PURCHASE
AND ASSIGNMENT AGREEMENT
THIS
PURCHASE AND ASSIGNMENT AGREEMENT
(this
"
Agreement
"),
is
made on December 18, 2007, among Montgomery Equity Partners Ltd. (“Montgomery”
or the “Assignor”), Triumph Small Cap Fund, Inc. (the “
Assignee
”),
and
In Veritas Medical Diagnostics, Inc. (the "
Company
").
WHEREAS
,
Assignor is the legal and beneficial owner of those certain Secured Convertible
Debentures set forth on Schedule I attached hereto (collectively, the
“Debentures”), of the Company issued on the dates and in the amounts as
indicated on Schedule I.
WHEREAS
,
the
Debentures were originally issued pursuant to a Securities Purchase Agreement,
as amended, between the Assignor and the Company dated as of September 7, 2005
(the “
Securities
Purchase Agreement
”);
WHEREAS
,
Assignor desires to assign to Assignee and Assignee desires to accept from
Assignor the Debentures on the basis of the representations, warranties and
agreements contained in this Agreement, and upon the terms but subject to the
conditions set forth herein;
WHEREAS
,
Assignor desires to assign to Assignee and Assignee desires to assume from
Assignor, its rights as a holder of the Debentures under (a) the Securities
Purchase Agreement, (b) the Investor Registration Rights Agreement, dated
September 7, 2005, between the Company and Montgomery (the "
Registration
Rights Agreement
"),
(c)
the Security Agreement, dated September 7, 2005, between the Company and
Montgomery (“
Security
Agreement
”),
(d)
the Pledge and Escrow Agreement dated September 7, 2005, by and among the
Company, Montgomery and David Gonzalez (the “
Pledge
Agreement
”)
(e)
all related documents under which the Assignor has rights or interests in the
Debentures, and (f) all amendments to the documents referred to in (a) through
(e) in this paragraph (collectively, the "
Transaction
Documents
"),
on
the basis of the representations, warranties and agreements contained in this
Agreement, and upon the terms but subject to the conditions set forth
herein;
WHEREAS
,
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1.
Purchase
Price
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a)
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As
consideration for assignment set forth herein of the Debentures owned
by
Montgomery, the Assignee agrees to (the “
Purchase
Price
”):
(A) pay the aggregate sum of One Hundred Fifty Thousand and Fifty
Two
($150,052) Dollars which shall be paid by the issuance of a promissory
note issued by the Assignee to Montgomery; (B) transfer to Montgomery
One
Hundred and Fifty Thousand (150,000) shares of common stock of the
Company
which are held by the Assignee (the “Shares”), post a reverse stock split
which is contemplated by the Company; and (C) issue to Montgomery
a
warrant to purchase 50,000 shares of its common stock at a price
of $1.00
per share (the “Warrants”).
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2.
Assignment
.
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a)
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On
the Closing Date (as set forth below), for the payment of the Purchase
Price the
Assignor
hereby absolutely, irrevocably and unconditionally sells, assigns,
conveys, contributes and transfers to the Assignee (a) all of the
Debentures owned by the Assignor and all of its rights and benefits
thereunder and conferred therein, including without limitation the
right
to collect from the Company the principal amounts outstanding thereunder,
plus accrued but unpaid interest as indicated on Schedule I, and
(b) all
rights and interests that Assignor has under the Transaction Documents
and
the Assignee accepts such assignment.
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b)
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Closing Procedures
.
The closing of the assignment contemplated hereunder shall take place
simultaneously with the date of execution hereof (the “
Closing
Date
”)
or such other date as mutually agreed by the parties hereto, at the
offices of Montgomery. On the Closing Date, the following shall take
place:
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i)
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The
Assignee shall deliver the Promissory Note to the Assignor;
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ii)
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The
Assignee shall deliver a warrant agreement (the “Warrant”) to the Assignor
that is (i) acceptable in form to Assignor and (ii) provides Assignor
with
the purchase right set forth in Section 1(a)(C) of this Agreement;
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iii)
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The
Assignee shall deliver to Sichenzia Ross Friedman Ference LLP (“SRFF”)
50,000 shares of common stock to be held in escrow to be issued to
Montgomery upon exercise of the Warrants;
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iv)
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Immediately
upon receipt of the items set forth in 1(b)(i) hereof, the Assignor
shall
deliver to SRFF, as escrow agent, the original Debentures as set
forth on
Schedule I and shall cause, David Gonzalez, the Escrow Agent pursuant
to
the Pledge Agreement, to deliver the Transfer Documents, as such
term is
defined in the Pledge Agreement, to SRFF.
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3.
Additional
Documents
.
The
Assignor and Assignee agree to take such further action and to execute and
deliver, or cause to be executed and delivered, any and all other documents
which are, in the reasonable opinion of their counterparty, necessary to carry
out the terms and conditions of this Assignment.
4.
Effective
Date and Counterpart Signature
.
The
transactions contemplated hereby shall become effective simultaneously with
the
closing of the Stock Purchase Agreement among the Company and Medical Diagnostic
Innovations Ltd. but in no event not later than sixty (60) days from the date
hereof. In the event that the transactions contemplated by the Stock Purchase
Agreement are not consummated within sixty (60) days from the date hereof,
this
Agreement shall become null and void. This Agreement, and acceptance of same,
may be executed in one or more counterparts, each of which shall be deemed
an
original, but all of which together shall constitute one and the same
instrument. Confirmation of execution by telex or by telecopy or telefax of
a
facsimile signature page shall be binding upon that party so
confirming.
5.
Representations
and Warranties of the Assignee
.
(a)
Organization;
Authority
.
The
Assignee is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate, partnership or other applicable power and authority to enter into
and
to consummate the transactions contemplated by this Agreement and otherwise
to
carry out its obligations thereunder, and the execution, delivery and
performance by the Assignee of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or similar action on the
part of the Assignee. This Agreement, when executed and delivered by the
Assignee, will constitute a valid and legally binding obligation of the
Assignee, enforceable against the Assignee in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors’ rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, or (c) to the extent the indemnification provisions contained herein
may be limited by federal or state securities laws.
(b)
Ownership
.
Assignee
owns and is conveying to Assignee all of its rights, title and interests to
the
Shares and the Warrant, free and clear of all liens, mortgages, pledges,
security interests, encumbrances or charges of any kind or
description
(c)
Investment
Experience; Access to Information and Preexisting Relationship
.
The
Assignee (a) either alone or together with its representatives, has such
knowledge and experience in financial and business matters as to be capable
of
evaluating the merits and risks of this investment and make an informed decision
to so invest, and has so evaluated the risks and merits of such investment,
(b)
has the ability to bear the economic risks of this investment and can afford
a
complete loss of such investment, (c) understands the terms of and risks
associated with the acquisition of the Debentures, including, without
limitation, a lack of liquidity, price transparency or pricing availability
and
risks associated with the industry in which the Company operates, (d) has had
the opportunity to review such disclosure regarding the Company, its business,
its financial condition and its prospects as the Assignee has determined to
be
necessary in connection with the Assignment of the Debentures, including,
without limitation, the
Company’s
Annual Report on Form 10-K (or substantially equivalent form) for its most
recently completed fiscal year, the Company’s Quarterly Reports on Form 10-Q (or
substantially equivalent form) for the fiscal quarters since the end of such
completed fiscal year, and the Company’s Current Reports on Form 8-K (or
substantially equivalent form) since the end of such completed fiscal year,
each
as amended
.
(d)
Assignee
Status
.
At the
time the Assignee was offered the Debentures, it was, and as of the date hereof
it is, an “
accredited
investor
”
as
that
term is defined in Rule 501(a) of Regulation D under the Securities Act. The
Assignee is not, and is not required to be registered as, a broker-dealer under
Section 15 of the Securities Exchange Act of 1934, as amended (the “
Exchange
Act
”).
(e)
Restrictions
on Transfer
.
The
Assignee understands that (a) the Debentures (including the shares of Common
Stock underlying such Debentures) have not been registered under the Securities
Act or the securities laws of any state, (b) the Debentures (including the
shares of Common Stock underlying such Debenture) are and will be “
restricted
securities
”
as
said
term is defined in Rule 144 of the Rules and Regulations promulgated under
the
Securities Act (“
Rule
144
”),
(c)
the Debentures (including the shares of Common Stock underlying such Debenture)
may not be sold, pledged or otherwise transferred unless a registration
statement for such transaction is effective under the Securities Act and any
applicable state securities laws, or unless an exemption from such registration
provisions is available with respect to such transaction, and (d) the Debentures
(including the shares of Common Stock underlying such Debentures) will bear
a
legend substantially as set forth below:
NEITHER
THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES
ACT
”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
(f)
General
Solicitation
.
The
Assignee is not accepting such Assignment as a result of any advertisement,
article, notice or other communication regarding the Debentures published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(g)
No
Conflicts; Advice
.
Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, does or will violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any government, governmental agency, or court to which
the Assignee is subject or any provision of its organizational documents or
other similar governing instruments, or conflict with, violate or constitute
a
default under any agreement, credit facility, debt or other instrument or
understanding to which the Assignee is a party. The Assignee has consulted
such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with the Assignment of the
Debenture.
(h)
No
Litigation
.
There
is no action, suit, proceeding, judgment, claim or investigation pending, or
to
the knowledge of the Assignee, threatened against the Assignee which could
reasonably be expected in any manner to challenge or seek to prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement.
(i)
Consents
.
No
authorization, consent, approval or other order of, or declaration to or filing
with, any governmental agency or body or other Person is required for the valid
authorization, execution, delivery and performance by the Assignee of this
Agreement and the consummation of the transactions contemplated
hereby.
(j)
Stop
Transfer Notices
.
The
Assignee agrees that, in order to ensure compliance with the restrictions
referred to herein, appropriate “stop transfer” instructions may be issued to
the Company’s transfer agent.
(k)
Assignor’s
Relationship with Company
.
The
Assignor has informed the Assignee that the Assignor and its affiliates have
and
have had a variety of relationships with the Company. The Assignor and its
affiliates may have obtained or be in possession of, or later may come into
possession of, material, non-public, confidential information concerning the
Company and their respective subsidiaries and affiliates, their respective
assets or the Debentures (or the common stock into which such Debentures are
convertible) and are precluded from sharing such information with the Assignee.
The Assignor and its affiliates have advised the Assignee that such information
may be indicative of a value of the Debentures that is substantially less than
or greater than the consideration for which they are being assigned hereunder.
The Assignee is experienced, sophisticated and knowledgeable in trading in
publicly-traded and other securities of companies and understands the
disadvantage to which he may be subject on account of the disparity of
information as between it and the Assignor. The Assignee expressly releases
the
Seller and each of its affiliates and their respective officers, directors,
members, managers, partners, equity holders and employees (collectively, the
"
Released
Parties
")
from
any and all liabilities arising from the Assignor’s failure to have access to or
review such confidential information and otherwise in respect of the transaction
that is the subject of this Agreement (the “
Transaction
”),
and
agrees to make no claim against the Released Parties in respect of the
Transaction. The Assignor is relying on this Paragraph 5(k) in assigning the
Debentures for the consideration set forth herein, and would not engage in
the
transaction of which the assignment of the Debentures is part in the absence
of
this Paragraph 5(k).
6.
Representations
and Warranties of the Assignor
(a)
Organization;
Authority
.
The
Assignor is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate, partnership or other applicable power and authority to enter into
and
to consummate the transactions contemplated by this Agreement and otherwise
to
carry out its obligations thereunder, and the execution, delivery and
performance by the Assignor of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or similar action on the
part of the Assignor. This Agreement, when executed and delivered by the
Assignor, will constitute a valid and legally binding obligation of the
Assignor, enforceable against the Assignor in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors' rights generally, (b) as limited by laws relating
to
the availability of specific performance, injunctive relief, or other equitable
remedies, or (c) to the extent the indemnification provisions contained herein
may be limited by federal or state securities laws.
(b)
Ownership
.
Subject
to the terms of the Escrow Agreement of even date herewith governing their
deposit into escrow, Assignor owns and is conveying to Assignee all of its
rights, title and interests to the assigned Debentures, free and clear of all
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind or description.
(c)
No
Consents, Approvals, Violations or Breaches
.
Neither
the execution and delivery of this Agreement by the Assignor, nor the
consummation by Assignor of the transactions contemplated hereby, will (i)
require any consent, approval, authorization or permit of, or filing,
registration or qualification with or prior notification to, any governmental
or
regulatory authority under any law of the United States, any state or any
political subdivision thereof applicable to Assignor, (ii) violate any statute,
law, ordinance, rule or regulation of the United States, any state or any
political subdivision thereof, or any judgment, order, writ, decree or
injunction applicable to Assignor or any of Assignor’s properties or assets, the
violation of which would have a material adverse effect upon Assignor, or (iii)
violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or any event which, with or without due notice or lapse
of
time, or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, any of the terms, conditions
or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Assignor is a party
or by which Assignor or any of Assignor’s properties or assets may be bound
which would have a material adverse effect upon Assignor.
7.
Governing
Law; Submission to Jurisdiction
.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW JERSEY, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. EACH PARTY
AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING IN ANY WAY
TO
THIS AGREEMENT SHALL BE BROUGHT IN A U.S. FEDERAL OR STATE COURT OF COMPETENT
JURISDICTION SITTING IN HUDSON COUNTY, IN THE STATE OF NEW JERSEY. EACH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF SUCH
COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN
INCONVENIENT FORUM OR A LACK OF PERSONAL JURISDICTION TO THE MAINTENANCE OF
ANY
ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION OR VENUE ON ACCOUNT OF THE
PLACE OF RESIDENCE OR DOMICILE OF ANY PARTY HERETO. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
8.
Amendments
.
No
provision hereof may be waived or modified other than by an instrument in
writing signed by the party against whom enforcement is sought.
9.
Severability
.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
10.
Consent
.
Pursuant to Section 9(g) of the Securities Purchase Agreement, the Company
consents to the assignment of the Debentures.
11.
Release
.
Upon
the execution of this Agreement by the Assignor, the Assignee, and the Company
and completion of the obligations contained in Paragraph 1 and 2 :
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a)
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any
and all commitments, rights and obligations to the Company by the
Assignor
set forth under the Transaction Documents shall be terminated, and
all
amounts due and payable by the Company to the Assignor under the
Transaction Documents shall be deemed to be paid in full and complete
satisfaction of all outstanding
obligations;
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b)
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the
Assignee, on behalf of itself and on behalf of its affiliates, and
its and
their respective officers, directors, partners, general partner,
limited
partners, shareholders, associates, employees, members, parents,
subsidiaries, affiliates, agents, predecessors, successors and assigns
(collectively, the "
Assignee
Affiliated Parties
"),
hereby releases and forever discharges the Assignor and their affiliates,
and their respective officers, directors, partners, general partner,
limited partners, shareholders, associates, employees, members, parents,
subsidiaries, affiliates, agents, predecessors, successors and assigns
(including, without limitation, Yorkville Advisors, LLC and its respective
officers, directors, partners, general partners, limited partners,
shareholders, associates, employees, members, parents, subsidiaries,
affiliates, agents, predecessors, successors and assigns) (collectively,
the "
Assignor
Affiliated Parties
"),
of and from any and all claims, complaints, demands, obligations,
causes
of action, choices in action and/or damages whatsoever, at law or
in
equity (collectively, "Claims") which such parties ever had or now
have
based on or arising out of events or circumstances occurring, or
actions
taken or failed to be taken, in each case, that are known or unknown
by an
Assignee or an Assignee Affiliated Party as of the date hereof, in
connection with the Debentures.
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c)
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each
of the Assignees, on its own behalf and on behalf of the Assignee
Affiliated Parties, covenants, to the maximum extent permitted by
law,
that neither it nor any Assignee Affiliated Party shall at any time
hereafter file, commence or maintain or authorize any third party
to file,
commence or maintain on its behalf, any suit, action or proceeding
before
any federal, state or local court, administrative body, agency, authority
or arbitral organization or other tribunal against any of the Assignor
Affiliated Parties with respect to any Claims released pursuant to
Paragraph 10(b).
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d)
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the
Company, on behalf of itself and on behalf of its affiliates, and
its and
their respective officers, directors, partners, general partner,
limited
partners, shareholders, associates, employees, members, parents,
subsidiaries, affiliates, agents, predecessors, successors and assigns,
and anyone claiming by or through any of the foregoing (collectively,
the
"
Company
Affiliated Parties
"),
hereby releases and forever discharges the Assignor and the Assignor
Affiliated Parties of and from any and all Claims which such parties
ever
had or now have based on or arising out of events or circumstances
occurring, or actions taken or failed to be taken, in each case,
that are
known or unknown by the Company or a Company Affiliated Party as
of the
date hereof, in connection with the Debentures
.
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e)
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the
Company, on its own behalf and on behalf of the Company Affiliated
Parties, covenants, to the maximum extent permitted by law, that
neither
it nor any Company Affiliated Party shall at any time hereafter file,
commence or maintain or authorize any third party to file, commence
or
maintain on its behalf, any suit, action or proceeding before any
federal,
state or local court, administrative body, agency, authority or arbitral
organization or other tribunal against the Assignor or the Assignor
Affiliated Parties with respect to any Claims released pursuant to
Paragraph 10 (d).
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f)
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the
Assignor, on behalf of itself and the Assignor Affiliated Parties,
hereby
releases and forever discharges the Assignee Parties, the Assignee
Affiliated Parties, the Company and the Company Affiliated Parties
of and
from any and all Claims, known or unknown, which such parties ever
had,
now have or may hereafter have based on or arising out of the
Debentures.
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g)
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the
Assignor, on its own behalf and on behalf of the Assignor Affiliated
Parties, covenants, to the maximum extent permitted by law, that
neither
it nor any Assignor Affiliated Party shall at any time hereafter
file,
commence or maintain or authorize any third party to file, commence
or
maintain on its behalf, any suit, action or proceeding before any
federal,
state or local court, administrative body, agency, authority or arbitral
organization or other tribunal against the Assignee Parties, the
Assignee
Affiliated Parties, the Company or the Company Affiliated Parties
with
respect to any Claims released pursuant to Paragraph
10(f).
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IN
WITNESS WHEREOF
,
the
parties hereto have executed this Agreement the day and year first above
written.
ASSIGNOR
MONTGOMERY
EQUITY PARTNERS, L.P.
By:
/s/
Mark
Angelo
Name:
Mark Angelo
Title:
Portfolio Manager of Yorkville Advisors, LLC, the
Investment
Manager of Montgomery Equity Partners, L.P.
ASSIGNEE
TRIUMPH
SMALL CAP FUND, INC.
By:____
/s/
Kenneth Orr
__________________________
Name:
Kenneth Orr
Title:
President
AGREED
AND ACKNOWLEDGED
IN
VERITAS MEDICAL DIAGNOSTICS, INC.
By:
/s/
Martin Thorp
Name:
Martin Thorp
Title:
Chief Financial Officer
SCHEDULE
I