Exhibit 10.1





 











Exhibit 10.1

 



ASSET PURCHASE AGREEMENT

 


This
ASSET PURCHASE AGREEMENT
(this “Agreement”), dated
December 14, 2017, is made by and between QuantRx Biomedical
Corporation, a Nevada corporation (“Seller”), and Preprogen
LLC, a Delaware limited liability company (“Buyer”). Buyer and Seller
are collectively referred to herein as the “Parties” and each
individually as a “Party”.

 


WHEREAS, the Parties desire that, at the
Closing (defined below) and subject to the terms and conditions set
forth in this Agreement, Seller shall sell, assign, transfer and
deliver to Buyer, and Buyer shall purchase and accept from Seller,
all of the Purchased Assets (defined below).

 


NOW, THEREFORE, in consideration of the
foregoing and the representations, warranties, covenants and
agreements herein contained, the Parties hereto agree as
follows:

 




SECTION
1.


DEFINITIONS AND TERMS.





 


1.1 Specific Definitions. As used
in this Agreement, the following terms have the following
meanings:

 


“Affiliate” means, with
respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with, such
Person. For purposes of this definition, “control”
(including, with correlative meaning, the terms
“controlling”, “controlled by” and
“under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person through the
ownership of such Person’s voting securities, by contract or
otherwise.

 


“Allocation” has the
meaning set forth in Section 3.4.

 


“Agreement” has the
meaning set forth in the preamble to this Agreement.

 


“Base Cash Amount” has the
meaning set forth in Section 2.3.

 


“Business” means the
collection and analysis of vaginal fluid and exfoliated vaginal
cells, including, but not limited to, fetal cellular material
and/or cancer cells utilizing, among other resources, the
proprietary PadKit technology of Seller, and the commercialization
of the foregoing.

 


“Business Day” means any
day other than a Saturday, a Sunday or a day on which banks in New
York City are authorized or obligated by Law or executive order to
close.

 


“Buyer” has the meaning
set forth in the preamble to this Agreement.

 


“Buyer Indemnified
Parties” has the meaning set forth in Section 7.1(a).

 


“Code” has the meaning set
forth in Section
3.4.

 


“Closing” has the meaning
set forth in Section
3.1.

 


“Closing Date” has the
meaning set forth in Section 3.1.

 


“Disagreement Notice” has
the meaning set forth in Section 7.3(f).

 


“Disputed Items” has the
meaning set forth in Section 4.2.

 


“Encumbrance” means any
mortgage, lien, pledge, security interest, charge, encumbrance,
claim, covenant, condition or restriction or any other adverse
claim, right or encumbrance of any kind or nature
whatsoever.

 


“Equity Amount” has the
meaning set forth in Section 2.3.

 


“Equity Consideration” has
the meaning set forth in Section 3.2(c).

 





 

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“Excluded Business” means
the development, manufacturing, marketing and sale of the
over-the-counter (“OTC”) miniform products
for the feminine hygiene markets and hemorrhoid treatment markets,
including, for the avoidance of doubt, the OTC Pad technologies,
including feminine and anal hygienic pad, and lateral flow
technology.

 


“Excluded Liabilities” has
the meaning set forth in Section 2.2.

 


“Final Revenue Statement”
has the meaning set forth in Section 4.2.

 


“Fundamental
Representations” means, collectively, Sections 5.1(a)
(Organization), 5.1(b) (Authorization), 5.1(c)(i) (No Conflicts),
and 5.1(k) (No Brokers).

 


“GAAP” means United States
generally accepted accounting principles as in effect from time to
time.

 


“Governmental Authority”
means any federal, state, local or foreign government or other
political subdivision thereof or any entity, body, regulatory or
administrative authority, agency, commission, court, tribunal or
judicial body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.

 


“Indemnified Party” has
the meaning set forth in Section 7.3(a).

 


“Indemnifying Party” has
the meaning set forth in Section 7.3(a).

 


“Independent Expert” has
the meaning set forth in Section 4.2.

 


“Intellectual Property”
means all rights in intellectual property throughout the world,
including:

 


(a)           all
domestic and foreign copyright interests in any original work of
authorship, whether registered or unregistered, including to all
copyright registrations or foreign equivalent, all applications for
registration or foreign equivalent, all moral rights, all
common-law rights, and all rights to register and obtain renewals
and extensions of copyright registrations, together with all other
copyright interests accruing by reason of international copyright
convention (“Copyrights”);

 


(b)           all
domestic and foreign patents (including certificates of invention
and other patent equivalents), provisional applications, patent
applications and patents issuing therefrom as well as any division,
continuation or continuation in part, reissue, extension,
reexamination, certification, revival or renewal of any patent, all
Inventions and subject matter related to such patents, in any and
all forms (“Patents”);

 


(c)           all
domestic and foreign trademarks, trade dress, service marks, trade
names, icons, logos, slogans, and any other indicia of source or
sponsorship of goods and services, designs and logotypes related to
the above, in any and all forms, all trademark registrations and
applications for registration related to such trademarks (including
intent to use applications), and all goodwill related to the
foregoing (“Trademarks”);

 


(d)           all
domain name registrations (“Domain
Names”);

 


(e)           any
formula, design, device or compilation, or other information which
is used or held for use by a business, which gives the holder
thereof an advantage or opportunity for advantage over competitors
which do not have or use the same, and which is not generally known
by the public. Trade Secrets can include, by way of example,
formulas, algorithms, market surveys, market research studies,
information contained on drawings and other documents, and
information relating to research, development or testing
(“Trade
Secrets”);

 


(f)         
novel devices, processes, compositions of matter, methods,
techniques, observations, discoveries, apparatuses, machines,
designs, expressions, theories and ideas, and inventions, whether
or not patentable, scientific, engineering, mechanical, electrical,
financial, marketing or practical knowledge or experience useful in
the operation of Seller or the Business (“Know How”);

 




 



 

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(g)       
(i) any and all computer programs and/or software programs
(including all source code, object code, firmware, programming
tools and/or documentation), (ii) databases and compilations,
including any and all data and collections of data, and (iii) all
content contained on Internet site(s) (“Software”);

 


(h)        
all documentation and media constituting, describing or relating to
the above, including memoranda, manuals, technical specifications
and other records wherever created throughout the world;
and

 


(i)         
the right to sue for past, present, or future infringement and to
collect and retain all damages and profits related to the
foregoing.

 


“IP Assignments” has the
meaning set forth in Section 3.2.

 


“Knowledge of Seller”
means the actual knowledge after reasonable due inquiry of Dr.
Shalom Hirschman and Michael Abrams.

 


“Law” or
“Laws”
means any law (both common and statutory law and civil and criminal
law), treaty, convention, rule, directive, legislation, ordinance,
regulatory code (including statutory instruments, guidance notes,
circulars, directives, decisions, rules and regulations) or similar
provision having the force of law or an order of any Governmental
Authority.

 


“License Agreement” has
the meaning set forth in Section 3.2(c).

 


“Losses” has the meaning
set forth in Section
7.1(a).

 


“Notice of Claim” has the
meaning set forth in Section 7.3(a).

 


“Other Transaction
Documents” means, collectively, the Preprogen
Operating Agreement, the IP Assignments, the Warrant and the
License Agreement.

 


“Owned IP” has the meaning
set forth in Section
5.1(g)(i)(A).

 


“Parties” has the meaning
set forth in the preamble to this Agreement.

 


“Person” means an
individual, a corporation, a limited liability company, a
partnership, an association, a trust or other entity or
organization, including any Governmental Authority.

 


“Preprogen Operating
Agreement” has the meaning set forth in Section 3.2(c).

 


“Proceeding” has the
meaning set forth in Section 7.3(a).

 


“Promissory Notes” has the
meaning set forth in Section 3.2(b).

 


“Promissory Notes Amount”
means $65,000, representing the aggregate outstanding principal
amount of the Promissory Notes.

 


“PTO” has the meaning set
forth in Section
5.1(g)(ii)(C).

 


“Purchased Assets” has the
meaning set forth in Section 2.1.

 


“Purchase Price” has the
meaning set forth in Section 3.4.

 


“Registered IP” has the
meaning set forth in Section
5.1(g)(i)(A).

 


 




 



 

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“Revenue” means the amount
of gross revenue recognized by Buyer following the Closing from the
sale of products that utilize, in whole or in part, or royalty
payments or licensing fees received by Buyer with respect to, (i)
the Patents included in the Owned IP acquired pursuant to this
Agreement that relate primarily to the Business, and/or (ii)
improvements to, or extensions of, such acquired Patents made by,
or issued to, Buyer following the Closing or any Patents developed
by Buyer following the Closing that relate, in whole or in part, to
such acquired Patents, in each case, calculated in accordance with
GAAP.

 


“Revenue Payment” has the
meaning set forth in Section 4.1.

 


“Revenue Statement” has
the meaning set forth in Section 4.1.

 


“Securities Act” has the
meaning set forth in Section 5.1(h).

 


“Seller” has the meaning
set forth in the preamble to this Agreement.

 


“Seller Disclosure
Schedule” has the meaning set forth in Section 5.1.

 


“Seller Indemnified
Parties” has the meaning set forth in Section 7.2(a).

 


“Warrant” has the meaning
set forth in Section
3.2.

 


“Warrant Shares” has the
meaning set forth in Section 5.1(h).

 


“Warrantholder” has the
meaning set forth in Section 2.3.

 


1.2 Other Definitional Provisions.
All references to Articles, Sections and Exhibits are references to
Articles, Sections and Exhibits of this Agreement unless otherwise
provided. Terms defined in the singular have a comparable meaning
when used in the plural, and vice versa. The use of the masculine,
feminine or neuter gender herein shall not limit any provision of
this Agreement. The words “include”,
“includes” and “including” shall be deemed
to be followed by the words “without limitation”
whether or not they are in fact followed by those words or words of
like import. The terms “dollars” and “$”
mean U.S. dollars. Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business Days
are specified. Whenever any action must be taken hereunder on or by
a day that is not a Business Day, then such action may be validly
taken on or by the next day that is a Business Day. The words
“hereof”, “hereto”, “hereby”,
“herein”, “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular section or article in which
such words appear. The phrase “the date of this
Agreement”, “date hereof” and terms of similar
import, unless the context otherwise requires, shall be deemed to
refer to the date set forth in the preamble of this Agreement. The
use of “or” is not intended to be exclusive unless
expressly indicated otherwise. References to any Law shall be
deemed to refer to such Law and the rules and regulations
promulgated thereunder, as in effect from time to time prior to the
Closing, and any successor to such Law. The exhibits and annexes to
this Agreement constitute a part of this Agreement and are
incorporated herein for all purposes.

 




SECTION
2.


PURCHASE AND SALE OF ASSETS.





 


2.1 Purchased
Assets. Seller shall
(and, effective as of the Closing, does hereby) sell, assign,
transfer and deliver to Buyer, and Buyer shall (and, effective as
of the Closing, does hereby) purchase and accept from Seller, at
the Closing, all legal and beneficial right, title and interest of
Seller in and to all of the Purchased Assets, in each case, free
and clear of any and all Encumbrances. “Purchased Assets” means,
collectively, all properties, rights, claims, assets, records,
Intellectual Property (including patents, know-how, trade secrets,
and diagnostic applications and data) of Seller related to the
Business. Further and not in limitation of the foregoing, Purchased
Assets shall include the properties, rights, claims, assets,
records and Intellectual Property set forth on Schedule A.

 


 




 



 

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2.2 Excluded Assets and
Liabilities.
Notwithstanding any provision in this Agreement to the contrary,
Buyer is not purchasing any properties, rights, claims or assets of
Seller other than the Purchased Assets and is not assuming any
liability or obligation of Seller or any of its Affiliates (or any
predecessor of Seller or any of its Affiliates, or any prior owner
of all or part of Seller’s or its Affiliates’
businesses or assets) of whatever nature, whether absolute,
accrued, contingent or otherwise, and whether presently in
existence or arising hereafter. All such liabilities and
obligations shall be retained by and remain obligations and
liabilities of Seller or its Affiliates, as applicable (all such
liabilities and obligations herein referred to as the
“Excluded
Liabilities”).

 


2.3 Transaction Consideration. The
aggregate consideration to be paid by Buyer in respect of the
transactions contemplated by this Agreement shall consist of (a)
one million dollars ($1,000,000) (the “Base Cash Amount”), which
shall be paid in the manner set forth in Section 3.2(a), (b) the
issuance by Buyer of the Equity Consideration, as such term is
defined in Section
3.2(c) below, which for purposes of this Agreement shall be
valued at five hundred thousand dollars ($500,000) (the
“Equity
Amount”), and (c) Seller’s right to receive the
Revenue Payments, if any, pursuant to Section 4. In addition, as part
of the overall consideration for the transactions contemplated
hereby, Seller shall issue the Warrant to Rashbi Capital Group,
LLC, a Delaware limited liability company (the “Warrantholder”), in
accordance with Section
3.2(g).

 




SECTION
3.


CLOSING.





 


3.1 Closing Date. The closing of
the transactions contemplated hereby (the “Closing”) shall take
place at the offices of Kramer Levin Naftalis & Frankel LLP,
1177 Avenue of the Americas, New York, NY 10036, at 10:00 a.m. on
the date hereof, simultaneously with the execution and delivery
hereof, unless another time, date or place is agreed to in writing
by the parties. The date on which the Closing occurs is referred to
herein as the “Closing Date”, and the
Closing will be deemed effective as of 12:01 a.m. Eastern Time on
the Closing Date.

 


3.2 Closing Transactions. At the
Closing, the following transactions shall be effected by the
Parties:

 


(a) Buyer shall pay, by
wire transfer of immediately available funds to the account(s)
designated in writing by Seller prior to the Closing, an amount
equal to the Base Cash Amount, less (i) the Promissory Notes
Amount, and (ii) the Portland Payoff Amount.

 


(b) Buyer shall pay to
the City of Portland (“Portland”) on behalf of
Seller and in accordance with the payment instructions set forth in
the payoff letter attached hereto as Exhibit 3.2(b) the aggregate
amount indicated on such payoff letter as required to be paid to
Portland on the Closing Date in order to fully discharge the
indebtedness owing to Portland (such amount, the
“Portland Payoff
Amount”).

 


(c) Each of the Parties
agrees that, effective concurrently with the payment by Buyer
pursuant to Section
3.2(a), (i) that certain Convertible Promissory Demand Note,
with an issuance date of May 8, 2017, issued by Seller to Buyer in
the principal sum of $25,000, (ii) that certain Convertible
Promissory Demand Note, with an issuance date of March 16, 2017,
issued by Seller to Buyer in the principal sum of $25,000 (iii)
that certain Convertible Promissory Demand Note, with an issuance
date of October 2, 2017, issued by Seller to Buyer in the principal
sum of $15,000 (such Convertible Promissory Demand Notes
collectively, the “Promissory Notes”) shall
be canceled and terminated, and any and all of the rights,
obligations, covenants, agreements, representations and warranties
contained therein (including any interest accrued thereon and all
other rights of the holder thereunder) shall be canceled and
terminated and of no further force and effect.

 


(d) Buyer shall issue
to Seller that number of membership interests of Buyer equal to 15%
of the issued and outstanding membership interests of Buyer on a
fully diluted basis as of the Closing Date (assuming the
conversion, exercise, or exchange for membership interests of all
convertible securities issued and outstanding prior to such
conversion, all outstanding warrants and options, and all other
convertible debt, notes, debentures, or any other securities which
are convertible, exercisable or exchangeable for membership
interests (“Convertible
Securities”), including for such purpose all
Convertible Securities which Buyer has agreed to issue prior to
such conversion (the “Equity Consideration”),
for an aggregate price equal to the Equity Amount in accordance
with this Agreement and that certain Amended and Restated Limited
Liability Company Agreement of Buyer in the form attached hereto as
Exhibit 3.2(d) (the
“Preprogen Operating
Agreement”).

 


 




 



 

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(e) Seller and the
other equity holders named in the Preprogen Operating Agreement
shall duly execute and deliver to each other the Preprogen
Operating Agreement.

 


(f) Seller shall duly
execute and deliver to Buyer each of the intellectual property
assignments attached hereto as Exhibit 3.2(f) (the
“IP
Assignments”).

 


(g) Seller shall duly
execute, deliver and issue to the Warrantholder, and the
Warrantholder shall duly execute and deliver to Seller, the warrant
in the form attached hereto as Exhibit 3.2(g) (the
“Warrant”).

 


(h) Buyer and Seller
shall duly execute and deliver to each other the license agreement
in the form attached hereto as Exhibit 3.2(h) (the
“License
Agreement”).

 


3.3 Sales
and Transfer Taxes. Seller shall bear solely all sales, use,
excise, and other transfer taxes and duties applicable to the
transfer of the Purchased Assets in connection with this Agreement
and the Other Transaction Documents. Any payment or reimbursement
under this Section
3.3 shall be made within ten (10) Business Days after any
such valid request for payment or reimbursement.

 


3.4 Purchase
Price
Allocation. The Base
Cash Amount and the Revenue Payments
to be made in accordance with Section
4, if any, (the
“Purchase
Price”) shall be allocated among the Purchased Assets
in the manner agreed upon by Seller and Buyer in good faith as
promptly as practicable following the Closing in the manner required by Section 1060 of the
Internal Revenue Code of 1986, as amended (the
“Code”)
(such resulting allocation, the “Allocation”).
Seller and Buyer agree that they will adopt and utilize the amounts
allocated to each of the Purchased Assets for all purposes,
including all tax returns filed by them and that they will not take
any position or action inconsistent therewith or on any such tax
return or in any legal or administrative proceeding or otherwise.
Each Party hereto agrees to prepare and timely file all applicable
Internal Revenue Service and applicable state tax forms relating to
the Allocation including IRS Form 8594, to reasonably cooperate
with the other Party in the preparation of such forms. Each Party
agrees that any Revenue Payments made in accordance with
Section
4 and any indemnification
payments made in accordance with Section 7
shall each be treated as adjustments
to the Purchase Price. The parties agree to treat the transaction
for U.S. federal, state and local income tax purposes (a) as a
taxable sale and purchase to the extent of the Base Cash Amount and
Revenue Payments, and (b) as a contribution of property to Buyer
under Section 721(a) of the Code to the extent of the Equity
Amount. No party hereto (nor any of such party’s Affiliates)
shall take any position inconsistent with the foregoing tax
characterizations.

 


3.5 Withholding. Buyer shall be
entitled to deduct and withhold from any amounts payable or
otherwise deliverable pursuant to this Agreement such amounts as
may be required to be deducted or withheld therefrom under any
provision of federal, state, local or non-U.S. Tax law or under any
applicable legal requirement and to request any necessary Tax
forms, including Form W-9 or the appropriate series of Form W-8, as
applicable, or any similar information. To the extent such amounts
are so deducted or withheld and properly remitted to the
appropriate Governmental Authority, such amounts shall be treated
for all purposes under this Agreement as having been paid to the
Person to whom such amounts would otherwise have been paid. Buyer
shall give Seller reasonable advance notice of its intention to
withhold and an opportunity to avoid such withholding consistent
with applicable Law.

 




SECTION
4.


REVENUE PAYMENTS.





 


4.1 Revenue Payment Calculation and
Payment.

 


(a) Calculation. In addition to the
payments contemplated by Section 3.2 and subject to the
conditions set forth in this Section 4, Seller shall be
eligible to receive additional payments (the “Revenue Payments”) based
upon Revenue, if any, in accordance with this Section 4. The amount of
Revenue Payments that Seller is entitled to receive hereunder, if
any, will be calculated as follows:

 


(i) 1.5% of aggregate
Revenue, until aggregate Revenue exceeds $100,000,000;


 


(ii)
thereafter, 1.75% of aggregate Revenue that exceeds $100,000,000,
until aggregate Revenue exceeds $200,000,000; and

 


(iii) thereafter,
2% of aggregate Revenue that exceeds $200,000,000.

 


 




 



 

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(b) Payment. As soon as
practicable, but in no event later than forty-five (45) calendar
days following the end of each calendar quarter following the
Closing Date, Buyer shall prepare and deliver (or shall cause to be
prepared and delivered) to Seller a statement, in reasonable
detail, of (i) the Revenue recognized during such calendar quarter,
if any, (ii) the aggregate Revenue recognized since the Closing and
(iii) the amount of the Revenue Payment (if any) earned in respect
of such quarter (each, a “Revenue Statement”). If
any Revenue is recognized during a calendar quarter following the
Closing, then no later than forty-five (45) calendar days
following the end of such calendar quarter, Buyer shall pay to
Seller, by wire transfer of immediately available funds to the bank
account(s) designated in writing by Seller, the Revenue Payment
earned during such calendar quarter (or the pro rata amount thereof
in the case of any partial calendar quarter period), as reflected
on the Revenue Statement for such calendar quarter.

 


4.2 Disputes. If Seller shall have
any disagreement with respect to any Revenue Statement or the
calculation of any Revenue Payment, Seller shall have the right to
dispute such Revenue Statement(s) and calculation of Revenue
Payment(s), no more than once per calendar year (and such dispute
shall be limited to the Revenue Statements and calculation of any
Revenue Payment delivered in such calendar year), by giving written
notice to Buyer. Any such notice from Seller shall specify, in
reasonable detail, such disagreement and the basis therefor. The
failure by Seller to notify Buyer of its disagreement within thirty
(30) calendar days following the end of each calendar year will
constitute Seller’s acceptance of the applicable Revenue
Statement(s), the calculation(s) of the Revenue recognized (if any)
set forth in such Revenue Statement(s), the calculation(s) of
aggregate Revenue recognized since the Closing as set forth in such
Revenue Statement(s) and the amount of the Revenue Payment(s) (if
any) earned in respect of the quarter(s) with respect to which such
Revenue Statement(s) relate, and the foregoing shall be deemed
final and binding on the Parties. Any item contained in a Revenue
Statement(s) for which Seller has not notified Buyer of a dispute
within such thirty (30) calendar day period shall be deemed final
and binding on the Parties. If Buyer and Seller are unable to
resolve any disagreement between them within thirty (30) calendar
days after Seller’s giving of notice of such disagreement, or
such longer period as Buyer and Seller may mutually agree, the
items in dispute (collectively, the “Disputed Items”) will
promptly be referred for determination and resolution to a
nationally-recognized accounting firm mutually agreed by Buyer and
Seller (the “Independent Expert”).
Buyer and Seller shall each make written submissions to the
Independent Expert promptly (and in any event within ten (10)
calendar days of the Independent Expert’s engagement), which
submissions shall contain such party’s computation of the
Disputed Items and information, arguments, and support for such
party’s position as such party may elect to offer. The
Independent Expert shall be instructed to, within thirty (30)
calendar days of the date on which a Disputed Item has been
referred to it for determination, (i) make a written determination
(such determination to include a worksheet setting forth all
material calculations used in arriving at such determination and to
be based solely on information provided to the Independent Expert
by Buyer and Seller) only as to each of the Disputed Items and
shall have no authority to review and make a determination with
respect to any item which has not been submitted by Seller and
Buyer for determination by the Independent Expert, and (ii) based
on the items not in dispute and on the Independent Expert’s
determination of the Disputed Items, calculate the applicable Final
Revenue Statement for the applicable calendar quarter(s) and the
Revenue Payment(s) earned (if any) during such calendar quarter(s),
which determination and calculation will be (x) in writing, (y)
promptly furnished to Seller and Buyer after the Disputed Items
have been referred to the Independent Expert (but in any event, to
the extent possible, within thirty (30) calendar days) and (z)
conclusive and binding upon each of the parties hereto and not
subject to appeal absent fraud or manifest error. In resolving any
Disputed Item, the Independent Expert may not assign a value to any
item greater than the highest value for such item claimed by either
party or less than the lowest value for such item claimed by either
party. Any applicable Revenue Statement, (A) as agreed upon by
Buyer and Seller following Seller’s delivery of a notice of
disagreement, or (B) as finally determined by the Independent
Expert pursuant to this Section 4.2, shall be referred
to herein as a “Final Revenue Statement”.
In connection with its determination of the Disputed Items, the
Independent Expert will be entitled to review the workpapers, trial
balances and similar materials and any books and records related
thereto. The fees and expenses of the Independent Expert will be
paid by Buyer and Seller in inverse proportion as they may prevail
(based on the disputed items as resolved by the Independent Expert
as compared to the disputed items proposed by Buyer and Seller) as
determined by the Independent Expert. If the amount of the Revenue
Payment earned with respect to any calendar quarter as set forth in
the Final Revenue Statement for such calendar quarter exceeds the
amount previously paid by Buyer with respect to such calendar
quarter in accordance with Section 4.1, Buyer shall pay
such excess to Seller within five (5) Business Days after the
determination of the Final Revenue Statement for such calendar
quarter in accordance with this Section 4.2.

 


 




 



 

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4.3 Post-Closing Operation of the
Purchased Assets. Subsequent to the Closing, Buyer shall
have sole discretion with regard to all matters relating to the
operation of the Purchased Assets, it being understood and agreed
that Buyer has no obligation to operate the Purchased Assets in
order to achieve any Revenue or Revenue Payment or to maximize the
amount of the Revenue Payments; provided, that Buyer shall
comply with the covenant of good faith and fair dealing implicit in
this Agreement. For the avoidance of doubt, it is understood and
agreed that (a) the contingent rights to receive any Revenue
Payments shall not be represented by any form of certificate or
other instrument, are not transferable without the prior written
consent of Buyer, and do not constitute an equity or ownership
interest in Buyer or any Affiliate thereof, (b) Seller shall not
have any rights as a securityholder of Buyer or any of its
Affiliates as a result of contingent right to receive any Revenue
Payments hereunder, (c) no interest is payable with respect to any
Revenue Payments, and (d) neither Buyer, nor any of its Affiliates
shall owe any fiduciary duty to Seller as though it were an equity
holder of Buyer or any of its Affiliates or otherwise as a result
of the contingent right to receive any Revenue Payments
hereunder.

 


4.4 Setoff Right. Any payment due
by Buyer to Seller pursuant to this Section 4 shall be permitted to
be set off against any payment owed by Seller under Section 7.1.

 





SECTION 5.


REPRESENTATIONS AND WARRANTIES.





 


5.1 Seller
Representations and Warranties. Subject to such exceptions
as are specifically set forth in the appropriate section or
subsection of the disclosure schedule delivered by Seller to Buyer
on the date hereof (the “Seller Disclosure
Schedule”) or in any other section or subsection of
the Seller Disclosure Schedule if and to the extent that the
relevance of such disclosure to such other section or subsection is
reasonably apparent on the face of such disclosure without
reference to the documents referenced therein, Seller hereby
represents and warrants to Buyer and the Warrantholder as
follows:

 


(a) Organization. Seller is a
corporation duly created and organized, and validly existing under
the laws of its jurisdiction of creation, and has full power and
authority to own or use the properties and assets that it purports
to own or use, and to sell, encumber, distribute, exchange or in
any other way dispose of such assets. Seller is legally qualified
to transact business, and, to its knowledge, there are no claims or
allegations by any Person contesting or questioning the authority
of Seller to conduct such business.

 


(b) Authorization. Seller has full
corporate power and authority to execute, deliver and perform this
Agreement and each Other Transaction Document to which it is a
party and to consummate the transactions contemplated by this
Agreement and the Other Transaction Documents. The execution,
delivery and performance by Seller of this Agreement and the Other
Transaction Documents to which it is a party, and the consummation
of the transactions contemplated by this Agreement and the Other
Transaction Documents, have been duly authorized by all necessary
corporate action of Seller. This Agreement and each Other
Transaction Document to which Seller is a party have been duly
executed and delivered by Seller and constitute or will constitute
a valid and legally binding obligation of Seller enforceable
against Seller in accordance with its terms, except that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting
creditors’ rights generally, (ii) equitable principles which
may limit the availability of certain equitable remedies (such as
specific performance) in certain instances, and (iii) public policy
considerations with respect to the enforceability of rights of
indemnification.

 


(c) No Conflicts. The execution,
delivery and performance by Seller of this Agreement and the Other
Transaction Documents to it is a party and the consummation of the
transactions contemplated by this Agreement and the Other
Transaction Documents do not and will not (i) conflict with or
result in a violation of any provision of the certificates of
incorporation, bylaws or other organizational documents of Seller,
(ii) conflict with or result in a violation of any provision of, or
constitute (with or without the giving of notice or the passage of
time or both) a default under, any bond, debenture, note, mortgage,
indenture, lease, agreement, or other instrument or obligation to
which it is a party or by which Seller or any of its properties may
be bound, (iii) result in the creation or imposition of any
Encumbrance upon any of the Purchased Assets, or (iv) violate any
Law binding upon Seller.

 


 




 



 

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(d) No Consents. No consent,
approval, order or authorization of, or declaration, filing or
registration with, any Governmental Authority or any other Person
is required to be obtained or made by Seller in connection with the
execution, delivery or performance by Seller of this Agreement or
any Other Transaction Document to which it is a party or the
consummation of the transactions contemplated by this Agreement and
the Other Transaction Documents. The representations and warranties
of Seller contained in this Section 5.1, insofar as such
representations and warranties pertain to compliance by Seller with
the requirements of applicable state or federal securities Laws
with respect to the issuance of the Warrant and Warrant Shares, are
based on the representations and warranties of Buyer contained in
Section
5.2(d).

 


(e) No Impairments. There is (i) no
order, action, suit, demand or claim in writing or legal,
administrative, arbitration or other alternative dispute resolution
proceeding, hearing, inquiry or investigation before or by any
Governmental Authority or arbitrator or official now pending or, to
the knowledge of Seller, threatened, to which Seller is or may be a
party or to which the business, property or assets of Seller is or
may be subject, (ii) no statute, rule, regulation or order that has
been enacted, adopted or issued by any Governmental Authority or,
to the knowledge of Seller, that has been proposed by any
Governmental Authority and (iii) no injunction, restraining order
or order of any nature issued by a Governmental Authority of
competent jurisdiction to which Seller is or, or to the knowledge
of Seller, may be subject, that, in the case of clauses (i), (ii)
and (iii) above, is reasonably expected to (A) prevent or result in
the suspension of the issuance of the Warrant or Warrant Shares or
(B) otherwise affect adversely the ability of Seller to consummate
the transactions contemplated by this Agreement and the Other
Transaction Documents.

 


(f) Title to Purchased
Assets; Sufficiency. Seller has
good, valid, marketable and exclusive title in and to each of the
Purchased Assets owned by Seller free and clear of all
Encumbrances. Upon consummation of the transactions contemplated by
this Agreement, Buyer will have acquired good, valid, marketable
and exclusive title in and to each of the Purchased Assets, free
and clear of all Encumbrances. The Purchased Assets include all of the
Intellectual Property that is used or held for use in the
Business.

 


(g) Intellectual
Property.

 


(i) General.

 


(A)  Schedule 5.1(g)(i)(A) lists (i)
all issued Patents included in the Purchased Assets, and all
pending applications for Patents included in the Purchased Assets;
(ii) all registered Trademarks included in the Purchased Assets,
and all pending applications for Trademarks included in the
Purchased Assets; (iii) all registered Copyrights included in the
Purchased Assets, and all pending applications for Copyrights
included in the Purchased Assets; and (iv) all Domain Names
included in the Purchased Assets; in each case of (i), (ii), (iii)
and (iv) above, owned by or purported to be owned by Seller
(“Registered
IP”; the Registered IP, together with all other
Intellectual Property, including Know How, Trade Secrets and
Software, owned by or purported to be owned by Seller that is
included in the Purchased Assets, collectively, the
“Owned
IP”). Schedule 5.1(g)(i)(A) also
lists all material unregistered or common law Trademarks included
in the Purchased Assets. For the Registered IP, Schedule 5.1(g)(i)(A) lists, as
applicable, the Patent title, Trademark or Domain Name, the Patent
number registration number or application number, date of
application, registration or issuance, record owner, original
applicant, registrar or country, and current status or next action
due.

 


(B)  The Owned IP
does not include, and Seller does not own or purport to own, any
Software.

 


(C)  There are no
licenses, sublicenses, agreements (development, distribution or
otherwise) or other instruments involving the Owned IP, and Seller
is not a party to any license, sublicense, agreement (development,
distribution or otherwise) or other instrument involving any
Intellectual Property of any Person.

 




 



 

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(D)  All officers,
employees and contractors of Seller who have authored, invented or
otherwise developed Owned IP, have executed an agreement under
which all rights, title and ownership in and to such Intellectual
Property have been assigned to Seller.

 


(E)  Seller has
not infringed upon, misappropriated or otherwise violated, and no
Owned IP has or will, infringe upon, misappropriate or otherwise
violate, any Intellectual Property or other proprietary right of
any Person. There are no pending, nor to the Knowledge of Seller,
threatened claims, proceedings or actions contesting or challenging
the Owned IP. To the Knowledge of Seller, no Person, including any
current or former employee or contractor of Seller, is infringing
upon, misappropriating, or otherwise violating Seller’s
rights to the Owned IP.

 


(F)  The Owned IP
is free and clear of any and all Liens.

 


(ii) Patents.

 


(A)  All of the
issued Patents and pending applications for Patents that are Owned
IP are currently in compliance with all legal requirements for
maintaining pendency of patents (including payment of filing,
examination, and maintenance fees), and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90)
days after the Closing Date.

 


(B)  No Patent
that is Owned IP has been or is now involved in any infringement,
interference, reissue or reexamination Proceeding and, to the
Knowledge of Seller, no such action is threatened with respect to
any such Patents.

 


(C)  Seller, the
inventors and the attorneys of record, have each complied with the
United States Patent and Trademark Office (“PTO”) and any other
country’s or jurisdiction’s office duty of candor and
good faith in dealing, including the duty to disclose to the PTO
(or such other office) all information known to be material to the
patentability of each of the Patents that is Owned IP. To the
Knowledge of Seller, Seller has all necessary documentation
underlying the specifications or claims in the Patents included in
the Purchased Assets and all claims thereunder.

 


(D)  All
assignments from all inventors and any subsequent assignee to, as
the case may be, Seller, or to a predecessor-in-interest to Seller,
have been executed and either recorded with the PTO (or other
applicable registration authority), or submitted to the PTO (or
such authorities) for the Patents that are Owned IP, such that the
records of the PTO (and the applicable authority) reflect that
Seller is the current owner of record of each such Patent. Copies
of all Patents, recorded assignments and all maintenance fee
records for each such Patent (including each application) have been
made available to Buyer.

 


(E)  No product
manufactured or sold by Seller, nor any Patent of Seller is alleged
to infringe any patent or product of any Person, and to the
Knowledge of Seller, no Patent of, or product manufactured or sold
by, Seller is infringed.

 


(F)  All products
sold under the Patents included in the Purchased Assets have been
marked with the proper patent notice.

 


(iii) Trademarks.

 


(A)  All
registered Trademarks included in the Purchased Assets, and pending
applications for Trademarks included in the Purchased Assets with
the PTO or any other country’s trademark office, of Seller is
currently in compliance with all legal requirements (including the
filing of affidavits of use and renewal applications as
applicable), and are not subject to any maintenance fees or taxes
or actions falling due within ninety (90) days after the Closing
Date.

 




 



 

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(B)  No Trademark
of Seller included in the Purchased Assets has been or is now
involved in any opposition, infringement, dilution, unfair
competition or cancellation Proceeding and, to the Knowledge of
Seller, no such action is threatened with respect to any of the
Trademarks included in the Purchased Assets of Seller.

 


(C)  No Trademark
included in the Purchased Assets of Seller is alleged to infringe
Trademark of any Person, and to the Knowledge of Seller, no
Trademark of Seller included in the Purchased Assets is
infringed.

 


(D)  All products
displaying a Trademark of Seller included in the Purchased Assets
which has been registered with the PTO, bear the proper federal
registration notice.

 


(iv) Copyrights.
Seller does not own or purport to own any registered Copyrights or
pending applications for Copyrights.

 


(v) Domain Names.

 


(A)  All
registered Domain Names of Seller included in the Purchased Assets
are currently in compliance with all legal requirements and are not
subject to any maintenance fees or taxes or action falling due
within ninety (90) days after the Closing Date.

 


(B)  No Domain
Name of Seller included in the Purchased Assets has been or is now
the subject of any dispute resolution or infringement Proceeding
and, to the Knowledge of Seller, no such action is threatened with
respect to any Domain Name of Seller included in the Purchased
Assets.

 


(C)  No Domain
Name of Seller included in the Purchased Assets is alleged to
infringe the Trademark or the Domain Name of any other Person, and
to the Knowledge of Seller, no Domain Name of Seller included in
the Purchased Assets is infringed.

 


(D)  Seller has
taken commercially reasonable steps to protect the proprietary
nature of the Owned IP and to maintain in confidence all Trade
Secrets and confidential Intellectual Property and information
owned or used by Seller. To the Knowledge of Seller, no Trade
Secret or other confidential Owned IP has been disclosed or
authorized to be disclosed to any Person, including any employee,
agent, contractor, or other entity, other than pursuant to a
non-disclosure agreement or other conditional obligation that
protects Seller’s proprietary interests in and to such Trade
Secrets or confidential Intellectual Property or information. All
such agreements, if any, have been made available to
Buyer.

 


(h) Warrant.
Without limiting the other representations and warranties contained
in this Section
5.1: (i) Seller has all requisite corporate power and
authority to issue and sell the Warrant and, upon exercise of the
Warrant, to issue the securities issuable upon exercise of the
Warrant (the “Warrant Shares”); and
(ii) the issuance and sale of the Warrant, the reservation of the
Warrant Shares issuable upon exercise of the Warrant and, upon
exercise of the Warrant, the issuance of the Warrant Shares, have
been duly exercised by all necessary corporate action on the part
of Seller. Assuming the accuracy of the representations and
warranties of Warrantholder contained in the Warrant, the offer,
sale and issuance of the Warrant and the Warrant Shares will be
exempt from the registration requirements of the Securities Act of
1933, as amended (the “Securities Act”) and any
other applicable Laws. Schedule 5.1(h) sets forth
any (x) shares of capital stock or
other equity, ownership or voting interests of the Seller, (y)
securities or instruments convertible into or exchangeable for
shares of capital stock or other equity, ownership or voting
interests of the Seller, and (z) equity-equivalents, earnings,
profits or revenue-based or equity-based rights of the Seller, in
each case of (x) through (y) above, issued and outstanding as of
the date hereof. Except as set forth on Schedule 5.1(h), the Seller
has not issued or agreed to issue any (x) shares of capital stock
or other equity, ownership or voting interests, (y) securities or
instruments convertible into or exchangeable for shares of capital
stock or other equity, ownership or voting interests, or (z)
equity-equivalents, earnings, profits or revenue-based or
equity-based rights.

 


 




 



 

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(i) Equity
Consideration. The Equity
Consideration is being acquired for Seller’s own investment
portfolio and account (and not
on behalf of, and without the participation of, any other Person)
with the intent of holding such Equity Consideration for investment
and without the intent of participating, directly or indirectly, in
a distribution of any portion of the Equity Consideration and not
with a view to, or for resale in connection with, any distribution
of any portion of the Equity Consideration, nor is Seller aware of
the existence of any distribution of Buyer’s securities.
Seller acknowledges that Equity Consideration was not offered to
Seller by means of publicly disseminated advertisements of sales
literature, nor is Seller aware of any offers made to other Persons
by such means. Seller is an “accredited investor” (as
defined in Rule 501 promulgated under the Securities Act) and is
knowledgeable and experienced in finance, securities and
investments and has had sufficient experience analyzing and
investing in securities similar
to the Equity Consideration so as to be capable of evaluating the
merits and risks of an investment in the Equity Consideration.
Seller is able to bear the economic risk of an investment in the
Equity Consideration. Seller has had an opportunity to discuss
Buyer’s business, management, financial affairs and the terms and conditions
of the issuance of the Equity Consideration with Buyer. Seller
understands that no portion of the Equity Consideration will have
been registered pursuant to the Securities Act or any applicable
state securities laws, that the Equity Consideration will be
characterized as “restricted
securities” under federal securities laws, and that under
such laws and applicable regulations no portion of the Equity
Consideration can be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom. In
this connection, Seller represents that it is familiar with Rule
144 promulgated under the Securities Act, as currently in effect,
and understands the resale limitations imposed thereby and by the
Securities Act. Seller understands that no public market now exists
for the Equity Consideration, and that Seller has made no assurances that a public market
will ever exist for the Equity Consideration. A legend indicating
that Equity Consideration has not been registered under applicable
federal and state securities laws and referring to the restrictions on
transferability and sale of Equity Consideration pursuant to this
Agreement, the Preprogen Operating Agreement or otherwise may be
placed on any certificate(s) or other document delivered to Seller
or any substitute therefor and any transfer agent of Buyer may be
instructed to require compliance therewith. Seller understands that
the Equity Consideration acquired by it shall, upon issuance by
Buyer, without any further action on the part of Buyer or such
Person, be subject to the terms of Preprogen Operating Agreement,
including restrictions on transfer of the Equity Consideration
contained therein.

 


(j) Tax.
Seller represents that none of the Purchased Assets are
“section 197(f)(9) intangible” as defined in section
1.197-2(h) of the Treasury Regulations promulgated under the
Code.

 


(k) No
Brokers. Seller has not paid or
become obligated to pay any fee or commission to any broker, finder
or intermediary in connection with the transactions contemplated by
this Agreement and the Other Transaction Documents for which Buyer
shall have any liability.

 


(l) No Commercialization. Seller
has not in any way commercialized or engaged in any business
activities with third parties with respect to the Purchased Assets that relate to the
Business other than the internal development of the Owned IP that
relates primarily to the Business.

 


5.2 Buyer Representations
and Warranties. Buyer hereby
represents and warrants to Seller on the date hereof as
follows:

 


(a) Organization. Buyer is a
limited liability company duly created and organized, and validly
existing under the laws of its jurisdiction of creation, and has
full power and authority to own or use the properties and assets
that it purports to own or use, and to sell, encumber, distribute,
exchange or in any other way dispose of such assets. Buyer is
legally qualified to transact business, and, to its knowledge,
there are no claims or allegations by any person or entity
contesting or questioning the authority of Buyer to conduct such
business.

 


 




 



 

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(b) Authorization. Buyer has full
limited liability company power and authority to execute, deliver
and perform this Agreement and each Other Transaction Document to
which it is a party and to consummate the transactions contemplated
by this Agreement and the Other Transaction Documents. The
execution, delivery and performance by Buyer of this Agreement and
the Other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated by this Agreement and
the Other Transaction Documents, have been duly authorized by all
necessary limited liability company action of Buyer. This Agreement
and each Other Transaction Document to which Buyer is a party have
been or will be duly executed and delivered by Buyer, and
constitute or will constitute a valid and legally binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors’ rights generally, (ii)
equitable principles which may limit the availability of certain
equitable remedies (such as specific performance) in certain
instances, and (iii) public policy considerations with respect to
the enforceability of rights of indemnification.

 


(c) No Impairments. There are no
orders, actions, suits, demands or claims in writing or legal,
administrative, arbitration or other alternative dispute resolution
proceedings, hearings, inquiries or investigations pending against
Buyer or, to Buyer’s knowledge, threatened, which are
reasonably likely to call into question the validity of this
Agreement, any Other Transaction Document, any portion of the
Equity Consideration, or any action taken or to be taken pursuant
hereto or thereto.

 


(d) Equity
Consideration. Without limiting the other
representations and warranties contained in this Section 5.2: (i) Buyer has all
requisite limited liability company power and authority to issue
and sell the Equity Consideration; (ii) the issuance and sale of
Equity Consideration has been duly authorized by all necessary
limited liability company action on the part of Buyer; and (iii)
assuming the accuracy of the representations and warranties of
Seller contained in Section 5.1(i), the offer, sale
and issuance of the Equity Consideration will be exempt from the
registration requirements of the Securities Act and any other
applicable Laws. Buyer has been formed for the purposes of entering
into the transactions contemplated by this Agreement and, except as
set forth on Schedule
5.2(d), Buyer has no material assets or
liabilities.

 


(e) No
Brokers. Buyer has not
paid or become obligated to pay any fee or commission to any
broker, finder or intermediary in connection with the transactions
contemplated by this Agreement and the Other Transaction Documents
for which Seller shall have liability.

 


5.3 No Other
Representations.

 


(a) Except
as set forth in Section 5.2
or in the Preprogen Operating
Agreement, and other than in the case of fraud or willful
misconduct and subject to the terms of this Agreement and the
Preprogen Operating Agreement, the Equity Consideration is provided
“as-is” without warranty of any kind, express or
implied, and Seller acknowledges that neither Buyer nor any other
Person has made any representation or warranty, expressed or
implied, as to Buyer, the Equity Consideration, the accuracy or
completeness of any information regarding Buyer, its business,
properties, assets or operations furnished or made available to
Seller and its representatives, or any other matter related to the
transactions contemplated herein and that Seller is relying only on
the representations and warranties set forth in Section 5.2
and in the Preprogen Operating
Agreement.

 


(b) Except
as set forth in Section 5.1
or in any Other Transaction Document,
and other than in the case of fraud or willful misconduct and
subject to the terms of this Agreement and the Other Transaction
Documents, the Purchased Assets and the Warrant are provided
“as-is” without warranty of any kind, express or
implied, and Buyer acknowledges that neither Seller nor any other
Person has made any representation or warranty, expressed or
implied, as to Seller, the Warrant, the Warrant Shares, the
accuracy or completeness of any information regarding Seller, its
business, properties, assets or operations furnished or made
available to Buyer and its representatives, or any other matter
related to the transactions contemplated herein and Buyer is
relying only on the representations and warranties set forth
in Section 5.1
and in the Other Transaction
Documents.

 


 




 



 

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SECTION
6.


COVENANTS.





 


6.1 Further Assurances. From time
to time after the Closing, without further consideration, Seller
and Buyer will execute and deliver such documents and take such
additional action as Buyer may reasonably request in order to more
effectively consummate or evidence the sale and purchase of the
Purchased Assets and to more effectively vest in Buyer good and
marketable title to such ownership interest or to more effectively
consummate or evidence the consummation of the transactions
contemplated hereby and the Other Transaction Documents. Without
limiting the foregoing, in the event that any Purchased Assets or
any other properties, rights, claims, assets, records, Intellectual
Property (including patents, know-how, trade secrets, and
diagnostic applications and data) related to or necessary to pursue
the Business are held by Affiliates of Seller (including QX Labs,
Inc.), then from time to time after the Closing, without further
consideration, Seller will execute and deliver such documents and
take such additional actions as Buyer may reasonably request in
order to transfer to Buyer (or evidence the transfer to Buyer of,
or vest good and marketable title in Buyer to the ownership of)
such Purchased Assets and other properties, rights, claims, assets,
records and Intellectual Property.

 


6.2 Use of Trade Names and
Trademarks.

 


(a) From
and after the Closing, Seller shall not, and Seller shall cause its
Affiliates, successors, assigns not to, use any of the trade names
and trademarks that are included in the Purchased Assets.

 


(b) As
soon as reasonably practicable (and, in any event, prior to the end
of the first month after the Closing), Seller shall, and Seller
shall cause its Affiliates
successors, and assigns to, cease use of any materials, including
signage, labels, packing materials, forms, business cards,
letterhead, and paper or electronic advertising and marketing
materials, in each case which include any of the trade names and
trademarks that are included in the Purchased Assets (or any terms
confusingly similar thereto).

 


6.3 Funding for Manufacturer.
Promptly after the Closing, Buyer shall use commercially reasonable
efforts to enter into a manufacturing agreement, with a
manufacturer reasonably acceptable to Seller, for the development
of the initial manufacturing protocols and production processes for
the ultimate manufacture of the miniform pads necessary for the
respective products to be marketed and sold by Buyer, on the one
hand, and Seller, on the other hand, as applicable. It is
anticipated that the aggregate fees, costs and expenses to be
incurred to purchase the necessary equipment, materials and tools
relating thereto will be approximately $1,000,000. Buyer and Seller
shall each be responsible for fifty percent (50%) of such fees,
costs and expenses incurred in connection with such manufacturing
agreement until the aggregate amount of such fees, costs and
expenses equals $800,000 (such fees, costs and expenses, the
“Shared Fees, Costs
and Expenses”), and Buyer shall be responsible for any
such fees, costs and expenses in excess thereof. Seller shall
reasonably cooperate and assist Buyer in pursuing, negotiating and
performing such manufacturing agreement. The Parties shall
cooperate in good faith to more formally document the actions and
agreements contemplated by this Section 6.3. Following
completion of the development of such initial manufacturing
protocols and production processes, the Parties shall discuss in
good faith the entry into separate agreements with such
manufacturer between (i) such manufacturer and Buyer and (ii) such
manufacture and Seller. In connection with the foregoing, at
Closing, Seller shall deposit $400,000 in a separate escrow account
to be established, and following the Closing, Buyer and Seller will
provide appropriate joint instructions to the escrow agent from
time to time to release funds from escrow to cover the Shared Fees,
Costs and Expenses described above for which Seller is responsible.
In the event funds remain in escrow as of the first anniversary of
the Closing Date, provided Seller has not breached any of its
obligations under this Section 6.3, then Buyer and
Seller shall joinly instruct the escrow agent to release any
remaining funds in escrow to Seller, it being understood and
agreed, however, that such release of funds to Seller shall not
relieve Seller of its obligations under this Section
6.3.

 


6.4 Restrictive
Covenants.

 


(a) Certain
Acknowledgements. Buyer and
Seller acknowledge that in order to assure Buyer that it will
retain the value, including the goodwill, of the Business as a
“going concern,” Buyer has required that the covenants
and agreements contained in this Section 6.4
be delivered in this Agreement, and
Seller, as a condition to Buyer’s willingness to enter into
the transactions contemplated by this Agreement, has agreed to do
so. Each of Buyer and Seller acknowledges and agrees that it is
fair, reasonable and necessary, for the protection of the value of
the Business and the operations, prestige, reputation and goodwill
of the Business and of the purchase thereof by Buyer hereunder,
that Buyer and Seller make the agreements and covenants contained
in this Agreement.

 


 




 



 

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(b) Non-Competition.
For a period (the “Restricted
Period”) commencing on
the Closing Date and ending on the date that is five (5) years
following the Closing Date, Seller shall not, directly or
indirectly compete with the Business or as an individual
proprietor, partner, shareholder, member, equityholder, officer,
manager, director, employee, consultant, independent contractor,
joint venturer, investor or lender, participate in any business or
enterprise engaged anywhere in the United States in the provision
of any services that are the same as, substantially similar to or
competitive with the services that the Business was designing,
developing, selling or providing, or actively planning to sell or
provide, as of the Closing Date (each, a “Competing
Business”);
provided,
however, nothing contained
herein shall prohibit the Seller from developing, operating or
managing the Excluded Business. The foregoing restrictions shall
not be construed to prohibit the ownership by Seller of not more
than one percent (1%) of any class of equity securities of any
Person having a class of equity securities registered pursuant to
the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder that are publicly owned and
regularly traded on any national securities exchange or
over-the-counter market, if such ownership represents a personal
investment and Seller does not, directly or indirectly, in any way,
manage or exercise control of any such Person, guarantee any of its
financial obligations or otherwise take part in its business, other
than exercising Seller’s rights as a holder of such equity
securities.

 


(c) Non-Disparagement.
Seller agrees that it shall not: (i) disparage, defame or slander
the Business or Buyer, its Affiliates or any of their employees or
take any action that is intended to detrimentally affect the
reputation, image, relationships or public view of the Business or
Buyer, its Affiliates or any of their employees; or (ii) attempt to
do any of the foregoing, or assist, entice, induce or encourage any
other Person to do or attempt to do any activity that, were it done
by Seller, would violate any provision of this Section 6.4(c).

 


(d) Non-Hire and Non-Solicitation of
Employees and Consultants. Seller agrees that it shall not,
during the Restricted Period, directly or indirectly, solicit Dr.
Shalom Hirschman, hire Dr.
Shalom Hirschman or in any
manner encourage Dr. Shalom
Hirschman to terminate his relationship with the Business.
The Parties agree and acknowledge that nothing contained herein
shall prevent Dr. Shalom Hirschman from serving as a director of
Seller, provided he does not serve as an executive or employee of
Seller or its Affiliates.

 


(e) Other
Documents. The provisions of
this Section 6.4
are in addition to, and not in
limitation of, Seller’s obligations and agreements set forth
in the other agreements contemplated by this
Agreement.

 


6.5 Registration
Rights.

 


(a) Piggyback Registration Rights.
If at any time following the date of this Agreement Seller proposes
for any reason to register any shares of its common stock under the
Securities Act of 1933, as amended (the “Securities Act”) (other
than pursuant to a registration statement on Form S-4 or Form S-8
(or a similar or successor form)) with respect to an offering of
common stock by Seller for its own account or for the account of
any of its stockholders, it shall at each such time promptly give
written notice to the Warrantholder of its intention to do so (but
in no event less than thirty (30) days before the anticipated
filing date) and include in such registration all Warrant Shares
with respect to which Seller has received written requests for
inclusion therein within fifteen (15) days after receipt of
Seller’s notice.  Such notice shall offer the
Warrantholder the opportunity to register such number of Warrant
Shares as the Warrantholder may request.

 


(b) Demand Registration Rights. If,
at any time when it is not eligible to use a Form S-3 registration
statement, the Company receives a request from the Warrantholder
that the Company file a Form S-1 registration statement with
respect to the Warrant Shares, then the Company shall as soon as
practicable, and in any event within sixty (60) days after the date
such request is given by the Warrantholder, file a Form S-1
registration statement under the Securities Act covering all
Warrant Shares that the Warrantholder requested to be registered.
If, at any time when it is eligible to use a Form S-3 registration
statement, the Company receives a request from the Warrantholder
that the Company file a Form S-3 registration statement with
respect to the Warrant Shares, then the Company shall as soon as
practicable, and in any event within forty-five (45) days after the
date such request is given by the Warrantholder, file a Form S-3
registration statement under the Securities Act covering all
Warrant Shares requested to be included in such registration by the
Warrantholder.

 


 




 



 

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(c) Assignment. Notwithstanding
anything to the contrary contained herein, the Warrantholder shall
be permitted to transfer and assign its rights under this Section
6.5 to any Person to which all or a portion of the Warrant or the
Warrant Shares are transferred, and any Person to which the rights
under this Section 6.5 are transferred and assigned shall be
permitted to subsequently transfer and assign its rights under this
Section 6.5 to any Person to which all or a portion of the Warrant
or the Warrant Shares are subsequently transferred.

 




SECTION
7.

INDEMNIFICATION.





 


7.1 Indemnification by Seller. Seller will
indemnify and hold harmless Buyer, its Affiliates (including the
Warrantholder), and each of their respective directors, officers,
managers, partners, members, stockholders, equity holders,
employees, agents and representatives (collectively, the
“Buyer
Indemnified
Parties”) for, and will pay to the Buyer Indemnified
Parties the amount of, any loss, liability, claim, damage or
expense (including costs of investigation and defense and
reasonable attorneys’ fees) or diminution of value
(collectively, “Losses”), whether or not
involving a third-party claim, arising out of or relating
to:

 


(a) any
breach of any representation or
warranty made by Seller in this Agreement or any Other Transaction
Document;

 


(b) any
breach by Seller of any covenant or
obligation of Seller in this Agreement or any Other Transaction
Document;

 


(c) any
Excluded Liability;

 


(d) without
limiting Section
5.1(f), Section
5.1(g) or any other provision of this Agreement, any
Encumbrance claimed by Platinum Long
Term Growth VII LLC or any of its Affiliates or any of their
respective successors or assigns on
any of the Purchased Assets; or

 


(e) without limiting
Section 5.1(f),
Section 5.1(g) or
any other provision of this Agreement, that certain assignment
dated as of February 8, 2006, by William H. Fleming in favor of
“QuantRx Medical Corporation, a corporation organized under
the laws of the State or Oregon” with respect to U.S. Patent
No. 6,811,549 and the failure of such assignment to properly name
the Seller as the assignee;

 


Notwithstanding
the foregoing, no claim for indemnification under Section 7.1(a) may be made by
Buyer on behalf of the Buyer Indemnified Parties, and no payment in
respect of such a claim for indemnification shall be required from
Seller for any such claim until the aggregate amount of Losses
which the Buyer Indemnified Parties have incurred on a cumulative
basis exceeds fifty thousand thousand United States dollars
($50,000) (the “Deductible”), after which
the Buyer Indemnified Parties shall be indemnified for all such
Losses in excess of the Deductible; provided that the Deductible
shall not apply, and the Buyer Indemnified Parties shall be
entitled to indemnification without regard to satisfaction of the
Deductible, in the event of fraud or with respect to, claims for
breach of any Fundamental Representation. For the avoidance of
doubt, the Deductible shall apply only once in respect of all
claims for indemnification under Section 7.1(a) (except, in each
case, in the event of fraud or with respect to claims for breach of
any Fundamental Representation) by the Buyer Indemnified
Parties.

 


7.2 Indemnification by Buyer. Buyer
will indemnify and hold harmless Seller, its Affiliates, and each
of their respective directors, officers, managers, partners,
members, stockholders, equity holders, employees, agents and
representatives (collectively, the “Seller Indemnified
Parties”) for, and will pay to the Seller Indemnified
Parties the amount of, any Losses, whether or not involving a
third-party claim, arising out of or relating to:

 


(a) any
breach of any representation or warranty made by Buyer in this
Agreement or any Other Transaction Document; or

 


(b) any
breach by Buyer of any covenant or obligation of Buyer in this
Agreement or any Other Transaction Document.

 


 




 



 

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7.3 Procedure for
Indemnification.

 


(a) The party seeking
indemnification (the “Indemnified Party”) shall
give prompt notice (“Notice of Claim”) to the
party against whom indemnification is sought (the
“Indemnifying
Party”) of the assertion of any claim, or the
commencement of any suit, action or proceeding in which
indemnification may be sought under this Section 7 (a
“Proceeding”),
providing in reasonable detail the facts giving rise to the claim,
the amount sought, the basis for the claim and supporting
documentation and stating the basis for the indemnification sought
(in each case taking into account the information then available to
such Indemnified Party).

 


(b) Promptly after
receipt by the Indemnified Party of notice of the commencement of
any Proceeding against it, such Indemnified Party will give written
notice to the Indemnifying Party of the commencement of such claim,
together with all available information regarding the same, but the
failure to notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability that it may have to any
Indemnified Party, except to the extent that the Indemnifying Party
demonstrates that the defense of such action is prejudiced by the
Indemnifying Party’s failure to give such
notice.

 


(c) If any Proceeding
is brought against an Indemnified Party and it gives notice to the
Indemnifying Party of the commencement of such Proceeding, the
Indemnifying Party will be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (A) the
Indemnifying Party is also a party to such Proceeding and legal
counsel for the Indemnified Party determines in good faith that a
bona fide conflict of interest would result in the case of joint
representation, or (B) the Indemnifying Party fails to provide
reasonable assurance to the Indemnified Party of its financial
capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), to assume the defense of such
Proceeding with counsel reasonably satisfactory to the Indemnified
Party and, after notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such
Proceeding, the Indemnifying Party will not, as long as it
diligently conducts such defense, be liable to the Indemnified
Party under this Section
7 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case
subsequently incurred by the Indemnified Party in connection with
the defense of such Proceeding, other than reasonable costs of
investigation. If the Indemnifying Party assumes the defense of a
Proceeding, (x) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within
the scope of and subject to indemnification; (y) no compromise or
settlement of such claims may be effected by the Indemnifying Party
without the Indemnified Party’s consent, such consent not to
be unreasonably withheld, conditioned or delayed; and (z) the
Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its
consent, such consent not to be unreasonably withheld, conditioned
or delayed. If notice is given to an Indemnifying Party of the
commencement of any Proceeding and the Indemnifying Party does not,
within ten (10) Business Days after the Indemnified Party’s
notice is given, give notice to the Indemnified Party of its
election to assume the defense of such Proceeding, the Indemnifying
Party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the Indemnified
Party.

 


(d) Notwithstanding the
foregoing, if an Indemnified Party determines in good faith that
there is a reasonable probability that a Proceeding may adversely
affect it other than as a result of monetary damages for which it
would be entitled to indemnification under this Agreement, the
Indemnified Party may, by notice to the Indemnifying Party, assume
the exclusive right to defend, compromise, or settle such
Proceeding, but the Indemnifying Party will not be bound by any
determination of a Proceeding so defended or any compromise or
settlement effected without its consent (which may not be
unreasonably withheld, conditioned or delayed).

 


(e) A claim for
indemnification for any matter not involving a third-party claim
may be asserted by notice to the party from whom indemnification is
sought.

 


(f) If the Indemnifying
Party disputes all or any portion of the Notice of Claim, the
Indemnifying Party must provide written notice (a
“Disagreement
Notice”) of its objection (detailing the objection) to
the Indemnified Party within ten (10) Business Days after the
receipt of the notice from the Indemnified Party. Failure by the
Indemnifying Party to give such Disagreement Notice shall be deemed
acknowledgment and agreement by the Indemnifying Party that the
Indemnifying Party is liable for that portion of the claim as to
which no objection is made. If a Disagreement Notice is provided by
the Indemnifying Party to the Indemnified Party within the time
required, for a ten (10) day period thereafter the Indemnified
Party and the Indemnifying Party shall attempt in good faith to
resolve any differences that they may have with respect to any
matter specified in the Disagreement Notice. If, at the end of such
ten (10) day period, the Indemnified Party and the Indemnifying
Party have failed to reach written agreement with respect to all of
such matters, then any party shall be entitled to pursue any remedy
at law or in equity.

 


 




 



 

-17-








 






7.4 Survival. All of the
representations and warranties of each Party contained in this
Agreement shall survive the Closing hereunder indefinitely. The
covenants of each Party under this Agreement shall survive the
Closing indefinitely unless a shorter period of performance is
specified with respect to such covenant. If an indemnification
claim is asserted by an Indemnified Party before the expiration of
the survival or limitations period, such asserted claim shall
survive until the final adjudication and resolution of such
claim.

 




SECTION
8.

GENERAL.





 


8.1 Expenses. Except as otherwise
provided in this Agreement, each Party will bear its respective
expenses and legal fees incurred with respect to this Agreement,
and the transactions contemplated hereby.

 


8.2 Confidentiality; Public
Announcement.

 


(a) Seller shall not,
and Seller shall cause its Affiliates not to, use, disclose or
furnish to any third party any information of or regarding Buyer or
the Purchased Assets, except for information which: (i) is or
becomes available in the public domain (other than as a result of a
disclosure by Seller or its Affiliates in breach of this
Agreement); (ii) is required to be disclosed by applicable Law
(provided that
Seller provide Buyer prior notice of such required disclosure and a
reasonable opportunity to take steps to maintain the
confidentiality thereof); or (iii) Buyer expressly authorizes, in
writing, Seller or other party to disclose such information prior
to such disclosure.

 


(b) Each Party shall
not disclose or furnish to any third party (other than their
directors, legal counsel and accountants who are bound by
reasonable confidentiality obligations) the terms and conditions of
this Agreement. Notwithstanding the foregoing, (i) each Party may
disclose the terms and conditions of this Agreement to the extent
such disclosure is reasonably necessary to comply with applicable
law (including any securities law or regulation or the rules of a
securities exchange) and with judicial process, it being understood
and agreed that Seller shall provide Buyer a reasonable opportunity
to review and comment on any public announcement regarding this
Agreement or the transactions contemplated hereby, (ii) each Party
may disclose the terms and conditions of this Agreement to the
extent necessary in connection with the enforcement of this
Agreement, and (iii) Buyer may disclose the terms and conditions of
this Agreement to an actual or potential assignee or other
purchaser, investment banker, investor or lender, and their
representatives.

 


8.3 Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. All disputes arising out
of this Agreement or the transactions contemplated hereby shall be
governed by and construed in accordance with the laws of the State
of Delaware without regard to its rules of conflict of laws. The
Parties hereby irrevocably and unconditionally consent to submit to
the sole and exclusive jurisdiction and venue of the federal and
state courts of the State of Delaware for any litigation between
the Parties arising out of or relating to this Agreement;
provided, that any
judgment or order obtained from such court(s) may be enforced in
any other applicable jurisdiction. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT
OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT
OF ANY DISPUTES OR LITIGATION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN TORT OR CONTRACT OR OTHERWISE.

 


8.4 Assignment; Binding Effect; No
Third-Party Rights. No Party may assign this Agreement in
whole or in part without the prior written consent of the other
Party; provided,
however, that Buyer may
assign this Agreement without the written consent of Seller to (a)
its financing sources (solely as security for obligations arising
in connection with such financing), provided that Buyer continues to be
bound by its obligations hereunder, and (b) an Affiliate or Buyer
or an entity succeeding to substantially all the assets and
business of Buyer by merger, purchase or otherwise, provided that such assignee expressly
agrees to be bound by Buyer’s obligations hereunder. Except
as otherwise expressly provided herein, this Agreement and its
provisions are for the sole benefit of the parties to this
Agreement and their successors and permitted assigns and shall not
give any other Person any legal or equitable right, remedy or
claim; provided
however, that, for the avoidance of
doubt, the Warrantholder is an intended third party beneficiary of
Section 5.1 (Seller
Representations and Warranties), Section 6.5 (Registration
Rights) and Section
7 (Indemnification) with the right and power to enforce the
provisions thereof.

 


 




 



 

-18-








 






8.5 Notices. Any notice, request,
demand or other communication required or permitted hereunder shall
be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted, if transmitted
by facsimile, electronic or digital transmission method; the day
after it is sent if sent for next day delivery to a domestic
address by a recognized overnight delivery service. All notices to
a Party will be sent to the addresses set forth below such
Party’s signature hereto or to such other address or person
or entity as such Party may designate by notice to each other Party
hereunder.

 


8.6 Specific Performance. The
Parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
Accordingly, each of the Parties shall be entitled to specific
performance of the terms hereof, including an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being
in addition to any other remedy to which such party is entitled at
law or in equity. Each of the parties hereby further waives (i) any
defense in any action for specific performance that a remedy at law
would be adequate and (ii) any requirement under any Law to post
security as a prerequisite to obtaining equitable
relief.

 


8.7 Miscellaneous. This Agreement
may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement,
including the schedules and exhibits referred to herein and the
other writings specifically identified herein or contemplated
hereby, is complete, reflects the entire agreement of the Parties
with respect to its subject matter, and supersedes all previous
written or oral negotiations, commitments and writings. This
Agreement may not be amended or modified, nor may compliance with
any condition or covenant set forth herein be waived, except by a
writing duly and validly executed by each Party hereto, or in the
case of a waiver, the Party waiving compliance. Whenever possible,
each provision of this Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law, but if
any provision of this Agreement shall be deemed prohibited or
invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and
such prohibition or invalidity shall not invalidate the remainder
of such provision or the other provisions of this Agreement. A
facsimile or electronic (e.g., PDF) signature shall be considered
original for all purposes hereunder.

 



[Remainder
of Page Intentionally Left Blank]

 




 



 

-19-








 






IN WITNESS
WHEREOF, the Parties hereto
have caused this Agreement to be executed as of the date set forth
above by their duly authorized representatives.

 


 

 


	


BUYER 



PREPROGEN LLC


 

 



By: /s/ Mayer
Goldberger



Name: Mayer
Goldberger



Title: Founder


 


Address
for Notice


 



4 Lemberg Court



Suite 304



Monroe NY 10950



Attn: E. Goldberge



rEmail:eli@egoldco.com


 


	

 

 



SELLER 



QUANTRX BIOMEDICAL CORPORATION


 

 



By: /s/ Shalom Z.
Hirschman



Name: Dr. Shalom Z.
Hirschman  



Title: Chief Executive
Officer


 


Address
for Notice


 



QuantRx Biomedical Corporation



171 Sherwood Lane



Raynham, MA 02767



Attention: Michael Abrams



Tel No.: (212) 980-2235



Email Address: mabrams@burnhamhill.com


 


	
 


	
 







 

 





[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]



 

-20-








 







SCHEDULE A



PURCHASED ASSETS

 



See attached

 


 

 


 

 


 

 





 

-21-








 







EXHIBIT 3.2(B)



PAYOFF LETTER

 



See attached.

 


 

 

 

 





 

-22-








 







EXHIBIT 3.2(D)



PREPOGEN OPERATING AGREEMENT

 



See attached.

 

 

 

 


 





 

-23-








 







EXHIBIT 3.2(F)



IP ASSIGNMENTS

 



See attached.


 


 


 

 


 





 

-24-








 







EXHIBIT 3.2(G)



WARRANT

 



See attached.

 

 

 

 


 





 

-25-








 







EXHIBIT 3.2(H)



LICENSE AGREEMENT

 



See attached.

 


 


 


 

 





 

-26-