Document:

Unassociated Document

    

      CONFIDENTIAL
        TREATMENT REQUESTED. Confidential portions of this document have been redacted
        and separately filed with the Commission.

      

      *****
        Confidential material redacted and filed separately with the
        Commission.

      EXECUTION
        COPY

      

      LICENSE
        AGREEMENT dated as of August 17, 2005 (the “Agreement
        Date”)
        between VivoQuest, Inc., a Delaware corporation
        (“VivoQuest”),
        and
        XTL Biopharmaceuticals Ltd., an Israeli corporation (“Licensee”).

      

      WHEREAS,
        VivoQuest owns the patents and patent applications listed on Schedule I hereto;
        

      

      WHEREAS,
        subject to the terms and conditions hereinafter set forth, VivoQuest is willing
        to grant to Licensee and Licensee is willing to accept from VivoQuest the
        License (as hereinafter defined); and

      

      WHEREAS,
        within five business days of the execution of this agreement, VivoQuest will
        issue a communication to ***** in the form attached hereto as Exhibit
        A;

      

      NOW,
        THEREFORE, in consideration of the mutual promises and agreements contained
        herein, the parties hereto hereby agree as follows: 

      

      SECTION
        1. Definitions.
        

      

      (a)
        As
        used in this Agreement, the following terms shall have the following
        meanings:

      

      “Affiliate”
        shall
        mean, with respect to any Person, any other Person directly or indirectly
        controlling, controlled by or under common control with such Person, and
        in the
        case of any natural Person shall include all relatives and family members
        of
        such Person. For purposes of this definition, a Person shall be deemed to
        control another Person if such first Person directly or indirectly owns or
        holds
        five percent (5%) or more of the ownership interests in such other
        Person.

      

      “Asset
        Purchase Agreement”
        shall
        mean that certain Asset Purchase Agreement dated as of the date hereof between
        VivoQuest and Licensee.

      

      “Contract”
        means
        any contract, indenture, note, bond, loan, mortgage, license, instrument,
        lease
        or agreement.

      

      “Disclosed
        Compound”
        shall
        mean a compound disclosed in a patent or patent application listed on Schedule
        I. 

       

      “Fair
        Market Value”
        shall
        mean, as to any security, the average closing bid price of such security
        on the
        principal stock exchange or interdealer quotation system in which such
        securities are traded over a period of 20 consecutive trading days the latest
        of
        which shall be the trading day immediately preceding the date as of which
        "Fair
        Market Value" is being determined or, if such security is not then traded
        on an
        exchange or through an inter-dealer quotation system, the fair value of such
        security as reasonably determined by the Board of Directors of Licensee.
        

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      “FDA”
        shall
        mean the United States Food and Drug Administration.

       

      “Governmental
        Body”
        means
        any government or governmental or regulatory authority or body thereof, or
        political subdivision thereof, whether federal, state, local or foreign,
        or any
        agency, instrumentality or authority thereof, or any court or arbitrator
        (public
        or private).

       

      “HCV
        Product”
        shall
        mean a Licensed Product having as its active ingredient a Disclosed Compound
        that has been approved by the FDA or a foreign regulatory counterpart for
        the
        treatment or prevention of hepatitis C virus infection, whether or not such
        Licensed Product has been approved for another indication. 

       

      “Intellectual
        Property Rights”
        shall
        mean means the rights associated with the following: (a) any and all trademarks,
        service marks, brand names, certification marks, trade dress, assumed names,
        trade names, logos and other indications of origin, sponsorship or affiliation,
        together with the goodwill associated therewith (whether the foregoing are
        registered or unregistered); registrations thereof in any jurisdiction and
        applications to register any of the foregoing in any jurisdiction, and any
        extension, modification or renewal of any such registration or application;
        (b)
        any and all inventions, developments, improvements, discoveries, know how,
        concepts and ideas, whether patentable or not in any jurisdiction; (c) any
        and
        all patents, revalidations, industrial designs, industrial models and utility
        models, patent applications (including reissues, continuations, divisions,
        continuations-in-part and extensions) and patent disclosures; (d) any and
        all
        non-public information, trade secrets and proprietary or confidential
        information and rights in any jurisdiction to limit the use or disclosure
        thereof by any Person; (e) any and all writings and other works, whether
        copyrighted, copyrightable or not in any jurisdiction, such works including
        computer programs and software (including source code, object code, data
        and
        databases); (f) any and all copyrights, copyright registrations and applications
        for registration of copyrights in any jurisdiction, and any renewals or
        extensions thereof; (g) any and all other intellectual property or proprietary
        rights; (h) any and all agreements, licenses, immunities, covenants not to
        sue
        and the like relating to any of the foregoing; and (i) any and all claims
        or
        causes of action arising out of or related to any infringement or
        misappropriation of any of the foregoing.

      

      “Knowledge
        of VivoQuest”
        means
        (regardless of case) any fact, circumstance, event or other matter in question,
        of which any member of senior management of VivoQuest has actual knowledge
        or
        should have had actual knowledge after reasonable due inquiry 

      

      “Law”
        means
        any federal, state, local or foreign law (including common law), statute,
        code,
        ordinance, rule, regulation or binding administrative
        pronouncement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

        *****
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          separately with the Commission.

         

      

         “Liability”
        means
        any liability (whether known or unknown, whether asserted or unasserted,
        whether
        absolute or contingent, whether accrued or unaccrued, whether liquidated
        or
        unliquidated, and whether due or to become due). 

      

      “License”
        shall
        mean the license granted to Licensee in Section 2(a). 

      

      “Licensed
        Patents”
        shall
        mean (i) the patents listed on Schedule I, (ii) any and all U.S. and foreign
        patent applications covering the Licensed Technology including, without
        limitation, the patent applications listed on Schedule I, (iii) the patents
        proceeding from such applications and (iv) all claims of and any divisions,
        continuations, in whole or in part, reissues, re-examinations, renewals and
        extensions of any such patents or patent applications.

      

      “Licensed
        Products”
        shall
        mean any product covered by a claim of any unexpired Licensed Patent which
        has
        not been disclaimed or held invalid by a court of competent jurisdiction
        from
        which no appeal can be taken, or which incorporates or is developed using
        Licensed Technology.

      

      “Licensed
        IP”
        shall
        mean all Licensed Patents, the Licensed Technology and all other Intellectual
        Property Rights of VivoQuest (including Intellectual Property Rights arising
        under (i) the Contracts listed in Section 3.13 of the Seller Disclosure
        Schedule, (ii) the Contracts identified in Section 3.13(b) of the Asset Purchase
        Agreement and (iii) any other Contracts to which VivoQuest is or has at any
        time
        been a party, in each case whether or not any such Contract is an Included
        Contract). Notwithstanding the foregoing, the Licensed IP excludes the
        tradenames “VivoQuest” and “ChemQuest” and derivatives thereof.

       

      “Licensed
        Technology”
        shall
        mean all technology owned by VivoQuest or in which VivoQuest has any interest,
        including all, lab notebooks, drawings, designs, design and manufacturing
        documentation (such as bill of materials, build instructions and test reports),
        schematics, algorithms, routines, software (including all source code),
        databases and data collections, development and lab equipment, processes,
        prototypes and devices, compounds and compound libraries and technical
        information, know-how and concepts whether or not embodied in tangible form,
        including all Intellectual Property Rights in or underlying such technology.
        

      

      “Net
        Sales”
        shall
        mean the amount actually collected in connection with sales of the Licensed
        Products to any person or entity that is not an Affiliate or subcontractor
        of
        Licensee or a direct or indirect sublicensee of Licensee under the License,
        after deduction of all trade, cash and quantity credits, discounts; refunds
        or
        rebates; allowances or credits for returns; sales commissions; and prepaid
        freight, transportation insurance, sales taxes and other government charges
        (including value-added tax). Sales of Licensed Products by Licensee or an
        Affiliate, subcontractor or direct or indirect sublicensee of Licensee to
        any
        Affiliate, subcontractor or direct or indirect sublicensee shall be excluded,
        and only the subsequent sale of such Licensed Products by Affiliates or direct
        or indirect sublicensees of Licensee to unrelated end users shall be deemed
        Net
        Sales hereunder.

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      “Net
        Sublicensing Revenues”
        shall
        mean, with respect to any product for any fiscal period, the fair value,
        as
        reasonably determined by Licensee, of the milestone payments, profit sharing
        payments or royalty payments received by Licensee for the direct or indirect
        sublicensing of such product (other than to Affiliates of Licensee or to
        subcontractors), provided that “Net Sublicensing Revenues” shall exclude
        payments based on the achievement of research and development milestones
        and any
        other payments that are not based on commercial sales of products.

       

      “Non-HCV
        Product”
        shall
        mean a Licensed Product having as its active ingredient a Disclosed Compound
        that has been approved by the FDA or a foreign regulatory counterpart for
        an
        indication other than the treatment or prevention of hepatitis C virus infection
        and has not been so approved for the treatment or prevention of hepatitis
        C
        virus infection.

       

      “Option”
        shall
        mean the option granted to Licensee in Section 12. 

      

      “Order”
        means
        any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
        award entered, issued, made or rendered by any Governmental Body.

       

      “Ordinary
        Shares”
        shall
        mean the ordinary shares, par value NIS 0.02 per share, of
        Licensee.

      

      “Person”
        shall
        mean any individual, corporation, partnership, firm, joint venture, association,
        joint-stock company, trust, unincorporated organization, Governmental Body
        or
        other entity. 

      

      *****

      

      “Transaction
        Documents”
        shall
        mean this Agreement and the Asset Purchase Agreement.

      (b)
        Capitalized terms used and not otherwise defined in this Agreement shall
        have
        the meanings assigned to such terms in the Asset Purchase
        Agreement.

      

      SECTION
        2. Grant
        of License.
        (a)
        Subject to the terms and conditions hereinafter set forth, VivoQuest hereby
        grants to Licensee, and Licensee hereby accepts from VivoQuest, in each case
        effective as of the Closing Date, a worldwide, perpetual, irrevocable,
        non-terminable (except as provided in Section 12), sublicensable right and
        license under all of the Licensed IP to make, have made, use, have used,
        sell,
        have sold, offer for sale, import and have imported Licensed Products and
        to
        practice the Licensed IP, including any claimed method within the Licensed
        IP.
        The License is subject to (i) the rights of ***** and (ii) the rights of
        the
        U.S. government under 35 U.S.C. Section 200 et seq.
        and the
        regulations promulgated thereunder, as in effect from time to time. If the
        Asset
        Purchase Agreement is terminated, the license granted herein shall not come
        into
        effect and this Agreement shall terminate, provided that (x) Section 7 shall
        survive such termination other than with respect to the Licensed IP, (y)
        Section
        10 shall survive such termination with respect to the matters described in
        Section 10(a)(i) and 10(a)(ii) and (z) no such termination shall relieve
        a
        breaching party from Liability resulting from any breach by that party of
        this
        Agreement. 

      

      
        
          
          

        

        
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        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      (b)
        In
        the event that at any time (i) ***** is entitled to a license under the *****
        (or any agreement to which ***** becomes a party pursuant to the *****) with
        respect to any portion of the Licensed IP in the field of hepatitis C virus
        or
        (ii) VivoQuest is obligated to refrain from entering into an agreement with
        a
        third party with respect to ***** in the field of hepatitis C virus, the
        License
        shall, without further act of any party, be deemed to be non-exclusive or
        to
        have terminated, as appropriate to avoid any conflict with the terms of the
        ***** or any such other agreement, with respect to such portion of the Licensed
        IP in the field of hepatitis C virus, provided that the License shall, without
        further act of any party, be deemed to have been reinstated in the field
        of
        hepatitis C virus at such time as the reinstatement no long is in conflict
        with
        the ***** or any such other agreement. 

      

      (c)
        The
        License granted to Licensee in Section 2(a) shall remain in force on a
        country-by-country basis until ten (10) years from the first commercial sale
        in
        such country or until the expiration date of the last to expire of the Licensed
        Patents, whichever shall be later. Licensee shall inform VivoQuest in writing
        of
        the date of first commercial sale with respect to each Licensed Product in
        each
        country as soon as reasonably practicable after the making of each such first
        commercial sale. Upon the expiration of the License in any country, the License
        shall be fully paid-up, royalty free and perpetual in such country.

      

      (d)
        To
        the extent any of the tangible items within the Licensed Technology are not
        located at VivoQuest’s Valley Cottage, New York facility as of the Closing Date,
        VivoQuest shall deliver such tangible items to such facility within 5 business
        days following the Closing Date. 

      

      (e)
        If
        ***** does not provide the *****, including *****, to VivoQuest within the
        period provided in the communication referenced in the letter agreement dated
        the date hereof between Seller and Purchaser and Section 6.1(m) of the Asset
        Purchase Agreement, or if any other basis for termination of the ***** exists
        after the date hereof, VivoQuest shall, unless the Asset Purchase Agreement
        has
        terminated, effect the termination of the ***** if and as directed by Licensee,
        and Licensee shall be entitled to participate in any discussions with *****
        relating to such termination. VivoQuest shall provide the ***** to *****
        as
        promptly as practicable in accordance with the terms of the *****. The *****
        shall be subject to the prior review and approval of Licensee. VivoQuest
        acknowledges and agrees that money damages would not be an adequate remedy
        for
        any breach of its obligations under this paragraph and that in addition to
        any
        other remedies available to Licensee, Licensee shall be entitled to the remedies
        of injunction, specific performance and other equitable relief for any
        threatened or actual breach of such obligations.

      

      
        
          
          

        

        
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        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      SECTION
        3. Consideration
        for License.

      

      (a)
        In
        consideration for the grant and during the term of the License, Licensee
        shall
        provide the following consideration to VivoQuest:

      

      (i)
        on
        the Closing Date, US $941,176 in Ordinary Shares; 

      

      (ii)
        upon
        achievement of each the following technical milestones, the payments indicated
        below, each of which shall be payable no more than one time: 

      

      
        	
                Milestone

              	
                Consideration

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              

      

      

      All
        or
        any portion of the milestone payments described in (A) through (E) above
        may, at
        Licensee’s sole option, be satisfied by the delivery to VivoQuest of Ordinary
        Shares. Any consideration required to be provided in the form of Ordinary
        Shares
        (or, where permitted to be provided in the form of Ordinary Shares, to the
        extent Licensee elects to provide such consideration in the form of Ordinary
        Shares) shall be satisfied by the delivery to VivoQuest of a number of Ordinary
        Shares equal to the applicable US dollar amount divided by the Fair Market
        Value
        of one Ordinary Share as of the date such milestone payment is earned in
        accordance with the foregoing schedule; and

      

      (iii)
        (A)
        with respect to each HCV Product, for each fiscal year of Licensee, a royalty
        of
        ***** of the first US $***** of Net Sales of such HCV Product by Licensee
        and
        its Affiliates and ***** of the Net Sales in excess of US $***** of such
        HCV
        Product by Licensee and its Affiliates; 

      

      (B)
        for
        each fiscal year of Licensee, with respect to each HCV Product, a royalty
        equal
        to the lower of (I) ***** of the Net Sales of such HCV Product by direct
        or
        indirect sublicensees of Licensee (other than Affiliates of Licensee) and
        (II)
        ***** of Net Sublicensing Revenues attributable to such HCV Product;
        and

      

      (C)
        for
        each fiscal year of Licensee, with respect to each Non-HCV Product, a royalty
        equal to the lower of (I) ***** of the Net Sales of such Non-HCV Product
        by
        License and direct or indirect sublicensees of Licensee (including Affiliates
        of
        Licensee) and (II) ***** of Net Sublicensing Revenues attributable to such
        Non-HCV Product.

      

      
        
          
          

        

        
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      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      Notwithstanding
        the foregoing: 

      

      (x)
        if a
        payment is owed by Licensee or a direct or indirect sublicense of Licensee
        (including an Affiliate of Licensee) to one or more third parties with respect
        to any sale of an HCV Product, Licensee may credit ***** of such third party
        payments in determining the amounts payable to VivoQuest pursuant to clauses
        (A)
        and (B) above, provided that aggregate royalty payments to VivoQuest pursuant
        to
        clauses (A) and (B) above shall not be reduced by more than *****percent
        (*****)
        as a result of such third party payments, with excess amounts being carried
        forward and credited in future periods, provided further that if such third
        party payments are attributable to a breach of a representation, warranty
        or
        covenant by VivoQuest in the Transaction Documents (irrespective of any
        limitation on the survival period applicable thereto), the entire amount
        of such
        payments may be credited without limitation as to the reduction in amounts
        payable to VivoQuest pursuant to clauses (A) and (B) above except to the
        extent
        that the portion of any such reduction in excess of ***** percent (*****)
        would
        exceed any cap, or would not give effect to any threshold amount, applicable
        to
        liability for breach of such representation, warranty or covenant;
        and

      

      (y)
        if a
        payment is owed by Licensee or a direct or indirect sublicense of Licensee
        (including an Affiliate of Licensee) to one or more third parties with respect
        to any sale of a non-HCV Product, Licensee may credit ***** of such third
        party
        payments in determining the amounts payable to VivoQuest pursuant to clause
        (C)
        above, provided that aggregate royalty payments to VivoQuest pursuant to
        clause
        (C) above shall not be reduced by more than ***** percent (*****) as a result
        of
        such third party payments, with excess amounts being carried forward and
        credited in future periods, provided further that if such third party payments
        are attributable to a breach of a representation, warranty or covenant by
        VivoQuest in the Transaction Documents (irrespective of any limitation on
        the
        survival period applicable thereto), the entire amount of such payments may
        be
        credited without limitation as to the reduction in amounts payable to VivoQuest
        pursuant to clause (C) above except to the extent that the portion of any
        such
        reduction in excess of ***** percent (*****) would exceed any cap, or would
        not
        give effect to any threshold amount, applicable to liability for breach of
        such
        representation, warranty or covenant.

      

      
        
          
          

        

        
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      *****
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        Commission.

       

      Only
        one
        royalty shall be paid hereunder with respect to the sale of any HCV Product
        or
        Non-HCV Product, whether or not it is covered by more than one claim of a
        patent, by the claims of more than one patent, or by the claims of patents
        of
        more than one country.

      

      (b)
        For
        the purpose of computing the royalties due to VivoQuest hereunder, the year
        shall be divided into four parts ending on March 31, June 30, September 30,
        and
        December 31. Not later than ***** days after each December, March, June,
        and
        September in each calendar year during the term of the License, Licensee
        shall
        submit to VivoQuest a full and detailed report of royalties or payments due
        VivoQuest under the terms of this Agreement for the preceding quarter year
        (hereinafter the “Quarter-Year
        Report”),
        setting forth the Net Sales and/or lump sum payments and all other payments
        or
        consideration received by Licensee and its direct and indirect sublicensees
        upon
        which such royalties are computed, as well as any offsetting payments described
        in clauses (x) and (y) of Section 3(a)(iii), and including at least

      

      (i) the
        quantity of each HCV Product and Non-HCV Product
        sold;

      

      (ii) the
        selling price of each HCV Product and Non-HCV
        Product; 

       

      (iii) a
        detailed description of the amount of, and the justification
        for, any offsetting payments;

      

      (iv) the
        revenues received from sublicensees; and 

      

      (v) the
        royalty computations.

      

      If
        no
        royalties or other payments are due, a statement shall be sent to VivoQuest
        stating such fact. Payment of the full amount of any royalties or other payments
        due to VivoQuest for the preceding quarter shall accompany each Quarter-Year
        Report on royalties and payments. Licensee shall keep for a period of at
        least
        ***** years after the date of entry, full, accurate and compete books and
        records consistent with sound business and accounting practices and in such
        form
        and in such detail as to enable the determination of the amounts due to
        VivoQuest from Licensee pursuant to the terms of this Agreement. 

      

      (c)
        On
        reasonable notice and during regular business hours, VivoQuest or the authorized
        representative of VivoQuest shall each have the right to inspect the books
        of
        accounts, records and other relevant documentation of Licensee or any of
        its
        Affiliates insofar as they relate to the production, marketing and sale of
        the
        Licensed Products, in order to ascertain or verify the amount of royalties
        and
        other payments due to VivoQuest hereunder, and the accuracy of the information
        provided to VivoQuest in the aforementioned reports.

      

      
        
          
          

        

        
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        *****
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      (d)
        In no
        event will any Ordinary Shares be issued hereunder if the issuance of such
        Ordinary Shares would cause the total number of Ordinary Shares issued pursuant
        to the Transaction Documents to exceed 19.9% of the number of Ordinary Shares
        outstanding on the date of this Agreement unless all requisite shareholder
        approvals for the issuance of Ordinary Shares in excess of such amount have
        been
        obtained. Any amounts that would otherwise be satisfied by the issuance of
        Ordinary Shares in excess of such amount will be paid in cash. The Ordinary
        Shares issued from time to time hereunder are referred to herein collectively
        as
        the “Shares”.

       

      (e)
        (i)
        VivoQuest acknowledges that the Shares are being acquired pursuant to an
        exemption from registration under the Securities Act of 1933, as amended
        (the
“Securities
        Act”)
        and
        that the Shares may be transferred only pursuant to an effective registration
        statement or an exemption from registration under the Securities Act. VivoQuest
        represents that it is familiar with Rule 144 under the Securities Act. VivoQuest
        shall not be permitted to transfer any Shares in the absence of an effective
        registration statement unless VivoQuest has furnished Licensee with an opinion
        of counsel, reasonably satisfactory to Licensee, that such disposition does
        not
        require registration of such Shares under the Securities Act. It is agreed
        that
        Licensee will not require opinions of counsel for transfers made pursuant
        to
        Rule 144 if Licensee is provided with any certificates or other evidence
        of
        compliance with Rule 144 reasonably required by it in connection with such
        transfer (including without limitation a copy of the relevant Form 144).
        

       

      (ii)
        It
        is understood that the certificates evidencing the Shares shall bear a legend
        to
        the following effect:

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
        HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
        STATEMENT WITH RESPECT THERETO OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
        REQUIREMENTES OF SUCH ACT.

       

      The
        certificates evidencing the Shares may also bear any legends required by
        applicable blue sky laws.

       

      (iii)
        (A)
        The Shares shall be freely tradeable on the London Stock Exchange (for so
        long
        as the Parent Ordinary Shares are listed on the London Stock Exchange), subject
        to any restrictions imposed on a party to any transaction executed on the
        London
        Stock Exchange by the Laws of a country other than the United Kingdom to
        which
        such party is subject, including the other provisions of this section
        3(e)).

       

      (B)
        In
        the event any of the Shares evidenced by a certificate bearing a restrictive
        legend as provided in Section 3(e)(ii) above are transferred by VivoQuest
        or a
        transferee of VivoQuest pursuant to Rule 904 under the Securities Act, as
        currently in effect, Licensee shall instruct the transfer agent for the Ordinary
        Shares to issue shares upon transfer free of any restrictive legend or notation
        if Licensee is presented with a written certification to the following effect
        from the transferor in such transfer: 

       

      
        
          
          

        

        
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        *****
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      The
        undersigned registered holder is selling some or all of the shares evidenced
        by
        the accompanying certificate in a resale transaction in compliance with Rule
        904
        under the United States Securities Act of 1933. 

       

      Any
        unsold balance of the shares represented by such certificate will continue
        to
        bear a restrictive legend until such time as they are the subject of a
        transaction executed in accordance with this Section 3(e)(iii)(B) or until
        such
        legend may otherwise be removed in the opinion of counsel to Licensee.

      

      (f)
        In
        the event of a merger, consolidation or other transaction (a “Conversion
        Transaction”)
        as a
        result of which substantially all of the outstanding Shares are converted
        into
        the right to receive, in whole or in part, equity securities, if such equity
        securities are traded on a recognized securities exchange or interdealer
        quotation system, in the United States, Europe or Israel, or another securities
        exchange or interdealer quotation system reasonably acceptable to VivoQuest
        (“Listed
        Equity Securities”),
        (i)
        any Shares shall be eligible to participate in any Conversion Transaction
        on the
        same basis as other outstanding Shares and (ii) any consideration required
        to be
        provided to VivoQuest hereunder that would otherwise be permitted to be
        satisfied through the issuance of Shares shall thereafter be permitted to
        be
        satisfied through the issuance of such Listed Equity Securities. For such
        purpose, such Listed Equity Securities shall be valued at their aggregate
        Fair
        Market Value as of the date such Shares would have been valued. In the event
        that, in any Conversion Transaction, substantially all of the outstanding
        Shares
        are converted into the right to receive equity securities that are not Listed
        Equity Securities (or are converted into the right to receive a combination
        of
        such equity securities and cash), then, until such equity securities constitute
        Listed Equity Securities, any further consideration required to be provided
        to
        VivoQuest hereunder that would otherwise be permitted to be satisfied through
        the issuance of Shares shall be satisfied entirely in cash. In the event
        of a
        merger, consolidation or other transaction as a result of which substantially
        all of the outstanding Shares are converted into the right to receive only
        cash,
        any further consideration required to be provided to VivoQuest hereunder
        that
        would otherwise be permitted to be satisfied through the issuance of Shares
        shall be required to be satisfied entirely in cash, provided that if the
        surviving or transferee entity in such transaction (or an Affiliate thereof)
        has
        a class of Listed Equity Securities, any portion of such consideration that
        would otherwise be permitted to be satisfied through the issuance of Shares
        shall thereafter be permitted to be satisfied through the issuance of such
        Listed Equity Securities, valued at their aggregate Fair Market Value as
        of the
        date such Shares would have been valued.

      

      (g)
        Neither VivoQuest nor any transferee of VivoQuest shall sell, pledge, hedge
        or
        otherwise dispose of any economic interest in 50% of the Shares issued pursuant
        to Section 3(a)(i) during the period ending 30 days after the Closing Date.
        Furthermore, VivoQuest shall consult with Licensee prior to disposing of
        any
        Shares issued pursuant to Section 3(a)(i) on the open market to determine
        whether Licensee may provide VivoQuest with an alternate opportunity for
        liquidity at the same or better pricing, taking into account transaction
        costs,
        and without material delay.

      

      
        
          
          

        

        
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      (h)
        Responsibility for the aggregate license payments under the ReBLikon GmbH
        license required to be delivered by VivoQuest pursuant to Section 6.1(o)
        of the
        Asset Purchase Agreement shall be allocated as follows: the first $50,000
        shall
        be borne by Licensee, the next $50,000 shall be borne 50% by Licensee and
        50% by
        VivoQuest, and any portion in excess of $100,000 shall be borne by VivoQuest.
        The portion of such aggregate license payments to be borne by VivoQuest shall
        be
        deducted from the Ordinary Shares to be issued to Seller pursuant to Section
        3(a)(i) and (ii) of this Agreement.

      

      SECTION
        4. Method
        of Payment.
        (a) (i)
        Royalties due to VivoQuest under Section 3(a)(iii) with respect to sales
        in the
        United States shall be paid to VivoQuest in United States dollars. All royalties
        due to VivoQuest based on sales in countries other than the United States
        shall
        accrue in the currency of the country in which the sales are made. Licensee
        shall utilize its best efforts to effect US dollar transfers with respect
        to
        such royalties. However, any and all loss of exchange value, taxes, or other
        expenses incurred in the transfer or conversion of foreign currency into
        US
        dollars (measured, with respect to currency conversion, as of the end of
        the
        quarterly period during which the applicable royalties accrue), and any income,
        remittance, or other taxes on such royalties required to be withheld at the
        source shall be the exclusive responsibility of VivoQuest. 

      

      (ii)
        It
        is agreed and understood that the milestone payments to be made pursuant
        to
        Section 3(a)(ii) shall be made in United States dollars and that this Section
        4(a) shall be inapplicable thereto.

      

      (b)
        Licensee shall be responsible for payment to VivoQuest of all royalties due
        on
        Net Sales of Licensed Products by direct or indirect sublicensees of Licensee
        (including Affiliates of Licensee). 

      

      SECTION
        5. Patents
        and Patent Applications.
        (a) At
        the initiative of Licensee, the parties shall consult with each other regarding
        the prosecution of all patent applications with respect to the Licensed IP.
        VivoQuest shall use its best efforts to implement all requests made by Licensee,
        at Licensee’s sole expense, with regard to the preparation, filing, prosecution
        and/or maintenance of patent applications and/or patents within the Licensed
        IP.
        Such patent applications shall be filed, prosecuted and maintained by counsel
        selected by Licensee. 

      

      (b)
        All
        applications and proceedings with respect to the Licensed Patents shall be
        filed, prosecuted and maintained by VivoQuest at the direction and expense
        of
        Licensee, provided that Licensee shall have the right to assume direct oversight
        of any or all such activities at any time. Against the submission of invoices,
        Licensee shall reimburse VivoQuest for all costs and fees invoiced by outside
        patent counsel to VivoQuest during the term of this Agreement in connection
        with
        the filing, maintenance, prosecution, protection and the like of the Licensed
        Patents. 

      

      
        
          
          

        

        
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      (c)
        Licensee shall be entitled to discontinue (or direct VivoQuest to discontinue)
        in its sole discretion the prosecution or maintenance of any patents or patent
        applications within the Licensed Patents, or to elect to forego the filing
        of
        any such patent application, without loss of any portion of the License
        (including the exclusivity of the License in any jurisdiction). 

       

      (d)
        Nothing herein contained shall be deemed to be a warranty by VivoQuest that
        VivoQuest can or will be able to obtain any patent or patents on any patent
        application or applications in the Licensed Patents or any portion thereof,
        or
        that any of the Licensed Patents will afford adequate or commercially worthwhile
        protection.

      

      SECTION
        6. Representations
        And Warranties.
        (a)
        Licensee hereby represents and warrants to VivoQuest as follow:

      

      (i)
        Licensee is a corporation duly organized, validly existing and in good standing
        under the laws of Israel. Licensee has been granted all requisite power and
        authority to carry on its business and to own and operate its properties
        and
        assets. The execution, delivery and performance of this Agreement have been
        duly
        authorized by the Board of Directors of Licensee. 

      

      (ii)
        There is no pending or, to Licensee’s knowledge, threatened litigation involving
        Licensee which would have any effect on this Agreement or on Licensee's ability
        to perform its obligations hereunder.

      

      (iii)
        None of the execution and delivery by Licensee of this Agreement, the
        consummation of the transactions contemplated hereby by Licensee, or compliance
        by Licensee with any of the provisions hereof or thereof will (i) conflict
        with,
        or result in the breach of, any provision of Licensee’s charter documents;
        (ii) conflict with, violate, result in the breach or termination of,
        or
        constitute a default under any Contract to which Licensee is a party or by
        which
        Licensee or its properties or assets is bound, or require a consent or waiver
        by
        any Person in order to avoid any such conflict, violation, breach, termination
        or default; (iii) violate any Law or any Order by which Licensee is bound;
        or
        (iv) result in the creation of any Lien upon the properties or assets
        of
        Licensee. No governmental franchise, easement, permit, right, application,
        filing, registration, license or other authorization (each a “Permit”),
        Order, waiver, declaration or filing with, or notification to any Person
        is
        required on the part of Licensee in connection with the execution, delivery
        and
        performance of this Agreement or the compliance by either Licensee with any
        of
        the provisions hereof.

      

      (b)
        VivoQuest hereby represents and warrants to Licensee as follows: 

      

      (i)
        VivoQuest is a corporation duly organized, validly existing and in good standing
        under the laws of the State of Delaware and is qualified to do business and
        is
        in good standing in the State of New York. VivoQuest has been granted all
        requisite power and authority to carry on its business and to own and operate
        its properties and assets. The execution, delivery and performance of this
        Agreement have been duly authorized by the Board of Directors of VivoQuest.
        

      

      
        
          
          

        

        
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      (ii)
        There is no pending or, to VivoQuest's Knowledge, threatened litigation
        involving VivoQuest which would have any effect on this Agreement or on
        VivoQuest's ability to perform its obligations hereunder.

      

      (iii)
        None of the execution and delivery by VivoQuest of this Agreement, the
        consummation of the transactions contemplated hereby by VivoQuest, or compliance
        by VivoQuest with any of the provisions hereof or thereof will (i) conflict
        with, or result in the breach of, any provision of VivoQuest’s charter
        documents; (ii) conflict with, violate, result in the breach or termination
        of, or constitute a default under any Contract to which VivoQuest is a party
        or
        by which VivoQuest or its properties or assets is bound, or require a consent
        or
        waiver by any Person in order to avoid any such conflict, violation, breach,
        termination or default; (iii) violate any Law or any Order by which VivoQuest
        is
        bound; or (iv) result in the creation of any Lien upon the properties
        or
        assets of VivoQuest. No Permit, Order, waiver, declaration or filing with,
        or
        notification to any Person is required on the part of VivoQuest in connection
        with the execution, delivery and performance of this Agreement or the compliance
        by either VivoQuest with any of the provisions hereof

      

      (iv)
        (A)
        VivoQuest owns all right, title and interest in and to the Licensed Patents
        and
        the compounds listed on Schedule II to this License Agreement (the “Scheduled
        Compounds”),
        all
        other Licensed IP (other than compounds in its compounds libraries that are
        not
        Scheduled Compounds) and, to its Knowledge, all compounds in its compounds
        libraries that are not Scheduled Compounds, free and clear of all Liens (other
        than Permitted Exceptions), including without limitation any claims of joint
        ownership or right of use pursuant to any of the Contracts listed in Section
        3.13 of the Seller Disclosure Schedule or in Section 3.13(b) of the Asset
        Purchase Agreement, provided that not own all compounds listed in its pending
        patent applications that are not Scheduled Compounds may be covered by valid
        claims. No Licensed IP is held under license from a third party. The Licensed
        IP
        includes all Intellectual Property Rights and technology that was necessary
        to
        conduct the research and development programs conducted by VivoQuest through
        the
        date of this Agreement. 

       

      (B)
        There
        is no pending or, to the Knowledge of VivoQuest, threatened action, arbitration,
        suit, notice, order, or legal, administrative or other proceeding before
        any
        court or governmental agency, authority or body, against, or affecting
        VivoQuest, either directly or indirectly, with respect to the Licensed IP.
        There
        is no order, writ, injunction, or decree of any federal, state or local,
        or
        foreign court, department, agency, or instrumentality, which will directly
        or
        indirectly relate to the Licensed IP. VivoQuest has complied and is complying
        with all law, ordinances, and government rules and regulations applicable
        to it
        and its properties, assets, and business.

       

      
        
          
          

        

        
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      (C)
        No
        use of any of the Scheduled Compounds or any of the Licensed IP other than
        compounds or, to the Knowledge of VivoQuest, any compounds that are not
        Scheduled Compounds constitutes or has constituted an unauthorized use of,
        or an
        infringement, misappropriation or other violation or impairment of, the
        Intellectual Property Rights of any Person and no valid grounds exist for
        any
        bona fide claims against VivoQuest with respect to the Scheduled Compounds
        or
        any of the Licensed IP other than compounds or, to the Knowledge of VivoQuest,
        any compounds that are not Scheduled Compounds. No Person, including without
        limitation any Person who was ever employed or engaged as a contractor by
        VivoQuest, has asserted or, to the Knowledge of VivoQuest, threatened any
        claim
        of infringement against VivoQuest relating to the Licensed IP. 

       

      (D)
        To
        the Knowledge of VivoQuest, there is no unauthorized use or misappropriation
        or
        infringement of any Licensed IP, including by any employee or former employee
        of
        VivoQuest. VivoQuest has a policy requiring each employee and contractor
        to
        execute nondisclosure of proprietary information and confidentiality agreements
        in the forms previously provided to Licensee and each such employee and
        contractor has executed such agreements. Each such employee is or was an
        “employee” for purposes of 17 U.S.C. 101.

      

      (v)
        VivoQuest was not organized for the specific purpose of acquiring Shares.
        VivoQuest has sufficient knowledge and experience in investing in companies
        similar to Licensee in terms of Licensee’s market capitalization and other
        relevant factors so as to be able to evaluate the risks and merits of its
        investment in Licensee and it is able financially to bear the risks thereof.
        VivoQuest has had an opportunity to discuss the terms of the offering and
        sale
        of the Shares to be issued hereunder and Licensee’s business, management and
        financial affairs with Licensee’s management and to obtain any additional
        information regarding the foregoing which Licensee possesses or can acquire
        without unreasonable effort or expense. Such Shares are being acquired for
        VivoQuest’s own accounts and not with a view to, or the intention of, any
        distribution in violation of the Securities Act or any applicable state
        securities laws. VivoQuest understands that (i)
        such
        Shares have not been registered under the Securities Act by reason of the
        issuance of such Shares in a transaction exempt from the registration
        requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
        505
        or 506 promulgated under the Securities Act, (ii)
        such
        Shares must be held indefinitely unless a subsequent disposition thereof
        is
        registered under the Securities Act or is exempt from such registration,
        (iii)
        such
        Shares will bear a legend to such effect and (iv)
        Licensee will issue stop transfer instructions to its transfer agent consistent
        with Section 3(e).

      

      (v)
        The
        representations and warranties made by VivoQuest in the Asset Purchase Agreement
        are correct and complete as of the date hereof, except as set forth in the
        Seller Disclosure Schedule.

       

      SECTION
        7. Confidential
        Information.
        (a)
        Except as otherwise provided in Sections 7(b) and (c) below, VivoQuest shall
        maintain (i) the Licensed IP, (ii) all information provided to VivoQuest
        by
        Licensee and its officers, directors, attorneys and other agents (collectively,
        “Representatives”)
        and
        (iii) the terms and provisions of this Agreement (the materials and information
        described in clauses (i) through (iii) being referred to herein as the
“Confidential
        Information”)
        in
        confidence and shall not release or disclose any tangible or intangible
        component thereof to any third party without first receiving the prior written
        consent of Licensee to said release or disclosure. Notwithstanding the
        foregoing, VivoQuest may disclose the Licensed IP (i) in accordance with
        the
        instructions of Licensee pursuant to Section 5 and (ii) to VivoQuest’s
        Representatives who are bound by confidentiality obligations equivalent to
        those
        provided herein.

      

      
        
          
          

        

        
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      (b)
        The
        obligations of confidentiality set forth in Section 7(a) shall not apply
        to any
        component of the Licensed IP which: (i) was part of the public domain prior
        to
        the Closing Date or which becomes a part of the public domain other than
        as a
        consequence of a breach by VivoQuest of this Agreement; or (ii) is disclosed
        to
        VivoQuest by a third party who has the right to make such disclosure free
        of any
        confidentiality restriction. 

      

      (c)
        If
        VivoQuest or any of its Representatives is requested or required (by oral
        questions, interrogatories, requests for information or documents in legal
        proceedings, subpoena, civil investigative demand or other similar process)
        to
        disclose any of the Confidential Information, VivoQuest shall provide Licensee
        with prompt written notice of any such request or requirement so that Licensee
        may seek a protective order or other remedy and/or waive compliance with
        the
        provisions of this Agreement. If Licensee seeks a protective order or other
        remedy, VivoQuest shall provide such cooperation as Licensee shall reasonably
        request. If, in the absence of a protective order or other remedy or the
        receipt
        by VivoQuest of a waiver from Licensee, VivoQuest or any of its Representatives
        is required to disclose Confidential Information to any person, VivoQuest
        or its
        Representatives may, without liability hereunder, disclose to such person
        only
        that portion of the Confidential Information that is legally required to
        be
        disclosed. 

      

      (d)
        VivoQuest agrees that because damages arising from violations of this Section
        7
        are extremely difficult to quantify with certainty, injunctive relief will
        be
        necessary to effect the intent of such Section. Accordingly, VivoQuest hereby
        consents to the imposition of a preliminary or permanent injunction as a
        remedy
        to his breach of this Section 7 (without any requirement that Licensee post
        a
        bond).

      

      SECTION
        8. Infringement
        of Licensed Patents.
        

      

      (a)
        In
        the event VivoQuest acquires information that a third party is infringing
        one or
        more of the Licensed Patents, VivoQuest shall promptly notify Licensee in
        writing of such infringement. 

      

      (b)
        In
        the event of an infringement of a Licensed Patent, Licensee shall have the
        sole
        and exclusive right, but shall not be required, to bring suit against the
        infringer. Should Licensee elect to bring suit against an infringer, Licensee
        shall have the right to join VivoQuest as a party plaintiff in any such suit
        or
        to bring such suit in the name of VivoQuest. Except to the extent resulting
        from
        a breach of any representation, warranty or covenant of VivoQuest in the
        Transaction Documents, the expenses of any such suit that Licensee elects
        to
        bring, including any expenses of VivoQuest incurred in conjunction with the
        prosecution of such suit or the settlement thereof, shall be paid for entirely
        by Licensee and Licensee shall hold VivoQuest harmless from and against any
        and
        all costs of such litigation. 

      

      
        
          
          

        

        
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      (c)
        In
        the event Licensee exercises the right to sue herein conferred, Licensee
        shall
        be entitled to retain all recoveries with respect thereto. 

      

      (d)
        VivoQuest agrees to cooperate fully with Licensee at the request of Licensee,
        including by giving testimony and producing documents lawfully requested
        in the
        prosecution of any suit by Licensee for infringement of the Licensed Patents;
        provided that (except to the extent resulting from a breach of any
        representation, warranty or covenant of VivoQuest in the Transaction Documents)
        Licensee shall pay all reasonable expenses (including reasonable attorneys’
        fees) incurred by VivoQuest in connection with such cooperation. VivoQuest
        shall
        cooperate fully with Licensee and shall endeavor to cause the VivoQuest
        Representatives and all other present and former employees of VivoQuest to
        cooperate with Licensee at the request of Licensee, including by giving
        testimony and producing documents lawfully requested in the prosecution of
        any
        suit by Licensee for infringement of the Licensed Patents, provided that
        (except
        as aforesaid) Licensee shall pay all reasonable expenses (including reasonable
        attorneys’ fees) incurred by VivoQuest in connection with such cooperation.

      

      SECTION
        9. Pre-Closing
        Conduct.
        (a)
        During the period between the Agreement Date and the Closing Date (the
“Closing
        Period”),
        VivoQuest shall conduct its business in the ordinary course consistent with
        past
        practice. During the Closing Period, VivoQuest shall not, without the prior
        written consent of Licensee, (i) enter into, amend, terminate or assert any
        claim under or with respect to any Contract, (ii) dispose of any material
        asset
        or any interest therein, including without limitation any interest in any
        of the
        Licensed IP, (iii) incur any indebtedness, (iv) amend its charter documents
        or
        (v) issue any securities.

      

      (b)
        During the Closing Period, VivoQuest shall, and shall cause its employees,
        directors, agents and Affiliates to, immediately suspend any existing
        negotiations or discussions relating to any sale, joint venture or other
        transfer of any interest in the Licensed IP, and VivoQuest shall not, and
        shall
        cause its employees, directors, agents and Affiliates not to, (i) solicit
        any proposals or offers relating to a transaction involving any of the Licensed
        IP or (ii) negotiate or engage in discussions with any third party
        concerning any proposal or offer for a transaction involving any of the Licensed
        IP.

      

      SECTION
        10. Indemnification.
        (a)
        VivoQuest covenants and agrees to defend, indemnify and hold harmless Licensee
        and its Affiliates (including without limitation XTL Biopharmaceuticals Inc.)
        and the respective its officers, directors, employees, agents, advisers and
        representatives of the foregoing (collectively, the “Licensee
        Indemnitees”),
        from
        and against, and to pay or reimburse Licensee Indemnitees for, any and all
        claims, liabilities, obligations, losses, fines, costs, proceedings or damages
        (whether absolute, accrued, conditional or otherwise and whether or not
        resulting from third party claims), including all reasonable fees and
        disbursements of counsel incurred in the investigation or defense of any
        of the
        same or in asserting any of their respective rights hereunder (collectively,
        “Losses”),
        resulting from or arising out of:

       

      
        
          
          

        

        
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      (i) any
        misrepresentation or breach of any warranty of VivoQuest contained in the
        Transaction Documents; provided that in determining whether any such
        misrepresentation or breach occurred, any dollar amount thresholds, materiality
        qualifiers and material adverse effect qualifier contained in any such
        representation or warranty shall be disregarded; 

       

      (ii) any
        failure of VivoQuest to perform any covenant or agreement made or contained
        in
        the Transaction Documents or fulfill any obligation in respect thereof
        (including without limitation any indemnification obligation contained in
        the
        Asset Purchase Agreement); or

       

      (iii) except
        as
        provided in Section 10(b), any liability or obligation arising out of or
        relating to the *****, including any claim by ***** that the ***** is breached
        by virtue of VivoQuest’s entry into the Transaction Documents or the
        consummation of the transactions contemplated thereby.

       

      VivoQuest
        shall not be required to indemnify Licensee Indemnitees with respect to any
        claim for indemnification (other than a claim for indemnification based on
        a
        breach of the representations and warranties contained in Section 6(b)(iv)
        of
        this Agreement or Sections 3.9, 3.11(c), 3.12, 3.14 or 3.18 of the Asset
        Purchase Agreement) resulting from or arising out of matters described in
        clause (i) above pursuant to this Section 10(a) (and not resulting
        from or
        arising out of matters described in clause (ii) or (iii) above) or
        resulting from or arising out of matters described in clause (i) of
        Section
        8.1 of the Asset Purchase Agreement (and not resulting from or arising out
        of
        matters described in clause (ii) or (iii) of Section 8.1 of the Asset
        Purchase Agreement) unless and until the aggregate amount of all such claims
        against VivoQuest exceeds $10,000 (the “Threshold
        Amount”),
        in
        which case VivoQuest shall be required to indemnify Licensee Indemnitees
        for the
        amount of such claims in excess of the Threshold Amount. Claims thereafter
        may
        be asserted regardless of amount.

       

      VivoQuest’s
        maximum liability to Licensee Indemnitees under clause (i) above (and not
        resulting from or arising out of matters described in clause (ii)
        or (iii)
        above) and resulting from or arising out of matters described in clause (i)
        of Section 8.1 of the Asset Purchase Agreement (and not resulting from or
        arising out of matters described in clause (ii) or (iii) of Section
        8.1 of
        the Asset Purchase Agreement) shall
        not
        exceed the Total Consideration. “Total
        Consideration”
        means,
        as of the time any liability pursuant to this Section 10 is determined and
        required to be satisfied, the sum of (x) $1,250,000, (y) the total amount
        of
        cash paid to VivoQuest pursuant to Sections 3(a)(ii) and (iii) of this Agreement
        and (y) the aggregate Fair Market Value as of the applicable Value Date(s)
        of
        any Shares theretofore issued pursuant to Section 3(a)(ii) of this Agreement.
        As
        used herein, “Value
        Date”
        shall
        mean, with respect to the Shares issued pursuant to Section 3(a)(ii) of this
        Agreement, the date on which the relevant milestone is earned.

      

      
        
          
          

        

        
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      (b)
        Licensee covenants and agrees to defend, indemnify and hold harmless VivoQuest
        and its Affiliates and the respective its officers, directors, employees,
        agents, advisers and representatives of the foregoing (collectively, the
        “VivoQuest
        Indemnitees”)
        from
        and against any Losses resulting from or arising out of:

      

      (i)
        the
        design, production, manufacture, sale, use in commerce or in human clinical
        trials or promotion by Licensee or by a sublicense of Licensee of any Licensed
        Product; and

      

      (ii)
        any
        action taken from and after the Closing Date by a VivoQuest Indemnitee under
        or
        with respect to the ***** to the extent (A) such action is taken at the request
        of and in accordance with any related instructions from Licensee and (B)
        such
        instructions are determined by a final nonappealable order of a court of
        competent jurisdiction to have been given in bad faith. 

      

      (c)
        (i)
        In the case of any claim asserted by a third party against a party entitled
        to
        indemnification under this Agreement (the “Indemnified
        Party”),
        notice shall be given by the Indemnified Party to the party required to provide
        indemnification (the “Indemnifying
        Party”)
        as
        soon as practicable after such Indemnified Party has actual knowledge of
        any
        claim as to which indemnity may be sought, and the Indemnified Party shall
        permit the Indemnifying Party (at the expense of such Indemnifying Party)
        to
        assume the defense of any third party claim or any litigation with a third
        party
        resulting therefrom; provided,
        however,
        that
        (a) the counsel for the Indemnifying Party who shall conduct the defense
        of
        such claim or litigation shall be subject to the approval of the Indemnified
        Party (which approval shall not be unreasonably withheld or delayed),
        (b) the Indemnified Party may participate in such defense at such
        Indemnified Party’s expense (which shall not be subject to reimbursement
        hereunder except as provided below), and (c) the failure by any Indemnified
        Party to give notice as provided herein shall not relieve the Indemnifying
        Party
        of its indemnification obligation under this Agreement except and only to
        the
        extent that such Indemnifying Party is actually and materially damaged as
        a
        result of such failure to give notice. Except with the prior written consent
        of
        the Indemnified Party, no Indemnifying Party, in the defense of any such
        claim
        or litigation, shall consent to entry of any judgment or enter into any
        settlement that provides for injunctive or other nonmonetary relief affecting
        the Indemnified Party or that does not include as an unconditional term thereof
        the giving by each claimant or plaintiff to such Indemnified Party of a general
        release from any and all liability with respect to such claim or litigation.
        If
        the Indemnified Party shall in good faith determine that the conduct of the
        defense of any claim subject to indemnification hereunder or any proposed
        settlement of any such claim by the Indemnifying Party might be expected
        to
        affect adversely the ability of the Indemnified Party to conduct its business,
        or that the Indemnified Party may have available to it one or more defenses
        or
        counterclaims that are inconsistent with one or more of those that may be
        available to the Indemnifying Party in respect of such claim or any litigation
        relating thereto, the Indemnified Party shall have the right at all times
        to
        take over and assume control over the defense, settlement, negotiations or
        litigation relating to any such claim at the sole cost of the Indemnifying
        Party; provided,
        however,
        that if
        the Indemnified Party does so take over and assume control, the Indemnified
        Party shall not settle such claim or litigation without the prior written
        consent of the Indemnifying Party, such consent not to be unreasonably withheld
        or delayed. If the Indemnifying Party does not accept the defense of any
        matter
        as above provided within ten (10) days after receipt of the notice from the
        Indemnified Party described above, the Indemnified Party shall have the full
        right to defend against any such claim or demand at the sole cost of the
        Indemnifying Party and shall be entitled to settle or agree to pay in full
        such
        claim or demand. In any event, the Indemnifying Party and the Indemnified
        Party
        shall reasonably cooperate in the defense of any claim or litigation subject
        to
        this Article 10 and the records of each shall be reasonably available to
        the
        other with respect to such defense.

      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      (ii)
        With
        respect to any claim for indemnification hereunder which does not involve
        a
        third party claim, the Indemnified Party will give the Indemnifying Party
        written notice of such claim. The Indemnifying Party may acknowledge and
        agree
        by notice to the Indemnified Party in writing to satisfy such claim within
        twenty (20) days of receipt of notice of such claim from the Indemnified
        Party.
        If the Indemnifying Party shall dispute such claim, the Indemnifying Party
        shall
        provide written notice of such dispute to the Indemnified Party within such
        20-day period, setting forth in reasonable detail the basis of such dispute.
        Upon receipt of notice of any such dispute, the Indemnified Party and the
        Indemnifying Party shall use reasonable efforts to resolve such dispute within
        thirty (30) days of the date such notice of dispute is received. If the
        Indemnifying Party shall fail to provide written notice to the Indemnified
        Party
        within twenty (20) days of receipt of notice from the Indemnified Party that
        the
        Indemnifying Party either acknowledges and agrees to pay such claim or disputes
        such claim, the Indemnifying Party shall be deemed to have acknowledged and
        agreed to pay such claim in full and to have waived any right to dispute
        such
        claim. Once (a) the Indemnifying Party has acknowledged and agreed to pay
        any
        claim pursuant to this Section 10, (b) any dispute under this Section 10
        has
        been resolved in favor of indemnification by mutual agreement of the
        Indemnifying Party and the Indemnified Party, or (c) any dispute under this
        Section 10 has been finally resolved in favor of indemnification by order
        of a
        court of competent jurisdiction or other tribunal (including an arbitrator
        contemplated by this agreement) having jurisdiction over such dispute, then
        the
        Indemnifying Party shall pay the amount of such claim to the Indemnified
        Party
        within twenty (20) days of the date of acknowledgement by the Indemnifying
        Party
        or final resolution in favor of indemnification, as the case may be, to such
        account and in such manner as is designated in writing by the Indemnified
        Party.

       

      (d)
        All
        representations and warranties contained in this Agreement shall survive
        the
        Closing until March 31, 2007; provided,
        however,
        that
        the representations and warranties stated in Section 6(b)(iv) shall survive
        indefinitely and the representations and warranties incorporated by reference
        to
        the Asset Purchase Agreement in Section 6(b)(v) shall survive for the period
        provided in the Asset Purchase Agreement. 

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      (e)
        Absent fraud or criminal activity, and except for equitable relief a party
        is
        entitled to seek under the Transaction Documents or applicable law, the
        indemnifications provided for in this Article 10 shall be the sole
        and
        exclusive post-Closing remedies available to either party against the other
        party for any claims under or based upon this Agreement. In no event shall
        VivoQuest be entitled to terminate the License as a remedy for any alleged
        breach of this Agreement by Licensee. VivoQuest acknowledges that the
        representations and warranties contained in the Transaction Documents shall
        not
        be deemed waived or otherwise affected by any investigation by or on behalf
        of
        Licensee.

       

      (f)
        If
        VivoQuest shall have any Liability to Licensee or any other Licensee Indemnitee
        pursuant to the Transaction Documents, Licensee shall be entitled, in addition
        to any other right or remedy it may have, to exercise rights of set-off against
        any payments or securities payable or deliverable to VivoQuest in connection
        with the Transaction Documents or otherwise, including without limitation
        pursuant to Section 3 of this Agreement. 

      

      SECTION
        11. *****. (a) From and after the date of this Agreement, VivoQuest (i) shall
        comply in all respects with the terms and conditions of the *****, (ii) shall
        consult with Licensee prior to taking any action under or with respect to
        the
        *****, (iii) shall not take any action under or with respect to the *****
        except
        in conformity with Licensee’s instructions and shall take all actions reasonably
        requested by Licensee under or with respect to the ***** and (iv) shall not
        enter into any amendment of the ***** or any license or other agreement with
        ***** (or, with respect to the Licensed IP, any other party) without the
        consent
        of Licensee.

      

      (b)
        In
        the event that ***** and VivoQuest execute an agreement for hepatitis C virus
        for *****, VivoQuest shall include in such agreement a provision permitting
        the
        assignment of VivoQuest’s rights and a delegation of VivoQuest’s obligations
        under such agreement to Licensee, and upon Licensee’s written request, VivoQuest
        shall assign such rights to Licensee provided that Licensee simultaneously
        assumes such obligations. Prior to such assignment, VivoQuest shall administer
        such agreement for the benefit of Licensee and in accordance with Licensee’s
        instructions and all consideration to VivoQuest under such agreement shall
        be
        transferred to Licensee on a pass-through basis, net of direct, out-of-pocket
        expenses of such administration.

      

      SECTION
        12. Licensee
        Option.
        (a)
        VivoQuest hereby grants to Licensee an irrevocable option, exercisable in
        whole
        at any time or in part from time to time, upon written notice to VivoQuest,
        to
        take title to and assume all legal and equitable attributes of ownership
        of all
        or any portion of the Licensed IP. If Licensee exercises such option with
        respect to any portion of the Licensed IP that is then subject to the *****
        Agreement, Licensee shall, to the extent reasonably practicable, consult
        with
        VivoQuest prior to doing so.

      

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      (b)
        If
        Licensee exercises its option to take title to and assume all legal and
        equitable attributes of ownership of any of the Licensed IP, the license
        granted
        in Sections 2 of this Agreement shall cease to exist with respect to such
        Licensed IP as a consequence thereof, but VivoQuest shall continue to be
        entitled to the consideration provided for in Section 3 as if such license
        had
        not terminated with respect to such Licensed IP. After the expiration of
        a
        reasonable transition period determined by Licensee (not to exceed 120 days
        with
        respect to any exercise of such option), Section 5 shall cease to apply with
        respect to such Licensed IP and Licensee shall have full control and
        responsibility for all patents and patent applications with respect to such
        Licensed IP. VivoQuest shall provide reasonable assistance to Licensee with
        any
        exercise of such option, including by promptly transferring to Licensee all
        relevant patents and patent applications owned by VivoQuest.

      

      (c)
        In
        connection with any exercise of the option granted to Licensee pursuant to
        this
        Section 12, VivoQuest shall and shall cause its Affiliates to execute such
        patent assignments and other agreements and instruments as shall be reasonably
        requested by Licensee in order to transfer and reflect of record the transfer
        of
        the ownership of the Licensed IP with respect to which such option is
        exercised.

      

      (d)
        VivoQuest hereby assigns to Licensee, effective as of the Closing Date, all
        of
        VivoQuest’s rights under or with respect to the Employee Non-Disclosure,
        Non-Competition and Assignment of Intellectual Property Agreements listed
        in
        paragraph (i)b. of Section 3.13 of the Seller Disclosure Schedule. The
        provisions of Section 1.3 of the Asset Purchase Agreement shall apply, mutatis
        mutandis, to the assignment of any tangible or intangible asset pursuant
        to this
        Agreement. 

      

      SECTION
        13. Assignment.
        Neither
        Licensee nor VivoQuest shall have the right to assign, delegate or transfer
        at
        any time to any party, in whole or in part, any or all of the rights, duties
        and
        interest herein granted without first obtaining the written consent of the
        other
        to such assignment, which consent shall not be unreasonably withheld, provided
        that no prior written consent shall be required (i) for any such assignment
        of
        Licensee’s rights and obligations hereunder (a) in connection with a sale or
        other transfer (whether directly or indirectly, including by merger or
        consolidation) of the business of Licensee relating to this Agreement, (b)
        to an
        Affiliate of Licensee or (c) as security for the obligations of Licensee
        or any
        Affiliate of Licensee under a credit agreement entered into with a bank or
        other
        financial institution or (ii) in connection with the assignment of this
        Agreement (together with its remaining transferable assets, if any) by VivoQuest
        to a liquidating trust in accordance with applicable Law. No assignment of
        this
        Agreement shall relieve the assigning party of any of its obligations or
        liability hereunder. Any attempted assignment not in compliance with this
        Section 13 shall be of no force or effect.

      

      SECTION
        14. Publicity.
        VivoQuest shall not issue any press release or make any other public
        announcement relating to the subject matter of this Agreement without the
        prior
        written consent of Licensee. Licensee shall be free to issue any such press
        release or other public announcement from and after the date
        hereof.

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      SECTION
        15. Payment
        Net of Tax.
        All
        compensation due to VivoQuest hereunder shall be paid or provided net of
        all
        applicable duties, customs, shipping, import, export, value-added, withholding
        and any international, federal, state or local taxes (each of the foregoing
        an
“Imposition”
        and
        collectively, “Impositions”)
        imposed on or as a consequence of the payment or provision of such compensation
        by Licensee; provided that
        VivoQuest shall have no liability for any tax based on Licensee’s net income.
        Without limitation of the foregoing, all payments to VivoQuest hereunder
        shall
        be reduced by applicable withholding tax (at the statutory rate or, if VivoQuest
        provides any certificates or other evidence required to establish, in accordance
        with applicable law, that it is the beneficiary of a lower treaty rate, such
        lower rate). Shares to be delivered to VivoQuest hereunder, other than the
        Shares to be delivered pursuant to Section 3(a)(i) or with respect to milestone
        event (A) pursuant to Section 3(a)(ii), shall be reduced by a number of Shares
        reasonably determined by Licensee to have a Fair Market Value, as of the
        date
        the remainder of such Shares are issued to Licensee, equal to any Impositions
        required to be satisfied by Licensee with respect thereto. VivoQuest shall
        reimburse Licensee in cash for Licensee’s withholding tax liability (at an
        assumed rate of 15%) relating to the Shares issued pursuant to Section 3(a)(i)
        or with respect to milestone event (A) pursuant to Section 3(a)(ii). Licensee
        shall provide to VivoQuest original or certified copies of all Tax payments
        or
        other evidence of payment of Taxes by Licensee with respect to transactions
        or
        payments under this Agreement that is reasonably requested by VivoQuest for
        the
        purpose of determining its entitlement to any tax credit or deduction.

      

      SECTION
        16. Miscellaneous.
        (a) If
        any provision of this Agreement is determined to be invalid or void, the
        remaining provisions shall remain in effect.

      

      (b)
        This
        Agreement shall be deemed to have been made in the State of New York and
        shall
        be governed and interpreted in all respects under the laws of the State of
        New
        York without regard to conflicts of law rules.

      

      (c)
        All
        notices and other communications under this Agreement shall be in writing
        and
        shall be deemed given when delivered personally or mailed by certified mail,
        return receipt requested, to the parties (and shall also be transmitted by
        facsimile to the Persons receiving copies thereof) at the following addresses
        (or to such other address 

      
        
          
          

        

        
          22

          
            

          

        

        
          
          
*****
          Confidential material redacted and filed separately with the
          Commission.

      

      as
        a
        party may have specified by notice given to the other party pursuant to this
        provision):

      

      If
        to
        VivoQuest, to:

       

      *****

      

      With
        a
        copy to:

      

      *****

      

      If
        to
        Licensee:

      

      *****

      

      With
        a
        copy to:

       

      *****

       

      Any
        such
        notice or communication shall be deemed to have been received (i) when
        delivered, if personally delivered or transmitted by electronic mail, with
        receipt acknowledgment by the recipient by return electronic mail, (ii) when
        sent, if sent by facsimile on a business day during normal business hours
        (or,
        if not sent on a business day during normal business hours, on the next business
        day after the date sent by facsimile), (iii) on the next business day after
        dispatch, if sent by nationally recognized, overnight courier guaranteeing
        next
        business day delivery, and (iv) on the 5th
        business
        day following the date on which the piece of mail containing such communication
        is posted, if sent by mail. 

      

      (d)
        This
        Agreement constitutes the entire agreement between the parties with respect
        to
        the subject mater hereof and thereof and no variation, modification or waiver
        of
        any of the terms or conditions hereof or thereof shall be deemed valid unless
        made in writing and signed by both parties hereto. This Agreement supersedes
        any
        and all prior agreements or understandings, whether oral or written, with
        respect to such subject matter between Licensee and VivoQuest. 

      

      (e)
        No
        waiver by either party of any non-performance or violation by the other party
        of
        any of the covenants, obligations or agreements of such other party hereunder
        shall be deemed to be a waiver of any subsequent violation or non-performance
        of
        the same or any other covenant, agreement or obligation, nor shall forbearance
        by any party be deemed to be a waiver by such party of its rights or remedies
        with respect to such violation or non-performance. 

      

      (f)
        The
        descriptive headings contained in this Agreement are included for convenience
        and reference only and shall not be held to expand, modify or aid in the
        interpretation, construction or meaning of this Agreement. 

      

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      (g)
        It is
        not the intent of the parties to create a partnership or joint venture or
        to
        assume partnership responsibility or liability. 

      
 

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement effective
        as of
        the date and year first above written. 

      

      
        
          	 	 	 
	 	VIVOQUEST,
                  INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                  

                  Name:

                  Title:

                
	 	 

        

      
        	 	 	 
	 	XTL
                BIOPHARMACEUTICALS LTD.
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name:

                Title:

              
	 	 

      

      
 

      
        
          
          

        

        
          24Unassociated Document

    

      EXECUTION
        COPY

      

      ASSET
        PURCHASE AGREEMENT dated as of August 17, 2005 among VivoQuest, Inc., a Delaware
        corporation (“Seller”),
        and
        XTL Biopharmaceuticals Inc., a Delaware corporation (“Purchaser”).

       

      In
        consideration of the mutual covenants, representations and warranties made
        herein and other good and valuable consideration, the receipt and sufficiency
        of
        which hereby are acknowledged, the parties hereto agree as follows:

       

      ARTICLE
        I

       

      PURCHASE
        AND SALE OF THE ASSETS 

       

      Section
        1.1 Assets.
        Subject
        to and upon the terms and conditions set forth in this Agreement, at the
        closing
        of the transactions contemplated hereby (the “Closing”),
        Seller shall sell, transfer, convey, assign and deliver to Purchaser, and
        Purchaser shall purchase and acquire from Seller, all right, title and interest
        of Seller in and to all properties, assets and rights of every nature, kind
        and
        description, tangible and intangible (including goodwill), whether accrued,
        contingent or otherwise, that relate to or are used or held for use in the
        Business (such term and other capitalized terms used herein being defined
        in
        Article X) (collectively, the “Assets”),
        including without limitation the following Assets:

       

      (a) all
        computer hardware, furniture, furnishings, equipment, machinery and other
        tangible personal property;

       

      (b) all
        rights under the Contracts listed on Schedule I (the “Included
        Contracts”);

       

      (c) all
        notes
        and accounts receivable (in all cases, whether or not billed) and the benefit
        of
        any security therefor; 

       

      (d) all
        Books
        and Records; and

       

      (e) to
        the
        extent their transfer is permitted by applicable Law, all Governmental
        Approvals, including all applications therefore.

       

      Without
        limitation of the foregoing, the Assets shall include the assets of Seller
        listed on Section 1.1 of the Seller Disclosure Schedule (as defined below).
        At
        the Closing, the Assets shall be transferred or otherwise conveyed to Purchaser
        free and clear of all Liens excepting only Permitted Exceptions. 

       

      Section
        1.2 Excluded
        Assets.
        Notwithstanding Section 1.1, Seller shall retain Seller’s right, title and
        interest in and to the following assets (collectively, the “Excluded
        Assets”):

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (a) all
        cash
        and cash equivalents of Seller (it being understood that all such cash and
        cash
        equivalents shall be applied to reduce Seller’s pre-Closing liabilities);

       

      (b) all
        Intellectual Property and technology, including the compounds and compound
        libraries (the “Licensed
        Property”),
        subject to that certain License Agreement dated as of the date hereof between
        Seller and Purchaser (the “License
        Agreement”);

       

      (c) insurance
        policies and causes of action, lawsuits, claims, demands, rights of recovery
        and
        set-off under or with respect to, and the proceeds of, insurance
        policies;

       

      (d) causes
        of
        action, lawsuits, claims, demands, and rights of recovery and set-off with
        respect to any Excluded Assets or Excluded Liability; 

       

      (e) prepaid
        Taxes and any claims for any refund, rebate or abatement with respect to
        Taxes
        for any period or portion thereof through the date (the “Closing
        Date”)
        of the
        Closing; 

       

      (f) subject
        to the last paragraph of this Section 1.2, Contracts other than Included
        Contracts;

       

      (g) any
        and
        all income tax returns and related workpapers used to prepare the same for
        periods ending on or prior to the Closing Date; 

       

      (h) all
        Employee Benefit Plans, and Pension Plans; and

       

      (i) the
        rights of Seller under this Agreement and the other Transaction
        Documents.

       

      Notwithstanding
        the foregoing, Purchaser shall have the sole and exclusive right, but shall
        not
        be required, to enforce the provisions of the Contracts that are not Included
        Contracts (the “Excluded
        Contracts”)
        relating to the allocation of Intellectual Property rights, confidentiality
        obligations, publication restrictions and all related matters. Should Purchaser
        elect to bring a claim or be required to defend a claim involving any such
        matter, Purchaser shall have the right, at its sole expense, to join Seller
        as a
        party for such purpose. 

       

      Purchaser
        may elect at any time prior to, on or after the Closing Date to have any
        Excluded Contract (other than one relating to a scientific advisory or
        consulting relationship) included in the Assets in its sole discretion and,
        if
        Purchaser elects to have any such Excluded Contract included in the Assets,
        such
        Excluded Contract shall thereupon become an Included Contract (and, to the
        extent applicable, a Delayed Asset). Notwithstanding Section 2.3, with respect
        to any such Excluded Contract that Purchaser elects to include in the Assets
        after the Closing Date, Purchaser shall assume only liabilities and obligations
        of Seller under such Excluded Contract included that, by the terms of such
        Excluded Contracts, arise after the date of assignment, relate to periods
        following the assignment and are to be observed, paid, discharged, or performed
        as the case may be, at any time after the assignment. With respect to Seller’s
        scientific advisory and consulting relationships with Charles Rice, David
        Ho,
        Gregory Verdine, Chi-Huey Wong and K.C. Nicolau Seller shall, to the extent
        desired by Purchaser, use its best reasonable efforts to cause such persons
        to
        enter into comparable scientific advisory and consulting relationships with
        Purchaser following the Closing (including by way of assignment of any prior
        agreement if the advisor consents to such assignment), provided that the
        entry
        by such persons into scientific advisory and consulting relationships with
        Purchaser shall not be a condition to the Closing.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      Section
        1.3 Required
        Consents.
        Notwithstanding anything to the contrary in this Agreement, this Agreement
        shall
        not constitute an agreement to assign or transfer any Asset or interest therein
        as to which (i) an assignment or transfer thereof or an attempt to make such
        an
        assignment or transfer without a Consent (a “Required
        Consent”)
        would
        constitute a breach or violation thereof or of applicable Law, or would
        adversely affect the rights or obligations thereunder to be assigned or
        transferred to or for the account of Purchaser and (ii) all such Required
        Consents shall not have been obtained with respect to such Asset or interest
        therein prior to the Closing. Any transfer or assignment to Purchaser by
        Seller
        of any such Asset or interest therein (a “Delayed
        Asset”),
        and
        any assumption by Purchaser of any corresponding Assumed Liability (a
“Delayed
        Liability”),
        shall
        be made subject to all such Required Consents in respect of such Delayed
        Asset
        being obtained. If there are any Delayed Assets, Seller shall use its reasonable
        best efforts to obtain all Required Consents in respect thereof as promptly
        as
        practicable following the Closing without any further cost to Purchaser or
        any
        of its Affiliates. Until all Required Consents with respect to each Delayed
        Asset (other than one relating to a scientific advisory or consulting
        relationship) have been obtained, (a) Seller shall hold the Delayed Asset
        on
        behalf of Purchaser, (b) Seller shall cooperate with Purchaser for no additional
        consideration in any lawful arrangement (including subleasing or subcontracting,
        or performance thereunder by Seller as Purchaser’s agent) to provide Purchaser
        with all of the benefits of or under any such Delayed Asset, (c) to the extent
        of any benefits received by or for the account of Purchaser under clause
        (b)
        above, Purchaser shall assume and perform any corresponding Delayed Liabilities
        and (d) Seller shall otherwise enforce and perform for the account of Purchaser
        and as directed by Purchaser any other rights of Seller arising from such
        Delayed Asset. At such time and on each occasion after the Closing Date as
        all
        Required Consents with respect to a Delayed Asset have been obtained, such
        Delayed Asset shall automatically be transferred and assigned by Seller to
        Purchaser for no additional consideration, and all corresponding Delayed
        Liabilities shall be simultaneously assumed by Purchaser, without the need
        for
        any further act on the part of any party. 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      ARTICLE
        II

       

      PURCHASE
        PRICE AND CLOSING

       

      Section
        2.1 Purchase
        Price; Allocation.
        i)
        The
        consideration for the Assets (the “Purchase
        Price”)
        shall
        consist of (i) a number of unregistered ordinary shares, par value NIS 0.02
        per
        share (“Parent
        Ordinary Shares”),
        of
        XTL Biopharmaceuticals Ltd., an Israeli corporation (“Parent”)
        equal
        to the quotient of (x) $450,000, divided by (y) the Fair Market Value of
        one
        Parent Ordinary Share as of the Closing Date (the
        “Shares”)
        and
        (ii) the assumption by Purchaser at the Closing of the Assumed Liabilities.
        On
        the Closing Date, Purchaser shall deliver to the transfer agent for the Parent
        Ordinary Shares irrevocable instructions to issue the Shares in the name
        of
        Seller. The Shares shall be issued without any deduction in respect of
        withholding taxes.

       

      (b)
        The
        Purchase Price shall be allocated by Purchaser among the Assets in the manner
        required by Section 1060 of the Code and regulations thereunder. Purchaser
        shall
        deliver to Seller a copy of such allocation within seventy five (75) days
        after
        the Closing. The portion of the Purchase Price, if any, allocated to one
        or more
        covenants set forth in a Transaction Document shall not be offered by any
        party
        hereto as evidence, or otherwise taken into account, in connection with a
        determination of the damages arising from a breach of any such covenant.
        Purchaser and Seller shall file on a timely basis with the IRS substantially
        identical initial and supplemental IRS Forms 8594 consistent with such
        allocation. Purchaser and Seller agree, for all Tax purposes, to report the
        transactions effected pursuant to the Transaction Documents in a manner
        consistent with the terms of this Agreement (including the Purchase Price
        allocation prepared by Purchaser) and neither of them shall take a position
        on
        any Tax return, before any Tax authority or in any judicial proceeding that
        is,
        in any manner, inconsistent with such allocation without the consent of the
        other or unless specifically required pursuant to a determination by an
        applicable Tax authority. The parties shall promptly advise one another of
        the
        existence of any Tax audit, controversy or litigation related to any allocation
        hereunder.

      

      Section
        2.2 Closing
        Date.
        The
        Closing shall, subject to Section 9.4, take place at the Law Office of Kenneth
        G. Alberstadt PLLC, 111 Broadway, 18th
        Floor,
        New York, New York 10006 at 10:00 a.m. on the earlier of (i) a date determined
        by Purchaser, which date shall be within two weeks after American Depository
        Receipts for the Parent Ordinary Shares begin trading on NASDAQ and (ii)
        September 22, 2005, provided that the conditions set forth in Sections 5.1
        and
        5.2 have been satisfied (or waived by the party entitled to waive such
        conditions). At the Closing, the parties shall make the deliveries provided
        for
        in Section 2.1 and Article VI hereof. The Closing shall become effective
        as of
        11:59 P.M. EST on the Closing Date. 

       

      Section
        2.3 Assumption
        of Liabilities .
        Subject
        to the terms and conditions set forth herein, at the Closing, Purchaser shall
        assume and agree to pay and discharge when due all liabilities and obligations
        of Seller under Included Contracts included in the Assets that, by the terms
        of
        such Included Contracts, arise after the Closing, relate to periods following
        the Closing and are to be observed, paid, discharged, or performed as the
        case
        may be, at any time after the Closing and no other liabilities or obligations
        of
        Seller (the “Assumed
        Liabilities”).
        Liabilities and obligations for periods that include the Closing Date shall
        be
        allocated on a per diem basis.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      Section
        2.4 Excluded
        Liabilities.
        Purchaser shall not be responsible for any Liabilities, obligations or
        commitments of Seller that are not specifically set forth in Section 2.3
        (collectively, the “Excluded
        Liabilities”).
        In
        addition, notwithstanding anything to the contrary in this Agreement (including
        Section 2.3), Purchaser shall not be responsible for any of the following
        (each
        of which shall also constitute Excluded Liabilities):

       

      (a) any
        Liability relating to any cause of action or judicial or administrative action,
        suit, proceeding or investigation, (i) pending or threatened on or prior
        to the
        Closing Date, or (ii) relating to Excluded Assets or Excluded
        Liabilities;

       

      (b) any
        Liability relating to any failure or alleged failure to comply with, or any
        violation or alleged violation of, (i) any Law, Order or Governmental
        Approval applicable to the Business or the Assets, including without limitation
        any Tax Law or any Law relating to employment practices, or (ii) any
        Contract, in each case which failure or violation occurred or was alleged
        to
        have occurred on or prior to the Closing Date;

       

      (c) any
        Liability, severance obligation, termination fee or other obligation or
        commitment relating to or arising out of (i) the employment by Seller of
        any of
        its employees or the engagement by Seller of any of its independent contractors
        (or any employee of an independent contractor), (ii) any Employee Benefit
        Plan
        or Pension Plan, including any sponsorship, administration or contribution
        obligation of any Person under any Employee Benefit Plan or Pension Plan
        or the
        termination prior to any such assumption of any Employee Benefit Plan or
        Pension
        Plan or (iii) the termination of employment or engagement of any employee
        or independent contractor of Seller, including as a consequence of any
        constructive termination resulting from the consummation of the transactions
        contemplated by the Transaction Documents;

       

      (d) any
        Liability relating to any infringement or alleged infringement of the rights
        of
        any other Person arising out of the use of any Intellectual Property in
        connection with the Business on or prior to the Closing Date;

       

      (e) any
        Liability for (i) any Taxes attributable to Seller, or (ii) for Taxes
        attributable to the Assets or the Business with respect to any taxable period
        (or portion thereof) ending on or prior to the Closing Date;

       

      (f) any
        Liability relating to any Excluded Asset; or

       

      
        
          
          

        

        
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      (g) any
        Liability imposed by any Environmental Law and incurred in connection with
        (i)
        conditions existing or events occurring on or prior to the Closing Date on
        Seller Property (as defined below), (ii) any real property, business
        entities or assets, whether domestic or foreign, formerly owned, leased,
        occupied or operated by or in connection with the Business on or prior to
        the
        Closing Date or (iii) the transportation or disposal of any Hazardous Materials
        to or at any offsite facility or location by or in connection with the Business
        occurring prior to the Closing Date.

       

      For
        purposes of Section 2.4(g), in the case of any taxable period that begins
        before
        and ends after the Closing Date (a “Straddle Period”), the amount of any Tax for
        the portion of such taxable period ending on the Closing Date shall be deemed
        to
        be the amount of such Tax for the entire taxable period multiplied by a fraction
        the numerator of which is the number of days in the taxable period through
        the
        Closing Date and the denominator of which is the number of days in such Straddle
        Period. 

       

      Section
        2.5 Transferability;
        Legending of Shares.
        (a)
        Seller acknowledges that the Shares are being acquired pursuant to an exemption
        from registration under the Securities Act of 1933, as amended (the
“Securities
        Act”)
        and
        that the Shares may be transferred only pursuant to an effective registration
        statement or an exemption from registration under the Securities Act. Seller
        represents that it is familiar with Rule 144 under the Securities Act. Seller
        shall not be permitted to transfer any Shares in the absence of an effective
        registration statement unless Seller has furnished Parent with an opinion
        of
        counsel, reasonably satisfactory to Parent, that such disposition does not
        require registration of such Shares under the Securities Act. It is agreed
        that
        Parent will not require opinions of counsel for transfers made pursuant to
        Rule
        144 if Parent is provided with any certificates or other evidence of compliance
        with Rule 144 reasonably required by it in connection with such transfer
        (including without limitation a copy of the relevant Form 144). 

       

      (b)
        It is
        understood that the certificates evidencing the Shares shall bear a legend
        to
        the following effect:

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
        HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
        STATEMENT WITH RESPECT THERETO OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
        REQUIREMENTES OF SUCH ACT.

       

      The
        certificates evidencing the Shares may also bear any legends required by
        applicable blue sky laws.

       

      (c)
        (i)
        The Shares shall be freely tradeable on the London Stock Exchange (for so
        long
        as the Parent Ordinary Shares are listed on the London Stock Exchange), subject
        to any restrictions imposed on a party to any transaction executed on the
        London
        Stock Exchange by the Laws of a country other than the United Kingdom to
        which
        such party is subject, including the other provisions of this section
        2.5).

       

      
        
          
          

        

        
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      (ii).
        In
        the event any of the Shares evidenced by a certificate bearing a restrictive
        legend as provided in Section 2.5(b) above are transferred by Seller or a
        transferee of Seller pursuant to Rule 904 under the Securities Act, as currently
        in effect, Purchaser shall cause Parent to instruct the transfer agent for
        the
        Parent Ordinary Shares to issue shares upon transfer free of any restrictive
        legend or notation if Purchaser is presented with a written certification
        to the
        following effect from the transferor in such transfer: 

       

      The
        undersigned registered holder is selling some or all of the shares evidenced
        by
        the accompanying certificate in a resale transaction in compliance with Rule
        904
        under the United States Securities Act of 1933, as amended. 

       

      Any
        unsold balance of the shares represented by such certificate will continue
        to
        bear a restrictive legend until such time as they are the subject of a
        transaction executed in accordance with this Section 2.5(c) or until such
        legend
        may otherwise be removed in the opinion of counsel to Parent. 

       

      Section
        2.6 Certain
        Transactions; Share Lock-up.
        (a) In
        the event of a merger, consolidation or other transaction (a “Conversion
        Transaction”)
        as a
        result of which substantially all of the outstanding Parent Ordinary Shares
        are
        converted into the right to receive, in whole or in part, equity securities,
        if
        such equity securities are traded on a recognized securities exchange or
        interdealer quotation system, in the United States, Europe or Israel, or
        another
        securities exchange or interdealer quotation system reasonably acceptable
        to
        Seller (“Listed
        Equity Securities”),
        (i)
        any issued Parent Ordinary Shares issued hereunder (“Shares”) shall be eligible
        to participate in any Conversion Transaction on the same basis as other
        outstanding Parent Ordinary Shares and (ii) any consideration required to
        be
        provided to Seller hereunder that would otherwise be permitted to be satisfied
        through the issuance of Parent Ordinary Shares shall thereafter be permitted
        to
        be satisfied through the issuance of such Listed Equity Securities. For such
        purpose, such Listed Equity Securities shall be valued at their aggregate
        Fair
        Market Value as of the date such Parent Ordinary Shares would have been valued.
        In the event that, in any Conversion Transaction, substantially all of the
        outstanding Parent Ordinary Shares are converted into the right to receive
        equity securities that are not Listed Equity Securities (or are converted
        into
        the right to receive a combination of such equity securities and cash), then,
        until such equity securities constitute Listed Equity Securities, any further
        consideration required to be provided to Seller hereunder that would otherwise
        be permitted to be satisfied through the issuance of Parent Ordinary Shares
        shall be satisfied entirely in cash. In the event of a merger, consolidation
        or
        other transaction as a result of which substantially all of the outstanding
        Parent Ordinary Shares are converted into the right to receive only cash,
        any
        further consideration required to be provided to Seller hereunder that would
        otherwise be permitted to be satisfied through the issuance of Parent Ordinary
        Shares shall be required to be satisfied entirely in cash, provided that
        if the
        surviving or transferee entity in such transaction (or an Affiliate thereof)
        has
        a class of Listed Equity Securities, any portion of such consideration that
        would otherwise be permitted to be satisfied through the issuance of Parent
        Ordinary Shares shall thereafter be permitted to be satisfied through the
        issuance of such Listed Equity Securities, valued at their aggregate Fair
        Market
        Value as of the date such Parent Ordinary Shares would have been
        valued.

      

      
        
          
          

        

        
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      (b)
        Neither Seller nor any transferee of Seller shall sell, pledge, hedge or
        otherwise dispose of any economic interest in 50% of the Shares during the
        period ending 30 days after the Closing Date. Furthermore, Seller shall consult
        with Purchaser prior to disposing of any Shares on the open market to determine
        whether Purchaser may provide Seller with an alternate opportunity for liquidity
        at the same or better pricing, taking into account transaction costs, and
        without material delay.

         .
        

      ARTICLE
        III

       

      REPRESENTATIONS
        AND WARRANTIES OF SELLER

       

      Seller
        represents and warrants to Purchaser that, except as set forth in the Seller
        Disclosure Schedule attached hereto, the following statements are correct
        and
        complete as of the date hereof. The disclosures in the Seller Disclosure
        Schedule shall be arranged in sections corresponding to the sections contained
        in Article III hereof and the disclosures in any section or paragraph of
        the
        Disclosure Schedule shall qualify only (a) the corresponding section or
        paragraph in Article III hereof and (b) other sections or paragraphs in Article
        III hereof to the extent that it is reasonably apparent (notwithstanding
        the
        absence of a specific cross reference) from a reading of the disclosure that
        such disclosure is applicable to such other sections or paragraphs. The
        disclosure of the existence of a contract on the Seller Disclosure Schedule
        shall not, without more, constitute the disclosure of any particular provisions
        of such contract or the actual or potential consequences thereof. 

       

      Section
        3.1 Organization
        and Good Standing.
        Seller
        is a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Delaware and has all requisite corporate power and
        authority to own, lease and operate its properties and to carry on its business.
        Seller is duly qualified or authorized to do business as a foreign corporation
        and is in good standing under the laws of each jurisdiction in which it owns
        or
        leases real property and each other jurisdiction in which the conduct of
        its
        business or the ownership of its properties requires such qualification or
        authorization, except where the failure to be so qualified or authorized
        would
        not have a Seller Material Adverse Effect. Section 3.1 of the Seller Disclosure
        Schedule sets forth a true, correct and complete list of each jurisdiction
        in
        which Seller is qualified or authorized to do business as a foreign
        corporation.

       

      
        
          
          

        

        
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      Section
        3.2 Authorization
        and Enforceability.
        Seller
        has all requisite power and authority to execute and deliver this Agreement
        and
        each other agreement, document, instrument or certificate contemplated by
        this
        Agreement or to be executed by Seller in connection with the consummation
        of the
        transactions contemplated by this Agreement, and to consummate the transactions
        contemplated hereby and thereby. The execution, delivery and performance
        by
        Seller of each of the Transaction Documents to which it is a party have been
        duly authorized by all necessary corporate action on the part of Seller.
        This
        Agreement and the other Transaction Documents have been duly and validly
        executed and delivered by Seller and constitute legal, valid and binding
        obligations of Seller, enforceable against Seller in accordance with their
        respective terms subject to applicable bankruptcy, insolvency, reorganization,
        moratorium and similar laws affecting creditors’ rights and remedies generally
        and subject, as to enforceability, to general principles of equity (regardless
        of whether enforcement is sought in a proceeding at law or in equity).

       

      Section
        3.3 Ownership;
        Subsidiaries.
        Section
        3.3 of the Seller Disclosure Schedule sets forth (i) the record and beneficial
        ownership of all outstanding equity interests in Seller and (ii) a true and
        complete list of all partnerships, joint venture arrangements or other Persons
        in which Seller owns a direct or indirect equity interest, together with
        the
        jurisdiction of organization thereof and each record and beneficial owner
        of
        equity interests in such partnership, joint venture or other
        Person.

       

      Section
        3.4 Seller’s
        Records.

       

      (a) The
        minute books of Seller previously made available to Purchaser contain all
        existing records of meetings and other corporate action of the Board of
        Directors and stockholders of Seller for the last five years other than those
        reflecting consideration of a possible sale of Seller or a sale or license
        of a
        substantial portion of its assets outside the ordinary course of business.
        The
        records that have been omitted because they contain such subject matter do
        not
        discuss any matters bearing materially on the representations and warranties
        made by Seller herein (other than those relating solely to the financial
        condition of Seller). The certificate books and transfer ledgers of Seller
        previously made available to Purchaser are true, correct and complete.

       

      (b) Seller
        has not engaged in any material transaction with respect to its business,
        maintained any bank account for its business or used any of its funds, except
        for transactions, bank accounts and funds which have been and are reflected
        in
        the normally maintained books, records and accounts of Seller. Seller is
        not
        aware that any fraud, whether or not material, has occurred that involves
        or
        involved management or other employees who have a significant role in Seller’s
        system of internal accounting control.

       

      
        
          
          

        

        
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      Section
        3.5 Conflicts;
        Consents of Third Parties.

       

      None
        of
        the execution and delivery by Seller of this Agreement and the other Transaction
        Documents to which it is a party, the consummation of the transactions
        contemplated hereby or thereby, or compliance by Seller with any of the
        provisions hereof or thereof will (i) conflict with, or result in the breach
        of,
        any provision of Seller’s certificate of incorporation or by-laws or
        comparable organizational documents (collectively, “Organizational
        Documents”)
        of
        Seller; (ii) conflict with, violate, result in the breach or termination
        of, or constitute a default under any Contract to which Seller is a party
        or by
        which Seller or its properties or assets is bound, or require a consent or
        waiver by any Person in order to avoid any such conflict, violation, breach,
        termination or default; (iii) violate any Law or any Order by which Seller
        is
        bound; or (iv) result in the creation of any Lien upon the properties
        or
        assets of Seller. No governmental franchise, easement, permit, right,
        application, filing, registration, license or other authorization (each a
        “Permit”),
        Order, waiver, declaration or filing with, or notification to any Person,
        including without limitation any Governmental Body, is required on the part
        of
        Seller in connection with the execution, delivery and performance of this
        Agreement or the other Transaction Documents to which it is a party, or the
        compliance by Seller with any of the provisions hereof or thereof.

       

      Section
        3.6 Financial
        Statements.
        Included in Section 3.6 of the Seller Disclosure Schedule are (i) the
        balance sheets of the Seller as at December 31, 2003 and 2004 and the related
        statements of income and of cash flows of the Seller for the years then ended
        and (ii) the unaudited balance sheet (the “Balance
        Sheet”)
        of the
        Seller as at June 30, 2005 (the “Balance
        Sheet Date”)
        and
        the related statements of income and cash flows of the Seller for the six-month
        period then ended and for the comparable period in the prior year (such
        statements, including the related notes and schedules thereto, are referred
        to
        herein as the “Financial
        Statements”).
        The
        Financial Statements have been prepared from the books and records of the
        Seller
        and fairly present in all material respects the financial position and results
        of operations, stockholders’ equity and cash flows of the Seller as at the dates
        and for the periods reflected thereon in accordance with GAAP applied on
        a
        consistent basis throughout the periods indicated, except as may be indicated
        in
        the notes thereto and except, in the case of the six-month financial statements,
        for the failure of the unaudited financial statements to include the footnotes
        required by GAAP, and subject to normal year-end audit adjustments and any
        other
        adjustments specifically described therein that will not individually or
        in the
        aggregate be material.   

       

      Section
        3.7 No
        Undisclosed Liabilities.
        Seller
        has no indebtedness or any other material obligation or Liability of any
        kind,
        including any Liability as guarantor, surety or otherwise, which is not either
        fully reflected in, reserved against or otherwise described in the Balance
        Sheet
        or the notes thereto or incurred in the ordinary course of business consistent
        with past practice since the Balance Sheet Date.

       

      
        
          
          

        

        
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      Section
        3.8 Absence
        of Certain Developments.
        Since
        the Balance Sheet Date:

       

      (a) there
        has
        not been any damage, destruction or loss, whether or not covered by insurance,
        with respect to the property and assets of Seller;

       

      (b) Seller
        has not made any change in the rate of compensation, commission, bonus or
        other
        direct or indirect remuneration payable, or paid or agreed or orally promised
        to
        pay, conditionally or otherwise, any bonus, incentive, retention or other
        compensation, retirement, welfare, fringe or severance benefit or vacation
        pay,
        to or in respect of any director, officer, employee, distributor or agent
        of
        Seller, other than increases in the ordinary course of business consistent
        with
        past practice in the base salaries of employees of Seller other than officers
        or
        senior managers;

       

      (c) Seller
        has not entered into any employment, deferred compensation, severance or
        similar
        agreement (nor amended any such agreement);

       

      (d) there
        has
        not been any change by Seller in accounting or Tax reporting principles,
        methods
        or policies;

       

      (e) Seller
        has not conducted its business other than in the ordinary course consistent
        with
        past practice;

       

      (f) Seller
        has not entered into (1) any Contract that is not an Included Contract or
        (2)
        any other material transaction;

       

      (g) Seller
        has not hired any employees or engaged independent contractors;

       

      (h) Seller
        has not materially breached any Included Contract or materially amended any
        Included Contract;

       

      (i) Seller
        has not failed to promptly pay and discharge current Liabilities except where
        disputed in good faith in an appropriate manner;

       

      (j) Seller
        has not mortgaged, pledged or subjected to any Lien any of its assets, or
        acquired any assets or sold, assigned, transferred, conveyed, leased or
        otherwise disposed of any assets of Seller except for assets acquired or
        sold,
        assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary
        course of business consistent with past practice;

       

      (k) Seller
        has not discharged or satisfied any Lien, or paid any obligation or Liability,
        except in the ordinary course of business consistent with past practice and
        which, in the aggregate, are not material to Seller;

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      (l) Seller
        has not canceled or compromised any debt or claim or amended, canceled,
        terminated, relinquished, waived or released any Contract or right except
        in the
        ordinary course of business consistent with past practice and which, in the
        aggregate, are not material to the Company;

       

      (m) Seller
        has not made or committed to make any capital expenditures or capital additions
        or improvements;

       

      (n) Seller
        has not entered into any prepaid services transactions with any of its customers
        or otherwise accelerated revenue recognition or the sales of its services
        for
        periods prior to any Closing hereunder; 

       

      (o) Seller
        has not amended any of its Organizational Documents;

       

      (p) Seller
        has not issued any equity securities or any securities exercisable or
        exchangeable for or convertible into equity securities of Seller; 

       

      (q) Seller
        has not declared or made any dividend or distribution, in cash or in kind,
        or
        repurchased any of its equity securities; and

       

      (r) Seller
        has not entered into any agreements to do or perform in the future any actions
        referred to in this Section 3.8 which have not been consummated as of the
        date
        hereof.

       

      Section
        3.9 Taxes.

       

      Seller
        has duly and timely filed all Tax Returns with respect to Taxes required
        to be
        filed on or before the Closing Date. All such Tax Returns are true, complete
        and
        correct in all material respects. All Taxes owed by Seller (whether or not
        shown
        on any Tax Return) or for which Seller is responsible have been duly and
        timely
        paid. Seller has not waived any statute of limitations in respect of Taxes
        or
        agreed to any extension of time with respect to a Tax assessment or deficiency.
        Seller is not currently the beneficiary of any extension of time within which
        to
        file any Tax Return. Seller has withheld all required amounts in respect
        of
        Taxes from its employees, agents, contractors and nonresidents and, to the
        extent required, has remitted such amounts to the proper agencies. Seller
        is not
        a “foreign person” within the meaning of Section 1445(b)(2) of the Code. Seller
        (a) has not been a member of an affiliated group filing a consolidated income
        Tax Return and (b) does not have any liability for the Taxes of any person
        under
        Treasury Regulations section 1.1502-6(a) (or any analogous or similar provision
        of any state, local or foreign Law), as a transferee or successor, by contract,
        or otherwise. Seller is, and since the date of its formation has been, treated
        as a partnership for federal, state and local income tax purposes and neither
        Seller nor any of its owners, nor any taxing authority has taken any position
        inconsistent with such treatment, including, without limitation, filing an
        election to be treated as an association taxable as a corporation under Treasury
        Regulation Section 301.7701-3(c). There
        are
        no liens for taxes (other than Taxes not yet due and payable) on any of the
        Assets. No deficiency or proposed adjustment for any amount of Tax has been
        proposed, asserted or assessed by any taxing authority against Seller that
        has
        not been paid, settled or otherwise resolved. There is no action, suit, claim,
        examination, investigation, proceeding or audit now pending, proposed or,
        to the
        Knowledge of Seller, threatened against Seller with respect to Taxes. None
        of
        the Assumed Liabilities is an obligation to make a payment that is not
        deductible under Code section 280G. No claim has ever been made by any taxing
        authority in a jurisdiction where Seller did not file Tax Returns that Seller
        may be subject to taxation by that jurisdiction. Seller will not be required
        under applicable Law to report on any return for a period commencing on or
        after
        the Closing Date income realized prior to the Closing Date. 

       

      
        
          
          

        

        
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      Section
        3.10 Real
        Property.

       

      (a) Seller
        does not own in fee any real property or interest in real property. Section
        3.10
        of the Seller Disclosure Schedule sets forth a complete list of all real
        property and interests in real property leased by Seller (individually, a
        “Real
        Property Lease”
        and the
        real properties specified in such leases being referred to herein individually
        as a “Seller
        Property”
        and
        collectively as the “Company
        Properties”)
        as
        lessee. The Seller Property constitutes all interests in real property currently
        used or currently held for use in connection with the Business or which are
        necessary for the continued operation of the Business as the Business is
        currently conducted and proposed to be conducted. Seller has a valid and
        enforceable leasehold interest under each of the Real Property Leases, subject
        to applicable bankruptcy, insolvency, reorganization, moratorium and similar
        laws affecting creditors’ rights and remedies generally and subject, as to
        enforceability, to general principles of equity (regardless of whether
        enforcement is sought in a proceeding at law or in equity). Seller has not
        received any written notice of any default or event that with notice or lapse
        of
        time, or both, would constitute a default under any of the Real Property
        Leases
        and Seller and, to Seller’s Knowledge, each other party thereto is in compliance
        in all material respects with all obligations of such party thereunder. All
        of
        the Seller Property, buildings, fixtures and improvements thereon owned or
        leased by Seller are in good operating condition and repair (subject to normal
        wear and tear). Seller has delivered or otherwise made available to Purchaser
        true, correct and complete copies of the Real Property Leases, together with
        all
        amendments, modifications or supplements, if any, thereto.

       

      (b) Seller
        has all material certificates of occupancy and Permits of any Governmental
        Body
        necessary or useful for the current use and operation of each Seller Property,
        and Seller has fully complied with all material conditions of the Permits
        applicable to it. No default or violation, or event that with the lapse of
        time
        or giving of notice or both would become a default or violation, has occurred
        in
        the due observance of any Permit.

       

      (c) To
        the
        Knowledge of Seller, there does not exist any actual or threatened or
        contemplated condemnation or eminent domain proceeding that affects Seller
        Property or any part thereof, and Seller has not received any notice, oral
        or
        written, of the intention of any Governmental Body or other Person to take
        or
        use all or any part thereof.

       

      
        
          
          

        

        
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      Section
        3.11 Tangible
        Personal Property; Title; Sufficiency of Assets.

       

      (a) Section
        3.11 of the Seller Disclosure Schedule lists all leases of personal property
        (“Personal
        Property Leases”)
        involving annual payments in excess of $5,000 relating to personal property
        used
        in the Business or to which Seller is a party or by which the properties
        of
        Seller are bound. Seller has delivered or otherwise made available to Purchaser
        true, correct and complete copies of the Personal Property Leases, together
        with
        all amendments, modifications or supplements thereto.

       

      (b) Seller
        has a valid leasehold interest under each of the Personal Property Leases
        under
        which it is a lessee, subject to applicable bankruptcy, insolvency,
        reorganization, moratorium and similar laws affecting creditors’ rights and
        remedies generally and subject, as to enforceability, to general principles
        of
        equity (regardless of whether enforcement is sought in a proceeding at law
        or in
        equity), and there is no default under any Personal Property Lease by Seller
        or,
        to the Knowledge of Seller, by any other party thereto, and no event has
        occurred that with the lapse of time or the giving of notice or both would
        constitute a default thereunder, and Seller and, to the Knowledge of Seller,
        each other party thereto is in compliance in all material respects with all
        obligations of Seller or such other party, as the case may be, thereunder.
        

       

      (c) Seller
        has good and marketable title to the Assets used in the Business as of the
        date
        hereof (which include, without limitation, all of the items of tangible personal
        property reflected in the Balance Sheet), free and clear of any and all Liens
        other than the Permitted Exceptions. All tangible personal property included
        in
        the Assets, and all of the items of tangible personal property used by Seller
        under the Personal Property Leases, are in good condition and in a state
        of good
        maintenance and repair (ordinary wear and tear excepted) and are in all material
        respects suitable for the purposes used. The Assets include all assets, rights
        and interests other than the Licensed IP (as defined in the License Agreement)
        that are reasonably required for the continued conduct of the Business by
        Purchaser as now being conducted and proposed to be conducted. 

       

      Section
        3.12 Intellectual
        Property.

       

      (a) Seller
        owns, free and clear from all Liens (other than Permitted Exceptions), including
        without limitation any claims of joint ownership or right of use pursuant
        to any
        of the Contracts listed in Section 3.13 of the Seller Disclosure Schedule
        or
        identified in Section 3.13(b), (i) the compounds listed in Section 3.12(a)
        of
        the Seller Disclosure Schedule and (ii) any Intellectual Property (other
        than
        compounds that are not listed in Section 3.12(a) of the Seller Disclosure
        Schedule) that is reasonably necessary to conduct the Business as currently
        conducted (collectively, the “Section
        3.12(a) Intellectual Property”)
        and,
        to its Knowledge, the compounds in Seller’s compound libraries, or otherwise
        under Seller’s control, that are not listed in Section 3.12(a) of the Seller
        Disclosure Schedule. 

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      (b) Section
        3.12(b)(i) of the Seller Disclosure Schedule sets forth a true, complete
        and
        correct list of all Intellectual Property for which a registration or
        application has been filed with a Governmental Body, including patents,
        trademarks, service marks and copyrights, issued by or registered with, or
        for
        which any application for issuance or registration thereof has been filed
        with,
        any Governmental Body. Section 3.12(b)(ii) of the Seller Disclosure Schedule
        sets forth a complete and correct list of all trademarks, service marks and
        other trade designations that are owned by Seller and not otherwise identified
        in Section 3.12(b)(i) of the Seller Disclosure Schedule. Seller is not a
        party
        to anyl written or oral licenses and arrangements (other than ordinary course
        licenses of commercially available software), (A) pursuant to which
        the use
        by any Person of Intellectual Property is permitted by Seller or
        (B) pursuant to which the use by Seller of Intellectual Property is
        permitted by any Person. 

       

      (c) Nothing
        will interfere with, infringe upon, misappropriate, or otherwise come into
        conflict with, any Intellectual Property rights of third parties as a result
        of
        the continued operation of the Business as presently conducted, provided
        that
        the representation contained in this Section 3.12(c) is made to Seller’s
        Knowledge with respect to any compound not listed in Section 3.12(a) of the
        Seller Disclosure Schedule. 

       

      (d) To
        the
        Knowledge of Seller, no Intellectual Property owned by Seller or that is
        subject
        to any Intellectual Property License is being infringed by third parties.
        There
        is no claim or demand of any Person pertaining to, or any proceeding which
        is
        pending or, to the Knowledge of Seller, threatened, that challenges the rights
        of Seller in respect of any Intellectual Property owned by Seller or claims
        that
        any default exists under any Intellectual Property License.

       

      (e) Seller
        has no Liability relating to (i) the creation by Seller or an employee or
        independent contractor of Seller of Intellectual Property in connection with
        the
        performance of services for a customer of Seller or (ii) any failure of Seller
        or any such employee or independent contractor to assign rights therein to
        such
        customer. 

       

      Section
        3.13 Contracts.
        (a)
        Section 3.13 of the Seller Disclosure Schedule sets forth all of the Contracts
        to which Seller is a party or by which it is bound and categorizes such
        Contracts by the types described below: (i) Contracts with any current officer,
        director, employee or stockholder of Seller, or any Affiliate of Seller or
        any
        such Person; (ii) Contracts with any employee or labor union or association
        representing any employee; (iii)  Contracts for the sale of any Assets
        other than in the ordinary course of business; (iv) joint venture or partnership
        agreements; (v) Contracts containing covenants not to compete in any line
        of
        business or with any person in any geographical area or covenants of any
        other
        person not to compete with Seller in any line of business or in any geographical
        area, or otherwise concerning confidentiality or non-competition (other than
        ordinary course customer contracts that would otherwise be included solely
        because they contain confidentiality provisions); (vi) Contracts entered
        into
        within the last five years relating to the acquisition of any operating business
        or the capital stock or equity interests of any other Person; (vii) Contracts
        relating to the borrowing of money from or by Seller or the extension of
        any
        credit by Seller to any customer, employee or other Person; (viii) all customer
        Contracts, (ix) Real Property Leases, (x) any other Contracts, other than
        Real
        Property Leases and customer contracts, with respect to which the amount
        to be
        paid or received thereunder in the future could reasonably be expected to
        exceed
        $5,000 in any calendar year or $15,000 in the aggregate and (xi) all other
        Contracts except Contracts with respect to which the amount to be paid or
        received thereunder in the future could not reasonably be expected to exceed
        $5,000 in any calendar year or $15,000 in the aggregate and which do not
        involve
        the licensing, transfer, screening, development, manufacture or
        commercialization of any Intellectual Property (including any drug candidate).
        There have been made available to Purchaser true, correct and complete copies
        of
        all of the Contracts. All of the Contracts are in full force and effect.
        Neither
        Seller not, to the Knowledge of Seller, any other party to any Contract in
        default thereunder or has otherwise failed to comply in all material respects
        with its obligations thereunder. No Contract has been modified or amended
        except
        as described in Section 3.13 of the Seller Disclosure Schedule. Seller has
        not
        received any notice or communication from any party to a Contract or other
        material customer or supplier (whether or not a party to a Contract) relating
        to
        such party’s intent to modify, terminate or fail to renew the arrangements and
        relationships set forth therein. There are no outstanding powers of attorney
        executed on behalf of Seller. The consummation of the transactions contemplated
        hereby will not affect any of the Contracts in a manner that could reasonably
        be
        expected to have a Seller Material Adverse Effect.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      (b)
        (i)
        There are no research, testing or other activities currently being undertaken
        pursuant to the Material Transfer Agreement dated as of November 2, 2001
        between
        Seller and Professor Hu Chang-Xu; the Material Evaluation Agreement dated
        March
        17, 2003 between Seller and ViroLogic, Inc.; the Material Transfer Agreement
        dated as of June 9, 2003 among Seller, Georgetown University and Dr. Brent
        Korba, as amended; the Material Transfer Agreement dated as of April 18,
        2003
        among the University of Hong Kong, Dr. David Ho and Seller; the Material
        Transfer Agreement dated as of April 5, 2004 among Seller, New York Medical
        College and David Frick, Ph.D.; the Material Transfer Agreement dated as
        of
        April 6, 2005 between Pharmassat, Inc. and Seller; the Asthma Pilot Research
        Collaboration dated April 31, 2003 between Seller and Aptus Pharmaceuticals;
        the
        Letter of Intent for FPRLI Receptor dated November 11, 2004 between Seller
        and
        Applied Cell Science, Inc.; the Evaluation Agreement dated as of March 5,
        2002
        between Seller and Apath, L.L.C.; the Collaboration Agreement dated June
        30,
        2002 between Seller and Institute of Materia Medica; the General Agreement
        for
        Collaboration dated April 24, 1999 between Seller and Institute of Botany,
        Chinese Academy of Sciences; the Agreement for Collaboration between Seller
        and
        Beijing Medical University dated May 24, 1999; the Memorandum of Understanding
        dated December 4, 1998 between Seller and Hong Kong University of Science
        and
        Technology (“HKU”); the Contracted Traditional Chinese Medicine (TCM)-Based Drug
        Screening agreement dated March 3, 1999 between Seller and HKU; the Contract
        Research Services agreement dated as of May 24, 2000 between Seller and HKU;
        the
        Agreement for a Collaborative Venture dated May 24, 2000 between Seller and
        HKU;
        the Services Agreement dated June 1, 2004 between Seller and Inpharmatica
        Limited; the Replizyme Agreement for Services dated February 25, 2004; the
        Memorandum of Understanding dated October 28, 1998 between Seller and State
        Administration of Traditional Chinese Medicine; the Agreement for a
        Collaborative Venture dated as of March 3, 1999 between Seller and HKU, as
        extended; the Memorandum of Understanding dated August 30, 1999 between Seller
        and Shanghai Institute of Organic Chemistry; the Sponsored Research Agreement
        dated February 2, 2001 among Seller, HKU and Technology RandD Corporation
        Limited; the License Agreements dated February 2, 1999, June 1, 1999 and
        August
        20, 1999 between Seller and Institute of Chinese Materia Medica; and the
        Sponsored Research Agreement dated February 2, 2001 between Seller and Aaron
        Diamond AIDS Research Center (the “Aaron
        Diamond Agreement”).
        

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      (ii)
        No
        research activities were ever conducted pursuant to the Corporate Research
        Agreement dated as of April 1, 2001 between Seller and University of Pittsburgh.
        No project budget or research proposal was ever developed pursuant to such
        Contract.

       

      (iii)
        No
        research activities were ever undertaken and no regulatory filings were ever
        made pursuant to or in connection with the Patent and Technology License
        Agreement dated February 2, 2001 among Seller, Hong Kong University of Science
        and Technology and Technology RandD Corporation Limited.

       

      (iv)
        No
        activity was ever undertaken pursuant to the Contract Screening Agreement
        dated
        as of March 15, 2004 between Seller and Beijing Kaizheng Biotech Developing
        Ltd.

       

      (v)
        No
        Contract has been entered into in furtherance of the letter of intent dated
        January 8, 2003 between Seller and Aptanomics, S.A. No jointly owned inventions
        or discoveries have been created pursuant to such agreement other than a
        limited
        number of compounds that have not been the subject of any further research
        efforts by Seller or Aptanomics, S.A. and are not within the scope of Seller’s
        current research activities.

       

      (vi)
        No
        invention, discovery or other Intellectual Property was created pursuant
        to the
        Sponsored Research Agreement dated as of October 8, 2001 between Seller and
        Peking University.

       

      (vii)
        No
        potential drug candidates were identified through the work performed pursuant
        to
        the Material Transfer Agreement dated as of April 18, 2003 among the University
        of Hong Kong, Dr. David Ho and Seller.

       

      (c)
        All
        amounts payable by Seller pursuant to the Contracts listed in Section 3.13(b)
        and, except as set forth in Section 3.13 of the Seller Disclosure Schedule,
        any
        other Contract of Seller have been paid in full. Except as described in Section
        3.13(b)(v), no jointly developed Intellectual Property, including inventions
        and
        discoveries, has been created pursuant to any such Contract. Where any such
        Contract provides that Intellectual Property, including inventions and
        discoveries, created solely by the other party to such Contract shall be
        owned
        by such other party, no such Intellectual Property is being used or contemplated
        to be used in Seller’s research activities. No information or other Intellectual
        Property applicable to the research programs of Seller as conducted or proposed
        to be conducted is required to be maintained by Seller in confidence pursuant
        to
        any Contract Contracts listed in Section 3.13(b). 

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      Section
        3.14 Employee
        Benefits.

       

      (a) Section
        3.14 of the Seller Disclosure Schedule sets forth a complete and correct
        list of
        (i) all “employee benefit plans,” as defined in Section 3(3) of the Employee
        Retirement Income Security Act of 1974, as amended (“ERISA”),
        and
        any other pension plans or employee benefit agreements, arrangements, programs
        or payroll practices (including without limitation severance pay, other
        termination benefits or compensation, vacation pay, company awards, salary
        continuation for disability, sick leave, retirement, deferred compensation,
        bonus or other incentive compensation, stock purchase arrangements or policies,
        hospitalization, medical insurance, life insurance and scholarship programs)
        that is currently in effect or was maintained, sponsored or contributed to
        by
        Seller within the last six years to which Seller contributes or is obligated
        to
        contribute thereunder with respect to employees of Seller, or that has been
        approved before the date hereof but is not yet effective (“Employee
        Benefit Plans”)
        and
        (ii) all “employee pension plans,” as defined in Section 3(2) of ERISA,
        maintained by Seller or any trade or business (whether or not incorporated)
        which are under control, or which are treated as a single employer, Seller
        under
        Section 414(b), (c), (m) or (o) of the (“ERISA
        Affiliate”)
        or to
        which Seller or any ERISA Affiliate contributed or is obligated to contribute
        thereunder (“Pension
        Plans”)
        within
        the last six years. Section 3.14 of the Seller Disclosure Schedule identifies,
        in separate categories, Employee Benefit Plans or Pension Plans that are
        (i) subject to Section 4063 and 4064 of ERISA (“Multiple
        Employer Plans”),
        (ii)
        multiemployer plans (as defined in Section 4001(a)(3) of ERISA) (“Multiemployer
        Plans”)
        or
        (iii) “benefit plans”, within the meaning of Section 5000(b)(1) of the Code
        providing continuing benefits after the termination of employment (other
        than as
        required by Section 4980B of the Code or Part 6 of Title I of ERISA and at
        the
        former employee’s or his beneficiary’s sole expense).

       

      (b) Neither
        Seller nor any ERISA Affiliate maintains, sponsors, or contributes, or has,
        within the past six years, maintained, sponsored or had any obligation to
        contribute to or for the benefit of current or former employees (i) a defined
        benefit plan subject to Title IV of ERISA, (ii) any Multiemployer Plan or
        (iii)
        any Multiple Employer Plan.

       

      (c) All
        contributions and premiums required by Law or by the terms of any Employee
        Benefit Plan or Pension Plan or any agreement relating thereto have been
        timely
        made (without regard to any waivers granted with respect thereto) to any
        funds
        or trusts established thereunder or in connection therewith, and no accumulated
        funding deficiencies exist in any of such plans.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      (d) Seller
        and any ERISA Affiliate which maintains a “group health plan” within the meaning
        of Section 5000(b)(1) of the Code and each plan sponsor or administrator
        has
        complied with the COBRA reporting, disclosure, notice, election, and other
        benefit continuation and coverage requirements of Section 4980B of the Code
        or
        Part 6 of Title I of ERISA and the applicable regulations thereunder and
        any
        comparable state laws, and has not incurred any direct or indirect liability,
        and is not subject to any loss, assessment or excise tax, penalty, loss of
        federal income tax deduction or other sanction arising on account of or in
        respect of any direct or indirect failure at any time to comply with any
        such
        federal or state benefit continuation coverage requirements.

       

      (e) Neither
        the execution and delivery of this Agreement nor the consummation of the
        transactions contemplated hereby will (i) result in any payment becoming
        due to
        any employee; (ii) increase any benefits otherwise payable under any Employee
        Benefit Plan or Pension Plan; or (iii) result in the acceleration of the
        time of
        payment or vesting of any such benefits.

       

      (f) The
        consummation of the transactions contemplated by this Agreement will not
        give
        rise to any liability for termination of any agreements related to any Employee
        Benefit Plan or Pension Plan.

       

      Section
        3.15 Labor.

       

      (a) Seller
        is
        not a party to any labor or collective bargaining agreement and there are
        no
        labor or collective bargaining agreements which pertain to employees of
        Seller.

       

      (b) No
        employees of Seller are represented by any labor organization. No labor
        organization or group of employees of Seller has made a pending demand for
        recognition, and there are no representation proceedings or petitions seeking
        a
        representation proceeding presently pending or, to the Knowledge of Seller,
        threatened to be brought or filed, with the National Labor Relations Board
        or
        other labor relations tribunal. There is no organizing activity involving
        Seller
        pending or, to the Knowledge of Seller, threatened by any labor organization
        or
        group of employees of Seller.

       

      (c) There
        are
        no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii)
        material grievances or other labor disputes pending or, to the Knowledge
        of
        Seller, threatened against or involving Seller. There are no unfair labor
        practice charges, grievances or complaints pending or, to the Knowledge of
        Seller, threatened by or on behalf of any employee or group of employees
        of
        Seller.

       

      (d) There
        are
        no complaints, charges or claims against Seller pending or, to the Knowledge
        of
        Seller, threatened which could be brought or filed, with any public or
        Governmental Body based on, arising out of, in connection with, or otherwise
        relating to the employment or termination of employment by Seller, of any
        individual.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      (e) Seller
        is
        in compliance in all material respects with all Laws and Orders relating
        to the
        employment of labor, including all such Laws and orders relating to wages,
        hours, the Worker Adjustment and Retraining Notification Act and any similar
        state, local or foreign “plant closing” Law (“WARN”),
        collective bargaining, discrimination, civil rights, safety and health, worker’s
        compensation, payment of overtime wages and the collection and payment of
        withholding and/or social security taxes and any similar tax.

       

      (f) There
        has
        been no “mass layoff” or “plant closing” as defined by WARN with respect to
        Seller within the six (6) months prior to making this
        representation.

       

      Section
        3.16 Litigation.
        There
        is not, since the inception of Seller there has not been, any suit, action,
        proceeding, investigation, claim or order pending or, to the Knowledge of
        Seller, threatened by or against Seller, or to the Knowledge of Seller, pending
        or threatened, against any of the officers, directors, employees or independent
        contractors (or employees of independent contractors) of Seller with respect
        to
        their business activities on behalf of Seller, or to which Seller or any
        such
        officer, director, employee, independent contractor or employee of an
        independent contractor, with respect thereto, is otherwise a party, before
        any
        court, or before any governmental department, commission, board, agency,
        or
        instrumentality; nor to the Knowledge of Seller is there any reasonable basis
        for any such action, proceeding, or investigation. Seller is not subject
        to any
        Order of any Governmental Body.

       

      Section
        3.17 Compliance
        with Laws; Permits.
        Seller
        is in compliance with all Laws applicable to it or to the conduct of the
        businesses or operations of Seller. Seller has all Permits from Governmental
        Bodies which are required for Seller to operate its businesses.

       

      Section
        3.18 Environmental
        Matters.
        

       

      (a) To
        Seller’s Knowledge, the operations of Seller are in compliance with all
        applicable Environmental Laws and all Permits issued pursuant to Environmental
        Laws or otherwise (“Environmental
        Permits”);

       

      (b) To
        Seller’s Knowledge, Seller has obtained and currently maintains all
        Environmental Permits required under all applicable Environmental Laws necessary
        to operate its business;

       

      (c) Seller
        is
        not the subject of any outstanding written Order or Contract with any
        Governmental Body or other Person respecting (i) Environmental Laws,
        (ii) Remedial Action or (iii) any Release or threatened Release
        of a
        Hazardous Material;

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      (d) Seller
        has not received any written communication alleging either that Seller may
        be in
        violation of any Environmental Law or Environmental Permit or that Seller
        may
        have any liability under any Environmental Law;

       

      (e) Seller
        has not incurred, assumed or undertaken any current contingent liability
        in
        connection with any Release of any Hazardous Materials into the indoor or
        outdoor environment (whether on-site or off-site) and there are no facts,
        circumstances or conditions relating to, arising out of or attributable to
        Seller that could give rise to liability under Environmental Laws;

       

      (f) There
        are
        no judicial or administrative proceedings pending or, to the Knowledge of
        Seller, threatened against Seller that allege a violation of, or seek to
        impose
        liability pursuant to, Environmental Laws or Environmental Permits and, to
        Seller’s Knowledge, there are no investigations of the business, operations, or
        currently or previously owned, operated or leased property of Seller pending
        or
        threatened which could result in Seller incurring any liability pursuant
        to any
        Environmental Law;

       

      (g) There
        is
        not located at any of the properties of Seller any (i) underground storage
        tanks, (ii) asbestos-containing material or (iii) equipment containing
        polychlorinated biphenyls; and

       

      (h) Seller
        has provided to Purchaser all environmentally related audits, studies, reports,
        analyses, and results of investigations that have been performed with respect
        to
        the currently or previously owned, leased or operated properties of
        Seller.

       

      Section
        3.19 Insurance.
        Section
        3.19 of the Seller Disclosure Schedule sets forth a complete and accurate
        list
        of all policies of insurance of any kind or nature covering Seller or any
        of
        Seller’s employees, properties or assets. All such policies are in full force
        and effect, and Seller is not in default of any provision thereof. Section
        3.19
        of the Seller Disclosure Schedule describes all self-insurance arrangements
        affecting Seller.

       

      Section
        3.20 Receivables;
        Payables.

       

      (a) All
        accounts receivable of Seller have arisen from bona fide transactions in
        the
        ordinary course of business consistent with past practice. All accounts
        receivable of Seller reflected on the Balance Sheet are good and believed
        to be
        collectible at the aggregate recorded amounts thereof and subject to no setoffs
        (including without limitation reductions in respect of customer advances
        or
        deposits) or counterclaims. All accounts receivable arising after the Balance
        Sheet Date are believed to be good and collectible at the aggregate recorded
        amounts thereof and subject to no setoffs (including without limitation
        reductions in respect of customer advances or deposits) or
        counterclaims.

       

      (b) All
        accounts payable of Seller reflected on the Balance Sheet or arising after
        the
        Balance Sheet Date are the result of bona fide transactions in the ordinary
        course of business and have been paid or are not yet due and payable, except
        for
        accounts payable that are being disputed in good faith in an appropriate
        manner.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      Section
        3.21 [reserved]
        

       

      Section
        3.22 [reserved]

       

      Section
        3.23 No
        Misrepresentation.
        No
        representation or warranty of Seller contained in this Agreement or in any
        Schedule hereto or in any certificate or other instrument furnished by Seller
        to
        Purchaser pursuant to the terms hereof, contains any untrue statement of
        a
        material fact or omits to state a material fact necessary to make the statements
        contained herein or therein not misleading.

       

      Section
        3.24 Financial
        Advisors.
        Seller
        has no Liability or obligation to pay any fees or commissions to any broker,
        finder or agent with respect to the transactions contemplated by this
        Agreement.

       

      Section
        3.25 Private
        Placement.
        Seller
        was not organized for the specific purpose of acquiring the Shares. Seller
        has
        sufficient knowledge and experience in investing in companies similar to
        Parent
        in terms of Parent's market capitalization and other relevant factors so
        as to
        be able to evaluate the risks and merits of its investment in Parent and
        it is
        able financially to bear the risks thereof. Seller has had an opportunity
        to
        discuss the terms of the offering and sale of the Shares and Parent's business,
        management and financial affairs with Parent's management and to obtain any
        additional information regarding the foregoing which Parent possesses or
        can
        acquire without unreasonable effort or expense. The Shares are being acquired
        for the Seller’s own accounts and not with a view to, or the intention of, any
        distribution in violation of the Securities Act or any applicable state
        securities laws. Seller understands that (i)
        the
        Shares have not been registered under the Securities Act by reason of the
        issuance of the Shares in a transaction exempt from the registration
        requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
        505
        or 506 promulgated under the Securities Act, (ii)
        the
        Shares must be held indefinitely unless a subsequent disposition thereof
        is
        registered under the Securities Act or is exempt from such registration,
        (iii)
        when
        issued, the Shares will bear a legend to such effect and (iv)
        Parent
        will issue stop transfer instructions to its transfer agent consistent with
        Section 2.5. 

       

      ARTICLE
        IV

       

      REPRESENTATIONS
        AND WARRANTIES OF PURCHASER

       

      Purchaser
        represents and warrants to Seller that the following statements are correct
        and
        complete as of the date hereof. 

       

      Section
        4.1 Organization.
        (a)
        Purchaser is a corporation duly organized, validly existing and in good standing
        under the laws of  Delaware.
        Purchaser is duly qualified or authorized to do business as a foreign limited
        liability company and is in good standing under the laws of each jurisdiction
        in
        which it owns or leases real property and each other jurisdiction in which
        the
        conduct of its business or the ownership of its properties requires such
        qualification or authorization, except where the failure to be so qualified
        or
        authorized would not have a material adverse effect on the business or assets
        of
        Purchaser.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      (b) Purchaser
        is a direct or indirect wholly-owned subsidiary of Parent. All of the issued
        ownership interests in Purchaser have been duly and validly authorized and
        issued, are fully paid and non-assessable and are owned directly or indirectly
        by Parent. 

       

      Section
        4.2 Authorization
        of Transaction.
        The
        execution, delivery and performance of the Transaction Documents to which
        Purchaser is a party have been duly authorized by all necessary action by
        or on
        behalf of Purchaser. Purchaser has full power and authority to execute and
        deliver this Agreement and each other Transaction Document to which it is
        a
        party, and to perform its obligations hereunder and thereunder. This Agreement
        and each Transaction Document to which Purchaser is or will be a party has
        been
        or will be duly and validly executed and delivered and constitutes the valid
        and
        legally binding obligation of Purchaser, enforceable against Purchaser in
        accordance with its terms, subject to applicable bankruptcy, insolvency,
        reorganization, moratorium and similar laws affecting creditors’ rights and
        remedies generally and subject, as to enforceability, to general principles
        of
        equity (regardless of whether enforcement is sought in a proceeding at law
        or in
        equity). Purchaser is not required to give any notice to, make any filing
        with,
        or obtain any authorization, consent, or approval of any Governmental Body
        in
        order to consummate the transactions contemplated by this Agreement and each
        such Transaction Document.

       

      Section
        4.3 Noncontravention.
        Neither
        the execution and the delivery by Purchaser of this Agreement and the other
        Transaction Documents to which it is a party, nor the consummation of the
        transactions contemplated hereby and thereby on the part of Purchaser, will
        (i) violate any Law or any Order by which Purchaser is bound or any
        provision of its organizational documents or (ii) result in a breach of,
        constitute a default under, result in the acceleration of, create in any
        party
        the right to accelerate, terminate, modify, or cancel, or require any notice
        under any Contract to which Purchaser is a party or by which Purchaser is
        bound
        or to which any of its assets is subject. No Order, Permit or waiver, or
        declaration or filing with any Governmental Body is required on the part
        of
        Purchaser in connection with the execution, delivery and performance of this
        Agreement or the other Transaction Documents to which it is a party, or the
        compliance by Purchaser with any of the provisions hereof or
        thereof.

       

      Section
        4.4 Brokers’
        Fees.
        Purchaser has no Liability or obligation to pay any fees or commissions to
        any
        broker, finder or agent with respect to the transactions contemplated by
        this
        Agreement for which Seller shall have any Liability. 

       

      
        
          
          

        

        
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      Section
        4.5 Periodic
        Reports.
        Each
        periodic report filed by Parent with any Governmental Body or delivered to
        its
        shareholders since August 1, 2004 (the "Parent
        Reports")
        were
        prepared in all material respects in accordance with all applicable legal
        requirements. Each set of consolidated financial statements (including, in
        each
        case, any related notes thereto) contained in the Parent Reports, including
        any
        Parent Reports filed after the date hereof until the Closing, (i) complied
        as to
        form in all material respects with all applicable legal requirements and
        (ii)
        fairly presents in all material respects the consolidated financial position
        of
        Parent and its Subsidiaries at the respective dates thereof and the consolidated
        results of its operations and cash flows for the periods indicated. Since
        the
        date of the last such consolidated financial statement, there has not been
        and
        there currently is no investigation, inquiry or other proceeding pending
        or, the
        Purchaser’s Knowledge, threatened related to the Parent Reports or the
        consolidated financial statements contained therein. 

       

      ARTICLE
        V

       

      CONDITIONS
        TO CLOSING

       

      Section
        5.1 Conditions
        Precedent to Obligations of Purchaser at the Closing.
        The
        obligation of Purchaser to consummate the transactions contemplated by this
        Agreement is subject to the fulfillment, on or prior to the Closing Date,
        of
        each of the following conditions (any or all of which may be waived by Purchaser
        in whole or in part to the extent permitted by applicable Law):

       

      (a) all
        representations and warranties of Seller contained in the Transaction Documents
        shall have been true and correct on and as of the date hereof;

       

      (b) Seller
        shall have performed and complied in all material respects with all obligations
        and covenants required by the Transaction Documents to be performed or complied
        with by Seller on or prior to the Closing Date;

       

      (c) there
        shall not have been or occurred any Seller Material Adverse Change since
        the
        Balance Sheet Date;

       

      (d) no
        Legal
        Proceedings shall have been instituted or threatened or claim or demand made
        against Seller , Parent or Purchaser seeking to restrain or prohibit or to
        obtain substantial damages with respect to the consummation of the transactions
        contemplated hereby;

       

      (e) there
        shall not be in effect any Order by a Governmental Body of competent
        jurisdiction restraining, enjoining or otherwise prohibiting the consummation
        of
        the transactions contemplated hereby;

       

      (f) Purchaser
        shall have received letters in form and substance satisfactory to it from
        UPMC
        Health System, Highmark Health Ventures Investment Fund, L.P. and any other
        holder of indebtedness of any Person that is secured by any of the Assets
        confirming the release of all related Liens; Purchaser shall be authorize
        pursuant to such letters to file appropriate UCC termination statements filed
        with respect thereto; and UPMC Health System, Highmark Health Ventures
        Investment Fund, L.P. and each such other holder shall have delivered to
        Purchaser a covenant not to bring any claim against Purchaser with respect
        to
        such indebtedness, including any claim based on fraudulent conveyance,
        fraudulent transfer or any similar theory;

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      (g) the
        employment of all employees of Seller other than Peter Tombros, Maryjane
        Dougherty and Nellie Chi shall have terminated (which termination may occur
        simultaneously with the Closing); 

       

      (h) Seller
        shall have terminated its relationship with its scientific consultants and
        advisors to the extent directed by Purchaser and shall not have taken any
        action
        to terminate such relationships except as so directed by Purchaser (it being
        agreed that such relationship with David Ho has been or will be terminated);
        and

       

      (i) any
        waiting period under the HSR Act applicable to the transactions contemplated
        by
        this Agreement shall have expired or been terminated.

       

      Section
        5.2 Conditions
        Precedent to Obligations of Seller at the Closing.
        The
        obligations of Seller to consummate the transactions contemplated by this
        Agreement are subject to the fulfillment, prior to or on the Closing Date,
        of
        each of the following conditions (any or all of which may be waived by Seller,
        on behalf of the Seller, in whole or in part to the extent permitted by
        applicable Law):

       

      (a) all
        representations and warranties of Purchaser contained in the Transaction
        Documents shall be true and correct on and as of the Closing Date;

       

      (b) Purchaser
        shall have performed and complied in all material respects with all obligations
        and covenants required by the Transaction Documents to be performed or complied
        with by Purchaser on or prior to the Closing Date; 

       

      (c) there
        shall not be in effect any Order by a Governmental Body of competent
        jurisdiction restraining, enjoining or otherwise prohibiting the consummation
        of
        the transactions contemplated hereby; and

       

      (d) any
        waiting period under the HSR Act applicable to the transactions contemplated
        by
        this Agreement shall have expired or been terminated.

       

      ARTICLE
        VI

       

      DOCUMENTS
        TO BE DELIVERED

       

      Section
        6.1 Deliveries
        by Seller to Purchaser at the Closing.
        At the
        Closing, Seller shall deliver, or shall cause to be delivered, to Purchaser
        the
        following:

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      (a) a
        duly
        executed bill of sale, assignments and assumption agreement in the form of
        Exhibit
        A

       

      (b) a
        duly
        executed assignment of lease and estoppel certificate, dated the Closing
        Date,
        with respect to each Real Property Lease in form and substance satisfactory
        to
        Purchaser and its counsel;

       

      (c) all
        consents and waivers that are required for the assignment to and assumption
        by
        Purchaser of the Included Contracts (collectively, the “Closing
        Consents”);

       

      (d) certificates
        of title to all motor vehicles included in the Assets (if any), duly endorsed
        for transfer to Purchaser as of the Closing Date;

       

      (e) a
        certificate (dated the Closing Date and in form and substance reasonably
        satisfactory to Purchaser) executed by Seller certifying as to the fulfillment
        of the conditions specified in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(d), 5.1(e)
        and 5.1(f) hereof;

       

      (f) an
        opinion of Foley Hoag LLP, counsel for Seller, dated the Closing Date,
        substantially in the form attached hereto as Exhibit
        B;

       

      (g) a
        receipt
        for the Shares;

       

      (h) a
        certificate of the secretary of Seller certifying to (A) Seller’s attached
        Organizational Documents, (B) the adoption of resolutions of the Board of
        Directors and stockholders of Seller and (C) the incumbency of the officers
        signing the Transaction Documents on behalf of Seller (together with their
        specimen signatures);

       

      (i) a
        certificate of good standing with respect to Seller issued by the Secretary
        of
        State of the State of Delaware and for each state in which Seller is qualified
        to do business as a foreign limited liability company dated as soon as
        practicable prior to the Closing Date; 

       

      (j) a
        copy of
        IRS Form W-9 duly and properly executed by Seller; 

       

      (k) a
        certificate of non-foreign person status in the form prescribed by United
        States
        Treasury Regulation § 1.1445-2(b)(2)(iii) with respect to Seller in form
        and substance acceptable to Purchaser; 

       

      (l) copies
        of
        letters terminating the employment and consulting/advisory relationships
        to be
        terminated pursuant to Sections 5.1(g) and (h);

       

      (m) evidence
        satisfactory to Purchaser that a letter in the form attached as Exhibit
        C
        was sent
        by certified mail, return receipt requested, to Schering-Plough no later
        than
        five business days after the execution of this Agreement; 

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      (n) (1)
        copies of the documents terminating the Aaron Diamond Agreement and the Patent
        and Technology License Agreement dated February 2, 2001 among Seller, HKU
        and
        Technology RandD Corporation Limited and (2) written confirmation from the
        Aaron
        Diamond AIDS Research Center that Seller has not outstanding obligations
        under
        the Aaron Diamond Agreement. 

       

      (o) a
        legally
        binding commitment from ReBLikon GmbH (“ReBLikon”),
        for
        the benefit of Parent, to enter into a license with Parent having substantially
        the same terms (other than pricing terms) as those contained in the Agreement
        effective May 12, 2003 between ReBLikon and Seller and a term of at least
        two
        years; 

       

      (p) executed
        copies of inventor assignments satisfactory to Purchaser with respect to
        all
        issued patents and filed patent applications of Seller; 

       

      (q) an
        amendment in the form attached as Exhibit
        D
        to the
        Employee Non-Disclosure, Non-Competition and Assignment of Intellectual Property
        Agreement dated as of March 3, 2003 between Anthony Sandrasagra and Seller;
        

       

      (r) a
        document satisfactory to Purchaser terminating the promissory note dated
        May 31,
        2001made by Zhen Yang in favor of Seller; and

       

      (s) such
        other documents, instruments or certificates as shall be reasonably requested
        by
        Purchaser or its counsel.

       

      Section
        6.2 Deliveries
        by Purchaser to Seller.
        At the
        Closing, Purchaser shall deliver to Seller, on behalf of Seller, the
        following:

       

      (a) irrevocable
        instructions to the transfer agent for the Parent Ordinary Shares to issue
        the
        Shares in accordance with Section 2.1; 

       

      (b) a
        duly
        executed bill of sale, assignment and assumption agreement in the form of
        Exhibit
        A;

       

      (c) an
        assignment of lease, dated the Closing Date, with respect to each Real Property
        Lease in form and substance reasonably satisfactory to Seller and its counsel
        duly executed by Purchaser; 

       

      (d) a
        certificate dated the Closing Date and in form and substance reasonably
        satisfactory to Seller executed by an authorized officer of Purchaser certifying
        as to the fulfillment of the conditions specified in Sections 5.2(a), 5.2(b),
        5.2(d) and 5.2(e) hereof;

       

      (e) a
        certificate of the secretary of Purchaser certifying to (A) Purchaser’s attached
        Organizational Documents, (B) the adoption of attached resolutions of the
        Board
        of Directors of Purchaser approving the execution by Purchaser of the
        Transaction Documents to which Purchaser is a party and the consummation
        of the
        transactions contemplated thereby and (C) the incumbency of the officers
        signing
        the Transaction Documents on behalf of Seller (together with their specimen
        signatures); 

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      (f) opinions
        of Kantor & Co. and the Law Office of Kenneth G. Alberstadt PLLC, special
        counsel for Purchaser, dated the Closing Date, substantially in the forms
        attached hereto as Exhibits
        E-1
        and
E-2;
        and

       

      (g) such
        other documents, instruments or certificates as shall be reasonably requested
        by
        Seller or its counsel.  

       

      ARTICLE
        VII

       

      POST-CLOSING
        COVENANTS

       

      The
        parties agree as follows with respect to the period following the
        Closing:

       

      Section
        7.1 General.
        In the
        event that at any time after the Closing any further action is necessary
        or
        desirable to carry out the purposes of this Agreement, each of the parties
        will
        take such further action (including the execution and delivery of such further
        instruments and documents) as any other party reasonably may request.

       

      Section
        7.2 Litigation
        Support.
        In the
        event and for so long as any party actively is contesting or defending against
        any action, suit, proceeding, hearing, investigation, charge, complaint,
        claim,
        or demand in connection with (i) any transaction contemplated under this
        Agreement or (ii) any fact, situation, circumstances, status, condition,
        activity, practice, plan, occurrence, event, incident, action, failure to
        act,
        or transaction on or prior to the Closing Date involving Seller, each of
        the
        other parties will cooperate reasonably with such party and such party’s counsel
        in the contest or defense, make available their personnel, and provide such
        testimony and access to their books and records as shall be necessary in
        connection with the contest or defense, all at the sole cost and expense
        of the
        contesting or defending Party (unless the contesting or defending Party is
        entitled to indemnification therefor hereunder).

       

      Section
        7.3 Confidentiality.
        (a)
        From and after the date hereof (unless this Agreement is terminated in
        accordance with its terms), Seller will, and will cause its Affiliates and
        Key
        Personnel (as defined below) to, hold in strict confidence, and will not,
        and
        will cause its Affiliates and Key Personnel not to, disclose to any third
        party
        or use for any purpose, any and all information with respect to Seller, the
        Business, the Transaction Documents or the transactions contemplated thereby.
        Notwithstanding the foregoing, Seller may, and may permit its Affiliates
        and Key
        Personnel to, disclose such information (i) if compelled to disclose the
        same by
        judicial or administrative process or by other requirements of Law (but subject
        to the following provisions of this Section), (ii) if the same hereafter
        is in
        the public domain through no fault of Seller or (iii) if the same is later
        acquired by Seller from another source that is not under an obligation to
        another Person to keep such information confidential. If Seller or any of
        its
        Affiliates or Key Personnel is requested or required (by oral questions,
        interrogatories, requests for information or documents in legal proceedings,
        subpoena, civil investigative demand or other similar process) to disclose
        any
        such information, Seller shall provide Purchaser with prompt written notice
        of
        any such request or requirement so that Purchaser may seek a protective order
        or
        other appropriate remedy and/or waive compliance with the provisions of this
        Section. If, in the absence of a protective order or other remedy or the
        receipt
        of a waiver by Purchaser, Seller nonetheless, based on the written advice
        of
        outside counsel, is required to disclose such information to any tribunal
        or in
        accordance with applicable Law, Seller or such Affiliate or Key Personnel,
        without liability hereunder, may disclose that portion of such information
        which
        such counsel advises Seller or such Affiliate or Key Personnel it is legally
        required to disclose. Seller acknowledges and agrees that money damages would
        not be an adequate remedy for any breach of its agreements contained in this
        Section 7.3 and that in addition to any other remedies available to
        Purchaser, Purchaser shall be entitled to the remedies of injunction, specific
        performance and other equitable relief (without any requirement to post a
        bond)
        for any threatened or actual breach of this Section 7.3. 

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      (b)
        The
        Non-Disclosure Agreement dated as of April 7, 2005, as amended May 24, 2005,
        between Seller and Purchaser shall terminate on the Closing Date. If the
        Closing
        Date does not occur, such agreement, as so amended, shall remain in full
        force
        and effect. 

       

      Section
        7.4 Non-Competition.
        As a
        material inducement to Purchaser to enter into this Agreement, Seller agrees
        as
        follows:

       

      (a) During
        the Non-Competition Period, Seller will not engage or participate, directly
        or
        indirectly, as principal, agent, proprietor, joint venturer, trustee, employer,
        consultant, stockholder, partner or in any other capacity whatsoever, in
        the
        conduct or management of, or own any stock or any other equity investment
        in or
        debt of, any business that is competitive with any business conducted or
        proposed to be conducted by Seller as of the Closing Date, excluding passive
        investments of up to 1% of the common stock of any publicly traded
        company.

       

      (b) During
        the Non-Competition Period, Seller will not, for its own benefit or for the
        benefit of any Person other than Purchaser, (i) solicit, or assist any person
        or
        entity to solicit, any officer, director, executive or employee of Purchaser
        (or, prior to the Closing Date, Seller) to leave his or her employment, (ii)
        hire or cause to be hired any person who is then, or who will have been at
        any
        point in time during the Non-Competition Period, an officer, a director,
        an
        executive or an employee of Purchaser (or, prior to the Closing Date, Seller),
        or (iii) engage any Person who is then, or who will have been at any point
        in
        time during the Non-Competition Period, an officer, director, executive or
        employee of Purchaser (or, prior to the Closing Date, Seller) as a partner,
        contractor, sub-contractor or consultant.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      (c) Seller
        acknowledges that (i) the markets served by Seller are national and
        international in scope and are not dependent on the geographic location of
        the
        executive personnel or the businesses by which they are employed; and (ii)
        the
        above covenants are manifestly reasonable on their face, and the parties
        expressly agree that such restrictions have been designed to be reasonable
        and
        no greater than is required for the protection of Purchaser and are a
        significant element of the consideration hereunder. Seller acknowledges and
        agrees that money damages would not be an adequate remedy for any breach
        of its
        agreements contained in this Section 7.4 and that in addition to any
        other
        remedies available to Purchaser, Purchaser shall be entitled to the remedies
        of
        injunction, specific performance and other equitable relief (without any
        requirement to post a bond) for any threatened or actual breach of this
        Section 7.4.

       

      If
        the
        final judgment of a court of competent jurisdiction declares that any term
        or
        provision of this Section 7.4 is invalid or unenforceable, the parties agree
        that the court making the determination of invalidity or unforceability shall
        have the power to reduce the scope, duration, or area of the term or provision,
        to delete specific words or phrases, or to replace any invalid or unenforceable
        term or provision with a term or provision that is valid and enforceable
        that
        comes closest to expressing the intention of the invalid or unenforceable
        term
        or provision, and this Agreement shall be enforceable as so modified after
        the
        expiration of the time within which the judgment may be appealed.

       

      Section
        7.5 Corporate
        Existence .
        Seller
        hereby agrees that it will (i) not commence any dissolution of its corporate
        existence, liquidation or winding up, or commence a voluntary proceeding
        under
        Title 11 of the United States Code, until at least one year from the Closing
        Date and (ii) timely object to the commencement of any involuntary proceeding
        filed under Title 11 of the United States Code or to any action seeking the
        appointment of a receiver or trustee in respect of it or its assets if such
        petition, proceeding or action is commenced prior to the first anniversary
        of
        the Closing Date. 

       

      Section
        7.6 Mail;
        Payments.
        From
        and after the Closing, Seller agrees to refer to Purchaser all customer,
        supplier, employee or other inquiries or correspondence relating to the Assets
        or the conduct of the Business after the Closing Date. Seller further agrees
        to
        promptly remit to Purchaser all payments and invoices received after the
        Closing
        Date that relate to the Assets, the Assumed Liabilities or the conduct of
        the
        Business after the Closing Date and Purchaser agrees to promptly remit to
        Seller
        all payments and invoices received after the Closing Date that relate to
        the
        Excluded Assets or the Excluded Liabilities or (other than with respect to
        the
        Assets or the Assumed Liabilities) the conduct of the Business prior to the
        Closing Date.

       

      Section
        7.7 [reserved] 

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      Section
        7.8 Certain
        Financial Information.
        From
        and after the Closing Date, to the extent requested by Purchaser, Seller
        shall
        to deliver to Purchaser the financial information, management representation
        letters and other documents and information with respect to Seller required
        by
        Parent to prepare and file the financial statements required to be filed
        by
        Parent pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange
        Act”)
        or any
        other applicable Law, and will use commercially reasonable efforts to cause
        its
        independent accountants to deliver to Purchaser such reports and consents
        as may
        be required in connection therewith, all reasonably in advance of the time
        such
        filings are required to be made. 

       

      Section
        7.9 Retention
        of and Access to Records.
        Seller
        will provide Purchaser with access to the Books and Records included in the
        Excluded Assets, upon reasonable written notice from Purchaser, during ordinary
        business hours and in such a manner as does not interfere with the business
        operations of Seller or any of its Affiliates, for purposes reasonably related
        to any actual or threatened Legal Proceedings relating to Purchaser’s operation
        of the Business or to any Tax audit or proceedings in which any Purchaser
        or any
        of its Affiliates is involved. Seller’s undertaking in this Section 8.9 shall
        survive for six years following the Closing or such longer period during
        which
        Seller maintain such Books and Records in the course of its business, provided
        that Seller may at its option offer to deliver to Purchaser at any time any
        such
        Books and Records and if Purchaser shall decline to take possession of such
        Books and Records, Seller shall thereafter be free to dispose of the same.
        Seller may require that any Person who will obtain access to Books and Records
        pursuant to this Section 7.9 execute a confidentiality undertaking reasonably
        satisfactory to Seller.

       

      ARTICLE
        VIII

       

      INDEMNIFICATION

       

      Section
        8.1 Indemnity
        Obligations of Seller.
        Seller
        covenants and agrees to defend, indemnify and hold harmless Purchaser and
        its
        Affiliates (including Parent) and the respective its officers, directors,
        employees, agents, advisers and representatives of the foregoing (collectively,
        the “Purchaser
        Indemnitees”),
        from
        and against, and to pay or reimburse Purchaser Indemnitees for, any and all
        claims, liabilities, obligations, losses, fines, costs, proceedings or damages
        (whether absolute, accrued, conditional or otherwise and whether or not
        resulting from third party claims), including all reasonable fees and
        disbursements of counsel incurred in the investigation or defense of any
        of the
        same or in asserting any of their respective rights hereunder (collectively,
        “Losses”),
        resulting from or arising out of:

       

      (i) any
        misrepresentation or breach of any warranty of Seller contained in the
        Transaction Documents; provided that in determining whether any such
        misrepresentation or breach occurred, any dollar amount thresholds, materiality
        qualifiers and Seller Material Adverse Effect qualifier contained in any
        representation or warranty herein shall be disregarded;

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      (ii) any
        failure of Seller to perform any covenant or agreement made or contained
        in the
        Transaction Documents or fulfill any obligation in respect thereof;
        or

       

      (iii) any
        and
        all Excluded Liabilities.

       

      Seller
        shall not be required to indemnify Purchaser Indemnitees with respect to
        any
        claim for indemnification (other than a claim for indemnification based on
        a
        breach of the representations and warranties contained in Sections 3.9, 3.11(c)
        or 3.24) resulting from or arising out of matters described in clause (i)
        above pursuant to this Section 8.1 (and not resulting from or arising out
        of
        matters described in clause (ii) or (iii) above) or arising out of
        matters
        described in clause (i) of Section 10(a) of the License Agreement
        (and not
        resulting from or arising out of matters described in clause (ii)
        or (iii)
        of Section 10(a) of the License Agreement) unless and until the aggregate
        amount
        of all such claims against all Seller exceeds $10,000 (the “Seller
        Threshold Amount”),
        in
        which case Seller shall be required to indemnify Purchaser Indemnitees for
        the
        amount of such claims in excess of the Seller Threshold Amount. Claims
        thereafter may be asserted regardless of amount.

       

      Seller’s
        maximum liability to Purchaser Indemnitees under clause (i) above (and not
        resulting from or arising out of matters described in clause (ii)
        or (iii)
        above) and under clause (i) of Section 10(a) of the License Agreement
        (and
        not resulting from or arising out of matters described in clause (ii)
        or
        (iii) of Section 10(a) of the License Agreement) shall not exceed the Total
        Consideration. “Total
        Consideration”
        means,
        as of the time any liability pursuant to this Section VIII is determined
        and
        required to be satisfied, the sum of (i) $1,250,000, (ii) the aggregate amount
        of cash paid to Seller by Parent pursuant to Sections 3(a)(ii) and (iii)
        of the
        License Agreement and (iii) the aggregate value (determined in accordance
        with
        the License Agreement) of the Parent Ordinary Shares issued to Seller pursuant
        to Section 3(a)(ii) of the License Agreement. 

       

      Section
        8.2 Indemnity
        Obligations of Purchaser.
        Purchaser covenants and agrees to defend, indemnify and hold harmless Seller
        and
        its Affiliates and their respective officers, directors, employees, agents,
        advisers and representatives (collectively, the “Seller
        Indemnitees”),
        from
        and against any and all Losses resulting from or arising out of:

       

      (i) any
        misrepresentation or breach of warranty of any Purchaser Indemnitor contained
        in
        the Transaction Documents; provided that in determining whether any such
        misrepresentation or breach occurred, any dollar amount thresholds and
        materiality qualifiers contained in any representation or warranty herein
        shall
        be disregarded;

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      (ii) any
        failure of any Purchaser Indemnitor to perform any covenant or agreement
        made or
        contained in the Transaction Documents or fulfill any other obligation in
        respect thereof; 

       

      
        	 	
                (iii)

              	
                the
                  Assumed Liabilities; or 

              

      

       

      (iv) except
        (A) as otherwise provided in the License Agreement with respect to the
        Schering-Plough Agreement or (B) to the extent attributable to a breach by
        Seller of a representation, warranty or covenant contained in the Transaction
        Documents, Purchaser’s use of the Assets following the Closing.

       

      Purchaser
        shall not be required to indemnify Seller Indemnitees with respect to any
        claim
        for indemnification resulting from or arising out of matters described in
        clause (i) above pursuant to this Section 8.2 (and not resulting from
        or
        arising out of matters described in clause (ii) or (iii) above) unless
        and
        until the aggregate amount of all claims against Purchaser exceeds $10,000
        (the
“Purchaser
        Threshold Amount”),
        in
        which case Purchaser shall be required to indemnify Seller Indemnitees for
        the
        full amount of such claims in excess of the Purchaser Threshold Amount. Claims
        thereafter may be asserted regardless of amount. Purchaser’s maximum liability
        to Seller Indemnitees under clause (i) above (and not resulting from or arising
        out of matters described in clause (ii) or (iii) above) shall not
        exceed
        the Total Consideration.

       

      Section
        8.3 Indemnification
        Procedures.
        (a)
Third
        Party Claims.
        In the
        case of any claim asserted by a third party against a party entitled to
        indemnification under this Agreement (the “Indemnified
        Party”),
        notice shall be given by the Indemnified Party to the party required to provide
        indemnification (the “Indemnifying
        Party”)
        as
        soon as practicable after such Indemnified Party has actual knowledge of
        any
        claim as to which indemnity may be sought, and the Indemnified Party shall
        permit the Indemnifying Party (at the expense of such Indemnifying Party)
        to
        assume the defense of any third party claim or any litigation with a third
        party
        resulting therefrom; provided,
        however,
        that
        (a) the counsel for the Indemnifying Party who shall conduct the defense
        of
        such claim or litigation shall be subject to the approval of the Indemnified
        Party (which approval shall not be unreasonably withheld or delayed),
        (b) the Indemnified Party may participate in such defense at such
        Indemnified Party’s expense (which shall not be subject to reimbursement
        hereunder except as provided below), and (c) the failure by any Indemnified
        Party to give notice as provided herein shall not relieve the Indemnifying
        Party
        of its indemnification obligation under this Agreement except and only to
        the
        extent that such Indemnifying Party is actually and materially damaged as
        a
        result of such failure to give notice. Except with the prior written consent
        of
        the Indemnified Party, no Indemnifying Party, in the defense of any such
        claim
        or litigation, shall consent to entry of any judgment or enter into any
        settlement that provides for injunctive or other nonmonetary relief affecting
        the Indemnified Party or that does not include as an unconditional term thereof
        the giving by each claimant or plaintiff to such Indemnified Party of a general
        release from any and all liability with respect to such claim or litigation.
        If
        the Indemnified Party shall in good faith determine that the conduct of the
        defense of any claim subject to indemnification hereunder or any proposed
        settlement of any such claim by the Indemnifying Party might be expected
        to
        affect adversely the ability of the Indemnified Party to conduct its business,
        or that the Indemnified Party may have available to it one or more defenses
        or
        counterclaims that are inconsistent with one or more of those that may be
        available to the Indemnifying Party in respect of such claim or any litigation
        relating thereto, the Indemnified Party shall have the right at all times
        to
        take over and assume control over the defense, settlement, negotiations or
        litigation relating to any such claim at the sole cost of the Indemnifying
        Party; provided,
        however,
        that if
        the Indemnified Party does so take over and assume control, the Indemnified
        Party shall not settle such claim or litigation without the prior written
        consent of the Indemnifying Party, such consent not to be unreasonably withheld
        or delayed. If the Indemnifying Party does not accept the defense of any
        matter
        as above provided within thirty (30) days after receipt of the notice from
        the
        Indemnified Party described above, the Indemnified Party shall have the full
        right to defend against any such claim or demand at the sole cost of the
        Indemnifying Party and shall be entitled to settle or agree to pay in full
        such
        claim or demand. In any event, the Indemnifying Party and the Indemnified
        Party
        shall reasonably cooperate in the defense of any claim or litigation subject
        to
        this Article VIII and the records of each shall be reasonably available to
        the
        other with respect to such defense.

       

      
        
          
          

        

        
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      (b)
        Non-Third
        Party Claims.
        With
        respect to any claim for indemnification hereunder which does not involve
        a
        third party claim, the Indemnified Party will give the Indemnifying Party
        written notice of such claim. The Indemnifying Party may acknowledge and
        agree
        by notice to the Indemnified Party in writing to satisfy such claim within
        twenty (20) days of receipt of notice of such claim from the Indemnified
        Party.
        If the Indemnifying Party shall dispute such claim, the Indemnifying Party
        shall
        provide written notice of such dispute to the Indemnified Party within such
        20-day period, setting forth in reasonable detail the basis of such dispute.
        Upon receipt of notice of any such dispute, the Indemnified Party and the
        Indemnifying Party shall use reasonable efforts to resolve such dispute within
        thirty (30) days of the date such notice of dispute is received. If the
        Indemnifying Party shall fail to provide written notice to the Indemnified
        Party
        within twenty (20) days of receipt of notice from the Indemnified Party that
        the
        Indemnifying Party either acknowledges and agrees to pay such claim or disputes
        such claim, the Indemnifying Party shall be deemed to have acknowledged and
        agreed to pay such claim in full and to have waived any right to dispute
        such
        claim. Once (a) the Indemnifying Party has acknowledged and agreed to pay
        any
        claim pursuant to this Section 8.3, (b) any dispute under this Section 8.3
        has
        been resolved in favor of indemnification by mutual agreement of the
        Indemnifying Party and the Indemnified Party, or (c) any dispute under this
        Section 8.3 has been finally resolved in favor of indemnification by order
        of a
        court of competent jurisdiction or other tribunal (including an arbitrator
        contemplated by this agreement) having jurisdiction over such dispute, then
        the
        Indemnifying Party shall pay the amount of such claim to the Indemnified
        Party
        within twenty (20) days of the date of acknowledgement by the Indemnifying
        Party
        or final resolution in favor of indemnification, as the case may be, to such
        account and in such manner as is designated in writing by the Indemnified
        Party.  

       

      
        
          
          

        

        
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      Section
        8.4 Expiration
        of Representations and Warranties.
        All
        representations and warranties contained in this Agreement shall survive
        the
        Closing until March 31, 2007; provided,
        however,
        that
        the representations and warranties stated in Sections 3.9, 3.11(c),
        3.12,
        3.14, 3.18 and 3.24 shall survive indefinitely.

       

      Section
        8.5 Exclusive
        Remedy.
        Absent
        fraud or criminal activity and except as provided under Sections 7.3
        and
        7.4, the indemnifications provided for in this Article VIII shall
        be the
        sole and exclusive post-Closing remedies available to either party against
        the
        other party for any claims under or based upon this Agreement. Each party
        acknowledges that the representations and warranties made by such party in
        the
        Transaction Documents shall not be deemed waived or otherwise affected by
        any
        investigation by or on behalf of another party.

       

      Section
        8.6 Set
        Off.
        If
        Seller shall have any Liability to Purchaser or any other Purchaser Indemnitee
        pursuant to the Transaction Documents, Purchaser shall be entitled, in addition
        to any other right or remedy Purchaser or any other Purchaser Indemnitee
        may
        have, to exercise rights of set-off against any payments or securities payable
        or deliverable to Seller in connection with the Transaction Documents or
        otherwise. 

       

      Section
        8.7 Treatment
        of Indemnification Payments.
        All
        indemnification payments made under this Agreement shall be treated by the
        parties as an adjustment to the Purchase Price, to the extent permitted by
        applicable Law.

       

      ARTICLE
        IX

       

      PRE-CLOSING
        CONDUCT; TERMINATION 

       

      Section
        9.1 Pre-Closing
        Conduct.
        Except
        as otherwise expressly permitted by this Agreement or as otherwise consented
        to
        by Purchaser in writing, Seller shall refrain from taking or omitting any
        action
        which, if taken or omitted prior to the date hereof, would cause the
        representations in Section 3.8 to be untrue. In addition, during the period
        form
        the date hereof until the effectiveness of the Closing, Seller shall not
        incur
        any material indebtedness (other than ordinary course accruals for rent and
        compensation expense) without the prior written consent of
        Purchaser.

       

      Section
        9.2 Information.
        Seller
        shall (and shall cause its accountants, counsel, consultants, employees and
        agents to) give Purchaser and its respective accountants, counsel, consultants,
        employees and agents, reasonable access during normal business hours to,
        and
        furnish them with all documents, records, work papers and information with
        respect to, all properties, assets, books, contracts, commitments, reports
        and
        records of, Seller, as Purchaser shall from time to time reasonably request.
        In
        addition, Seller shall permit Purchaser, and its accountants, counsel,
        consultants, employees and agents, reasonable access to such personnel of
        Seller
        during normal business hours as may be necessary to Purchaser in connection
        with
        its review of the properties, assets and business affairs of Seller and the
        above-mentioned documents, records and information. Purchaser shall have
        the
        right, upon giving reasonable advance notice, to enter upon and inspect the
        Company Properties. Purchaser’s exercise of its rights granted pursuant to the
        two preceding sentences shall not unreasonably interfere with Sellers’ operation
        of the Business.

       

      
        
          
          

        

        
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      Section
        9.3 No
        Solicitation.
        During
        the period from the date of this Agreement through the Closing Date, Seller
        shall, and shall cause its employees, directors, agents and Affiliates to,
        immediately suspend any existing negotiations or discussions relating to
        any
        sale, joint venture or other transfer of actual or beneficial ownership of
        any
        securities of Seller or any of its operations or any assets associated therewith
        (other than goods and services of Seller sold in the ordinary course of
        business) (collectively, an “Acquisition
        Transaction”),
        and
        Seller shall not, and shall cause its employees, directors, agents and
        Affiliates not to, (i) solicit any proposals or offers relating to
        an
        Acquisition Transaction, or (ii) negotiate or engage in discussions
        with
        any third party concerning any proposal or offer for an Acquisition
        Transaction.

       

      Section
        9.4 Termination.
        This
        Agreement may be terminated at any time prior to the Closing Date: 

       

      (i) by
        mutual
        written agreement of Purchaser and Seller;

       

      (ii) by
        either
        Purchaser or Seller (provided that neither the terminating party nor any
        of its
        Affiliates is then in material breach of any representation, warranty, covenant,
        or other agreement contained in the Transaction Documents) by written notice
        to
        the other in the event of a material breach by the other or a party Affiliated
        with the other of any representation or warranty contained in the Transaction
        Documentswhich cannot be or has not been cured within ten (10) days after
        the
        giving of written notice to other of such breach and which breach is reasonably
        likely, in the opinion of the terminating party, to permit such party to
        refuse
        to consummate the transactions contemplated by this Agreement in accordance
        with
        the terms hereof;

       

      (iii) by
        either
        Purchaser or Seller (provided that neither the terminating party nor any
        of its
        Affiliates is then in material breach of any representation, warranty, covenant,
        or other agreement contained in the Transaction Documents) by written notice
        to
        the other in the event of a material breach by the other or a party Affiliated
        with the other of any covenant or agreement contained in the Transaction
        Documentswhich cannot be or has not been cured within ten (10) days the giving
        of written notice to other of such breach and which breach is reasonably
        likely,
        in the opinion of the terminating party, to permit such party to refuse to
        consummate the transactions contemplated by this Agreement in accordance
        with
        the terms hereof; 

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

      (iv) by
        either
        Purchaser or Seller by written notice to the other in the event the consummation
        of such transactions shall have been temporarily or permanently and restrained,
        enjoined or otherwise prohibited by force of Law or any Person has threatened
        to
        seek such a restraint, injunction or prohibition;

       

      (v) by
        either
        Purchaser or Seller by written notice to the other in the event that the
        Closing
        shall not have been consummated by the time provided for in Section 2.2 if
        the
        failure to consummate the transactions contemplated hereby on or before such
        date is not caused by any breach of this Agreement by the party electing
        to
        terminate pursuant to this Section 9.4(v) or an Affiliate of such party;
        

       

      (vi) by
        Purchaser by written notice to Seller in the event of a Seller Material Adverse
        Change; 

       

      (vii) by
        Purchaser in the event any third party shall assert or allege, whether or
        not in
        writing, that the execution of this Agreement and/or the License Agreement
        or
        the consummation of any transaction contemplated hereby or thereby constitutes
        a
        breach of an agreement between Seller or any of its Affiliates and such third
        party; or

       

      (viii) as
        provided in the letter agreement of even date herewith between the parties
        hereto

       

      Section
        9.5 Effect
        of Termination.
        In the
        event of the termination and abandonment of this Agreement pursuant to Section
        9.4, this Agreement shall become void and have no effect, except that no
        such
        termination shall relieve a breaching party from Liability resulting from
        any
        breach by that party of this Agreement.

       

      ARTICLE
        X

       

      MISCELLANEOUS

       

      Section
        10.1 Certain
        Definitions.

       

      For
        purposes of this Agreement, the following terms shall have the meanings
        specified in this Section 10.1:

       

      “Affiliate”
        means,
        with respect to any Person, any other Person directly or indirectly controlling,
        controlled by or under common control with such Person, and in the case of
        any
        natural Person shall include all relatives and family members of such Person.
        For purposes of this definition, a Person shall be deemed to control another
        Person if such first Person directly or indirectly owns or holds five percent
        (5%) or more of the ownership interests in such other Person.

       

      
        
          
          

        

        
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       “Books
        and Records”
        means
        all books and records of Seller, including manuals, price lists, mailing
        lists,
        lists of customers, sales and promotional materials, purchasing materials,
        documents evidencing intangible rights or obligations, personnel records,
        accounting records and litigation files (regardless of the media in which
        stored), in each case relating to or used in the Business, excluding only
        Seller’s corporate seal, corporate minute book and stock record
        books.

       

      “Business”
        means
        the business of Seller as conducted or proposed to be conducted on the date
        hereof and as of the Closing Date.

       

      “Code”
        shall
        mean the Internal Revenue Code of 1986, as amended.

       

      “Contract”
        means
        any contract, indenture, note, bond, loan, mortgage, license, instrument,
        lease
        or agreement.

       

      “Environmental
        Law”
        means
        any foreign, federal, state or local statute, regulation, ordinance, or rule
        of
        common law as now or hereafter in effect in any way or any other legally
        binding
        requirement relating to the environment, natural resources or protection
        of
        human health and safety including, without limitation, the Comprehensive
        Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601
et seq.),
        the
        Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.),
        the
        Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
        the
        Clean Water Act (33 U.S.C. § 1251 et seq.),
        the
        Clean Air Act (42 U.S.C. § 7401 et seq.)
        the
        Toxic Substances Control Act (15 U.S.C. § 2601 et seq.),
        the
        Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
et seq.),
        and
        the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.),
        and
        the regulations promulgated pursuant thereto.

       

      “Fair
        Market Value”
        means,
        as to the Parent Ordinary Shares, (i) the average closing bid price of the
        Parent Ordinary Shares on quoted on the London Stock Exchange (or, if the
        Parent
        Ordinary Shares are not traded on the London Stock Exchange at the time of
        determination, the principal exchange or inter-dealer quotation system on
        which
        the Parent Ordinary Shares are then traded) over a period of 20 consecutive
        trading days the latest of which shall be the trading day immediately preceding
        the date as of which "Fair Market Value" is being determined or, if the Parent
        Ordinary Shares are not then traded on an exchange or through an inter-dealer
        quotation system, the fair value of the Parent Ordinary Shares as reasonably
        determined by the Board of Directors of Parent.

       

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

       

      “Governmental
        Approval”
        means
        any Consent of, with or to any Governmental Body.

       

      “Governmental
        Body”
        means
        any government or governmental or regulatory authority or body thereof, or
        political subdivision thereof, whether federal, state, local or foreign,
        or any
        agency, instrumentality or authority thereof, or any court or arbitrator
        (public
        or private).

       

      
        
          
          

        

        
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      “Hazardous
        Material”
        means
        any substance, material or waste which is regulated by the United States,
        the
        foreign jurisdictions in which Seller conducts business, or any state, local
        or
        foreign governmental authority including, without limitation, petroleum and
        its
        by-products, asbestos, and any material or substance which is defined as
        a
“hazardous waste,”“hazardous substance,”“hazardous material,”“restricted
        hazardous waste,”“industrial waste,”“solid
        waste,”“contaminant,”“pollutant,”“toxic waste” or “toxic substance” under any
        provision of Environmental Law.

       

      “Intellectual
        Property”
        means
        (a) all inventions (whether patentable or unpatentable and whether or not
        reduced to practice), all improvements thereto, and all patents, patent
        applications, and patent disclosures, together with all reissuances,
        continuations, continuations-in-part, revisions, extensions, and reexaminations
        thereof, (b) all trademarks, service marks, trade dress, logos, trade names,
        and
        corporate names, together with all translations, adaptations, derivations,
        and
        combinations thereof and including all goodwill associated therewith, and
        all
        applications, registrations and renewals in connection therewith, (c) all
        copyrightable works, all copyrights, and all applications, registrations
        and
        renewals in connection therewith, (d) all mask works and all applications,
        registrations and renewals in connection therewith, (e) all trade secrets
        and
        confidential information (including ideas, research and development, know-how,
        formulas, compositions, manufacturing and production processes and techniques,
        technical data, designs, drawings, specifications, customer and supplier
        lists,
        pricing and cost information, and business and marketing plans and proposals),
        (f) all computer software (including data and related documentation), (g)
        all
        other proprietary rights, and (h) all copies and tangible embodiments thereof
        (in whatever form or medium).

       

      “IRS”
        means
        the United States Internal Revenue Service.

       

      “Knowledge”
        or
        words of similar effect means, means (regardless of case) any fact,
        circumstance, event or other matter in question, of which (i) with respect
        to
        VivoQuest, any member of senior management of VivoQuest has actual knowledge
        or
        should have had actual knowledge after reasonable due inquiry and (ii) with
        respect to Purchaser, any member of senior management of Purchaser has actual
        knowledge or should have had actual knowledge after reasonable due
        inquiry.

       

      “Law”
        means
        any federal, state, local or foreign law (including common law), statute,
        code,
        ordinance, rule, regulation or other requirement.

       

      “Legal
        Proceeding”
        means
        any judicial, administrative or arbitral actions, suits, proceedings (public
        or
        private), claims or governmental proceedings.

       

      “Liability”
        means
        any liability (whether known or unknown, whether asserted or unasserted,
        whether
        absolute or contingent, whether accrued or unaccrued, whether liquidated
        or
        unliquidated, and whether due or to become due), including any liability
        for
        Taxes.

       

      
        
          
          

        

        
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      “Lien”
        means
        any lien, pledge, mortgage, deed of trust, security interest, claim, lease,
        charge, option, right of first refusal, easement, servitude, transfer
        restriction under any shareholder or similar agreement, encumbrance or any
        other
        restriction or limitation whatsoever.

       

      “Non-Competition
        Period”
        means
        the period from the Closing Date through the fifth anniversary thereof.

       

      “Order”
        means
        any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
        award.

       

      “Permitted
        Exceptions”
        means
        (i) statutory liens for current taxes, assessments or other governmental
        charges
        not yet delinquent or the amount or validity of which is being contested
        in good
        faith by appropriate proceedings, provided an appropriate reserve is established
        therefor; (ii) mechanics’, carriers’, workers’, repairers’ and similar Liens
        arising or incurred in the ordinary course of business that are not material
        to
        the business, operations and financial condition of the property so encumbered
        or Seller; (iii) zoning, entitlement and other land use and environmental
        regulations by any Governmental Body, provided that such regulations have
        not
        been violated; and (iv) such other imperfections in title, charges, easements,
        restrictions and encumbrances which do not materially detract from the value
        of
        or materially interfere with the present use of the Assets subject thereto
        or
        affected thereby.

       

      “Person”
        means
        any individual, corporation, partnership, firm, joint venture, association,
        joint-stock company, trust, unincorporated organization, Governmental Body
        or
        other entity.

       

      “Release”
        means
        any release, spill, emission, leaking, pumping, injection, deposit, disposal,
        discharge, dispersal, migration or leaching into the indoor or outdoor
        environment, or into or out of any property.

       

      “Remedial
        Action”
        means
        all actions to (x) clean up, remove, treat or in any other way address any
        Hazardous Material; (y) prevent the Release of any Hazardous Material so
        it does
        not endanger or threaten to endanger public health or welfare or the indoor
        or
        outdoor environment; or (z) perform pre-remedial studies and investigations
        or
        post-remedial monitoring and care.

       

      “Seller
        Material Adverse Change”
        or
“Seller
        Material Adverse Effect”
        means
        the occurrence of any of the following events: the commencement or threat
        of any
        litigation, arbitration, investigation or other proceeding before or by any
        Governmental Body with respect to Seller or any of the Assets or, insofar
        as
        Seller, the Assets or the Transaction Documents are concerned, Purchaser
        or any
        Affiliate of Purchaser, except for the potential claim in the amount of
        approximately $25,000 by Hong Kong University Science and Technology Center
        disclosed in the Seller Disclosure Schedule; the assertion by a third party
        (including an employer of or consultant to Seller) that any of the Licensed
        IP
        (as defined in the License Agreement) infringes the rights of such third
        party
        or that Seller does not have the right to enter into the License Agreement
        with
        respect to all or any portion of the Licensed IP; or any of Reza Fathi, Zhen
        Yang or Anthony Sandrasagra ceases to be employer by Seller.

       

      
        
          
          

        

        
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      “Subsidiary”
        means,
        as to any Person, any other Person of which a 50% or more of the outstanding
        voting securities or other equity interests are owned, directly or indirectly,
        by such Person.

       

      “Tax”
        or
“Taxes”
        shall
        mean means any federal, state, provincial, local or foreign income, alternative
        minimum, accumulated earnings, personal holding company, franchise, capital
        stock, net worth, capital, profits, windfall profits, gross receipts, value
        added, sales, use, goods and services, excise, customs duties, transfer,
        conveyance, mortgage, registration, stamp, documentary, recording, premium,
        severance, environmental (including taxes under Section 59A of the
        Code or
        any analogous or similar provision of any state, local or foreign law or
        regulation), real property, personal property, ad valorem, intangibles, rent,
        occupancy, license, occupational, employment, unemployment insurance, social
        security, disability, workers’ compensation, payroll, health care, withholding,
        estimated or other similar tax, duty or other governmental charge or assessment
        or deficiencies thereof, and including any interest, penalties or additions
        to
        tax attributable to the foregoing.

       

      “Tax
        Return”
        means
        any return, report, declaration, form, claim for refund or information return
        or
        statement relating to Taxes, including any schedule or attachment thereto,
        and
        including any amendment thereof.

       

      “Transaction
        Documents”
        means,
        collectively, this Agreement, the License Agreement and all other agreements,
        documents, instruments and certificates executed pursuant hereto or thereto
        in
        connection herewith or therewith.

       

      Section
        10.2 Publicity .
        No
        party shall issue any press release or make any other public announcement
        relating to the subject matter of this Agreement without the prior written
        consent of Purchaser.

       

      Section
        10.3 Payment
        of Sales, Use or Similar Taxes; Transfer Taxes.
        Seller
        shall be responsible for and pay in a timely manner all sales, use, value
        added,
        documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
        recording, license and other similar Taxes and fees (“Transfer
        Taxes”),
        arising out of or in connection with or attributable to the transactions
        effected pursuant to the Transaction Documents. Each party hereto shall prepare
        and timely file all Tax Returns required to be filed in respect of Transfer
        Taxes that are the primary responsibility of such party under applicable
        Law;
provided,
        however,
        that
        such party’s preparation of any such Tax Returns shall be subject to the other
        party’s approval, which approval shall not be unreasonably withheld or
        delayed.

       

      
        
          
          

        

        
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      Section
        10.4 Expenses.
        On the
        Closing Date, or upon any valid termination of this Agreement by Seller prior
        to
        the Closing Date pursuant to Section 9.4, subject to receipt of substantiating
        documentation, Purchaser shall reimburse Seller for up to $50,000 of its
        reasonable and customary legal fees incurred in connection with the negotiation
        and execution of the Transaction Documents. Except as provided in the preceding
        sentence, each party shall bear all costs and expenses incurred by such party
        in
        connection with the negotiation and execution of this Agreement and each
        other
        Transaction Document, whether or not the transactions contemplated hereby
        and
        thereby are consummated.

       

      Section
        10.5 Specific
        Performance.
        Seller
        acknowledges and agrees that the breach of this Agreement would cause
        irreparable damage to Purchaser and that Purchaser will not have an adequate
        remedy at law. Therefore, the obligations of Seller under this Agreement,
        including, without limitation, Seller’s obligation to sell the Assets to
        Purchaser, shall be enforceable by a decree of specific performance issued
        by
        any court of competent jurisdiction, and appropriate injunctive relief may
        be
        applied for and granted in connection therewith (without the requirement
        of the
        posting of a bond or other surety). Such remedies shall, however, be cumulative
        and not exclusive and shall be in addition to any other remedies which any
        party
        may have under this Agreement or otherwise.

       

      Section
        10.6 Submission
        to Jurisdiction; Consent to Service of Process.
        The
        parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
        of
        any federal or state court located in New York, New York over any dispute
        arising out of or relating to this Agreement or any of the transactions
        contemplated hereby and each party hereby irrevocably agrees that all claims
        in
        respect of such dispute or any suit, action proceeding related thereto may
        be
        heard and determined in such courts. The parties hereby irrevocably waive,
        to
        the fullest extent permitted by applicable Law, any objection which they
        may now
        or hereafter have to the laying of venue of any such dispute brought in such
        court or any defense of inconvenient forum for the maintenance of such dispute.
        Each of the parties hereto agrees that a judgment in any such dispute may
        be
        enforced in other jurisdictions by suit on the judgment or in any other manner
        provided by law.

       

      Section
        10.7 Entire
        Agreement; Amendments and Waivers.
        This
        Agreement (including the schedules and exhibits hereto) represents the entire
        understanding and agreement between the parties hereto with respect to the
        subject matter hereof and can be amended, supplemented or changed, and any
        provision hereof can be waived, only by written instrument making specific
        reference to this Agreement signed by Purchaser, in the case of an amendment,
        supplement, modification or waiver sought to be enforced against Purchaser,
        or
        Seller, in the case of an amendment, supplement, modification or waiver sought
        to be enforced against Seller. No action taken pursuant to this Agreement,
        including without limitation, any investigation by or on behalf of any party,
        shall be deemed to constitute a waiver by the party taking such action of
        compliance with any representation, warranty, covenant or agreement contained
        herein. The waiver by any party hereto of a breach of any provision of this
        Agreement shall not operate or be construed as a further or continuing waiver
        of
        such breach or as a waiver of any other or subsequent breach. No failure
        on the
        part of any party to exercise, and no delay in exercising, any right, power
        or
        remedy hereunder shall operate as a waiver thereof, nor shall any single
        or
        partial exercise of such right, power or remedy by such party preclude any
        other
        or further exercise thereof or the exercise of any other right, power or
        remedy.
        All remedies hereunder are cumulative and are not exclusive of any other
        remedies provided by law.

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      Section
        10.8 Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of New York without regard to conflicts of law principles
        thereof.

       

      Section
        10.9 Table
        of Contents and Headings.
        The
        table of contents and section headings of this Agreement are for reference
        purposes only and are to be given no effect in the construction or
        interpretation of this Agreement.

       

      Section
        10.10 Notices.
        All
        notices and other communications under this Agreement shall be in writing
        and
        shall be deemed given when delivered personally or mailed by certified mail,
        return receipt requested, to the parties (and shall also be transmitted by
        facsimile to the Persons receiving copies thereof) at the following addresses
        (or to such other address as a party may have specified by notice given to
        the
        other party pursuant to this provision):

       

      

      If
        to
        Seller, to:

       

      VivoQuest,
        Inc.

      711
        Executive Boulevard

      Valley
        Cottage, New York 10989

      Attn:
        Peter Tombros

      Telecopier:
        845-267-0926

      

      With
        a
        copy to:

      

      Foley
        Hoag LLP

      Seaport
        World Trade Center West

      155
        Seaport Boulevard

      Boston, Massachusetts
        02210-2600

      Attention:
        Bruce Kinn, Esq.

      Telecopier:
        617-832-7000

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

      If
        to
        Purchaser:

      

      XTL
        Biopharmaceuticals Inc.

      275
        Grove
        Street, Suite 2-400

      Newton,
        Massachusetts 02466

      Telecopier:
        617-663-5353

      

      With
        a
        copy to:

       

      Law
        Office of Kenneth G. Alberstadt PLLC

      111
        Broadway, 18th
        Floor

      New
        York,
        New York 10006

      Attention:
        Kenneth G. Alberstadt, Esq.

      Telecopier:
        (212) 404-7567

       

      Any
        such
        notice or communication shall be deemed to have been received (i) when
        delivered, if personally delivered or transmitted by electronic mail, with
        receipt acknowledgment by the recipient by return electronic mail, (ii) when
        sent, if sent by facsimile on a business day during normal business hours
        (or,
        if not sent on a business day during normal business hours, on the next business
        day after the date sent by facsimile), (iii) on the next business day after
        dispatch, if sent by nationally recognized, overnight courier guaranteeing
        next
        business day delivery, and (iv) on the 5th
        business
        day following the date on which the piece of mail containing such communication
        is posted, if sent by mail.

      

      Section
        10.11 Bulk
        Sales.
        Purchaser and Seller hereby waive compliance by the other with the provisions
        of
        the bulk sales laws of any jurisdiction, to the extent applicable to the
        transactions contemplated by this Agreement. Seller shall indemnify and hold
        harmless Purchaser and the other Purchaser Indemnitees from and against any
        and
        all Losses resulting from or arising out of any noncompliance or alleged
        noncompliance by Purchaser or Seller with such bulk sales laws.

       

      Section
        10.12 Severability.
        If any
        provision of this Agreement is invalid or unenforceable, the balance of this
        Agreement shall remain in effect.

       

      Section
        10.13 Binding
        Effect; Assignment.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their respective successors and permitted assigns. Except as provided in
        Article
        VIII, nothing in this Agreement shall create or be deemed to create any third
        party beneficiary rights in any person or entity not a party to this Agreement.
        No assignment of this Agreement or of any rights or obligations hereunder
        may be
        made by any party hereto (by operation of law or otherwise) without the prior
        written consent of the other party hereto and any attempted assignment without
        the required consents shall be void, provided that no such consent shall
        be
        required (i) for any such assignment of Purchaser’s rights and obligations
        hereunder (a) in connection with a sale or other transfer (whether directly
        or
        indirectly, including by merger or consolidation) of the Business, (b) to
        an
        Affiliate of Purchaser or (c) as security for the obligations of Purchaser
        or
        any Affiliate of Purchaser under a credit agreement entered into with a bank
        or
        other financial institution or (ii) for any such assignment of Seller’s rights
        and obligations hereunder in connection with the assignment of this Agreement
        (together with its remaining transferable assets, if any) by Seller to a
        liquidating trust in accordance with applicable Law. 

       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

      Section
        10.14 Counterparts.
        This
        Agreement may be executed in one or more counterparts, each of which shall
        be
        deemed an original but all of which together will constitute one and the
        same
        instrument.

       

      Section
        10.15 Headings.
        The
        section headings contained in this Agreement are inserted for convenience
        only
        and shall not affect in any way the meaning or interpretation of this
        Agreement.

       

      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Asset Purchase Agreement
        effective as of the date and year first above written.

       

       

      
        
          	 	 	 
	 	VIVOQUEST,
                  INC.
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
                  
Name:
	 	Title: 

        

        
          	 	 	 
	 	XTL
                  BIOPHARMACEUTICALS INC.
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
                  
Name:
	 	Title: 

        

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

      SCHEDULE
        I

      

      Included
        Contracts

      

      Industrial
        Real Estate Lease dated November 15, 2004 between Suga Development, L.L.C.
        and
        Seller

      

      Agreement
        effective May 12, 2003 between ReBLikon GmbH and Seller

      

      CAS
        Scifinder License Agreement between Seller and the American Chemical Society,
        through its Chemical Abstracts Services division

      

      
        
          
          

        

        
          47

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