agrees  to  issue  and  sell to the
               Purchaser,  21,428,572  shares of the Common  Stock  (the  "Kerns
               Shares")  and the  Warrant to  purchase  4,285,714  shares of the
               Common   Stock   for  an   aggregate   purchase   price   of  One
               Million-Five-Hundred-Thousand ($1,500,000) Dollars (the "Purchase
               Price").
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          1.1.2. The Warrant shall have an initial exercise price for each share
               of the Common Stock represented thereby of $0.08 per share

     1.2. Closing.

          1.2.1. The closing of the purchase and sale of $1,500,000 of the Kerns
               Shares and the Warrant under this Agreement (the "Closing") shall
               be held at the  offices  of Wachtel & Maysr,  LLP,  110 East 59th
               Street,  New York,  New York (or  remotely  via the  exchange  of
               documents  and  signatures),  on June 21,  2007  (the date of the
               Closing is hereinafter referred to as the "Closing Date").

          1.2.2. At the Closing,  the Company shall deliver to the Purchaser the
               Kerns  Shares and the  Warrant  against  payment of the  Purchase
               Price to the Company.

          1.2.3. Conditions precedent to the Closing are that, concurrently with
               the execution of this Agreement,  (a) the Company,  the Purchaser
               and Living Data have executed an agreement  pursuant to which the
               Company  grants  "piggyback"  registration  rights to each of the
               Purchasers and Living Data (the "Registration Rights Agreement");
               (b) the Company and Living Data have  executed  the  Distribution
               Agreement;  and (c) the Company and Living Data have executed the
               Supplier Agreement.

2.   Option of Company to Put Additional Common Stock

     2.1. Additional  Commitment  to  Purchase.  At the  option of the  Company,
          exercisable  from time to time at any time on and after  December  31,
          2007 and prior to June 30, 2008 by notice  given to the  Purchaser  as
          provided in Section 7.3 hereof (the "Notice of Sale"),  the  Purchaser
          irrevocably  agrees and commits to purchase  from the Company,  for an
          aggregate purchase price of up to $1,000,000, additional shares of the
          Common Stock (the  "Additional  Shares") at a purchase price per share
          equal to 85% of the  Market  Value on the date of the  Notice of Sale,
          but not more than $.09 per share.

          2.1.1. As used herein,  the term "Market  Value" shall be deemed to be
               the average of the last  reported sale prices of the Common Stock
               for the last five (5) trading days immediately preceding the date
               the Notice of Sale is delivered by the Company to the  Purchaser,
               as officially  reported by the principal  securities  exchange or
               the NASD's OTC  Bulletin  Board on which the Common Stock is then
               listed or admitted for trading, or, if the Common Stock is not so
               reported,  the average of the closing bid prices as  furnished by
               Pink Sheets LLC or similar  organization if Pink Sheets LLC is no
               longer reporting such information.

          2.1.2. Any closing of the purchase and sale of the  Additional  Shares
               shall take place on the tenth business day following  delivery of
               the Notice of Sale,  and the Company and the  Purchaser  shall be
               deemed  with  respect to the  Additional  Shares to have made the
               same representations and warranties they made with respect to the
               Shares and the Warrant,  as set forth in Articles 3 and 4 hereof,
               respectively.

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     2.2. Condition  Precedent  to  Demand.  The  only  condition  precedent  to
          delivery  of a Notice  of Sale to the  Purchaser  is that the  Company
          demonstrates   to  the  Purchaser,   by  financial   data   reasonably
          satisfactory  to the  Purchaser,  that the Company,  on a consolidated
          basis,  has had, for the three (3) months  immediately  preceding  the
          month in which the Notice of Sale is delivered, either (a) income from
          operations  or (b)  operating  revenues  from  equipment  and services
          exceeding $1,800,000.

     2.3. Additional  Shares:  The parties  acknowledge that the Company may not
          have sufficient  authorized  shares of the Common Stock to deliver all
          shares of the Additional Shares which may be issuable pursuant to this
          Article 2. If the Company  elects to put such  shares,  the  Purchaser
          agrees to deliver funds  against the  obligation of the Company (a) to
          promptly   cause  an  Amendment  to  the  Company's   Certificate   of
          Incorporation  to be submitted to the  stockholders of the Company for
          their  consideration  changing the  authorized  capital to provide for
          such shares,  (b) to use commercially  reasonable efforts to cause the
          stockholders  of the  Company  to  approve  the  Amendment,  (c)  upon
          approval by the stockholders, to file the Amendment with the Secretary
          of State  of  Delaware  reflecting  such  approval  within  three  (3)
          Business  Days  of  stockholders'   approval  and  (d)  to  issue  the
          Additional  Shares to the Purchaser  within three (3) Business Days of
          such filing.  As used  herein,  the term  "Business  Day" mean any day
          other than Saturday, Sunday or any day on which the Transfer Agent for
          the Common Stock is not open for business.

3.   Representations  and Warranties of the Company.  The Company represents and
     warrants to the Purchaser as follows:

     3.1. Corporate Status. The Company is a corporation duly organized, validly
          existing,  and in good standing under the laws of ---------------- the
          State of Delaware, and has all requisite corporate power and authority
          to carry on its business as now conducted.  The Company's subsidiaries
          (the   "Subsidiaries")   are  duly   organized  in  their   respective
          jurisdictions of  organization,  validly existing and in good standing
          in such respective  jurisdictions and each has the power and authority
          to carry on its respective business as now conducted.  The Company and
          the  Subsidiaries  are duly qualified to transact  business and are in
          good standing in each  jurisdiction in which the failure so to qualify
          would not have a Material Adverse Effect on the Company's  business or
          properties.  For the purposes of this  Agreement,  the term  "Material
          Adverse  Effect"  shall  mean any  change or effect  that is, or could
          reasonably  be  expected to be,  materially  adverse to the assets and
          liabilities  (taken together as a whole),  capitalization or condition
          (financial or otherwise) of the Company and its Subsidiaries, taken as
          a whole,  other than any change or effect (a)  relating to the economy
          in general or (b)  relating  to the  industry in which the Company and
          its  Subsidiaries  operate  in  general  and not  specifically  to the
          Company or any Subsidiary.

     3.2. Authorization.  The Company has the  corporate  power and authority to
          execute and deliver this Agreement, the Registration Rights Agreement,
          the Distribution Agreement,  and the Supplier Agreement (together with

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          this Agreement,  the Warrant,  the Registration Rights Agreement,  the
          Distribution  Agreement and the Supplier  Agreement being collectively
          referred  to as the  "Transaction  Documents")  and to  carry  out its
          obligations  hereunder and  thereunder.  The  execution,  delivery and
          performance  by the  Company  of the  Transaction  Documents  and  the
          consummation of the transactions  contemplated hereby and thereby have
          been duly authorized by all necessary  corporate action on the part of
          the  Company  and this  Agreement  and each of the  other  Transaction
          Documents  constitutes the valid and legally binding obligation of the
          Company  enforceable  against  the  Company  in  accordance  with  its
          respective  terms,  except as the same may be limited  by  bankruptcy,
          insolvency,  reorganization or other laws affecting the enforcement of
          creditors'  rights generally now or hereafter in effect and subject to
          the  application  of  equitable  principles  and the  availability  of
          equitable remedies.

     3.3. No  Conflicts.  The  execution,   delivery  and  performance  of  this
          Agreement and the other Transaction  Documents and the consummation of
          the transactions contemplated hereby and thereby by the Company do not
          and will not with or without  the  giving of notice or the  passage of
          time or both,  violate  or  conflict  with or  result  in a breach  or
          termination  of any provision of, or constitute a default  under,  the
          Certificate  of  Incorporation  or the  By-Laws of the  Company or any
          order, judgment, decree, statute,  regulation,  contract, agreement or
          any other  restriction of any kind or description to which the Company
          or its assets may be bound or  subject.  Neither  the  Company nor any
          Subsidiary  is in violation of or (with or without  notice or lapse of
          time or both) in default under,  any material term or provision of its
          Certificate of Incorporation  or By-Laws or of any indenture,  loan or
          credit  agreement,  note agreement,  mortgage,  security  agreement or
          other agreement, lease or other instrument,  commitment or arrangement
          to which  the  Company  or a  Subsidiary  is a party  or by which  the
          Company's or the Subsidiary's assets are bound.

     3.4. Fully Paid and  Non-Assessable.  Upon issuance of the Kerns Shares and
          the Warrant and payment  therefor  pursuant to the terms hereof,  each
          share of the Common  Stock  issued as part of the Kerns Shares and the
          Warrant shall be validly issued,  fully paid and  non-assessable  and,
          upon exercise of the Warrant and payment  therefor,  each share of the
          Common Stock issuable upon exercise of the Warrant (a "Warrant Share")
          shall be validly issued, fully paid and non-assessable.

     3.5. Certificate and Bylaws. The copies of the Certificate of Incorporation
          and Bylaws of the Company  which have been  delivered to the Purchaser
          prior to the  execution  of this  Agreement  are true and complete and
          have not been amended or repealed.

     3.6. Capital Stock. As of the Closing Date,  prior to the issuance and sale
          of the Kerns Shares and the Warrant to the  Purchaser and the issuance
          of  shares  of  the  Common  Stock  to  Living  Data  pursuant  to the
          Distribution  Agreement,  the authorized  capital stock of the Company
          will consist of (a)  1,000,000  shares of preferred  stock,  par value
          $.001 per share (the "Preferred  Stock"),  of which no shares shall be
          outstanding,  and (b) 110,000,000 shares of the Common Stock, of which
          65,198,592  shares shall be outstanding and 8,995,688  shares shall be
          reserved for issuance upon the exercise of  outstanding  options.  All

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          such outstanding  shares of the Common Stock have been duly authorized
          and validly issued and are fully paid and nonassessable.

     3.7. Binding Obligations.

          3.7.1.  This  Agreement  and  the  other  Transaction  Documents  each
               constitutes  the  legal,  valid and  binding  obligations  of the
               Company,  enforceable  against the Company in accordance with its
               respective  terms,  except  as such  enforcement  is  limited  by
               bankruptcy,  insolvency  and other  similar  laws  affecting  the
               enforcement  of  creditors'   rights  generally  and  by  general
               equitable principles.

          3.7.2.  The  Kerns  Shares,   the  Warrant  and  the  Warrant   Shares
               (collectively,  the  "Securities")  are duly authorized and, when
               issued  and  paid  for in  accordance  with  the  terms  of  this
               Agreement,   will  be  duly   authorized,   validly   issued  and
               outstanding,  fully paid and  nonassessable and free and clear of
               all liens, security interests and restrictions,  other than liens
               or security interests that might have been created or suffered by
               the Purchaser  with respect to the  Securities  and  restrictions
               imposed by the Securities Act, as defined below, state securities
               laws or this Agreement.

          3.7.3. The Warrant Shares, when issued and paid for in accordance with
               the terms of the Warrant, will be duly authorized, validly issued
               and outstanding,  fully paid and nonassessable and free and clear
               of all liens,  security  interests and  restrictions,  other than
               liens or  security  interests  that  might  have been  created or
               suffered  by the  Purchaser  with  respect to the  Warrant or the
               Warrant Shares and restrictions  imposed by the Securities Act of
               1933, as amended (the "Securities Act"), state securities laws or
               this Agreement.

     3.8. Financial Statements. Included in the Form 10-Q of the Company for the
          nine months ended  February  28, 2007 (the "Form  --------------------
          10-Q") filed with the Securities and Exchange  Commission  (the "SEC")
          are the Company's  consolidated  unaudited balance sheet (the "Balance
          Sheet") as of February  28, 2007 (the  "Balance  Sheet  Date") and the
          unaudited    condensed    consolidated    statement     --------------
          ------------------- of operations for the three and nine-month periods
          then ended.  Included  in its Annual  Report on Form 10-K for the year
          ended May 31, 2006 (the  "Annual  Report")  filed with the SEC are the
          Company's  audited  consolidated  balance sheet as of May 31, 2006 and
          the  audited  consolidated  statements  of  operations,  cash flow and
          changes of  stockholders'  equity for the period then ended,  together
          with the related report of Miller  Ellerin & Company LLP,  independent
          certified public accountants.  The foregoing financial  statements (a)
          are  complete  and  correct  in  all  material  respects  and  are  in
          accordance  with the books and  records of the  Company,  (b)  present
          fairly the  consolidated  financial  condition  of the Company and its
          Subsidiaries  at the  Balance  Sheet  Date  and  other  dates  therein
          specified  and the  results of  operations  and  changes in  financial
          position of the Company and its  Subsidiaries  for the periods therein
          specified,  and (c) have been  prepared in accordance  with  generally
          accepted  accounting  principles  applied on a basis  consistent  with
          prior  accounting   periods,   except  that  the  unaudited  financial

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          statements  are  subject  to  year-end  audit  adjustments  and do not
          contain complete  footnotes or statements of stockholders  equity. The
          Company  and its  Subsidiaries  have no  liabilities  or  obligations,
          either  acquired  or  absolute,  contingent  or  otherwise,  of a type
          required by generally accepted  accounting  principles to be reflected
          on, or reserved  against in, a balance sheet,  which are not reflected
          or provided for in the financial  statements  and related notes except
          liabilities  arising  after the Balance Sheet Date which were incurred
          in the ordinary course of business.

     3.9. Changes. Since the Balance Sheet Date, except as disclosed in the Form
          10-Q,  there has been no event  which  would have a  Material  Adverse
          Effect.  Since the Balance Sheet Date, except as disclosed in the Form
          10-Q ,  neither  the  Company  nor  any of its  Subsidiaries  has  (a)
          mortgaged,  pledged or subjected  to lien any of its material  assets,
          tangible or  intangible,  (b) sold,  transferred  or leased a material
          portion of its assets,  (c) cancelled or compromised any material debt
          or claim,  or waived or released  any right,  of material  value,  (d)
          suffered  any physical  damage,  destruction  or loss  (whether or not
          covered by insurance)  having a material effect,  (e) declared or paid
          any dividends on or made any other  distributions  with respect to, or
          purchased or redeemed,  any of its outstanding equity  securities,  or
          (f) suffered or experienced any Material Adverse Change or loss in its
          business other than its continuing losses from operations.

     3.10. Material  Agreements  of the Company.  Neither the Company nor any of
          its  Subsidiaries  is a party to or otherwise  bound by any written or
          oral  agreement,  instrument  or  arrangement  that is material to the
          Company  except for those  agreements  referenced  in or  included  as
          exhibits to the Annual Report or the Form 10-Q ("Material Contracts").
          The Company has furnished or made  available to the Purchaser true and
          complete  copies  of all such  agreements  and all  other  agreements,
          instruments  and other  documents  requested  by the  Purchaser or its
          authorized  representative.  The  Company  is  not in  default  in any
          material provision of any Material Contract.

     3.11. Litigation.  Except as disclosed in the Form 10-Q, there is no action
          pending  and,  to the  best  knowledge  of the  Company,  there  is no
          material action  threatened  against the Company,  its Subsidiaries or
          their properties or assets.  Neither the Company nor any Subsidiary is
          in default  with  respect to any order,  writ,  judgment,  injunction,
          decree,  determination  or award of any  court or of any  governmental
          entity.

     3.12. Disclosure.   The  representations  and  warranties  of  the  Company
          contained herein, when read together with the Form 10-Q and the Annual
          Report,  do not contain any untrue  statement of material fact or omit
          to state a material fact necessary to make the statements  therein, in
          light of the circumstances under which they are made, not misleading.

     3.13. Intellectual Property.

          3.13.1. To the best of the Company's  knowledge,  the Company and each
               of its  Subsidiaries  has sufficient title to and ownership of or
               rights  to  all  patents,  patent  rights,  patent  applications,
               inventions,  trademarks,  service marks, trade names,  copyrights

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               and information,  proprietary rights and processes  necessary for
               the  conduct of its  business,  and the use by the Company of the
               foregoing does not conflict with or constitute an infringement of
               the rights of others.

          3.13.2.  The  Company  and  each of its  Subsidiaries  has  sufficient
               licenses, permits and other governmental  authorizations required
               for the conduct of its business as currently conducted and is not
               in default  with respect  thereto,  except as the failure to have
               any such  license,  permit or  authorization  or any default with
               respect thereto would not have a Material Adverse Effect.

          3.13.3. The Company has not received any communications  alleging that
               it or any of its Subsidiaries has violated, has no knowledge that
               the  Company  or any  of its  Subsidiaries  has  violated,  or by
               conducting its business, each of the Company and its Subsidiaries
               will  not,  to the  best of its  knowledge,  violate,  any of the
               patents,  patent applications,  inventions,  trademarks,  service
               marks,  trade names,  copyrights or trade  secrets,  confidential
               information, proprietary rights or processes of any other person.

     3.14. No Governmental  Consent or Approval  Required.  Based in part on the
          representations   made  by  the  Purchaser  in  this   Agreement,   no
          authorization, consent, approval or other order of, declaration to, or
          registration,  qualification, designation or filing with, any federal,
          state or local governmental  agency or body is required by or from the
          Company for the valid and lawful authorization, execution and delivery
          by the Company of this Agreement or any other  agreement  entered into
          by the Company in connection with this Agreement,  and consummation of
          the transactions  contemplated hereby or thereby, or for the valid and
          lawful authorization, issuance, sale and delivery of the Securities or
          for the valid and lawful authorization,  reservation,  issuance,  sale
          and  delivery  of the  Securities,  other than the  qualification  (or
          taking of such action as may be necessary to secure an exemption  from
          qualification,  if available) of the offer and sale of the  Securities
          under the New York  Securities Law and applicable  federal  securities
          laws,  which  filings  and  qualifications,   if  required,   will  be
          accomplished   in  a  timely   manner  so  as  to  comply   with  such
          qualification or exemption from qualification requirements.

     3.15. Bulletin Board Compliance. The Common Stock is registered pursuant to
          Section 12(g) of the Securities  Exchange Act of 1934, as amended (the
          "Exchange  Act"),  and is  eligible  for  quotation  on the NASD's OTC
          Bulletin Board.

     3.16. Reporting  Status.  The  Company  has  filed in a timely  manner  all
          documents that the Company was required to file under the Exchange Act
          during the 12 months  preceding  the date of this  Agreement  and such
          documents  complied as to form in all material respects with the SEC's
          requirements as of their respective  filing dates, and the information
          contained  therein as of the date  thereof  did not contain any untrue
          statement of a material fact or omit to state a material fact required
          to be stated  therein or necessary to make the  statements  therein in
          light of the circumstances under which they were made not misleading.

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     3.17. Brokers.  Except as set forth  below in Section 5 hereof,  no broker,
          investment  banker  or  other  person  is  entitled  to any  broker's,
          finder's or other similar fee or commission  payable by the Company in
          connection with the transactions contemplated by this Agreement or the
          other Transaction Documents.

4.   Representations and Warranties of the Purchaser.  The Purchaser  represents
     and warrants to the Company as follows:

     4.1. Status.  The  Purchaser  is  a  corporation  duly  organized,  validly
          existing and in good standing  under the laws of the State of New York
          with full  corporate  power and  authority  to  execute,  deliver  and
          perform its obligations under this Agreement.

     4.2. Authority for  Agreements.  The Purchaser has the corporate  power and
          authority to execute and deliver this  Agreement  and to carry out its
          obligations hereunder. The execution,  delivery and performance by the
          Purchaser of this Agreement and the  consummation of the  transactions
          contemplated  hereby have been duly authorized by all necessary action
          on the part of the Purchaser and this Agreement  constitutes the valid
          and legally binding obligation of the Purchaser,  enforceable  against
          the Purchaser in accordance with its terms,  except as the same may be
          limited  by  bankruptcy,  insolvency,  reorganization  or  other  laws
          affecting  the  enforcement  of  creditors'  rights  generally  now or
          hereafter  in effect  and  subject  to the  application  of  equitable
          principles and the availability of equitable remedies.

     4.3. No  Conflicts.  The  execution,   delivery  and  performance  of  this
          Agreement  and the other  instruments  and  agreements to be executed,
          delivered  and  performed  by the  Purchaser  pursuant  hereto and the
          consummation of the  transactions  contemplated  hereby and thereby by
          the  Purchaser  does not and will not with or  without  the  giving of
          notice or the  passage of time or both,  violate or  conflict  with or
          result in a breach or termination of any provision of, or constitute a
          default under,  the Certificate of Incorporation or the By-Laws of the
          Purchaser  or  any  order,  judgment,  decree,  statute,   regulation,
          contract,   agreement  or  any  other   restriction  of  any  kind  or
          description  to  which  the  Purchaser  is a  party  or by  which  the
          Purchaser may be bound.

     4.4. Accredited Investor.  The Purchaser is an "accredited investor" within
          the meaning of Rule 501(a) of Regulation D of the SEC, as presently in
          effect.

     4.5. Investor Representations and Acknowledgments.

          4.5.1. The Purchaser is acquiring the Securities  for the  Purchaser's
               own  account for  investment  only and not with a view to, or for
               sale in connection  with, a distribution of the Securities or its
               components   and   with  no   present   intention   of   selling,
               transferring,   granting   a   participation   in  or   otherwise
               distributing,  the Securities or its  components,  all within the
               meaning  of the  Securities  Act and the  rules  and  regulations
               thereunder and any applicable  state  securities or blue-sky laws
               and the rules and regulations thereunder.

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          4.5.2. The  Purchaser  is not a party  or  subject  to or bound by any
               contract,  undertaking,  agreement or arrangement with any person
               to sell, transfer or pledge the Securities or any part thereof to
               any  person,  and has no present  intention  to enter into such a
               contract, undertaking, agreement or arrangement.

          4.5.3. The Purchaser acknowledges to the Company that:

               4.5.3.a.  The  Company  has  advised  the   Purchaser   that  the
                    Securities have not been registered under the Securities Act
                    or  under  the  laws of any  state  on the  basis  that  the
                    issuance  thereof  contemplated  by this Agreement is exempt
                    from such registration;

               4.5.3.b. The Company has advised the Purchaser that a purchase of
                    the  Securities  involves  a  high  degree  of  risk  and is
                    suitable only for persons of substantial financial means who
                    have no need for liquidity in their investments;

               4.5.3.c.  The  Company's  reliance  on the  availability  of such
                    exemption   is,  in  part,   based  upon  the  accuracy  and
                    truthfulness  of the Purchaser's  representations  contained
                    herein;

               4.5.3.d.  The  Purchaser  is aware  that the  Kerns  Shares,  the
                    Warrant and the Warrant Shares that are being  purchased are
                    characterized   as   "restricted   securities"   under   the
                    Securities  Act inasmuch as they are being acquired from the
                    Company in a transaction  not  involving a public  offering,
                    and that under the Securities  Act and applicable  rules and
                    regulations   such   securities   may  be   resold   without
                    registration  under  the  Securities  Act  only  in  certain
                    limited  circumstances.  In this  connection,  the Purchaser
                    represents  that  it is  familiar  with  SEC  Rule  144,  as
                    presently in effect,  and understands the resale limitations
                    imposed thereby and by the Securities Act.

               4.5.3.e.  The  Purchaser  has  evaluated  the merits and risks of
                    purchasing  the  Securities,  and  has  such  knowledge  and
                    experience  in  financial  and  business  matters  that  the
                    Purchaser is capable of  evaluating  the merits and risks of
                    such purchase,  is aware of and has considered the financial
                    risks and financial  hazards of purchasing  the  Securities,
                    and is able to bear  the  economic  risk of  purchasing  the
                    Securities,  including  the  possibility  of a complete loss
                    with respect thereto;

               4.5.3.f.  The  Purchaser  has  had  access  to  such  information
                    regarding  the  business and finances of the Company and its
                    Subsidiaries,  and has  been  provided  the  opportunity  to
                    discuss with the Company's management the business,  affairs
                    and financial  condition of the Company and its Subsidiaries
                    and such other  matters  with respect to the Company and its
                    Subsidiaries   as  would   concern   a   reasonable   person
                    considering the transactions  contemplated by this Agreement
                    and/or concerned with the operations of the Company; and

                                      -9-
<PAGE>
               4.5.3.g. All of the  Purchaser's  representations  and warranties
                    set forth  herein are correct and complete as of the date of
                    this Agreement, shall be true and correct as of the Closing,
                    shall  survive  the  Closing  and,  if there  should  be any
                    material change in such information prior to the sale to the
                    Purchaser of the Securities,  the Purchaser will immediately
                    furnish  such  revised  or  corrected   information  to  the
                    Company.

5.   Agency;  Other Fees.  Each party  represents that it neither is nor will be
     obligated for any finders' or brokers' fee or commission in connection with
     this  transaction;  provided,  however,  that,  in the event the Closing is
     consummated,  the  Company  shall be  obligated  to and  shall  pay to Life
     Science  Group,  Inc. fees of 6% of the Purchase Price (and of the purchase
     price of such Additional Shares that Company elects to put to Purchaser, as
     provided  for  herein)  plus  common  stock  purchase   warrants  on  terms
     substantially  similar  to the  Warrant  but  without  registration  rights
     covering  a number of  shares  equal to 2% of the  number  of shares  being
     purchased by the Purchaser at the Closing.

6.   Vasomedical Covenants Post-Closing.

     6.1. Directorship.  Concurrently with the Closing,  Vasomedical has elected
          each of Simon Srybnik and Jun Ma as a director of Vasomedical  and has
          agreed to nominate  each of them for  reelection  at least at the next
          two  Annual  Meetings  of  Stockholders  of  Vasomedical  and the then
          directors  shall use their best  efforts to  solicit  proxies  for the
          election of each of them at such meetings.

     6.2. Preferred Stock.  During the three-year  period following the Closing,
          Vasomedical  shall not issue any shares of the Preferred Stock without
          the prior written consent of the Purchaser, which consent shall not be
          unreasonably withheld.

7.   Miscellaneous.

     7.1. Entire Agreement;  Survival of Provisions.  The Transaction  Documents
          and the SEC  reports  referenced  herein and  therein  constitute  the
          entire  agreement  of the  parties  with  respect to the  transactions
          contemplated   hereby  and   supersede   all  prior   agreements   and
          understandings  with respect thereto,  whether written or oral. All of
          the covenants of the parties made herein shall remain operative and in
          full force and effect pursuant to their respective terms regardless of
          acceptance of the Securities and payment therefor. The representations
          and  warranties  set forth  herein  shall  survive the  execution  and
          delivery of this  Agreement and the issuance of the Securities in each
          case until the third  anniversary  of the date of this  Agreement (the
          "Expiration   Date"),   and  shall  in  no  way  be  affected  by  any
          investigation of the subject matter thereof made --------------- by or
          on  behalf  of the  Purchaser  or  the  Company.  Notwithstanding  the
          preceding sentence, any representation or warranty in respect of which
          an indemnity  may be sought  hereof shall survive the time at which it
          would  otherwise  terminate  pursuant to the  preceding  sentence if a
          claim for  indemnification  shall have been given to the party against

                                      -10-
<PAGE>

          whom such  indemnity may be sought prior to the  Expiration  Date. The
          agreements  and  covenants  of the parties set forth in a  Transaction
          Document shall survive for the term of the Transaction  Document.  The
          representations,  warranties,  agreements  and  covenants  made in the
          Transaction  Documents shall be deemed to have been relied upon by the
          parties hereto.

7.2. No  Waiver;  Modifications  in  Writing.  No failure or delay by a party in
     exercising any right,  power or remedy  hereunder shall operate as a waiver
     thereof,  nor shall any single or partial exercise of any such right, power
     or remedy preclude any other or further exercise thereof or the exercise of
     any other right,  power or remedy.  Except as otherwise  expressly provided
     herein with respect to any right of indemnification,  the remedies provided
     for herein are cumulative and are not exclusive of any remedies that may be
     available  to any party at law or in equity or  otherwise.  No waiver of or
     consent to any  departure by a party from any  provision of this  Agreement
     shall be effective  unless  signed in writing by the party  entitled to the
     benefit thereof. No amendment, modification or termination of any provision
     of this  Agreement  shall be  effective  unless  signed in  writing  by all
     parties.  Any amendment,  supplement or modification of or to any provision
     of this Agreement,  any waiver of any provision of this Agreement,  and any
     consent to any departure from the terms of any provision of this Agreement,
     shall be  effective  only in the  specific  instance  and for the  specific
     purpose for which made or given.

7.3. Notices.  All  notices,  demands  and  other  communications  provided  for
     hereunder  shall  be in  writing,  shall  be  given  by (a)  registered  or
     certified  mail,  return receipt  requested,  (b) telecopy with  electronic
     confirmation  of such  transmission,  (c) national  courier  service or (d)
     personal  delivery and shall be deemed  delivered  (a) three  business days
     after  deposit  with  the  U.S.  Postal  Service,  (b) the  date  given  by
     electronic  or e-mail  delivery,  (c) on the  business  day next  following
     deposit  with  a  courier  service  for  overnight  delivery  with  written
     confirmation of such delivery or (d) upon personal  delivery,  addressed to
     the parties, as follows:

                  If to the Company, to:

                           Vasomedical, Inc..
                           180 Linden Avenue
                           Westbury, NY 11590
                           Attention:  Chief Financial Officer
                           Telecopy:  (516) 997-2299
                           E-Mail: TEfstathiou@vasomedical.com

                     with a copy to (which shall not constitute notice):

                           David H. Lieberman, Esq.
                           Beckman, Lieberman & Barandes, LLP
                           Suite 1313, 116 John Street
                           New York, NY 10038

                                      -11-
<PAGE>

                           Telecopy:  (212) 608-9687
                           E-Mail:  DLieberman@blbllp.com

                      If to the Purchaser, to:
                           Kerns Manufacturing Corp.
                           37-14 29th Street
                           Long Island City, NY 11101
                           Attention: Chief Financial Officer
                           Telecopy: (718) 786-0534
                           E-Mail:  kernsmfg@optonline.net

                      with a copy to (which shall not constitute notice):

                      Robert W. Berend, Esq.
                      Wachtel & Masyr, LLP
                      110 East 59th Street
                      New York NY 10022
                      Telecopy: (212)909-9455
                      E-Mail:  berend@wmllp.com

     or to such  other  address  as any party  shall  designate  in  writing  in
     compliance with the provisions of this Section 7.3.

7.4. Execution in  Counterparts;  Facsimile  Signatures.  This  Agreement may be
     executed in any number of counterparts  and by different  parties hereto on
     separate  counterparts,  each of which  counterparts,  when so executed and
     delivered, shall be deemed to be an original and all of which counterparts,
     taken  together,  shall  constitute  but one and the  same  Agreement.  The
     parties  agree that they may rely on the  facsimile  signature of any party
     with respect to this  Agreement  or any waiver,  amendment,  supplement  or
     consent relating thereto,  with the same effect as if such signature was an
     original.

7.5. Binding Effect; Assignment. The rights and obligations of the parties under
     this  Agreement may not be assigned or otherwise  transferred  to any other
     person or entity,  without  the prior  written  consent of the other  party
     hereto.  Except as expressly  provided in this  Agreement,  this  Agreement
     shall not be construed so as to confer any right or benefit upon any person
     or entity  other than the parties to this  Agreement  and their  respective
     successors and permitted assigns.  This Agreement shall be binding upon and
     shall  inure  to the  benefit  of the  Company,  the  Purchaser  and  their
     respective permitted successors and assigns.

7.6. Governing Law. This  Agreement  shall be deemed to be a contract made under
     and shall be governed by and construed in accordance with the internal laws
     of the  State  of New York  without  giving  effect  to the  principles  of
     conflict of laws; provided,  however, that the due authorization,  issuance
     and  enforceability of the terms of the Common Stock and the Warrant or the
     due authorization and issuance of the Warrant Shares, or any requirement of

                                      -12-
<PAGE>

     stockholder  approval or the  validity or  invalidity  of any action by the
     Board of Directors or compliance by the Company or any Subsidiary  with its
     Certificate of Incorporation or Bylaws or any of their corporate authority,
     shall be governed by, and  construed in  accordance  with,  the laws of the
     State of Delaware  without  giving effect to the principles of the conflict
     of laws.

7.7. Consent  to  Jurisdiction  and  Service  of  Process.  Any suit,  action or
     proceeding  arising out of or relating to the Transaction  Documents or the
     transactions  contemplated  hereby  or  thereby  may be  instituted  in any
     federal court situated in the Southern or Eastern  Districts of New York or
     any state court of the State of New York,  in each case,  in the Borough of
     Manhattan, City of New York, or Nassau County in the State of New York, and
     each  party  agrees  not to  assert,  by way of  motion,  as a  defense  or
     otherwise, in any such suit, action or proceeding, any claim that it is not
     subject personally to the jurisdiction of such court, that the suit, action
     or proceeding is brought in an  inconvenient  forum,  that the venue of the
     suit, action or proceeding is improper or that the Transaction Documents or
     the  subject  matter  hereof or thereof  may not be  enforced in or by such
     court. Each party further  irrevocably  submits to the jurisdiction of such
     court in any such  suit,  action  or  proceeding.  Any and all  service  of
     process and any other notice in any such suit,  action or proceeding  shall
     be effective  against any party if given  personally  or by  registered  or
     certified  mail,  return  receipt  requested  if sent to such  party at the
     address for such party set forth herein, or by any other means of mail that
     requires a signed receipt,  postage fully prepaid,  mailed to such party as
     herein  provided.  Nothing herein  contained  shall be deemed to affect the
     right of any party to serve  process in any manner  permitted  by law or to
     commence legal  proceedings or otherwise proceed against any other party in
     any other jurisdiction.

7.8. Waiver of Jury Trial. The parties hereto hereby irrevocably waive all right
     to a trial by jury in any action, proceeding or counterclaim arising out of
     or  relating to this  Agreement  or any other  Transaction  Document or the
     transactions contemplated hereby or thereby.

7.9. Further  Assurances.  Each of the parties  hereto shall execute and deliver
     such documents, instruments and agreements and take such further actions as
     may be reasonably  required or desirable to carry out the provisions of the
     Transaction Documents and the transactions contemplated hereby and thereby,
     and  each  of the  parties  hereto  shall  cooperate  with  each  other  in
     connection with the foregoing.

7.10. Severability  of  Provisions.  Any provision  hereof that is prohibited or
     unenforceable  in any  jurisdiction  shall,  as to  such  jurisdiction,  be
     ineffective to the extent of such prohibition or  unenforceability  without
     invalidating the remaining  provisions  hereof, and any such prohibition or
     unenforceability  in  any  jurisdiction  shall  not  invalidate  or  render
     unenforceable  such  provision  in any other  jurisdiction.  To the  extent
     permitted  by law,  the  parties  hereto  waive any  provision  of law that
     renders any such provision prohibited or unenforceable in any respect.

                                      -13-
<PAGE>

7.11. Headings.  The Article,  Section and subsection headings used or contained
     in this  Agreement  are for  convenience  of  reference  only and shall not
     affect the construction of this Agreement.

7.12. Costs and Expenses.  Each of the Company and the Purchaser shall pay their
     respective  costs and expenses  incurred  with respect to the  negotiation,
     execution,  delivery  and  performance  of this  Agreement  and  the  other
     Transaction  Documents.  If any action at law or in equity is  necessary to
     enforce or interpret the terms of the Transaction Documents, the prevailing
     party shall be entitled to reasonable attorney's fees, costs, and necessary
     disbursements  in addition  to any other  relief to which such party may be
     entitled.

                             SIGNATURE PAGE FOLLOWS

                    BALANCE OF PAGE LEFT BLANK INTENTIONALLY

                                      -14-
<PAGE>

                                 SIGNATURE PAGE

                                       To

                          Securities Purchase Agreement

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

Company:                                           Purchaser:

VASOMEDICAL, INC.                                  KERNS MANUFACTURING CORP.

By:    /s/ John C K Hui                            By:    /s/ Simon Srybnik
       ---------------                                    -------------
Name:  John C K Hui                                Name:  Simon Srybnik
Title: Chief Executive Officer                     Title: Chairman of the Board

                                      -15-
<PAGE>
                                                                    EXHIBIT A TO
                                                             SECURITIES PURCHASE
                                                                       AGREEMENT

                             DISTRIBUTION AGREEMENT
                             ----------------------

     DISTRIBUTION  AGREEMENT (this  "Agreement") made and entered into as of the
21st day of June,  2007 by and between  Living Data  Technology  Corporation,  a
corporation  incorporated  under  the laws of the  State  of New  York  ("Living
Data"), with executive offices at 37-14 29th Street, Long Island City, NY 11101,
and Vasomedical, Inc., a corporation incorporated under the laws of the State of
Delaware ("Vasomedical"), with executive offices at 180 Linden Avenue, Westbury,
New York 11590.

     WHEREAS,  Vasomedical has engaged, pursuant to a Supplier Agreement of even
date herewith by and between the parties  hereto (the  "Supplier  Agreement") as
the exclusive supplier of (1) Vasomedical Products (as therein defined) for sale
or distribution by Vasomedical to customers  throughout the world and (2) Living
Data Products for sale or distribution by Vasomedical; and

     WHEREAS,  Living  Data  desires  to  engage  Vasomedical  as its  exclusive
distributor  of certain  Living Data  products to customers in the Territory (as
hereinafter defined) on the terms and conditions hereinafter set forth; and

     NOW,  THEREFORE,  in  consideration  of the mutual  covenants,  agreements,
representations and warranties contained herein, the parties hereto hereby agree
as follows:

     1. Definitions.

     (a)  When  used in this  Agreement,  the  following  terms  shall  have the
meanings set forth in this Section 1(a):

     (i)  "Affiliate"  of any  Person  shall mean any Person  that  directly  or
indirectly through one or more intermediaries, controls, is controlled by, or is
under  common  control  with such  Person.  For the purpose of this  definition,
"control" when used with respect to any Person means the possession, directly or
indirectly,  of the power to direct or cause the direction of the management and
policies of such Person whether through the ownership of voting  securities,  by
contract  or  otherwise;  and the  terms  "controlling"  and  "controlled"  have
meanings correlative to the foregoing.

     (ii)  "Anticipated  Delivery  Date"  shall  mean the  anticipated  date for
delivery of Products pursuant to an Order confirmed by Living Data.

     (iii) "Business Day" shall mean any day other than Saturday,  Sunday or any
other day on which  commercial banks are authorized to close and do close in New
York City.

     (iv) "CE Marking"  shall mean that  certification  issued by an  authorized
Notified  Body (as  defined  by a  directive  from the  European  Union)  in the
European Union.
<PAGE>
     (v) ""cGMP" shall mean current good manufacturing practices as that term is
defined by the FDA from time to time.

     (vi) "Contract  Year" shall mean each 12-month period of the Term from June
1st through May 31st,  provided that with respect to the first  Contract Year of
the Term, the Contract Year shall be from June 21, 2007 until May 31, 2008.

     (vii)  "FDA"  shall  mean the Food and Drug  Administration  of the  United
States of America.

     (viii) "Net Sales" shall mean the gross sales by Vasomedical,  less cost of
sales,  arising from the sale or distribution of Products to customers  pursuant
to this Agreement as determined in accordance with generally accepted accounting
principles  ("GAAP"),  consistently  applied, as GAAP is in effect, from time to
time, in the United States.

     (ix) "Person" shall mean an individual, a corporation,  a limited liability
company, a partnership,  an unincorporated association, a trust, a joint venture
or any other entity or organization of whatever nature.

     (x)  "Products"  shall mean all of the  AngioNew ECP systems used to assist
the heart by applying positive or negative pressure to one or more of the body's
limbs in  synchrony  with the heart  cycle,  whether  now  offered or  hereafter
developed by Living Data during the Term, and any  improvements or modifications
thereto.  The current AngioNew ECP systems are the AngioNew-V,  a mobile system,
and the AngioNew-VI, a table type system.

     (xi) "Quarter-Annual  Period" shall mean each three (3)-month period ending
on February 28, May 31,  August 31 and November 30 of each  Contract Year during
the Term.

     (xii) "Term" shall have the meaning set forth in Section 6.1(a) hereof.

     (xiii) "Territory" shall mean the United States,  Puerto Rico and all other
territories and possessions administered by the United States.

     (xiv)  "Vasomedical  Products"  shall mean all of the ECP  therapy  systems
which are  marketed  under the  registered  trademark  "EECP" and which  utilize
fundamental  hemo-dynamic  principles to augment  coronary blood flow and at the
same time reduce the work load of the heart while improving the overall vascular
function,  whether now offered or hereafter  developed by Vasomedical during the
Term, and any  improvements or modifications  thereto.  The current EECP therapy
systems are EECP-Lumenair, EECP-TS3 and EECP-TS4.

     (b) As  used in this  Agreement  pronouns  shall  refer  to male or  female
persons or entities  where such  construction  is required to give  meaning to a
provision contained herein. Whenever a singular or plural number is used herein,
the same shall refer to the plural or singular,  as applicable,  as well. Unless
the  context  clearly  requires  otherwise,  the words  "hereof,"  "herein"  and
"hereunder  to" and words of similar  import shall refer to this  Agreement as a
whole and not to any particular  provision hereof.  The headings of the Articles

                                      -2-
<PAGE>

and Sections of this Agreement are inserted for  convenience  only and shall not
constitute a part hereof or affect in any way the meaning or  interpretation  of
this Agreement.  Each party acknowledges that it has been represented by counsel
and  that  it  has  actively   participated  in  the  review,   negotiation  and
finalization of this Agreement and documents  relating hereto.  Accordingly,  in
the event of a dispute,  the drafting of any particular term or provision hereof
shall not be a factor in the determination of the construction or interpretation
of such term or provision.

     2. Issuance of Vasomedical Shares.

     2.1  Issuance.  As additional  consideration  for Living Data entering into
this  Agreement,  Vasomedical  shall,  on the date of the closing (the  "Closing
Date") to be held pursuant to the Securities  Purchase Agreement (as hereinafter
defined),  issue to Living Data such number of shares of its Common Stock, $.001
par value (the "Common  Stock"),  as is equal to ten percent of the  outstanding
shares of the Common Stock on a fully  diluted basis as of the Closing Date (the
"Living Data Shares"). In making such calculation of the number of shares of the
Common Stock to be issued Vasomedical shall include the shares issuable pursuant
to a warrant to be issued to Life  Science  Group,  Inc. on the Closing Date and
shall  exclude  (a)  the  shares  of  the  Common  Stock  to be  sold  to  Kerns
Manufacturing Corp., a New York corporation ("Kerns"), (b) those shares issuable
upon the exercise of a warrant to Kerns, (c) those shares as to which there is a
put, all pursuant to the Securities  Purchase Agreement of even date herewith by
and between Vasomedical and Kerns (the "Securities Purchase Agreement"), and (d)
those shares  reserved for issuance on options (i) held by terminated  employees
which  options  expire within 60 days of the date hereof plus (ii) which have an
exercise  price in excess  of $.75 per  share.  In the event any of the  options
described  in (d) shall  hereafter  be  executed  within one year of the Closing
Date,  Vasomedical  shall,  within five Business  Days after any such  exercise,
issue to Living Data ten percent of the shares of the Common  Stock  issued upon
such exercise.

     2.2 Confirmation of Calculation.  Together with the delivery to Living Data
of the stock certificate for the Living Data Shares, Vasomedical shall furnish a
schedule  showing how the ten percent  calculation  was made.  Living Data shall
have five  Business  Days to challenge  such  calculation  and, if it does so by
notice  to  Vasomedical,  the  parties  shall  promptly  in good  faith  seek to
reconcile  the  difference.   If  Living  Data   successfully   demonstrates  to
Vasomedical's  satisfaction  that  additional  shares of the Common Stock should
have been issued to it, then  Vasomedical  shall  promptly  direct the  Transfer
Agent for the Common Stock to issue a stock  certificate  to Living Data for the
additional  shares. If the parties cannot agree on the number of the Living Data
Shares,  the issue shall be resolved pursuant to the Conciliation  Procedure set
forth in Section 10.1 hereof.

     2.3 Investment  Representation  by Living Data.  Living Data represents and
warrants  to  Vasomedical  that it shall  acquire  the  Living  Data  Shares for
investment and not with a view toward,  or in connection  with, any distribution
as such term is  contemplated  by the  Securities  Act of 1933,  as amended (the
"Securities Act").

     2.4 Restricted Stock.  Living Data acknowledges that the Living Data Shares
are restricted  securities as such term is defined in Rule  144(a)(3)  under the
Securities Act and that, accordingly, any certificate evidencing the Living Data

                                      -3-
<PAGE>

Shares will bear the  standard  Securities  Act  restrictive  legend used by the
Transfer Agent for the Common Stock.

     2.5 Representations by Vasomedical.  Vasomedical represents and warrants to
Living Data that the Living Data Shares have been duly  authorized,  are validly
issued and fully paid,  are free of any preemptive or similar rights and will be
delivered  to Living  Data free and clear of any liens,  security  interests  or
other  encumbrances  other than those created by Living Data, but subject to any
restrictions created by the Securities Act or applicable state securities laws.

     3. Distribution.

     3.1 Vasomedical's Obligations.  (a) During the Term, Vasomedical shall sell
and distribute Products to customers in accordance with the terms and provisions
of this Agreement and of any applicable  Annual  Marketing Plan (as  hereinafter
defined).  Vasomedical  agrees that it shall not sell or distribute  Products to
any  subdistributor  without Living Data's prior written approval and until such
subdistributor signs an undertaking in substantially the form attached hereto as
Exhibit A which names  Living  Data as a  third-party  beneficiary.  Vasomedical
shall deliver a fully executed copy of each such undertaking  promptly to Living
Data and shall not make any material  changes to the form without  Living Data's
prior consent.

     (b)  Vasomedical  agrees that,  during the Term, it shall not,  directly or
indirectly,  sell or distribute  any Product (a) outside of the Territory or (b)
to any Person that Vasomedical knows, or reasonably should know, intends to sell
or  distribute  Products  (directly  or  indirectly)  outside of the  Territory.
Notwithstanding the foregoing, Living Data acknowledges that there are legal and
practical  restrictions  on  Vasomedical's  ability  to  prevent  the  resale of
Products  outside of the  Territory  by  Vasomedical's  customers  inside of the
Territory.  Accordingly,  Vasomedical shall not be liable to Living Data for any
commission,  compensation or other payment or for any damage or loss suffered by
Living  Data  whatever  arising  out of,  or in  connection  with,  any sales or
shipments of Products by any distributor,  jobber,  retailer or other party to a
Person  outside the  Territory  unless such sales or  shipments  shall have been
expressly and knowingly authorized by Vasomedical.

     (c)  Vasomedical  agrees that,  during the Term, it shall not,  directly or
indirectly,  sell or distribute  any product  providing  therapy  similar to the
Products other than the Vasomedical Products and the Living Data Products.

     3.2  Restriction  on  Living  Data's  Rights.  (a)  Except  as  hereinafter
provided,  during the Term, Living Data shall not directly or indirectly sell or
distribute  Products to  customers  in the  Territory,  but may continue to sell
Products  outside the Territory and fulfill its  outstanding  purchase orders in
the Territory as of the date hereof. Subject to Vasomedical's full, faithful and
prompt performance of Vasomedical's duties and obligations hereunder, the rights
regarding  distribution  of Products by Vasomedical to customers  granted hereby
shall be  exclusive  in the  Territory  during  the  Term.  Notwithstanding  the
foregoing,   Vasomedical   acknowledges  that  there  are  legal  and  practical
restrictions on Living Data's ability to prevent the resale of Products into the
Territory by Living  Data's  customers  outside of the  Territory.  Accordingly,
Living Data shall not be liable to Vasomedical for any commission,  compensation

                                      -4-
<PAGE>

or other  payment or for any damage or loss  suffered  by  Vasomedical  whatever
arising out of, or in connection with, any sales or shipments of Products by any
distributor, jobber, retailer or other party to a Person in the Territory unless
such sales or shipments  shall have been  expressly and knowingly  authorized by
Living Data.  Notwithstanding  anything to the contrary in this Section  3.2(a),
Living Data shall not be liable to Vasomedical for any sales or shipments of any
existing inventory of Products by Living Data in the Territory as of the date of
this  Agreement  and the  continued  sales and  distribution  of such  inventory
subject to  subsection  (b) of this  Section 3.2.  Living Data shall,  within 30
Business Days after commencement of the Term, furnish Vasomedical with a listing
of existing inventory.

     (b)  Because  as  provided  in  Section  4.1(d)  hereof   Vasomedical,   in
collaboration  with Living Data,  shall be  developing a marketing  plan for the
Living Data Products during the three months  following the  commencement of the
Term,  Living Data may continue to sell and  distribute  Living Data Products in
the Territory during such three-month period. Thereafter, Living Data shall have
the right, but not the obligation,  to turn over to Vasomedical on a consignment
basis for distribution  its remaining  inventory of Products in the Territory at
the sales price per unit provided in the Supplier Agreement. Notwithstanding the
foregoing,  nothing  herein  shall  prevent  Living  Data  from  maintaining  an
inventory of Products for sale and distribution outside the Territory.

     4. Marketing of the Products.

     4.1 Annual  Marketing  Plan.  (a) Before the start of each  Contract  Year,
commencing with the Contract Year commencing on June 1, 2008,  Vasomedical shall
develop an annual  marketing  plan (the "Annual  Marketing  Plan") in the format
provided by Living Data for each Contract  Year.  Such format shall be submitted
to Vasomedical for its approval in the exercise of its  commercially  reasonable
judgment.  Each  Annual  Marketing  Plan  shall  set  forth  the sales and other
marketing objectives for the Contract Year covered thereby, and without limiting
the generality of the foregoing, each such Plan shall include an annual purchase
forecast (the "Forecast")  setting forth (by product code and unit) each Product
that Vasomedical anticipates purchasing during that year and levels of inventory
to be maintained by  Vasomedical.  The Forecast shall be updated by Vasomedical,
not later than 90 days prior to the beginning of each Quarter-Annual  Period, to
set forth  Vasomedical's  then  anticipated  Product  purchases  for each of the
immediately  succeeding four  Quarter-Annual  Periods.  In addition,  the Annual
Marketing  Plan  shall set forth a full and  complete  description  of  proposed
promotional  expenditures  and formats for the subject  Contract Year  including
Vasomedical's "Advertising and Promotional Plan" for such Contract Year showing,
to the maximum extent feasible,  the locations,  dates and times of all proposed
promotional  events and the amounts that shall be expended  therefor during such
Contract Year.

     (b) Living Data shall review each proposed Annual  Marketing Plan submitted
to it  pursuant  to  subsection  (a)  of  this  Section  4.1  and  shall  advise
Vasomedical of such changes and revisions as Living Data shall deem appropriate,
in the  exercise of its  commercially  reasonable  judgment.  Vasomedical  shall
thereafter in good faith review the proposed  Annual  Marketing  Plan, and shall
furnish to Living Data the revised (final) Annual  Marketing Plan not later than
four weeks after Living Data advises  Vasomedical of such requested  changes and
revisions.  Where the  parties  cannot  come to  agreement  on the final  Annual
Marketing Plan, such disagreement shall be resolved pursuant to the Conciliation
Procedure set forth in Section 10.5 hereof.

                                      -5-
<PAGE>

     (c) If there shall be any inconsistencies  between any provisions contained
in any  Annual  Marketing  Plan  and  the  provisions  of  this  Agreement,  the
provisions of this Agreement shall control unless otherwise explicitly agreed in
writing by the parties hereto.

     (d)  Notwithstanding   anything  to  the  contrary  in  this  Section  4.1,
Vasomedical,  in collaboration with Living Data, shall develop, during the three
months  following  commencement  of the Term,  a marketing  plan for Living Data
Products for the remainder of the Contract Year ending May 31, 2008. Vasomedical
shall  include  in such  marketing  plan a  Forecast  as to  projected  sales of
Vasomedical Products during such period.

     4.2  Vasomedical's  Duties. In furtherance of the duties and obligations of
Vasomedical  under this Agreement,  during the Term,  Vasomedical  shall use its
commercial   reasonable   efforts  to  (i)  promote   diligently  the  sale  and
distribution  of Products to customers,  (ii) meet and satisfy  timely and fully
all  obligations  of  Vasomedical  under this  Agreement  and under each  Annual
Marketing  Plan,  and  (iii)  provide  customers  with  satisfactory   services,
including prompt delivery. Without limiting the generality of the foregoing:

     (a) Vasomedical shall furnish Living Data with the following (and with such
other  information or forms as Living Data may  reasonably  request from time to
time):

     (i) not later  than 45 days  after the end of each  Quarter-Annual  Period,
detailed  quarterly reports setting forth Net Sales to customers,  setting forth
for each customer,  gross sales by Product, or Vasomedical Product, gross sales,
returns, discounts, allowances and customer service expenses;

     (ii) not later  than 45 days after the end of each  Quarter-Annual  Period,
quarterly  reports  setting  forth (by product  code and unit) the  Products and
Vasomedical  Products  held in  inventory by  Vasomedical  as of the end of such
Quarter-Annual Period; and

     (iii) not later than 45 days after each May 31 and  November 30, a detailed
report setting forth advertising, demonstration and promotional expenditures for
the prior six months.

     (b)  Vasomedical,  at  its  sole  expense,  shall  comply  with  all  laws,
ordinances,  rules,  and  regulations  (including,   without  limitation,  those
pertaining  to  health,  sanitation,  fair  trade or  consumer  protection,  but
excluding  those related to the  manufacture of the Products and the Vasomedical
Products,  including manufacturing licenses thereof and manufacturing warranties
related  thereto,  which  compliance  shall be that of Living Data),  obtain all
licenses  and  permits  required  by,  and pay all  taxes,  fees,  charges,  and
assessments  imposed or enacted by, any governmental  authority solely regarding
the sale of the Products and the  Vasomedical  Products and not the  manufacture
thereof,  and  shall  not  take any  action  which  will  cause  Living  Data or
Vasomedical  to be in  violation  of  any  law  of  any  jurisdiction  in  which
Vasomedical  distributes the Products and the Vasomedical Products. For purposes
of clarification,  all obligations  related to compliance with FDA manufacturing
regulations   (including,   without   limitation,   cGMP  satisfaction)  and  CE

                                      -6-
<PAGE>
manufacturing  standards are manufacturing  obligations for the Products and the
Vasomedical Products.

     (c) All advertising  and  promotional  materials will be provided to Living
Data,  sufficiently  in  advance  of  publication  to allow  for  Living  Data's
approval.  Such approval must be in writing and shall,  insofar as it relates to
Products,  be given in Living Data's sole discretion.  Vasomedical shall provide
to Living Data, 30 days after the end of each Contract  Year,  copies of all ads
used in, and a report of advertising  and promotion  expenditures  to the extent
not expended during, such Contract Year.

     4.3 Books and  Records.  Throughout  the Term and for one year  thereafter,
Vasomedical  shall  provide  to  Living  Data  and  its  representatives,   upon
reasonable  notice,  for its  review  (hereby  authorizing  Living  Data and its
representatives  to make  copies and  extracts  therefrom)  all of its books and
records of account, invoices, statements,  agreements,  correspondence and other
data relative to this Agreement,  reasonably requested by Living Data respecting
the  quarterly  reports,  the  marketing  of Products and other  obligations  of
Vasomedical under this Agreement and under each Annual Marketing Plan.

     4.4 Access.  Vasomedical shall make available to  representatives of Living
Data access during normal  business  hours to its  warehouses,  upon  reasonable
notice, for their inspection no more than twice in any 12-month period.

     4.5 Living Data Advertising.  Vasomedical  acknowledges that Living Data or
its Affiliates  may conduct local,  national  and/or  international  advertising
campaigns  with  respect  to  the  Products,  and  Vasomedical  shall  have  the
unrestricted right to utilize such advertising or promotion  materials of Living
Data or any of its Affiliates solely for the purposes of satisfying the goals of
the Annual Marketing Plan.

     4.6  Warranty  by Living  Data.  Living Data shall  provide,  pursuant to a
written policy, a full 12-month warranty on parts, commencing with acceptance of
installation of a unit at an end-user.

     5.  Intellectual  Property.  Living Data markets its ECP systems  under its
registered trademark "AngioNew" (the "Mark.")

     5.1 Acknowledgement of Rights.  Vasomedical  acknowledges that the Mark has
acquired a valuable secondary meaning and goodwill in the minds of the trade and
the public and those goods, including Products, bearing the Mark have acquired a

                                      -7-
<PAGE>
reputation for high quality and style.  Vasomedical  acknowledges that it is not
the  owner of any  right,  title or  interest  in and to the Mark in any form or
embodiment thereof, and it is not the owner of the goodwill attached to the Mark
in connection with the business and goods in relation to which the same has been
and may in the future be used and shall not  acquire  any such  right,  title or
interest in the Mark except as provided in Section 5.2 hereof.

     5.2  Licenses.  Living Data hereby grants to  Vasomedical  a  non-exclusive
license  during  the  Term  to use  the  Mark in its  advertising  material  for
marketing  the Products in the  Territory  (the  "Advertising  Materials").  The
grants of these  non-exclusive  licenses are on the  condition  that the Mark is
identified  as that of the owner and subject to the other  terms and  conditions
set forth in this  Article 5 and in Section 9.3 hereof.  Any use of a Mark shall
require the prior written approval of the owner of that Mark.

     5.3 Compliance.  Vasomedical  shall comply with all notice  requirements of
any law or regulation  applicable or reasonably necessary in connection with its
activities hereunder for the protection of the Mark in connection with Products.
Sales by  Vasomedical  of  Products  shall be  deemed  for the  purposes  of the
acquisition of the trademark  rights and the purposes of trademark  registration
to have been  made by and for the  benefit  of  Living  Data as the owner of the
Mark.  Vasomedical  will not, at any time, do any act or thing which may, in any
way,  impair the rights of Living  Data in and to the Mark of the other party or
which  may  affect  the  validity  of the Mark of the  other  party or which may
depreciate  the value of the Mark of the other  party or its  prestige  and good
will.

     5.4 No Registration Right. Vasomedical acknowledges that it may not acquire
a registration or file and prosecute a trademark  application or applications to
register the Mark for any items or services, including Products, anywhere in the
world.

     5.5 Assignment.  (a) To the extent any rights in and to the Mark are deemed
to accrue to Vasomedical  pursuant to this  Agreement or otherwise,  Vasomedical
hereby  assigns any and all such  rights,  at such time as they may be deemed to
accrue to Living  Data.  Vasomedical  shall  execute any and all  documents  and
instruments  required  by the  owner  of the  Mark  which  the  owner  may  deem
necessary,  proper or appropriate  to accomplish or confirm the  foregoing.  Any
such  assignment,  transfer or conveyance shall be without  consideration  other
than the mutual agreements  contained herein.  Upon expiration or termination of
this Agreement for any reason whatsoever, Vasomedical will forthwith execute and
file any and all  documents  requested  by Living Data  terminating  any and all
trademark registrations, registered user agreements, if any, and other documents
regarding the Mark.

     (b) All right, title and interest to any intellectual  property  associated
with any Product or Advertising  Materials (including,  without limitation,  all
artwork,  designs,  prototypes,  packaging and promotion materials and any other
trademarks,  designs,  patents  and  copyrights)  shall vest in Living Data upon
submission  of  same by  Vasomedical  to  Living  Data in  accordance  with  the
provisions of this  Agreement and shall entitle Living Data to the ownership and
use of such intellectual  property in any manner Living Data may deem beneficial
anywhere in the world in perpetuity. In furtherance thereof,  Vasomedical agrees
and acknowledges that all trademarks, designs, patents, copyrights and all other
intellectual  property  (the  "Property")  created  by or  for  Vasomedical  and
utilized in conjunction with the Products and/or Advertising Materials,  whether
or not created by  Vasomedical or any third party during the Term, are and shall
remain the property of Living Data notwithstanding the expiration or termination
of this Agreement and Living Data shall have the  unrestricted  right to utilize
the Property in any manner that it deems appropriate

     (c)  In  furtherance  of  the  provisions  set  forth  in  Section  5.5(b),
Vasomedical  hereby assigns and transfers to Living Data all of its right, title

                                      -8-
<PAGE>

and interest,  including, without limitation,  ownership of all rights under any
trademarks,  copyrights,  trade dress, patents and/or design patents created for
or associated in any way with the Products and  Advertising  Materials,  and any
copyright  in  and  to  all  advertisements  of  any  kind,   including  without
limitation, television or radio commercials, labels, packaging, promotion pieces
or any other  Advertising  Material  produced or created hereafter by or for the
Living Data which may  related to the  Products or which may bear or contain the
Mark. The effective  date of such transfer and  assignment  shall be the date on
which the Advertising  Materials were created.  To the extent that rights in any
of such Advertising  Materials produced for Vasomedical may be in third persons,
Vasomedical  will obtain and deliver to Living Data  assignments  of said rights
from said third  persons to Living Data  effective as of the date of creation of
such  Advertising  Materials  in order  that  such  rights  in such  Advertising
Materials will fully vest in Living Data. If Vasomedical  will fail or refuse to
sign any  such  documents  which  may be  required  pursuant  to this  Agreement
(including without  limitation any assignments of copyrights),  then Living Data
will be entitled to sign such  documents for and on behalf of  Vasomedical  and,
for this  purpose,  Vasomedical  hereby  irrevocably  appoints  Living  Data its
attorney-in-fact with power of substitution to sign all such documents as may be
required. This power-of-attorney is coupled with an interest and is irrevocable.

     5.6 No Challenge or Contest.  Vasomedical agrees never (a) to challenge the
validity or ownership of the Mark or any application for  registration  thereof,
or any trademark  registrations thereof in any jurisdiction,  nor (b) to contest
the fact that any party's  rights under this Agreement are solely those provided
for herein, and terminate upon termination or expiration of this Agreement.

     5.7 Limit on Use. Vasomedical shall not use the Mark as part of a corporate
or  business  name or as a  service  mark and shall not use the Mark in any form
without the owner's prior written consent.

     5.8 Survival of Provisions.  The provisions of this Article 5 shall survive
the termination or expiration of this Agreement.

     6. Term and Termination.

     6.1 Term.  The term of this  Agreement  (the "Term") shall commence on June
21, 2007 and will continue,  subject to the termination  provisions set forth in
this  Article 6, for an initial  term ending May 31,  2012,  provided  that this
Agreement will automatically renew for additional one-year periods unless either
party give  written  notice to the other not to extend the Term not less than 90
days prior to the then next upcoming expiration date.

     6.2   Termination  by  Living  Data.   This  Agreement  may  be  terminated
immediately  upon notice from Living Data if: (a)  Vasomedical  is unable to pay
its debts as and when the same becomes due, (b) Vasomedical  files a petition in
bankruptcy,  or a petition is filed against Vasomedical and is not removed in 60
days,  (c)  Vasomedical  makes an  assignment  for the benefit of  Vasomedical's
creditors,  (d)  Vasomedical  makes  any  extraordinary   arrangement  with  its
creditors,  (e)  Vasomedical  is subject to the  appointment  of a receiver  for
Vasomedical  which is not cured in 60 days, (f) Vasomedical fails to perform any
of its material covenants  hereunder after 30 days' prior written notice to cure

                                      -9-

<PAGE>

and  Vasomedical  does not in fact cure within such 30-day period,  (g) Products
are resold  directly by  Vasomedical  or an Affiliate  outside the Territory and
Vasomedical  has had 30 days to correct the  situation  and has failed to do so,
(h) Vasomedical is convicted of any crime in any  jurisdiction  which materially
and adversely  reflects on Living Data, or (i) any of the reports or forms which
Vasomedical  submits  to  Living  Data  are  found  to be  materially  false  or
fraudulent.  Notwithstanding  anything in subsection  (f) of this Section 6.2 to
the  contrary,  after the initial  Contract  Year, if  Vasomedical's  failure to
perform is its  failure to market  Products  in an amount at least  equal to the
minimum amount  projected in the Annual  Marketing Plan (or such standard as may
then be in effect)  and such  failure  is not a result of the  failure of Living
Data to provide  Products on a timely basis pursuant to the Supplier  Agreement,
after notice from Living Data to such  effect,  Living Data shall have the right
at the end of the second  quarter to render  Vasomedical's  distribution  rights
non-exclusive  within  the  Territory  and shall  have the right to grant  other
Persons  (including  Living  Data)  the  right  to  distribute  Products  in the
Territory and may not terminate this Agreement  until such failure has continued
for at least four successive Quarter-Annual Periods. In no event may Vasomedical
manufacture, or cause to be manufactured by a Person other than Living Data, any
Product.

     6.3   Termination  by   Vasomedical.   This  Agreement  may  be  terminated
immediately  upon notice from  Vasomedical  if: (a) Living Data is unable to pay
its debts as and when the same  becomes due, (b) Living Data files a petition in
bankruptcy,  or a petition is filed against Living Data and is not removed in 60
days,  (c) Living  Data makes an  assignment  for the  benefit of Living  Data's
creditors,  (d)  Living  Data  makes  any  extraordinary  arrangement  with  its
creditors,  (e)  Living  Data is subject to the  appointment  of a receiver  for
Living Data which is not cured in 60 days,  (f) Living Data fails to perform any
of its material covenants  hereunder after 30 days' prior written notice to cure
and Living Data does not in fact cure within such 30-day period,  and (g) Living
Data  is  convicted  of any  crime  in any  jurisdiction  which  materially  and
adversely reflects on Vasomedical

     6.4 No Further Use.  Vasomedical  acknowledges  that any use of the Mark or
the  Advertising  Materials  after the date that  termination is effective shall
constitute an infringement of the  intellectual  property rights of Living Data.
Upon the expiration or termination of this Agreement,  Vasomedical  shall return
to  Living  Data,  at  Vasomedical's  cost,  all of Living  Data's  Confidential
Information (as defined in Section 9.2),  Products and Advertising  Materials in
its  possession  and  Vasomedical  shall  certify to Living Data that it has not
retained  or made  copies of any of the  foregoing.  If  instructed  to do so in
writing by Living Data,  Vasomedical shall destroy the Advertising Materials and
Living Data's  Confidential  Information  in its  possession  and be required to
deliver a  certificate  to Living Data  evidencing  such  destruction.  Upon the
expiration  or  termination  of this  Agreement,  Living  Data  shall  return to
Vasomedical,   at  Living  Data's  cost,  all  of   Vasomedical's   Confidential
Information in its possession and Living Data shall certify to Vasomedical  that
it has not retained or made copies of any of the foregoing.  If instructed to do
so in writing  by  Vasomedical,  Living  Data shall  destroy  the  Vasomedical's
Confidential  Information  in  its  possession  and be  required  to  deliver  a
certificate to Vasomedical evidencing such destruction.

     7. Representations and Warranties.

     7.1 Living Data  represents  and  warrants to  Vasomedical,  as of the date
hereof,  as follows,  in each case  subject to the  exceptions  set forth in the
disclosure  statement  delivered  by  Living  Data to  Vasomedical  prior to the

                                      -10-
<PAGE>

execution of this Agreement (the "Living Data Disclosure Statement"). The Living
Data Disclosure Statement is arranged in Schedules corresponding to the numbered
and lettered subsections of this Section 7.1, and the disclosure in any Schedule
of the Living Data  Disclosure  Statement  shall qualify only the  corresponding
subsection of this Section 7.1.

     (a)  Organization.  Living Data is a corporation  duly  organized,  validly
existing  and in good  standing  under the laws of the State of New York and has
all  requisite  corporate  power and  authority  to own,  lease and  operate its
properties and assets in the manner in which such  properties and assets are now
owned,  leased  and  operated  and to carry on the  business  in which it is now
engaged.

     (b) Good Standing.  Living Data is duly qualified as a foreign  corporation
to do  business,  and is in  good  standing,  in  each  jurisdiction  where  the
character  of its owned or leased  properties  or the  nature of its  activities
makes such qualification necessary,  except where the failure to be so qualified
or in good standing would not,  individually or in the aggregate,  reasonably be
expected to have a Living Data Material Adverse Effect (as defined in subsection
(e)(ii) of this Section 7.1).

     (c) Validity. Living Data has full corporate power and authority to execute
and  deliver  this  Agreement  and all of the  other  agreements  and  documents
referred to herein,  executed in connection  herewith or contemplated  hereby to
which Living Data is or will be a party and to perform its obligations hereunder
and  to  consummate  the  transactions   contemplated   hereby.  This  Agreement
constitutes  the valid and binding  obligation  of Living Data,  enforceable  in
accordance  with its terms,  subject  to  bankruptcy,  insolvency  or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies.  The execution  and delivery of this  Agreement by Living Data and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the board of directors of Living Data and such execution and delivery of this
Agreement and the  consummation of the transactions  contemplated  hereby do not
and will not require the consent, approval or authorization of any other Person,
including,  without  limitation,  its  shareholders  or any public  authority or
self-regulatory authority.

     (d) No Conflict.  The  execution  and delivery of this  Agreement by Living
Data and the performance of its  obligations  hereunder (a) are not in violation
or breach of, and will not conflict with, or constitute a default under,  any of
the terms of the Living Data  certificate  of  incorporation  or the Living Data
bylaws,  or any note,  debt  instrument,  security  agreement,  deed of trust or
mortgage or any other contract, agreement or commitment binding upon Living Data
or any of its  assets or  properties,  (b) will not  result in the  creation  or
imposition of any lien, security interest, encumbrance, equity or restriction in
favor of any third party upon any of the assets or  properties  of Living  Data,
and (c) will not  conflict  with or  violate  any  applicable  law,  regulation,
judgment,  order or  decree  of any  government,  governmental  instrumentality,
self-regulatory  authority or court having  jurisdiction over Living Data or any
of its assets or properties.

     (e) Absence of Certain  Changes or Events Since  December  31, 2006.  Since
December 31, 2006:

                                      -11-
<PAGE>
     (i)  Living  Data  has  not  sustained  any  damage,  destruction  or  loss
(including,  without limitation,  by reason of revocation of license or right to
do business, total or partial termination,  suspension,  default or modification
of  contracts,   governmental  or   self-regulatory   restriction,   regulation,
investigation or inquiry).

     (ii) No Living  Data  Material  Adverse  Effect  (as  defined  herein)  has
occurred. For purposes of this Agreement,  "Living Data Material Adverse Effect"
shall mean any change or effect that is, or could  reasonably be expected to be,
materially  adverse to the business,  operations,  assets and liabilities (taken
together  as a  whole),  capitalization,  results  of  operations  or  condition
(financial  or  otherwise)  of Living Data,  other than any change or effect (i)
relating  to the economy in general or (ii)  relating  to the  industry in which
Living Data operates in general and not specifically relating to Living Data.

     (iii)  Living Data has no  agreement,  arrangement  or  understanding  with
respect to any of the foregoing.

     (f) Environmental.

     (i) No Hazardous Materials (as hereinafter  defined) have been used, stored
or otherwise  handled in any manner by Living Data or any  Affiliate  on, under,
in, from or affecting  any of the real  property  owned or leased by Living Data
during  the  past  five  years  (the  "Living  Data  Property"),  other  than in
compliance with  Environmental Laws (as hereinafter  defined).  To Living Data's
knowledge, no prior or current owner or occupant of the Living Data Property has
used  Hazardous  Materials  on,  under,  in, from or  affecting  the Living Data
Property.

     (ii) No Hazardous  Materials have at any time been released into, stored or
deposited by Living Data or any Affiliate within or on the Living Data Property,
by Living Data or any  Affiliate  into any water systems on or below the surface
of the Living  Data  Property,  or by Living Data or any  Affiliate  directly or
indirectly onto any property or water system adjoining,  adjacent to or abutting
the Living Data  Property,  or have been used by Living Data or any Affiliate in
the  construction  of any  improvements  located  on or about  the  Living  Data
Property.

     (iii) Neither  Living Data nor any Affiliate has received any notice of any
violations  (nor  is any  of  them  aware  of any  existing  violations)  of any
applicable  laws  or  regulations   governing  the  use,   storage,   treatment,
transportation,  manufacture,  refinement,  handling,  production or disposal of
Hazardous  Materials on,  under,  in, from or affecting the Living Data Property
and there are not any  legal  actions  or  proceedings  commenced  or, to Living
Data's knowledge, threatened by any Person with respect to any such violations.

     (iv) The Living Data Property is currently being, and has in the past been,
operated  by  Living  Data in  accordance  with,  and in  compliance  with,  all
applicable Environmental Laws.

     (v) For purposes of this  Agreement  (A)  "Hazardous  Materials"  means any
hazardous  materials,  hazardous wastes,  hazardous  constituents,  hazardous or
toxic substances or petroleum  products  (including  gasoline,  crude oil or any

                                      -12-
<PAGE>

fraction  thereof),  defined or regulated as such in or under any  Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls and urea
formaldehyde  insulation,  and (B) "Environmental Laws" are any and all federal,
state,  local  or  municipal  laws,  rules,   orders,   regulations,   statutes,
ordinances,  codes, decrees, requirements of any governmental authority or other
requirements of law (including  common law) regulating,  relating to or imposing
liability or standards of conduct  concerning  protection of human health or the
environment.

     (g)  Proprietary  Rights.  Schedule  7.1(g) of the Living  Data  Disclosure
Statement  contains a full and complete list of all material  Proprietary Rights
(as herein defined)  owned,  possessed or used by Living Data. The operations of
Living  Data do not now  conflict  with or  infringe,  and  have not in the past
conflicted with or infringed, any Proprietary Rights owned, possessed or used by
any third party.  There are no third parties whose  operations  conflict with or
infringe,  nor  has  anyone  asserted  that  such  operations  conflict  with or
infringe,  any Proprietary  Rights owned,  possessed or used by Living Data. For
purposes of this Agreement,  "Proprietary Rights" means trademarks, trade names,
service  marks,  copyrights  and patents,  or  applications  therefor,  or other
intellectual property.

     (h) Litigation.  There is no claim, dispute,  action,  proceeding,  suit or
appeal or investigation or inquiry, at law or in equity,  involving Living Data,
or any of its officers and  directors  (in their  capacities as such) before any
court, agency, authority,  self-regulatory authority, arbitration panel or other
tribunal,  which, if decided  adversely to Living Data, would have a Living Data
Material  Adverse  Effect,  and, to the knowledge of Living Data,  none has been
threatened or is in prospect  against  Living Data or its officers and directors
(in their capacity as such). To the knowledge of Living Data, there are no facts
which,  if  known  to   shareholders,   customers,   governmental   authorities,
self-regulatory authorities, regulators, bondholders or other investors or other
persons,  would form the basis of any such claim, dispute,  action,  proceeding,
suit,  appeal,  investigation or inquiry,  and Living Data is not subject to any
order, writ, injunction or decree of any court, agency,  authority,  arbitration
panel or other tribunal.

     (i) Brokers or Finders.  Living Data has not incurred,  and will not incur,
directly or indirectly,  any liability for brokerage or finders' fees or agents'
commissions  or any similar  charges in  connection  with this  Agreement or the
transactions contemplated hereby.

     (j) Foreign  Corrupt  Practices Act.  Neither Living Data nor any Affiliate
and none of Living Data's officers or directors, or, to Living Data's knowledge,
any  employees,  agents,  distributors  or  representatives  acting on behalf of
Living Data or any  Affiliate,  has paid,  given or received,  or has offered or
promised to pay, give or receive,  any bribe or other unlawful  payment of money
or  other  thing  of  value,  any  unlawful  discount,  or  any  other  unlawful
inducement,  to or from any  Person  (including  any  government  entity) in the
United States or elsewhere in connection  with or in furtherance of the business
of Living Data (including,  without limitation,  any unlawful offer,  payment or
promise  to pay  money or other  thing of  value  (i) to any  foreign  official,
political party (or official  thereof) or candidate for political office for the
purposes of influencing any act,  decision or omission in order to assist Living
Data in obtaining business for or with, or directing business to, any Person, or

                                      -13-
<PAGE>

(ii) to any Person,  while  knowing that all or a portion of such money or other
thing  of  value  will be  offered,  given or  promised  unlawfully  to any such
official or party for such purposes). The business of Living Data is and was not
in any manner  dependent upon the making or receipt of such payments,  discounts
or other inducements.  Neither Living Data nor any Affiliate has otherwise taken
any action  that could  cause  Living  Data to be in  violation  of the  Foreign
Corrupt Practices Act of 1977, as amended,  the regulations  thereunder,  or any
applicable law or regulation of similar effect.

     (k) Disclosure of Material Facts.  Living Data has disclosed to Vasomedical
all  material  facts  relating  to the  operations  of  Living  Data as to which
Vasomedical has made inquiry.  The representations  and warranties  contained in
this  Section 7.1 and in the Living  Data  Disclosure  Statement,  and any other
documents or information furnished to Vasomedical by or on behalf of Living Data
in  connection  with this  Agreement  do not contain any untrue  statement  of a
material  fact or  omit  to  state  any  material  fact  necessary  to make  the
statements contained herein or therein not misleading.

     7.2  Vasomedical  represents  and warrants to Living  Data,  as of the date
hereof,  as follows,  in each case  subject to the  exceptions  set forth in the
disclosure  statement  delivered  by  Vasomedical  to Living  Data  prior to the
execution  of this  Agreement  (the  "Vasomedical  Disclosure  Statement").  The
Vasomedical  Disclosure Statement is arranged in Schedules  corresponding to the
numbered and lettered subsections of this Section 7.2, and the disclosure in any
Schedule  of  the  Vasomedical  Disclosure  Statement  shall  qualify  only  the
corresponding subsection of this Section 7.2.

     (a)  Organization.  Vasomedical is a corporation  duly  organized,  validly
existing  and in good  standing  under the laws of the State of Delaware and has
all  requisite  corporate  power and  authority  to own,  lease and  operate its
properties and assets in the manner in which such  properties and assets are now
owned,  leased  and  operated  and to carry on the  business  in which it is now
engaged.

     (b) Subsidiaries. Vasomedical does not own any equity interest, directly or
indirectly,  in any corporation,  partnership,  limited liability company, joint
venture,  firm or other entity other than in its subsidiaries listed in Schedule
7.2(b) of the Vasomedical  Disclosure Statement (herein collectively referred to
as  the   "Vasomedical   Subsidiaries"   and   individually  as  a  "Vasomedical
Subsidiary").  Each  Vasomedical  Subsidiary  is a corporation  duly  organized,
validly  existing  and in good  standing  under  the laws of the  state or other
jurisdiction in which it was incorporated and has all requisite  corporate power
and authority to own,  lease and operate its properties and assets in the manner
in which such  properties  and assets are now owned,  leased and operated and to
carry on the business in which it is now engaged..  Each Vasomedical  Subsidiary
is  wholly-owned  by Vasomedical  except as set forth in Schedule  7.2(b) of the
Vasomedical Disclosure Statement.

     (c) Good Standing. Each of Vasomedical and the Vasomedical  Subsidiaries is
duly qualified as a foreign corporation to do business, and is in good standing,
in each  jurisdiction  where the character of its owned or leased  properties or
the nature of its activities makes such  qualification  necessary,  except where

                                      -14-
<PAGE>

the failure to be so qualified or in good standing would not, individually or in
the  aggregate,  reasonably be expected to have a Vasomedical  Material  Adverse
Effect (as defined in subsection (j)(ii) of this Section 7.2).

     (d) Validity. Vasomedical has full corporate power and authority to execute
and  deliver  this  Agreement  and all of the  other  agreements  and  documents
referred to herein,  executed in connection  herewith or contemplated  hereby to
which Vasomedical is or will be a party and to perform its obligations hereunder
and  to  consummate  the  transactions   contemplated   hereby.  This  Agreement
constitutes  the valid and binding  obligation  of  Vasomedical  enforceable  in
accordance  with its terms,  subject  to  bankruptcy,  insolvency  or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies.  The execution and delivery of this Agreement by  Vasomedical  and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the board of directors of Vasomedical and such execution and delivery of this
Agreement and the  consummation of the transactions  contemplated  hereby do not
and will not require the consent, approval or authorization of any other Person,
including,  without  limitation,  its  stockholders  or any public  authority or
self-regulatory authority,  except with respect to the offer and issuance of the
Shares as to which  Vasomedical  will take such  action on a timely  basis as is
necessary to secure an exemption under the Securities Act and the New York State
Martin Act and to file such reports as are required by the  Securities  Exchange
Act of 1934, as amended (the "Exchange Act").

     (e)  No  Conflict.   The  execution  and  delivery  of  this  Agreement  by
Vasomedical  and the  performance  of its  obligations  hereunder (a) are not in
violation  or breach of, and will not  conflict  with,  or  constitute a default
under,  any of the terms of the Vasomedical  certificate of incorporation or the
Vasomedical bylaws, or any note, debt instrument,  security  agreement,  deed of
trust or mortgage or any other  contract,  agreement or commitment  binding upon
Vasomedical or any Vasomedical  Subsidiary or any of their assets or properties,
(b)  will not  result  in the  creation  or  imposition  of any  lien,  security
interest,  encumbrance,  equity or  restriction in favor of any third party upon
any of the assets or properties of  Vasomedical or any  Vasomedical  Subsidiary,
and (c) will not  conflict  with or  violate  any  applicable  law,  regulation,
judgment,  order or  decree  of any  government,  governmental  instrumentality,
self-regulatory  authority or court having  jurisdiction over Vasomedical or any
Vasomedical Subsidiary or any of their assets or properties.

     (f) Capitalization.  Vasomedical's authorized capital stock consists of (a)
110,000,000 shares of the Common Stock, of which 65,198,592 shares are currently
issued and  outstanding,  and  1,000,000  shares of Preferred  Stock,  $.001 par
value,  of which no shares  are  currently  issued and  outstanding.  All of the
issued and  outstanding  shares of the Common  Stock have been duly  authorized,
validly issued and fully paid, are  nonassesable  and are free of any preemptive
or similar rights.

     (g)  Obligations  with  respect  to  Capital  Stock.   Vasomedical  has  no
commitment  or  obligation  to  issue,   deliver  or  sell,   under  any  offer,
subscription,  stock option  agreement,  stock bonus  agreement,  stock purchase
plan, incentive  compensation plan, warrant,  call,  conversion right otherwise,
any shares of its  capital  stock or other  securities,  except as  contemplated

                                      -15-
<PAGE>

under this Agreement, under the Securities Purchase Agreement or as disclosed in
Schedule  8.2(g)  of  the  Vasomedical   Disclosure  Statement.   There  are  no
stockholder  agreements,  voting  agreements,  voting  trusts  or other  similar
arrangements  which may have the effect or restricting or limiting the transfer,
voting or other rights associated with the capital stock of Vasomedical.

     (h) Financial Statements.  Each of the financial statements (including,  in
each case, any related notes thereto) (the "Vasomedical  Financial  Statements")
contained in the  Vasomedical  SEC Reports (as defined in subsection (k) of this
Section  7.2 hereof)  filed by  Vasomedical  with the  Securities  and  Exchange
Commission  (the "SEC") (i) was  prepared in  accordance  with GAAP applied on a
consistent  basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements,  as
may be permitted by the SEC on Form 10-Q under the Securities  Exchange Act; and
(u) fairly  presented the consolidated  financial  position of Vasomedical as at
the respective dates thereof and the consolidated  results of its operations and
cash flows for the periods  indicated,  consistent with the books and records of
the  Vasomedical  and the  Vasomedical  Subsidiaries,  except that the unaudited
statements  were or are  subject to normal and  recurring  year-end  adjustments
which were not, or are not expected to be, material in amount.

     (i) No Undisclosed  Liabilities.  Neither  Vasomedical  nor any Vasomedical
Subsidiary  has any  liabilities  (absolute,  accrued,  contingent or otherwise)
other than liabilities or obligations (a) included in the Vasomedical  Financial
Statements,  (b) incurred  since  February  28, 2007 in the  ordinary  course of
business consistent with past practice, which, individually or in the aggregate,
would not reasonably be expected to have a Vasomedical  Material Adverse Effect,
(c)  under  this  Agreement,  or (d) as  disclosed  in  Schedule  7.2(i)  of the
Vasomedical Disclosure Statement, which, individually or in the aggregate, would
not reasonably be expected to have a Vasomedical Material Adverse Effect.

     (j) Absence of Certain  Changes or Events Since  February  28, 2007.  Since
February 28, 2007:

     (i) Neither  Vasomedical nor any  Vasomedical  Subsidiary has sustained any
damage,  destruction  or loss  (including,  without  limitation,  by  reason  of
revocation  of license or right to do  business,  total or partial  termination,
suspension,   default   or   modification   of   contracts,    governmental   or
self-regulatory restriction, regulation, investigation or inquiry).

     (ii) No  Vasomedical  Material  Adverse  Effect  (as  defined  herein)  has
occurred. For purposes of this Agreement,  "Vasomedical Material Adverse Effect"
shall mean any change or effect that is, or could  reasonably be expected to be,
materially  adverse to the assets and  liabilities  (taken together as a whole),
capitalization  or condition  (financial or otherwise)  of  Vasomedical  and the
Vasomedical Subsidiaries,  taken as a whole, other than any change or effect (i)
relating  to the economy in general or (ii)  relating  to the  industry in which
Vasomedical  and  the  Vasomedical  Subsidiaries  operate  in  general  and  not
specifically to Vasomedical or any Vasomedical Subsidiary.

     (iii)  Vasomedical  has not  purchased,  redeemed or otherwise  acquired or
committed itself to acquire,  directly or indirectly,  any shares of the capital
stock of Vasomedical.

                                      -16-
<PAGE>
     (iv) Neither  Vasomedical  nor any  Vasomedical  Subsidiary  has mortgaged,
pledged  or  otherwise  encumbered  or  subjected  to lien  any  Vasomedical  or
Vasomedical Subsidiary assets or properties,  tangible or intangible, except for
liens for  current  taxes  which  are not yet due and  payable  and other  liens
arising out of the ordinary course of business.

     (v) Vasomedical has not made any change in accounting methods or principles
used for financial reporting purpose,  except as required by a change in GAAP or
pursuant  to  changes  in,  or  additions  to,  FASB or SEC  pronouncements  and
concurred with by its independent registered public accounting firm.

     (vi) Neither Vasomedical nor any Vasomedical  Subsidiary has any agreement,
arrangement or understanding with respect to any of the foregoing.

     (k) SEC  Filings.  Vasomedical  has filed with the SEC all forms,  reports,
registration  statements  and documents  required to be filed by it with the SEC
under the  Exchange  Act after  January 1, 2006  (collectively,  all such forms,
reports,  registration statements and documents so filed are referred to in this
Agreement as the "Vasomedical SEC Reports").  All of the Vasomedical SEC Reports
were timely filed and complied as to form,  when filed (if amended or superseded
by filing prior to the date of this Agreement,  then on the date of such amended
or superseding filing), in all material respects with the applicable  provisions
of the Securities Act, the Exchange Act and the  Sarbanes-Oxley  Act of 2002, as
the case may be.  The  Vasomedical  SEC  Reports  (including  all  exhibits  and
schedules thereto and documents  incorporated by reference  therein) did not, at
the time they were filed (or, if amended or  superseded by filing prior the date
of this  Agreement,  then on the date of such  amended or  superseding  filing),
contain any untrue statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  under which they were made, not misleading.  To the
knowledge of  Vasomedical,  except as disclosed in the  Vasomedical SEC Reports,
each of  Vasomedical  officers  and  directors  has  complied  with  all  filing
requirements under Section 16(a) of the Exchange Act.

     (l) Environmental.

     (i) No Hazardous  Materials have been used,  stored or otherwise handled in
any manner by Vasomedical or any Vasomedical  Subsidiary on, under,  in, from or
affecting  any of the  real  property  owned or  leased  by  Vasomedical  or any
Vasomedical Subsidiary during the past five years (the "Vasomedical  Property"),
other than in compliance with Environmental Laws. To Vasomedical's knowledge, no
prior  or  current  owner  or  occupant  of the  Vasomedical  Property  has used
Hazardous Materials on, under, in, from or affecting the Vasomedical Property.

     (ii) No Hazardous  Materials have at any time been released into, stored or
deposited  by  Vasomedical  or  any  Vasomedical  Subsidiary  within  or on  the
Vasomedical  Property,  by Vasomedical or any  Vasomedical  Subsidiary  into any
water  systems  on or below the  surface  of the  Vasomedical  Property,  or any

                                      -17-
<PAGE>

Vasomedical  Subsidiary directly or indirectly onto any property or water system
adjoining,  adjacent to or abutting the Vasomedical  Property, or have been used
by  Vasomedical  or  any  Vasomedical  Subsidiary  in  the  construction  of any
improvements located on or about the Vasomedical Property.

     (iii) Neither Vasomedical nor any Vasomedical  Subsidiary nor any Affiliate
of either has received any notice of any violations (nor is any of them aware of
any existing  violations)  of any applicable  laws or regulations  governing the
use, storage,  treatment,  transportation,  manufacture,  refinement,  handling,
production or disposal of Hazardous  Materials on, under,  in, from or affecting
the  Vasomedical  Property  and there are not any legal  actions or  proceedings
commenced or, to Vasomedical's knowledge,  threatened by any Person with respect
to any such violations.

     (iv) The Vasomedical Property is currently being, and has in the past been,
operated by Vasomedical and the Vasomedical Subsidiaries in accordance with, and
in compliance with, all applicable Environmental Laws.

     (m)  Licenses  and  Permits.   Each  of  Vasomedical  and  the  Vasomedical
Subsidiaries had obtained,  and is in compliance  with, all necessary  licenses,
permits, consents, approvals, orders, certificates, authorizations, declarations
and  filings  required  by all  federal,  state,  local and other  governmental,
self-regulatory  or regulatory bodies and all courts and other tribunals for the
conduct of the  business  and  operations  of  Vasomedical  and the  Vasomedical
Subsidiaries  as now  conducted or as  conducted  in the past,  except where the
failure to obtain or comply would not have Vasomedical Material Adverse Effect.

     (n) Compliance  with Law. The businesses of Vasomedical and the Vasomedical
Subsidiaries  at all times  have been  conducted  in all  material  respects  in
accordance  with all  applicable  laws,  rules,  regulations,  orders  and other
requirements of governmental and self-regulatory authorities, including, without
limitation,  ERISA,  all  Environmental  Laws, all laws,  regulations and orders
relating to antitrust or trade regulation,  employment practices and procedures,
the health and safety of employees and consumer credit.  Neither Vasomedical nor
any  Vasomedical  Subsidiary nor any Affiliate of either has received any notice
of  alleged  violations  of  any  laws,  rules,  regulations,  orders  or  other
requirements of governmental or self-regulatory authorities.

     (o) Litigation.  There is no claim, dispute,  action,  proceeding,  suit or
appeal or investigation or inquiry, at law or in equity,  involving  Vasomedical
or any Vasomedical Subsidiary,  or any of their officers and directors (in their
capacities  as  such)  before  any  court,  agency,  authority,  self-regulatory
authority,  arbitration  panel or other  tribunal that would require  disclosure
pursuant  to Item 103 of the  SEC's  Regulation  S-K and,  to the  knowledge  of
Vasomedical,  none has been threatened or is in prospect against  Vasomedical or
any Vasomedical  Subsidiary or their officers and directors (in their capacities
as such). To the knowledge of Vasomedical, there are no facts which, if known to
stockholders, customers, governmental authorities,  self-regulatory authorities,
regulators,  bondholders  or other  investors or other  persons,  would form the
basis  of  any  such  claim,   dispute,   action,   proceeding,   suit,  appeal,
investigation or inquiry.  Neither Vasomedical nor any Vasomedical Subsidiary is
subject  to  any  order,  writ,  injunction  or  decree  of any  court,  agency,
authority, arbitration panel or other tribunal.

                                      -18-
<PAGE>
     (p)  Brokers  or  Finders.  Neither  Vasomedical  nor  any  Affiliates  has
incurred,  nor will either of  Vasomedical or any Affiliate  incur,  directly or
indirectly,  any liability for brokerage or finders' fees or agents' commissions
or any similar  charges in connection  with this  Agreement or the  transactions
contemplated  hereby other than to Life Science Group, Inc., which obligation to
Life Science Group, Inc. shall be paid by Vasomedical.

     (q) Foreign Corrupt  Practices Act.  Neither  Vasomedical nor any Affilaite
and none of  Vasomedical's or Vasomedical  Subsidiaries'  officers or directors,
or,  to  Vasomedical's  knowledge,  any  employees,   agents,   distributors  or
representatives  acting on behalf of Vasomedical or any Vasomedical  Subsidiary,
has paid, given or received, or has offered or promised to pay, give or receive,
any  bribe or other  unlawful  payment  of money or other  thing of  value,  any
unlawful  discount,  or any other  unlawful  inducement,  to or from any  Person
(including  any  government  entity)  in  the  United  States  or  elsewhere  in
connection  with  or in  furtherance  of  the  business  of  Vasomedical  or any
Vasomedical  Subsidiary  (including,  without  limitation,  any unlawful  offer,
payment  or  promise  to pay money or other  thing of value  (i) to any  foreign
official,  political  party (or  official  thereof) or candidate  for  political
office for the purposes of influencing any act, decision or omission in order to
assist Vasomedical or the Vasomedical  Subsidiaries in obtaining business for or
with, or directing business to, any Person, or (ii) to any Person, while knowing
that all or a portion  of such money or other  thing of value  will be  offered,
given or promised  unlawfully to any such official or party for such  purposes).
The business of Vasomedical and the  Vasomedical  Subsidiaries is and was not in
any manner  dependent upon the making or receipt of such payments,  discounts or
other inducements. Neither Vasomedical nor any Affiliate has otherwise taken any
action  that could  cause  Vasomedical  or any  Vasmedical  Subsidiary  to be in
violation  of the  Foreign  Corrupt  Practices  Act of  1977,  as  amended,  the
regulations thereunder, or any applicable law or regulation of similar effect.

     (r) Disclosure of Material Facts.  Vasomedical has disclosed to Living Data
all material facts relating to the condition (financial or otherwise), business,
net worth,  assets,  properties or operations of Vasomedical and the Vasomedical
Subsidiaries as to which Living Data has made inquiry.  The  representations and
warranties  contained  in this  Section  7.2 and in the  Vasomedical  Disclosure
Statement, and any other documents or information furnished to Living Data by or
on behalf of  Vasomedical  in connection  with this Agreement do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained herein or therein not misleading.

     (s) Diminish the Mark.  Neither  Vasomedical nor any Affiliate shall at any
time do any act or thing that may in any way impair the value of the Mark or the
exclusive  ownership  rights and interests of Living Data  therein.  Vasomedical
will not, by any act or omission,  use any Marks in any manner that may tarnish,
degrade,  disparage  or reflect  adversely  on the Mark or on Living  Data,  its
business or  reputation,  or the Products.  Vasomedical  will not, by any act or
omission,  take any other action which damages Living Data's reputation or which
reflects negatively upon Living Data or the Mark or the Products.

     8. Indemnities

     8.1  Living  Data's  Indemnity.   Living  Data  shall  indemnify  and  hold
Vasomedical  harmless from and against,  and shall defend  promptly  Vasomedical

                                      -19-
<PAGE>
from,  and  reimburse  Vasomedical  for,  any and all  losses,  damages,  costs,
expenses,  liabilities,  obligations and claims of any kind (including,  without
limitation,   reasonable   attorneys'   fees  and  other  costs  and   expenses)
(collectively,  "Damages") which Vasomedical may at any time suffer or incur, or
become subject to, as a result of, or in connection with,

     (a) any material breach of this Agreement or material  inaccuracy of any of
the  representations  and warranties  made by Living Data in or pursuant to this
Agreement;

     (b) any material failure by Living Data to carry out, perform,  satisfy and
discharge any of its material covenants, agreements, undertakings,  liabilities,
or  obligations  under  this  Agreement,   but  excluding  any  claim  based  on
non-delivery to third parties of Products;

     (c) any claim  that the  Proprietary  Rights of Living  Data  infringe  the
Proprietary Rights of a Person (other than Vasomedical or an Affiliate thereof);

     (d) any product  liability or warranty claim arising out of a latent defect
in the design of any of the Products;

     (e) any claim arising out of an alleged violation of Environmental  Laws at
the Living Data Property; and

     (f) any other third party claim arising out of Living  Data's  operation of
its business, both before and after the date of this Agreement.

     8.2 Vasomedical's Indemnity.  Vasomedical shall indemnify and hold harmless
Living Data  harmless from and against,  and shall defend Living Data from,  and
reimburse  Living Data for, any Damages which Living Data may at any time suffer
or incur, or become subject to, as a result of, or in connection with,

     (a) any material breach of this Agreement or material  inaccuracy of any of
the  representations  and warranties  made by Vasomedical in or pursuant to this
Agreement;

     (b) any material  failure by Vasomedical or any  Vasomedical  Subsidiary to
carry  out,  perform,  satisfy  and  discharge  any of its  material  covenants,
agreements, undertakings, liabilities, or obligations under this Agreement;

     (c) any claim arising out of an alleged violation of Environmental  Laws at
the Vasomedical Property; and

     (d) any other third party claim arising out of  Vasomedical's  operation of
its business, both before and after the date of this Agreement.

     8.3  Indemnity  Procedure.   Living  Data  or  Vasomedical,   whichever  is
applicable (the 'Indemnified Party"), shall promptly notify the other party (the
"Indemnifying  Party") of any claim,  demand,  action,  or proceeding  for which
indemnification  will be sought under this Article 8 and, if such claim, demand,

                                      -20-
<PAGE>

action, or proceeding is a third party claim,  demand,  action, or proceeding (a
"Proceeding"),  the  Indemnifying  Party  shall have the right at its expense to
assume  the  defense  thereof  using  counsel   reasonably   acceptable  to  the
Indemnified Party. The Indemnified Party shall have the right to participate, at
its own expense,  with respect to any such  Proceeding.  In connection  with any
such  proceeding,  the  Indemnifying  Party  and  the  Indemnified  Party  shall
cooperate  with each other and provide each other with access to relevant  books
and records in its possession.  Notwithstanding anything in the foregoing to the
contrary,  an  indemnified  Party will have the right to retain its own counsel,
with  the  fees  and  expenses  to  be  paid  by  the  Indemnifying   Party,  if
representation of such Indemnified Party would be inappropriate due to actual or
potential  conflict of interests  between such  Indemnified  Party and any other
party  represented by such counsel in such Proceeding.  No such Proceeding shall
be settled without the prior written  consent of both the Indemnified  Party and
the Indemnifying Party. If a firm written offer is made to settle any Proceeding
and the Indemnified  Party refuses to consent to such settlement,  then: (i) the
Indemnifying  Party shall be excused from,  and the  Indemnified  Party shall be
solely  responsible  for, all further  defense of such  Proceeding  and (ii) the
maximum liability of the Indemnifying Party relating to such Proceeding shall be
the amount of the proposed  settlement if the amount  thereafter  recovered from
the  Indemnified  Party on such  Proceeding  is  greater  than the amount of the
proposed settlement.

     9. Miscellaneous.

     9.1  Independent  Contractors.  Each of Living Data and  Vasomedical  is an
independent contractor, and shall not hold itself out as, or be deemed to be, an
employee, agent or partner of the other party. Its authority shall be limited to
the matters  expressly set forth in this Agreement.  Each shall have no right or
power to enter into any  agreement or commitment in the name or on behalf of, or
otherwise to obligate or bind,  the other party,  and each shall not hold itself
out as having the authority to do so. Neither party to this Agreement shall have
any  authority to employ any person on behalf of the other and each shall,  with
respect to all persons employed by it, perform all obligations and discharge all
liabilities imposed upon employers under law. This Section 9.1 shall survive any
termination or expiration of this Agreement.

     9.2 Confidential  Information.  "Confidential  Information"  shall mean all
information which is not public knowledge  disclosed  heretofore or hereafter by
either party,  including without  limitation  customer and pricing lists, to the
other party (including its attorneys,  accountants or other  representatives) in
connection with its performance  under this Agreement shall be kept confidential
by such other party,  and shall not its used by such other party  otherwise than
for use as herein  contemplated,  except to the  extent  (a) it is or  hereafter
becomes  public  knowledge or becomes  lawfully  obtainable  from other sources,
including  from a third party who is under no obligation of  confidentiality  to
the party  disclosing  such  information  or to whom  information  was  released
without  restriction,  or (b) such other party is  compelled  to  disclose  such
information  by  judicial  or  administrative  process or, in the opinion of its
counsel,  by other  requirements of law, or (c) such duty as to  confidentiality
and non-use is waived by the non-disclosing  party. The obligations set forth in
this Section 9.2 shall survive any  termination or expiration of this Agreement.
Notwithstanding the foregoing, the parties to this Agreement (and each employee,

                                      -21-
<PAGE>

representative  or  other  agent of the  parties)  may  disclose  to any and all
persons,  without  limitation  of any kind,  the tax treatment and tax structure
provided  for  therein  provided,  however,  that no party  (nor  any  employee,
representative,  or other agent thereof)  shall disclose any  information to the
extent that such disclosure  could result in a violation of any federal or state
securities law.

     9.3 Proprietary  Rights.  Each of Living Data and Vasomedical  acknowledges
and  recognizes  that (i) Living Data solely  owns and has  exclusive  worldwide
right,  title and interest in and to all  Proprietary  Rights listed in Schedule
7.1(h) of the Living Data Disclosure  Statement and all derivative  works and/or
modifications  thereto  and  (ii)  Vasomedical  solely  owns  and has  exclusive
worldwide right,  title and interest in and to all Proprietary  Rights listed in
Schedule 7.2(m) of the Vasomedical Disclosure Statement and all derivative works
and/or  modifications  thereto.  Each  agrees  that it will  not  challenge  the
validity or enforceability of any of the Proprietary  Rights of the other or any
part  thereof  at any  time.  In  addition,  each  party  will not  directly  or
indirectly  apply for or  attempt  to  register  for itself or others any of the
trademarks,  service  marks,  copyrights or similar  protection in any county or
area. In the event that either party wishes to obtain additional  protection for
its  Proprietary  Rights  anywhere  in the  world,  the other  party  will fully
cooperate by providing such documents and  information  and performing such acts
as are reasonably requested by the party seeking the additional protection. This
Section 9.3 shall survive any termination or expiration of the Agreement.

     9.4 No Employee Solicitation. Neither party to this Agreement shall solicit
any employee of the other party for employment by it or any Affiliate, nor shall
either party induce any employee of the other party to leave such employment.

     9.5 Equitable Remedies. Each of Living Data and Vasomedical recognizes that
the other  party's  remedy at law for any breach of the  provisions  of Sections
9.1, 9.2, 9.3 and 9.4 of this  Agreement  will be inadequate  and,  accordingly,
each  agrees  that in addition  to such other  rights and  remedies  that may be
available  to the other  party,  in law or in  equity,  any  court of  competent
jurisdiction  may enjoin,  without the  necessity of  requiring  proof of actual
damages or the posting of any bond or other  security,  any actual or threatened
breach of the provisions of any such Section (whether during or after the Term).

     9.6  Notices.  Any notice  required or intended to be given by either party
hereto to the other,  pursuant to this  Agreement or any provision of law, shall
be in writing  and sent by  registered  or  certified  mail,  postage  paid,  or
delivered by hand or overnight  courier and  acknowledged,  or by telecopier and
confirmed by registered or certified mail as follows:

         If to Living Data, to:

                  Living Data Technology Corporation
                  37-14 29th Street
                  Long Island City, NY 11101
                  Attn: Chief Financial Officer
                  Fax: (718) 786-0534

         With a copy to (which shall not constitute notice):
                        -----------------------------------

                                      -22-
<PAGE>
                  Wachtel & Masyr, LLP
                  110 East 59th Street
                  New York, NY  10022
                  Attn.:  Robert W. Berend, Esq.
                  Fax: (212) 909-9455

         If to Vasomedical, to:

                  Vasomedical, Inc.
                  180 Linden Avenue
                  Westbury, NY  11590
                  Attn.:  Chief Financial Officer
                  Fax: (516) 987-2299

                  With a copy to (which shall not constitute notice):

                  Beckman, Lieberman & Barandes, LLP
                  116 John Street
                  New York, NY  10038
                  Attn.:  David H. Lieberman, Esq.
                  Fax: (212) 608-9687

or to such other address as may be designated by the respective  party by notice
given to the other in  accordance  with this  Section  9.6.  Each  notice  given
pursuant  to this  Section  9.6  shall be deemed  delivered:  if  mailed,  three
Business Days after deposit with the United States Post Office;  if delivered by
hand or  telecopier,  when  delivered;  and if sent by a  nationally  recognized
overnight courier, one Business Day after deposit with such courier.

     9.7 Waivers.  No waiver by Living Data or  Vasomedical of any of the terms,
conditions,  covenants  or  agreements  of  this  Agreement,  or  non-compliance
therewith,  shall be  binding  unless in  writing  and signed by the party to be
charged,  and no such  waiver  shall be  deemed or taken as a waiver at any time
thereafter  of the same of any other  term,  condition,  covenant  or  agreement
herein contained, nor of the strict and prompt performance thereof.

     9.8  Assignments.  Neither  this  Agreement  nor  any  right,  interest  or
obligation  hereunder  shall be assigned by any party  hereto  without the prior
written  consent of the other party.  This  Agreement  shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
permitted assigns.  This Agreement is not intended to confer any rights upon any
person other than the parties to this Agreement.

     9.9 Entire Agreement. This Agreement (including the Disclosure Agreements),
the  Securities  Purchase  Agreement,  the  Warrant of even date  herewith,  the
Registration  Rights Agreement of even date herewith and the Supplier  Agreement
constitutes  the entire  agreements  of the parties  hereto with  respect to the

                                      -23-
<PAGE>

subject matter hereof.  No covenants,  representations  or warranties other than
those  contained,  incorporated  or referred to herein have been made,  given or
received.  No course of dealing should be, or be deemed, a waiver of any term or
condition hereof. This Agreement may not be changed,  modified or amended except
in writing and signed by the parties to be charged.

     9.10  Severability.  Whenever  possible,  each  provision of this Agreement
shall be  interpreted  in such a  manner  as to be  effective  and  valid  under
applicable law. However,  if any provision of this Agreement shall be prohibited
by or invalid  under  such law,  it shall be deemed  modified  to conform to the
minimum  requirements  of such law or,  if for any  reason  it is not  deemed so
modified,  it  shall  be  prohibited  or  invalid  only  to the  extent  of such
prohibition  or  invalidity  without  the  remainder  thereof  or any other such
provision being prohibited or invalid.

     9.11 Governing Law. This Agreement  shall be construed (both as to validity
and  performance)  and enforced in accordance with, and governed by, the laws of
the State of New York  applicable to contracts to be performed  entirely  within
that  State,  without  giving  effect to the  principles  of  conflicts  of law;
provided,  however, that the due authorization,  issuance and enforcement of the
terms of the  Living  Data  Shares  shall  be  governed  by,  and  construed  in
accordance with, the laws of the State of New York, without giving effect to the
principles  of conflicts of law.  Subject to compliance  with the  provisions of
Article 10 relating to Dispute Conciliation and Arbitration,  the parties hereto
irrevocably and unconditionally  consent to the exclusive jurisdiction and venue
of the federal and state  courts  located in the State of New York,  Counties of
New York or Nassau with respect to any action, suit or proceeding arising out of
this Agreement or the  consummation  of the  transactions  contemplated  hereby;
provided,  however, that no party hereto waives its right to request the removal
of such action,  suit or  proceeding  from the state court to a federal court in
such  jurisdictions.  The parties  hereto each waives any claim that either such
jurisdiction is not a convenient  forum for any such action,  suit or proceeding
and the defense of lack of personal jurisdiction. The parties agree that service
of process sent as provided for notices  hereunder shall be effective service of
process of any action,  suit or  proceeding  against it in any such  court.  The
parties  hereto  irrevocably  waive all right to a trial by jury in any  action,
suit or  proceeding  arising out of this  Agreement or the  consummation  of the
transactions contemplated hereby.

     9.12 Force  Majeure.  Neither  party shall be liable to the other party for
any  loss,  damage,  delay or  failure  of  performance  resulting  directly  or
indirectly  from any  cause  beyond  its  reasonable  control,  including  force
majeure,  strikes,  or the laws,  regulations,  acts,  or  failure to act of any
governmental authority.

     9.13 Exclusion of Certain Damages. Nothing in this Agreement shall obligate
either  party for the lost  profits,  lost  revenues or other  consequential  or
special damages of the other party.

     9.14 Counterparts and Facsimile Signatures.  This Agreement may be executed
in two or more  counterparts,  each of which shall be deemed an original but all
of which together  shall  constitute  one and the same  instrument.  The parties
agree that they may rely on facsimile signatures of either party with respect to
this Agreement or any waiver, amendment, supplement or consent relating thereto,
with the same as if such signature was an original.

                                      -24-

<PAGE>
     9.15 Knowledge. For purposes of this Agreement,  "knowledge" as of any date
that a  representation  or warranty is given by a party shall mean the actual or
constructive  knowledge of the  management  of such party,  at the level of vice
president or above, and "knows" shall have a correlative meaning.

     9.16 Survival of Representation  and Warranties.  The  representations  and
warranties  of the parties  contained in this  Agreement  shall survive the date
hereof and shall  terminate and be of no further force or effect as of the third
anniversary  of the date hereof (the  "Expiration  Date") and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of either party to this  Agreement.  Notwithstanding  anything in the  preceding
sentence to the contrary,  any representation or warranty in respect if which an
indemnity  may be  sought  hereof  shall  survive  the  time at  which  it would
otherwise   terminate  pursuant  to  the  preceding  sentence  if  a  claim  for
indemnification  shall have been given to the  Indemnifying  Party  prior to the
Expiration Date.

     10. Dispute Conciliation And Arbitration

     10.1 Conciliation.  Where specifically provided in this agreement, business
disputes  arising  from this  Agreement,  shall be the  subject of a request for
settlement by amicable  arrangement through  conciliation in accordance with the
following.

     (a) The party  desiring  conciliation  ("Requesting  Party")  shall  make a
request  therefor in writing to the other party  ("Recipient").  The request for
conciliation shall consist of a statement of the issue from the point of view of
the Requesting  Party and shall be accompanied by copies of relevant  papers and
documents.

     (b) Upon receipt of a request for conciliation,  the Recipient, within five
(5) Business Days, shall submit to the Requesting  Party a written  statement of
the  issue  from  their  point of view,  with  copies  of  relevant  papers  and
documents.

     (c) Within five (5) Business Days of the response to the  Requesting  Party
(the "Convening Date"), the Requesting Party, the Recipient, or their respective
designees or attorneys shall convene a Conciliation Committee.

     (i) The  Committee  shall  be  composed  of  three  conciliators,  one each
appointed by the Requesting Party and the Recipient and a Chairman. Unless he is
unable to so act,  Simon  Srybnik shall act as Chairman.  In his absence,  Louis
Srybnik,  shall act as Chairman. If neither is available,  the Chairman shall be
selected by mutual agreement of the Requesting Party and the Recipient.

     (d) The Committee  shall  acquaint  itself with the details of the case and
procure any  information  required  for this purpose by  communicating  with the
Requesting  Party  and the  Recipient,  and  shall  hear  from the  parties,  if
possible.

     (e) The  Requesting  Party and Recipient may appear before the Committee in
person or be represented by duly accredited agents. They may also be assisted by
counsel.

                                      -25-
<PAGE>
     (f) After  having  examined  the issue and  having  heard the  parties,  if
possible, the Conciliation Committee shall submit, within five (5) Business Days
of the Convening Date suggested  terms of resolution to the parties.  Should the
parties agree to the suggested settlement, the Conciliation Committee shall draw
up and sign a record  of the  settlement,  and  shall  communicate  the terms of
settlement to the parties and their representatives.

     (i)  If  the  parties  do  not  agree  to  the  suggested  settlement,  the
Conciliation Committee is authorized to direct the settlement, and same shall be
binding on the parties.

     (ii) In lieu of directing a  settlement,  the  Conciliation  Committee  may
direct  that the  matter  at issue be  submitted  to  Arbitration  as  otherwise
provided in this agreement.

     10.2  Arbitration.  Should a settlement  not result based on the foregoing,
the parties must submit the dispute to be resolved by arbitration in New York in
accordance with the rules of the American Arbitration  Association and the award
of the arbitration panel should be binding on the parties. The arbitration panel
shall consist of one arbitrator.  Any party may take appropriate  legal steps to
enforce the award at a court of law.

     (a) No person  having  participated  as a participant  of the  Conciliation
Committee for the  settlement of a dispute may be appointed  arbitrator  for the
same dispute.

     10.3 Costs.  Each participant  shall bear an equal cost of the conciliation
or arbitration panel.  Except for the foregoing  sentence,  each Party should be
responsible for its own costs and expenses incurred under this Section.

       (Balance of page left intentionally blank; Signature Page follows)

                                      -26-
<PAGE>
     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.

                                    LIVING DATA TECHNOLOGY CORPORATION

                                      By:/s/Simon Srybnik
                                         ----------------------
                                            Name: Simon Srybnik
                                            Title:  President

                                    VASOMEDICAL, INC.

                                      By: /s/John CK Hui
                                          --------------------
                                            Name:  John CK Hui
                                            Title:  President

                                      -27-

<PAGE>
                                    EXHIBIT A

                               Form of Undertaking

     The  undersigned  entity  whose  name  is set  forth  below  ("Buyer"),  in
consideration of the sale of certain ECP/EECP products (the "Products") to it by
Vasomedical,  Inc.  ("Seller") hereby agrees to the following  undertaking (this
"Undertaking"):

     1. Buyer shall not, directly or indirectly,  at any time, sell,  distribute
or advertise,  any Products in any country other than United States, Puerto Rico
and the territories or other possessions  administered by the United States, but
not including  duty-free  shops in such country (all other areas,  collectively,
the  "Prohibited  Area"),  or sell or distribute  any Products to any person who
Buyer knows, or should reasonably have known, intends to sell or distribute,  or
arrange or participate,  directly or indirectly, in the sale or distribution of,
any Products within the Prohibited Area (collectively, the "Restrictions").

     2. Buyer  represents  and  warrants  that it will not sell,  distribute  or
advertise the Products in the  Prohibited  Area or otherwise act  inconsistently
with the Restrictions.

     3. Buyer acknowledges that the Restrictions have been imposed in connection
with an  arrangement  between  Seller and  Living  Data  Technology  Corporation
("LDTC")  and  understands,  intends  and  agrees  that  LDTC is a  third  party
beneficiary of this Undertaking and shall have all rights hereunder as if it was
a party  hereto,  including  the right to apply for, from any court of competent
jurisdiction, an order enjoining Buyer from breach of this Undertaking.

     4. (a) Buyer  acknowledges that it is not the owner of any right,  title or
interest  in and to (i) the  trademark  in the type face and style  used by LDTC
(the "Living Data Mark") in any form or embodiment  thereof or the trademarks in
the type face and style used by the Seller  (collectively,  "Vasomedical Marks")
in any form or  embodiment  thereof,  and Buyer is not the owner of the goodwill
attached to the Living Data Mark or the  Vasomedical  Marks or (ii) or any trade
secrets, designs,  patents,  copyrights and other intellectual property relating
to Products  (the  "Other  Intellectual  Property").  Sales by Buyer of Products
shall be deemed for the purposes of the  acquistion of trademark  rights and the
purpose of  trademark  registration  to have been made by and for the benefit of
LDTC as the  owner  of the  Living  Data  Mark or  Seller  as the  owner  of the
Vasomedical Marks, whichever is applicable.  Buyer will not, at any time, do any
act or thing  which  may,  in any way,  impair  the rights of LDTC in and to the
Living  Data Mark or the right of Seller in and to the  Vasomedical  Products or
each of their respective rights to the the Other Intellectual Property, or which
may affect the  validity  of the Living  Data Mark or the  Vasomedical  Marks or
which may depreciate the value of the Living Data Mark, the Vasomedical Marks or
its or their prestige and good will.

     (b)  To  the  extent  any  rights  in and to  the  Living  Data  Mark,  the
Vasomedical Marks or Other Intellectual  Property are deemed to accrue to Buyer,
Buyer hereby  assigns any and all such rights at such time as they may be deemed
to accrue to LDTC or Seller, whichever is applicable.

                                      -28-
<PAGE>
     (c) Buyer agrees never to challenge the validity or ownership of the Living
Data  Mark,  the  Vasomedical  Marks or the  Other  Intellectual  Property,  any
application  for  registration  thereof,  or any  registrations  thereof  in any
jurisdiction.

     (d) Buyer  shall  not use the  Living  Data Mark or any of the  Vasomedical
Marks as part of a corporate or business name or as a service mark and shall not
use the Living Data Mark or any of the  Vasomedical  Marks in any form or use or
attempt to use or exploit  the Other  Intellectual  Property  without  the prior
written consent of the owner.

     (e) The provisions of this paragraph 4 shall survive the termination of the
sale of Products from Seller to Buyer.

     5. Buyer agrees to furnish  Seller and LDTC with such  information or forms
as they may reasonably request regarding Buyer's net sales.

     6. Buyer,  at its sole  expense,  shall  comply with all laws,  ordinances,
rules,  and regulations  (including,  without  limitation,  those  pertaining to
health, sanitation, fair trade or consumer protection),  obtain all licenses and
permits required by, and pay all taxes, fees,  charges,  and assessments imposed
or enacted by, any  governmental  authority  and shall not take any action which
will cause  Seller or LDTC to be in  violation  of any law of any  jurisdiction,
including but not limited to the U.S. Foreign Corrupt Practices Act of 1977.

     7. Buyer  acknowledges  that LDTC or Seller  may  conduct  local,  national
and/or  international  advertising  campaigns,  and Buyer agrees that it may not
utilize any advertising or promotion materials of LDTC or Seller for any purpose
whatsoever,  whether  such  materials  appear  within or  outside  of the United
States,  without  the prior  written  consent  of LDTC or Seller,  whichever  is
applicable.

     8. Buyer agrees that it shall purchase all Products from Seller and that it
shall not sell or distribute  any Products to any person unless  purchased  from
LDTC or Seller.

     9. Buyer  acknowledges and agrees that either Buyer or Seller may terminate
the sales  arrangements  between  Buyer and Seller  without  cause upon 30 days'
prior written notice to the other. Buyer acknowledges and agrees that its rights
to sell Products are subordinated and subject to the rights of Seller to sell in
Buyer's  territory,  and if  Seller  may no  longer  sell  Products  in  Buyer's
territory,  then  Buyer's  rights  hereunder  shall  terminate.   Buyer  further
acknowledges  and  agrees  that  Seller  may  terminate  the sales  arrangements
immediately  if Buyer (i) breaches any term of this  Undertaking,  (ii) fails to
pay its  debts as and when due,  (iii)  files a  petition  in  bankruptcy  by or
against Buyer, (iv) makes an assignment for the benefit of its creditors, (v) is
insolvent  or if a receiver is  appointed  for Buyer,  (vi) is  convicted of any
crime in any jurisdiction  which adversely  reflects on LDTC or Seller, or (vii)
submits any financial  information  or reports to LDTC or Seller which are found
to be  fraudulent.  Buyer  agrees  that from and after the date of  termination,
Buyer shall not sell or  distribute  any  Products  and shall not use the Living
Data  Mark or the  Vasomedical  Marks or any name,  symbol  or logo  confusingly
similar thereto.

                                      -29-
<PAGE>
     10. Buyer  acknowledges  that it may not assign to any person or entity any
of its rights to sell Products on behalf of Seller.

     11. Buyer agrees that any disputes governing the sales arrangements between
Buyer and Seller or governing this  Undertaking,  including the  interpretation,
performance or non-performance thereof, shall be governed and interpreted by the
laws of the  State  of New York  without  giving  effect  to any  principles  of
conflicts of law.  Buyer hereby submits to the  jurisdiction  of the federal and
state  courts  in the  County  and State of New York  with  respect  to any such
disputes and agrees to be bound by any competent  court of law or equity in such
jurisdiction.  Buyer agrees that nothing  contained  herein is intended to limit
Seller's  rights to bring an  action in any  jurisdiction  in which  Buyer  does
business.

     12.  Buyer  recognizes  that  Seller's  remedy at law for any breach of the
provisions of this Agreement shall be inadequate and, accordingly,  Buyer agrees
that in addition to such other  rights and  remedies  that may be  available  to
Seller,  in law or in equity,  any court of competent  jurisdiction  may enjoin,
without the necessity of requiring proof of actual damages or the posting of any
bond or other  security,  any actual or threatened  breach of the  provisions of
this Agreement.

                               [Name of Buyer]

                        By: ____________________________
                               Authorized Signature

                        Address:

                        Person signing:
                        Title:
                        Telex or Phone:

<PAGE>
                                                                    EXHIBIT B TO
                                                             SECURITIES PURCHASE
                                                                       AGREEMENT

                               SUPPLIER AGREEMENT

     SUPPLIER  AGREEMENT (this "Agreement") made and entered into as of the 21st
day  of  June,  2007  by and  between  Living  Data  Technology  Corporation,  a
corporation  incorporated  under  the laws of the  State  of New  York  ("Living
Data"), with executive offices at 37-14 29th Street, Long Island City, NY 11101,
and Vasomedical, Inc., a corporation incorporated under the laws of the State of
Delaware ("Vasomedical"), with executive offices at 180 Linden Avenue, Westbury,
New York 11590.

     WHEREAS,  Living Data has engaged,  pursuant to a Distribution Agreement of
even  date  herewith  by and  between  the  parties  hereto  (the  "Distribution
Agreement"),  Vasomedical  as its exclusive  distributor of Living Data Products
(as hereinafter  defined) to customers in the Territory (as therein  defined) on
the terms and conditions therein set forth; and

     WHEREAS,  Vasomedical  desires  to  engage  Living  Data,  on the terms and
conditions  hereinafter set forth, as the exclusive  supplier of (1) Vasomedical
Products (as  hereinafter  defined) for sale or  distribution  by Vasomedical to
customers  throughout  the  world  and (2)  Living  Data  Products  for  sale or
distribution by Vasomedical pursuant to the Distribution Agreement;

     NOW,  THEREFORE,  in  consideration  of the mutual  covenants,  agreements,
representations and warranties contained herein, the parties hereto hereby agree
as follows:

     1. Definitions.

     (a)  When  used in this  Agreement,  the  following  terms  shall  have the
meanings set forth in this Section 1(a):

     (i)  "Affiliate"  of any Person  shall mean any Person  that  directly,  or
indirectly through one or more intermediaries, controls, is controlled by, or is
under  common  control  with such  Person.  For the purpose of this  definition,
"control" when used with respect to any Person means the possession, directly or
indirectly,  of the power to direct or cause the direction of the management and
policies of such Person whether through the ownership of voting  securities,  by
contract  or  otherwise;  and the  terms  "controlling"  and  "controlled"  have
meanings correlative to the foregoing.

     (ii)  "Anticipated  Delivery  Date"  shall  mean the  anticipated  date for
delivery of Products or parts pursuant to an Order confirmed by Living Data.

     (iii) "Business Day" shall mean any day other than Saturday,  Sunday or any
other day on which  commercial banks are authorized to close and do close in New
York City.

     (iv) "CE Marking"  shall mean that  certification  issued by an  authorized
Notified  Body (as  defined  by a  directive  from the  European  Union)  in the
European Union.
<PAGE>
     (v) "cGMP" shall mean current good manufacturing  practices as that term is
defined by the FDA from time to time.

     (vi) "Contract  Year" shall mean each 12-month period of the Term from June
1st through May 31st,  provided that, with respect to the first Contract Year of
the Term, the Contract Year shall be from June 21, 2007 until May 31, 2008.

     (vii)  "FDA"  shall  mean the Food and Drug  Administration  of the  United
States of America.

     (viii)  "Forecast"  shall mean a projection by  Vasomedical to Living Data,
delivered at least 90 days before the start of a  Quarter-Annual  Period,  as to
the number of  Products  that Living  Data may be  requested  to produce for the
immediately succeeding Quarter-Annual Period.

     (ix) "Living Data Products" shall mean all of the AngioNew ECP systems used
to assist the heart by applying  positive or negative pressure to one or more of
the body's  limbs in  synchrony  with the heart  cycle,  whether  now offered or
hereafter  developed  by Living Data during the Term,  and any  improvements  or
modifications  thereto.  The current AngioNew ECP systems are the AngioNew-V,  a
mobile system, and the AngioNew-VI, a table type system.

     (x) "Order"  shall mean any purchase  order for Products or parts placed by
Vasomedical with Living Data.

     (xi) "Person" shall mean an individual, a corporation,  a limited liability
company, a partnership,  an unincorporated association, a trust, a joint venture
or any other entity or organization of whatever nature.

     (xii) "Products" shall mean Living Data Products and Vasomedical Products.

     (xiii)  "Quarter-Annual  Period"  shall  mean each three  (3)-month  period
ending on February 28, May 31,  August 31 and November 30 of each  Contract Year
during the Term.

     (xiv) "Term" shall have the meaning set forth in Section 4.1(a) hereof.

     (xv) "Vasomedical Products" shall mean all of the ECP therapy systems which
are marketed under the registered trademark "EECP" and which utilize fundamental
hemo-dynamic  principles  to  augment  coronary  blood flow and at the same time
reduce the work load of the heart while improving the overall vascular function,
whether now offered or hereafter  developed by Vasomedical  during the Term, and
any improvements or modifications  thereto. The current EECP therapy systems are
EECP-Lumenair, EECP-TS3 and EECP-TS4.

     (b) As  used in this  Agreement  pronouns  shall  refer  to male or  female
Persons or entities  where such  construction  is required to give  meaning to a
provision contained herein. Whenever a singular or plural number is used herein,

                                      -2-
<PAGE>
the same shall refer to the plural or singular,  as applicable,  as well. Unless
the  context  clearly  requires  otherwise,  the words  "hereof,"  "herein"  and
"hereunder  to" and words of similar  import shall refer to this  Agreement as a
whole and not to any particular  provision hereof.  The headings of the Articles
and Sections of this Agreement are inserted for  convenience  only and shall not
constitute a part hereof or affect in any way the meaning or  interpretation  of
this Agreement.  Each party acknowledges that it has been represented by counsel
and  that  it  has  actively   participated  in  the  review,   negotiation  and
finalization of this Agreement and documents  relating hereto.  Accordingly,  in
the event of a dispute,  the drafting of any particular term or provision hereof
shall not be a factor in the determination of the construction or interpretation
of such term or provision.

     2. Purchasing and Pricing.

     2.1 Exclusive  Manufacturing Right. (a) Vasomedical hereby grants to Living
Data the  exclusive  right to  manufacture,  or  cause to be  manufactured,  the
Vasomedical Products except as otherwise provided in this Agreement.

     (i) To facilitate such right, Vasomedical shall, not later than 30 Business
Days after commencement of the Term, begin to furnish Living Data specifications
and such technical assistance relating to manufacturing the Vasomedical Products
as Living Data may reasonably request.  Vasomedical shall also make available to
Living Data access to such of its personnel as are appropriate to facilitate the
transition process.

     (ii)  Vasomedical  acknowledges  that  Living  Data  may  rely  on  various
suppliers  to furnish  components  for the  Products  and that the  Living  Data
Products  currently are, and the Vasomedical  Products will be,  manufactured at
the Living Data facility located in the Peoples  Republic of China.  Living Data
represents and warrants to Vasomedical  that such facility is in full compliance
with FDA cGMP  requirements  and is ISO 9001  and ISO  13485  certified.  In the
event,  however,  should Living Data in the future seek to have the  Vasomedical
Products  manufactured  by a third party at a facility other than that of Living
Data,  Living Data shall first seek the  approval by  Vasomedical  of such third
party  manufacturers,  which  approval  shall not be  unreasonably  withheld.  A
condition precedent to any such approval shall be the written commitment by such
third party manufacturer to comply with all of the manufacturing  obligations of
Living Data hereunder, including, without limitation, those obligations relating
to quality  control,  compliance  with all  governmental  rules and  regulations
(including,  without limitation, those relating to CE Marking and a satisfaction
of FDA manufacturing  requirements,  including,  without  limitation,  cGMP) and
pricing.

     (iii) Living Data  acknowledges  that  Vasomedical  shall have the right to
utilize the inventory held by it, as of the date hereof, to have the Vasomedical
Products  manufactured  as it may  determine  by any party  selected by it or by
itself,  that  Vasomedical  may acquire  generic  additional  parts as needed to
complete the  manufacturing  process and that Vasomedical may use such inventory
as parts for repairs or otherwise as Vasomedical  may elect;  provided,  however
that  Vasomedical  may not acquire or manufacture  generic  additional  parts to
create entirely new finished units of Vasomedical  Products not  contemplated by
the current inventory.

                                      -3-
<PAGE>

     (b)  Vasomedical  shall have the right,  at any time, to propose changes to
Vasomedical Product designs,  specifications,  and materials. Living Data agrees
to use reasonable  commercial efforts to evaluate  Vasomedical's  requests under
this  Section  2.1(b);   provided,   however,  that  Living  Data  shall  notify
Vasomedical  within 30 days if Living Data is not able to meet such request.  If
any such changes cause an increase or decrease in the cost, or the time required
for  performance,  an  equitable  adjustment  in pricing  shall be made and this
Agreement  shall be  modified in writing  accordingly.  Failure to comply with a
request shall be subject to the Conciliation  Procedure described in Section 8.1
hereof.

     (c)  Living  Data and  Vasomedical  agree to  actively  pursue a program of
continuous improvement in regards to the Products and their relationship on both
technical and commercial  levels.  Each party shall promptly advise the other of
any  changes to raw  material,  manufacturing,  process or any other  reasonably
available technological advances which the disclosing party becomes aware of and
which may result in Product improvements or cost reductions,  providing that the
disclosure  party  has no  third  party  restrictions  on the  sharing  of  such
information.  Living Data agrees to use reasonable  commercial efforts to reduce
the  cost  of  supply  of  the  Products  and  to  incorporate,  to  the  extent
practicable, cost improvement techniques developed or suggested by Vasomedical.

     (d) To facilitate  Living Data's  manufacturing  right  Vasomedical  hereby
grants  to  Living  Data  during  the  Term a  non-exclusive  license,  with  no
royalties,   to  use  the  Vasomedical  patents  in  its  manufacturing  of  the
Vasomedical Products.

     2.2   Vasomedical's   Obligations.   (a)  Except  as  provided  in  Section
2.1(a)(iii),  Section  2.2(d)  and  Section  4.3  hereof,  all  Products  to  be
distributed by Vasomedical  during the Term, and all parts for servicing,  shall
be purchased by  Vasomedical  from Living  Data,  and no such  Products or parts
shall be purchased from any other source whatsoever  without Living Data's prior
written consent.

     (i) Living Data shall  deliver to  Vasomedical,  whenever  requested  after
commencement of the Term,  specifications and technical drawings relating to the
current  parts.  Only if there is a change in the  specifications  and technical
drawings and materials of parts shall Living Data,  within 30 Business Days of a
change,  provide  to  Vasomedical  specifications  and  technical  drawings  and
materials  relating to such changed parts so that  Vasomedical  can  effectively
price or replace such changed  parts where Living Data does not provide the same
as set forth herein.

     (b) Commencing  with the  Quarter-Annual  Period  commencing  June 1, 2008,
Vasomedical  shall provide  Living Data with a Forecast,  not later than 90 days
prior to the commencement of each  Quarter-Annual  Period,  for the Products set
forth in the  Forecast for the  immediately  succeeding  Quarter-Annual  Period.
Living  Data  shall,  within ten days after  receipt  of such  Forecast,  advise
Vasomedical in writing as to the extent,  if any, such Forecast as to quantities
and types  cannot be  fulfilled  in the  immediately  succeeding  Quarter-Annual
Period,  which notice shall indicate the reason for any such proposed changes to

                                      -4-
<PAGE>

the  Forecast.  In the event that  Living Data does so advise  Vasomedical,  the
parties shall in good faith  negotiate any change to the Forecast.  In the event
the parties  shall  disagree as to the proposed  changes,  such dispute shall be
resolved in accordance with the Conciliation  Procedure described in Section 8.1
hereof.

     (i)  Notwithstanding  the  foregoing,  Vasomedical  shall use  commercially
reasonable  efforts to advise  Living Data of its on-going  manufacturing  needs
during the first  Contract  Year not later than three months after the effective
date of this Agreement.

     (c) Thereafter, Vasomedical shall deliver to Living Data an Order, at least
75 days prior to the delivery date it is requesting in the Order,  setting forth
therein,  among other items, (i) the quantities and types of Products requested,
(ii) the  delivery  date  requested  and (iv)  whether  the  Products  are to be
delivered  directly  to  a  named  customer  location  or  to  a  pre-designated
Vasomedical  location.  If no customer delivery  location is designated,  Living
Data shall make delivery pursuant to the Order to the pre-designated Vasomedical
location. Living Data shall, within ten days of receipt of the Order, confirm to
Vasomedical  the  Anticipated  Delivery  Date or Dates for the  Products  in the
Order. Vasomedical shall use only Order forms and other forms approved by Living
Data to order  Products  and shall  follow  all of  Living  Data  procedures  in
connection therewith as shall be in effect from time to time. Living Data agrees
that such forms and procedures will at all times be in compliance with the terms
and  conditions of this Agreement  which shall  supersede the provisions of such
forms and  procedures.  Any  issues  related  to same  shall be  subject  to the
Conciliation Procedure described in Section 8.1 hereof.

     (d)  Notwithstanding  anything in this Section 2.2 to the contrary,  Living
Data  acknowledges  that, as of the date of this  Agreement,  Vasomedical has an
existing inventory of Vasomedical Products and, accordingly, Vasomedical desires
to sell such inventory, whether in the Territory or elsewhere, as parts or after
manufacture  into finished  goods.  Vasomedical  shall,  within 30 Business Days
after the  commencement  of the  Term,  deliver  to  Living  Data a list of such
inventory.  The parties  acknowledge  that Vasomedical has represented to Living
Data that such inventory may meet all of Vasomedical's  needs in connection with
the sale,  manufacture and service of Vasomedical  Products for approximately 12
months.

     2.3 Sales  Price to  Vasomedical.  The sales  price to be charged by Living
Data to Vasomedical for each unit of the current  Products  purchased  hereunder
shall be (i) during  the period  ending May 31,  2009,  the amount  provided  on
Schedule  A hereto  and (ii)  thereafter  such  sales  price  for each unit of a
Product as to which the parties  mutually  agree.  On or prior to February 28 of
each Contract Year,  Living Data shall, by written notice to Vasomedical,  set a
sales price for each Product  commencing  June 1 of that  Contract  Year. In the
event that  Vasomedical  accepts such sales price or does not respond  within 30
days of receipt of Living  Data's  notice,  such sales  price shall be the sales
price  commencing  June 1 of that Contract  Year. In the event that  Vasomedical
objects to such proposed sales price,  the parties shall negotiate in good faith
a sales  price,  failing  which the issue of sales price shall be subject to the
Conciliation  Procedure  described  in Section  8.1 hereof.  It is  specifically
understood  that the time frame for providing  any Forecast  shall be tolled for
that period of time until the sales price has been  settled as such  Forecast is
dependent thereon.

                                      -5-
<PAGE>

     (a) The  initial  sale price from Living  Date to  Vasomedical  for any new
Product  hereafter  developed  shall be such price as the parties shall mutually
agree,  failing  which  agreement  the  sales  price  shall  be  subject  to the
Conciliation  Procedure described in Section 8.1 hereof.  Thereafter,  the sales
price in any subsequent Contract Year shall be determined as provided above.

     (b) Living Data  represents  and warrants that the pricing for the Products
is no greater than the lowest price at which similar products are sold by Living
Data in similar  quantities to any other competitive  customer in the Territory.
Living Data further  covenants  that,  during the Term of this Agreement and any
renewal periods, if Living Data grants to any competitive customer a price which
is less than the price then in effect for  Vasomedical,  Living  Data shall make
such lower price immediately  available to Vasomedical without action or request
by Vasomedical.

     2.4 Furnishing of Parts. Other than Vasomedical's  right to use its current
inventory during the Term, Living Data shall have the exclusive right to furnish
such parts for the Products as shall be necessary for Vasomedical to service the
Products.  The parts shall be furnished to Vasomedical at Living Data's standard
prices,  subject to the  pricing  limitations  set forth in Section  2.3 hereof,
including  resolution  of any  dispute as to pricing  of parts  pursuant  to the
Conciliation Procedure described in Section 8.1 hereof..

     (a) To the  extent  feasible,  Vasomedical  shall  include  in  each of its
Forecasts  its  anticipated  requirements  for  parts  during  such  immediately
succeeding  Quarter-Annual  Period.  Vasomedical shall deliver to Living Data an
Order  for  parts,  at least  75 days  prior to the  first  delivery  date it is
requesting  in the Order,  setting  forth  therein,  among other items:  (i) the
quantities  and  types  of parts  requested,  (ii)  the  delivery  date or dates
requested  and  (iii)  the  Vasomedical  location  to which  the parts are to be
delivered.  Living Data shall, within ten days of receipt of the Order,  confirm
the Anticipated  Delivery Date or Dates for the parts in the Order.  Living Data
shall use its commercially reasonably efforts to fulfill Orders from Vasomedical
for parts on an emergency basis.

     2.5 Living Data's  Warranties.  (a) Living Data warrants to Vasomedical (i)
that  all  Products  furnished  by it  hereinunder  will be of good  quality  in
material and workmanship and, only in the case of Living Data Products,  design,
suitable  for  their  intended  purpose  and,  in the  case  of the  Vasomedical
Products,  Living Data will, to the extent possible,  comply with  Vasomedical's
guidelines,  specifications,  standards  and  design;  (ii)  that no  injurious,
deleterious,  or toxic substances will be used in or on the Products; (iii) that
such Products will not cause harm when used as instructed and with ordinary care
for their intended purpose; (iv) that all Products will be manufactured and sold
in  compliance  with  all  applicable  laws  and  regulations;  and (v) that all
Products will be  manufactured  in compliance with and fulfilling all applicable
rules and  regulations  to satisfy  FDA  obligations  and meet and  secure  cGMP
qualification  if  marketed in the  Territory  and CE Marking  qualification  if
marketed in the European Union countries.

     (b)  Living  Data  shall  provide,  pursuant  to a written  policy,  a full
12-month  warranty on parts (not including  consumables and accessories that may
be included in the shipment),  commencing  with  acceptance of installation of a
unit at an end-user.

                                      -6-
<PAGE>
     (c) Vasomedical acknowledges that, except as set forth in this Section 2.5,
neither  Living  Data nor any other  Person has made,  and  Vasomedical  has not
relied upon, any warranty or representation, express or implied, with respect to
manufacture  by Living  Data of the  Products  or parts  thereof  other than (i)
Living  Data's  standard  warranty  for parts and (ii)  Living  Data's  standard
warranty to end-user customers.  Vasomedical's  exclusive remedy with respect to
defective  Products,  if any, shall be the return of such Products for repayment
of the purchase price  therefor,  or the repair or replacement of such Products,
in Living Data's discretion.

     2.6 Quantities. Living Data (a) will manufacture Products in the quantities
necessary  during the Term to comply with the Forecasts  prepared by Vasomedical
and approved by Living Data as provided in Section 2.2 (b) hereof;  (b) will use
all  commercially  reasonable  efforts to fill Orders on a timely basis; and (c)
will have responsibility for sourcing all materials and goods and for making all
decisions regarding the supply chain.

     2.7 Returns.  Other than as provided for breakage,  loss and damage returns
as described in Section 2.8 hereof, Vasomedical shall not be permitted to return
any Product to Living Data unless: (i) not later than 90 days from and after the
date of  installation  of such Product by Vasomedical at its end-user  location,
Vasomedical notifies Living Data of any deficiencies in such Product,  (ii) such
deficiencies  render the subject Product unusable for the purpose intended,  and
(iii) such deficiencies are (in the commercially  reasonable  judgment of Living
Data)  directly  attributable  to the  manufacturing  and/or  packaging  of such
Product.  Returns shall be made in accordance with Living Data's standard return
authorization procedures as from time to time in effect.

     2.8 Title and Risk of Loss.  All  Products  shall be shipped by Living Data
F.O.B.,  Living  Data's  facility  located  at  Brooklyn,  New York  ("Departure
Origin").  As packaging is an obligation of Living Data, risk of loss shall pass
to Vasomedical  upon receipt and acceptance by Vasomedical of each Order, at its
destination,  and all of Living Data's  responsibility with respect to breakage,
damage or loss shall only cease upon such  delivery,  subject to the  inspection
and  rejection  rights  set  forth in this  Section  2.8.  Vasomedical  shall be
responsible for all costs of shipping,  duty, freight and all charges whatsoever
in connection  with the  shipments by  Vasomedical  from the  Departure  Origin.
Vasomedical shall inspect each Product within five Business Days of delivery for
breakage,  damage  or loss,  and if  breakage,  loss or  damage  is  discovered,
Vasomedical  shall promptly  notify Living Data and the carrier within that time
period  in  writing.  If no  claim  as to  breakage,  damage  or loss is made by
Vasomedical  within  such  time  period,  the  Product  will be  deemed to be in
acceptable  condition  (subject  to Section  2.5) and Living  Data shall have no
further  responsibility or obligation with respect to such Product for breakage,
damage or loss.

     2.9 Vasomedical Insurance. Vasomedical shall bear all costs of insurance to
cover all shipments of the Products from the Departure Origin. Vasomedical shall
maintain  insurance  for such purpose in an amount per Product at least equal to
Vasomedical's  purchase price therefor. In addition,  Vasomedical shall maintain
such other  insurance  coverage  as a  distributor  and as the  designer  of the
Vasomedical Products similar to the coverage provided for Living Data in Section
2.10 hereof.  Copies of such  insurance  policies  shall be made  available  for
inspection  by  Living  Data  and,  where  appropriate,  Living  Data  (and  its
Affiliates) shall be a named insured  thereunder.  Whenever there is a change in
the  insurance  coverage  Vasomedical  shall notify  Living Data and furnish the
latter with a copy of such change.

                                      -7-
<PAGE>
     2.10 Living  Data  Insurance.  Commencing,  no later than 30 days after the
commencement of the Term, Living Data shall, during the Term and for three years
thereafter,  maintain the following  insurance  coverage  ("Required Living Data
Insurance"),  at its sole cost and expense,  issued by a  nationally  recognized
insurance  carrier  acceptable  to  Vasomedical,  which  consent  shall  not  be
unreasonably withheld, with an A.M. Best Rating or A or better.
<TABLE>
<CAPTION>
         Coverage                                     Limits
--------------------------------------------------------------------------------
<S>                                                <C>
Statutory Worker's Compensation and
Employer's Liability Insurance                       $500,000
--------------------------------------------------------------------------------
Comprehensive general and product
liability including but not limited to
personal injury, property damage, products/
completed operations, and contractual
liability.
                                                   $5,000,000
                                         Combined Single Limit, for
                                         Bodily   injury   (including   personal
                                         injury)  or   property   damage,   each
                                         occurrence
--------------------------------------------------------------------------------
</TABLE>
     (b)  Additional  Insureds.  Living  Data  shall  include  Vasomedical,  the
Vasomedical Subsidiaries (as such term is hereinafter defined) and Affiliates as
additional  insureds under its liability  policies,  including the provisions of
such policies insuring Living Data's obligations under the indemnity  provisions
of this Agreement.

     (c) Certificates of Insurance. Upon Vasomedical's request Living Data shall
provide  evidence of such  insurance  in the form of  certificates  of insurance
which shall include  provision for 30 days' prior notice to  Vasomedical  of any
change or cancellation of the policy.

     (d) No Limitation by Insurance  Living Data's  indemnities  and obligations
under this Agreement  shall not be limited or defined in any fashion  whatsoever
by the amount of Required Living Data Insurance, or by any policy limitations or
restriction on the amount or type of damages.

     (e)  Change  on  Coverage.  Whenever  there  is a change  in the  insurance
coverage Living Data shall notify Vasomedical and furnish the latter with a copy
of such change.  Objections  to any such change in coverage  shall be subject to
the Conciliation Procedure set forth in Section 8.1 hereof.

     2.11  Invoicing.  Living Data will  endeavor to deliver all or a portion of
each Order on a regular basis and Living Data will invoice  Vasomedical  for the
Products  contained in each such delivery.  All Products shall be purchased on a
net 30-day  basis from the  actual  date of  delivery  for each  shipment,  with
payment to be made by  Vasomedical on or prior to the 30th day after the date of

                                      -8-
<PAGE>

actual delivery.  Payment shall be made in U.S.  Dollars  regardless of to where
the Products are shipped.

     2.12  Failure to Deliver.  In the event that Living Data fails to deliver a
shipment of an Order within 15 days of the  Anticipated  Delivery Date specified
in an Order  for such  shipment,  then  Vasomedical  shall be free to  accept or
reject such shipment of such Order.

     2.13  Access.  Living  Data  shall make  available  to  representatives  of
Vasomedical  access  during  reasonable  business  hours to its  facility,  upon
reasonable  notice,  for their  inspection,  but not more than twice  during any
Contract Year. Notwithstanding the foregoing limitation,  Vasomedical shall have
unlimited  access  in the  event  that the FDA  asserts  a  failure  to meet its
requirements.

     3.  Vasomedical  Trademarks.  Vasomedical  markets  its  devices  under the
registered trademark EECP and also uses the trademarks MC, TS and Lumenair. Each
of these trademarks shall be referred to herein as a "Mark."

     3.1 Acknowledgement of Rights.  Living Data acknowledges that each Mark has
acquired a valuable secondary meaning and goodwill in the minds of the trade and
the public and that goods, including Vasomedical Products, bearing the Mark have
acquired a reputation for high quality and style.  Living Data acknowledges that
it is not the owner of any right,  title or  interest  in and to any Mark in any
form or embodiment thereof,  and it is not the owner of the goodwill attached to
any Mark in connection with the business and goods in relation to which the same
has been and may in the  future be used and shall not  acquire  any such  right,
title or interest in any Mark except as provided in Section 3.2 hereof.

     3.2  Licenses.  Vasomedical  hereby  grants to Living Data a  non-exclusive
license during the Term to use the Marks on the Vasomedical Products that Living
Data  manufactures as directed by Vasomedical.  The grant of this  non-exclusive
license is on the condition  that the Mark is identified as that of  Vasomedical
as the owner and  subject to the other  terms and  conditions  set forth in this
Section 3 and in Section 7.3 hereof.  Any use of a Mark shall  require the prior
written approval of Vasomedical.

     3.3  Compliance.  Living Data shall comply with all notice  requirements of
any law or regulation  applicable or reasonably necessary in connection with its
activities  hereunder  for  the  protection  of  any  Mark  in  connection  with
Vasomedical  Products and, in connection  with any Mark  generally to the extent
the same shall be reasonably  necessary in the judgment of  Vasomedical  for the
protection of any Mark in any country. Manufacture by Living Data of Vasomedical
Products shall be deemed for the purposes of the acquisition of trademark rights
and the  purposes  of  trademark  registration  to have been made by and for the
benefit of Vasomedical  as the owner of the Marks.  Living Data will not, at any
time,  do any  act or  thing  which  may,  in any  way,  impair  the  rights  of
Vasomedical  in and to any Mark or which may affect the  validity of any Mark or
which may depreciate the value of any Mark or its prestige and good will.

     3.4 No Registration Right. Living Data acknowledges that it may not acquire
a registration or file and prosecute a trademark  application or applications to
register any Mark for any items or  services,  including  Vasomedical  Products,
anywhere in the world.

                                      -9-
<PAGE>
     3.5  Assignment.  To the extent any rights in and to any Mark are deemed to
accrue to Living  Data  pursuant to this  Agreement  or  otherwise,  Living Data
hereby  assigns any and all such  rights,  at such time as they may be deemed to
accrue,  to Vasomedical as owner of the Mark.  Living Data shall execute any and
all documents and instruments required by Vasomedical which Vasomedical may deem
necessary,  proper or appropriate  to accomplish or confirm the  foregoing.  Any
such  assignment,  transfer or conveyance shall be without  consideration  other
than the mutual agreements  contained herein.  Upon expiration or termination of
this Agreement for any reason whatsoever, Living Data will forthwith execute and
file any and all  documents  requested by  Vasomedical  as the owner of any Mark
terminating any and all trademark registrations,  registered user agreements, if
any, and other documents regarding the Mark.

     3.6 No Challenge or Contest.  Living Data agrees never (a) to challenge the
validity or ownership of any Mark or any application for  registration  thereof,
or any trademark  registrations thereof in any jurisdiction,  nor (b) to contest
the fact that  Living  Data's  rights  under this  Agreement  are  solely  those
provided for herein,  and  terminate  upon  termination  or  expiration  of this
Agreement.

     3.7 Limit on Use. Living Data shall not use any Mark of Vasomedical as part
of a corporate or business  name or as a service mark and shall not use any Mark
in any form without Vasomedical's prior written consent.

     3.8 Survival of Provisions.  The provisions of this Article 3 shall survive
the termination or expiration of this Agreement.

     4. Term and Termination.

     4.1 Term.  The term of this  Agreement  (the "Term") shall commence on June
21, 2007 and will continue,  subject to the termination  provisions set forth in
this  Article 4, for an initial  term ending May 31,  2012,  provided  that this
Agreement will automatically renew for additional one year periods unless either
party give  written  notice to the other not to extend the Term not less than 90
days prior to the then next upcoming expiration date.

     4.2   Termination  by  Living  Data.   This  Agreement  may  be  terminated
immediately  upon notice from Living Data if: (a)  Vasomedical  is unable to pay
its debts as and when the same becomes due, (b) Vasomedical  files a petition in
bankruptcy,  or a petition is filed against Vasomedical and is not removed in 60
days,  (c)  Vasomedical  makes an  assignment  for the benefit of  Vasomedical's
creditors,  (d)  Vasomedical  makes  any  extraordinary   arrangement  with  its
creditors,  (e)  Vasomedical  is subject to the  appointment  of a receiver  for
Vasomedical  which is not cured in 60 days, (f) Vasomedical fails to perform any
of its material covenants  hereunder after 30 days' prior written notice to cure
and  Vasomedical  does  not in fact  cure  within  such  30-day  period,  or (g)
Vasomedical is convicted of any crime in any  jurisdiction  which materially and
adversely reflects on Living Data.

     4.3  Termination  by  Vasomedical.  (a) This  Agreement  may be  terminated
immediately  upon notice from  Vasomedical  if: (a) Living Data is unable to pay
its debts as and when the same  becomes due, (b) Living Data files a petition in
bankruptcy,  or a petition is filed against Living Data and is not removed in 60

                                      -10-
<PAGE>

days,  (c) Living  Data makes an  assignment  for the  benefit of Living  Data's
creditors,  (d)  Living  Data  makes  any  extraordinary  arrangement  with  its
creditors,  (e)  Living  Data is subject to the  appointment  of a receiver  for
Living Data which is not cured in 60 days,  (f) Living Data fails to perform any
of its material covenants  hereunder after 30 days' prior written notice to cure
and Living Data does not in fact cure within such 30-day period,  and (g) Living
Data  is  convicted  of any  crime  in any  jurisdiction  which  materially  and
adversely reflects on Vasomedical. Notwithstanding anything in subsection (f) of
this  Section  4.3 to the  contrary,  if Living  Data's  failure to perform  its
material  covenants is (x) that it misses  deliveries  of Products in accordance
with the  Forecasts  or (y) the  returns of Products  in any  Contract  Year not
meeting the quality  standard as provided in Section  2.5(a) hereof  exceeds ten
percent of the units of  Products  delivered,  provided  that at least ten units
were  delivered in such Contract  Year, in each case after notice by Vasomedical
to such effect,  Vasomedical  may not terminate this Agreement until either such
failure  or both such  failures  have  continued  for at least  four  successive
quarters;   provided,  however,  after  the  second  quarter,   Vasomedical  may
manufacture the Vasomedical Products, or order the same from a Person other than
Living Data, until the earlier of (x) Living Data delivering Products consistent
with the  Forecasts  and Section  2.5(a)  hereof or (y) the  expiration  of four
successive  quarters with such continued  failure or failures by Living Data. In
no event may  Vasomedical  manufacture,  or cause to be manufactured by a Person
other than Living Data, any Living Data Products.

     (b)  Notwithstanding  anything to the  contrary in  subsection  (a) of this
Section 4.3,  Vasomedical  reserves the right, if, during any warranty year, its
labor costs of servicing customers with respect to units of Living Data Products
exceeds  $4,000  per unit of  Product,  to  submit to  Living  Data  appropriate
documentation  and, if Living Data  concurs with such  computation,  Living Data
shall pay to Vasomedical the amount of any excess.  If the parties cannot agree,
the dispute  shall be  submitted  for  resolution  pursuant to the  Conciliation
Procedure set forth in Section 8.1 hereof.

     4.4 No Further Use. Living Data acknowledges that any use of any Mark after
the date that  termination is effective shall  constitute an infringement of the
intellectual property rights of Vasomedical.  Upon the expiration or termination
of this  Agreement,  Living Data shall return to  Vasomedical,  at Living Data's
cost, all of Vasomedical's Confidential Information (as defined in Section 7.2),
Vasomedical Products, Vasomedical Product parts and components in its possession
and Living Data shall  certify to  Vasomedical  that it has not retained or made
copies of any of the  foregoing.  Vasomedical  shall pay Living  Data within ten
days of receipt for any Vasomedical Products,  parts and components delivered by
Living  Data at the  sales  prices  in  effect  at the  time of  termination  or
expiration. If instructed to do so in writing by Vasomedical,  Living Data shall
destroy Vasomedical's Confidential Information in its possession and be required
to deliver a certificate to Vasomedical  evidencing such  destruction.  Upon the
expiration or termination of this Agreement,  Vasomedical shall return to Living
Data, at Vasomedical's  cost, all of Living Data's  Confidential  Information in
its  possession  and  Vasomedical  shall  certify to Living Data that it has not
retained or made copies of any of the Confidential Information. If instructed to
do so in writing by Living  Data,  Vasomedical  shall  destroy  the Living  Data
Confidential  Information  in  its  possession  and be  required  to  deliver  a
certificate to Living Data evidencing such destruction.

                                      -11-
<PAGE>
     5. Representations and Warranties.

     5.1 Living Data  represents  and  warrants to  Vasomedical,  as of the date
hereof,  as follows,  in each case  subject to the  exceptions  set forth in the
disclosure  statement  delivered  by  Living  Data to  Vasomedical  prior to the
execution of this Agreement (the "Living Data Disclosure Statement"). The Living
Data Disclosure Statement is arranged in Schedules corresponding to the numbered
and lettered subsections of this Section 5.1, and the disclosure in any Schedule
of the Living Data  Disclosure  Statement  shall qualify only the  corresponding
subsection of this Section 5.1.

     (a)  Organization.  Living Data is a corporation  duly  organized,  validly
existing  and in good  standing  under the laws of the State of New York and has
all  requisite  corporate  power and  authority  to own,  lease and  operate its
properties and assets in the manner in which such  properties and assets are now
owned,  leased  and  operated  and to carry on the  business  in which it is now
engaged.

     (b) Good Standing.  Living Data is duly qualified as a foreign  corporation
to do  business,  and is in  good  standing,  in  each  jurisdiction  where  the
character  of its owned or leased  properties  or the  nature of its  activities
makes such qualification necessary,  except where the failure to be so qualified
or in good standing would not,  individually or in the aggregate,  reasonably be
expected to have a Living Data  Material  Adverse  Effect.  For purposes of this
Agreement, "Living Data Material Adverse Effect" shall mean any change or effect
that is, or could  reasonably  be  expected  to be,  materially  adverse  to the
business,  operations,  assets  and  liabilities  (taken  together  as a whole),
capitalization,  results of operations or condition  (financial or otherwise) of
Living  Data,  other than any change or effect (i)  relating  to the  economy in
general or (ii)  relating  to the  industry  in which  Living  Data  operates in
general and not specifically relating to Living Data.

     (c) Validity. Living Data has full corporate power and authority to execute
and  deliver  this  Agreement  and all of the  other  agreements  and  documents
referred to herein,  executed in connection herewith,  or contemplated hereby to
which Living Data is or will be a party and to perform its obligations hereunder
and  to  consummate  the  transactions   contemplated   hereby.  This  Agreement
constitutes  the valid and binding  obligation  of Living Data,  enforceable  in
accordance  with its terms,  subject  to  bankruptcy,  insolvency  or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies.  The execution  and delivery of this  Agreement by Living Data and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the board of directors of Living Data and such execution and delivery of this
Agreement and the  consummation of the transactions  contemplated  hereby do not
and will not require the consent, approval or authorization of any other Person,
including,  without  limitation,  its  shareholders  or any public  authority or
self-regulatory authority.

     (d) No Conflict.  The  execution  and delivery of this  Agreement by Living
Data and the performance of its  obligations  hereunder (i) are not in violation
or breach of, and will not conflict with, or constitute a default under,  any of
the terms of the Living Data  certificate  of  incorporation  or the Living Data
bylaws,  or any note,  debt  instrument,  security  agreement,  deed of trust or
mortgage or any other contract, agreement or commitment binding upon Living Data

                                      -12-
<PAGE>

or any of its  assets or  properties,  (ii) will not result in the  creation  or
imposition of any lien, security interest, encumbrance, equity or restriction in
favor of any third party upon any of the assets or  properties  of Living  Data,
and (iii) will not  conflict  with or violate any  applicable  law,  regulation,
judgment,  order or  decree  of any  government,  governmental  instrumentality,
self-regulatory  authority or court having  jurisdiction over Living Data or any
of its assets or properties.

     (e) Environmental.

     (i) No Hazardous Materials (as hereinafter  defined) have been used, stored
or otherwise  handled in any manner by Living Data or any  Affiliate  on, under,
in, from or affecting  any of the real  property  owned or leased by Living Data
during  the  past  five  years  (the  "Living  Data  Property"),  other  than in
compliance with  Environmental Laws (as hereinafter  defined).  To Living Data's
knowledge, no prior or current owner or occupant of the Living Data Property has
used  Hazardous  Materials  on,  under,  in, from or  affecting  the Living Data
Property.

     (ii) No Hazardous  Materials have at any time been released into, stored or
deposited by Living Data or any Affiliate within or on the Living Data Property,
by Living Data or any  Affiliate  into any water systems on or below the surface
of the Living  Data  Property,  or by Living Data or any  Affiliate  directly or
indirectly onto any property or water system adjoining,  adjacent to or abutting
the Living Data  Property,  or have been used by Living Data or any Affiliate in
the  construction  of any  improvements  located  on or about  the  Living  Data
Property.

     (iii) Neither  Living Data nor any Affiliate has received any notice of any
violations  (nor  is any  of  them  aware  of any  existing  violations)  of any
applicable  laws  or  regulations   governing  the  use,   storage,   treatment,
transportation,  manufacture,  refinement,  handling,  production or disposal of
Hazardous  Materials on,  under,  in, from or affecting the Living Data Property
and there are not any  legal  actions  or  proceedings  commenced  or, to Living
Data's knowledge, threatened by any Person with respect to any such violations.

     (iv) The Living Data Property is currently being, and has in the past been,
operated  by  Living  Data in  accordance  with,  and in  compliance  with,  all
applicable Environmental Laws.

     (v) For purposes of this  Agreement  (A)  "Hazardous  Materials"  means any
hazardous  materials,  hazardous wastes,  hazardous  constituents,  hazardous or
toxic substances or petroleum  products  (including  gasoline,  crude oil or any
fraction  thereof),  defined or regulated as such in or under any  Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls and urea
formaldehyde  insulation,  and (B) "Environmental Laws" are any and all federal,
state,  local  or  municipal  laws,  rules,   orders,   regulations,   statutes,
ordinances,  codes, decrees, requirements of any governmental authority or other
requirements of law (including  common law) regulating,  relating to or imposing
liability or standards of conduct  concerning  protection of human health or the
environment.

     (f) Licenses and Permits.  Living Data has  obtained,  and is in compliance
with,   all  necessary   licenses,   permits,   consents,   approvals,   orders,
certificates, authorizations,  declarations and filings required by all federal,
state,  local and other  governmental,  self-regulatory or regulatory bodies and

                                      -13-
<PAGE>

all courts and other tribunals for the conduct of the business and operations of
Living Data as now  conducted  or as  conducted  in the past,  except  where the
failure  to obtain  or comply  would  not have a Living  Data  Material  Adverse
Effect.

     (g) Labor and Employment.  Living Data is not a party to any union contract
or other collective  bargaining  agreement,  nor to the knowledge of Living Data
are there any  activities or  proceedings  of any labor union to organize any of
the  employees of Living Data.  Living Data is in material  compliance  with all
applicable  (i) laws,  regulations  and  agreements  respecting  employment  and
employment  practices,  (ii)  terms  and  conditions  of  employment,  and (iii)
occupational health and safety requirements.  There are no controversies pending
or, to the knowledge of Living Data threatened,  between Living Data, on the one
hand, and any of its employees,  on the other hand,  which  controversies  would
reasonably be expected to have,  individually or in the aggregate, a Living Data
Material Adverse Effect. There are no labor controversies  pending or threatened
against Living Data.

     (h) Compliance  with Law. The business of Living Data has been conducted in
all  material   respects  in  accordance  with  all  applicable   laws,   rules,
regulations,  orders and other requirements of governmental and  self-regulatory
authorities,  including, without limitation,  ERISA, all Environmental Laws, all
laws,  regulations  and  orders  relating  to  antitrust  or  trade  regulation,
employment  practices  and  procedures,  the health and safety of employees  and
consumer  credit,  except where the failure to so conduct its business would not
have a  Living  Data  Material  Adverse  Effect.  Neither  Living  Data  nor any
Affiliate  has received any notice of alleged  violations  by Living Data of any
laws,  rules,  regulations,  orders or other  requirements  of  governmental  or
self-regulatory authorities.

     (i) Litigation.  There is no claim, dispute,  action,  proceeding,  suit or
appeal or investigation or inquiry, at law or in equity,  involving Living Data,
or any of its officers and  directors  (in their  capacities as such) before any
court, agency, authority,  self-regulatory authority, arbitration panel or other
tribunal,  which, if decided  adversely to Living Data, would have a Living Data
Material  Adverse  Effect,  and, to the knowledge of Living Data,  none has been
threatened or is in prospect  against  Living Data or its officers and directors
(in their capacity as such). To the knowledge of Living Data, there are no facts
which,  if  known  to   shareholders,   customers,   governmental   authorities,
self-regulatory authorities, regulators, bondholders or other investors or other
persons,  would form the basis of any such claim, dispute,  action,  proceeding,
suit,  appeal,  investigation or inquiry,  and Living Data is not subject to any
order, writ, injunction or decree of any court, agency,  authority,  arbitration
panel or other tribunal.

     (j) Brokers or Finders.  Living Data has not incurred,  and will not incur,
directly or indirectly,  any liability for brokerage or finders' fees or agents'
commissions  or any similar  charges in  connection  with this  Agreement or the
transactions contemplated hereby.

     (k) Foreign  Corrupt  Practices Act.  Neither Living Data nor any Affiliate
and none of Living Data's officers or directors, or, to Living Data's knowledge,
any  employees,  agents,  distributors  or  representatives  acting on behalf of
Living Data or any  Affiliate,  has paid,  given or received,  or has offered or
promised to pay, give or receive,  any bribe or other unlawful  payment of money

                                      -14-
<PAGE>

or  other  thing  of  value,  any  unlawful  discount,  or  any  other  unlawful
inducement,  to or from any  Person  (including  any  government  entity) in the
United States or elsewhere in connection  with or in furtherance of the business
of Living Data (including,  without limitation,  any unlawful offer,  payment or
promise  to pay  money or other  thing of  value  (i) to any  foreign  official,
political party (or official  thereof) or candidate for political office for the
purposes of influencing any act,  decision or omission in order to assist Living
Data in obtaining business for or with, or directing business to, any Person, or
(ii) to any Person,  while  knowing that all or a portion of such money or other
thing  of  value  will be  offered,  given or  promised  unlawfully  to any such
official or party for such purposes). The business of Living Data is and was not
in any manner  dependent upon the making or receipt of such payments,  discounts
or other inducements.  Neither Living Data nor any Affiliate has otherwise taken
any action  that could  cause  Living  Data to be in  violation  of the  Foreign
Corrupt Practices Act of 1977, as amended,  the regulations  thereunder,  or any
applicable law or regulation of similar effect.

     (l) Disclosure of Material Facts.  Living Data has disclosed to Vasomedical
all  material  facts  relating  to the  operations  of  Living  Data as to which
Vasomedical has made inquiry.  The representations  and warranties  contained in
this Section 5.1 and in the Living Data Disclosure  Statement,  and in any other
documents or information furnished to Vasomedical by or on behalf of Living Data
in  connection  with this  Agreement  do not contain any untrue  statement  of a
material  fact or  omit  to  state  any  material  fact  necessary  to make  the
statements contained herein or therein not misleading.

     5.2  Vasomedical  represents  and warrants to Living  Data,  as of the date
hereof,  as follows,  in each case  subject to the  exceptions  set forth in the
disclosure  statement  delivered  by  Vasomedical  to Living  Data  prior to the
execution  of this  Agreement  (the  "Vasomedical  Disclosure  Statement").  The
Vasomedical  Disclosure Statement is arranged in Schedules  corresponding to the
numbered and lettered subsections of this Section 5.2, and the disclosure in any
Schedule  of  the  Vasomedical  Disclosure  Statement  shall  qualify  only  the
corresponding subsection of this Section 5.2.

     (a)  Organization.  Vasomedical is a corporation  duly  organized,  validly
existing  and in good  standing  under the laws of the State of Delaware and has
all  requisite  corporate  power and  authority  to own,  lease and  operate its
properties and assets in the manner in which such  properties and assets are now
owned,  leased  and  operated  and to carry on the  business  in which it is now
engaged.

     (b) Subsidiaries. Vasomedical does not own any equity interest, directly or
indirectly,  in any corporation,  partnership,  limited liability company, joint
venture,  firm or other entity other than in its subsidiaries listed in Schedule
5.2(b) of the Vasomedical  Disclosure Statement (herein collectively referred to
as  the   "Vasomedical   Subsidiaries"   and   individually  as  a  "Vasomedical
Subsidiary").  Each  Vasomedical  Subsidiary  is a corporation  duly  organized,
validly  existing  and in good  standing  under  the laws of the  state or other
jurisdiction in which it was incorporated and has all requisite  corporate power
and authority to own,  lease and operate its properties and assets in the manner
in which such  properties  and assets are now owned,  leased and operated and to
carry on the business in which it is now engaged. Each Vasomedical Subsidiary is
wholly-owned  by  Vasomedical  except  as set forth in  Schedule  5.2 (b) of the
Vasomedical Disclosure Statement.

                                      -15-
<PAGE>

     (c) Good Standing. Each of Vasomedical and the Vasomedical  Subsidiaries is
duly qualified as a foreign corporation to do business, and is in good standing,
in each  jurisdiction  where the character of its owned or leased  properties or
the nature of its activities makes such  qualification  necessary,  except where
the failure to be so qualified or in good standing would not, individually or in
the  aggregate,  reasonably be expected to have a Vasomedical  Material  Adverse
Effect.  For purposes of this Agreement,  "Vasomedical  Material Adverse Effect"
shall mean any change or effect that is, or could  reasonably be expected to be,
materially  adverse to the assets and  liabilities  (taken together as a whole),
capitalization  or condition  (financial or otherwise)  of  Vasomedical  and the
Vasomedical Subsidiaries,  taken as a whole, other than any change or effect (i)
relating  to the economy in general or (ii)  relating  to the  industry in which
Vasomedical  and  the  Vasomedical  Subsidiaries  operate  in  general  and  not
specifically to Vasomedical or any Vasomedical Subsidiary.

     (d) Validity. Vasomedical has full corporate power and authority to execute
and  deliver  this  Agreement  and all of the  other  agreements  and  documents
referred to herein,  executed in connection herewith,  or contemplated hereby to
which Vasomedical is or will be a party and to perform its obligations hereunder
and  to  consummate  the  transactions   contemplated   hereby.  This  Agreement
constitutes  the valid and binding  obligation  of  Vasomedical  enforceable  in
accordance  with its terms,  subject  to  bankruptcy,  insolvency  or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies.  The execution and delivery of this Agreement by  Vasomedical  and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the board of directors of Vasomedical and such execution and delivery of this
Agreement and the  consummation of the transactions  contemplated  hereby do not
and will not require the consent, approval or authorization of any other Person,
including,  without  limitation,  its  stockholders  or any public  authority or
self-regulatory authority.

     (e)  No  Conflict.   The  execution  and  delivery  of  this  Agreement  by
Vasomedical  and the  performance  of its  obligations  hereunder (a) are not in
violation  or breach of, and will not  conflict  with,  or  constitute a default
under,  any of the terms of the Vasomedical  certificate of incorporation or the
Vasomedical bylaws, or any note, debt instrument,  security  agreement,  deed of
trust or mortgage or any other  contract,  agreement or commitment  binding upon
Vasomedical or any Vasomedical  Subsidiary or any of their assets or properties,
(b)  will not  result  in the  creation  or  imposition  of any  lien,  security
interest,  encumbrance,  equity or  restriction in favor of any third party upon
any of the assets or properties of  Vasomedical or any  Vasomedical  Subsidiary,
and (c) will not  conflict  with or  violate  any  applicable  law,  regulation,
judgment,  order or  decree  of any  government,  governmental  instrumentality,
self-regulatory  authority or court having  jurisdiction over Vasomedical or any
Vasomedical Subsidiary or any of their assets or properties.

     (f) Environmental.

     (i) No Hazardous  Materials have been used,  stored or otherwise handled in
any manner by Vasomedical or any Vasomedical  Subsidiary on, under,  in, from or
affecting  any of the  real  property  owned or  leased  by  Vasomedical  or any

                                      -16-
<PAGE>

Vasomedical Subsidiary during the past five years (the "Vasomedical  Property"),
other than in compliance with Environmental Laws. To Vasomedical's knowledge, no
prior  or  current  owner  or  occupant  of the  Vasomedical  Property  has used
Hazardous Materials on, under, in, from or affecting the Vasomedical Property.

     (ii) No Hazardous  Materials have at any time been released into, stored or
deposited  by  Vasomedical  or  any  Vasomedical  Subsidiary  within  or on  the
Vasomedical  Property,  by Vasomedical or any  Vasomedical  Subsidiary  into any
water  systems  on or below the  surface  of the  Vasomedical  Property,  or any
Vasomedical  Subsidiary directly or indirectly onto any property or water system
adjoining,  adjacent to or abutting the Vasomedical  Property, or have been used
by  Vasomedical  or  any  Vasomedical  Subsidiary  in  the  construction  of any
improvements located on or about the Vasomedical Property.

     (iii) Neither Vasomedical nor any Vasomedical  Subsidiary nor any Affiliate
of either has received any notice of any violations (nor is any of them aware of
any existing  violations)  of any applicable  laws or regulations  governing the
use, storage,  treatment,  transportation,  manufacture,  refinement,  handling,
production or disposal of Hazardous  Materials on, under,  in, from or affecting
the  Vasomedical  Property  and there are not any legal  actions or  proceedings
commenced or, to Vasomedical's knowledge,  threatened by any Person with respect
to any such violations.

     (iv) The Vasomedical Property is currently being, and has in the past been,
operated by Vasomedical and the Vasomedical Subsidiaries in accordance with, and
in compliance with, all applicable Environmental Laws.

     (g)  Proprietary  Rights.  Schedule  5.2(g) of the  Vasomedical  Disclosure
Statement  contains a full and complete list of all material  Proprietary Rights
owned,  possessed or used by Vasomedical.  The operations of Vasomedical and the
Vasomedical  Subsidiaries do not now conflict with or infringe,  and have not in
the past conflicted with or infringed,  any Proprietary Rights owned,  possessed
or used by any third party. There are no third parties whose operations conflict
with or infringe,  nor has anyone asserted that such operations conflict with or
infringe,  any Proprietary Rights owned, possessed or used by Vasomedical or any
Vasomedical Subsidiary.

     (h) Litigation.  There is no claim, dispute,  action,  proceeding,  suit or
appeal or investigation or inquiry, at law or in equity,  involving  Vasomedical
or any Vasomedical Subsidiary,  or any of their officers and directors (in their
capacities  as  such)  before  any  court,  agency,  authority,  self-regulatory
authority,  arbitration  panel or other  tribunal that would require  disclosure
pursuant  to Item  103 of the  Regulation  S-K of the  Securities  and  Exchange
Commission and, to the knowledge of Vasomedical,  none has been threatened or is
in prospect against Vasomedical or any Vasomedical  Subsidiary or their officers
and directors (in their  capacities as such).  To the knowledge of  Vasomedical,
there are no facts  which,  if known to  stockholders,  customers,  governmental
authorities,  self-regulatory  authorities,  regulators,  bondholders  or  other
investors  or other  persons,  would form the basis of any such claim,  dispute,
action, proceeding,  suit, appeal, investigation or inquiry. Neither Vasomedical
nor any  Vasomedical  Subsidiary  is subject to any order,  writ,  injunction or
decree of any court, agency, authority, arbitration panel or other tribunal.

                                      -17-
<PAGE>
     (i)  Brokers  or  Finders.  Neither  Vasomedical  nor  any  Affiliates  has
incurred,  nor will either of  Vasomedical or any Affiliate  incur,  directly or
indirectly,  any liability for brokerage or finders' fees or agents' commissions
or any similar  charges in connection  with this  Agreement or the  transactions
contemplated  hereby other than to Life Science Group, Inc., which obligation to
Life Science Group, Inc. shall be paid by Vasomedical.

     (j) Disclosure of Material Facts.  Vasomedical has disclosed to Living Data
all material facts relating to the condition (financial or otherwise), business,
net worth,  assets,  properties or operations of Vasomedical and the Vasomedical
Subsidiaries as to which Living Data has made inquiry.  The  representations and
warranties  contained  in this  Section  5.2 and in the  Vasomedical  Disclosure
Statement, and in any other documents or information furnished to Living Data by
or on behalf of Vasomedical in connection with this Agreement do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained herein or therein not misleading.

     6. Indemnities

     6.1  Living  Data's  Indemnity.   Living  Data  shall  indemnify  and  hold
Vasomedical  harmless from and against,  and shall defend  promptly  Vasomedical
from,  and  reimburse  Vasomedical  for,  any and all  losses,  damages,  costs,
expenses,  liabilities,  obligations and claims of any kind (including,  without
limitation,   reasonable   attorneys'   fees  and  other  costs  and   expenses)
(collectively,  "Damages") which Vasomedical may at any time suffer or incur, or
become subject to, as a result of, or in connection with,

     (a) any material breach of this Agreement or material  inaccuracy of any of
the  representations  and warranties  made by Living Data in or pursuant to this
Agreement;

     (b) any material failure by Living Data to carry out, perform,  satisfy and
discharge any of its material covenants, agreements, undertakings,  liabilities,
or  obligations  under  this  Agreement,   but  excluding  any  claim  based  on
non-delivery to third parties of Products;

     (c) any product  liability or warranty  claim  arising out of Living Data's
manufacture of any Vasomedical  Products,  except claims based on the design and
the underlying specifications therefor;

     (d)  any  product  liability  or  warranty  arising  out of  Living  Data's
manufacture  of any of the  Living  Data  Products  before  and after it assumes
manufacturing responsibility for all Products pursuant to this Agreement;

     (e) any product  liability or warranty claim arising out of a latent defect
in the design of any of the Living Data Products;

     (f) any claim arising out of an alleged violation of Environmental  Laws at
the Living Data Property; and

                                      -18-
<PAGE>
     (g) any other third party claim arising out of Living  Data's  operation of
its business, both before and after the date of this Agreement.

     6.2 Vasomedical's Indemnity.  Vasomedical shall indemnify and hold harmless
Living Data  harmless from and against,  and shall defend Living Data from,  and
reimburse  Living Data for, any Damages which Living Data may at any time suffer
or incur, or become subject to, as a result of, or in connection with,

     (a) any material breach of this Agreement or material  inaccuracy of any of
the  representations  and warranties  made by Vasomedical in or pursuant to this
Agreement;

     (b) any material  failure by Vasomedical or any  Vasomedical  Subsidiary to
carry  out,  perform,  satisfy  and  discharge  any of its  material  covenants,
agreements, undertakings, liabilities, or obligations under this Agreement;

     (c) any claim  that the  Proprietary  Rights of  Vasomedical  infringe  the
Proprietary Rights of a Person (other than Living Data or an Affiliate thereof);

     (d) any product  liability or warranty claim arising out of a latent defect
in the design of any of the Vasomedical Products;

     (e) any claim arising out of an alleged violation of Environmental  Laws at
the Vasomedical Property; and

     (f) any other third party claim arising out of  Vasomedical's  operation of
its business, both before and after the date of this Agreement.

     6.3  Indemnity  Procedure.   Living  Data  or  Vasomedical,   whichever  is
applicable (the `Indemnified Party"), shall promptly notify the other party (the
"Indemnifying  Party") of any claim,  demand,  action,  or proceeding  for which
indemnification  will be sought under this Article 9 and, if such claim, demand,
action, or proceeding is a third party claim, demand,  action, or proceeding (or
"Proceeding"  the  Indemnifying  Party  shall  have the right at its  expense to
assume  the  defense  thereof  using  counsel   reasonably   acceptable  to  the
Indemnified Party. The Indemnified Party shall have the right to participate, at
its own expense,  with respect to any such  Proceeding.  In connection  with any
such  Proceeding,  the  Indemnifying  Party  and  the  Indemnified  Party  shall
cooperate  with each other and provide each other with access to relevant  books
and records in its possession.  Notwithstanding anything in the foregoing to the
contrary,  an  Indemnified  Party will have the right to retain its own counsel,
with  the  fees  and  expenses  to  be  paid  by  the  Indemnifying   Party,  if
representation  of  such  Indemnified  Party  by  the  counsel  retained  by the
Indemnifying Party would be inappropriate due to actual or potential conflict of
interests between such Indemnified Party and any other party represented by such
counsel in such  Proceeding.  No such  Proceeding  shall be settled  without the
prior written consent of both the Indemnified Party and the Indemnifying  Party.
If a firm  written  offer  is  made  to  settle  any  such  Proceeding  and  the

                                      -19-
<PAGE>

Indemnified  Party  refuses  to  consent  to  such  settlement,  then:  (i)  the
Indemnifying  Party shall be excused from,  and the  Indemnified  Party shall be
solely  responsible  for, all further  defense of such  Proceeding  and (ii) the
maximum liability of the Indemnifying Party relating to such Proceeding shall be
the amount of the proposed  settlement if the amount  thereafter  recovered from
the  Indemnified  Party on such  Proceeding  is  greater  than the amount of the
proposed settlement.

     7. Miscellaneous.

     7.1  Independent  Contractors.  Each of Living Data and  Vasomedical  is an
independent contractor, and shall not hold itself out as, or be deemed to be, an
employee, agent or partner of the other party. Its authority shall be limited to
the matters  expressly set forth in this Agreement.  Each shall have no right or
power to enter into any  agreement or commitment in the name or on behalf of, or
otherwise to obligate or bind,  the other party,  and each shall not hold itself
out as having the authority to do so. Neither party to this Agreement shall have
any  authority to employ any person on behalf of the other and each shall,  with
respect to all persons employed by it, perform all obligations and discharge all
liabilities imposed upon employers under law. This Section 7.1 shall survive any
termination or expiration of this Agreement.

     7.2 Confidential  Information.  "Confidential  Information"  shall mean all
information which is not public knowledge  disclosed  heretofore or hereafter by
either party to the other party  (including its attorneys,  accountants or other
representatives)  in connection with its performance  under this Agreement shall
be kept  confidential  by such other party,  and shall not be used by such other
party otherwise than for use as herein contemplated, except to the extent (a) it
is or hereafter  becomes public  knowledge or becomes  lawfully  obtainable from
other  sources,  including  from a third  party  who is under no  obligation  of
confidentiality  to the party disclosing such information or to whom information
was  released  without  restriction,  or (b) such other  party is  compelled  to
disclose  such  information  by  judicial or  administrative  process or, in the
opinion of its  counsel,  by other  requirements  of law, or (c) such duty as to
confidentiality  and  non-use  is  waived  by  the  non-disclosing   party.  The
obligations  set forth in this  Section  7.2 shall  survive any  termination  or
expiration of this Agreement. Notwithstanding the foregoing, the parties to this
Agreement (and each employee,  representative or other agent of the parties) may
disclose  to any  and all  persons,  without  limitation  of any  kind,  the tax
treatment  and tax structure  provided for therein  provided,  however,  that no
party (nor any employee,  representative, or other agent thereof) shall disclose
any information to the extent that such  disclosure  could result in a violation
of any federal or state securities law.

     7.3  Proprietary  Rights.  Living Data  acknowledges  and  recognizes  that
Vasomedical solely owns and has exclusive worldwide right, title and interest in
and to all  Proprietary  Rights  listed in  Schedule  5.2(j) of the  Vasomedical
Disclosure  Statement and all  derivative  works and/or  modifications  thereto.
Living Data agrees that it will not challenge the validity or  enforceability of
any of the Proprietary Rights of Vasomedical or any part thereof at any time. In
addition,  Living Data will not directly or  indirectly  apply for or attempt to
register for itself or others any of the trademarks,  service marks,  copyrights
or  similar  protection  in any county or area.  In the event  that  Vasomedical
wishes to obtain  additional  protection for its Proprietary  Rights anywhere in
the world,  Living Data will fully  cooperate by providing  such  documents  and
information  and performing  such acts as are reasonably  requested by the party
seeking  the  additional   protection.   This  Section  7.3  shall  survive  any
termination or expiration of the Agreement.

                                      -20-
<PAGE>
     7.4 No Employee Solicitation. Neither party to this Agreement shall solicit
any employee of the other party for employment by it or any Affiliate, nor shall
either party induce any employee of the other party to leave such employment.

     7.5 Equitable Remedies. Each of Living Data and Vasomedical recognizes that
the other  party's  remedy at law for any breach of the  provisions  of Sections
7.1, 7.2, 7.3 and 7.4 of this  Agreement  will be inadequate  and,  accordingly,
each  agrees  that in addition  to such other  rights and  remedies  that may be
available  to the other  party,  in law or in  equity,  any  court of  competent
jurisdiction  may enjoin,  without the  necessity of  requiring  proof of actual
damages or the posting of any bond or other  security,  any actual or threatened
breach of the provisions of any such Section (whether during or after the Term).

     7.6  Notices.  Any notice  required or intended to be given by either party
hereto to the other,  pursuant to this  Agreement or any provision of law, shall
be in writing  and sent by  registered  or  certified  mail,  postage  paid,  or
delivered by hand or overnight  courier and  acknowledged,  or by telecopier and
confirmed by registered or certified mail as follows:

         If to Living Data, to:

                  Living Data Technology Corporation
                  37-14 29th Street
                  Long Island City, NY 11101
                  Attn: Chief Financial Officer
                  Fax: (718) 786-0534

         With a copy to (which shall not constitute notice):

                  Wachtel & Masyr, LLP
                  110 East 59th Street
                  New York, NY  10022
                  Attn.:  Robert W. Berend, Esq.
                  Fax: (212) 909-9455

         If to Vasomedical, to:

                  Vasomedical, Inc.
                  180 Linden Avenue
                  Westbury, NY  11590
                  Attn.:  Chief Financial Officer
                  Fax: (516) 987-2299

                  With a copy to (which shall not constitute notice):

                                      -21-
<PAGE>

                  Beckman, Lieberman & Barandes, LLP
                  116 John Street
                  New York, NY  10038
                  Attn.:  David H. Lieberman, Esq.
                  Fax: (212) 608-9687

or to such other address as may be designated by the respective  party by notice
given to the other in  accordance  with this  Section  7.6.  Each  notice  given
pursuant  to this  Section  7.6  shall be deemed  delivered:  if  mailed,  three
Business Days after deposit with the United States Post Office;  if delivered by
hand or  telecopier,  when  delivered;  and if sent by a  nationally  recognized
overnight courier, one Business Day after deposit with such courier.

     7.7 Waivers.  No waiver by Living Data or  Vasomedical of any of the terms,
conditions,  covenants  or  agreements  of  this  Agreement,  or  non-compliance
therewith,  shall be  binding  unless in  writing  and signed by the party to be
charged,  and no such  waiver  shall be  deemed or taken as a waiver at any time
thereafter  of the same of any other  term,  condition,  covenant  or  agreement
herein contained, nor of the strict and prompt performance thereof.

     7.8  Assignments.  Neither  this  Agreement  nor  any  right,  interest  or
obligation  hereunder  shall be assigned by any party  hereto  without the prior
written  consent of the other party.  This  Agreement  shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
permitted assigns.  This Agreement is not intended to confer any rights upon any
Person other than the parties to this Agreement.

     7.9 Entire Agreement. This Agreement (including the Disclosure Agreements),
the Securities  Purchase  Agreement of even date  herewith,  the Warrant of even
date herewith,  the Registration  Rights Agreement of even date herewith and the
Distribution  Agreement  constitutes the entire agreements of the parties hereto
with respect to the subject  matter  hereof.  No covenants,  representations  or
warranties other than those  contained,  incorporated or referred to herein have
been made,  given or received.  No course of dealing should be, or be deemed,  a
waiver of any term or  condition  hereof.  This  Agreement  may not be  changed,
modified or amended except in writing and signed by the parties to be charged.

     7.10  Severability.  Whenever  possible,  each  provision of this Agreement
shall be  interpreted  in such a  manner  as to be  effective  and  valid  under
applicable law. However,  if any provision of this Agreement shall be prohibited
by or invalid  under  such law,  it shall be deemed  modified  to conform to the
minimum  requirements  of such law or,  if for any  reason  it is not  deemed so
modified,  it  shall  be  prohibited  or  invalid  only  to the  extent  of such
prohibition  or  invalidity  without  the  remainder  thereof  or any other such
provision being prohibited or invalid.

     7.11  Governing  Law  and  Dispute  Resolution.  This  Agreement  shall  be
construed (both as to validity and performance) and enforced in accordance with,
and governed by, the laws of the State of New York applicable to contracts to be
performed entirely within that State, without giving effect to the principles of
conflicts of law.  Subject to compliance with the provisions of Article 8 hereof
relative to Dispute Conciliation and Arbitration, the parties hereto irrevocably
and  unconditionally  consent  to the  exclusive  jurisdiction  and venue of the

                                      -22-
<PAGE>

federal and state courts located in the State of New York,  Counties of New York
or Nassau  with  respect to any action  suit or  proceeding  arising out of this
Agreement or the consummation of the transactions contemplated hereby; provided,
however,  that no party  hereto  waives its right to request the removal of such
action,  suit or  proceeding  from the state  court to a  federal  court in such
jurisdictions  or vice  versa.  The  parties  hereto  each waives any claim that
either such jurisdiction is not a convenient forum for any such action,  suit or
proceeding and the defense of lack of personal  jurisdiction.  The parties agree
that  service  of  process  sent as  provided  for  notices  hereunder  shall be
effective service of process of any action, suit or proceeding against it in any
such court. The parties hereto irrevocably waive all right to a trial by jury in
any action, suit or proceeding arising out of this Agreement or the consummation
of the transactions contemplated hereby.

     7.12 Force  Majeure.  Neither  party shall be liable to the other party for
any  loss,  damage,  delay or  failure  of  performance  resulting  directly  or
indirectly  from any  cause  beyond  its  reasonable  control,  including  force
majeure,  strikes,  or the laws,  regulations,  acts,  or  failure to act of any
governmental authority.

     7.13 Exclusion of Certain Damages. Nothing in this Agreement shall obligate
either  party for the lost  profits,  lost  revenues or other  consequential  or
special damages of the other party.

     7.14 Counterparts and Facsimile Signatures.  This Agreement may be executed
in two or more  counterparts,  each of which shall be deemed an original but all
of which together  shall  constitute  one and the same  instrument.  The parties
agree that they may rely on facsimile signatures of either party with respect to
this Agreement or any waiver, amendment, supplement or consent relating thereto,
with the same as if such signature was an original

     7.15 Knowledge. For purposes of this Agreement,  "knowledge" as of any date
that a  representation  or warranty is given by a party shall mean the actual or
constructive  knowledge of the  management  of such party,  at the level of vice
president or above, and "knows" shall have a correlative meaning.

     7.16 Survival of Representation  and Warranties.  The  representations  and
warranties  of the parties  contained in this  Agreement  shall survive the date
hereof and shall  terminate and be of no further force or effect as of the third
anniversary  of the date hereof (the  "Expiration  Date") and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of either party to this  Agreement.  Notwithstanding  anything in the  preceding
sentence to the contrary,  any representation or warranty in respect of which an
indemnity  may be  sought  hereof  shall  survive  the  time at  which  it would
otherwise   terminate  pursuant  to  the  preceding  sentence  if  a  claim  for
indemnification  shall have been given to the  Indemnifying  Party  prior to the
Expiration Date.

     8. Dispute Conciliation And Arbitration

     8.1 Conciliation.  Where specifically provided in this Agreement,  business
disputes  arising  from this  Agreement,  shall be the  subject of a request for
settlement by amicable  arrangement through  conciliation in accordance with the
following process:

                                      -23-
<PAGE>
     (a) The party desiring  conciliation (the "Requesting  Party") shall make a
request  therefor in writing to the other party (the  "Recipient").  The request
for  conciliation  shall  consist of a statement  of the issue from the point of
view of the  Requesting  Party and shall be  accompanied  by copies of  relevant
papers and documents.

     (b) Upon receipt of a request for conciliation,  the Recipient, within five
Business Days, shall submit to the Requesting  Party a written  statement of the
issue from its point of view, with copies of relevant papers and documents.

     (c) Within five Business Days of the response to the Requesting  Party (the
"Convening  Date"),  the Requesting  Party,  the Recipient,  or other respective
designees or attorneys shall convene a Conciliation Committee.

     (i) The  Committee  shall  be  composed  of  three  conciliators,  one each
appointed by the Requesting Party and the Recipient and a Chairman. Unless he is
unable to so act,  Simon  Srybnik shall act as Chairman.  In his absence,  Louis
Srybnik  shall act as Chairman.  If neither is available  the Chairman  shall be
selected by mutual agreement of the Requesting Party and the Recipient.

     (d) The Committee  shall  acquaint  itself with the details of the case and
procure any  information  required  for this purpose by  communicating  with the
Requesting  Party  and the  Recipient,  and  shall  hear  from the  parties,  if
possible.

     (e) The  Requesting  Party and Recipient may appear before the Committee in
person or be represent by duly accredited  agents.  They may also be assisted by
counsel.

     (f) After  having  examined  the issue and  having  heard the  parties,  if
possible,  the Conciliation Committee shall submit, within five Business Days of
the Convening  Date  suggested  terms of  resolution to the parties.  Should the
parties agree to the suggested settlement, the Conciliation Committee shall draw
up and sign a record  of the  settlement,  and  shall  communicate  the terms of
settlement to the parties and their representatives.

     (i)  If  the  parties  do  not  agree  to  the  suggested  settlement,  the
Conciliation Committee is authorized to direct the settlement, and same shall be
binding on the parties.

     (ii) In lieu of directing a  settlement,  the  Conciliation  Committee  may
direct  that the  matter  at issue be  submitted  to  Arbitration  as  otherwise
provided in Section 8.2 hereof.

     8.2 Arbitration. Should a settlement not result based on the foregoing, the
parties  must submit the dispute to be  resolved by  arbitration  in New York in
accordance with the rules of the American Arbitration  Association and the award
of the arbitration panel should be binding on the parties. The arbitration panel
shall consist of one arbitrator.  No person having participated as a participant
of the  Conciliation  Committee for the settlement of a dispute may be appointed
arbitrator for the same dispute.  Any party may take appropriate  legal steps to
enforce the award at a court of law.

                                      -24-
<PAGE>

     8.3 Costs. Each participant shall bear an equal cost of the conciliation or
arbitration  panel.  Except for the  foregoing  sentence,  each Party  should be
responsible for its own costs and expenses incurred under this Article 8.

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

                                    LIVING DATA TECHNOLOGY CORPORATION

                                      By: /s/Simon Srybnik
                                          ----------------------
                                            Name:  Simon Srybnik
                                            Title: President

                                    VASOMEDICAL, INC.

                                      By: /s/John CK Hui
                                          --------------------
                                            Name:  John CK Hui
                                            Title: President

                                      -25-EXHIBIT 4.2

                                                                    Exhibit C to

                                                   Securities Purchase Agreement

                                 FORM OF WARRANT

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE HAVE
BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES
ACT"),  OR UNDER ANY STATE  SECURITIES  LAW. THE COMPANY WILL NOT TRANSFER  THIS
WARRANT, OR ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE,  UNLESS (i) THERE
IS  AN  EFFECTIVE  REGISTRATION  COVERING  THIS  WARRANT  OR  SHARES  UNDER  THE
SECURITIES ACT AND APPLICABLE  STATE  SECURITIES LAWS, (ii) IT FIRST RECEIVES AN
OPINION  FROM COUNSEL TO THE  COMPANY,  STATING  THAT THE  PROPOSED  TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND UNDER ALL APPLICABLE STATE
SECURITIES  LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO RULE 144 PROMULGATED
UNDER THE SECURITIES ACT.

                                                Date of Issuance:  June 21, 2007

                                VASOMEDICAL, INC.
                             Stock Purchase Warrant
                           (Void after June 20, 2012)

     VASOMEDICAL,  INC.,  a  Delaware  corporation  (the  "Company"),  for value
received,  hereby  certifies and agrees that Kerns  Manufacturing  Corp., or its
registered assigns (the "Registered Holder"), is entitled,  subject to the terms
set forth below, to purchase from the Company,  at any time or from time to time
on or after the date hereof (the "Date of Issuance")  and on or before 5:00 p.m.
New York time on June 20, 2012 (such date and time, the "Expiration Time"), Four
Million Two Hundred  Eighty-Five  Thousand,  Seven Hundred Fourteen  (4,285,714)
duly authorized,  validly issued,  fully paid and  non-assessable  shares of the
Company's common stock,  $0.001 par value per share (the "Common Stock"),  at an
initial exercise price equal to $.08 per share, subject to adjustment in certain
cases as described  herein.  The shares  issuable upon exercise of this Warrant,
and the purchase price per share,  are  hereinafter  referred to as the "Warrant
Shares" and the  "Exercise  Price,"  respectively.  The term  "Warrant"  as used
herein  shall  include  this  Warrant  and  any  other  warrants   delivered  in
substitution  or exchange  therefor,  as provided  herein.  This  Warrant  shall
terminate at the Expiration Time.

     This  Warrant is the Warrant  issued  pursuant to that  certain  Securities
Purchase  Agreement  dated as of June 21,  2007 by and  between  the Company and
Kerns Manufacturing Corp. (the "Securities Purchase Agreement"). Any capitalized
term used and not  otherwise  defined  herein shall have the meaning  given such
term in the Securities Purchase Agreement.
<PAGE>

     1. Exercise.

     1.1 Method of Exercise

     (a) This Warrant may be exercised by the Registered Holder at any time from
time to time, in whole or in part,  prior to the Expiration Time by surrendering
this  Warrant,  with a Notice  of  Exercise  in the form of Annex A hereto  (the
"Notice  of  Exercise")  duly  executed  by such  Registered  Holder  or by such
Registered  Holder's duly authorized  attorney,  at the principal  office of the
Company  set forth on the  signature  page  hereto,  or at such other  office or
agency as the  Company  may  designate  in  writing  (the  "Company's  Office"),
accompanied  by payment in full,  in lawful money of the United  States (by wire
transfer  of  immediately  available  funds or by bank  cashier's  or  certified
check),  of the  Exercise  Price  payable  in respect of the number of shares of
Warrant  Shares  purchased  upon such  exercise.  In lieu of cash  payment,  the
Warrant may be exercised  through a cashless exercise in the manner set forth in
Section 1.2 below.

     (b) Each  exercise of this  Warrant  shall be deemed to have been  effected
immediately  prior to the close of business on the day on which the  appropriate
Annex form shall be dated and  directed  to the  Company  (as  evidenced  by the
applicable  postmark or other  evidence of  transmittal)  as provided in Section
1.1(a)  hereof.  At such time,  the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
in Section 1.1(c) hereof shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.

     (c) As soon as practicable  after the exercise of this Warrant,  in full or
in part, and in any event within five (5) Business Days thereafter, the Company,
at its expense,  will cause to be issued in the name of, and  delivered  to, the
Registered Holder, or as such Registered Holder (upon payment by such Registered
Holder of any applicable transfer taxes) may direct:

     (i) a certificate or certificates  for the number of full Warrant Shares to
which such Registered  Holder shall be entitled upon such exercise plus, in lieu
of any  fractional  share to which such  Registered  Holder  would  otherwise be
entitled, cash in an amount determined pursuant to Section 3 hereof; and

     (ii) in case such  exercise  is in part only,  a new  warrant  or  warrants
(dated the date hereof) of like tenor, representing in the aggregate on the face
or faces thereof the number of Warrant  Shares equal  (without  giving effect to
any  adjustment  therein) to the number of such shares called for on the face of
this Warrant minus the number of such shares purchased by the Registered  Holder
upon such  exercise  as  provided  in Section 3 hereof or  received  pursuant to
Section 1.2 hereof.

     1.2. Exercise by Surrender of Warrant. In addition to the method of payment
set forth in Section 1.1 and in lieu of any cash  payment  required  thereunder,
this  Warrant  may be  exercised  by  surrendering  this  Warrant  in the manner
specified in this Section 1.2,  together with  irrevocable  instructions  to the
Company to issue in exchange for this Warrant the number of shares of the Common
Stock  equal to the  product  of (x) the  number of shares of the  Common  Stock

                                       2
<PAGE>

underlying this Warrant multiplied by (y) a fraction,  the numerator of which is
the Market Value (as defined  below) of the Common Stock less the Exercise Price
and the  denominator of which is such Market Value.  As used herein,  the phrase
"Market  Value" at any date shall be deemed to be the last  reported sale price,
or, in case no such  reported  sale takes place on such day,  the average of the
last  reported sale prices for the last five (5) trading days, in either case as
officially  reported by the  principal  securities  exchange on which the Common
Stock is listed or the NASD's OTC Bulletin Board if admitted to trading thereon,
or, if the Common  Stock is not so  reported,  the average  closing bid price as
furnished by the Pink Sheets LLC or similar  organization  if Pink Sheets LLC is
no longer reporting such  information,  or if the Common Stock is not so quoted,
as  determined  in good faith by  resolution  of the Board of  Directors  of the
Company, based on the best information available to it.

     2. Shares to be Fully Paid;  Reservation of Shares;  Fractional Shares. The
Company  covenants  and agrees that all shares of the Common  Stock which may be
issued upon the exercise of the rights  represented  by this Warrant will,  upon
issuance by the Company,  be validly issued,  fully paid and nonassessable,  and
free from preemptive rights and free from all taxes,  liens,  security interests
and charges with respect thereto. The Company further covenants and agrees that,
from and after the Date of  Issuance  and  during the  period  within  which the
rights  represented  by this Warrant may be  exercised,  the Company will at all
times have  authorized,  and reserve,  free from preemptive  rights,  out of its
authorized  but unissued  shares of the Common Stock,  solely for the purpose of
effecting  the exercise of this  Warrant,  a sufficient  number of shares of the
Common  Stock to provide  for the  exercise  of the rights  represented  by this
Warrant.  The Company shall not be required upon the exercise of this Warrant to
issue any fractional shares but shall make an adjustment therefor in cash on the
basis of the Market  Value for each  fractional  share of the Common Stock which
would be issuable upon exercise of this Warrant.

     3. Requirements for Transfer.

     (a) Warrant  Register.  The Company will  maintain a register (the "Warrant
Register")  containing  the  names and  addresses  of the  Registered  Holder or
Registered Holders. Any Registered Holder of this Warrant or any portion thereof
may change its address as shown on the Warrant Register by written notice to the
Company requesting such change, and the Company shall promptly make such change.
Until this Warrant is  transferred on the Warrant  Register of the Company,  the
Company may treat the Registered  Holder as shown on the Warrant Register as the
absolute owner of this Warrant for all purposes,  notwithstanding  any notice to
the  contrary,  provided,  however,  that if and when this  Warrant is  properly
assigned in blank,  the Company may,  but shall not be  obligated  to, treat the
bearer hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.

     (b) Warrant  Agent.  The Company may, by written  notice to the  Registered
Holder,  appoint an agent for the purpose of  maintaining  the Warrant  Register
referred to in Section 3(a) hereof,  issuing shares of the Common Stock issuable
upon the exercise of this  Warrant,  exchanging  this  Warrant,  replacing  this
Warrant  or any or all of the  foregoing.  Thereafter,  any  such  registration,
issuance,  exchange,  or  replacement,  as the case  may be,  may be made at the
office of such agent.

                                       3
<PAGE>

     (c) Transfer. Subject to the provisions of this Section 3, this Warrant and
all rights hereunder are  transferable,  in whole or in part, upon the surrender
of this Warrant with a properly  executed  Assignment Form in substantially  the
form attached hereto as Annex B (the  "Assignment")  at the principal  office of
the Company.

     (d) Exchange of Warrant  Upon a Transfer.  On surrender of this Warrant for
exchange,  properly  endorsed on the Assignment and subject to the provisions of
this Warrant and with the  limitations on assignments and transfers as contained
in this Section 3, the Company at its expense  shall issue to or on the order of
the  Registered  Holder a new warrant or warrants of like tenor,  in the name of
the Registered  Holder or as the Registered Holder (on payment by the Registered
Holder of any applicable  transfer  taxes) may direct,  for the number of shares
issuable upon exercise hereof.

     4. Adjustment.

     (a) Computation of Adjusted Exercise Price. Except as hereinafter provided,
in case the Company  shall at any time after the date  hereof  issue or sell any
shares of its Stock (as defined in Section  4(g)),  other than the  issuances or
sales  referred to in Section 4(h) hereof,  for a  consideration  per share less
than the Exercise Price in effect  immediately  prior to the issuance or sale of
such shares,  or without  consideration,  then  forthwith  upon such issuance or
sale,  the Exercise Price shall (until another such issuance or sale) be reduced
to the price (calculated to the nearest full cent) equal to the quotient derived
by  dividing  (A) an  amount  equal  to the  sum of (X) the  product  of (a) the
Exercise Price in effect immediately prior to such issuance or sale,  multiplied
by (b) the total number of shares of Stock outstanding immediately prior to such
issuance or sale, plus (Y) the aggregate of the amount of all consideration,  if
any, received by the Company upon such issuance or sale, by (B) the total number
of  shares  of  Stock  outstanding  immediately  after  such  issuance  or sale;
provided,  however,  that in no event  shall  the  Exercise  Price  be  adjusted
pursuant to this  computation  to an amount in excess of the  Exercise  Price in
effect  immediately  prior  to  such  computation,  except  in  the  case  of  a
combination of outstanding  shares of Stock, as provided by Section 4(c) hereof.
For the  purposes  of this  Section 4 the term  Exercise  Price  shall  mean the
Exercise  Price  per  share set  forth on the  first  page of this  Warrant,  as
adjusted from time to time pursuant to the provisions of this Section 4.

     (i) For  purposes of any  computation  to be made in  accordance  with this
Section 4(a), the following provisions shall be applicable:

     (ii) In case of the issuance or sale of shares of Stock for a consideration
part or all of which shall be cash, the amount of the cash  consideration  shall
be deemed to be the amount of cash  received by the Company for such shares (or,
if shares of Stock are offered by the Company for subscription, the subscription
price, or, if either of such securities shall be sold to underwriters or dealers
for public  offering  without a subscription  price,  the public offering price,
before  deducting  therefrom any  compensation  paid or discount  allowed in the
sale,  underwriting  or  purchase  thereof by  underwriters  or dealers or other
persons or entities  performing similar  services),  or any expenses incurred in
connection therewith.

     (iii) In case of the  issuance  or sale  (otherwise  than as a dividend  or
other  distribution  on any  stock of the  Company)  of  shares  of Stock  for a

                                       4
<PAGE>

consideration  part or all of which shall be other than cash,  the amount of the
consideration  therefor  other than cash shall be deemed to be the value of such
consideration  as  determined  in good  faith by the Board of  Directors  of the
Company.

     (iv) Shares of Stock issuable by way of dividend or other  distribution  on
any capital stock of the Company shall be deemed to have been issued immediately
after the  opening of  business  on the day  following  the record  date for the
determination  of  stockholders  entitled  to  receive  such  dividend  or other
distribution and shall be deemed to have been issued without consideration.

     (v) The  reclassification of securities of the Company other than shares of
Stock into securities  including  shares of Stock shall be deemed to involve the
issuance of such shares of Stock for  consideration  other than cash immediately
prior to the  close of  business  on the date  fixed  for the  determination  of
security  holders  entitled  to  receive  such  shares,  and  the  value  of the
consideration  allocable to such shares of Stock shall be determined as provided
in Section 4(a)(iii).

     (vi) If, in any  case,  the total  number  of  shares of the  Common  Stock
issuable upon exercise of any Option (as hereinafter  defined) or upon exercise,
conversion or exchange of any Convertible Security (as hereinafter  defined), is
not,  in fact,  issued and the rights to exercise  such  Option or to  exercise,
convert or exchange such Convertible  Security shall have expired or terminated,
the Exercise Price then in effect will be readjusted to the Exercise Price which
would have been in effect at the time of such expiration or termination had such
Option or Convertible Security,  to the extent outstanding  immediately prior to
such  expiration or  termination  (other than in respect of the actual number of
shares of the Common Stock issued upon  exercise or conversion  thereof),  never
been issued.

     (b) Options, Rights, Warrants and Convertible and Exchangeable Securities.

     (i) In case the  Company  shall at any time  after  the date  hereof  issue
options,  rights or warrants  to  subscribe  for shares of Stock  (collectively,
"Options" and individually,  an "Option"),  or issue any securities  convertible
into or exchangeable for shares of Stock (collectively, "Convertible Securities"
and individually,  "Convertible  Security"),  for a consideration per share less
than the  Exercise  Price in effect  immediately  prior to the  issuance of such
Options or such Convertible Securities,  or without consideration,  the Exercise
Price in  effect  immediately  prior to the  issuance  of such  Options  or such
Convertible  Securities,  as the  case  may  be,  shall  be  reduced  to a price
determined by making a computation in accordance  with the provisions of Section
4(a) hereof, provided that:

     (ii) The aggregate  maximum number of shares of Stock,  as the case may be,
issuable under such Options shall be deemed to be issued and  outstanding at the
time such Options were issued, for a consideration equal to the minimum purchase
price per share  provided for in such Options at the time of issuance,  plus the
consideration  (determined in the same manner as  consideration  received on the
issue or sale of shares in accordance  with the terms of this Warrant),  if any,
received by the Company for such Options. The aggregate maximum number of shares

                                       5
<PAGE>

of Stock  issuable  upon  conversion or exchange of any  Convertible  Securities
shall be deemed to be issued and  outstanding  at the time of  issuance  of such
Convertible  Securities,  and for a  consideration  equal  to the  consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Stock in accordance  with the terms of this  Warrant)  received by the
Company for such Convertible Securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof. If any change
shall occur in the price per share  provided for in any of the Options  referred
to in this  subsection,  or in the  price  per  share at which  the  Convertible
Securities  referred to in this  subsection  are  exchangeable,  such Options or
Convertible  Securities,  as the case may be, shall be deemed to have expired or
terminated  on the date when such price  change  became  effective in respect to
shares not theretofore issued pursuant to the exercise or exchange thereof,  and
the  Company  shall be deemed to have  issued  upon  such  date new  Options  or
Convertible  Securities  at the new  price in  respect  of the  number of shares
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.

     (c) Subdivision and Combination.  If the Company at any time subdivides (by
any   stock   split,   stock   dividend,    recapitalization,    reorganization,
reclassification  or  otherwise)  the  shares of Stock  subject  to  acquisition
hereunder  into a greater number of shares,  then,  after the date of record for
effecting such  subdivision,  the Exercise Price in effect  immediately prior to
such  subdivision  will be  proportionately  reduced and the number of shares of
Common  Stock  subject to  acquisition  upon  exercise of this  Warrant  will be
proportionately increased. If the Company at any time combines (by reverse stock
split,  recapitalization,  reorganization,  reclassification  or otherwise)  the
shares of Stock  subject  to  acquisition  hereunder  into a  smaller  number of
shares,  then,  after the date of record for  effecting  such  combination,  the
Exercise  Price  in  effect  immediately  prior  to  such  combination  will  be
proportionately  increased  and the number of shares of Common Stock  subject to
acquisition upon exercise of this Warrant will be proportionately decreased.

     (d) Merger or  Consolidation.  In case of any  consolidation of the Company
with,  or merger of the Company  into any other  corporation,  or in case of any
sale or  conveyance  of all or  substantially  all of the assets of the  Company
other than in  connection  with a plan of complete  liquidation  of the Company,
then,  as a  condition  of such  consolidation,  merger  or sale or  conveyance,
adequate  provision  will be made  whereby the  Registered  Holder will have the
right to acquire and receive upon exercise of this Warrant in lieu of the shares
of the Common Stock  immediately  theretofore  subject to  acquisition  upon the
exercise of this Warrant,  such shares of stock,  securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of the
Common Stock immediately  theretofore subject to acquisition and receivable upon
exercise of this Warrant had such  consolidation,  merger or sale or  conveyance
not taken place. In any such case, the Company will make  appropriate  provision
to insure  that the  provisions  of this  Section 4 hereof  will  thereafter  be
applicable  as nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant.

     (e) Notice of  Adjustment.  Upon the occurrence of any event which requires
any  adjustment  of the Exercise  Price,  then and in each such case the Company
shall give notice thereof to the Registered Holder, which notice shall state the

                                       6
<PAGE>

Exercise Price resulting from such  adjustment and the increase or decrease,  if
any, in the number of Warrant  Shares  purchasable  at such price upon exercise,
setting forth in reasonable  detail the method of calculation and the facts upon
which such calculation is based.

     (f)  Adjustment  in  Number of  Securities.  Upon  each  adjustment  of the
Exercise  Price  pursuant  to the  provisions  of this  Section 4, the number of
securities  issuable  upon the exercise of this Warrant shall be adjusted to the
nearest  full amount by  multiplying  a number  equal to the  Exercise  Price in
effect  immediately  prior to such  adjustment  by the number of Warrant  Shares
issuable upon exercise of this Warrant  immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.

     (g)  Definition  of Stock.  For the  purpose  of this  Agreement,  the term
"Stock" shall mean (i) the class of stock  designated as the Common Stock in the
Certificate  of  Incorporation  of the  Company as may be amended as of the date
hereof,  or (ii) any other class of stock resulting from  successive  changes or
reclassifications  of such Stock  consisting  solely of changes in par value, or
from par value to no par value, or from no par value to par value.

     (h) No Adjustment of Exercise Price in Certain Cases.  No adjustment of the
Exercise Price shall be made:

     (i) Upon issuance or sale of this Warrant or Warrant  Shares,  or the other
Warrants,  if any,  issued  pursuant to the  Securities  Purchase  Agreement and
Warrant  Shares issued upon exercise  thereof,  or other  options,  warrants and
convertible  securities  outstanding as of the date hereof into or for shares of
the Common Stock.

     (ii) Upon the issuance or sale of any shares of capital stock, or the grant
of  options  exercisable  therefor,  issued or  issuable  after the date of this
Warrant,  to directors,  officers,  employees,  advisers and  consultants of the
Company or any  subsidiary  pursuant to any  incentive  or  non-qualified  stock
option plan or agreement,  stock purchase plan or agreement,  stock  restriction
agreement  or  restricted  stock plan,  employee  stock  ownership  plan (ESOP),
consulting  agreement,  stock appreciation right (SAR), stock depreciation right
(SDR),  bonus stock  arrangement,  or such other similar  compensatory  options,
issuances, arrangements, agreements or plans approved by the Board of Directors.

     (iii) If the amount of said adjustment  shall be less than one cent ($0.01)
per security issuable upon exercise of this Warrant, provided,  however, that in
such case any adjustment  that would otherwise be required then to be made shall
be carried  forward and shall be made at the time of and together  with the next
subsequent  adjustment  which,  together with any adjustment so carried forward,
shall amount to at least two cents  ($0.02) per security  issuable upon exercise
of this Warrant.

     5. No  Impairment.  The Company  will not, by  amendment  of its charter or
through reorganization,  consolidation,  merger, dissolution,  sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this  Warrant  but will at all  times  carry out all such
terms and take all such action as may be reasonably  necessary or appropriate in
order to protect the rights of the holder of this Warrant against impairment.

                                       7
<PAGE>

     6. Notices of Record Date,  Etc. If the Company  shall take a record of the
holders  of its  Common  Stock  (or  other  stock  or  securities  at  the  time
deliverable  upon the exercise of this  Warrant) for the purpose of entitling or
enabling them to receive any dividend or other  distribution,  or to receive any
right to subscribe for or purchase any shares of stock of any class or any other
securities,  or to receive any other right; or of any capital  reorganization of
the Company,  any  reclassification  of the capital  stock of the  Company,  any
consolidation or merger of the Company with or into another  corporation  (other
than a consolidation or merger in which the Company is the surviving entity), or
any transfer of all or substantially all of the assets of the Company; or of the
voluntary or involuntary dissolution,  liquidation or winding-up of the Company,
then,  and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice  specifying,  as the case may be, (i)
the date on which a record  is to be taken  for the  purpose  of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution or right, or (ii) the effective date on which such  reorganization,
reclassification,  consolidation,  merger, transfer, dissolution, liquidation or
winding-up is to take place,  and the time,  if any is to be fixed,  as of which
the holders of record of Common Stock (or such other stock or  securities at the
time  deliverable  upon the  exercise  of this  Warrant)  shall be  entitled  to
exchange  their shares of Common Stock (or such other stock or  securities)  for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation,  merger, transfer, dissolution, liquidation or
winding-up.  Such  notice  shall be mailed  at least ten (10) days  prior to the
record date or effective date for the event specified in such notice unless such
prior notice is waived by the Registered Holder.

     7. No Rights of Stockholders.  The Registered  Holder shall not be entitled
to vote,  to  receive  dividends  or  subscription  rights,  nor shall  anything
contained herein be construed to confer upon the Registered Holder, as such, any
of the rights of a stockholder of the Company,  including without limitation any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders,  to give or withhold consent to any corporate action (whether upon
any  recapitalization,  issuance of stock,  reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance,
or otherwise),  to receive notices,  or otherwise,  until the Warrant shall have
been exercised as provided herein..

     8. Replacement of Warrant. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss,  theft  or  destruction)  upon  delivery  of an  indemnity
agreement reasonably satisfactory to the Company, or (in the case of mutilation)
upon surrender and cancellation of this Warrant, the Company will issue, in lieu
thereof, a new Warrant of like tenor.

     9. Limitation on Sales. The Registered Holder of this Warrant  acknowledges
that this Warrant and the Warrant Shares, as of the date of original issuance of
this Warrant,  have not been  registered  under the  Securities  Act of 1933, as
amended (the  "Securities  Act"),  and agrees not to sell,  pledge,  distribute,
offer for sale,  transfer or  otherwise  dispose of this  Warrant or any Warrant
Shares issued upon its exercise in the absence of (i) an effective  registration
statement  under the Securities Act as to this Warrant or such Warrant Shares or
(ii) an  opinion  of  counsel,  reasonably  acceptable  to the  Company  and its
counsel, that such registration and qualification are not required.  The Warrant
Shares  issued  upon  exercise  thereof  shall be  imprinted  with a  legend  in
substantially the following form:

                                       8
<PAGE>

               "THE ISSUANCE OF THIS SECURITY HAS NOT BEEN REGISTERED  UNDER THE
               SECURITIES  ACT  OF  1933,  AS  AMENDED,   OR  APPLICABLE   STATE
               SECURITIES  LAWS,  AND  MAY NOT BE  SOLD,  PLEDGED  OR  OTHERWISE
               TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION THEREOF UNDER SUCH
               ACT  OR  PURSUANT   TO  AN   EXEMPTION   FROM  THE   REGISTRATION
               REQUIREMENTS  OF SAID ACT OR APPLICABLE  STATE  SECURITIES  LAWS,
               SUPPORTED BY AN OPINION OF COUNSEL,  REASONABLY  SATISFACTORY  TO
               THE  COMPANY  AND ITS  COUNSEL,  THAT  SUCH  REGISTRATION  IS NOT
               REQUIRED."

     10. Mailing of Notices,  Etc. All notices and other communications from the
Company to the Registered  Holder of this Warrant shall be mailed by first-class
certified or registered mail,  postage prepaid,  to the address furnished to the
Company in writing by the last Registered  Holder of this Warrant who shall have
furnished  an  address  to  the  Company  in  writing.  All  notices  and  other
communications  from the  Registered  Holder of this  Warrant  or in  connection
herewith to the Company shall be mailed by  first-class  certified or registered
mail,  postage prepaid,  to the Company at its principal office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth below,  then it shall give prompt written notice
to the  Registered  Holder of this Warrant and thereafter all references in this
Warrant to the location of its principal  office at the particular time shall be
as so specified in such notice.

     11.  Change or Waiver.  Any term of this  Warrant  may be changed or waived
only by an instrument in writing  signed by the party against which  enforcement
of the change or waiver is sought.

     12.  Headings.  The  headings in this Warrant are for purposes of reference
only and shall not limit or  otherwise  affect the meaning of any  provision  of
this Warrant.

     13.  Severability.  If any  provision of this  Warrant  shall be held to be
invalid and unenforceable,  such invalidity or unenforceability shall not affect
any other provision of this Warrant.

     14.  Governing  Law and  Submission to  Jurisdiction.  This Warrant will be
governed by and construed in  accordance  with the laws of the State of New York
without regard to principles of conflict or choice of laws of any  jurisdiction.
The parties hereby agree that any action, proceeding or claim against it arising
out of, or relating in any way to this Warrant  shall be brought and enforced in
the  courts  of  the  State  of  New  York,  and  irrevocably   submit  to  such
jurisdiction, which jurisdiction shall be exclusive.

     15.  Supplements and Amendments.  The Company and the Registered Holder may
from  time to time  supplement  or  amend  this  Warrant  in  order  to cure any
ambiguity,  to correct or supplement any provision contained herein which may be

                                       9
<PAGE>

defective  or  inconsistent  with any  provision  herein,  or to make any  other
provisions in regard to matters or questions arising hereunder which the Company
and the Holder may deem necessary or desirable.

     16.  Successors.  This Warrant shall be binding upon and shall inure to the
benefit of the respective successors and assigns of the parties, except that the
Company shall not have the right to assign or otherwise transfer all or any part
of its rights or obligations  hereunder or any interest herein without the prior
written consent of the Registered Holder.

     17. Benefits of this Warrant. Nothing in this Warrant shall be construed to
give to any  person,  entity  or  corporation  other  than the  Company  and the
Registered  Holder of the  Warrant  Certificate  any legal or  equitable  right,
remedy or claim under this  Warrant;  and this Warrant shall be for the sole and
exclusive  benefit  of the  Company  and the  Registered  Holder of the  Warrant
Certificate.

                    Balance of Page Intentionally left Blank

                             Signature Page Follows

                                       10
<PAGE>

IN WITNESS  WHEREOF,  VASOMEDICAL,  INC. has caused this Warrant to be signed by
its duly authorized officers under its corporate seal and to be dated on the day
and year first written above.

                                       VASOMEDICAL, INC.

                                       By:_________________________________
                                             Name: John C. K. Hui
                                             Title:  President

                                       Principal Office: 180 Linden Avenue
                                                         Westbury, NY 11590

                                       11

<PAGE>

                                     ANNEX A

                             NOTICE OF EXERCISE FORM
                             -----------------------

To:                                                         Dated:

     The undersigned, pursuant to the provisions in the attached Warrant, hereby
irrevocably elects to: [check the appropriate box]

__ (i) purchase  _____ shares of Common Stock covered by such Warrant and hereby
makes payment of $_______,  representing  the full purchase  price for shares at
the exercise price per share provided for in such Warrant.  Enclosed herewith is
payment of the exercise price of such shares in full; or

__ (ii)  exercise the Warrant on a  "cashless"  basis in the manner set forth in
Section 1.2 of the  Warrant.  Such  calculation  results in the net  issuance of
_______ shares of Common Stock of the Company to the undersigned.

Please have the shares of Common Stock of the Company issuable  pursuant to this
exercise delivered to ________________.

                                   Signature:

                                   Dated:

                                   Address:

<PAGE>

                                     ANNEX B

                                 ASSIGNMENT FORM
                                 ---------------

     FOR VALUE RECEIVED, _________________________________ hereby sells, assigns
and transfers all of the rights of the  undersigned  under the attached  Warrant
with respect to the number of shares of Common Stock  covered  thereby set forth
below, unto:

Name of Assignee                     Address                    No. of Shares
----------------                     -------                    -------------

                                   Dated:

                                   Signature:

                                   Dated:

                                   Witness:

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