Execution Copy
 
SHARE TRANSFER RESTRICTION AGREEMENT
 
This SHARE TRANSFER RESTRICTION AGREEMENT (this “Agreement”), dated as of March
22, 2010 (the “Effective Date”), is made by and between The Quigley Corporation,
a Nevada corporation (“Quigley”), and Phosphagenics Ltd., an Australian
corporation (“PSI Parent” and, collectively with Quigley, the “Parties”).
 
A.          Quigley and PSI Parent are party to a license agreement, dated as of
the Effective Date, an executed copy of which is attached as Exhibit A (the
“License Agreement”), pursuant to which, among other things, (i) PSI Parent
granted to Quigley a perpetual, paid-up, global, exclusive license to exploit
Products (as defined in the License Agreement) embodying Phosphagenics
Intellectual Property (as defined in the License Agreement), as more
specifically set forth in the License Agreement, and (ii) in exchange therefor,
Quigley paid to PSI Parent $1,000,000 and issued to PSI Parent 1,440,000 shares
(such shares, collectively, the “Acquired Shares”) of Quigley’s common stock,
par value $0.0005 per share (such class of Quigley’s stock, “Common Stock”).
 
B.           The Parties desire to set forth herein, and that PSI Parent
acknowledge, (i) certain transfer restrictions with respect to, and other terms
applicable to, the Acquired Shares and the acquisition thereof by PSI Parent and
(ii) certain restrictions on PSI Parent’s acquisition of Additional Shares (as
defined in Section 5(b)).
 
C.           Contemporaneously with their entry into this Agreement, the Parties
are entering into a limited liability company agreement (the “LLC Agreement”) of
Phusion Laboratories, LLC, a Delaware limited liability company (the “Company”),
by and among Quigley, Phosphagenics Inc., a Delaware corporation, PSI Parent
(for the purposes stated therein), and the Company.
 
The Parties therefore hereby agree as follows:
 
1.
Definitions. Capitalized terms used but not otherwise defined herein have the
respective meanings given to such terms in the LLC Agreement.

 
2.
Restrictions on Transfer of Acquired Shares.

 
 
(a)
Without the prior written consent of Quigley, prior to June 1, 2012, PSI Parent
shall not, directly or indirectly, Transfer the Acquired Shares, in whole or in
part; provided, however, that, subject to Section 2(b), PSI Parent may Transfer
any or all of the Acquired Shares in connection with, and contemporaneously upon
the consummation of, a Company Sale.

 
 
(b)
PSI Parent shall not Transfer any of the Acquired Shares in contravention of
applicable law.

 
 
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(c)
“Company Sale” means any arm’s-length transaction in which (i) Quigley sells all
or substantially all of its assets to a Third Party, (ii) a Third Party
purchases outstanding Common Stock such that, upon the consummation thereof,
such Third Party will own more than 50% of the shares of capital stock of
Quigley entitled to vote generally in the election of Quigley’s directors, or
(iii) a Third Party merges with Quigley such that, immediately upon consummation
of such merger, the equityholders of such Third Party will own, in the
aggregate, more than 50% of the shares of capital stock of Quigley entitled to
vote generally in the election of Quigley’s directors.

 
 
(d)
“Third Party” means any Person that is not an Affiliate of Quigley immediately
prior to the consummation of a transaction of the type described in
Section 2(c).

 
 
(e)
Any purported Transfer in contravention of this Section 2 will be null and void
ab initio.

 
3.
PSI Parent Representations and Acknowledgments.

 
 
(a)
In order to induce Quigley to issue the Acquired Shares to PSI Parent, PSI
Parent represents and warrants to Quigley that:

 
 
(i)
PSI Parent has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment in the
Acquired Shares;

 
 
(ii)
no broker has acted on behalf of PSI Parent in connection with this Agreement or
the License Agreement, and there are no brokerage commissions, finders’ fees or
commissions payable in connection herewith or therewith based on any agreement,
arrangement or understanding with PSI Parent or any action taken by PSI Parent;

 
 
(iii)
PSI Parent is acquiring the Acquired Shares for investment purposes only, for
its own account and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”);

 
 
(iv)
the offer of the Acquired Shares to PSI Parent was not made by any public or
general means or pursuant to any public or general solicitation;

 
 
(v)
PSI Parent is an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act;

 
 
(vi)
PSI Parent is not purchasing the Acquired Shares for the account or on behalf of
any U.S. Person (which, for the purposes of this Agreement, shall have the
definition ascribed thereto in Regulation S promulgated under the Securities Act
(“Regulation S”));

 
 
(vii)
PSI Parent is not a U.S. Person, was not formed under the laws of any United
States jurisdiction and was not formed for the purpose of investing in
securities not registered under the Securities Act;

 
 
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(viii)
PSI Parent has not made any pre-arrangement to transfer any of the Acquired
Shares to a U.S. Person or to return any of the Acquired Shares to the United
States securities markets (which includes short sales and hedging transactions
in the United States within the periods restricted under Regulation S (the
“Restricted Periods”) to be covered by delivery of any of the Acquired Shares)
and is not acquiring the Acquired Shares as part of any plan or scheme to evade
the registration requirements of the Securities Act;

 
 
(ix)
PSI Parent acknowledges and understands that (A) all offers and sales of any of
the Acquired Shares by PSI Parent in the United States or to U.S. Persons or
otherwise, whether prior to the expiration or after the expiration of the
Restricted Periods, shall be made only pursuant to a registration of such
Acquired Shares under the Securities Act or an exemption from registration
requirements of the Securities Act and (B) Quigley will, in order to approve
removal of the restrictive legend from certificates evidencing the Acquired
Shares, require from PSI Parent (i) certain written representations to indicate
that the sale of the Acquired Shares was made in a transaction that complies
with the provisions of Regulation S, pursuant to a registration of the Acquired
Shares under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act and (ii) require a legal opinion
that removal of the legend is appropriate;

 
 
(x)
PSI Parent has not engaged in any “directed selling efforts” (as defined in
Regulation S) in the United States regarding any of the Acquired Shares, nor has
it engaged in any act intended to or that reasonably might have the effect of
preconditioning the U.S. market for the resale of any of the Acquired Shares;

 
 
(xi)
PSI Parent is not a “distributor” as defined in Regulation S and is not an
officer, director or “affiliate” (as that term is defined in Rule 405 under the
Securities Act) of Quigley or an “underwriter” or “dealer” (as such terms are
defined in the federal securities laws of the United States); and

 
 
(xii)
PSI Parent does not have a short position in, or other hedged position with
respect to, the Acquired Shares or any other shares of the Common Stock and will
not have a short position in, or other hedged position with respect to, such
securities at any time prior to the expiration of the Restricted Periods.

 
 
(b)
PSI Parent acknowledges:

 
 
(i)
that the Acquired Shares have not been registered under (and that Quigley has no
present intention to register the Acquired Shares under) the Securities Act or
applicable state securities law and that the offering and sale of the Acquired
Shares have been made in reliance on the exemption from the registration
requirements provided by Section 4(2) of the Securities Act and the regulations
promulgated thereby and analogous provisions of certain state securities laws or
in accordance with Regulation S under the Securities Act;

 
 
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(ii)
that the Acquired Shares may not be sold or otherwise transferred unless, among
other things, the Acquired Shares have been registered under the Securities Act
and applicable state securities laws or are sold or transferred in a transaction
exempt therefrom; and

 
 
(iii)
that it may have to bear the economic risk associated with its ownership of the
Acquired Shares for an indefinite period of time or to suffer a complete loss of
its investment;

 
 
(iv)
that: (A) it has received and reviewed this Agreement; (B) it, its attorney and
its accountant have had access to, and an opportunity to review, all documents
and other materials requested of Quigley; and (C) it and they have been given an
opportunity to ask any and all questions of, and receive answers from, Quigley
concerning the terms and conditions of the offering and issuance of Acquired
Shares and to obtain all information that it or they believe necessary or
appropriate to invest in Quigley and to purchase the Acquired Shares, to verify
the accuracy of documents and materials requested of Quigley and to evaluate the
suitability of an investment in the Acquired Shares; and

 
 
(v)
that, in evaluating the suitability of an investment in the Acquired Shares, it
has not relied upon any representations, warranties or other information
(whether oral or written), other than such information as has been made publicly
available in Quigley’s periodic reports, as filed with the United States
Securities and Exchange Commission (such information, “Public Information”).

 
 
(c)
PSI Parent hereby waives, to the maximum extent permitted by law, any claim, or
potential claim, it has or may have against Quigley and its officers, directors,
shareholders, partners, successors and assigns, relating to any such person’s
possession of information that is not Public Information.

 
4.
Legends on Share Certificates. PSI Parent hereby consents to the placement of
the following legends on the stock certificate or certificates representing the
Acquired Shares:

 
 
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“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ‘SECURITIES ACT’), AND MAY
NOT BE OFFERED OR SOLD (I) IN THE UNITED STATES OR TO U.S. PERSONS BY OR ON
BEHALF OF ANY U.S. PERSON, UNLESS (A) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT IS IN EFFECT WITH RESPECT THERETO OR (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION AND A WRITTEN OPINION FROM COUNSEL FOR THE ISSUER OR COUNSEL
FOR THE HOLDER REASONABLY ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO THE
EFFECT THAT NO SUCH REGISTRATION IS REQUIRED AND (II) OUTSIDE THE UNITED STATES,
UNLESS IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT AND THE PURCHASER IN
SUCH TRANSACTION PROVIDES A CERTIFICATION TO THE ISSUER THAT IT IS A NON-U.S.
PERSON.  EACH BENEFICIAL HOLDER, BY ACCEPTING AN INTEREST IN THE SECURITIES
REPRESENTED BY THIS CERTIFICATE, AGREES THAT NO HEDGING TRANSACTION INVOLVING
SUCH SECURITIES IS PERMITTED TO BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.  TERMS IN THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.”
 
“TRANSFER OF SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED UNDER THE
TERMS OF A SHARE TRANSFER RESTRICTION AGREEMENT, DATED AS OF MARCH 22, 2010, TO
WHICH THE ISSUER IS PARTY. A COPY OF THE SHARE TRANSFER RESTRICTION AGREEMENT
WILL BE FURNISHED TO ANY HOLDER OF SECURITIES EVIDENCED BY THIS CERTIFICATE UPON
WRITTEN REQUEST, AND WITHOUT CHARGE, WITHIN FIVE DAYS AFTER THE ISSUER’S RECEIPT
OF A WRITTEN REQUEST THEREFOR.”
 
5.
Restrictions on Acquisition of Additional Shares.

 
 
(a)
Without the prior written consent of Quigley, PSI Parent shall not, and shall
not cause any of its Subsidiaries to, directly or indirectly: (i) acquire any
(A) Additional Shares, (B) Common Stock Equivalents, and/or (C) beneficial or
other interest (whether with respect to voting rights, economic rights, or
otherwise) in any Additional Shares or in any Common Stock Equivalents; and/or
(ii) enter into any Contract with respect to any of the actions described in the
immediately foregoing clause (i).

 
 
(b)
“Additional Shares” means any shares of Common Stock other than the Acquired
Shares.

 
 
(c)
“Common Stock Equivalents” means (i) any warrant, option, subscription or
purchase right with respect to one or more shares of Common Stock, (ii) any
Security convertible into, exchangeable for or otherwise entitling the holder
thereof to acquire one or more shares of Common Stock, or (iii) any warrant,
option, subscription or purchase right with respect to any Security described in
the immediately foregoing clause (ii).

 
 
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6.
Piggyback Rights.

 
 
(a)
If, at any time after June 1, 2012, Quigley proposes to register any Common
Stock (such Common Stock, “Offered Securities”) under the Securities Act in
connection with an underwritten public offering by Quigley of such Offered
Securities solely for cash and on any form that would permit the registration of
the Acquired Shares (other than a registration (i) relating solely to the sale
of securities to participants in a stock grant, option or purchase plan or other
employee stock incentive program or agreement, (ii) on any form that does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of Acquired Shares, (iii) in which
such Offered Securities constitute all or part of the consideration in
connection with a Company Sale (or analogous transaction with respect to any
Subsidiary of Quigley) or (iv) in which such Offered Securities are being
registered in connection with a private investment in Quigley’s securities or a
transaction commonly referred to as a “PIPE” transaction), then, on or before
the date that is 20 days prior to the filing of a registration statement in
connection with such registration (any such registration, a “Registration”),
Quigley shall give written notice (such notice, a “Registration Notice”) of such
proposed Registration to PSI Parent, specifying in such Registration Notice the
number of Offered Securities that Quigley intends to register.

 
 
(b)
PSI Parent may elect to participate (subject to the terms of this Section 6) in
such Registration, with respect to the Acquired Shares, by giving written notice
to Quigley (such notice, a “Registration Participation Notice”) on or before the
date that is 15 days after Quigley gives a Registration Notice, specifying in
such Registration Participation Notice the number of Acquired Shares that it
elects to include in such Registration (such Acquired Shares, as specified in
such Registration Participation Notice and as may thereafter be reduced in
number pursuant to Section 6(d), the “Registration Requested Acquired Shares”).

 
 
(c)
If PSI Parent elects to participate in a given Registration in accordance with
this Section 6, then (i) PSI Parent shall enter into an underwriting agreement
in usual and customary form with the underwriter or underwriters selected by
Quigley for such underwriting (including, if applicable, provisions relating to
a lock-up period after such Registration is effected with respect to the sale of
Registration Requested Acquired Shares) and (ii) PSI Parent shall complete and
execute all questionnaires, powers of attorney, indemnities and other documents,
each in customary form, reasonably required under the terms of such underwriting
agreement; provided, however, that (x) PSI Parent will not be required to make
any representations or warranties in connection with any such underwriting
agreement other than customary representations and warranties with respect to
itself and the Registration Requested Acquired Shares, and (y) any obligation of
PSI Parent to indemnify any Person pursuant to any such underwriting agreement
will be limited to the net amount received by PSI Parent from the sale of its
Registration Requested Acquired Shares pursuant to such Registration.

 
 
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(d)
Notwithstanding anything in this Section 6 to the contrary, if the managing
underwriter for such Registration (such underwriter, the “Managing Underwriter”)
advises Quigley that marketing factors require a limitation of the number of
securities to be underwritten in such Registration, then Quigley shall give
written notice thereof to PSI Parent and the number of Registration Requested
Acquired Shares that PSI Parent will be entitled to include in such Registration
and the number of other securities (such other securities, collectively with the
Registration Requested Acquired Shares, “Participating Securities”) offered for
the account of other Persons (such other Persons, collectively with PSI Parent,
“Participating Stockholders”) will be collectively reduced on a pro rata basis
based upon the number of securities that each Participating Stockholder has
elected to include in such Registration, such that the aggregate number of
Participating Securities included in such Registration can be sold (in the
opinion of the Managing Underwriter) in light of such marketing factors.

 
 
(e)
Notwithstanding anything in this Section 6 to the contrary, Quigley may elect to
abandon any given Registration, whether or not PSI Parent has elected to
participate in such Registration, by providing written notice to PSI Parent that
it would be detrimental to Quigley or its stockholders to proceed with such
Registration.

 
 
(f)
The rights afforded to PSI Parent pursuant to this Section 6 will extend to any
Person that acquires Acquired Shares in accordance with this Agreement and
applicable law.

 
 
(g)
Notwithstanding anything in this Section 6 to the contrary, the rights afforded
pursuant to this Section 6 will not apply with respect to Acquired Shares that
have been registered and sold pursuant to the Securities Act, that have been
sold pursuant to Rule 144 under the Securities Act (or any similar rules
promulgated pursuant to the Securities Act), or that are eligible for sale
pursuant to Rule 144(k) under the Securities Act.

 
7.
Miscellaneous.

 
 
(a)
Amendments. Any provision of this Agreement may be amended if, and only if, such
amendment is in writing and is signed by each Party.

 
 
(b)
Incorporation of Provisions in LLC Agreement. The following provisions of the
LLC Agreement are hereby incorporated by reference as if set forth herein in
full, mutatis mutandis: Sections 1.2 (Construction);  20.1 (Notices);
20.5 (Waivers); 20.6 (Successors and Assigns); 20.7 (Governing Law); 20.8
(Dispute Resolution and Arbitration); 20.9 (Counterparts); 20.11 (No Third-Party
Beneficiaries); 20.13 (Captions); 20.14 (Severability); 20.15 (Interpretation);
20.16 (Consent to Jurisdiction and Venue); 20.17 (Specific Performance);
20.18 (Further Assurances); 20.19 (Signed Writings); and 20.21 (Access to
Counsel).

 
[Signature page follows.]
 
 
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The Parties are signing this Agreement as of the Effective Date.
 
THE QUIGLEY CORPORATION
   
By: 
/s/ Ted Karkus
 
Name: Ted Karkus
 
Title: Chief Executive Officer
   
PHOSPHAGENICS LTD.
   
By: 
/s/ Fred Banti
 
Name: Fred Banti
 
Title: Senior Vice President and Chief Business Officer

Signature Page to Share Transfer Restriction Agreement

 

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Exhibit A
 
License Agreement

 

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