ex101102007.htm


    Exhibit
      10.1

     

     

    


      


       

      ASSET
        PURCHASE AGREEMENT

       

      between:

       

      REAGENTS
        APPLICATIONS, INC.,

      a
        Delaware corporation;

       

      And

       

      CLINIQA
        CORPORATION

      a
        California corporation

       

      Dated
        as
        of October 8, 2007

       


      
        
                

                    
      
      

                         
    

           

        

        
           

          
            

          

        

        
           

        

      


      ASSET
        PURCHASE AGREEMENT

       

      THIS
        ASSET PURCHASE AGREEMENT (hereinafter, along with all Exhibits hereto,
        this “Agreement”) is being entered into as of the close of business on October
        8, 2007, by and between REAGENTS APPLICATIONS, INC. (“Seller”)
        a Delaware corporation located at 8225 Mercury Court, San Diego, CA 92121
        and
CLINIQA CORPORATION (“Purchaser”) a California corporation
        located at 774 Twin Oaks Valley Rd. San Marcos, CA 92069 for the assets of
        Reagents Applications, Inc., a wholly owned subsidiary of
        Hemagen Diagnostics, Inc., a Delaware Corporation located at 9033 Red Branch
        Road, Columbia, MD 21045.  Seller and Purchaser are referred to
        collectively in this Agreement as the “Parties.”

       

      RECITAL

       

      The
        Parties wish to provide for the purchase by Purchaser of certain assets from
        Seller on the terms and subject to the conditions and other provisions set
        forth
        in this Agreement.

       

      AGREEMENT

       

      The
        Parties, intending to be legally bound, agree as follows:

       

      
        	
                1.

              	
                SALE
                  AND PURCHASE OF SPECIFIED ASSETS; RELATED
                  MATTERS.

              


      

       

      1.1.           Sale
        and Purchase of Specified Assets.  On the terms and subject
        to the conditions and other provisions set forth in this Agreement, at the
        Closing Seller will sell and transfer to Purchaser, and Purchaser will purchase
        and receive from Seller, all of the following, as they exist at the Closing
        Date
        (the “Specified Assets”):

       

      (a)           all
        of Seller’s rights and interests in products that are set forth in
Exhibit A (the “Specified Products”), which includes but
        is not limited to any 510k application or 510k approval for any Specified
        Products; with the exception that Hemagen shall continue to share the rights
        and
        interest in Raichem formulations and/or 510K clearances for any Raichem
        formulations that are or will be used only in Hemagen’s
        Analyst® Consumable Products.

       

      (b)           all
        of Seller’s rights and interests in, and the documentary records reflecting, the
        proprietary formulas, recipes and manufacturing procedures for the Specified
        Products set forth in Exhibit B (the “Specified
        Know-How”); with the exception that Hemagen shall continue to share the rights
        and interest in Raichem formulations and/or 510K clearances for any Raichem
        formulations that are or will be used only in Hemagen’s
        Analyst® Consumable Products

       

      (c)           all
        of Seller’s rights and interests in certain contracts and purchase orders set
        forth in Exhibit C (the “Specified
        Contracts”);

       

      (d)           Seller’s
        customers for the Specified Products and other customers of Seller that are
        set
        forth in Exhibit D (the “Specified Customers”) and
        Seller’s business goodwill;

       

      (e)           all
        items of laboratory equipment owned or leased by Seller set forth on
Exhibit E (the “Specified Laboratory
        Equipment”);

       


      
        
                

                    
      
      

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      (f)           the
        laboratory supplies relating to the Specified Products and the Specified
        Contracts set forth on Exhibit F (the “Specified
        Laboratory Supplies”).

       

      (g)           $100,000
        worth of inventory as further described in the Inventory Purchase Agreement
        on
Exhibit L;

       

      (h)           all
        proprietary documentation, trade secrets and marketing rights including,
        but not
        limited to, trademarks, tradenames, copyrights, CE marks, FDA approvals,
        and any
        licenses for trade owned by Seller.  This includes any pending
        regulatory filings as well as the Raichem name; with the exception that Hemagen
        shall continue to share the rights and interest in Raichem formulations and/or
        510K clearances for any Raichem formulations that are or will be used
only in Hemagen’s Analyst® Consumable
        Products;

       

      (i)           With
        respect to the Edwards Freeze Dryer Lyomax 170 (the “Dryer”) Purchaser shall
        provide Seller with two Lypholization runs for Seller’s Analyst
        Controls.  Purchaser shall provide all control materials to be used to
        fill vials; and Seller shall provide bottles, caps, stoppers and
        labels.  Seller shall provide Purchaser with specifications for the
        product and Seller shall pre-approve material required prior to acceptance
        of
        lot.  It is anticipated that each run shall consist of approximately
        5,000 vials of Level I control, and 5,000 vials of Level II
        control.  In addition, Purchaser agrees to remove the Dryer from the
        premises by May 31, 2008 or such earlier date that the Dryer is removed from
        the
        building, and to fix and repair the wall and any other damage caused by such
        removal to the landlords satisfaction.

       

      1.2.           Excluded
        Assets.  Notwithstanding anything to the contrary contained
        in this Agreement, Seller will not be required to sell or transfer to Purchaser,
        and the Specified Assets will not be deemed to include any right or interest
        in
        any of Seller’s assets not expressly set forth in Section 1.1 above.  For clarification purposes, and
        without limitation, the following assets of Seller and/or Hemagen Inc. are
        expressly excluded from the sale:

       

      (a)           any
        of Seller’s cash, cash equivalents, accounts receivables, all equipment and
        inventory related to Hemagen’s Analyst business, the large conference room
        table, all inventory with the exclusion of $100,00 included above in
        1.1(g).

       

      (b)           Hemagen
        shall continue to share the rights and interest in Raichem formulations and/or
        510K clearances for any Raichem formulations that are or will be used
only in Hemagen’s Analyst® Consumable
        Products.

       

      1.3.           Purchase
        Price.  Purchaser will make the following payments to Seller,
        which in the

       

      aggregate,
        constitutes the purchase price of the Specified Assets (“the Purchase
        Price”):

       

      (a)           On
        the Closing Date, Purchaser will pay to Seller (without deduction or setoff
        of
        any nature) the sum of three hundred and sixty thousand U.S. dollars
        ($360,000.00);

       

      (b)           Purchaser
        will pay to Seller (without deduction or setoff of any nature) a total of
        eight
        hundred and forty thousand U.S. dollars ($840,000.00) (hereinafter, along with
        the interest due on such payments, the “Cash Remainder Payments”) by means of
        monthly payments of principal of seventeen thousand five hundred U.S. dollars
        ($17,500.00), plus accrued interest at the rate of eight percent (8%) per
        year,
        each upon the following schedule in accordance with

       


      
        
                

                    
      
      

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      terms
        of
        a promissory note issued to Seller (the “Promissory Note”) as set forth in
Exhibit G, and dated the Closing Date:

       

      1)           the
        first payment shall be made not later than the ninetieth (90th) day
        afterthe
        Closing Date;

       

      Once
        the
        Closing Date is ascertained, Seller shall provide Purchaser with a schedule
        reflecting the actual dates on which the Cash Remainder Payments are to be
        made;
provided, however, any failure by Seller to provide such schedule
        shall in no manner alter, waive, modify, suspend or otherwise change Purchaser’s
        obligation to make any Cash Remainder Payment.  Purchaser shall pay
        interest on the outstanding balance of the Cash Remainder at the annual rate
        of
        eight percent (8%), which shall begin to accrue on the Closing
        Date.  Each of the Cash Remainder payments shall also include a
        payment of interest at the eight percent (8%) annual rate for the outstanding
        balance of the Cash Remainder for the period prior to each payment.

       

      (c)           Any
        payment due by Purchaser under this Agreement and the Promissory Note, including
        but not limited to this Section 1.3, shall be by
        wire transfer of immediately available funds pursuant to standing wire
        instructions provided by Seller, which Seller may amend upon
        notice.

       

      1.4.           Purchaser’s
        Failure To Make Any Payment Due.  If Purchaser fails to make
        any payment due by Purchaser to Seller pursuant to this Agreement, the
        Promissory Note and the Inventory Purchase Agreement (a “Delinquent Amount”),
        within ten (10) days, Seller shall provide Purchaser of the default specifying
        the total due to cure the default and invoices or other support for the amount
        being claimed and shall provide the Purchaser with twenty (20) consecutive
        days
        from receipt of the written demand to cure the default.  The
        Delinquent Amount shall accrue interest each day on said amount(s) at the
        higher
        of (i) sixteen per cent (16%) per annum (“Delinquent Interest”) or (ii) the
        maximum legal amount of interest that may be charged.  If any
        Delinquent Amount and/or any Delinquent Interest is outstanding more than
        thirty
        (30) days, Seller may immediately accelerate the date for any Cash Remainder
        Payments pursuant to the Promissory Note and Purchaser shall make such payments
        within two Business Days of such notice.

       

      1.5.           Personal
        Guarantee.  Each payment due by Purchaser to Seller pursuant
        to this Agreement and the Promissory Note shall be personally guaranteed
        in
        writing by Purchaser’s Chief Executive Officer, Granger Haugh and his spouse,
        Marjorie Haugh (the “Personal Guarantee”).  The executed Personal
        Guarantee shall be set forth as Exhibit
        H to this Agreement.

       

      1.6.           Security
        Interest.  This Agreement shall be secured by the property
        set forth in the Security Agreement that is attached hereto as
Exhibit I.  The Security Agreement shall be
        executed by Purchaser and delivered to Seller on or before the Closing
        Date.  Seller may file a financing statement pursuant to the
        California Uniform Commercial Code to perfect such security
        interest.

       

      1.7.           Allocation
        of the Purchase Price.  The purchase price set forth in
        Section 1.3 shall be allocated in the manner set
        forth in Exhibit J.  Each of the Parties
        agrees to report this

       


      
        
                

                    
      
      

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      transaction
        for tax purposes in accordance with this allocation of purchase
        price.  The Parties agree that the allocation is reasonable and is
        intended to comply with Internal Revenue Code Section 1060 and the rules
        and
        regulations thereunder.

       

      1.8.           Taxes.  Purchaser
        will bear and pay, and will reimburse Seller for, any sales taxes, property
        taxes, use taxes, transfer taxes, documentary charges, recording fees, filing
        fees or similar taxes, charges, fees or expenses that may become payable
        in
        connection with the sale of the Specified Assets or which are assessed on
        the
        Specified Assets for any period on and after the Closing Date.

       

      1.9.           Bulk
        Sales Law.  Purchaser waives compliance by Seller with any
        applicable bulk sales law, and Seller agrees to indemnify Purchaser against
        any
        liability incurred by Purchaser thereunder by reason of such non-compliance
        by
        Seller.

       

      1.10.        Seller’s
        Audit Rights.  Not more than once each quarter, Seller shall
        have the right to audit Purchaser’s books, records and accounts with respect to
        any payment due, alleged by Seller to be due, or paid pursuant to this Agreement
        and the Promissory Note.

       

      1.11.        Specified
        Employees.  The Parties agree that Purchaser may solicit for
        employment or other contractual work relationships (“Employment”) certain
        employees of Seller who are involved in the production of Specified Products
        and
        the implementation of the Specified Contracts (the “Specified Employees”), a
        List of whom is set forth on Exhibit
        K.  Purchaser acknowledges and agrees that:

       

      (a)           Purchaser
        has not relied on any representation or statements by Seller as to the
        suitability of any Specified Employee for Employment with
        Purchaser;

       

      (b)           Purchaser
        is solely responsible for conducting its own due diligence as to each Specified
        Employee to whom Purchaser may or does make an offer of Employment;

       

      (c)           Purchaser
        is solely responsible for determining whether it is necessary or desirable,
        or
        unnecessary or undesirable, as the case may be, for Purchaser to offer
        Employment to, or to continue with any Employment relationship that may be
        established with any Specified Employee, in order for Purchaser to incorporate
        the Specified Assets into Purchaser’s business;

       

      (d)           Purchaser’s
        obligations under this Agreement, including but not limited to the payment
        obligations set forth in Section 1.3, are not
        dependent in any manner upon: i) any Specified Employee accepting any Employment
        with Purchaser; or ii) if any Specified Employee accepts Employment, the
        continuation of Employment with Purchaser or the Specified employee’s work
        performance.

       

      1.12.        Closing.  The
        closing of the purchase and sale of the Specified Assets (the “Closing”) will
        take place at the offices of Seller located at 8225 Mercury Court, San Diego,
        CA
        92121, at a time and on a date to be designated by Seller, which will be
        at
        least one business day but not more than three business days after the
        satisfaction or waiver of the last condition to be satisfied or waived of
        the
        conditions set forth in Sections 6 and 7 (other than
        those conditions that by their nature
        are to be satisfied at the Closing).  For purposes of this Agreement,
“Closing Date” means the date on which the Closing actually takes
        place.

       


      
        
                

                    
      
      

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      2.           REPRESENTATIONS
        AND WARRANTIES OF SELLER.

       

      2.1.           Title
        to Assets.  As of the Closing Date, except as otherwise
        described in this Agreement, Seller will have good and valid title to all
        of the
        personal property that constitutes the Specified Assets free and clear of
        any
        liens or encumbrances, except for (i) any lien for current taxes not yet
        due and
        payable; (ii) any lien or encumbrances referred to in the Specified Contracts;
        and (iii) minor liens and encumbrances that have arisen in the ordinary course
        of business and that do not materially detract from the value of the Specified
        Assets subject thereto.

       

      2.2.           Specified
        Products.  Seller has not knowingly granted any Person a
        license under any of the Specified Products Seller has received no written
        claim
        of infringement of any intellectual property rights of any person arising
        out of
        Seller’s development, manufacture, use, sale, or offer for sale of the Specified
        Products.  Seller has supplied to Purchaser true and correct copies of
        the 510k applications and approvals for certain Specified Products.

       

      2.3.           Specified
        Contracts.  Seller has made available to Purchaser true and
        correct copies of each Specified Contracts identified in Exhibit
        C.  Seller has received no notice that Seller is in
        material breach of any such executed contract, and, to Seller’s knowledge, no
        other party to any such contract is in material breach of such
        contract.  Seller expressly makes no representation or warranty as to:
        (i) the ability of Purchaser to take an assignment of any of the Specified
        Contracts; or (ii) the ability or willingness of any party to a Specified
        Contract to establish or thereafter to continue a business relationship with
        Purchaser.

       

      2.4.           Regulatory
        Matters.  Seller has received no written notice that any
        recalls, field notifications or seizures have been ordered or, to Seller’s
        knowledge, threatened by any governmental body with respect to any of the
        Specified Products.  Seller has not received a warning letter or other
        similar written notice from the U.S. Food and Drug Administration (FDA)
        regarding the Specified Products or the manufacturing facilities used to
        manufacture the Specified Products.  Seller is in substantial
        compliance with the laws applicable to the development, manufacture, labeling,
        testing and inspection of the Specified Products and the operation of
        manufacturing facilities used to manufacture the Specified Products, and
        with
        all applicable regulations, policies and procedures promulgated by the
        FDA.

       

      2.5.           Legal
        Proceedings.  There is no lawsuit or other legal proceeding
        pending or, to Seller’s knowledge, being threatened against Seller as of the
        date of this Agreement that involves the Specified Assets and which would
        reasonably be expected to result in a judgment having a material adverse
        effect
        on the value of the Specified Assets taken as a whole.

       

      2.6.           No
        Broker or Finder Used.  Seller has not employed any broker,
        finder or investment banker in connection with the sale of the Specified
        Assets
        to Purchaser, and has not agreed to the payment of any fee or commission
        to any
        person in connection with the sale of the Specified Assets to
        Purchaser.

       

      2.7.           Financial
        Statements.  Seller’s financial statements, including the
        balance sheet, delivered by Seller to Purchaser during the Pre-Closing Period
        are true and correct copies thereof and fairly present in all material respects
        the financial position of Seller as of such dates and for the periods delineated
        in such financial statements.

       


      
        
                

                    
      
      

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      2.8.           Authority;
        Binding Nature of Agreement.  Seller has all necessary
        corporate power and authority to execute and deliver this Agreement and to
        perform its obligations under this Agreement; and the execution, delivery
        and
        performance by Seller of this Agreement have been duly authorized by all
        necessary action on the part of Seller and its board of
        directors.  Upon execution, this Agreement will constitute a valid and
        binding obligation of Seller, enforceable against Seller in accordance with
        its
        terms, subject to (i) laws of general application relating to bankruptcy,
        insolvency and the relief of debtors and (ii) rules of law governing specific
        performance, injunctive relief and other equitable remedies.

       

      2.9.           No
        Implied Representations or Warranties.  Purchaser hereby
        acknowledges and agrees that Seller is not making any representation or warranty
        whatsoever, express or implied, except for those representations or warranties
        of Seller that are expressly set forth in this Agreement.  Subject to
        the Seller’s express warranties and representations in this Agreement: (a) the
        Specified Assets are being sold by Seller and purchased by Purchaser on an
“as
        is, where is” basis and in their then present condition, and Purchaser shall
        rely solely upon its own examination thereof; and (b) Seller and/or none
        of
        Seller’s officers, directors, employees or representatives has made any
        representation, express or implied, or any warranty with respect to any
        Specified Asset including but not limited to: (ii) the merchantability,
        suitability or fitness for a particular use; (ii) the absence of any defect,
        whether latent or patent; (iii) its condition, value or quality; (iv)
        Purchaser’s ability to utilize or incorporate into Purchaser’s business any
        Specified Asset; or (v) the ability or likelihood of any Specified Asset
        to
        generate any sales, income, revenue or profit for Purchaser.

       

      2.10.                      Access
        to Hemagen Accounting System.  For a period of time following
        the effective date, Purchaser will be given limited access to the Hemagen
        accounting software system in order to complete the transition of accounting
        and
        processing of transactions into the accounting system maintained by
        Purchaser.  This would include, but not be limited to, Bills of
        Materials, Routers, inventory item maintenance files, etc.

       

      Access
        to
        Electronic Documents.  Purchaser will be provided, wherever possible,
        electronic files in support of all controlled documents as they relate to
        any
        Products being acquired under this agreement.  This includes, but is
        not limited to, IMS documents, manufacturing specifications and Certificates
        of
        Analysis and any other document necessary for Purchaser to continue producing
        and selling Products without interruption.

       

      2.11.                      Taxes.  The
        Seller has timely filed all Tax Returns that it was required to file pertaining
        to the Specified Assets.  All such Tax Returns pertaining to the
        Specified Assets were correct and complete in all respects.  All Taxes
        owed by the Seller (whether or not shown or required to be shown on any Tax
        Return) have been paid.  The Seller is not the beneficiary of any
        extension of time within which to file any Tax Return.  No claim has
        ever been made by an authority in a jurisdiction where the Seller does not
        file
        Tax Returns that it is or may be subject to taxation by that
        jurisdiction.  There are no Encumbrances on any of the assets of the
        Seller that arose in connection with any failure (or alleged failure) to
        pay any
        Tax.

       

      The
        Seller has withheld and paid all Taxes required to have been withheld and
        paid
        in connection with any amounts paid or owing to any employee, independent
        contractor, creditor, stockholder, or
        other
        third party, and all Forms W-2 and 1099 required with respect thereto have
        been
        properly completed and timely filed.

       


      
        
                

                    
      
      

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      (i)           The
        Seller has not waived any statute of limitations in respect of Taxes or agreed
        to any extension of time with respect to a Tax assessment or
        deficiency.

       

      (ii)           The
        Seller is not a party to any Tax allocation or sharing agreement.

       

      (iii)           The
        Seller has not distributed stock of another Person, or has had its stock
        distributed by another Person, in a transaction that was purported or intended
        to be governed in whole or in part by Code Section 355 or 361.

       

      For
        purposes of this Agreement, “Tax” or “Taxes” means any federal,
        state, local, or foreign income, gross receipts license, payroll, employment,
        excise, severance, stamp, occupation, premium, windfall profits, environmental
        (including taxes under Code Section 59A), customs duties, capital stock,
        franchise, profits, withholding, social security (or similar), unemployment,
        disability, real property, personal property, sales, use, transfer,
        registration, value added, alternative or add-on minimum, estimated, or other
        tax of any kind whatsoever, whether computed on a separate or consolidated,
        unitary or combined basis or in any other manner, including any interest,
        penalty, or addition thereto, whether disputed or not and including any
        obligation to indemnify or otherwise assume or succeed to the Tax liability
        of
        any other Person, and “Tax Return” means any return,
        declaration, report, claim for refund, or information return or statement
        relating to Taxes, including any schedule or attachment thereto, and including
        any amendment thereof.

       

      
        	
                3.

              	
                REPRESENTATIONS
                  AND WARRANTIES OF
                  PURCHASER.

              


      

       

      3.1.           Purchaser’s
        Ability To Pay the Purchase Price.  Purchaser warrants and
        represents that it has sufficient available funds to pay in cash the portions
        of
        the Purchase Price that are due on the Closing Date or shortly thereabout
        pursuant to Sections 1.3(a) and 1.3(b).  Purchaser has
        no knowledge of any
        facts of, and does not anticipate the occurrence of any lawsuit or other
        legal
        proceeding or any change in Purchaser’s business, condition, capitalization,
        assets (tangible or intangible), liabilities, operations, financial performance,
        that would materially and adversely impact Purchaser’s payment to Seller of the
        Cash Remainder Payments.

       

      3.2.           Financial
        Statements.  Purchaser’s financial statements, including the
        balance sheet, delivered by Purchaser to Seller during the Pre-Closing Period
        are true and correct copies thereof and fairly present in all material respects
        the financial position of Purchaser as of such dates and for the periods
        delineated in such financial statements.

       

      3.3.           No
        Broker or Finder Used.  Purchaser has not employed any
        broker, finder or investment banker in connection with its purchase of the
        Specified Assets, and has not agreed to the payment of any fee or commission
        to
        any person in connection with the purchase of the Specified Assets.

       

      3.4.           Authority;
        Binding Nature of Agreement.  Purchaser has all necessary
        corporate power and authority to execute and deliver this Agreement and the
        Promissory Note and to perform its obligations under this Agreement and the
        Promissory Note; and the execution, delivery and

       


      
        
                

                    
      
      

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      performance
        by Purchaser of this Agreement and the Promissory Note have been duly authorized
        by all necessary action on the part of Purchaser and its board of
        directors.  Upon execution, this Agreement and the Promissory Note
        will constitute a valid and binding obligation of Purchaser, enforceable
        against
        Purchaser in accordance with its terms, subject to (i) laws of general
        application relating to bankruptcy, insolvency and the relief of debtors
        and
        (ii) rules of law governing specific performance, injunctive relief and other
        equitable remedies.

       

      3.5.           No
        Implied Representations or Warranties.  Seller hereby
        acknowledges and agrees that Purchaser is not making any representation or
        warranty whatsoever, express or implied, except for those representations
        or
        warranties of Purchaser that are expressly set forth in this
        Agreement.

       

      3.6.           Vendor
        Accounts.  Purchaser hereby acknowledges that it will need to
        establish new accounts with Seller’s vendors and that it will not utilize
        Seller’s vendors accounts post-Closing.

       

      3.7.           Seller’s
        Customer Funds.  Purchaser hereby acknowledges and agrees
        that if it receives any funds at the Raichem location that relate to Seller’s
        sale of goods delivered prior to Closing, those funds belong to Seller and
        Purchaser shall not deposit those funds in its account and immediately forward
        those funds to Seller.

       

      3.8.           Monthly
        and Quarterly Financials.  As long as the Promissory Note is
        outstanding, Purchaser shall provide Seller with detailed monthly financial
        statements during the first twelve months following the closing, and quarterly
        financial statements after the first twelve months following the
        closing.

       

      3.9.           Slow
        Paying Customers.  Seller shall provide Purchaser with an
        accounts receivable schedule of customers that Seller has identified as slow
        payers on Schedule 3.9.  Purchaser shall
        agree that it will not ship any products to these customers until Seller
        has
        received full payment from these customers.  Seller shall inform
        Purchaser of the status of these customers on a timely basis.

       

      
        	
                4.

              	
                PRE-CLOSING
                  COVENANTS OF SELLER.

              


      

       

      4.1.           Conduct
        ofBusiness.  Except (i) as contemplated by
        this Agreement; (ii) as may be necessary to carry out any of the transactions
        contemplated by this Agreement; (iii) as may be necessary to facilitate the
        requirements of any Specified Contract; or (iv) as approved by Purchaser,
        during
        the Pre-Closing Period, Seller:

       

      (a)           will:
        (i) conduct its business operations according to Seller’s ordinary course of
        business, to the extent such operations relate to the Specified Assets, and
        (ii)
        use commercially reasonable efforts to maintain the Specified Assets;
        and

       

      (b)           will
        not (i) license, sublicense, sell, transfer, encumber or dispose of any material
        Specified Asset, or (ii) prematurely terminate or materially amend, grant
        a
        sublicense under or assign any of the Specified Contracts.

       

      4.2.           Access
        By Seller.  Subject to the provisions of the Confidentiality
        Agreement and at Purchaser’s sole expense, during the Pre-Closing Period Seller
        will, after receiving reasonable

       


      
        
                

                    
      
      

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      advance
        notice from Purchaser of not less than two business days (which notice period
        may be waived by Seller), give Purchaser reasonable access during normal
        business hours to Seller’s books and records relating to the Specified Assets,
        excluding the Specified Know-How, solely for the purposes of: (i) effectuating
        the sale of the Specified Assets; and (ii) verifying the accuracy of the
        representations and warranties set forth in Section 2.  The Specified Know-How shall be
        transferred to Purchaser on the Closing Date.

       

      
        	
                5.

              	
                PRE-CLOSING
                  COVENANTS OF PURCHASER.

              


      

       

      5.1.           Conduct
        of Business.  Prior to the Closing, Purchaser shall not
        contact or communicate with any party to a Specified Contract prior to the
        Closing without Seller’s express authorization.  Purchaser may contact
        or communicate with a party to a Specified Contract with which Purchaser
        has had
        an existing business relationship prior to the date of this Agreement, but
        shall
        not disclose the existence of this Agreement or any term hereof.

       

      
        	
                6.

              	
                CONDITIONS
                  PRECEDENT TO SELLER’S OBLIGATION TO
                  CLOSE.

              


      

       

      Seller’s
        obligation to sell and transfer the Specified Assets to Purchaser and to
        take
        the other actions required to be taken by Seller at the Closing is subject
        to
        the satisfaction, at or prior to the Closing, of each of the following
        conditions (any of which may be waived by Seller, in whole or in part, in
        writing) in this Section 6:

       

      (a)           Accuracy
        ofRepresentations.  The representations and
        warranties of Purchaser set forth in this Agreement, including but not limited
        to Section 3, shall be accurate in all material
        respects as of the Closing Date as if made on and as of the Closing
        Date.

       

      (b)           No
        Adverse Changes.  No material adverse change shall have taken
        place with respect to the business or financial condition of Purchaser so
        as to
        impact materially the likelihood of Purchaser making or having the ability
        to
        make any payments to Seller provided for under this Agreement.

       

      (c)           Delivery
        of Consideration.  Seller shall have received: (i) the cash
        payment required pursuant to Section 1.3(a); and
        (ii) the executed Promissory Note and cash payment contemplated by Section
1.3(b); as applicable.

       

      (d)           No
        Restraints.  No injunction or other order preventing the
        consummation of the transactions contemplated by this Agreement shall have
        been
        issued since the date of this Agreement by any United States federal or state
        court of competent jurisdiction and shall remain in effect; and no United
        States
        federal or state legal requirement that makes consummation of the transactions
        contemplated by this Agreement illegal shall have been enacted or adopted
        since
        the date of this Agreement and shall remain in effect.

       

      (e)           Guarantor
        shall have delivered the Guarantee.

       

      (f)           Purchaser
        shall have executed and delivered to Seller the Security Agreement by Purchaser,
        as debtor, and Seller, as secured party.

       


      
        
                

                    
      
      

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      (g)           Purchaser
        shall have executed and delivered to Seller the Inventory Purchase Agreement
        that is attached hereto as Exhibit L.

       

      (h)           Purchaser
        shall have executed and delivered to Purchaser a Sublease Agreement for the
        Raichem facility that is attached hereto as Exhibit
        M.

       

      
        	
                7.

              	
                CONDITIONS
                  PRECEDENT TO PURCHASER’S OBLIGATION TO
                  CLOSE.

              


      

       

      Purchaser’s
        obligation to purchase and receive the Specified Assets from Seller and to
        take
        the other actions required to be taken by Purchaser at the Closing is subject
        to
        the satisfaction, at or prior to the Closing, of each of the following
        conditions (any of which may be waived by Purchaser, in whole or in part,
        in
        writing) in this Section 7:

       

      (a)           Accuracy
        of Representations.  The representations and warranties of
        Seller set forth in this Agreement, including but not limited to Section
2 shall be accurate in all material respects
        as of the
        Closing Date as if made on and as of the Closing Date.

       

      (b)           No
        Adverse Changes.  No adverse material change shall have taken
        place with respect to the Specified Assets other than those, if any, that
        result
        from the changes permitted by this Agreement.

       

      (c)           No
        Restraints.  No injunction or other order preventing the
        consummation of the transactions contemplated by this Agreement shall have
        been
        issued since the date of this Agreement by any United States federal or state
        court of competent jurisdiction and shall remain in effect; and no United
        States
        federal or state legal requirement that makes consummation of the transactions
        contemplated by this Agreement illegal shall have been enacted or adopted
        since
        the date of this Agreement and shall remain in effect.

       

      
        	
                8.

              	
                TERMINATION.

              


      

       

      8.1.           Right
        to Terminate Agreement.  This Agreement may be terminated
        prior to the Closing:

       

      (a)           by
        the mutual written consent of the Parties;

       

      (b)           by
        either Party (by delivery of a written termination notification in accordance
        with Section 10.7 and which shall state the basis
        for the termination) if the Closing has not taken place on or before September
        30, 2007, unless the failure of the Closing to take place on or before such
        date
        is attributable to a breach by such Party of any of its obligations set forth
        in
        this Agreement; or

       

      (c)           by
        either Party (by delivery of a written termination notification in accordance
        with Section 10.7 and which shall state the basis
        for the termination) ) if (i) there shall have been a breach on the part
        of the
        other Party of any of its representations, warranties or covenants such that
        the
        conditions set forth in this Agreement would not be satisfied as of the time
        of
        such breach; (ii) the terminating Party shall have given written notice of
        such
        breach to the other Party; (iii) at least ten days shall have elapsed since
        the
        delivery of such written notice to the other
        Party; (iv) such breach shall not have been cured; and (v) the other Party
        shall
        not be using commercially reasonable efforts to attempt to cure such
        breach.

       


      
        
                

                    
      
      

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      8.2.           Effect
        of Termination.  Upon the termination of this Agreement
        pursuant to Section 8.1, neither Party will have
        any obligation or other liability to the other Party, except that (i) the
        Parties will remain bound by the provisions of Section 10 and by the provisions of the Confidentiality
        Agreement, and (ii) neither Party will be relieved of any liability for any
        breach of its obligation to consummate the transactions contemplated by this
        Agreement or its obligation to take any other action required to be taken
        by
        such Party at or before the Closing.

       

      
        	
                9.

              	
                INDEMNIFICATION.

              


      

       

      Subject
        to the limitations set forth herein, each Party shall indemnify the other
        Party
        with respect to any and all claims, lawsuits, liabilities, losses, damages,
        costs and expenses arising out of any inaccuracies in any express representation
        or warranty made by each respective Party in this Agreement (an “Indemnification
        Claim”).  An Indemnifying Party shall not be required to indemnify the
        Indemnified Party pursuant to an Indemnification Claim except to the extent
        that
        the aggregate Indemnification Claim(s) exceed five thousand U.S. dollars
        ($5,000.00) No indemnification claim shall be filed, brought or asserted
        more
        than eighteen (18) months from the Closing Date.  The aggregate
        amounts payable by an Indemnifying Party with respect to all claims for
        indemnification by other Party and/or any third party shall not exceed twenty
        thousand U.S. dollars ($20,000.00).

       

      
        	
                10.

              	
                GENERAL
                  PROVISIONS.

              


      

       

      10.1.        Notices.  Any
        notice or other communication required or permitted to be delivered to either
        Party under this Agreement must be in writing and will be deemed properly
        delivered, given and received as follows: (i) on the date delivered for delivery
        by hand, registered mail, recognized courier or overnight delivery service;
        (ii)
        on the next Business Day for delivery by facsimile to the facsimile number
        set
        forth beneath the name of such Party below, with written fax confirmation
        of
        successful transmission.  A Party may specify new notice information
        for itself by providing written notice pursuant to this Section 10.1.

       

      If
        to
        Purchaser:

       

                Cliniqa
        Corporation

                Attention:
        Kevin
        Gould

             774
        Twin Oaks Valley Rd.

                San
        Marcos, CA 92069

                Fax
        Number:  760-744-4128

       

      If
        to
        Seller:

       

      Hemagen
        Diagnostics, Inc.

      Attention:
        William P. Hales, Chairman, President and CEO

       9033
        Red Branch Road 

      Columbia,
        Maryland 21045

      Fax
        Number:   (410) 992-9861


      
        
                

                    
      
      

                    -12-      
    

           

        

        
           

          
            

          

        

        
           

        

      


      

      

      10.2.        Business
        Days.  As used in this Agreement, Business Day shall have the
        same meaning as set forth in California Civil Code Section 9.

       

      10.3.        Public
        Announcements.  Except as may be required by any legal
        requirement, neither Party will (and neither Party will permit any of its
        advisors or representatives to) issue any press release or make any public
        statement regarding this Agreement or any of the transactions contemplated
        by
        this Agreement, without the other Party’s prior written consent (which will not
        be unreasonably withheld).

       

      10.4.        Assignment.  Neither
        Party may assign any of its rights or delegate any of its obligations under
        this
        Agreement (whether voluntarily, involuntarily, by way of merger or otherwise)
        to
        any other person or entity without the prior written consent of Purchaser;
        provided, however, that Seller may, before or after the Closing, (i)
        assign to any person or entity its right to receive all or any portion of
        any of
        the cash payments to be made by Purchaser pursuant under this
        Agreement.

       

      10.5.        Severability.  In
        the event that any provision of this Agreement, or the application of such
        provision shall be determined to be invalid, unlawful, void or unenforceable
        to
        any extent, the remainder of this Agreement, and the application of such
        provision other than to those circumstances as to which it is determined
        to be
        invalid, unlawful, void or unenforceable, will not be affected and will continue
        to be valid and enforceable to the fullest extent permitted by law.

       

      10.6.        Entire
        Agreement.  This Agreement sets forth the entire
        understanding of the Parties and supersede all other agreements and
        understandings between the Parties relating to the subject matter
        hereof.

       

      10.7.        Waiver.  No
        failure on the part of either Party to exercise any power, right, privilege
        or
        remedy under this Agreement, and no delay on the part of either Party in
        exercising any power, right, privilege or remedy under this Agreement, will
        operate as a waiver thereof; and no single or partial exercise of any such
        power, right, privilege or remedy will preclude any other or further exercise
        thereof or of any other power, right, privilege or remedy.

       

      10.8.        Counterparts.  This
        Agreement may be executed in several counterparts, each of which will constitute
        an original and all of which, when taken together, will constitute one
        agreement.

       

      10.9.        Amendments.  This
        Agreement may not be amended, modified, altered or supplemented except by
        means
        of a written instrument executed on behalf of both Parties.

       

      10.10.      Interpretation
        of Agreement.  Each Party acknowledges that it has
        participated in the drafting of this Agreement, and any applicable rule of
        construction to the effect that ambiguities

       


      
        
                

                    
      
      

                    -13-      
    

           

        

        
           

          
            

          

        

        
           

        

      


      are
        to be
        resolved against the drafting party will not be applied in connection with
        the
        construction or interpretation of this Agreement.

       

      10.11.       Governing
        Law.  This Agreement will be construed in accordance with,
        and governed in all respects by, the laws of the State of Delaware without
        giving effect to principles of conflicts of law.

       

      10.12.       Arbitration,
        Venue and Jurisdiction.  Any dispute, claim or controversy
        arising out of this Agreement shall be resolved exclusively by binding
        arbitration pursuant to the Commercial Rules of the American Arbitration
        Association then in effect, with venue for any arbitration proceedings in
        San
        Diego County, California.  A Party may institute legal action to
        compel arbitration or to enforce an arbitration award in the state or federal
        courts located in San Diego County, California.  Purchaser and Seller
        hereby expressly and irrevocably consent and submit to the jurisdiction of
        the
        state and federal courts in the County of San Diego, State of
        California.

       

      10.13.       Headings.  Headings
        included in this Agreement are for convenience only and are not to have any
        substantive effect.

       

      10.14.       Authority
        toExecute.  Each individual executing this
        Agreement on behalf of a Party (i) represents and warrants that he/she has
        all
        necessary legal and/or corporate authority to so bind such Party; and (ii)
        indemnifies the other Party for any defects in such legal and or corporate
        authority.

       

      The
        Parties have caused this Agreement to be executed as of October 8,
        2007.

       

      
        	 	Hemagen
                Diagnostics, Inc.	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ William
                P. Hales	 
	 	 	William
                P. Hales	 
	 	 	Chairman,
                President and CEO	 
	 	 	 	 


      

       

       

      
        	 	Cliniqa
                Corporation	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Granger
                Haugh	 
	 	 	Granger
                Haugh	 
	 	 	CEO	 
	 	 	 	 


      

      


       

      



      
        
                

                    
      
      

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