Document:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR QUANTRX BIOMEDICAL CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

QUANTRX BIOMEDICAL CORPORATION

Senior Secured Convertible Promissory Note

 

	
                        U.S. $
 	
                         
 	
                        Issuance Date: October __, 2007
 
	
                        No.: PN-07-
 	
                         
 	
                        Maturity Date: October 31, 2008
 

FOR VALUE RECEIVED, the undersigned, QuantRx Biomedical Corporation, a Nevada corporation (the “Company”), hereby promises to pay to the order of ____________________ or any future permitted holder of this Senior Secured Convertible Promissory Note (the “Payee”), at the principal office of the Payee set forth herein, or at such other place as the holder may designate in writing to the Company, the principal sum of __________________ ($________) or such other amount as may be outstanding hereunder, together with all accrued but unpaid interest, in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private
debts and in immediately available funds, as provided in this Senior Secured Convertible Promissory Note (this “Note”). 

1. Automatic Exchange of Principal and Interest into Qualified Financing. The outstanding principal amount of this Note together with all accrued but unpaid interest hereunder (the “Outstanding Balance”), shall automatically, without any action on the part of the Payee or the Company be exchanged into securities issued in an Equity Financing (as defined below) or a combination of Equity Financings following the Issuance Date with gross proceeds totaling at least $4,000,000 (the “Qualified Financing”); provided, however, such $4,000,000 shall be reduced by the principal amount represented by this Note, and the Other Notes (as defined below in Section 3) up to a maximum of $2,000,000 issued by the Company; provided, further, that for purposes of determining the number of equity securities, including warrants issued in such Qualified Financing, to be received by the Payee upon such exchange, the Payee shall be deemed to have tendered 115% of the Outstanding Balance of this Note as payment of the purchase price in the Qualified Financing. Upon such exchange pursuant to a Qualified Financing, the Payee shall be deemed to be a purchaser in such Qualified Financing and shall be granted all material rights afforded a purchaser in the
Qualified Financing. For purposes of this Note, “Equity Financing” shall mean the issuance and sale by the Company of its equity securities, the primary purpose of which is to raise capital for the Company, provided, however, that an Equity Financing shall not be deemed to include the following issuances: (1) shares of common stock issuable or issued to employees, independent contractors, consultants, directors or vendors of this Company directly or pursuant to a stock option plan, restricted stock plan or other agreement approved by the Board of Directors of this Company; (2) shares of common stock issued for the purpose of (I) a joint venture, technology licensing or research and development activity, (II) distribution or manufacture of the Company’s products or services, or (III) any other transaction involving a corporate partner that is primarily for a purpose other than raising capital
through the sale of equity securities; (3) shares of 

 

 

 

 

 

common stock issuable upon conversion of shares of preferred stock; (4) securities issued for the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets of such corporation or other reorganization; (5) securities issued as a dividend or distribution on preferred stock; (6) securities issued as a dividend on common stock where the Company declares or pays a common stock dividend on the preferred stock in the same manner as declared or paid on the common stock; (7) shares of common stock issuable or shares of preferred stock issuable upon conversion or exercise of options, warrants, notes or other securities or rights granted pursuant to a loan or commercial lease transaction; or (8) by way of dividend or other distribution on shares of common stock excluded from the definition of additional stock by the foregoing clauses (1), (2), (3), (4), (5),
(6), (7), or this clause (8). 

2. Voluntary Conversion of Principal and Interest. Subject to the terms of this Section 2, the Payee shall have the right, prior to the Maturity Date, at the Payee’s sole option, to convert the Outstanding Balance (the “Conversion Option”) into such number of fully paid and non-assessable shares of the Company’s common stock (the “Conversion Shares”) as is determined in accordance with the following formula: the Outstanding Balance divided by $0.80 (the “Conversion Price”). If the Payee desires to exercise the Conversion Option, the Payee shall, by personal delivery or nationally-recognized overnight carrier, surrender the original of this Note and give written notice to the Company (the “Conversion Notice”), which Conversion Notice shall (a) state the Payee’s election to exercise the Conversion Option, and (b) provide for a representation and warranty of the Payee to the Company that, as of the date of the Conversion Notice, the Payee has not assigned or otherwise transferred all or any portion of the Payee’s rights under this Note to any third parties. The Company shall, as soon as practicable thereafter, but in no event greater than seven (7) business days, issue and deliver to the Payee the number
of Conversion Shares to which the Payee shall be entitled upon exercise of the Conversion Option.  

3. Mandatory Conversion of Principal and Interest. Subject to an effective registration statement covering the Conversion Shares, if the closing bid price of the Company’s common stock is equal to or greater than 250% of the Conversion Price for ten (10) consecutive trading days, then the Outstanding Balance shall be automatically converted, without any action on the part of the Payee or the Company, into Conversion Shares as is determined in accordance with the following formula: the Outstanding Balance divided by the Conversion Price.

4. Seniority and Ranking. This Note shall rank senior to the Company’s currently issued and outstanding indebtedness and equity securities; provided, however, this Note shall rank pari-passu with respect to certain other senior secured convertible promissory notes of the Company of like tenor herewith, (the “Other Notes”), in an aggregate principal amount not to exceed $2,000,000, inclusive of this Note and excluding the PIK Notes (as defined below in Section 5(b)) (this Note together with the Other Notes and the PIK Notes shall be referred to as the “Notes”). The Company may not issue any new indebtedness while at least
50% of the original principal amount of the Notes in the aggregate remain outstanding, other than the PIK Notes and indebtedness incurred in the ordinary course of business, without the consent of the holders of at least 75% of the principal amount of the then outstanding Notes.

5. Principal and Interest Payments. 

(a) The Company shall repay the entire Outstanding Balance remaining outstanding on October 31, 2008 (the “Maturity Date”). 

(b) Interest on the outstanding principal balance of this Note shall accrue at a rate of ten percent (10%) per annum. Interest on the outstanding principal balance of this Note shall be 

 

 

 

 

 

computed on the basis of the actual number of days elapsed and a year of three hundred and sixty-five (365) days and shall be payable quarterly in arrears, on the last day of each calendar quarter, in cash. At the Payee’s sole option, the Payee may elect to receive the accrued and unpaid interest in additional Senior Secured Convertible Promissory Notes (the “PIK Notes”) with a principal amount equal to the calculated interest amount. Furthermore, upon the occurrence of an Event of Default, then to the extent permitted by law, the Company will pay interest to the Payee, payable on demand, on the outstanding principal balance of this Note from the date of the Event of Default until payment in full at the rate of twelve percent (12%) per annum.

(c) At any time prior to the Maturity Date, with ten (10) days prior written notice, the Company, at its sole option, may prepay this Note in cash for an amount equal to 115% of the outstanding principal balance of the Notes plus 100% of all accrued but unpaid interest on such Note(s). All payments made on account of the indebtedness evidenced by this Note shall be applied first to accrued but unpaid interest, if any, and the remainder shall be applied to principal. 

6. Issuance of Warrants. In consideration of the loan evidenced by this Note, the Payee shall be issued 25,000 common stock purchase warrants (the “Warrants”) for every $100,000 of principal amount invested in the Notes in the form attached as Exhibit A.

7. Most Favored Nations Exchange Right. So long as this Note remains outstanding, if the Company enters into any Equity Financing that is not a Qualified Financing, then the Payee in its sole discretion may exchange this Note for the securities issued or to be issued in such Equity or Equity Linked Financing. In the event of such exchange, the Payee shall be deemed to have tendered 115% of the Outstanding Balance of this Note as payment of the purchase price in such financing.

8. Certain Conversion Restrictions.

(a) Notwithstanding anything to the contrary set forth in this Note, at no time may a Payee of this Note convert this Note if the number of shares of the Company’s common stock to be issued pursuant to such conversion would cause the number of shares of the Company’s common stock beneficially owned by the Payee at such time to exceed, when aggregated with all other shares of the Company’s common stock beneficially owned by such Payee at such time, the number of shares of the Common Stock which would result in such Payee beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 4.99% of all of the Company’s common stock outstanding at such time; provided, however, that upon the Payee of this Note providing the Company with sixty-one (61) days notice (pursuant to Section 17 hereof) (the
“4.99% Waiver Notice”) that such Payee would like to waive this Section 8(a) with regard to any or all shares of the Company’s common stock issuable upon conversion of this Note, this Section 8(a) will be of no force or effect with regard to all or a portion of this Note referenced in the 4.99% Waiver Notice.

(b) Notwithstanding anything to the contrary set forth in this Note, at no time may a Payee of this Note convert this Note if the number of shares of the Company’s common stock to be issued pursuant to such conversion would cause the number of shares of the Company’s common stock beneficially owned by the Payee at such time to exceed, when aggregated with all other shares of the Company’s common stock beneficially owned by such Payee at such time, the number of shares of the Common Stock which would result in such Payee beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.99% of all of the Company’s common stock outstanding at such time; provided, however, that upon the Payee of this Note providing the Company with sixty-one (61) days notice (pursuant to Section 17 hereof) (the
“9.99% Waiver Notice”) that such Payee would like to waive this Section 8(b) with regard to any or all shares of the 

 

 

 

 

 

Company’s common stock issuable upon conversion of this Note, this Section 8(b) will be of no force or effect with regard to all or a portion of this Note referenced in the 9.99% Waiver Notice.

(c) In the event of an automatic exchange pursuant to Section 1 hereof or a mandatory conversion pursuant to Section 3 hereof, if the Payee would beneficially own, upon such conversion or exchange, as the case may be, when aggregated with all other shares of the Company’s common stock beneficially owned by such Payee at such time, the number of shares of he Company’s common stock which would result in such Payee beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 4.99% or 9.99% of all of the Company’s common stock outstanding at such time, the Payee shall be issued (i) the number of shares of the Company’s common stock, rounded to the nearest whole share, that would bring such Holder’s beneficial ownership of share of the Company’s common stock as close to, but not exceeding
4.99% or 9.99%, as the case may be, and (ii) shares of series of convertible preferred stock with a nominal liquidation preference substantially in the form attached hereto as Exhibit B, convertible into the number of shares of the Company’s common stock equal to the difference between the aggregate number of shares of the Company’s common stock to be issued to such Holder pursuant to the automatic exchange pursuant to Section 1 or a mandatory conversion pursuant to Section 3 as the case may be, and the actual number of shares of the Company’s common stock issued in accordance with this Section 8(c)(i).

9. Registration Rights. Provided that the Qualified Financing has not been completed on or before the March 31, 2008, the holders of the Notes together as a class (subject to majority approval of the then Outstanding Balance of the Notes) shall have a one-time demand registration right covering the Conversion Shares of the Notes (the “Demand Registration Right”). If  such majority of the holders desire to exercise the Demand Registration Right, a representative of the holders as a class shall, by personal delivery or nationally-recognized overnight carrier, give written notice to the Company (the “Demand Registration Notice”), which Demand Registration Notice shall state the holders election to exercise the Demand Registration Right. The Company shall, within thirty (30) days of receiving the Demand Registration Notice, file a registration statement covering the Conversion Shares to which the holders shall be entitled upon exercise of the Conversion Option. 

10. Non-Business Days. Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

11. Representations and Warranties of the Company. The Company represents and warrants to the Payee as follows:

(a) The Company has been duly incorporated and is validly existing and in good standing under the laws of the state of Nevada, with full corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted.

(b) This Note has been duly authorized, validly executed and delivered on behalf of the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally, and the Company has full power and authority to execute and deliver this Note and to perform its obligations hereunder.

 

 

 

 

 

(c) The execution, delivery and performance of this Note will not (i) conflict with or result in a breach of or a default under any of the terms or provisions of, (A) the Company’s certificate of incorporation or by-laws, or (B) any material provision of any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of its material properties or assets is bound, (ii) result in a violation of any material provision of any law, statute, rule, regulation, or any existing applicable decree, judgment or order by any court, Federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company, or any of its material properties or assets or (iii) result in the creation or imposition of any material lien, charge or encumbrance upon any material property or
assets of the Company or any of its subsidiaries pursuant to the terms of any agreement or instrument to which any of them is a party or by which any of them may be bound or to which any of their property or any of them is subject.  

(d) No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Note.

12. Events of Default. The occurrence of any of the following events shall be an “Event of Default” under this Note:

(a) the Company shall fail to make the payment of any amount of any principal outstanding for a period of seven (7) business days after the date such payment shall become due and payable hereunder; or

(b) the Company shall fail to make any payment of interest for a period of seven (7) business days after the date such interest shall become due and payable hereunder; or

(c) any representation, warranty or certification made by the Company herein or in any certificate or financial statement shall prove to have been materially false or incorrect or breached in a material respect on the date as of which made; or

(d) the holder of any indebtedness of the Company or any of its subsidiaries shall accelerate any payment of any amount or amounts of principal or interest on any indebtedness (the “Indebtedness”) (other than the Indebtedness hereunder) prior to its stated maturity or payment date the aggregate principal amount of which Indebtedness of all such persons is in excess of $100,000, whether such Indebtedness now exists or shall hereinafter be created, and such accelerated payment entitles the holder thereof to immediate payment of such Indebtedness which is due and owing and such indebtedness has not been discharged in full or such acceleration has not been stayed, rescinded or annulled within ten (10) business days of such acceleration; or  

(e) A judgment or order for the payment of money shall be rendered against the Company or any of its subsidiaries in excess of $100,000 in the aggregate (net of any applicable insurance coverage) for all such judgments or orders against all such persons (treating any deductibles, self insurance or retention as not so covered) that shall not be discharged, and all such judgments and orders remain outstanding, and there shall be any period of sixty (60) consecutive days following entry of the judgment or order in excess of $100,000 or the judgment or order which causes the aggregate amount described above to exceed $100,000 during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(f) the Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of 

 

 

 

 

 

its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic), or (vi) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

(g) a proceeding or case shall be commenced in respect of the Company or any of its subsidiaries without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) consecutive days or any order for relief shall be entered in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or any of its
subsidiaries or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Company or any of its subsidiaries and shall continue undismissed, or unstayed and in effect for a period of thirty (30) consecutive days.

13. Remedies Upon An Event of Default. If an Event of Default shall have occurred and shall be continuing, the Payee of this Note may at any time at its option, (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable; provided, however, that upon the occurrence of an Event of Default described in (i) Sections 12(f) and (g), without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Company, the outstanding principal balance and accrued interest
hereunder shall be automatically due and payable, and (ii) Sections 12(a) through (e), the Payee may exercise or otherwise enforce any one or more of the Payee’s rights, powers, privileges, remedies and interests under this Note or applicable law. No course of delay on the part of the Payee shall operate as a waiver thereof or otherwise prejudice the right of the Payee. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. Notwithstanding the foregoing, Payee agrees that its rights and remedies hereunder are limited to receipt of cash or shares of the Company’s equity securities, at the Payee’s option, in the amounts described herein.

14. Replacement. Upon receipt by the Company of (i) evidence of the loss, theft, destruction or mutilation of any Note and (ii) (y) in the case of loss, theft or destruction, of indemnity (without any bond or other security) reasonably satisfactory to the Company, or (z) in the case of mutilation, the Note (surrendered for cancellation), the Company shall execute and deliver a new Note of like tenor and date. However, the Company shall not be obligated to reissue such lost, stolen, destroyed or mutilated Note if the Payee contemporaneously requests the Company to convert such Note.

15. Parties in Interest, Transferability. This Note shall be binding upon the Company and its successors and assigns and the terms hereof shall inure to the benefit of the Payee and its successors and permitted assigns. This Note may be transferred or sold, subject to the provisions of Section 24 of this Note, or pledged, hypothecated or otherwise granted as security by the Payee.

16. Amendments. This Note may not be modified or amended in any manner except in writing executed by the Company and the Payee.

 

 

 

 

 

17. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The Company will give written notice to the Payee at least thirty (30) days prior to the date on
which the Company closes its books or takes a record (x) with respect to any dividend or distribution upon the common stock of the Company, (y) with respect to any pro rata subscription offer to holders of common stock of the Company or (z) for determining rights to vote with respect to a dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Company will also give written notice to the Payee at least twenty (20) days prior to the date on which dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to the Payee prior to such information being made known to the public.

 

	
                        Address of the Payee:
 	
                         
 	
                        _________________________
 
	
                         
 	
                         
 	
                        _________________________
 
	
                         
 	
                         
 	
                        _________________________
 
	
                         
 	
                         
 	
                        _________________________
 
	
                         
 	
                         
 	
                        Attention:
 
	
                         
 	
                         
 	
                        Tel. No.:
 
	
                         
 	
                         
 	
                        Fax No.:  
 
	
                         
 	
                         
 	
                         
 
	
                        Address of the Company:
 	
                         
 	
                        QuantRx Biomedical Corporation
 
	
                         
 	
                         
 	
                        100 S. Main Street, Suite 300
 
	
                         
 	
                         
 	
                        Doylestown, PA 18901
 
	
                         
 	
                         
 	
                        Attn.:  Mr. Walter Witoshkin
 
	
                         
 	
                         
 	
                        Tel. No.: (267) 880-1595
 
	
                         
 	
                         
 	
                        Fax No.:  (267) 880-1596
 
	
                         
 	
                         
 	
                         
 
	
                        With a copy to:
 	
                         
 	
                        Greenberg Traurig, LLP
 
	
                         
 	
                         
 	
                        The MetLife Building
 
	
                         
 	
                         
 	
                        200 Park Avenue, Floor 14
 
	
                         
 	
                         
 	
                        New York, NY 10166
 
	
                         
 	
                         
 	
                        Attn.:  Michael D. Helsel, Esq.
 

18.   Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions. This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

19. Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

20.  Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available

 

 

 

 

 

 under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Payee’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Payee and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Payee and that the remedy at law for any such breach may be inadequate. Therefore the Company
agrees that, in the event of any such breach or threatened breach, the Payee shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

21.  Failure or Indulgence Not Waiver. No failure or delay on the part of the Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

22. Enforcement Expenses. The Company agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys’ fees and expenses.

23. Binding Effect.  The obligations of the Company and the Payee set forth herein shall be binding upon the successors and assigns of each such party, whether or not such successors or assigns are permitted by the terms hereof.

24. Compliance with Securities Laws. The Payee of this Note acknowledges that this Note is being acquired solely for the Payee’s own account and not as a nominee for any other party, and for investment, and that the Payee shall not offer, sell or otherwise dispose of this Note other than in compliance with the laws of the United States of America and as guided by the rules of the Securities and Exchange Commission. This Note and any Note issued in substitution or replacement therefore shall be stamped or imprinted with a legend in substantially the following form:

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR QUANTRX BIOMEDICAL CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

25. Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

 

 

 

 

26. Consent to Jurisdiction. Each of the Company and the Payee (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Payee consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the
address set forth in Section 17 hereof and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 26 shall affect or limit any right to serve process in any other manner permitted by law.

27. Company Waivers. Except as otherwise specifically provided herein, the Company and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Company liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

(a) No delay or omission on the part of the Payee in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Payee, nor shall any waiver by the Payee of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

(b) THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE PAYEE OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

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IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the date first written above.

 

	
                         
 	
                         
 	
                        QuantRx Biomedical Corporation
 
	
                          
 	
                         
 	
                        

                        By: 
 	
                          
 
	
                         
 	
                         
 	
                         
 	
                        Walter W. Witoshkin
 
	
                         
 	
                         
 	
                         
 	
                        Chairman & CEO
 

 

	
                         
 	
                         
 	
                        ACCEPTED AND AGREED:
 
	
                         
 	
                         
 	
                        PAYEE
 
	
                          
 	
                         
 	
                        

                        By: 
 	
                          
 
	
                         
 	
                         
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                         
 	
                        Title:
 

 

 

 

 

 

 

Exhibit A

[Form of Warrant]

 

 

Exhibit B

[Form of Certificate of Designation]October ___, 2007

QuantRx Biomedical Corporation

100 S. Main Street, Suite 300

Doylestown, PA 18901

RE:  Letter Loan Agreement

Ladies and Gentlemen:

1. Loan. This letter when fully executed will constitute a loan agreement (this “Agreement”) between _______________________ (the “Lender”) and QuantRx Biomedical Corporation, a Nevada corporation (the “Borrower”), pursuant to which the Lender, on the terms and conditions provided herein, shall agree to make one or more loans to or for the benefit of the Borrower hereunder (the “Loan”). The day on which the Lender makes the Loan is referred to
herein as the “Closing Date.”   The Lender’s obligation to make the Loan is subject to the Borrower’s fulfillment of each of the applicable conditions set forth in Section 3 hereof.

2. Loan Documents. 

a. Notes. The Loan shall be evidenced by a senior secured convertible promissory note issued to the Lender in the principal amount of the Loan, dated the date the Borrower receives the funds from the Lender, in the form attached hereto as Exhibit A (together with any replacements and substitutes therefore, the “Note”). The principal amount of the Loan and interest thereon, calculated at the rate of 10% per annum, as provided in the Note, shall be payable as set forth more particularly therein. 

b. Warrants. In consideration for the Loan, for each $100,000 principal amount loaned to the Borrower by the Lender, the Borrower shall issue to the Lender a warrant (the “Warrant”), in the form attached hereto as Exhibit B, for the issuance of 25,000 shares of common stock of the Borrower at an exercise price of $1.25 per share and a five-year term. 

c. This Agreement, the Note, the Warrant, and any other instruments or documents required or contemplated hereunder or thereunder, whether now existing or at any time hereafter arising, are herein referred to as the “Loan Documents.”

3. Conditions Precedent. 

a. Documents to be Delivered. The obligation of the Lender to make the Loan is subject to the due execution and delivery by the Borrower (or the Borrower causing the due execution and delivery) to the Lender of each of the following (all documents to be in form and substance satisfactory to the Lender): 

i. This Agreement, the Note, and each other instrument, agreement and document to be executed and/or delivered pursuant to this Agreement and/or the instruments, agreements and documents referred to in this Agreement.

ii. A certified copy of the resolutions of the Board of Directors (or if the Board of Directors takes action by unanimous written consent, a copy of such unanimous written consent containing all of the signatures of the members of the Board of Directors) of the 

 

 

Borrower, dated as of the Closing Date, authorizing the execution, delivery and performance of the Loan Documents.

iii. A certificate, dated as of the Closing Date, signed by an executive officer of the Borrower to the effect that the representations and warranties set forth in Section 4 of this Agreement are true and correct as of the Closing Date.

b. Absence of Certain Events. The occurrence of a Material Adverse Effect (as defined below) shall not have occurred or be occurring as of the Closing Date.

4. Representations and Warranties of the Borrower. To induce the Lender to make the Loan, the Borrower hereby represents and warrants to the Lender that at and as of the date hereof:

a. The Borrower has been duly incorporated and is validly existing and in good standing under the laws of the state of Nevada, with full corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted. The Borrower is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary and where the failure so to qualify would have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on the ability of the Borrower to perform its obligations hereunder or on the business, operations, properties or financial condition of the Borrower.

b. Each of the Loan Documents has been duly authorized, validly executed and delivered on behalf of the Borrower and is a valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally, and the Borrower has full power and authority to execute and deliver this Agreement and the Loan Documents and to perform its obligations hereunder and thereunder.

c. The execution, delivery and performance of this Agreement and the Loan Documents will not (i) conflict with or result in a breach of or a default under any of the terms or provisions of (A) the Borrower’s articles of incorporation or by-laws, or (B) any material provision of any indenture, mortgage, deed of trust or other material agreement or instrument to which the Borrower is a party or by which it or any of its material properties or assets is bound, (ii) result in a violation of any material provision of any law, statute, rule, regulation, or any existing applicable decree, judgment or order by any court, Federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Borrower, or any of its material properties or assets or (iii) result in the creation or imposition of any material lien, charge or encumbrance upon
any material property or assets of the Borrower or any of its subsidiaries pursuant to the terms of any agreement or instrument to which any of them is a party or by which any of them may be bound or to which any of their property or any of them is subject, except, in the cases of (i), (ii) and (iii) above, as would not have a Material Adverse Effect.

 

 

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d. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Borrower is required in connection with the valid execution and delivery of this Agreement or the Loan Documents.

5. Miscellaneous. 

a. The representations and warranties of the Borrower contained herein shall not survive the Closing Date.

b. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted. 

c. Each of the Borrower and the Lender (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or the Loan Documents and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Borrower and the Lender consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address set forth in the Note and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in this Section 5(c) shall affect or limit any right to serve process in any other manner permitted by law.

d. Any forbearance, failure, or delay by the Lender in exercising any right, power, or remedy shall not preclude the further exercise thereof, and all of the Lender’s rights, powers, and remedies shall continue in full force and effect until specifically waived in writing by the Lender.

e. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.

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

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

h. This Agreement, the Note and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

 

 

3

 

i. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The Borrower shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Lender. Notwithstanding the foregoing, the Lender may assign its rights hereunder to any other person or entity without the consent of the Borrower.

j. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

k. All remedies of the Lender under this Agreement, the Note and the other Loan Documents (i) are cumulative and concurrent, (ii) may be exercised independently, successively or together with other lenders against the Borrower, (iii) shall not be exhausted by any exercise thereof, but may be exercised as often as occasion therefore may occur, and (iv) shall not be construed to be waived or released by the Lender’s delay in exercising, or failure to exercise, them or any of them at any time it may be entitled to do so.

l. All notices required hereunder shall be made in accordance with Section 12 of the Note.

 

 

4

 

By executing the appropriate signature line below, the Borrower, intending to be legally bound hereby, agrees to the terms and conditions of this Agreement as of the date hereof.

 

	
                         
 	
                         
 	
                        Very truly yours,
 
	
                         
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                        LENDER:
 
	
                          
 	
                         
 	
                        

                        By: 
 	
                          
 
	
                         
 	
                         
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                         
 	
                        Title:
 

 

	
                        QuantRx Biomedical Corporation
 	
                         
 	
                         
 
	
                        

By: 
 	
                          
 	
                         
 	
                         
 	
                          
 
	
                         
 	
                        Name:
 	
                        Walter W. Witoshkin
 	
                         
 	
                         
 	
                         
 
	
                         
 	
                        Title:
 	
                        Chairman & CEO
 	
                         
 	
                         
 	
                         
 

 

 

5

 

Exhibit A

[Form of Note]

 

 

6

 

Exhibit B

[Form of Warrant]

 

 

7

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