AGREEMENTAND PLAN OF MERGER DATEDAS OF JANUARY 29, 2010 BYAND AMONG QUANTRXBIOMEDICAL CORPORATION, NPACQUISITION CORPORATION AND NURXPHARMACEUTICALS, INC., TABLE OF CONTENTS

 

 

 

 

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(j)           institute, settle, or agree to settle any material pending or threatened suit, action, claim or litigation, before any arbitrator, court or other Governmental Authority (for the avoidance of doubt, any settlement or Claim, consent decree which involves a conduct remedy or injunctive, equitable or similar relief or has a restrictive impact on business or involves payments in excess of $100,000 in the aggregate shall be deemed to be material);

 

(k)          agree to (i) any exclusivity provision or covenant of the Company or any of its Subsidiaries not to compete with the business of any other Person, or (ii) any other covenant of the Company or any of its Subsidiaries restricting in any material respect the development, manufacture, marketing or distribution of the products or services of the Company or any of its Subsidiaries or otherwise limiting in any material respect the freedom of the Company or any Subsidiary of the Company to compete in any line of business or with any Person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any material assets or that would so limit the freedom of Parent or any of its Affiliates in any material respect after the consummation of the Merger or the Transactions;

 

(l)           enter into any new line of business;

 

(m)         other than as expressly permitted by Section 5.10, take any action for the purpose of preventing, delaying or impeding the consummation of the Merger or the Transactions;

 

(n)          take any action that would, or would be reasonably likely to, make any representation or warranty of the Company hereunder, or omit to take any action necessary to prevent any representation or warranty of the Company hereunder from being, inaccurate in any material respect at, or as of any time before, the Effective Time, or take any action that would, or would be reasonably likely to, result in, or omit to take any action necessary to prevent, any of the conditions to the Merger set forth in ARTICLE 6 not being satisfied; or

 

(o)          (i) enter into any contract or agreement other than in the ordinary course of business and consistent with past practice; (ii) authorize, or make any commitment with respect to, any single capital expenditure which is in excess of $100,000 or capital expenditures which are, in the aggregate, in excess of $250,000 for the Company and its Subsidiaries taken as a whole; or (iii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(o) or Section 5.01(h);

 

(p)         amend, modify or consent to the termination of any material contract, or amend, waive, modify or consent to the termination of the Company’s rights thereunder, other than in the ordinary course of business and consistent with past practice;

 

(q)         take any action, other than reasonable and usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures;

(r)          make any tax election or settle or compromise any United States federal, state, local or non-United States income tax liability;

 

(s)          pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the consolidated balance sheet of the Company as at September 30, 2009, or subsequently incurred in the ordinary course of business and consistent with past practice; or

 

(t)          announce an intention, authorize, resolve, commit or agree to take any of the foregoing actions.

 

5.02        Conduct of Business of Parent.  Except for matters expressly required, permitted or contemplated by this Agreement, set forth in Section 5.02 of the Parent Disclosure Schedule, or as otherwise consented to in advance in writing by the Company, from the date of this Agreement to the Effective Time, Parent shall use commercially reasonable efforts to, and shall cause each of its Subsidiaries to, conduct its business in the ordinary course consistent with past practice, maintain in effect all of its Permits necessary to conduct its business in the ordinary course consistent with past practice and (i) preserve intact its material assets, material proprietary rights of Parent and current business organization, (ii) keep available the services of its directors, officers and key employees, and (iii) preserve its relationships with its customers, partners, suppliers, licensors, licensees, distributors and others having material business relationships with it with the objective of preserving unimpaired their goodwill and ongoing business.  In addition, without limiting the generality of the foregoing, except for matters expressly permitted or contemplated by this Agreement or set forth in Section 5.02 of the Parent Disclosure Schedule, from the date of this Agreement until the Effective Time, Parent shall not, nor shall it permit any of its Subsidiaries to, do any of the following without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed:

 

(a)          (i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock, property or otherwise) in respect of, or enter into any agreement with respect to the voting of, any capital stock of Parent or any of its Subsidiaries, other than dividends and distributions by a direct or indirect wholly-owned Subsidiary of Parent to its parent, (ii) split, combine or reclassify any capital stock of Parent or any of its Subsidiaries, (iii) issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares of capital stock of Parent or any of its Subsidiaries, (iv) purchase, repurchase, redeem or otherwise acquire any capital stock of Parent or capital stock of the Subsidiaries of Parent (including, without limitation, securities exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, capital stock or other equity interests of Parent or any of its Subsidiaries), other than pursuant to currently existing Contracts providing for the repurchase of Parent’s capital stock upon the departure or termination of an employee, (v) amend any term of any capital stock of Parent or of its Subsidiaries (in each case, whether by merger, consolidation or otherwise), or (vi) sell, transfer or pledge, or agree to sell, transfer or pledge, any equity interest owned by Parent in any of its Subsidiaries or alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any of its Subsidiaries;

(b)         authorize for issuance, issue, deliver, sell, grant, pledge, transfer, or agree or commit to issue, sell or deliver or otherwise encumber or dispose of or subject to any Lien (whether through the issuance or granting of options, commitments, subscriptions, rights to purchase or otherwise), any shares of Parent’s capital stock or the capital stock of any of its Subsidiaries, any other securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, securities or convertible securities or any other securities or equity equivalents (including without limitation stock appreciation rights or phantom interests), other than the issuance and delivery of shares of Parent Common Stock upon the exercise of options or Parent Warrants that are outstanding on the date of this Agreement;

 

(c)         amend or change its Articles of Incorporation, Bylaws or comparable organizational documents (whether by merger, consolidation or otherwise);

 

(d)         acquire (i) any material amount of stock or assets of any other Person (in connection with a purchase of such Person’s business whether in whole or in part), whether by purchase of stock, purchase of assets, merger, consolidation, or otherwise or (ii) any other material assets (other than assets acquired in the ordinary course of business for amounts that are consistent with past practice);

 

(e)         (i) establish or acquire any Subsidiary other than wholly-owned Subsidiaries or Subsidiaries organized outside of the United States and its territorial possessions or (ii) amend, modify or waive any term of any outstanding security of Parent or any of its Subsidiaries;

 

(f)         pledge, transfer, sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any material Subsidiary of Parent or any of the assets or properties of Parent or any of its material Subsidiaries, except for  (i) immaterial properties or assets (or immaterial portions of properties or assets) or (ii) pursuant to existing contracts or commitments for inventory in the ordinary course of business consistent with past practice;

 

(g)         (i) grant to any current or former director, officer, employee or consultant of Parent or any Subsidiary of Parent any increase in any manner in compensation or benefits, or pay any bonus thereto except (x) increases in base salaries of non-executive officer employees in accordance with past practices so long as such increases do not exceed 5% of the aggregate current annualized base salaries of all non-executive officer employees of Parent and Subsidiaries of Parent, or (y) bonuses granted in the ordinary course consistent with past practice, (ii) terminate any employee other than in the ordinary course of business or grant or pay to any current or former director, officer, employee or consultant of Parent or any Subsidiary of Parent any severance or termination pay or benefits or any increase in severance, change of control or termination pay or benefits, except in connection with actual termination in the ordinary course of any such Person to the extent required under applicable Law or existing plans, policies, agreements or arrangements of Parent, (iii) establish, adopt, enter into or amend any employee benefit plan or any agreement, arrangement, plan or policy for the benefit of any current or former director, officer or employee in existence on the date hereof (other than entering into offer letters that contemplate “at will” employment without severance benefits or as otherwise permissible under this Section 5.02) or collective bargaining agreement except to the extent required under applicable Law, (iv) take any action to accelerate any rights or benefits or take any action to fund or in any other way secure the payment of compensation or benefits under any Company benefit plan, or (v) make any Person a beneficiary of any retention or severance plan under which such Person is not, as of the date of this Agreement, a beneficiary which would entitle such Person to payments, vesting, acceleration, or any other right as a consequence of consummation of the Transactions and/or termination of employment;

(h)         (i) assume, purchase, repurchase, prepay or incur any Indebtedness, including by way of a guarantee, issuance or sale of debt securities or any merger, business combination or other acquisition, (ii) issue or sell options, warrants, calls or other rights to acquire any debt securities of Parent or any of its Subsidiaries, (iii) guarantee any debt securities of others or enter into any “keep well” or other agreement to maintain any financial statement or similar condition of another person or enter into any arrangement having the economic effect of any of the foregoing, (iv) create any Lien on any material asset of Parent or any of its Subsidiaries, (v) make or forgive any loans, advances or capital contributions to, guarantees for the benefit of, or investments in, any other Person, other than to Parent or any of its wholly owned Subsidiaries, or (iv) assume, guarantee or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except for the obligations of the Subsidiaries of Parent permitted under this Agreement;

 

(i)          adopt or put into effect a plan or agreement of, or resolutions providing for or authorizing, any complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Parent or any of its material Subsidiaries, other than any transaction specifically contemplated by this Agreement;

 

(j)          institute, settle, or agree to settle any material pending or threatened suit, action, claim or litigation, before any arbitrator, court or other Governmental Authority (for the avoidance of doubt, any settlement or Claim, consent decree which involves a conduct remedy or injunctive, equitable or similar relief or has a restrictive impact on business or involves payments in excess of $100,000 in the aggregate shall be deemed to be material);

 

(k)         agree to (i) any exclusivity provision or covenant of Parent or any of its Subsidiaries not to compete with the business of any other Person, or (ii) any other covenant of Parent or any of its Subsidiaries restricting in any material respect the development, manufacture, marketing or distribution of the products or services of Parent or any of its Subsidiaries or otherwise limiting in any material respect the freedom of Parent or any Subsidiary of Parent to compete in any line of business or with any Person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any material assets or that would so limit the freedom of the Company or any of its Affiliates in any material respect after the consummation of the Merger or the Transactions;

 

(l)         enter into any new line of business;

 

(m)        take any action for the purpose of preventing, delaying or impeding the consummation of the Merger or the Transactions;

(n)        take any action that would, or would be reasonably likely to, make any representation or warranty of Parent hereunder, or omit to take any action necessary to prevent any representation or warranty of Parent hereunder from being, inaccurate in any material respect at, or as of any time before, the Effective Time, or take any action that would, or would be reasonably likely to, result in, or omit to take any action necessary to prevent, any of the conditions to the Merger set forth in ARTICLE 6 not being satisfied; or

 

(o)         (i) enter into any Contract or agreement other than in the ordinary course of business and consistent with past practice; (ii) authorize, or make any commitment with respect to, any single capital expenditure which is in excess of $100,000 or capital expenditures which are, in the aggregate, in excess of $250,000 for the Company and its Subsidiaries taken as a whole; or (iii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.02(o) or Section 5.02(h);

 

(p)        amend, modify or consent to the termination of any material contract, or amend, waive, modify or consent to the termination of Parent’s rights thereunder, other than in the ordinary course of business and consistent with past practice;

 

(q)        take any action, other than reasonable and usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures;

 

(r)         make any tax election or settle or compromise any United States federal, state, local or non-United States income tax liability;

 

(s)         pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the consolidated balance sheet of Parent as at September 30, 2009, or subsequently incurred in the ordinary course of business and consistent with past practice; or

 

(t)         announce an intention, authorize, resolve, commit or agree to take any of the foregoing actions.

 

5.03        Stockholders Meeting.  

 

(a)         The Company, acting through the Company Board, shall, in accordance with applicable Law and its Articles of Incorporation and Bylaws, duly call, give notice of, convene and hold a special meeting of its stockholders (the “Company Stockholders Meeting”) as soon as reasonably practicable following the clearance by the SEC of the Proxy Statement for the purpose of considering and voting upon the approval and adoption of this Agreement, the Merger and such other matters as may be necessary to effectuate the Transactions.  The Company Board shall (i) recommend to the stockholders of the Company the approval and adoption of this Agreement and the Merger, (ii) include in the Proxy Statement such favorable recommendation of the Company Board that the stockholders of the Company vote in favor of the approval and adoption of this Agreement, (iii) take all lawful actions to solicit such approval from the stockholders of the Company and (iv) not withdraw or modify such favorable recommendation, except in the event and to the extent the Company Board makes an Adverse Recommendation in accordance with Section 5.10(b). For purposes of this Agreement, a “Adverse Recommendation” shall be deemed to have occurred if:  (i) the Company Board or any committee thereof withdraws, modifies or changes its recommendation of this Agreement, the Merger or the Transactions in a manner adverse to Parent or shall have resolved or announced an intention to do so; (ii) the Company Board shall have recommended to the Company’s stockholders a competing Transaction or shall have resolved to do so or shall have entered into any letter of intent, memorandum of understanding, agreement in principle, merger agreement acquisition agreement, option agreement, joint venture agreement, alliance agreement, partnership agreement or similar document or any agreement, contract or commitment accepting any competing Transaction; (iii) the Company shall have failed to include in the Proxy Statement the recommendation of the Company Board in favor of the approval and adoption of this Agreement and the approval of the Merger or (iv) the Company fails to call the Company Stockholders Meeting.

(b)        As soon as reasonably practicable following the execution of this Agreement and in connection with the Company Stockholders Meeting, the Company shall (i) promptly prepare and file with the SEC, use its commercially reasonable efforts to have cleared by the SEC and thereafter mail to its stockholders as promptly as practicable the Proxy Statement and all other proxy materials required in connection with such meeting, (ii) notify Merger Sub and Parent of the receipt of any comments of the SEC with respect to the Proxy Statement and of any requests by the SEC for any amendment or supplement thereto or for additional information and shall promptly provide to Merger Sub and Parent copies of all correspondence between the Company or any representative of the Company and the SEC, (iii) give Merger Sub and Parent and their counsel reasonable opportunity to review and provide comments to, and the Company shall incorporate any reasonable comments so provided, the Proxy Statement prior to its being filed with the SEC and give Merger Sub and Parent and their counsel reasonable opportunity to review and provide comments to, and the Company shall incorporate any reasonable comments so provided, all amendments and supplements to the Proxy Statement and all responses to requests for additional information and replies to comments prior to their being filed with, or sent to, the SEC, (iv) subject to Section 5.03(a), use its commercially reasonable efforts to obtain the necessary approvals by its stockholders of this Agreement and the Merger and (v) use its commercially reasonable efforts otherwise to comply with all legal requirements applicable to the Company Stockholders Meeting.

 

(c)        Parent, as the sole stockholder of Merger Sub, shall, immediately prior to the execution of this Agreement by the parties hereto, approve and adopt this Agreement and the Merger.

 

5.04        Filings and Consents.  Subject to the terms and conditions of this Agreement, each Parent and the Company (i) shall use its commercially reasonable efforts to cooperate with one another in determining which filings are required to be made by each party prior to the Effective Time with, and which consents, approvals, Permits or authorizations are required to be obtained by each party prior to the Effective Time from, Governmental Authorities or other third parties in connection with the execution and delivery of this Agreement and the consummation of the Transactions and (ii) shall use its commercially reasonable efforts to assist the other in timely making all such filings and timely seeking all such consents, approvals, Permits, authorizations and waivers required to be made and obtained by the other party.  Prior to making any application to or filing with any Governmental Authority in connection with this Agreement, each party shall provide the other party with drafts thereof (excluding any confidential information included therein), afford the other party a reasonable opportunity to comment on such drafts and shall incorporate any reasonable comments provided into such drafts.  

5.05        Access to Information.  From the date of this Agreement until the earlier of the Effective Time or the date this Agreement is validly terminated in accordance with ARTICLE 7, and subject to the requirements of applicable Law, including any anti-trust Law, the Company will, and will cause each of its Subsidiaries and its and their Affiliates, and each of their respective officers, directors, employees, agents, counsel, accountants, investment bankers, financial advisors and representatives (collectively, the “Company Representatives”) to, give Merger Sub and Parent and their respective officers, directors, employees, agents, counsel, accountants, financial advisors, representatives, consultants and financing sources (collectively, the “Purchaser Representatives”) access, upon reasonable notice and during the Company’s normal business hours, to the offices and other facilities, to the senior officers and other Company Representatives, and to the books and records of the Company and each of its Subsidiaries and will cause the Company Representatives and its Subsidiaries to furnish or make available to Parent, Merger Sub and the Purchaser Representatives such financial and operating data and such other information with respect to the business and operations of the Company or any of its Subsidiaries as Parent, Merger Sub or the Purchaser Representatives may from time to time reasonably request. No investigation pursuant to this Section 5.05 shall affect any representation or warranty in this Agreement of the Company or any condition to the obligations of Parent hereunder.  Unless otherwise required by Law, each of Parent and Merger Sub will, and will cause the Purchaser Representatives to, hold any such information in confidence in accordance with the terms of the Confidentiality Agreement (as defined below).  Except as otherwise agreed to by the Company, and notwithstanding termination of this Agreement, the terms and provisions of the Confidentiality Agreement, agreed to as of June 2, 2009 (the “Confidentiality Agreement”), between Parent and the Company shall apply to all information furnished to any Purchaser Representative by any Company Representative hereunder or thereunder.

 

5.06        Notification of Certain Matters.  Each of Parent and the Company shall promptly notify the other in writing of (a) receipt of any notice from any third party alleging that the consent of such third party is or may be required in connection with the Transactions, (b) any Company Material Adverse Effect or Parent Material Adverse Effect, as the case may be, (c) any material claims, Actions, proceedings or governmental investigations commenced or, to its knowledge, threatened, involving or affecting the Company or any of its Subsidiaries or any of their property or assets, (d) any representation or warranty made by such party contained in this Agreement becoming untrue or inaccurate and (e) any failure of the Company, Merger Sub or Parent, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder. Notwithstanding anything in this Agreement to the contrary, no such notification or investigation by any party shall affect the representations, warranties or covenants of any party or the conditions to the obligations of any party hereunder, nor shall it limit or otherwise affect the remedies available hereunder to the party receiving such notice.

5.07        Public Announcements.  Each of Parent and the Company agrees that, promptly following the execution of this Agreement, the Company and Parent shall (a) issue a joint press release in a form mutually agreed to by Parent and the Company announcing the execution of this Agreement and the Transactions and (b) each file a current report with the SEC on Form 8-K attaching such press release and a copy of this Agreement as exhibits.  Thereafter, each of Parent and the Company agrees to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the Merger and the other Transactions, agrees to provide to each other for review a copy of any such press release or statement, and shall not issue any such press release or make any such public statement without the prior written consent of the other party unless required by applicable Law.

 

5.08        Indemnification; Directors’ and Officers’ Insurance.  

 

(a)         The Articles of Incorporation and the Bylaws of the Surviving Corporation shall contain provisions with respect to indemnification, advancement of expenses and director exculpation substantially similar to those set forth in the Company’s Articles of Incorporation and Bylaws as in effect at the date hereof (to the extent consistent with applicable Law), which provisions shall not be amended, repealed or otherwise modified in any manner for a period of six (6) years following the Effective Time that would adversely affect the rights thereunder of the persons who at any time prior to the Effective Time were entitled to indemnification, advancement of expenses or exculpation under the Company’s Articles of Incorporation or Bylaws in respect of actions or omissions occurring at or prior to the Effective Time (including, without limitation, the Transactions), unless otherwise required by applicable Law.

 

(b)         From and after the Effective Time and for a period of six (6) years following the Effective Time, the Surviving Corporation shall indemnify, defend and hold harmless each person who is or has been prior to the date hereof or who becomes prior to the Effective Time an officer, director, employee or agent of the Company (collectively, the “Indemnified Parties”) against all losses, claims, damages, expenses, liabilities or amounts that are paid in settlement of, or otherwise incurred (“Losses”) (but only to the extent such Losses are not otherwise covered by insurance and paid), in connection with any claim, action, suit, demand, proceeding or investigation (a “Claim”) to which any Indemnified Party is or may become a party to by virtue of his or her service as a present or former director, officer, employee or agent of the Company and arising out of actual or alleged events, actions or omissions occurring or alleged to have occurred at or prior to the Effective Time (including, without limitation, the Transactions), in each case to the fullest extent permitted and provided in the Company’s Articles of Incorporation and Bylaws as in effect at the date hereof (and shall pay expenses in advance of the final disposition of the claim(s) that are reasonably incurred in defending any such action or proceeding to each Indemnified Party to the fullest extent permitted under Nevada Law as provided in the Company’s Articles of Incorporation and Bylaws as in effect at the date hereof, upon receipt from the Indemnified Party to whom expenses are advanced of the undertaking to repay such advances contemplated by Nevada Law).

(c)         Any Indemnified Party wishing to claim indemnification under this Section 5.08 after the Effective Time, upon learning of any such Claim, shall notify the Surviving Corporation thereof (although the failure to so notify the Surviving Corporation shall not relieve the Surviving Corporation from any liability that the Surviving Corporation may have under this Section 5.08, except to the extent such failure materially prejudices the Surviving Corporation).  In the event of any such Claim, the Surviving Corporation shall have the right to assume the defense thereof and the Surviving Corporation shall not be liable to such Indemnified Party for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, except that if the Surviving Corporation elects not to assume such defense or if there is an actual or potential conflict of interest between, or different defenses exist for the Surviving Corporation and the Indemnified Party, the Indemnified Party may retain counsel reasonably satisfactory to him or her and the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Party promptly as statements therefor are received by the Surviving Corporation; provided, however, that (i) the Surviving Corporation shall not, in connection with any such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, (ii) the Surviving Corporation and the Indemnified Parties will cooperate in the defense of any such matter and (iii) the Surviving Corporation shall not be liable for any settlement effected without its prior written consent, which consent will not be unreasonably withheld or delayed; and provided further, that the Surviving Corporation shall not have any obligation hereunder to any Indemnified Party if and when a court of competent jurisdiction shall ultimately determine that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable Law.

 

(d)        Prior to the Effective Time, the Company shall procure a “tail” directors’ and officers’ liability insurance and fiduciary liability insurance policy with terms and conditions reasonably satisfactory to the Company Board, so long as the cost thereof does not exceed 175% of the annual premium currently paid by the Company under its directors’ and officers’ liability insurance policy in effect as of the date of this Agreement, it being agreed that the Company shall use commercially reasonable efforts to obtain competitive quotes for such insurance coverage in an effort to reduce the cost thereof, provided, that if the cost for any such coverage is in excess of such amount, Parent or the Surviving Corporation shall only be required to maintain such coverage as is available for such amount.

 

(e)        This Section 5.08 shall survive the consummation of the Merger and is intended to be for the benefit of, and shall be enforceable by, the Indemnified Parties referred to herein, their heirs, legal representatives, successors, assigns and personal representatives and shall be binding on the Surviving Corporation and its successors and assigns.  The provisions of this Section 5.08 are in addition to, and not in substitution for, any other rights to indemnification that the Indemnified Parties, their heirs and personal representatives may have by contract or otherwise.

 

(f)         If the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each case, as a condition to such consolidation, merger, transfer or conveyance, proper provision shall be made so that the successors and assigns of the Surviving Corporation shall assume and agree to perform the obligations set forth in this Section 5.08.

5.09        Further Assurances; Commercially Reasonable Efforts.  Except as otherwise provided in this Agreement, prior to the Effective Time, the parties hereto shall use their commercially reasonable efforts to take, or cause to be taken, all such actions as may be necessary or appropriate in order to effectuate, as expeditiously as practicable, the Merger and the other Transactions on the terms and subject to the conditions set forth in this Agreement.

 

5.10        No Solicitation.  

 

(a)        The Company, its Subsidiaries and their respective Affiliates shall not, and shall cause the Company Representatives not to, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information or assistance), or take any other action to induce or facilitate, any inquiry in connection with or the making of any proposal from any Person that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal (as defined in Section 5.10(e)), (ii) enter into, explore, maintain, participate in or continue any discussion or negotiation with any Person (other than Merger Sub, Parent or any of the Purchaser Representatives, as applicable) regarding an Acquisition Proposal, or furnish to any Person (other than Merger Sub, Parent or any of the Purchaser Representatives, as applicable) any information or otherwise cooperate in any way with, or assist or participate in, induce, facilitate or encourage, any effort or attempt by any other Person (other than Merger Sub, Parent or any of the Purchaser Representatives, as applicable) to make or effect an Acquisition Proposal or (iii) enter into any agreement, arrangement or understanding with respect to, or otherwise endorse, any Acquisition Proposal; provided, however, that nothing contained in this Section 5.10 shall prohibit the Company Board, prior to approval of this Agreement by the stockholders of the Company at the Company Stockholders Meeting, from furnishing information to, or engaging in discussions or negotiations with, any Person that makes an unsolicited written Acquisition Proposal (which did not result from a breach of this Section 5.10) if (A) the Company Board determines in good faith, after consultation with its independent outside legal counsel, that failure to take such action would be inconsistent with  its fiduciary duties under applicable Law, (B) the Company Board determines in good faith, after consultation with an independent financial advisor of nationally recognized reputation that, the Acquisition Proposal constitutes or would reasonably be expected to lead to, after taking into consideration of any revised proposal that Parent makes in accordance with Section 5.10(b), a Superior Proposal (as defined in Section 5.10(f)), (C) the Company Board has provided written notice to Parent of its intent to furnish information, or enter into discussions with such Person at least two business days prior to taking any such action, (D) the Company Board has obtained from such Person an executed confidentiality agreement on terms no less favorable to the Company than those contained in the Confidentiality Agreement and (E) any information furnished to such Person has previously been provided to Parent or is provided to Parent prior to or substantially concurrent with the time it is provided to such Person. The Company shall take all action necessary to enforce, and shall not waive or amend, each confidentiality, standstill or similar agreement to which the Company or any of its Subsidiaries is a party or by which any of them is bound (in each case, other than any such agreement with Parent); provided, however, that the Company may waive any standstill or similar agreement and permit a proposal to be made if the Company Board (or committee thereof) determines in good faith, after consultation with outside counsel, that failure to do so would be inconsistent with its fiduciary duty under applicable Law.  From and after the date hereof, the Company shall not and shall cause its Subsidiaries not to enter into any confidentiality or other agreement with any Person or group that restricts or prohibits the Company or any of its Subsidiaries from providing to Parent the foregoing information regarding (including the identity of the Person submitting) an Acquisition Proposal or which provides for any exclusive right of negotiation or dealing.  The Company agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party and shall use its commercially reasonable efforts to enforce any such agreement at the request of or on behalf of Parent, unless the Company Board determines in good faith (after receiving the advice of its outside legal counsel and financial advisor) that such action (or inaction, in the case of failing to provide any such release or waiver) would be inconsistent with its fiduciary duties under applicable Law.

(b)        The Company (i) will promptly (but in any event within one day) notify Parent orally and in writing of the receipt of any Acquisition Proposal or any inquiry regarding the making of an Acquisition Proposal, including any request for information, the terms and conditions of such request, Acquisition Proposal or inquiry and the identity of the Person making such request, Acquisition Proposal or inquiry, (ii) will keep Parent fully informed of the status and details (including amendments and proposed amendments) of any such request, Acquisition Proposal or inquiry and (iii) provide to Parent as soon as practicable after receipt or delivery thereof a summary of the material terms and the identity of such Person.  Prior to taking any of the actions referred to in Section 5.10(a), the Company Board shall promptly (but in any event within one day) notify Parent orally and in writing of any action it proposes to take with respect to such Acquisition Proposal.  After taking any such action, the Company Board shall promptly advise Parent orally and in writing of the status of such action as developments arise or as requested by Parent.  Without limiting the foregoing, and subject to the compliance at all times with the provision of Section 5.10, (I) if a written Acquisition Proposal is made prior to the Company Stockholder Approval, the Company Board may make an Adverse Recommendation, if: (i)  the Company Board has determined in good faith (after receiving the advice of its outside legal counsel and independent financial advisor of nationally recognized reputation) that (A) that failing to make such Adverse Recommendation would be inconsistent with its fiduciary duties under applicable Law, and (B) such Acquisition Proposal constitutes a Superior Proposal; (ii)  the Company shall have provided Parent two business days’ prior notice (the “Notice Period”) following Parent’s receipt of written notice (a “Notice of Superior Proposal”) from the Company (A) representing to Parent that the Company Board has received a Superior Proposal not in violation of the provisions of Section 5.10, (B) specifying the material terms and conditions of such Superior Proposal, (C) identifying the Person making such Superior Proposal and (D) stating that the Company Board will consider making an Adverse Recommendation; it being understood and agreed that, prior to any such Adverse Recommendation occurring, any amendment to the consideration to be paid in connection with such Superior Proposal or material amendment to such Superior Proposal shall require a new Notice of Superior Proposal with respect to such amendments (a “Subsequent Notice”) and a new three business day Notice Period (a “Subsequent Notice Period”); (iii) during such Notice Period or Subsequent Notice Period, as the case may be, if requested by Parent, the Company shall have engaged in good faith negotiations with Parent and its Representatives so as to permit Parent to propose to amend this Agreement in such a manner that the Acquisition Proposal that was determined to constitute a Superior Proposal is no longer determined to constitute a Superior Proposal; and (iv) at the end of the Notice Period or any Subsequent Notice Period, as the case may be, such Acquisition Proposal has not been withdrawn and continues to constitute a Superior Proposal, and (II) after an Adverse Recommendation is made in accordance with the foregoing clause (I), the Company shall be entitled to enter into a definitive and binding Acquisition Agreement providing for a Superior Proposal if this Agreement is terminated by the Company pursuant to Section 7.04(b) and, concurrently with and as a condition to the effectiveness of any such termination by the Company, the Company shall, concurrently with entering into such definitive and binding Acquisition Agreement, have paid all amounts due to Parent pursuant to Section 8.01(b).  The Company agrees that it will not enter into an Acquisition Agreement providing for a Superior Proposal referred to in this Section 5.10(b) until at least the sixth (6th) business day after it has provided the Notice of Superior Proposal or until at least the fourth (4th) business day after it has provided a Subsequent Notice, as the case may be.  Notwithstanding the foregoing, the Board may make an Adverse Recommendation not involving a Superior Proposal if the Board has determined in good faith that the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable Law.

(c)         Nothing contained in this Agreement shall prevent the Company Board from taking, and disclosing to the Company’s stockholders, a position contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or Item 1012(a) of Regulation M-A, or from making any required disclosure to the Company’s stockholders if, in the good faith judgment of the Company Board, after consultation with outside counsel, failure to so disclose would be required under applicable Law; provided, however, that none of the Company, the Company Board (or any committee thereof) or any Company Representative shall, except as permitted by Section 5.10(b),  propose to approve or recommend any Acquisition Proposal.

 

(d)         The Company and each of its Subsidiaries shall immediately cease and cause its Affiliates and the Company Representatives to cease any and all existing activities, discussions or negotiations with any parties (other than Merger Sub, Parent or any of the Purchaser Representatives, as applicable) conducted heretofore with respect to any Acquisition Proposal, or any inquiry or proposal that may be expected to lead to an Acquisition Proposal, request the prompt return or destruction of all confidential information previously furnished in connection therewith and immediately terminate all physical and electronic dataroom access previously granted to any such party..

 

(e)         For purposes of this Agreement, “Acquisition Proposal” shall mean, other than the Transactions contemplated by this Agreement, any offer or proposal (whether or not in writing) for, or any indication of interest in, (i) any direct or indirect (including by way of merger, consolidation, share exchange, other business combination, partnership, joint venture, sale of capital stock of or other equity interests in a Subsidiary or otherwise) acquisition or purchase of the total assets of the Company or any of its Subsidiaries representing 20% or more of the consolidated revenues, net income or assets of the Company and the Subsidiaries, taken as a whole, in a single transaction or series of related transactions, (ii) any direct or indirect (including by way of merger, consolidation, share exchange, other business combination, partnership, joint venture, sale of capital stock of or other equity interests in a Subsidiary or otherwise) acquisition or purchase of 20% or more of any class of equity securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) of the Company or any of its Subsidiaries, in a single transaction or series of related transactions, (iii) any tender offer or exchange offer (including a self-tender offer) that if consummated would result in any Person beneficially owning 20% or more of any class of equity securities of the Company or any of its Subsidiaries, (iv) any merger, consolidation, share exchange, business combination, recapitalization, reclassification or other similar transaction involving the Company or any of its Subsidiaries, or (v) any public announcement of an agreement, proposal or plan to do any of the foregoing.

(f)         For purposes of this Agreement, “Superior Proposal” shall mean any written offer to consummate an Acquisition Proposal by a Person pursuant to which such Person would acquire, directly or indirectly, more than 50% of the Common Shares or substantially all of the assets of the Company and its Subsidiaries, taken as a whole that (i) the Company Board has determined in good faith, after consultation with an independent financial advisor of nationally recognized reputation, is more favorable from a financial point of view to the Company than the Merger (including any adjustment to the terms and conditions thereof proposed in writing by Parent in response to any such Acquisition Proposal), (ii) the Company Board has determined in good faith, after consultation with its independent outside legal counsel, is of such a nature that failure to accept such Acquisition Proposal would be inconsistent with its fiduciary duties under applicable Law and (iii) is reasonably likely to be completed in a timely manner (taking into account all financial, regulatory, legal and other aspects of such proposal (including, without limitation, the ready availability of cash on hand and/or commitments for the same, in each case as applicable, required to consummate any such Acquisition Proposal and any antitrust or competition Law approvals or non-objections)).

 

5.11        SEC Reports.  From the date of this Agreement until the earlier of the termination of this Agreement pursuant to ARTICLE 7 or the Effective Time, the Company shall use commercially reasonable efforts to file on a timely basis all SEC reports required to be filed by it with the SEC under the Exchange Act (“SEC Reports”), the Securities Act and the published rules and regulations of the SEC under either of the foregoing applicable to such SEC Reports, which SEC Reports shall comply in all material respects with the requirements of the Exchange Act, the Securities Act and the published rules and regulations of the SEC thereunder, each as applicable to such SEC Reports.

 

5.12        Termination of Registration.  Each of Parent and the Company agrees to cooperate with the other in taking, or causing to be taken, all actions necessary to terminate the registration of the Common Shares under the Exchange Act; provided that such termination shall not be effective until or after the Effective Time.

 

5.13        Stockholder Litigation.  Each of Parent and the Company shall give the other the reasonable opportunity to participate in the defense of any stockholder litigation against the Company, Parent or Merger Sub, as applicable, and their directors relating to the Transactions.  The Company agrees that it will not settle any litigation currently pending, or commenced after the date hereof, against the Company or any of its directors by any stockholder of the Company relating to this Agreement or the Merger, without the prior written consent of Parent (which will not be unreasonably conditioned, withheld or delayed).  The Company will not voluntarily cooperate with any third party which has sought or may hereafter seek to restrain, prohibit or otherwise oppose the Merger and will cooperate with Parent to resist any such effort to restrain, prohibit or otherwise oppose the Merger.

5.14        Employee Matters.  With respect to the employees of the Company who remain employed after the Effective Time by the Company following the Effective Time (the “Continuing Employees”), and to the extent not prohibited under the terms of Parent’s applicable benefit plans, Parent shall treat and cause its applicable benefit plans to treat the service of the Continuing Employees with the Company prior to the Effective Time as service rendered to Parent or any Affiliate of Parent for purposes of eligibility to participate and vesting, including applicability of minimum waiting periods for participation, and for the purpose of determining future vacation and severance.  Continuing Employees shall receive employee benefits no less favorable in aggregate than those provided to similarly situated Parent employees.  Parent shall, or shall cause its applicable Subsidiary to, assume and perform the Company’s employment and change in control agreements.  Parent shall use commercially reasonable efforts to provide that no such Continuing Employee, or any of his or her eligible dependents, who, at the Effective Time, are participating in the Company’s group health plan shall be excluded from Parent’s group health plan, or limited in coverage thereunder, by reason of any waiting period restriction or pre-existing condition limitation other than waiting period restrictions or pre-existing condition limitations that were applicable to such Continuing Employee immediately prior to the Effective Time and to provide credit for any coinsurance and deductibles prior to the Effective Time but in the same plan year.  Notwithstanding the foregoing, Parent shall not be required to provide any coverage, benefits or credit inconsistent with the terms of any Parent benefit plans.  Furthermore, nothing contained in this Section 5.14 shall require or imply that the employment of the employees of the Company who are employed at the Effective Time will continue for any particular period of time following the Effective Time.  This Section is not intended, and shall not be deemed, to confer any rights or remedies upon any Person other than the parties to this Agreement and their respective successors and permitted assigns, to create any agreement of employment with any Person or to otherwise create any third party beneficiary hereunder, or to be interpreted as an amendment to any plan of Parent or any Affiliate of Parent.

 

5.15        Options and Warrants.  

 

(a)         At the Effective Time, each Option which is outstanding at the Effective Time, whether or not exercisable, shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each Option, in accordance with the terms of the Company Stock Plan and stock option agreement by which it is evidenced, except that from and after the Effective Time, (i) Parent and its Board of Directors shall be substituted for the Company and the Company’s Board of Directors administering such Company Stock Plan, (ii) each Option assumed by Parent may be exercised solely for shares of Parent Common Stock (or cash, if so provided under the terms of such Option), (iii) the number of shares of Parent Common Stock subject to such Option shall be equal to the number of Common Shares subject to such Option immediately prior to the Effective Time multiplied by 1.54448 (the “Exchange Ratio”), and (iv) the per share exercise price under each such Option shall be adjusted by dividing the per share exercise price under each such Option by the Exchange Ratio and rounding up to the nearest cent.  Notwithstanding the provisions of clause (iii) of the preceding sentence, Parent shall not be obligated to issue any fraction of a share of Parent Common Stock upon exercise of Options and any fraction of a share of Parent Common Stock that otherwise would be subject to a converted Option shall represent the right to receive a cash payment upon exercise of such converted Option equal to the product of such fraction and the difference between the market value of one share of Parent Common Stock at the time of exercise of such converted Option and the per share exercise price of such converted Option.  In addition, notwithstanding the provisions of clauses (iii) and (iv) of the first sentence of this Section 5.15(a), (1) each Option which is an “incentive stock option” shall be adjusted as required by Section 424 of the Code, and the regulations promulgated thereunder, so as not to constitute a modification, extension or renewal of the option, within the meaning of Section 424(h) of the Code and (2) each Option shall be adjusted in a manner so as to comply with the requirements of Section 409A of the Code.  The Company agrees to take all necessary steps to effectuate the foregoing provisions of this Section 5.15(a), including using its best efforts to obtain from each holder of a Option any consent or contract or agreement that may be deemed necessary or advisable in order to effect the transactions contemplated by this Section 5.15(a).  Anything in this Agreement to the contrary notwithstanding, Parent shall have the right, in its sole discretion, not to deliver the consideration provided in this Section 5.15(a) to a former holder of a Option who has not delivered such consent or contract or agreement.

(b)         At the Effective Time, each Warrant which is outstanding at the Effective Time, whether or not exercisable, shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each Warrant, in accordance with its terms, except that from and after the Effective Time, (i) each Warrant assumed by Parent may be exercised solely for shares of Parent Common Stock (or cash, if so provided under the terms of such Warrant), (ii) the number of shares of Parent Common Stock subject to such Warrant shall be equal to the number of Common Shares subject to such Warrant immediately prior to the Effective Time multiplied the Exchange Ratio, and (iii) the per share exercise price under each such Warrant shall be adjusted by dividing the per share exercise price under each such Warrant by the Exchange Ratio and rounding up to the nearest cent.  Notwithstanding the provisions of clause (ii) of the preceding sentence, Parent shall not be obligated to issue any fraction of a share of Parent Common Stock upon exercise of Warrants and any fraction of a share of Parent Common Stock that otherwise would be subject to a converted Warrant shall represent the right to receive a cash payment upon exercise of such converted Warrant equal to the product of such fraction and the difference between the market value of one share of Parent Common Stock at the time of exercise of such converted Warrant and the per share exercise price of such converted Warrant.  The Company agrees to take all necessary steps to effectuate the foregoing provisions of this Section 5.15(b), including using its best efforts to obtain from each holder of a Warrant any consent or contract or agreement that may be deemed necessary or advisable in order to effect the transactions contemplated by this Section 5.15(b).  Anything in this Agreement to the contrary notwithstanding, Parent shall have the right, in its sole discretion, not to deliver the consideration provided in this Section 5.15(b) to a former holder of a Warrant who has not delivered such consent or contract or agreement.

 

5.16        Equity Financings.  From the date of this Agreement until the earlier of the termination of this Agreement pursuant to ARTICLE 7 or the Effective Time, Parent and the Company shall not, without the prior written consent of the other party, issue, or enter into any agreement to issue, any shares of capital stock or any other securities convertible into, or any rights, warrants or options to acquire, any such shares, securities or convertible securities or any other securities or equity equivalents in connection with a capital raising transaction.

5.17        Parent Covenants.  Following the Effective Time, Parent shall take reasonable actions to (i) change its name to “QuantRx Diagnostics Corp.,” (ii) qualify for listing on the American Stock Exchange or Nasdaq Global Market, (iii) increase the number of shares under the Parent Stock Plans such that the shares reserved for issuance pursuant to the Parent Stock Plans represent fifteen percent (15%) of the capital stock of Parent post-Merger on a fully diluted basis, (iv) maintain a board of directors of Parent consisting of five (5) directors, which shall consist of three directors to be designated by Parent and two of the directors to be designated by the Company, (v) designate an executive management team that shall consist of Mr. Walter Witoshkin, Harin Padma-Nathan, M.D. and Sasha Afanassiev, with the exact officer positions of such individuals to be determined prior to the Effective Time, and (vi) terminate the Limited Liability Company Agreement of QN Diagnostics, LLC, and to wind up and dissolve the affairs of such limited liability company in a tax efficient manner.

 

 

 

6.01        Conditions to the Obligations of Each Party.  The respective obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction of each of the following conditions:

 

(a)           Company Stockholder Approval.  The Company shall have obtained the Stockholder Approval at the Company Stockholders Meeting in accordance with Nevada Law, the Company’s articles of incorporation and its bylaws.

 

(b)           No Orders and Injunctions.  No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law, rule, regulation, executive order or decree, judgment, injunction, ruling or other order, whether temporary, preliminary or permanent (collectively, “Order”), that is then in effect and has the effect of preventing or prohibiting consummation of the Merger or otherwise imposing material limitations on the ability of Merger Sub and Parent effectively to acquire or hold the business of the Company and its Subsidiaries; provided, however, that each of the parties hereto shall use their commercially reasonable efforts to have any such Order vacated.

 

(c)           Material Consents.  All material consents, approvals, Permits of, authorizations from, notifications to and filings with any Governmental Authorities required to be made or obtained prior to the consummation of the Merger shall have been made or obtained.

 

(d)           No Litigation.  There shall not be pending by any Governmental Authority any suit, action or proceeding (i) challenging or seeking to restrain or prohibit the consummation of the Merger or any of the other Transactions, (ii) seeking to prohibit or limit the ownership or operation by the Company or any of its Subsidiaries of any material portion of the business or assets of the Company or any of its Subsidiaries, to dispose of or hold separate any material portion of the business or assets of the Company or any of its Subsidiaries, as a result of the Merger or any of the other Transactions or (iii) seeking to impose limitations on the ability of Parent, Merger Sub or any of their respective Affiliates, to acquire or hold, or exercise full rights of ownership of, any Common Shares, including, without limitation, the right to vote Common Shares on all matters properly presented to the stockholders of the Company.

 

(e)           Form S-4.  The SEC shall have declared the Registration Statement effective under the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceeding shall have been initiated by the SEC.

6.02        Conditions to Obligations of Merger Sub and Parent.  The obligations of each of Merger Sub and Parent to consummate the Merger are subject to the satisfaction, at or before the Effective Time, of each of the following additional conditions, unless waived by Parent, acting under the direction of its board of directors, in writing prior to the Effective Time:

 

(a)           Representations and Warranties.  The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects (ignoring for purposes of a determination of any breach of such representations and warranties any qualification based upon “material,” “materiality,” “Company Material Adverse Effect” or any similar qualification contained in such representations and warranties) (i) as of the date of this Agreement and (ii) as of the Closing Date as though then made on and as of the Closing Date, except for those representations and warranties that address matters only as of a particular date (in which case such representations and warranties shall be true and correct in all material respects as of such date); provided, however, that, in the event of a breach of a representation or warranty, the condition set forth in this Section 6.02(a) shall be deemed satisfied unless the effect of all such breaches of representations and warranties taken together has had, or would reasonably be expected to have, a Company Material Adverse Effect.

 

(b)           Covenants and Agreements.  The Company shall have, in all material respects performed all obligations and complied with all agreements and covenants required to be performed by it or complied with by it under this Agreement at or prior to the Effective Time.

 

(c)           No Company Material Adverse Effect.  No circumstance, effect, event or change shall have occurred prior to the Effective Time which, individually or in the aggregate, has had, or would reasonably be expected to have, a Company Material Adverse Effect.

 

(d)           Officers’ Certificate.  At the Closing, the Company shall deliver an Officers’ Certificate, duly executed by the Company’s Chief Executive Officer or Chief Financial Officer and dated as of the Closing Date, stating that the conditions to Closing set forth in Sections 6.02(a) and (b) above have been satisfied.

 

(e)           Minimum Cash Balance.  Immediately prior to the Closing, the Company shall provide evidence that is reasonably satisfactory to Parent that the Company has cash or cash equivalents equal to or greater than $1,000,000.

 

6.03        Conditions to Obligation of the Company.  The obligations of the Company to consummate the Merger are subject to the satisfaction, at or before the Effective Time, of each of the following additional conditions, unless waived by the Company in writing prior to the Effective Time:

(a)        Representations and Warranties.  The representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct in all material respects (ignoring for purposes of a determination of any breach of such representations and warranties any qualification based upon “material,” “materiality,” “Parent Material Adverse Effect” or any similar qualification contained in such representations and warranties) (i) as of the date of this Agreement and (ii) as of the Closing Date as though then made on and as of the Closing Date, except for those representations and warranties that address matters only as of a particular date (in which case such representations and warranties shall be true and correct in all material respects as of such date); provided, however, that, in the event of a breach of a representation or warranty, the condition set forth in this Section 6.03(a) shall be deemed satisfied unless the effect of all such breaches of representations and warranties taken together has had, or would reasonably be expected to have, a Parent Material Adverse Effect.

 

(b)        Covenants and Agreements.  Each of Merger Sub and Parent shall have, in all material respects, performed all obligations and complied with all agreements and covenants required to be performed by them or complied with by them under this Agreement at or prior to the Effective Time.

 

(c)        No Parent Material Adverse Effect.  No circumstance, effect, event or change shall have occurred prior to the Effective Time which, individually or in the aggregate, has had, or would reasonably be expected to have, a Parent Material Adverse Effect.

 

(d)        Officers’ Certificate.  At the Closing, each of Merger Sub and Parent shall deliver an Officers’ Certificate, duly executed by their respective Chief Executive Officer or Chief Financial Officer and dated as of the Closing Date, stating that the conditions to Closing set forth in Sections 6.03(a) and (b) above have been satisfied.

 

 

 

7.01        Termination by Mutual Consent.  This Agreement may be terminated and the Merger and other Transactions may be abandoned at any time prior to the Effective Time, before or after the approval of this Agreement by the stockholders of the Company, by the mutual written consent of the Company, acting under the direction of the Company Board, and Parent and Merger Sub, acting under the direction of their respective boards of directors.

 

7.02        Termination by Merger Sub, Parent or the Company.  This Agreement may be terminated and the Merger and other Transactions may be abandoned at any time prior to the Effective Time, before or after the approval of this Agreement by the stockholders of the Company, by either Merger Sub and Parent, on the one hand, by action of their respective boards of directors, or the Company, on the other hand, by action of the Company Board, if:

 

(a)        any Governmental Authority shall have issued an Order (which has not been vacated, withdrawn or overturned) permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger and such Order shall have become final and nonappealable; provided, however, that the right to terminate this Agreement pursuant to this Section 7.02(a) shall not be available to any party that has failed to perform in all material respects its obligations under Section 5.09 or the proviso contained in Section 6.01(b);

 

(b)        the Merger shall not have been consummated on or before June 30, 2010 (the “Expiration Date”); provided, however, that the right to terminate this Agreement under this Section 7.02(b) shall not be available to any party whose failure to perform any covenant or obligation under this Agreement has been the cause of or resulted in the failure of the Merger to have been consummated on or before the Expiration Date;

(c)        there shall be any Law that makes consummation of the Merger illegal or otherwise prohibited; or

 

(d)        the Stockholder Approval shall not have been obtained by the earlier to occur of (i) the Company Stockholders Meeting or at any adjournment or postponement thereof at which a vote on such approval was taken or (ii) the date that is two (2) business days prior to the Expiration Date.

 

7.03        Termination by Merger Sub and Parent.  This Agreement may be terminated and the Merger and other Transactions may be abandoned at any time prior to the Effective Time, before or after the approval of this Agreement by the stockholders of the Company, by action of the board of directors of Merger Sub and the board of directors of Parent, if:

 

(a)        the Company shall have breached any of its representations, warranties, covenants (other than Section 5.10) or other agreements set forth in this Agreement or any such representation or warranty shall have become untrue after the date of this Agreement (in either case, a “Terminating Company Breach”) and such Terminating Company Breach (i) would give rise to the failure of a condition set forth in Section 6.02(a) or Section 6.02(b) and (ii) has not been cured within twenty business days after notice thereof is received by the Company; provided, however, that Parent and Merger Sub shall have no right to terminate this Agreement pursuant to this Section 7.03(a) if there is an uncured Terminating Merger Sub Breach at the time of the Terminating Company Breach;

 

(b)        the Company Board shall have made an Adverse Recommendation; or

 

(c)        the Company shall have materially breached any of its obligations under Section 5.10;

 

7.04        Termination by the Company.  This Agreement may be terminated by the Company, acting under the direction of the Company Board, and the Merger and other Transactions may be abandoned, if:

 

(a)        at any time prior to the Effective Time, before or after the approval of this Agreement by the stockholders of the Company, Merger Sub or Parent shall have breached any of their respective representations, warranties, covenants or other agreements set forth in this Agreement or any such representation or warranty shall have become untrue after the date of this Agreement (in either case, a “Terminating Merger Sub Breach”) and such Terminating Merger Sub Breach (i) would give rise to the failure of a condition set forth in Section 6.03(a) or Section 6.03(b) and (ii) is not cured within twenty business days after written notice thereof is received by Merger Sub and Parent; provided, however, that the Company shall have no right to terminate this Agreement pursuant to this Section 7.04(a) if there is an uncured Terminating Company Breach at the time of the Terminating Merger Sub Breach; or

(b)        at any time prior to the approval of this Agreement by the stockholders of the Company, pursuant to and in accordance with Section 5.10 (provided that the Company shall have complied with the provisions of Section 5.10 in all material respects, including, without limitation, the notice provisions therein, and shall have concurrently with such termination made all payments to Merger Sub and Parent required by Section 8.01).

 

7.05        Effect of Termination.  In the event of the termination of this Agreement and abandonment of the Merger and other Transactions pursuant to this ARTICLE 7, this Agreement shall forthwith become null and void and have no effect, without any liability on the part of any party or its officers, directors, stockholders, Affiliates and agents, other than the provisions of the last sentence of Section 5.05 and the provisions of Sections 5.07, 7.05, 8.01, 8.03 and 8.08.  Nothing contained in this Section 7.05 shall relieve any party hereto from liability for any intentional breach of this Agreement.

 

 

 

8.01        Payment of Expenses.  

 

(a)           Except as otherwise specified in this Agreement, each of the parties hereto shall bear its own Expenses (as defined below) incurred by or on behalf of such party in preparing for, entering into and carrying out this Agreement and the consummation of the Merger and the financing of the Transactions.  “Expenses” as used in this Agreement shall include all actual, documented out-of-pocket expenses (including, without limitation, all fees and expenses of outside counsel, investment bankers, banks, other financial institutions, accountants, financial printers, experts and consultants to a party hereto) incurred by a party or on its behalf in connection with or related to the investigation, due diligence examination, authorization, preparation, negotiation, execution and performance of this Agreement and the Transactions and the financing thereof and all other matters contemplated by this Agreement and the closing thereof, together with any actual, documented out-of-pocket costs and expenses incurred by any party in enforcing any of its rights set forth in this Agreement, whether pursuant to litigation or otherwise.

 

(b)           If this Agreement is terminated by (i) the Company pursuant to Section 7.04(b) or (ii) by Parent pursuant to Section 7.03(b) or (iii) Parent or the Company (A) pursuant to Section 7.02(d) due to the failure of the Company’s stockholders to approve this Agreement or the Merger, (B) prior to the time of such failure to so approve this Agreement or the Merger a competing Transaction shall have been publicly announced with respect to the Company and (C) the Company enters into an agreement providing for a Third Party Acquisition (as defined below) within 12 months after the date of such termination, then, concurrently with any such termination of this Agreement, the Company shall pay to Parent the Break Up Fee.  “Break Up Fee” means cash in immediately available funds in an amount equal to $260,000 minus the amount of any Expenses paid by the Company to Parent under Section 8.01(c). “Third Party Acquisition” means, other than the Transactions contemplated by this Agreement, any offer or proposal for, or any indication of interest in, (i) any direct or indirect acquisition or purchase of 50% or more of the total assets of the Company or any of its Subsidiaries, in a single transaction or series of related transactions, (ii) any direct or indirect acquisition or purchase of 50% or more of any class of equity securities of the Company or any of its Subsidiaries, in a single transaction or series of related transactions, (iii) any tender offer or exchange offer (including a self-tender offer) that if consummated would result in any Person beneficially owning 50% or more of any class of equity securities of the Company or any of its Subsidiaries, (iv) any merger, consolidation, share exchange, business combination, recapitalization, reclassification or other similar transaction involving the Company or any of its Subsidiaries, or (v) any public announcement of an agreement, proposal or plan to do any of the foregoing.

(c)           All amounts payable by a party under this Section 8.01 shall be paid within ten (10) business days in cash and in immediately available funds to such account as Parent may designate in writing.

 

(e)           The parties acknowledge that the agreements contained in Section 8.01 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement.  If one party fails to promptly pay to the other any expense reimbursement or fee due under this Section 8.01, the defaulting party shall pay the costs and expenses (including reasonable legal fees and expenses) in connection with any action, including the filing of any Action, taken to collect payment, together with interest on the amount of any unpaid fee at the publicly announced prime rate of Citibank N.A. plus five percent (5%) per annum, compounded quarterly, from the date such expense reimbursement or fee was required to be paid.

 

8.02        Performance by Merger Sub and Surviving Corporation.  Parent agrees to cause Merger Sub and Surviving Corporation to perform all of their respective agreements, covenants and obligations under this Agreement.  Parent hereby irrevocably and unconditionally guarantees the due and punctual performance of Merger Sub’s obligations hereunder.  

 

8.03        No Survival.  The representations, warranties and agreements made in this Agreement shall not survive beyond the Effective Time or the termination of this Agreement in accordance with ARTICLE 7 hereof.  Notwithstanding the foregoing, the agreements set forth in ARTICLE 1 and ARTICLE 2, Section 5.08 and ARTICLE 8 shall survive the Effective Time and those set forth in Section 7.05, Section 8.01 and Section 8.02 shall survive termination.  

 

8.04        Modification or Amendment.  This Agreement may be amended by the parties hereto at any time before or after approval of this Agreement by the stockholders of the Company; provided, however, that after any such approval, there shall not be made any amendment that by Law requires the further approval by such stockholders without such further approval.  Without limiting the foregoing, this Agreement may not be amended or modified except by an instrument in writing signed by the parties.

 

8.05        Entire Agreement; Assignment.  This Agreement (including the documents and the instruments referred to herein) and the Confidentiality Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof.  Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party (except that each of Parent and Merger Sub may assign its rights, interests and obligations to any of their respective Affiliates or direct or indirect Subsidiaries without the consent of the Company, so long as they remain primarily obligated with respect to any such delegated obligation).  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

8.06        Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, unless the effects of such invalidity, illegality or unenforceability would prevent the parties from realizing the major portion of the economic benefits of the Merger that they currently anticipate obtaining therefrom, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the Transactions are fulfilled to the extent possible.

 

8.07         Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given as follows:

 

if to Parent or Merger Sub, to:

QuantRx Biomedical Corp.

100 S. Main Street

Suite 300

Doylestown, PA  18901

Attention: Chief Executive Officer

Facsimile No.: (267) 880-1596

with a copy to:

Greenberg Traurig, LLP

The MetLife Building

200 Park Avenue

New York, NY 10166

Attention: Michael D. Helsel, Esq.

Facsimile No.: (212) 805-9284

if to the Company, to:

NuRx Pharmaceuticals, Inc.

18 Technology, Suite 130

Irvine, CA  92618

Attention: Chief Executive Officer

Facsimile No.: (310) 247-3844

with a copy to:

DLA Piper LLP (US)

4365 Executive Drive, Suite 1100

San Diego, California 92121

Attention:  Michael S. Kagnoff, Esq.

Facsimile No.: (858) 638-5122

 

or to such other address or facsimile number as such party may hereafter specify for such purpose by notice to each other party hereto.  All such notices, requests and other communications shall be deemed received (i) on the date of delivery if delivered personally, (ii) on the date of confirmation of receipt of transmission by facsimile transmission, or (iii) on the date of confirmation of receipt if delivered by an internationally recognized courier service.

 

8.08        Governing Law.  This Agreement shall be governed by and construed in accordance with the Laws of the State of Nevada, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof.

 

8.09        Descriptive Headings.  The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

 

8.10        Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.  Original signatures hereto may be delivered by facsimile or by portable data format (PDF) which shall be deemed originals.

 

8.11        Certain Definitions.  As used in this Agreement:

 

(a)           “Affiliate,” as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by Contract or otherwise;

 

(b)           “Indebtedness” means, with respect to the Company and its Subsidiaries, (i) indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) obligations evidenced by notes, bonds, debentures or other similar instruments, (iii) obligations under leases (contingent or otherwise, as obligor, guarantor or otherwise) required to be accounted for as capitalized leases pursuant to generally agreed accounting principles, (iv) obligations for amounts drawn under acceptances, letters of credit, contingent reimbursement liabilities with respect to letters of credit or similar facilities, (v) any liability for the deferred purchase price of property or services, contingent or otherwise, as obligor or otherwise, (vi) any liability which is deemed a long-term liability under generally agreed accounting principles, (vii) guarantees and similar commitments relating to any of the foregoing items, and (viii) any accrued and unpaid interest on, and any prepayment premiums, penalties or similar contractual charges in respect of, any of the foregoing;

(c)           “Person” or “person” means any individual, corporation, partnership, limited liability company, trust, or any other entity or group (which term shall include a “group” as such term is defined in Section 13(d)(3) of the Exchange Act); and

 

(d)           “Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which such Person (either alone or through or together with any other Subsidiary), owns, directly or indirectly, more than 50% of the stock or other equity or beneficial interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, limited liability company, joint venture or other entity.

 

8.12        Specific Performance.  The parties hereto agree that irreparable damage would occur to one party in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached by the other party.  It is accordingly agreed that either party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement by the other party and to seek to enforce specifically the terms and provisions of this Agreement against the other party without bond or other security being required, this being in addition to any other remedy to which they are entitled at law or in equity.

 

8.13        Extension; Waiver.  At any time prior to the Effective Time, a party may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained in this Agreement or in any document delivered pursuant to this Agreement or (c) subject to the proviso in Section 8.04, waive compliance by the other party with any of the agreements or conditions contained in this Agreement.  Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.  The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.

 

8.14        Third-Party Beneficiaries.  Except for the provisions of Section 5.08, this Agreement is not intended to confer upon any person other than the parties hereto any rights or remedies.

 

8.15        Submission to Jurisdiction.  Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the courts of the State of Nevada or the United States District Court for the District of Nevada, in any action or proceeding arising out of or relating to this Agreement. Each of the parties hereto agrees that, subject to rights with respect to post-trial motions and rights of appeal or other avenues of review, a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in the state courts of the State of Nevada or the United States District Court for the District of Nevada. Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

8.16        Waiver of Jury Trial.  THE PARTIES, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF EITHER PARTY OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, MANAGERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH EITHER OF THE PARTIES IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

*     *     *     *     *

IN WITNESS WHEREOF, each of the parties has caused this Agreement and Plan of Merger to be executed on its behalf by its respective officer thereunto duly authorized, all as of the day and year first above written.