Document:

EXHIBIT
10.1

       

      DEVELOPMENT
AND SERVICES AGREEMENT

       

      This
DEVELOPMENT AND SERVICES
AGREEMENT (this “Agreement”) is dated as of this 30th day of
July, 2009 (the “Effective Date”), by and between QN Diagnostics, LLC, a
Delaware limited liability company (“QND”) and QuantRx Biomedical Corporation, a
Nevada corporation (“QuantRx”).

       

      RECITALS

       

      WHEREAS, as set forth in the
Limited Liability Company Agreement of QN Diagnostics, LLC, of even date hereof,
entered into by and between NuRx Pharmaceuticals, Inc. (“NuRx”) and QuantRx (the
“LLC Agreement”), NuRx and QuantRx each contributed certain capital and assets
and formed QND;

       

      WHEREAS, the LLC Agreement
provides that QuantRx shall enter into a development and services agreement with
QND pursuant to which QuantRx shall provide certain development, regulatory and
manufacturing services to QND with respect to the Lateral Flow Products (as
defined in the LLC Agreement); and

       

      WHEREAS, the parties desire
hereby to set forth the terms and conditions upon which QuantRx shall provide
such services to QND.

       

      NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

       

      1.        
  Definitions.

       

      “Affiliate” shall mean
any Person which, directly or indirectly, controls, or is controlled by, or is
under common control with the first Person.

       

      “Budget” shall have
the meaning specified in Section 3.1.

       

      “Claims and Losses”
shall have the meaning specified in Section 9.1.

       

      “Confidential
Information” shall mean all Trade Secrets and other confidential and/or
proprietary information of a party (the “Disclosing Party”), including
information derived from reports, investigations, research, work in progress,
codes, marketing and sales programs, financial projections, cost summaries,
pricing formula, contract analyses, financial information, projections,
confidential filings with any state or federal agency, and all other
confidential concepts, methods of doing business, ideas, materials or
information prepared or performed for, by or on behalf of such Person by its
employees, officers, directors, agents, representatives, or
consultants.  Information shall not be deemed Confidential Information
hereunder if (a) such information becomes available to or known by the
public generally through no fault of the party receiving such information (the
“Receiving Party”); (b) disclosure is required by law or the order of any
governmental authority under color of law, provided, however, that prior
to disclosing any information pursuant to this clause (b), the Receiving Party
shall, if possible, give prior written notice thereof to the Disclosing Party
and, at the Disclosing Party’s election, either provide the Disclosing Party
with the opportunity to contest such disclosure or seek to obtain a protective
order narrowing the scope of such disclosure and/or use of the Confidential
Information.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      “Copyrights” shall
mean all copyrights, including in and to works of authorship and all other
rights corresponding thereto throughout the world, whether published or
unpublished, including rights to prepare, reproduce, perform, display and
distribute copyrighted works and copies, compilations and derivative works
thereof.

       

      “Fees” shall have the
meaning specified in Section 3.1.

       

      “Intellectual Property
Rights” shall mean any or all rights in and to intellectual property and
intangible industrial property rights, including, without limitation,
(a) Patents, Trade Secrets, Copyrights and Trademarks, and (b) any
rights similar, corresponding or equivalent to any of the foregoing anywhere in
the world.

       

      “Key Employees” shall
mean those persons identified on Exhibit
B.

       

      “Patents” shall mean
all United States and foreign patents and utility models and applications
therefor and all reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries.

       

      “Person” means an
individual or entity, including a partnership, limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).

       

      “Representatives”
shall mean officers, directors, employees, attorneys, accountants, advisors,
agents, distributors, licensees, shareholders, subsidiaries and lenders of a
party.  In addition, all Affiliates of QuantRx shall be deemed to be
“Representatives” of QuantRx.

       

      “Service” (and, with
correlative meaning, “Services”) shall have the meaning specified in
Section 2.1.

       

      “Tooling” shall mean
all tools and hardware that are acquired, developed or used in the performance
of the Services.

       

      “Trade Secrets” shall
mean all trade secrets under applicable law and other rights in know-how and
confidential or proprietary information, processing, manufacturing or marketing
information, including new developments, inventions, processes, ideas or other
proprietary information that provide QuantRx with advantages over competitors
who do not know or use it and documentation thereof (including related papers,
blueprints, drawings, chemical compositions, formulae, diaries, notebooks,
specifications, designs, methods of manufacture and data processing software,
compilations of information) and all claims and rights related
thereto.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      “Trademarks” shall
mean any and all trademarks, service marks, logos, trade names, corporate names,
Internet domain names and addresses and general-use e-mail addresses, and all
goodwill associated therewith throughout the world.

       

      “Work Product” shall
mean (a) all Intellectual Property Rights and any related work-in-progress,
improvements or modifications to any Intellectual Property Rights that are
created, developed or conceived (alone or with others) in connection with the
Services, and (b) all regulatory filings, approvals, data and information
related to the Lateral Flow Products.  Work Product shall include,
without limitation, all materials required to be delivered to QND under this
Agreement.

       

      2.           Provision of Services; Standard of
Performance.

       

      2.1           Commencing
on the date hereof, QuantRx shall provide to QND the services specified on Exhibit A attached
hereto (the “Services”) for the period of time specified thereon, unless this
Agreement is earlier terminated or extended in accordance with the terms
hereof.

       

      2.2           The
parties agree to fully cooperate in good faith with each other in connection
with the provision of the Services and the matters related to or arising
hereunder, including, without limitation, QuantRx’s cooperation with QND to
enable QND to establish its own infrastructure to perform the Services
independently of QuantRx as may be agreed upon by NuRx and QuantRx after the
Effective Date.

       

      2.3           QuantRx
agrees during the term of this Agreement not to accept work or enter into any
agreement or accept any obligation that would cause QuantRx to breach its
obligations under this Agreement.

       

      2.4           In
the performance of the Services, QuantRx shall (a) enter into an employment
offer letter that is reasonably satisfactory to NuRx with William Fleming prior
to Closing, and (b) enter into employment offer letters that are reasonably
satisfactory to NuRx with each of Messrs. Buck and Burjess-Cassler within 45
days after the Closing, and shall use commercially reasonable efforts to
primarily utilize the services of the Key Employees.  QuantRx
represents that it has never been, and that none of its employees or other
persons engaged by QuantRx has ever been, (r) debarred (under the provisions of
the Generic Drug Enforcement Act of 1992, 21 U.S.C. §335a (a) and (b)), (s)
convicted of a crime for which a person can be debarred, (t) threatened to be
debarred, or (u) indicted for a crime or otherwise engaged in conduct for which
a person can be debarred.  QuantRx immediately shall notify QND in
writing of any such debarment, conviction, threat, or indictment.  The
terms of the proceeding sentence shall survive the expiration or termination of
this Agreement for a period of three (3) years.

       

      3.           Payment.

       

      3.1           QND
shall pay to QuantRx on the first business day of each month a monthly payment
for the Services performed by QuantRx (the “Fee(s)”) as specified in the
Preliminary Project Plan and Budget attached as Exhibit C (the
“Budget”).  The Budget and monthly Fees may be adjusted upon mutual
written agreement of the parties.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      

      3.2           If
QuantRx has costs for the Services in a month that are in excess of the monthly
Fee, then QuantRx will submit a request for additional funds at the time QuantRx
submits the detailed cost accounting for such month in accordance with
Section 3.3.  QND shall have a period of five (5) days after
receipt of such request and detailed cost accounting to accept or reject such
request, provided that such acceptance shall not be unreasonably
withheld.  If QND accepts such request, then QND shall pay such
additional amount within five (5) days after notice of
acceptance.  Notwithstanding the foregoing, in no event shall the Fees
(including any such additional amounts described in this Section 3.2)
exceed $3,700,000 in the aggregate.

       

      3.3           QND
shall pay the Fees for each month on the first day of such month in
advance.  Within ten (10) days of the end of each month, QuantRx shall
deliver a detailed accounting of the costs for the preceding month including a
report of the monthly and project-to-date budget-to-actual costs, costs to
complete each project, and such other reports as reasonably requested by
QND.  QuantRx acknowledges and agrees that QND shall not be liable for
making any further payment of the Fees if (i) QuantRx fails to reach any of
the Milestones by the expiration of the applicable Milestone Cure Period (as
such terms are defined in the LLC Agreement), or (ii) QuantRx breaches any
of its obligations under this Agreement, the LLC Agreement or the Related
Agreements (as defined in the LLC Agreement).

       

      3.4           QuantRx
acknowledges that the Fees for a calendar month may be less than the actual
costs to QuantRx to perform the Services for such month, and QuantRx agrees that
QuantRx shall continue to perform the Services and, unless the parties mutually
agree in writing, QND shall not be liable for any additional amounts for the
Services in excess of the Fees.

       

      4.           Term and Termination.

       

      4.1           Unless
earlier terminated in accordance with the terms of this Section 4, this
Agreement shall commence on the date hereof and shall terminate one (1) year
after the Effective Date.

       

      4.2           If
QND desires to extend the term of this Agreement, QND shall give QuantRx
thirty (30) days’ prior written notice, which notice shall include
reasonable details relating to such extension.  QND and QuantRx shall
negotiate in good faith regarding any such extended term.  If the
parties reach agreement during such 30-day period, such agreement not to be
unreasonably withheld by QuantRx, Section 4.1 shall thereafter be amended
to include the extended term.  Otherwise, this Agreement shall
automatically terminate.

       

      4.3           QND
shall have the right to terminate this Agreement if QuantRx fails to meet any of
the Milestones or if the LLC Agreement is terminated.

       

      4.4           This
Agreement may be terminated by either party upon written notice to the other
party if the other party defaults in the performance of any of its material
obligations under this Agreement and such default shall continue and not be
remedied for a period of thirty (30) days after receipt of prior written notice
stating that a default has occurred.

       

      4.5           The
provisions of Sections 4.5, 5, 9, 14 and 17 shall survive any termination
of this Agreement.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

      5.           Intellectual
Property.

       

      5.1           QND
hereby grants to QuantRx, under all Intellectual Property Rights owned by QND, a
non-exclusive right and license to perform the Services in accordance with this
Agreement.

       

      5.2           All
Work Product shall be the sole property of QND, with QND having the right to
obtain and hold in its own name all Intellectual Property Rights in and to such
Work Product.  QuantRx hereby irrevocably assigns and agrees to assign
to QND, without additional consideration, all right, title and interest in and
to all Work Product, whether currently existing or created or developed later,
including, without limitation, all Intellectual Property Rights related thereto,
whether existing now or in the future, effective immediately upon the inception,
conception, creation or development thereof.  QuantRx shall
(i) disclose promptly to QND all Work Product, and (ii) whether during
or after the term of this Agreement, at QND’s expense, execute such written
instruments and do such other acts as may be necessary in the opinion of QND to
obtain a patent, register a copyright, transfer a regulatory approval or
otherwise evidence or enforce QND’s rights in and to such Work Product (and
QuantRx hereby irrevocably appoints QND and any of its officers as its attorney
in fact to undertake such acts in its name).

       

      5.3           Upon
termination of this Agreement, or at any time QND requests, QuantRx shall
deliver immediately to QND all property belonging to QND, including all
(a) Work Product then in progress, (b) Tooling and (c) all
material in QuantRx’s possession containing Confidential Information of QND and
any copies thereof, whether prepared by QuantRx or others.

       

      6.           Representations. QuantRx represents,
warrants and covenants that: (a) QuantRx has the full power and authority to
enter into this Agreement and to perform its obligations hereunder, without the
need for any consents, approvals or immunities not yet obtained; (b) QuantRx’s
execution of and performance under this Agreement shall not breach any written
agreement with any third party or any obligation owed by QuantRx to any third
party to keep any information or materials in confidence or in trust; (c) the
Services, including, without limitation, any deliverables required hereunder,
shall substantially conform to any specifications for such Services and/or
deliverables as set forth or referenced on Exhibit A; (d) the
Work Product shall be the original work of QuantRx, and any persons involved in
the development of Work Product have executed (or prior to any such involvement,
shall execute) a written agreement with QuantRx in which such persons (i) assign
to QuantRx all right, title and interest in and to the Work Product in order
that QuantRx may fully grant the rights to QND as provided herein and (ii) agree
to be bound by confidentiality and non-disclosure obligations no less
restrictive than those set forth in this Agreement; (e) QuantRx has the right to
grant the rights and assignments granted herein, without the need for any
assignments, releases, consents, approvals, immunities or other rights not yet
obtained; and (f) to the knowledge of QuantRx, the Services do not infringe,
misappropriate or violate any Intellectual Property Right of any third
party.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      

      7.           Covenants.  The
Services and Work Product shall not infringe, misappropriate or materially
violate any Intellectual Property Right of any third party; and neither the Work
Product nor any element thereof shall be subject to any material
restrictions or to any mortgages, liens, pledges, security interests,
encumbrances or encroachments.

       

      8.            Independent
Contractor.  Each of QND and QuantRx shall be an independent
contractor in the performance of its respective obligations
hereunder.  Nothing in this Agreement shall create or be deemed to
create a partnership, joint venture or a relationship of principal and agent or
of employer and employee between QND and QuantRx, or between any of the
Representatives, contractors or suppliers of QND, on the one hand, and of
QuantRx, on the other hand.

       

      9.           Indemnification;
Insurance.

       

      9.1           QuantRx
shall indemnify and hold harmless, and at QND’s request defend, QND and its
Affiliates, successors and assigns (and its and their officers, directors and
employees) from and against any and all claims, losses, liabilities, damages,
settlements, expenses and costs (including, without limitation, attorneys’ fees
and court costs) (collectively, “Claims and Losses”) which arise out of or
relate to (a) any material breach of this Agreement by QuantRx, including,
without limitation, any material breach of any representation or warranty of
QuantRx set forth in Section 6.  Notwithstanding anything to the
contrary set forth in this Section 9.1, (i) QuantRx shall not be obligated
to indemnify QND or any of its Affiliate, successors and assigns (and its and
their officers, directors and employees) until Claims and Losses incurred exceed
$25,000 in the aggregate and (ii) the maximum amount of indemnifiable Claims and
Losses that may be recovered under this Section 9.1 shall not exceed
$5,000,000.

       

      9.2           Commencing
on the date that is thirty (30) days after the date hereof, QuantRx will
maintain during the term of this Agreement and for three (3) years after
termination or expiration of this Agreement commercial general liability
insurance from a minimum “A-” AM Bests rated insurance company, including
contractual liability, with coverage limits of not less than five (5) million
per occurrence and ten (10) million in the aggregate.  The minimum
level of insurance set forth herein shall not be construed to create a limit on
QuantRx’s liability hereunder.  Such policies shall name QND and its
Affiliates as additional insured and provide a waiver of subrogation in favor of
QND and its Affiliates.  QND shall pay all premiums and other costs
and expenses related to such commercial general liability insurance to the
extent (i) the Services performed under this Agreement increase such premiums or
directly result in other costs and expenses, and (ii) such premiums, costs and
other expenses are reasonable and customary in nature.

       

      10.         Amendments and
Waivers.  This Agreement may not be amended, supplemented or
modified, except by an agreement in writing signed by each of the
parties.  Either party may waive compliance by the other party with
any term or provision of this Agreement; provided, that such waiver shall not
operate as a waiver of, or estoppel with respect to, any other or subsequent
failure.  No waiver shall be effective unless it is in writing and is
signed by the party asserted to have granted such waiver.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

      11.           Notices.  All
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (i) when delivered personally or by telecopy,
(ii) one (1) day following the day when deposited with a reputable,
established overnight courier service for delivery to the intended addressee, or
(iii) three (3) days following the day when deposited with the United
States Postal Service as first class, registered or certified mail, postage
prepaid and addressed as set forth below:

       

      
        
          	
                  If
      to QuantRx:

                	 
      	
                  QuantRx
      Biomedical Corporation

                
	 
      	 
      	
                  100
      S. Main Street, Suite 300

                
	 
      	 
      	
                  Doylestown,
      PA 18901

                
	 
      	 
      	
                  Facsimile
      No.: (267) 880-1596

                
	 
      	 
      	
                  Attention:
      Sasha Afanassiev, CFO

                
	 
      	 
      	 
      
	
                  If
      to QND:

                	 
      	
                  QN
      Diagnostics, LLC

                
	 
      	 
      	
                  c/o
      QuantRx Biomedical Corporation

                
	 
      	 
      	
                  5920
      NE 112th Avenue

                
	 
      	 
      	
                  Portland,
      OR 97220

                
	 
      	 
      	
                  Facsimile
      No.: (503) 252-9732

                
	 
      	 
      	
                  Attention:
      Manager

                

        

      

      

      12.         Severability.  If
any provision of this Agreement, or the application of any such provision to any
person or entity or set of circumstances, shall be determined to be invalid,
unlawful, void or unenforceable to any extent, the remainder of this Agreement,
and the application of such provision to persons or entities or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.

       

      13.         Counterparts.  This
Agreement may be executed (including, without limitation, by facsimile
signature) in one or more counterparts, with the same effect as if the parties
had signed the same document.  Each counterpart so executed shall be
deemed to be an original, and all such counterparts shall be construed together
and shall constitute one agreement.

       

      14.         Governing Law.  This
Agreement is to be construed in accordance with and governed by the internal
laws of the State of Delaware, without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the
parties.

       

      15.         Successors and
Assigns.  QuantRx shall not assign, or suffer or permit an
assignment (by operation of law or otherwise) of, its rights or obligations
under or interest in this Agreement without the prior written consent of QND;
provided, however, that QuantRx shall be permitted to assign its rights and
obligations under this Agreement to any of its Affiliates, provided that in the
case of any such assignment, QuantRx shall remain primarily responsible and
liable for its obligations hereunder and QuantRx shall use commercially
reasonable efforts to ensure that the Key Employees continue to perform the
Services.  Any purported assignment or other disposition by QuantRx,
except as permitted herein, shall be null and void.  For purposes of
this section, the terms “assign” and “assignment” shall be deemed to include
(i) a merger in which a party hereto is not the surviving entity,
(ii) a consolidation or division of a party hereto, (iii) a sale of
all or substantially all of the assets of a party hereto, or (iv) a change
of control resulting from a sale or repurchase of shares or similar transaction
involving a party hereto.  Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns.

      
        
           

        

        
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      16.         Entire
Agreement.  This Agreement contains the entire understanding
between the parties hereto with respect to the Services and supersedes all prior
and contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.  The parties intend that this
Agreement be the several, complete and exclusive embodiment of their agreement,
and that any evidence, oral or written, of a prior or contemporaneous agreement
that alters or modifies this Agreement shall not be admissible in any proceeding
concerning this Agreement.  The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.

       

      17.         Construction.  The
construction of this Agreement shall not take into consideration the party who
drafted or whose representative drafted any portion of this Agreement, and no
canon of construction shall be applied that resolves ambiguities against the
drafter of a document.  Each party acknowledges that: (a) it has read
this Agreement; (b) it has been represented in the preparation, negotiation and
execution of this Agreement by legal counsel of its own choice or has
voluntarily declined to seek such counsel; and (c) it understands the terms and
consequences of this Agreement and is fully aware of the legal and binding
effect of this Agreement.

       

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          8

          
            

          

        

        
           

        

      

      

      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of the Effective Date.

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 
      	
                                      QN
      DIAGNOSTICS, LLC

                                    
	 
      	 
      
	 
      	
                                      By:  QuantRx
      Biomedical Corporation

                                    
	 
      	 
      
	 
      	 
      	
                                      By:

                                    	
                                      /s/ Walter Witoshkin

                                    
	 
      	 
      	
                                      Title: Chief
      Executive Officer

                                    
	 
      	 
      
	 
      	
                                      By:  NuRx
      Pharmaceuticals, Inc.

                                    
	 
      	 
      
	 
      	 
      	
                                      By:

                                    	
                                      /s/ Dr. Harin
  Padma-Nathan

                                    
	 
      	 
      	
                                      Title: Chief
      Executive Officer

                                    
	 	 	 
	 	      
                                      QUANTRX BIOMEDICAL CORPORATION

                                    
	 	 	 
	 	      
                                      By:
      /s/ 

                                    	Walter
      Witoshkin

                                      
    
	 	      
                                      Name:
      Walter Witoshkin

                                    
	 	      
                                      Title:  Chief
      Executive
Officer

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      EXHIBIT
A

      

      Services

      

      1.           QuantRx
shall provide all services, supplies, equipment and facilities needed by QND to
continue the research, development, regulatory approval and commercialization of
the Lateral Flow Products, such as accounting, administration, management,
research and development, clinical trials management, marketing, procurement,
inventory control, warehousing, office space, insurance, administrations and
communications services.

      

      2.           QuantRx
shall arrange and implement manufacturing capabilities for the Lateral Flow
Products, and shall maintain necessary capacity for such
manufacturing.

      

      3.           QuantRx
shall plan and conduct any necessary clinical studies, and obtain in QND’s name
any governmental regulatory approvals, which may be needed for manufacturing,
marketing and selling the Lateral Flow Products.  All regulatory
approvals for the Lateral Flow Products will be transferred by QuantRx and held
in the name of QND.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      EXHIBIT
B

      

      Key
Employees

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      EXHIBIT
C

      Preliminary
Project Plan and Budget

    

    
      
        
        

      

      
        1Exhibit
10.2

      

      LIMITED
LIABILITY COMPANY AGREEMENT

      of

      QN
DIAGNOSTICS, LLC

      A
Delaware Limited Liability Company

      

      THE
INTERESTS CREATED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH
THE SECURITIES AUTHORITIES OF ANY STATE UNDER ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER SUCH LAWS OR UNLESS
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS IS
AVAILABLE.  THE SALE OR TRANSFER OF SUCH INTERESTS IS SUBJECT TO
CERTAIN ADDITIONAL RESTRICTIONS DESCRIBED IN THIS AGREEMENT.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      LIMITED
LIABILITY COMPANY AGREEMENT

      of

      QN
DIAGNOSTICS, LLC

       

      
        This
Limited Liability Company Agreement (this “Operating Agreement”) is made and
entered into as of the Effective Date by and between NuRx Pharmaceuticals, Inc.,
a Nevada corporation (“NuRx”), and QuantRx Biomedical Corporation, a Nevada
corporation (“QuantRx,” and collectively with NuRx, the “Members”), for the
purpose of forming a Delaware limited liability company.

         

      

      RECITALS

      

      
        WHEREAS,
the Members desire to enter into this Operating Agreement in its entirety for
the purpose of entering into a joint venture with respect to the research,
development, manufacture, commercialization and sale of Lateral Flow Products
and to set forth the rights and liabilities of the Members with respect and the
business and affairs of the Company from and after the date of this Operating
Agreement; and

         

      

      
        WHEREAS,
the Members are contributing cash and/or assets to the Company in the amounts
set forth herein.

      

      NOW,
THEREFORE, in consideration of the mutual promises contained herein, and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

      

      ARTICLE
I

       

      DEFINITIONS

       

      The
following terms, as used herein, shall have the following respective
meanings:

       

      1.1           Act
- The Delaware Limited Liability Company Act, 6 Del.C. §18-101, et seq., as
amended from time to time.

       

      1.2           Additional
Member - A member other than an Initial Member who has acquired a Membership
Interest from the Company.

       

      1.3           Affiliate
- Any corporation, organization or other entity controlled by a Member or
controlling such Member or under common control.  Control means the
ownership of securities of the corporation, organization or other entity (other
than by way of security only), to which are attached more than fifty (50%)
percent of the votes that may be cast to elect directors and such votes are
sufficient, if exercised, to elect a majority of the directors of the
corporation, organization or other entity.

       

      1.4           A-Reader
– A Lateral Flow Strip reader that does not use NanoFL
Technology.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      1.5           Assets
- Any assets real or personal, tangible or intangible, including money and any
legal or equitable interest in such assets, but excluding services and promises
to perform services in the future.

       

      1.6           Assignee
- A transferee of a Membership Interest who has not been admitted as a
Member.

       

      1.7           Assignor
- A transferor of a Membership Interest.

       

      1.8           Budget
- An annual budget
and financial plan of the Company setting forth the Company's capital
requirements on a monthly basis, as unanimously approved and revised monthly by
the JV Board.

       

      1.9           Business
Day - Any day other than Saturday, Sunday or any legal holiday observed in the
State of Delaware, California or Pennsylvania.

       

      1.10         Capital
Account - The account maintained for a Member or Assignee determined in
accordance with ARTICLE V.

       

      1.11         Capital
Contribution - Any contribution actually made to the capital of the Company
pursuant to ARTICLE V by or on behalf of a Member or Assignee.

       

      1.12         Certificate
- The Certificate of Formation of the Company.

       

      1.13         Company
- The company named in Section 2.3 of this Operating Agreement, and any
successor thereof.

       

      1.14         Company
Assets - Any Assets owned by the Company.

       

      1.15         Company
Expiration Notice - As specified in Section 12.3.2.3.

       

      1.16         Company
Minimum Gain - The extent to which a nonrecourse liability exceeds the adjusted
tax basis of the Company Assets it encumbers.  The amount of Company
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(d) of the IRC by substituting the terms “Company” and “Holder” for the
terms “partnership” and “partner,” respectively, in each  place they
appear therein.

       

      1.17         Company
Refusal Period - As specified in Section 12.3.2.2.

       

      1.18         Completion
Date - As specified in Section 11.2.

       

      1.19         Completion
List - As specified in Section 11.1

       

      1.20         Contributing
Member - As specified in Section 5.4.

       

      1.21         Contribution
- A contribution as defined by the Act.

       

      1.22         Contribution
Agreement - The Contribution Agreement, dated as of the date hereof, by and
among QuantRx, NuRx and the Company.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      1.23         Co-Selling
Member - As specified in Section 12.5.1.

       

      1.24         Cure
Period - As specified in Section 5.4.1.

       

      1.25         Damages
- As specified in Section 4.6.1.

       

      1.26         Development
and Services Agreement.  The Development and Services Agreement, dated
as of the date hereof, by and among QuantRx, NuRx and the Company.

       

      1.27         Dissociated
Member - Any person who ceases to be a Member.

       

      1.28         Dissolution
Event - An event, the occurrence of which will result in the dissolution of the
Company under ARTICLE X, unless the Members agree to the contrary.

       

      1.29         Distribution
- A distribution of Money or Assets made pursuant to this Operating
Agreement.

       

      1.30         Economic
Interest - A Person’s right to share in the income, gains, losses, deductions,
credits or similar items of, and to receive Distributions from, the Company,
exclusive of any other rights of a Member including, without limitation, the
right to vote or to participate in management, or any right to information
concerning the business and affairs of the Company.

       

      1.31         Effective
Date - The date the Certificate is filed with the Delaware Secretary of
State.

       

      1.32         Escrow
Amount - As specified in Section 5.2.

       

      1.33         Field
- The scope of the business of the Company as set forth in Section
2.1.

       

      1.34         First
Milestone - the development of the Q-Reader working prototype by November 25,
2009 and successful demonstration at the Medica Device Conference in
Germany.

       

      1.35         First
Milestone Distribution – As specified in Section 7.5.1.

       

      1.36         Holder
- A Person holding an Economic Interest, whether as a Member or as an
Assignee.

       

      1.37         Income
and Losses - With respect to a taxable year of the Company (or other period for
which Income or Losses must be computed), the Company’s taxable income or loss
for federal income tax purposes, as determined by the tax advisors employed by
the Company for this purpose, except that: (1) any tax-exempt income of the
Company as described in IRC Section 705(a)(1)(B) shall be treated as gross
income of the Company, (2) any nondeductible noncapital expenditures as
described in IRC Section 705(a)(2)(B) shall be treated as a deduction of the
Company, and (3) if any Company Assets is reflected on the books of the Company
at a value (“Book Value”) different from the adjusted tax basis of such Assets,
any item of Income or Loss with respect to such Assets shall be computed by
reference to such Book Value.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      1.38         Indemnified
Parties - As specified in Section 4.6.1.

       

      1.39         Initial
Members - Those persons identified on Exhibit A attached
hereto and made a part hereof by this reference who have executed the Operating
Agreement.

       

      1.40         Intellectual
Property Assets - As specified in Section 1.1(a) of the Contribution
Agreement.

       

      1.41         IRC
- The Internal Revenue Code of 1986, as amended.

       

      1.42         JV
Board - The board formed pursuant to Section 4.2 which controls and delegates
the operation of the Company.

       

      1.43         JV
Board Member - Each member of the board formed pursuant to Section 4.2 which
controls and delegates the operation of the Company.

       

      1.44         JV
Markets - The markets for sales to all existing and potential customers for
Lateral Flow Products, which includes all markets on a worldwide basis, whether
now existing or subsequently developed.

       

      1.45         Lateral
Flow Strip - A positive-read test strip used in lateral flow chromatography, in
which a test sample fluid, suspected of containing an analyte, flows (for
example by capillary action) through or on the strip.  The test fluid and
any suspended analyte can flow to a detection zone where the presence or absence
of the analyte is signaled.

       

      1.46         Lateral
Flow Intellectual Property - Any intellectual property rights which QuanRx owns,
licenses or otherwise possesses or acquires any rights to use, relating to the
Lateral Flow Strip, the A-Reader and the Q-Reader, including any data,
inventions, information, processes, know-how, patents, patent applications,
trademarks, trademark applications, trade secrets, systems designs, copyrights,
mask works, compositions of matter, tangible material organisms, products
thereof, apparatus, methods, processes, and similar intellectual property rights
and physical manifestations or embodiments thereof, including, without
limitation, documents, records, schematics, product samples, toolings and
specifications, including all contracts of QuantRx relating thereto; provided,
however, that Lateral Flow Intellectual Property shall not include any
intellectual property, intellectual property rights or other rights under the
Technology License Agreement, dated July 2008, by and between Church &
Dwight Co., Inc. and QuantRx.  For avoidance of doubt, Lateral Flow
Intellectual Property shall include any intellectual property which QuantRx
acquired under the PRIA Agreement.

       

      1.47         Lateral
Flow Products - Any products that contain Lateral Flow Intellectual
Property.

       

      1.48         Majority
- The affirmative vote or consent of Members having Percentage Interests in
excess of one-half of the Percentage Interests of all the Members entitled to
vote on a particular matter.

       

      1.49         Manager
- The Manager designated by the JV Board to manage the affairs of the Company as
provided under ARTICLE IV hereof.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      1.50         Member
- A member as defined by the Act, including all Initial Members and Additional
Members (but not including any Assignee or any Dissociated Member).

       

      1.51         Member
Expiration Notice - As specified in Section 12.3.3.2.

       

      1.52         Member
Refusal Period - As specified in Section 12.3.3.2.

       

      1.53         Member’s
Share - means as to the Right of Co-Sale, an amount determined (i) by
multiplying the Remaining Offered Interest by (ii) the Percentage Interest
of such Member.

       

      1.54         Membership
Interest - A membership interest as defined by the Act.

       

      1.55         Milestones
- Each of the First Milestone, the Second Milestone and the Third
Milestone.

       

      1.56         Milestone
Cure Period - The sixty day period following QuantRx’s failure to reach any of
the Milestones.

       

      1.57         Money
- Cash or other legal tender of the United States, or any obligation that is
immediately reducible to legal tender without delay or
discount.  Money shall be considered to have a fair market value equal
to its face amount.

       

      1.58         NanoFL
Core Technology means multilens optical assembly and microfluidics.

       

      1.59         NanoFL
Technology means NanoFL Core Technology with fluorescent tagging.

       

      1.60         Net
Sales - The amount billed, after deducting trade, dealer, and/or quantity
discounts actually allowed for commercial worldwide sales of products sold by a
Member or its affiliate or sublicensees under Section 8.3 to independent
unrelated parties in bona fide arm’s-length transactions, less the following
deductions:

       

       (i)          sales
and other excise taxes and duties absorbed or allowed;

       

       (ii)         amounts
billed to cover transportation costs; and

       

       (iii)        amounts
repaid or credited by reason of rejections, defects, or returns.

       

      1.61         Non-Contributing
Member - As specified in Section 5.4.

       

      1.62         Notice
- Except as otherwise expressly provided herein, all Notices shall be in
writing.  Notice to the Company shall be considered given when mailed
by first class mail postage prepaid addressed to the Manager in care of the
Company at the address of the principal place of business of the
Company.  Notice to a Member shall be considered given when mailed by
first class mail postage prepaid addressed to the Member at the address
reflected in the books and records of the Company unless the Member has given
the Company a Notice of a different address.

       

      1.63         NuRx
Change of Control - Any of the following events:

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      (i)           the
acquisition by any person or group (within the meaning of Sections 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934) of beneficial ownership of any
capital stock of NuRx, if after such acquisition, such person or group would be
the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of securities of NuRx representing more
than fifty percent (50%) of the combined voting power of the NuRx’s then
outstanding securities entitled to vote generally in the election of
directors;

       

      (ii)          the
approval by the NuRx’s stockholders of a merger or consolidation of NuRx, with
any other person, other than a merger or consolidation which would result in the
NuRx’s voting securities outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of NuRx’s voting securities or such surviving entity’s
voting securities outstanding immediately after such merger or
consolidation;

       

      (iii)          the
sale, lease, transfer, exclusive license or other disposition, in a single
transaction or series of related transactions, by NuRx or any of its
subsidiaries of all or substantially all the assets of NuRx and its subsidiaries
taken as a whole  or the sale or disposition (whether by merger or
otherwise) of one or more subsidiaries of NuRx if substantially all of the
assets of NuRx and its subsidiaries taken as a whole are held by such subsidiary
or subsidiaries, except where such sale, lease, transfer, exclusive license or
other disposition is to a wholly owned subsidiary of NuRx; or

       

      (iv)         the
current members of the board of directors of NuRx ceasing to constitute at least
a majority of NuRx’s directors.

       

      1.64   
     NuRx Cure Period - As specified in Section
5.4.3.

       

      1.65    
    NuRx Distribution - As specified in Section
7.5.2.

       

      1.66     
   NuRx Initial Contribution - As specified in Section
5.2.

       

      1.67      
  NuRx Repayment Period - As specified in Section 7.5.3.

       

      1.68     
   NuRx Required Contribution - As specified in Section
5.4.3.

       

      1.69     
   Offered Interest - As specified in Section 12.1.

       

      1.70       
 Offered Price - As specified in Section 12.1.

       

      1.71       
 Operating Agreement - This Limited Liability Company Agreement and all
amendments thereto adopted in accordance with this Limited Liability Company
Agreement and the Act.

       

      1.72        
Operating Distribution - As specified in Section 7.1.

       

      1.73        
Organization - A Person other than a natural person.  Organization
includes, without limitation, corporations (both non-profit and other
corporations), partnerships (both limited and general), trusts, joint ventures,
limited liability companies, and unincorporated associations, but the term does
not include joint tenancies and tenancies by the entirety.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      1.74     
   Percentage Interest - With respect to a Member, the percentage
set forth opposite such Member’s name on Exhibit A hereto, as
such Exhibit is amended from time to time in accordance with Section 3.2
hereof, and with respect to a Holder not a Member, the Percentage Interest or
part thereof corresponding to the portion of a Member’s Economic Interest such
Holder has acquired.

       

      1.75   
     Person - A person as defined by the
Act.

       

      1.76    
    PRIA Agreement – The Asset Purchase Agreement, by and
between PRIA Diagnostics, LLC and QuantRx, dated as of the date
hereof.

       

      1.77      
  Proceeding - Any judicial or administrative trial, hearing or other
activity, civil, criminal or investigative, the result of which may be that a
court, arbitrator, or governmental agency may enter a judgment, order, decree,
or other determination which, if not appealed and reversed, would be binding
upon the Company, a Member or other person subject to the jurisdiction of such
court, arbitrator, or governmental agency.

       

      1.78      
  Q-Reader - A Lateral Flow Strip reader using NanoFL
Technology.

       

      1.79      
  QuantRx Required Contribution - As specified in Section
5.4.2.

       

      1.80      
  Regulations - Except where the context indicates otherwise, the
permanent, temporary or proposed regulations of the Department of the Treasury
promulgated under the IRC as such regulations may be amended from time to
time.

       

      1.81      
  Remaining Offered Interest - The portion of the Offered Interest
which the Company and the Members have elected not to purchase pursuant to their
Right of First Refusal in Section 12.3 of this Operating Agreement.

       

      1.82       
 Related Agreements - As specified in Section 5.5.

       

      1.83     
   Remaining Offered Interest - As specified in Section
12.4.

       

      1.84      
  Right of Co-Sale - The right of co-sale provided to the Members
pursuant to this  Agreement.

       

      1.85      
  Right of First Refusal - The right of first refusal provided to the
Company and the Members pursuant to this Operating Agreement.

       

      1.86      
  Sale Transaction - Whether effected in one transaction or a series
of transactions, (a) any merger, consolidation, reorganization or other business
combination pursuant to which the business of the Company is combined with that
of one or more purchasers or one or more persons formed by or affiliated with a
purchaser, including, without limitation, any joint venture (whether or not such
joint venture is affiliated with the Company) in a transaction in which the
Members of the Company immediately prior to the closing of such transaction hold
less than 50% of the outstanding Membership Interests of the surviving company
following such transaction, (b) the acquisition, directly or indirectly, by one
or more purchasers of more than 50% of the Membership Interests of the Company
by way of a tender or exchange offer, negotiated purchase or other means (other
than a financing), or (c) the acquisition, directly or indirectly, by one or
more purchasers, of all or a substantial portion of the Assets of, or of any
right to all or a substantial portion of the revenues or income of, the Company
by way of a negotiated purchase, lease, license, exchange, joint venture or
other means.

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      1.87   
     Second Milestone - the submission of an FDA
application for 510(k) clearance for the Q-Reader and a test strip based on the
Lateral Flow Intellectual Property to test for thyroid conditions by March 31,
2010.

       

      1.88    
    Second Milestone Distribution – As specified in Section
7.5.2.

       

      1.89      
  Selling Member - As specified in Section 12.1.

       

      1.90      
  Selling Member’s Notice - As specified in Section 12.1.

       

      1.91        
Sustaining Contribution Period - As specified in Section 5.4.

       

      1.92  
      Tangible Assets - As specified in Section
1.1(b) of the Contribution Agreement.

       

      1.93  
      Taxing Jurisdiction - Any state, local, or
foreign government that collects tax, interest or penalties, however designated,
on any Member’s share of the income or gain attributable to the
Company.

       

      1.94     
   Term - As specified in Section 2.7.

       

      1.95      
  Third Milestone - a first article or pre-production sample of the
Q-Reader by March 31, 2010.

       

      1.96       
 Transfer - means and includes any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise or
descent, or other transfer or disposition of any Membership Interest, including
but not limited to transfers to receivers, levying creditors, trustees or
receivers in bankruptcy proceedings or general assignees for the benefit of
creditors, whether voluntary or by operation of law, directly or indirectly,
except:

       

      (i)           any
transfers of a Membership Interest by a Member to a Member’s affiliate, spouse,
lineal descendant or antecedent, father, mother, brother or sister of a Member,
the adopted child or adopted grandchild of a Member, or the spouse of any child,
adopted child, grandchild or adopted grandchild of a Member, or to a trust or
trusts for the exclusive benefit of a Member or a Member’s family members, or
transfers of a Membership Interest by the Member by devise or descent, in all
cases if the transferee or other recipient executes a counterpart copy of this
Operating Agreement and becomes bound thereby in the same manner as a Member;
and

       

      (ii)           any
transfer of a Membership Interest by a Member made pursuant to a Sale
Transaction.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      ARTICLE
II

       

      FORMATION

       

      2.1           Scope of Business of the
Membership.  The scope of the business of the Company (defined
in Section 2.1 for convenience as the “Field”) shall be research,
development, manufacture and commercialization of Lateral Flow Products for sale
into the JV Markets.  The parties agree that since the initial
formation of the Company there never has been, nor will there be during the
continuance of the Company, any right or license granted or construed to be
granted by implication, estoppel or otherwise by one Member or any of its
Affiliates to the other Member or any of its Affiliates by the terms of this
Operating Agreement and the Related Agreements with respect to any activities
that are outside the Field.

       

      
        The
Company may, subject to this Operating Agreement and the Related Agreements,
exercise such general powers as may be necessary to pursue its business within
this scope of business including, without limitation, the incurrence of
indebtedness, but only with the consent of the JV Board and/or the Members, as
provided for elsewhere in this Operating Agreement.  The Company shall
not engage in any business other than that described in this Section 2.1
without the prior written consent of the Members.

         

      

      2.2           Powers.  The
Company shall have all powers necessary to accomplish its purposes without the
necessity of their specific enumeration herein including, without limitation,
all powers described in Section 18-106 of the Act.

       

      2.3           Formation and
Name.  The Members hereby agree to form a limited liability
company under the name of QN Diagnostics, LLC (the “Company”), by the filing of
the Certificate pursuant to the provisions of Section 18-201 of the
Act.  The Members desire to govern the affairs of the Company by
entering into this Operating Agreement.

       

      2.4           Principal Place of
Business.  The location of the principal place of business of
the Company shall be as determined by the JV Board from time to
time.

       

      2.5           Registered Office and
Registered Agent.  The Company’s registered office shall be
located at 1209 Orange Street, Wilmington, Delaware, and the name of its initial
registered agent at such address shall be The Corporation Trust
Company.  The Company may change the registered office and/or the
registered agent at such times and from time to time as the JV Board may deem
advisable.

       

      2.6           Records to be
Maintained.  The Company shall maintain and make available such
records as may be required by the Act.

       

      2.7           Term.  The
Term of this Operating Agreement shall commence upon the date the Certificate is
filed and shall continue until terminated pursuant to the terms of this
Operating Agreement or the Act.

       

      2.8           Qualification in Other
Jurisdictions.  The JV Board or Manager shall cause the Company
to be qualified or registered under applicable laws of any jurisdiction in which
the Company transacts business.

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      ARTICLE
III

       

      MEMBERS

       

      3.1           Admission of Additional
Members.  Additional Members may be admitted to the Company
upon the unanimous consent of the Members, which such consent may be granted in
their sole discretion.  The Capital Contribution of any Additional
Member shall be determined by the Members consenting to the
admission.  Each Additional Member shall execute a counterpart of this
Operating Agreement, agreeing thereby to be bound by all of the terms and
provisions hereof.

       

      3.2           Amendment of Member
Listing.  Upon admission of an Additional Member Exhibit A hereto
shall be amended accordingly.

       

      3.3           Payment of
Costs.  All reasonable expenses, including attorneys’ fees,
incurred by the Company in connection with the admission of an Additional Member
shall be borne by such Additional Member, unless otherwise agreed by the
Members.

       

      3.4           Limited Liability of
Members.  Members shall not be personally liable for the
liabilities of the Company.

       

      3.5           Voting
Rights.  All Members shall be entitled to vote on any matter
which requires the vote of the Members under this Operating
Agreement.  Unless otherwise specified herein, actions to be taken by
Members require the consent of a Majority of the Percentage Interests
represented at a duly held meeting of the Members or, if such action is taken by
written consent, by a Majority of all of the Percentage Interests.  A
meeting shall be deemed to be “duly held” if (a) called by any Member holding in
excess of twenty percent (20%) of the outstanding Percentage Interests and (b)
such Member provides written notice to each other Member at least three (3)
Business Days prior to such meeting.  All Members must be given the
opportunity to participate in any such meeting
telephonically.  Members may vote at any meeting by
proxy.  Notwithstanding the foregoing, the following actions require
the consent described below:

       

      
        
          
            	
                    Action

                  	 	
                    Consent Required

                  
	 
      	 	 
      
	
                    Any
      amendment of the Certificate or this Operating Agreement.

                  	 	
                    Both
      the Consent of the JV Board and the Consent of Members Holding A Majority
      Of Percentage Interests

                  
	 
      	 	 
      
	
                    Agreement
      of merger as defined in Section 17-551 of the Act.

                  	 	
                    Both
      the Consent of the JV Board and the Consent of Members Holding A Majority
      Of
Percentage Interests

                  

          

        

      

       

      3.6          Right of Inspection;
Provision of Records to Members.

       

      3.6.1     
  Right of
Inspection.  Each Member and JV Board Member has the right,
upon reasonable request, for purposes reasonably related to the interest of that
Person as a Member or JV Board Member, to each of the following at the expense
of the Company:

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      3.6.1.1          To
inspect and copy during normal business hours any of the records required to be
maintained by Section 2.6 above; and

       

      3.6.1.2          To
obtain from the JV Board or Manager, promptly after becoming available, a copy
of the Company’s federal, state, and local income tax or information returns for
each year.

       

      3.6.2      
  Copy of
Amendment of Certificate and Operating Agreement.  The JV Board
or Manager shall promptly furnish to a Member a copy of any amendment to the
Certificate or this Operating Agreement executed by the JV Board or Manager
pursuant to a power of attorney from the Member.

       

      3.6.3       
 Tax
Information.  The Company shall send or cause to be sent to
each Holder within ninety (90) calendar days after the end of each taxable year
such information as is necessary to complete their respective federal and state
income tax or information returns, and, if the Company has thirty-five (35) or
fewer Holders, a copy of the Company’s federal, state, and local income tax or
information returns for the year.

       

      3.6.4         Relationship with
Act.  Nothing in this Section 3.6 shall be construed as in
any way limiting a Member’s right of inspection as set forth in Section 18-305
of the Act.

       

      3.7           Representations and
Warranties.  Each Member hereby represents and warrants to the
Company and each other Member that:

       

      3.7.1         If
that Member is an Organization, that it is duly organized, validly existing, and
in good standing under the law of its state of organization and that it has full
organizational power to execute and agree to this Operating Agreement and
Related Agreements to perform its obligations hereunder;

       

      3.7.2         This
Operating Agreement and the Related Agreements will not materially breach or
cause or create a condition of material breach under any other agreement to
which a Member is a party which affects or would reasonably be expected to
affect its performance of this Operating Agreement or any of the Related
Agreements;

       

      3.7.3         This
Operating Agreement and each of the Related Agreements have been duly
authorized, executed, and delivered by it and constitute a valid and binding
agreement of such Member enforceable against such Member in accordance with its
terms, subject only to the usual legal qualifications respecting insolvency and
discretionary remedies;

       

      3.7.4         As
of the date on which it signed this Operating Agreement, each Member is not
aware of any law, regulation, or government policy which would effectively
prohibit or substantially restrict or interfere with the carrying out of its
obligations under this Operating Agreement or the Related
Agreements;

       

      3.7.5         Each
Member has full power and authority to transfer and assign to the Company the
Intellectual Property Assets and the Tangible Assets such that all of the
provisions of this Operating Agreement and each Related Agreement may be
performed; and

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      3.7.6         Each
Member is acquiring its interest in the Company for its own account for
investment purposes only and not with a view to the resale or distribution of
all or any part of such interest and such Member has no present intention,
agreement or arrangement to divide its participation with others or to sell,
assign, transfer or otherwise dispose of all or any part of such
interest.  Each Member hereby authorizes the JV Board, the Manager and
the Company to disclose such information as may be required under any state or
federal securities laws.  Each Member is aware that the interests have
not been registered under the Securities Act of 1933, or any state securities
laws, and that such interests may not be resold or otherwise disposed of unless
they are registered thereunder or an exemption from registration is
available.  Accordingly, each Member is aware that it must bear the
economic risk of investment in the Company for an indefinite period of
time.  Each Member is capable of bearing that risk.

       

      ARTICLE
IV

       

      MANAGEMENT

       

      4.1          Action Only with Written
Approval of Members.  The Company shall not, except with the
express written approval of all Members:

       

      4.1.1         Admit
any Additional Member into the Company, or otherwise issue any additional equity
or other interests in the Company or any instruments or rights, contingent or
otherwise, to acquire such interest;

       

      4.1.2         Adopt
or amend any by-law, resolution or rule governing the management of the Company,
and in no event shall any such by-law, resolution or rule be inconsistent with
the terms and conditions of this Operating Agreement;

       

      4.1.3         Incur
indebtedness or use any Assets or the Company as security for any indebtedness
of the Company or obligate the Company as a surety, guarantor or accommodation
party to any obligation of any other Person, other than in the ordinary course
of the business of the Company;

       

      4.1.4         Enter
into a Sale Transaction;

       

      4.1.5         Dissolve
the Company; provided that in no event shall the Company be dissolved except as
permitted under the terms and conditions of this Operating
Agreement;

       

      4.1.6         Sell,
assign, lease or otherwise dispose of any material Assets of the Company, other
than in the ordinary course of the business of the Company; or

       

      4.1.7         Authorize
any agreement or transaction with any Member or any of its Affiliates, or any JV
Board Member, other than the Related Agreements, or authorize any renewal,
extension, or amendment of, or any waiver or consent under, any of the Related
Agreements.

      
        
           

        

        
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      4.2           JV Board and Management
Authority.  Except as delegated to the Manager of the Company
by by-law or resolution of the JV Board, any and all actions by or on behalf of
the Company out of the ordinary course of business of the Company shall require
the approval of the JV Board.  The JV Board shall be responsible for
the management of the business and affairs of the Company and shall consist of
five members, two of whom shall be appointed by NuRx, two of whom shall be
appointed by QuantRx and one of whom shall be mutually selected by NuRx and
QuantRx.  At any time and from time to time, either Member may remove
and appoint a replacement for any JV Board Member appointed by it.  In
the case of a JV Board Member mutually selected by NuRx and QuantRx, both
Members must consent to the removal and appoint a replacement.  In the
event of the death, mental incompetency, or resignation of a member of the JV
Board, the Member who appointed such JV Board Member may similarly appoint a
replacement, and in the case of a JV Board Member mutually selected by NuRx and
QuantRx, both Members may similarly appoint the replacement.  The
Company shall not be obliged to pay any salary, fees, or other expenses to the
JV Board Members or their employers for acting as members.

       

      Notwithstanding
the foregoing, in the event either Member (i) fails to make a sustaining Capital
Contribution in accordance with Section 5.4, (ii) materially breaches its
obligations under the Development and Services Agreement and fails to cure such
breach within 60 days after receipt of notice of such breach, or (iii) files for
bankruptcy or other similar reorganization, one JV Board Member appointed by
such Member shall be removed by such Member automatically and without any action
of the Member and replaced with one JV Board Member appointed by the other
Member.  In addition, (i) if QuantRx fails to reach any of the
Milestones by the expiration of the applicable Milestone Cure Period, one JV
Board Member appointed by QuantrRx shall be removed by QuantRx automatically and
without any action of QuantRx and replaced with one JV Board Member appointed
NuRx, and (ii) if NuRx fails to repay a NuRx Distribution (as defined in Section
7.5.2) prior to the expiration of the NuRx Repayment Period (as defined in
Section 7.5.3), then one JV Board Member appointed by NuRx shall be removed by
NuRx automatically and without any action of NuRx and replaced with one JV Board
Member appointed QuantRx.

       

      The
Company shall not, without the approval of the JV Board, including at least one
JV Board Member appointed by each of NuRx and QuantRx, do or cause to be done
any of the following:

       

      4.2.1         Make
capital expenditures in excess of $100,000 per transaction except as otherwise
set forth in the Budget;

       

      4.2.2         Make
research and development expenditures exceeding an aggregate of $100,000 per
fiscal year except as otherwise set forth in the Budget;

       

      4.2.3         Approve
the Budget and/or increase the Budget by more than ten percent (10%); provided
however, that in the event the JV Board cannot agree on an amended Budget, the
current Budget shall remain in place without any action of the JV
Board;

       

      4.2.4         Select
Lateral Flow Products for development by the Company or authorize research and
development expenses for each of the Lateral Flow Products except as otherwise
set forth in the Budget;

      
        
           

        

        
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      4.2.5         Acquire
any stock or other ownership interest in any other entity, or acquire
substantially all the assets of any other entity for a price of $100,000 or more
for any one acquisition or $250,000 or more in the aggregate during any one
fiscal year;

       

      4.2.6         Acquire
any technology of third parties, or sell, license, sublicense, or otherwise
transfer any technology owned, licensed to, or used by the Company, except (i)
with respect to a Sale Transaction or (ii) in the ordinary course of
business;

       

      4.2.7         Authorize
any agreement for research and/or development for the Company by a third party
for a cost of $100,000 or more for any one project, or $250,000 or more in the
aggregate during any one fiscal year or appoint any third party to fulfill any
Company operation or function under this Operating Agreement or any of the
Related Agreements;

       

      4.2.8         Authorize
Distributions to the Members;

       

      4.2.9         Select
lawyers or auditors to represent the Company;

       

      4.2.10       Commence
any legal proceeding against any third party or compromise, waive, arbitrate or
otherwise settle any claim or demand of or against the Company in excess of
$100,000, except with respect to any legal proceeding between the parties to
this Operating Agreement;

       

      4.2.11       Adopt
the business plan of the Company based upon the projections and forecasts set
forth in the Preliminary Project Plan and Budget of the Company, dated July 27,
2009, and/or amend the business plan; or

       

      4.2.12       Adopt,
establish or otherwise enter into any new employee benefit plan, agreement,
program, policy or other arrangement, including any employment agreements, or
materially amend any of the foregoing.

       

      Notwithstanding
the foregoing, in the event a Member has less than two JV Board Members
appointed to the JV Board, the approval of the remaining JV Board Member
appointed by such Member shall not be required to take any of the foregoing
actions.

       

      Unless
otherwise specified herein, actions to be taken by the JV Board require the
consent of a majority of the total JV Board Members at a duly held meeting of
the Members, regardless of the number of JV Board Members actually present and
voting at any meeting.  A meeting shall be deemed to be “duly held” if
(a) called by any JV Board Member appointed by NuRx or QuantRx and (b) such JV
Board Member provides written notice to each other JV Board Member at least
three (3) Business Days prior to such meeting.  All JV Board Members
must be given the opportunity to participate in any such meeting
telephonically.  Members of the JV Board may vote at any meeting by
proxy.  Nothing herein is intended to limit or restrict the fiduciary
duty a Member may have to the Company or the other Member under applicable law
including, without limitation, in the event such Member shall have the voting
power to cause the Company to take an action without the consent other Member’s
representatives on the JV Board.

      
        
           

        

        
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      4.3           Action by Written
Consent.  Approval of the JV Board required prior to any action
to be taken by or on behalf of the Company may be given without the necessity
for a meeting of the JV Board by written instrument executed by the required
number of JV Board Members.

       

      4.4           Action Against
Member.  Any notice, demand, claim, or proceeding given, made,
instituted, or prosecuted on behalf of the Company to or against any Member,
shall be deemed to have been duly given, made, instituted, or prosecuted by the
Company if given, made, instituted, or prosecuted by the other Member, acting in
its own name or in the name of the Company.  Nothing in this Operating
Agreement shall be construed to require approval of the JV Board for enforcement
by the Company of any specific right of the Company against a Member under
circumstances where such Member would have voting power to block such
approval.

       

      4.5           Operational
Management.  It is the intention of the Members that the
Company should, to the maximum extent consistent with reasonable convenience and
cost effectiveness, delegate to and/or contract with the Members for all
functions of the Company and that the Company should operate with minimal
employees, facilities and costs.  Subject to the foregoing, the
following shall apply to the operations of the Company.

       

      The JV
Board shall designate a manager (the “Manager”) of the Company.  The
Manager shall, subject to the express provisions set forth in this Operating
Agreement, be responsible for any day-to-day operations of the Company delegated
by the JV Board.  The JV Board may change the Manager at any
time.  Prior to each fiscal year, the JV Board shall prepare and
submit to the Members a projected Budget for the Company.  The JV
Board shall review the Budget on a monthly basis and revise the Budget as
necessary.  The Company shall reimburse the Members for properly
approved services provided to the Company by its employees, and shall reimburse
the Members as applicable, for services provided to the Company pursuant to the
terms and conditions of the Development and Services Agreement.

       

      4.6           Indemnification and
Liability Insurance.

       

       4.6.1        Except
as limited by law, the Company shall indemnify the Manager, each JV Board
Member, the Members, any Affiliate of the JV Board Members, the Members and the
Manager, and their respective successors and assigns (“Indemnified Parties”)
from and against any and all liabilities, judgments, obligations, losses,
damages, taxes and interest and penalties thereon, claims, actions, suits or
other costs, expenses and disbursements of any kind and nature whatsoever
(“Damages”) in any way related to or arising out of this Operating Agreement,
the business of the Company or the action or inaction of such Person hereunder,
which may be imposed on, incurred by or asserted at any time against any such
Indemnified Party, except that no indemnification shall be provided for any
Indemnified Party regarding any matter as to which it shall be finally
determined that such Indemnified Party did not act in good faith and in the
reasonable belief that its action was in the best interests of the Company, or
with respect to a criminal matter, that it had reasonable cause to believe that
its conduct was unlawful.  The indemnification contained in this
Section 4.6.1 shall survive termination of this Operating Agreement and shall
inure to the benefit of the heirs and personal representatives of the
Indemnified Parties.  The provisions of this Section 4.6.1 shall not be
construed to limit the power of the Company to indemnify the Indemnified Parties
to the fullest extent permitted by law or to enter into specific agreements,
commitments or arrangements for indemnification permitted by law.  The
absence of any express provision for indemnification herein shall not limit any
right of indemnification existing independently of this Section
4.6.1.

      
        
           

        

        
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4.6.2        Except with respect to
claims by a Member against the Company, and except as limited by law, Damages
incurred by an Indemnified Party in defending any action, suit or proceeding,
including a proceeding by or in the right of the Company, shall be paid by the
Company to such Indemnified Party in advance of final disposition of the
proceeding upon receipt of its written undertaking to repay such amount if such
Indemnified Party is determined pursuant to Section 4.6.1 or adjudicated to be
ineligible for indemnification, which undertaking shall be an unlimited general
obligation but need not be secured and may be accepted without regard to the
financial ability of such Indemnified Party to make repayment.

       

        
4.6.3        The Company shall have the
power to purchase and maintain insurance on behalf of the JV Board Members and
Manager against any liability asserted against or incurred by the JV Board
Members and Manager in their respective capacities with the
Company.

       

      4.7           Actions of the JV
Board.  The JV Board, and as applicable, the Manager, have the
power to bind the Company as provided in this ARTICLE IV.  No act of a
Member in contravention of such a determination shall bind the Company to
Persons having knowledge of such determination.

       

      4.8           Authority of Members to Bind
the Company.  The Members hereby agree that only the JV Board,
and as applicable, the Manager, shall have the authority to bind the
Company.  No Member other than the JV Board and the Manager shall take
any action as a Member to bind the Company, and each Member shall indemnify the
Company for any costs or damages incurred by the Company as a result of the
unauthorized action of such Member.

       

      ARTICLE
V

       

      CAPITAL

       

      5.1           QuantRx Initial
Contributions.  On the Effective Date, QuantRx shall contribute
the Intellectual Property Assets pursuant to the terms of the Contribution
Agreement.  Upon the request of the JV Board, QuantRx shall contribute
all of the Tangible Assets pursuant to the terms of the Contribution
Agreement.  Such initial contributions are referred to herein
collectively as the “QuantRx Initial Contribution”).  The Members
acknowledge and agree that the fair market value of the Intellectual Property
Assets as of the Effective Date is $5,450,000, the fair market value of the
Tangible Assets is $100,000.  The Capital Account of QuantRx shall be
increased to reflect such contributions on the date of each such
contribution.

       

      5.2           NuRx Initial
Contributions.  On the Effective Date, NuRx shall contribute to
the Company an amount in cash equal to $5,000,000 (the “NuRx Initial
Contribution”).  The Capital Account of NuRx shall be increased as to
reflect such contribution on the date of such
contribution.  Notwithstanding the foregoing, the Company shall hold
$1,500,000 of the NuRx Initial Contribution in escrow (the “Escrow Amount”) in a
segregated bank account of the Company.  Subject to Section 7.5, upon
the Company’s achievement of the First Milestone, $1,000,000 of the Escrow
Amount shall be released to the Company from escrow, and upon the Company’s
achievement of the Second Milestone, $500,000 of the Escrow Amount shall be
released to the Company from escrow.

      
        
           

        

        
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      5.3           Membership
Interests.  Each of the Members shall receive a 50% Membership
Interest in the Company in consideration of its initial Capital
Contributions.

       

      5.4           Sustaining
Contributions.

       

       5.4.1        Each
Member shall make additional sustaining Capital Contributions from time to time
as the JV Board may deem necessary pursuant to Section 4.2, provided that
each sustaining Capital Contribution shall be made by the Members on a basis
equal to their respective Percentage Interests, except as otherwise set forth in
this Operating Agreement.  Subject to Section 5.4.2 and Section 5.4.3,
if the JV Board determines that a sustaining Capital Contribution is necessary,
within sixty (60) days of the JV Board’s determination (the “Sustaining
Contribution Period”), each Member shall make the sustaining Capital
Contribution required by the JV Board on a pro rata basis in accordance with
their respective Percentage Interests (each such Member who makes a sustaining
Capital Contribution, a “Contributing Member”) and the Capital Account of each
of the Contributing Members shall be amended
accordingly.  Notwithstanding the foregoing, a Member who fails to
make the sustaining Capital Contribution prior to the expiration of the
Sustaining Contribution Period (a “Non-Contributing Member”) shall have its
Percentage Interest decreased, and the Contributing Member shall have its
Percentage Interest correspondingly increased, by a percentage equal to the
following:

       

      The
product of (i) the quotient of (w) the aggregate Capital Contributions of the
Contributing Member, divided by (x) the aggregate Capital Contributions of all
Members, minus (ii) the quotient of (y) the initial Capital Contribution of the
Contributing Member, divided by (z) the initial Capital Contributions of all
Members.

       

      Notwithstanding anything to the
contrary set forth herein, a Non-Contributing Member may cure any failure by it
to make a sustaining Capital Contribution for a period of four (4) months
following the Sustaining Contribution Period (the “Cure Period”).  In
the event a Non-Contributing Member makes such a cure payment, the Members shall
have their respective Percentage Interests restored as if the Non-Contributing
Member had made the sustaining Capital Contribution prior to the expiration of
the Sustaining Contribution Period.  In no event shall a
Non-Contributing Member have its Percentage Interest restored for failing to
make a sustaining Capital Contributions received following the Cure
Period.

       

       5.4.2        Notwithstanding
Section 5.4.1, if at any time the JV Board determines that a sustaining Capital
Contribution is necessary pursuant to Section 4.2, then prior to the expiration
of the Sustaining Contribution Period, QuantRx solely shall be responsible for
making the sustaining Capital Contribution with respect to the first $700,000 in
the aggregate of any sustaining Capital Contribution required by the JV Board
(the “QuantRx Required Contribution”), and in the event that QuantRx fails to
make the QuantRx Required Contribution within the Sustaining Contribution
Period, QuantRx shall have its Percentage Interest decreased, and NuRx shall
have its Percentage Interest correspondingly increased, by a percentage equal
to:

      
        
           

        

        
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      The
product of (i) the quotient of (a) the unpaid amount of the QuantRx Required
Contribution, divided by (b) the initial Capital Contributions of all Members,
multiplied by (ii) two (2).

       

       
 5.4.3        Notwithstanding
Section 5.4.1, if at any time the JV Board determines that a sustaining Capital
Contribution is necessary pursuant to Section 4.2 in such amount as exceeds the
QuantRx Required Contribution and NuRx has failed to repay a NuRx Distribution
(as defined in Section 7.5.2), then prior to the expiration of the Sustaining
Contribution Period, NuRx solely shall be responsible for that amount of the
sustaining Capital Contribution required by the JV Board in excess of the
QuantRx Required Contribution to the extent of the amount of the unpaid amount
of the NuRx Distribution (such amount, the “NuRx Required
Contribution”),  In the event that NuRx fails to make the NuRx
Required Contribution within the Sustaining Contribution Period, NuRx shall have
its Percentage Interest decreased, and QuantRx shall have its Percentage
Interest correspondingly increased, by a percentage equal to:

       

      The
product of (i) the quotient of (a) the unpaid amount of the NuRx Required
Contribution, divided by (b) the initial Capital Contributions of all Members,
multiplied by (ii) two (2).

       

      Notwithstanding
anything to the contrary set forth herein, NuRx may cure its failure to repay
the NuRx Distribution for a period of four (4) months following the NuRx
Repayment Period (as defined in Section 7.5.3) (the “NuRx Cure
Period”).  In the event such repayment is made, NuRx shall have its
Percentage Interest restored as if NuRx had repaid the NuRx Distribution prior
to the expiration of the NuRx Repayment Period.  In no event shall
NuRx have its Percentage Interest restored following the NuRx Cure
Period.

       

       
 5.4.4        The Capital Accounts
of the Members shall be adjusted to reflect the sustaining Capital Contributions
under this Section 5.4 to reflect the relative Percentage Interests of the
Members after such contribution.

       

      5.5           Related
Agreements.  As of the date of this Operating Agreement, the
Company executed, and the JV Board has approved unanimously the Company’s
execution of the Contribution Agreement and the Development and Services
Agreement (collectively, the  “Related Agreements”).

       

      5.6           Additional
Members.  Additional Members shall make Capital Contributions
in the amount, at the time and on the terms determined by the Members consenting
to the admission pursuant to Section 3.1 hereof.

      
        
           

        

        
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      5.7           Capital
Accounts.  The Company shall establish and maintain a Capital
Account for each Holder in accordance with Regulations Section
1.704-1(b)(2)(iv).  Accordingly, a Holder’s Capital Account shall be
increased by (1) the amount of money the Holder contributes to the Company, (2)
the fair market value of Assets the Holder contributes to the Company (net of
liabilities secured by such contributed Assets that the Company is considered to
assume or take subject to under IRC Section 752, and (3) allocations to the
Holder of Income (or items thereof), including income and gain exempt from tax
and gain as computed for book purposes in accordance with Regulations Section
1.704-1(b)(2)(iv)(g) but excluding any gain separately computed for tax purposes
as described in Regulations Section 1.704-1(b)(4)(i).  A Holder’s
Capital Account shall be decreased by (1) the amount of money the Company
distributes to the Holder, (2) the fair market value of Assets the Company
distributes to the Holder (net of any liabilities secured by such distributed
Assets that the Holder is considered to assume or take subject to under IRC
Section 752), (3) allocations to the Holder of the Company’s nondeductible,
noncapital expenditures, and (4) allocations to the Holder of Losses (or item
thereof), including loss and deduction as computed for book purposes in
accordance with Regulations Section 1.704-1(b)(2)(iv)(g) but excluding
nondeductible, noncapital expenditures and loss and deduction separately
computed for tax purposes as described in Regulations Section
1.704-1(b)(4)(i).  A Holder’s Capital Account in all events shall be
adjusted in accordance with the additional rules set forth in Regulations
Section 1.704-1(b)(2)(iv).  In the event a Holder transfers all or any
portion of his interest in the Company, the transferee shall succeed to the
individual Capital Account balance of the transferor to the extent such
individual Capital Account balance relates to the transferred
interest.

       

      5.8           Adjustment for Distributions
in Kind.  Any asset of the Company distributed to the Holders
in kind shall be valued according to its fair market value.  An item
of Income or Loss shall be computed as if such asset had been sold at its fair
market value, such hypothetical item shall be allocated as provided in
Section 6.1, and each Holder’s Capital Account shall be credited or
charged, as the case may be, with the Holder’s share of such hypothetical item
prior to any such distribution of assets.

       

      5.9           Interest.  No
Capital Contribution or Capital Account balance shall bear
interest.

       

      5.10         Deficit Capital
Account.  No Holder shall be obligated to restore a Capital
Account having a balance of less than zero.

       

      5.11         Return of
Capital.  Except as otherwise provided in this Operating
Agreement, no Holder shall have any right to withdraw or make a demand for
Distribution or withdrawal or return of any Capital Contribution or Capital
Account balance.

       

      5.12         Adjustments to Capital
Accounts.  Upon (i) a contribution of cash or Assets (which
shall be valued at its fair market value) to the Company by a new or existing
Holder for a Membership or Economic Interest, (ii) a distribution by the Company
to a retiring or continuing Holder for a Membership or Economic Interest, or
(iii) the issuance of a profits interest in exchange for services, the Company
shall increase or decrease the Capital Accounts of the Holders to reflect a
revaluation of Company Assets to fair market value on the books of the Company,
in accordance with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f),
to the extent that such adjustment is necessary to reflect the relative equal
economic interests of the Members.

      
        
           

        

        
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      ARTICLE
VI

       

      INCOME
AND LOSSES

       

      6.1           Allocations.  Except
as otherwise provided in this ARTICLE VI, Income and Losses, and each item
thereof, of the Company shall be allocated to the Holders in proportion to their
Percentage Interests.

       

      6.2           Qualified Income
Offset.  A Holder whose Capital Account is unexpectedly reduced
on account of an adjustment described in Section 1.704-1(b)(2)(ii)(d)(4) of the
Regulations, an allocation described in Section 1.704-1(b)(2)(ii)(d)(5) of the
Regulations, or a distribution described in Section 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, shall be allocated that Holder’s pro rata portion of each item
of Company income, including gross income, and gain in an amount and manner
sufficient to eliminate such deficit balance as quickly as
possible.

       

      6.3           Minimum Gain
Chargeback.  Notwithstanding any other provision herein, if
there is a net decrease in Company Minimum Gain during any taxable year, items
of Company income and gain shall be allocated in accordance with the provisions
of Regulations Section 1.704-2(f).  This provision is intended to
comply with Regulations Section 1.704-2(e)(3).

       

      6.4           Contributed Assets and
Revaluations.  In accordance with IRC Section 704(c), income,
gain, loss and deduction with respect to Assets contributed to the Company by a
Holder shall be allocated solely for tax purposes among the Holders so as to
take account of any variation between the adjusted basis of the Assets to the
Company and its fair market value on the date of the
Contribution.  Further, if the book value of any Company asset is
adjusted as described in Regulations Section 1.704-1(b)(2)(iv)(f), subsequent
allocations for tax purposes of income, gain, loss and deduction with respect to
such asset shall take into account any variation between its adjusted tax basis
and its adjusted book value.  In either case, the JV Board or the
Manager shall determine such allocations using a method that qualifies as
reasonable within the meaning of Regulations Section 1.704-3.  No
Holder’s Capital Account shall be adjusted for allocations made under this
Section.

       

      6.5           Timing.  All
allocations of Income or Losses shall be made to the Persons shown on the
records of the Company to have been Holders as of the end of business on the
last day of the Company’s taxable year for which the allocation is
made.  Notwithstanding the foregoing, upon the transfer of an Economic
Interest or the admission of an Additional Member during a taxable year of the
Company, the Income or Losses shall be allocated between the former Holder and
the successor, or to the Additional Member, as the case may be, according to the
number of days during such year each was a Holder.

      
        
           

        

        
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      ARTICLE
VII

       

      DISTRIBUTIONS

       

      7.1           Operating
Distributions.  The JV Board from time to time may determine,
in its reasonable judgment, that: (i) there is an excess of cash on hand beyond
the Company’s current and anticipated requirements, including, without
limitation, cash flow and reserve requirements, and (ii) a distribution of such
excess cash on hand, if any, is permissible under Section 18-607 of the
Act.  In that event, the JV Board may, in its sole and absolute
discretion, make a distribution of all or a part of such excess (an “Operating
Distribution”) to the Holders, provided that no such Distribution shall be
declared and paid unless, after such Distribution, the Assets of the Company
will exceed all liabilities of the Company.  Such Distributions may be
made in cash or Assets or partly in both, as determined in the sole and absolute
discretion of the JV Board.

       

      7.2           Distribution
Methodology.  Except as provided in Sections 7.3, 7.4 or
7.5 below, Distributions shall be allocated to Holders in proportion to their
Percentage Interests.

       

      7.3           Liquidating
Distributions.  Subject to Section 11.2, upon the dissolution
of the Company, liquidating distributions in all cases shall be made in
accordance with the positive Capital Account balances of the Holders, as
determined after taking into account all Capital Account adjustments for the
Company’s taxable year during which such dissolution occurs (other than those
made pursuant to this section), by the end of such taxable year or, if later,
within ninety (90) days after the date of such dissolution.

       

      7.4           Distribution to
QuantRx.  On the Effective Date, the Company shall make a cash
Distribution to QuantRx in the amount of $2,000,000 (the “QuantRx Distribution”)
and the Capital Account of QuantRx shall be decreased to reflect the QuantRx
Distribution.

       

      7.5           Distributions to
NuRx.

       

       7.5.1        Prior
to the Company’s achievement of the First Milestone, upon written notice by NuRx
specifying the amount of the Distribution, the Company shall be required to make
a cash Distribution to NuRx as soon as practicable of up to $1,000,000 and the
Capital Account of NuRx shall be decreased to reflect the Distribution (the
“First Milestone Distribution”).

       

       7.5.2        Prior
to the Company’s achievement of the Second Milestone, upon written notice by
NuRx specifying the amount of the Distribution, the Company shall be required to
make a cash Distribution to NuRx as soon as practicable of up to $500,000 and
the Capital Account of NuRx shall be decreased to reflect the Distribution (the
“Second Milestone Distribution,” and along with the First Milestone
Distribution, the “NuRx Distributions”).

       

       7.5.3        In
the event the Company achieves the First Milestone and NuRx has received the
First Milestone Distribution, NuRx must repay the First Milestone Distribution
within thirty (30) days of the Company’s achievement of the First Milestone, and
in the event the Company achieves the Second Milestone and NuRx has received the
Second Milestone Distribution, NuRx must repay the Second Milestone Distribution
within thirty (30) days of the Company’s achievement of the Second Milestone
(each such thirty (30) day period, a “NuRx Repayment Period”).

       

       7.5.4        Notwithstanding
Section 7.5.1 and 7.5.2, if a NuRx Change of Control occurs after the date
hereof, the First Milestone Distribution and the Second Milestone Distribution
shall each be subject to the approval by QuantRx (which shall not be
unreasonably withheld).

      
        
           

        

        
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      ARTICLE
VIII

       

      OBLIGATIONS
RESPECTING ACTIVITIES IN THE FIELD

       

      8.1           Company Exclusive Vehicle to
Exploit Field.  Subject to the terms and conditions of this
Operating Agreement, during the term of this Operating Agreement, each of the
Members agrees to engage in activities in the Field exclusively through the
Company, and to refrain from engaging in any such activities directly or through
an Affiliate independently of the Company, except to the extent specifically
permitted in this ARTICLE VIII.

       

      8.2           New
Products.  If one Member submits to the JV Board a written
proposal, together with detailed budgets and timetables, for the development of
a product in the Field by the Company other than those products agreed to by the
JV Board in writing to be developed in the ordinary course of business of the
Company, which proposal is specifically identified as a proposal under this
Section 8.2, the JV Board shall evaluate such proposal and within 60 days after
the proposal was submitted, shall respond in writing, stating that:

       

       (i)    
      the Company will proceed with the funding
for and development of such proposed product consistent with approved detailed
budgets and timetables for development;

       

       (ii)      
   the Company will not develop such proposed product;
or

       

       (iii)     
   the Company will perform a feasibility study, to be completed
no later than 180 days after the proposal was first submitted.

       

      For the
purposes of this Section 8.2, a proposal for development of a product may
include, for example, a proposal for licensing a product or underlying
technology from a third party, acquiring a third party owning such product or
technology or a similar business opportunity.  If the Company chooses
to perform a feasibility study, the JV Board shall notify the proposing Member
in writing, no later than the last day of the feasibility study period, whether
or not the Company shall proceed with the funding for and development of such
proposed product.  If the Company chooses not to proceed with funding
or development, then the Member that submitted the rejected product shall have
the right to develop, directly or indirectly through any of its Affiliates, such
product independently of the Company, and the other Member and the Company shall
have no rights in such product; provided, however, that such Member and its
Affiliates shall not have the right to pursue such product independently
if:

       

       (i)      
    such Member or any of the JV Board Members appointed by
such Member has voted against funding for or development of such proposed
product;

       

       (ii)       
  such Member does not fund at least one third of the total costs of
development of the proposed product with its own funds (as opposed to government
or third party funds); or

       

       (iii)      
  the proposed product is directly competitive with a product already
under development or being marketed by the Company.

      
        
           

        

        
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      8.3           Discontinued
Products.  If any member of the JV Board appointed by one
Member shall have voted against continuing funding for or development of a
product under development by the Company, but all of the JV Board Members
appointed by the other Member voted in favor of continuing funding for and
development of such product, then the Member whose appointed JV Board Members
voted in favor of continuing the product shall have the right to continue
development, directly or indirectly through any of its Affiliates, of such
product independently of the Company; provided, however that in recognition of
the value that may have been contributed to such product by the Company and
provided that the dollar value of the funding for the product in question by the
Member whose members voted against continuance of funding or development shall
not have been less than $500,000, the Member completing such product shall make
payments to the other Member equal to 5% of the Net Sales of such product and
all modifications or other versions of such product by the completing Member and
its Affiliates, licensees, and sublicensees, for fifteen years from the
introduction of such product.  Such payments shall be made within 60
days after the end of each calendar quarter with respect to sales made-or other
amounts received during such quarter.  Each payment shall be
accompanied by a report setting forth in detail the Net Sales on which payments
are made.  The Members will have reasonable audit rights with respect
to such reports and payments.

       

      Notwithstanding
anything to the contrary in this Section, if a Member intends to complete a
product independently of the Company under this Section 8.3, such Member shall
first notify the other Member in writing of such intention, and the Member
receiving such notice may, within 30 days after such notice, reverse the vote of
its representatives by written notice to the Member sending the first notice,
whereupon the Company shall diligently proceed with the funding for and
development of such product pursuant to this Operating Agreement and the Related
Agreements and the Member intending to complete such product independently shall
not be permitted to do so unless such development is subsequently again
discontinued pursuant to this Section, in which case the provisions of this
Section shall again be applicable.

       

      ARTICLE
IX

       

      MEMBER’S
RELATIONSHIP WITH THE COMPANY

       

      9.1           Services.  The
Members shall have executed the Development and Services Agreement with the
Company under which:

       

       (i)          QuantRx
will provide all services, supplies, equipment and facilities needed by the
Company, such as accounting, administration, management, research and
development, clinical trials management, marketing, procurement, inventory
control, warehousing, office space, insurance, administrations and
communications services;

       

       (ii)         QuantRx
will be responsible for arranging and implementing manufacturing capabilities
for the Lateral Flow Products, and for maintaining necessary capacity for such
manufacturing; and

       

       (iii)        QuantRx
will be responsible for planning and conducting any necessary clinical studies,
and obtaining in the Company's name any governmental regulatory approvals, which
may be needed for manufacturing, marketing and selling the Lateral Flow Products
and the Company will bear all costs incurred for those matters.  All
regulatory approvals for the Lateral Products will be transferred by QuantRx and
held in the name of the Company.

       

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      Any
material breach of the Development and Services Agreement by the Members shall
constitute a material breach of this Operating Agreement.

       

      9.2     
      Contribution
Agreement.  The Members shall have executed the Contribution
Agreement.  Any material breach of the Contribution Agreement by the
Members shall constitute a material breach of this Operating
Agreement.

       

      9.3    
       Ownership of Proprietary
Rights and Related Assets.  The parties agree that all Lateral
Flow Intellectual Property and all Assets related to the Lateral Flow
Intellectual Property developed during the existence of the Company, the
development of which was or is funded by the Company, shall be owned by the
Company.  Any further disposition, including, but not limited to, the
licensing, patenting, sale, enforcement and defense of any Lateral Flow
Intellectual Property shall be in accordance with this Operating
Agreement.  Notwithstanding the foregoing, QuantRx will be responsible
for the filing, prosecuting and maintaining all of the Lateral Flow Intellectual
Property on behalf of the Company and in the Company's name.

       

      ARTICLE
X

       

      TERM,
DISSOLUTION

       

      10.1   
     Term; Termination by
Agreement.  This Agreement shall become effective as of the
date hereof and shall continue in effect for a period of ten years unless
earlier terminated or dissolved in accordance with Section 10.2 or
10.3.  The Agreement shall continue for an unlimited number of
additional five year periods immediately following the said ten-year term unless
either Member gives the other notice (such notice to be given at least two years
before the end of the ten-year term or any five year renewal term) of its intent
not to renew for such five-year period, in which event this Operating Agreement
will terminate at the end of the original ten-year term or five year renewal
term, as the case may be.  The transfer by a Member of its interest in
the Company on the terms permitted by this Operating Agreement, or on terms
specifically agreed to by the Members, shall not be deemed to be a dissolution
of the Company.

       

      10.2     
   Termination by Election of a
Member.  This Agreement may be terminated upon written
notice:

       

       (i)           by
the non-breaching  Member upon the material breach of this Operating
Agreement or any of the Related Agreements by the other Member if such breach is
not cured within 60 days after written notice from the non-breaching Member;
provided, however, that termination of this Operating Agreement is not intended
to be the sole remedy of either Member in the event of a breach of this
Operating Agreement by the other Member, and the other Member shall be entitled,
in addition, to all remedies available at law or in equity; or

       

       (ii)           by
a Member, effective immediately and without any requirement of notice, in the
event that the other Member becomes insolvent, files a petition in bankruptcy,
files a petition seeking any reorganization, arrangement, composition, or
similar relief under any federal, state or provincial law, regarding insolvency
or relief for debtors, or makes an assignment for the benefit of creditors or
similar undertaking or if a receiver, trustee, or similar officer is appointed
for the business or property of the other Member or if a petition in bankruptcy
is filed against the other Member and not dismissed within 60 days of being
filed.

      
        
           

        

        
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      10.3         Survival of
Provisions.  Notwithstanding any expiration or termination of
this Operating Agreement, the provisions of Sections 7.3, 10, 11 and 15.4
shall remain in effect in accordance with their terms for an indefinite period
reasonably necessary for their performance.

       

      ARTICLE
XI

       

      WINDING
UP; DISTRIBUTION OF ASSETS

       

      Upon an
expiration or termination of this Operating Agreement for any reason, the
affairs of the Company shall be wound up and dissolved and the Assets of the
Company applied as provided in this ARTICLE XI.

       

      11.1         Completion of
Products.  The Members shall fund, in accordance with their
obligations under this Operating Agreement, as of the date of a notice of
termination under Sections 10.2 or 10.3, continuing development work for a
period of one year after the date of the notice of termination at a level
required to complete the development of those products then under development
that can reasonably be completed within one year after such date in accordance
with the Company’s most recent pre-termination work plans and Budget, the
Members will mutually determine a list of those products under development which
will be completed during such period (the “Completion List”). If the Members are
unable to agree on a Completion List within 30 days after the notice of
termination, then the Completion List shall be determined on the following
basis:  The products under development shall be ranked in the order of
their completion status, with products requiring the least amount of work and
related funding for completion (according to the Company’s most recent
pre-termination work plans for such products) ranked first and those requiring
the in most work and relating funding for completion ranked last.  The
Completion List shall consist of all those products requiring the least amount
of work for completion that can be completed within the funding level set forth
above.  Additional products shall be added to such list, in the same
order of priority, if the products originally included therein are actually
completed prior to exhausting all of the research and development funding to be
provided for such completion period.  The Members shall exert their
reasonable best efforts to cause the completion of development of all products
included on such Completion List within one year of the date of notice of
termination, and during such year shall wind down all of the operations of the
Company with respect to unfinished products not on the Completion
List.  Notwithstanding anything contained herein or in the Related
Agreements to the contrary, the provisions of this Operating Agreement and the
Related Agreements shall continue in full force and effect to the extent
necessary to the continued development, manufacture, and sale of products on the
Completion List as provided in this Section 11.1.

       

      11.2     
   Distribution of
Assets.  Upon the expiration of the one-year completion period
provided in Section 11.1, the Assets of the Company, shall be applied as
follows:

       

       (i)           first
to the payment of liabilities and discharge of obligations of the Company to
persons other than the Members;

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

       (ii)           next
to the payment of liabilities and discharge of any obligations of the Company to
the Members, and if the Company’s Assets are insufficient, the Member to which
the greatest amount is then owed shall be paid until the Members are owed
amounts in proportion to their Percentage Interests and, thereafter, the Members
shall be paid any remaining amounts in proportion to their respective Percentage
Interests;

       

       (iii)           next
to the payment to each Member of an amount equal to its respective sustaining
Capital Contributions;

       

       (iv)           next
to the payment to each Member of an amount equal to its respective Capital
Account balance, or if such Assets or proceeds are less than the aggregate
Capital Account balances, in proportion to their respective Capital Account
balances; and

       

       (v)           the
remainder, if any, to the Members in accordance with their respective Percentage
Interests in the Company at the time of dissolution.

       

      Notwithstanding
the foregoing, upon the expiration of the one-year completion period provided in
Section 11.1 (the “Completion Date”), prior to the distribution of Assets,
QuantRx shall have a right of first refusal to purchase the Lateral Flow
Intellectual Property from the Company for the fair market value on the
Completion Date as determined by an independent appraiser.  The
Members shall select a mutually agreeable appraiser who shall, within 30 days
after his, her or its appointment, determine the appraised value of the Lateral
Flow Intellectual Property being purchased.  If the Members are unable
to agree on an appraiser within 30 days of the Completion Date, the appraised
value of the Lateral Flow Intellectual Property being purchased shall be
determined by an appraiser selected by the accountant or accountants then
regularly employed by the Company.  The appraised value of the Lateral
Flow Intellectual Property being purchased determined by the appraiser shall be
conclusive and binding on all parties.  The expenses for the appraisal
shall be borne by QuantRx.

       

      ARTICLE
XII

       

      ASSIGNMENT
OF INTERESTS

       

      12.1  
      Restrictions on
Transfers.  No Membership Interest may be Transferred by any
Member without the prior written consent of the other Members, except (a) to
another Member (b) to or for the exclusive benefit of any spouse, lineal
descendant of the transferring Member, or any trust established for the
exclusive benefit of said spouse and/or lineal descendant; (c) to any Affiliate
of any Member; or (d) pursuant to Sections 12.2 through 12.7.

       

      12.2    
    Notice of Proposed Transfer
by a Member. Subject to Section 12.1, before any Member may effect a
Transfer of a Membership Interest (such Member, a “Selling Member”), the Selling
Member must give at the same time to the Company and the other Members a written
notice signed by the Selling Member (the “Selling Member’s Notice”) stating
(a) the Selling Member’s bona fide intention to transfer such Membership
Interest; (b) the Selling Member’s Percentage Interest to be subject to the
Transfer (the “Offered Interest”); (c) the name, address and relationship,
if any, to the Selling Member of each proposed purchaser or other transferee;
and (d) the bona fide cash price or, in reasonable detail, other
consideration, per share for which the Selling Member proposes to transfer such
Offered Interest (the “Offered Price”).  Upon the request of the
Company or another Member, the Selling Member will promptly furnish such
information to the Company and to the Members as may be reasonably requested to
establish that the offer and proposed transferee are bona fide.

      
        
           

        

        
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      12.3  
      Right of First
Refusal.

       

       12.3.1 Company and other Members’
Rights.  With respect to any Transfer by a Selling Member, the
Company and the other Members shall have the Right of First Refusal to purchase
all or any part of the Offered Interest, exercisable as set forth in
Subsections 12.3.2 and 12.3.3 hereof.

       

       12.3.2 Exercise of the Company’s
Right of First Refusal.  The Company’s Right of First Refusal
may be exercised as follows:

       

      12.3.2.1
The Company shall have the opportunity to purchase all or any part of the
Offered Interest.

       

      12.3.2.2 If
the Company desires to purchase all or any part of the Offered Interest, the
Company must, within the twenty (20) day period (the “Company Refusal
Period”) commencing on the date of the Selling Member’s Notice, give written
notice to the Selling Member of the Company’s election to purchase the Offered
Interest.  In the event that the Company elects not to purchase all of
the Offered Interest, the remaining Offered Interest may be purchased by the
other Members as set forth in Section 12.3.3 below.

       

      12.3.2.3 Within
fifteen (15) days after expiration of the Company Refusal Period, the Company
will give written notice (the “Company’s Expiration Notice”) to the Selling
Member and to the other Members specifying either (A) that all or a portion
of the Offered Interest was subscribed by the Company exercising its Right of
First Refusal or (B) that the Company waived its right to purchase some or
all of the Offered Interest.  Notwithstanding any failure by the
Company to deliver the Company’s Expiration Notice, a failure by the Company to
exercise its Right of First Refusal within the Company Refusal Period shall be
deemed a waiver of such right.

       

       12.3.3 Exercise of Members’ Right
of First Refusal.  The other Members’ Right of First Refusal
may be exercised as follows:

       

      12.3.3.1 In
the event the Company does not purchase all of the Offered Interest, each other
Member shall have the opportunity to purchase its pro rata share of the
remaining Offered Interest.  For purposes of this Section 12.3, a
Member’s pro rata share shall be determined by dividing the Percentage Interest
of a Member by the aggregate Percentage Interest held by all other Members
(excluding the Selling Member).

      
        
           

        

        
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      12.3.3.2 If
any Member or its assignees desires to purchase its pro rata share of the
remaining Offered Interest, such Member must, within a ten (10) day period
(the “Member Refusal Period”) commencing on the date of the earlier of
(A) the Company’s Expiration Notice or (B) by the 35th day
after the Selling Member’s Notice, give written notice to the Selling Member and
to the Company of such Member’s election to purchase some or all of the Offered
Interest.  In the event that any Members elect not to purchase its pro
rata share of the Offered Interest, such Member shall, within five (5) days
after expiration of the Member Refusal Period, give written notice (“Member’s
Expiration Notice”) to the Selling Member that the Member is waiving its right
to purchase the relevant portion of such Offered Interest under this
Section 12.3.3.  Any Offered Interest that is not purchased by a
Member may be purchased by the other Members based on such other Members’ pro
rata share, or as otherwise agreed between such other
Members.  Notwithstanding any failure by a Member to deliver a
Member’s Expiration Notice, a failure by a Member to exercise its Right of First
Refusal within the Member Refusal Period shall be deemed a waiver of such
right.

       

       12.3.4 Purchase
Price.  The purchase price for the Offered Interest to be
purchased by the Company or by a Member exercising its Right of First Refusal
under this Section 12.3 will be the Offered Price, but will be payable as set
forth in Section 12.3.5 hereof.  If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration will be determined by the JV Board in good faith, which
determination will be binding upon the Company, the Members and the Selling
Member.

       

       12.3.5
Payment.  Payment
of the purchase price for the Offered Interest purchased by the Company or by a
Member exercising its Right of First Refusal will be made by the 50th day
after the Selling Member’s Notice.  Payment of the purchase price will
be made by the Company and/or exercising Member, as the case may be (i) in
cash or by wire transfer of immediately available funds, (ii) by
cancellation of all or a portion of any outstanding indebtedness of the Selling
Member to the Company or Member, as applicable, or (iii) by any combination
of the foregoing.

       

       12.3.6 Rights as a
Member.  If the Company or the Members exercise their Rights of
First Refusal to purchase the Offered Interest, then, upon consummation of such
purchase, the Selling Member will have no further rights as a Member except the
right to receive payment for the Offered Interest from the Company or the
Members, as the case may be, in accordance with the terms of this Operating
Agreement, and the Selling Member will forthwith cause all certificate(s)
evidencing such Offered Interest to be surrendered to the Company for transfer
to the Company or to the Members.

       

      12.4          Holder’s Right to
Transfer.  If the Company or the Holders have not elected to
purchase all or part of the Offered Interest, then, subject to the Right of
Co-Sale set forth in Section 12.5 below, the Selling Member may transfer
that portion of the Offered Interest permitted which the Company and the Members
have elected not to purchase (the “Remaining Offered
Interest”), to any person named as a purchaser or other transferee in the
Selling Member’s Notice, at the Offered Price or at a higher price, provided
that such transfer (i) is consummated within ninety (90) days after the
date of the Selling Member’s Notice and (ii) is in accordance with all the
terms of this Operating Agreement and (iii) the transferee executes a
counterpart copy of this Operating Agreement and becomes bound thereby in the
same manner as a Member.  If the Remaining Offered Interest is not so
transferred during such ninety (90) day period, then the Selling Member may not
transfer any of such Offered Interest without complying again in full with the
provisions of this Operating Agreement.

      
        
           

        

        
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      12.5          Right of
Co-Sale.

       

        12.5.1
Right of
Co-Sale.  If the Company and the other Members have waived or
failed to timely exercise their Rights of First Refusal in Section 12.4 as to
all of the Offered Interest, each of the other Members may transfer to the
transferee proposed in the Selling Member’s Notice the Member’s Share of the
Remaining Offered Interest on the same terms and conditions set forth in the
Selling Member’s Notice (each such other Member electing to do so, a “Co-Selling Member”),
by giving written notice to the Selling Member either (A) within ten (10)
days after the date of the Selling Member’s Expiration Notice or (B) by the
60th
day following the Selling Member’s Notice, specifying the Percentage Interest
that the Member desires to transfer to the transferee.

       

        12.5.2 Consummation of
Co-Sale.  A Co-Selling Member may consummate the Right of
Co-Sale by delivering to the Selling Member at the closing of the transfer of
Offered Interest to such transferee one or more certificates, properly endorsed
for Transfer, representing such stock to be transferred by the Co-Selling
Member.  At the closing, such certificates or other instruments will
be transferred and delivered to the transferee set forth in the Selling Member’s
Notice in consummation of the transfer of the Offered Interest pursuant to the
terms and conditions specified in such notice, and the Selling Member will
remit, or will cause to be remitted, to the Co-Selling Member within seven (7)
days after such closing that portion of the proceeds of the Transfer to which
the Co-Selling Member is entitled by reason of the Co-Selling Member’s
participation in such transfer pursuant to the Right of Co-Sale.

       

      12.6          Assignment of
Interests.  An Economic Interest is assignable in whole or in
part without complying with the Right of First Refusal and Right of Co-Sale set
forth above.

       

      12.7          No Dissolution upon
Assignment.  An assignment of an Economic Interest does not of
itself dissolve the Company or, except as otherwise set forth herein, entitle
the Assignee to vote or participate in the management and affairs of the Company
or to become or exercise any rights of a Member.  An assignment of an
Economic Interest merely entitles the Assignee to receive, to the extent
assigned, the Income, Losses, Distributions and similar items to which the
Assignor would be entitled.

       

      12.8          Information Regarding
Assignee.  Upon the assignment of all or part of an Economic
Interest, the Assignor shall provide the JV Board or the Manager of the Company
responsible for maintaining the books and records with the name and address of
the Assignee, together with details of the interest assigned.  The
Assignor shall continue to be a Member and to have the power to exercise any
rights and powers of a Member, including the right to vote which, in the case of
a Member who has assigned his or her or its entire Economic Interest in the
Company, shall include the right to vote in proportion to the Percentage
Interest that the assigning Member would have, had the assignment not been
made.

       

      12.9          No Release of Liability of
Assignor.  The Assignor shall not be released from liability as
a Member solely as a result of the Assignment.  The Assignor shall not
be released from the Assignor’s liability to the Company under Subchapter V
(commencing with Section 18-501) and Subchapter VI (commencing with Section
18-601) of the Act.

      
        
           

        

        
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      12.10        Pledge of Membership
Interest.  The pledge of, or granting of, a security interest,
lien, or other encumbrance in or against any or all of the Membership Interest
of a Member shall not cause the Member to cease to be a Member or to grant to
anyone else the power to exercise any rights or powers of a Member.

       

      12.11        Exercise of Rights upon
Death or Incompetency.  If a Member who is a natural person
dies or is adjudged by a court of competent jurisdiction to be incompetent to
manage the Member’s person or Assets, the Member’s executor, administrator,
guardian, conservator, or other legal representative may exercise all of the
Member’s rights for the purpose of settling the Member’s estate or administering
the Member’s Assets, including any power the Member had under the Certificate or
this Operating Agreement to assign its Membership Interest.

       

      12.12        Exercise of Rights upon
Dissolution or Termination.  If a Member which is an
Organization is dissolved or terminated, the powers of that Member may be
exercised by its legal representative or successor.

       

      ARTICLE
XIII

       

      DISSOLUTION
AND WINDING UP

       

      13.1          Dissolution.  The
Company shall and may only be dissolved, and its affairs wound up, upon the
first to occur of the following events (which, unless the Members agree to
continue the business, shall constitute Dissolution Events):

       

         13.1.1
the sale of all or substantially all of the Assets of the Company;

       

         13.1.2 the
vote of the Members; or

       

         13.1.3 the
entry of a decree of judicial dissolution pursuant to the Act.

       

      13.2          Effect of
Dissolution.  Upon dissolution, the Company shall be dissolved
and wound up in accordance with the Act, and the Company Assets shall be
distributed in accordance with Section 11.2.

       

      ARTICLE
XIV

       

      TAX AND
ACCOUNTING MATTERS

       

      14.1          Characterization as a
Partnership.  The Members intend that the Company be classified
as a partnership for federal and state income tax
purposes.  Accordingly, this Operating Agreement is written and shall
be construed in a manner consistent with such intent.

       

      14.2          No Partnership Intended for
Nontax Purposes.  The Members have formed the Company under the
Act, and expressly do not intend hereby to form a partnership under either the
Delaware Uniform Partnership Law or the Delaware Revised Uniform Limited
Partnership Act.  The Members do not intend to be partners one to
another, or partners as to any third party.  To the extent any Member,
by word or action, represents to another person that any other Member is a
partner or that the Company is a partnership, the Member making such wrongful
representation shall be liable to any other Member who incurs personal liability
by reason of such wrongful representation.

      
        
           

        

        
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      14.3          Fiscal
Year.  The fiscal year of the Company shall end on the last day
of December of each year.  The JV Board or the Manager may at any time
change the fiscal and taxable year of the Company, subject to any applicable
limitation of law or regulation.

       

      14.4          Accounting
Method.  The JV Board or Manager shall select the method of
accounting by which the Company books of account shall be maintained and its
income, gains, losses, deductions and credits shall be reported, for both
financial and tax accounting purposes.  The JV Board or Manager may at
any time change the financial and tax accounting method of the Company, subject
to any applicable limitation of law or regulation.

       

      14.5          Financial
Statements.  Within 30 days after the end of each fiscal
quarter (other than the last quarter of any fiscal year) of the Company, the
Company shall cause to be delivered to each Member a report containing an
unaudited balance sheet and statement of income and expenses of the Company,
prepared in accordance with generally accepted accounting principles
consistently applied (but not including all of the footnotes required by
generally accepted accounting principles).  Within 60 days after the
end of each fiscal year, the Company shall cause to be furnished to each
Member:

       

         (i)      
     the audited financial statements of the Company
for such year, prepared in accordance with generally accepted accounting
principles consistently applied, and certified by a recognized accounting firm
as may be designated by the JV Board or the Manager; and

       

         (ii)           all
information concerning the Company necessary for the preparation of the Member’s
income tax returns.

       

      14.6          Tax
Information.  As soon as reasonably practicable after the end
of the Company fiscal year, the JV Board or Manager shall cause each Holder to
be furnished with a Schedule K-1 for such year and any other schedule or
statement required by federal income tax law.

       

      14.7          Basis
Adjustment.  In the case of a Distribution of Company Assets or
a transfer of a Membership Interest, the JV Board or Manager may cause the
Company to file an election under IRC Section 754 to adjust the basis of the
Company Assets.  As a result of this election, the JV Board or Manager
shall have the right to require, as a condition to the granting of consent to
any transfer, the reimbursement of expenditures made by the Company for any
legal and accounting fees incurred to make any such basis
adjustment.  The JV Board or Manager shall have the right, in its sole
and absolute discretion, to decline to make such an election; and further, the
failure to make any election under the IRC in connection with any particular
transfer of an interest in the Company shall not affect the right of the JV
Board or Manager to make, or refuse to make, such an election with respect to
any subsequent transfer of an interest in the Company.

       

      14.8          Other
Elections.  The Company shall have the right, in the sole and
absolute discretion of the JV Board or Manager, to make any other elections or
determinations required or permitted for federal or state income tax or other
tax purposes.  The JV Board or Manager may rely upon the advice of the
Company’s accountants or tax attorneys with respect to the making of any such
election.

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

      14.9          Taxes of Taxing
Jurisdictions.  To the extent that the laws of any Taxing
Jurisdiction requires, each Holder requested to do so by the JV Board or Manager
will submit an agreement indicating that the Holder will make timely income tax
payments to the Taxing Jurisdiction and that the Holder accepts personal
jurisdiction of the Taxing Jurisdiction with regard to the collection of income
taxes attributable to the Holder’s income, and interest, and penalties assessed
on such income.  If the Holder fails to provide such agreement, the
Company may withhold and pay over to such Taxing Jurisdiction the amount of tax,
penalty and interest determined under the laws of the Taxing Jurisdiction with
respect to such income.  Any such payments with respect to the income
of a Holder shall be treated as a distribution to such Holder for purposes of
ARTICLE XI.  The Company may, where permitted by the rules of any
Taxing Jurisdiction, file a composite, combined or aggregate tax return
reflecting the income of the Company and pay the tax, interest and penalties of
some or all of the Holders on such income to the Taxing Jurisdiction, in which
case the Company shall inform the Holders of the amount of such tax, interest
and penalties so paid.

       

      14.10        Tax Matters
Partner.  The JV Board or Manager shall designate NuRx as the
tax matters partner of the Company pursuant to IRC Section
6231(a)(7).  Any Member designated as tax matters partner shall take
such action as may be necessary to cause each other Member to become a notice
partner within the meaning of IRC Section 6223.  Any Member who is
designated tax matter partner may not take any action contemplated by IRC
Sections 6222 through 6232 without the consent of the JV Board or
Manager.

       

      ARTICLE
XV

       

      MISCELLANEOUS
PROVISIONS

       

      15.1          Amendment of Operating
Agreement.  This Operating Agreement may be modified upon the
consent of the Members required pursuant to Section 3.5.  No
Member shall have any vested rights in this Operating Agreement which may not be
modified through an amendment to this Operating Agreement.

       

      15.2          Entire
Agreement.  The Operating Agreement represents the entire
agreement among all the Members and between the Members and the
Company.

       

      15.3          Interpretation.  To
the extent any provision of this Operating Agreement is prohibited or
ineffective under the Act, this Operating Agreement shall be considered amended
to the smallest degree possible in order to make the agreement effective under
the Act.  In the event the Act is subsequently amended or interpreted
in such a way to make any provision of this Operating Agreement that was
formerly invalid valid, such provision shall be considered to be valid from the
effective date of such interpretation or amendment.

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

      15.4          Confidentiality.  Each
Member agrees that it shall itself, and shall cause its employees and agents to,
use its best efforts to keep confidential and to refrain from using this
Operating Agreement or the Related Agreements, all confidential and proprietary
information owned or used by the Company, and all such information disclosed or
licensed to the Company, or disclosed to such Member through the Company, so
long as such Member is or controls a Member in the Company and for a period of
five years thereafter.  The foregoing shall not apply to such
information that (a) was known to the public at the time of such
disclosure, or subsequently becomes so known through no act or omission of such
Member, (b) is received by such Member from a third party not under any
obligation of confidentiality, or (c) is developed by such Member
independently of any disclosure hereunder (as demonstrated by clear and
convincing evidence).  Nothing contained in this Section shall be
deemed to supersede any express terms with respect to confidentiality contained
in any license agreement between the Company and any of the Members, or to
prohibit any disclosure pursuant to a sublicense or similar arrangement
permitted by any such license agreement, and nothing contained in this
Section shall be deemed to restrict the use of such confidential or
proprietary information as necessary to exercise the Members’ rights under this
Operating Agreement or the Related Agreements

       

      15.5          Rights of Creditors and
Third Parties under Operating Agreement.  This Operating
Agreement is entered into among the Company and the Members for the exclusive
benefit of the Company, its Members, and their successors and
assignees.  This Operating Agreement is expressly not intended for the
benefit of any creditor of the Company or any other Person.  Except
and only to the extent provided by applicable statute, no such creditor or third
party shall have any rights under this Operating Agreement or any agreement
between the Company and any Member with respect to any Capital Contribution or
otherwise.

       

      15.6          Valuation of Non-Cash
Consideration.  For purposes of this Operating Agreement, the
procedure for valuing any non-cash consideration shall be as
follows:  If the parties cannot otherwise agree, each party shall
select a qualified appraiser and the appraisers so selected shall jointly select
an appraiser, and the valuation of the appraiser so selected shall be binding on
all parties.  Such valuation shall be based on an arm’s length cash
sale of the assets.  If the non-cash consideration being valued is
real property, the selected appraiser shall be an MAI appraiser.

       

      15.7          Counterpart
Execution.  This Operating Agreement may be executed in any
number of identical counterparts, each of which shall be deemed to be an
original, and all of which together shall be deemed to be one and the same
instrument when each party has signed one (1) such counterpart.

       

      15.8          Remedies.  The
parties hereto recognize and agree that the breach of any term, provision, or
condition of this Operating Agreement may cause irreparable damage, the amount
of which is difficult to ascertain and that the award of damages may not be
adequate relief to the party aggrieved; the parties therefore agree that, in
addition to all other remedies available in the event of a breach of any of the
terms or conditions of this Operating Agreement, the party aggrieved shall have
the right, in addition to all other remedies available in the event of a breach
of this Operating Agreement, to injunctive or other equitable relief (from any
court or other body having appropriate jurisdiction).

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

      15.9          Successors and
Assigns.  Except as herein otherwise specifically provided,
this Operating Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, heirs, administrators, executors,
successors and assigns.

       

      15.10        Severability.  If
any provision of this Operating Agreement, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Operating Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.

       

      15.11        Delaware
Law.  This Operating Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without regard to the principles governing conflicts of laws.

       

      [Signature
Page Follows]

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, this Operating Agreement is entered into as of the Effective
Date.

      

      NURX
PHARMACEUTICALS, INC.

      

      
        
          
            	
                    By:

                  	
                    /s/
      Dr. Harin Padma-Nathan

                  
	 
      	
                    Name:
      Dr. Harin Padma-Nathan

                  
	 
      	
                    Title:
      President and CEO

                  

          

        

      

      

      QUANTRX
BIOMEDICAL CORPORATION

      

      
        
          
            	
                    By:

                  	
                    /s/
      Walter Witoshkin

                  
	 
      	
                    Name:  Walter
      Witoshkin

                  
	 
      	
                    Title:  Chief
      Executive Officer

                  

          

        

      

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

      EXHIBIT
A

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                  Member

                                                	 	
                                                  Percentage Interest

                                                	 
	 	 	 	 	 
	
                                                  NuRx
      Pharmaceuticals, Inc.

                                                	 	 	50	%
	 	 	 	 	 
	
                                                  QuantRx
      Biomedical Corporation

                                                	 	 	50	%
	 	 	 	 	 
	 
      	 	 	100	%

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

      TABLE
OF CONTENTS

      

      
        
          
            
              
                
                  	 
      	 	 
      	 	
                          Page

                        	 
	 
      	 	 
      	 	 	 
	
                          ARTICLE
      I

                        	 	
                          DEFINITIONS

                        	 	 	1	 
	
                          ARTICLE
      II

                        	 	
                          FORMATION

                        	 	 	9	 
	
                          2.1       

                        	 	
                          Scope
      of Business of the Membership

                        	 	 	9	 
	
                          2.2       

                        	 	
                          Powers

                        	 	 	9	 
	
                          2.3       

                        	 	
                          Formation
      and Name

                        	 	 	9	 
	
                          2.4       

                        	 	
                          Principal
      Place of Business

                        	 	 	9	 
	
                          2.5       

                        	 	
                          Registered
      Office and Registered Agent

                        	 	 	9	 
	
                          2.6       

                        	 	
                          Records
      to be Maintained

                        	 	 	9	 
	
                          2.7       

                        	 	
                          Term

                        	 	 	9	 
	
                          2.8       

                        	 	
                          Qualification
      in Other Jurisdictions

                        	 	 	9	 
	
                          ARTICLE
      III

                        	 	
                          MEMBERS

                        	 	 	10	 
	
                          3.1       

                        	 	
                          Admission
      of Additional Members

                        	 	 	10	 
	
                          3.2       

                        	 	
                          Amendment
      of Member Listing

                        	 	 	10	 
	
                          3.3       

                        	 	
                          Payment
      of Costs

                        	 	 	10	 
	
                          3.4       

                        	 	
                          Limited
      Liability of Members

                        	 	 	10	 
	
                          3.5       

                        	 	
                          Voting
      Rights

                        	 	 	10	 
	
                          3.6       

                        	 	
                          Right
      of Inspection; Provision of Records to Members

                        	 	 	10	 
	
                          3.7       

                        	 	
                          Representations
      and Warranties

                        	 	 	11	 
	
                          ARTICLE
      IV

                        	 	
                          MANAGEMENT

                        	 	 	12	 
	
                          4.1       

                        	 	
                          Action
      Only with Written Approval of Members

                        	 	 	12	 
	
                          4.2       

                        	 	
                          JV
      Board and Management Authority

                        	 	 	13	 
	
                          4.3       

                        	 	
                          Action
      by Written Consent

                        	 	 	15	 
	
                          4.4       

                        	 	
                          Action
      Against Member

                        	 	 	15	 
	
                          4.5       

                        	 	
                          Operational
      Management

                        	 	 	15	 
	
                          4.6       

                        	 	
                          Indemnification
      and Liability Insurance

                        	 	 	15	 
	
                          4.7       

                        	 	
                          Actions
      of the JV Board

                        	 	 	16	 
	
                          4.8       

                        	 	
                          Authority
      of Members to Bind the Company

                        	 	 	16	 
	
                          ARTICLE
      V

                        	 	
                          CAPITAL

                        	 	 	16	 
	
                          5.1       

                        	 	
                          QuantRx
      Initial Contributions

                        	 	 	16	 
	
                          5.2       

                        	 	
                          NuRx
      Initial Contributions

                        	 	 	16	 
	
                          5.3       

                        	 	
                          Membership
      Interests

                        	 	 	17	 

                

              

            

          

        

      

      
        
           

        

        
          -i-

          
            

          

        

        
           

        

      

      

      TABLE
OF CONTENTS

      (continued)

      

      
        
          
            
              
                	 
      	 	 
      	 	
                        Page

                      	 
	 
      	 	 
      	 	 	 
	
                        5.4       

                      	 	
                        Sustaining
      Contributions

                      	 	 	17	 
	
                        5.5       

                      	 	
                        Related
      Agreements

                      	 	 	18	 
	
                        5.6       

                      	 	
                        Additional
      Members

                      	 	 	18	 
	
                        5.7       

                      	 	
                        Capital
      Accounts

                      	 	 	19	 
	
                        5.8       

                      	 	
                        Adjustment
      for Distributions in Kind

                      	 	 	19	 
	
                        5.9       

                      	 	
                        Interest

                      	 	 	19	 
	
                        5.10       

                      	 	
                        Deficit
      Capital Account

                      	 	 	19	 
	
                        5.11       

                      	 	
                        Return
      of Capital

                      	 	 	19	 
	
                        5.12       

                      	 	
                        Adjustments
      to Capital Accounts

                      	 	 	19	 
	
                        ARTICLE
      VI

                      	 	
                        INCOME
      AND LOSSES

                      	 	 	20	 
	
                        6.1       

                      	 	
                        Allocations

                      	 	 	20	 
	
                        6.2       

                      	 	
                        Qualified
      Income Offset

                      	 	 	20	 
	
                        6.3       

                      	 	
                        Minimum
      Gain Chargeback

                      	 	 	20	 
	
                        6.4       

                      	 	
                        Contributed
      Assets and Revaluations

                      	 	 	20	 
	
                        6.5       

                      	 	
                        Timing

                      	 	 	20	 
	
                        ARTICLE
      VII

                      	 	
                        DISTRIBUTIONS

                      	 	 	21	 
	
                        7.1       

                      	 	
                        Operating
      Distributions

                      	 	 	21	 
	
                        7.2       

                      	 	
                        Distribution
      Methodology

                      	 	 	21	 
	
                        7.3       

                      	 	
                        Liquidating
      Distributions

                      	 	 	21	 
	
                        7.4       

                      	 	
                        Distribution
      to QuantRx

                      	 	 	21	 
	
                        7.5       

                      	 	
                        Distributions
      to NuRx

                      	 	 	21	 
	
                        ARTICLE
      VIII

                      	 	
                        OBLIGATIONS
      RESPECTING ACTIVITIES IN THE FIELD

                      	 	 	22	 
	
                        8.1       

                      	 	
                        Company
      Exclusive Vehicle to Exploit Field

                      	 	 	22	 
	
                        8.2       

                      	 	
                        New
      Products

                      	 	 	22	 
	
                        8.3       

                      	 	
                        Discontinued
      Products

                      	 	 	23	 
	
                        ARTICLE
      IX

                      	 	
                        MEMBER’S
      RELATIONSHIP WITH THE COMPANY

                      	 	 	23	 
	
                        9.1       

                      	 	
                        Services

                      	 	 	23	 
	
                        9.2       

                      	 	
                        Contribution
      Agreement

                      	 	 	24	 
	
                        9.3       

                      	 	
                        Ownership
      of Proprietary Rights and Related Assets

                      	 	 	24	 
	
                        ARTICLE
      X

                      	 	
                        TERM,
      DISSOLUTION

                      	 	 	24	 
	
                        10.1       

                      	 	
                        Term;
      Termination by Agreement

                      	 	 	24	 

              

            

          

        

      

       

      
        
           

        

        
          -ii-

          
            

          

        

        
           

        

      

      

      TABLE
OF CONTENTS

      (continued)

      

      
        
          
            
              
                	 
      	 	 
      	 	
                        Page

                      	 
	 
      	 	 
      	 	 	 
	
                        10.2       

                      	 	
                        Termination
      by Election of a Member

                      	 	 	24	 
	
                        10.3       

                      	 	
                        Survival
      of Provisions

                      	 	 	25	 
	
                        ARTICLE
      XI

                      	 	
                        WINDING
      UP; DISTRIBUTION OF ASSETS

                      	 	 	25	 
	
                        11.1       

                      	 	
                        Completion
      of Products

                      	 	 	25	 
	
                        11.2       

                      	 	
                        Distribution
      of Assets

                      	 	 	25	 
	
                        ARTICLE
      XII

                      	 	
                        ASSIGNMENT
      OF INTERESTS

                      	 	 	26	 
	
                        12.1       

                      	 	
                        Restrictions
      on Transfers

                      	 	 	26	 
	
                        12.2       

                      	 	
                        Notice
      of Proposed Transfer by a Member.

                      	 	 	26	 
	
                        12.3       

                      	 	
                        Right
      of First Refusal

                      	 	 	27	 
	
                        12.4       

                      	 	
                        Holder’s
      Right to Transfer

                      	 	 	28	 
	
                        12.5       

                      	 	
                        Right
      of Co-Sale

                      	 	 	29	 
	
                        12.6       

                      	 	
                        Assignment
      of Interests

                      	 	 	29	 
	
                        12.7       

                      	 	
                        No
      Dissolution upon Assignment

                      	 	 	29	 
	
                        12.8       

                      	 	
                        Information
      Regarding Assignee

                      	 	 	29	 
	
                        12.9       

                      	 	
                        No
      Release of Liability of Assignor

                      	 	 	30	 
	
                        12.10       

                      	 	
                        Pledge
      of Membership Interest

                      	 	 	30	 
	
                        12.11       

                      	 	
                        Exercise
      of Rights upon Death or Incompetency

                      	 	 	30	 
	
                        12.12       

                      	 	
                        Exercise
      of Rights upon Dissolution or Termination

                      	 	 	30	 
	
                        ARTICLE
      XIII

                      	 	
                        DISSOLUTION
      AND WINDING UP

                      	 	 	30	 
	
                        13.1       

                      	 	
                        Dissolution

                      	 	 	30	 
	
                        13.2       

                      	 	
                        Effect
      of Dissolution

                      	 	 	30	 
	
                        ARTICLE
      XIV

                      	 	
                        TAX
      AND ACCOUNTING MATTERS

                      	 	 	30	 
	
                        14.1       

                      	 	
                        Characterization
      as a Partnership

                      	 	 	30	 
	
                        14.2       

                      	 	
                        No
      Partnership Intended for Nontax Purposes

                      	 	 	31	 
	
                        14.3       

                      	 	
                        Fiscal
      Year

                      	 	 	31	 
	
                        14.4       

                      	 	
                        Accounting
      Method

                      	 	 	31	 
	
                        14.5       

                      	 	
                        Financial
      Statements

                      	 	 	31	 
	
                        14.6       

                      	 	
                        Tax
      Information

                      	 	 	31	 
	
                        14.7       

                      	 	
                        Basis
      Adjustment

                      	 	 	31	 
	
                        14.8       

                      	 	
                        Other
      Elections

                      	 	 	31	 
	
                        14.9       

                      	 	
                        Taxes
      of Taxing Jurisdictions

                      	 	 	32	 

              

            

          

        

      

      
        
           

        

        
          -iii-

          
            

          

        

        
           

        

      

      

      TABLE
OF CONTENTS

      (continued)

      

      
        
          
            
              
                	 
      	 	 
      	 	
                        Page

                      	 
	 
      	 	 
      	 	 	 
	
                        14.10       

                      	 	
                        Tax
      Matters Partner

                      	 	 	32	 
	
                        ARTICLE
      XV

                      	 	
                        MISCELLANEOUS
      PROVISIONS

                      	 	 	32	 
	
                        15.1       

                      	 	
                        Amendment
      of Operating Agreement

                      	 	 	32	 
	
                        15.2       

                      	 	
                        Entire
      Agreement

                      	 	 	32	 
	
                        15.3       

                      	 	
                        Interpretation

                      	 	 	32	 
	
                        15.4       

                      	 	
                        Confidentiality

                      	 	 	33	 
	
                        15.5       

                      	 	
                        Rights
      of Creditors and Third Parties under Operating Agreement

                      	 	 	33	 
	
                        15.6       

                      	 	
                        Valuation
      of Non-Cash Consideration

                      	 	 	33	 
	
                        15.7       

                      	 	
                        Counterpart
      Execution

                      	 	 	33	 
	
                        15.8       

                      	 	
                        Remedies

                      	 	 	33	 
	
                        15.9       

                      	 	
                        Successors
      and Assigns

                      	 	 	34	 
	
                        15.10       

                      	 	
                        Severability

                      	 	 	34	 
	
                        15.11       

                      	 	
                        Delaware
      Law

                      	 	 	34	 

              

            

          

        

      

       

      
        
           

        

        
          -iv-

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