**MERGERAGREEMENTExhibit10.11     This Merger Agreement **(“****Agreement****”)**is entered into as of September 1, 2006, byand among Xcorporeal, Inc. **(“****Shell****”),**NQCI Acquisition Corporation, a Delaware corporationand a newly-created wholly-owned Subsidiary of Shell **(“****Merger Subsidiary****”),**and NationalQuality Care, Inc., a Delaware corporation**(“****Company****”),**(each a **“****Party****”**andcollectively the **“****Parties****”).**RECITALS     A. This Agreement contemplates a reverse triangular merger as defined in Section 368(a)(2)(E)of the Code of Merger Subsidiary with and into Company in a transaction qualifying as areorganization under Section 354 of the Code.     B. This Agreement further contemplates that, in the event that the merger transactiondoes not close, Company may assign its Technology to Shell in consideration of Shell Shares.     C. The Closing of the transactions contemplated by this Agreement are subject to the filingand effectiveness of a Registration Statement and Information Statements as set forth herein.     D. At the Closing, either the Company Stockholders will receive Shell Shares in exchange fortheir Company Shares, and the Company will become a wholly-owned Subsidiary of Shell, or theCompany will receive Shell Shares in consideration of the Technology Transaction.     **NOW, THEREFORE,**in consideration of the premises and the representations, warranties andcovenants contained herein, the Parties agree as follows.**1.****Basic Transaction****.**     A. Merger. On and subject to the terms and conditions of this Agreement,Merger Subsidiary will merge with and into Company (the **“****Merger****”).**Company will be thecorporation surviving the Merger (after the Closing, the **“****Surviving Corporation****”).**Theseparate corporate existence of Merger Subsidiary will cease as of the Merger.     B Technology Transaction. If the Merger is terminated before the Closing of theMerger in accordance with Section 6.A, the Closing of the Technology Transaction shallproceed in accordance with Section 6.B.     C. Documents. As soon as practicable following the execution of this Agreement, eachParty will deliver to the others the various certificates, instruments, and documents referred toherein.     D. Closing. The closing of one of the two mutually-exclusive transactions contemplatedby this Agreement, either in the form of the Merger or the Technology Transaction,
 

 
will take place as soon as practicable on the business day following the satisfaction orwaiver of all conditions to the obligations of the Parties to consummate the transaction, otherthan conditions with respect to actions the respective Parties will take at the Closing itself, orsuch other time as the Parties may mutually determine, (the **“****Closing****”).**     D. Voting Agreements.          (1) Stockholder Agreement. Concurrently herewith, each of the Majority Stockholderswill enter into the Voting Agreement (the **“****Stockholder Agreement****”),**in the form attached as**Exhibit A** hereto, absolutely and irrevocably ratifying, approving and consenting to: (a)the License Agreement between Company and Shell entered into concurrently herewith (the**“****License Agreement****”)**and (b) subject to Sections 2.B(7) and 3.J andeffective as of the Closing, this Agreement and the transactions contemplated by this Agreement,including without limitation the Merger or the Technology Transaction.          (2) CNL Agreement. Concurrently herewith, CNL will enter into the Agreement (the**“****CNL Agreement****”),**in the form attached as **Exhibit B** hereto (together with theStockholder Agreements, the **“****Voting Agreements****”),**absolutely and irrevocably ratifying,approving and consenting to: (a) the License Agreement; and (b) subject to Sections 2.A and3.J and effective as of the Closing, this Agreement and the transactions contemplated bythis Agreement, including without limitation the Merger or the Technology Transaction.          (3) Director Agreement. Concurrently herewith, Shell will enter into theagreement (the **“****Director Agreement****”),**in the form attached as **Exhibit C**hereto.,     E. Merger Certificate. At the Closing of the Merger, Shell will file with theSecretary of State of the State of Delaware a Certificate of Merger between Company and MergerSubsidiary, in the form attached hereto as**Exhibit D** (the **“****Merger Certificate****”).**     F. Effect of Merger or Technology Transaction.          (1) General. The Merger will become effective upon filing of the Merger Certificatewith the Secretary of State of the State of Delaware (the **“****Effective Time****”).**The Mergerwill have the effect set forth in the DGCL. The Surviving Corporation may, at any time after theClosing, take any action, including executing or delivering any document, in the name and on behalfof either Company or Merger Subsidiary in order to carry out and effectuate the transactionscontemplated by this Agreement.          (2) Certificate of Incorporation. The certificate of incorporation of SurvivingCorporation will be amended and restated at and as of the Closing to read as did the certificate ofincorporation of Merger Subsidiary immediately prior to the Closing, except that the name ofSurviving Corporation may be changed by Shell.          (3) Bylaws. The bylaws of Surviving Corporation will be amended and restated at and asof the Closing to read as did the bylaws of Merger Subsidiary immediately prior to the Closing,except that the name of Surviving Corporation may be changed by Shell.
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          (4) Directors. The directors of Company who shall be directors of SurvivingCorporation at and as of the Closing are as set forth in the attached **Exhibit E****.**          (5) Conversion of Company Securities.               (a) Conversion of Shares. At and as of the Closing of the Merger, (a) all issuedandoutstanding Company Securities (other than any Dissenting Shares) will, by virtue of the Merger andwithout any further action on behalf of Shell, Company or any Company Stockholder, automatically beconverted into and become validly issued, fully paid and non assessable Shell Shares (the ratio ofCompany Shares to one (1) Shell Share is referred to herein asthe **“****Conversion Ratio****”),**such that all holders of all Company Shares will collectively receive, on a fully diluted basis,after taking into account the conversion into Company Shares of all Convertible Debt, which shalloccur prior to and as a condition of Closing, an aggregate of forty-eight (48%) of all Shell Sharesoutstanding as of the date hereof, adjusted for any stock splits or dividends prior to the Closing,(b) each Dissenting Share will be converted into the right to receive payment from SurvivingCorporation with respect thereto in accordance with the provisions of the DGCL and, to the extentapplicable, the CGCL, and (c) all unissued and treasury Company Shares will be cancelled.               (b) Share Certificates.                    (i) Following the Closing of the Merger, upon surrender of anoriginal stock certificate representing Company Shares, Shell will cause to be issued a stockcertificate for Shell Shares to which such Person is entitled pursuant to the Conversion Ratio,bearing any necessary or appropriate restrictive legend. Shell will not pay any dividend or makeany distribution on Shell Shares with a record date at or after the Closing to any record holder ofoutstanding Company Shares until the holder surrenders for exchange his, her, or its certificatesthat represented Company Shares.                    (ii) If any certificate evidencing Shares shall has been lost,stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming thecertificate to be lost, stolen or destroyed and, if required by Shell or its Transfer Agent, theposting of an indemnity bond, in such reasonable amount as the Transfer Agent may direct, ascollateral security against any claim that may be made with respect to the certificate, Shell willcause to be issued in exchange for the lost, stolen or destroyed certificate the applicable numberof Shell Shares.               (c) Conversion of Warrants. All warrants to purchase CompanyShares issued and outstanding at the Closing of the Merger, as set forth in the attached**Exhibit F****(“****Company Warrants****”)**will, by virtue of the Merger and without any actionon the part of Shell, Company or the holders of the Warrants, be converted into and will becomewarrants to purchase Shell Shares **(“****Shell Warrants****”)**as part of the Conversion Ratio, onthe same terms and conditions as those set forth in **Exhibit F****.**               (d) Conversion of Options. All options to purchase Company Shares outstanding at theClosing of the Merger, as set forth in the attached **Exhibit G****(“****Company**
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**Options****”)**will, by virtue of the Merger and without any action on the part of Shell,Company or the holders of the options, be assumed by Shell, and will become options to purchaseShell Shares **(“****Shell Options****”)**as part of the Conversion Ratio, on the same terms andconditions as those set forth in **Exhibit G****.**               (e) No fractional Shell Shares, or Shell Warrants or Shell Options to receive fractionalShellShares will be issued, and any right to receive a fractional share will be rounded to the nearestwhole Shell Share. As of the Closing of the Merger, the Company Shares, Company Warrants andCompany Options (collectively, **“****Company Securities****”)**will be deemed canceled and will ceaseto exist, and each holder of a Company Security will cease to have any rights with respect thereto,other than those expressly set forth in this Section l.F(5). After the Closing of theMerger, transfers of Company Shares outstanding prior to the Closing will not be made on the stocktransfer books of Surviving Corporation.               (f) CNL Warrants. At the Closing of the Merger, CNL will be granted Shell Warrants topurchase a number of validly issued, fully paid and non-assessable Shell Shares equal to theaggregate number of Shell Shares into which any Company Warrants outstanding as of the Closing areconvertible, at prices per share equal to the prices per share of all such Company Warrants, andotherwise on terms equal to or better than the most favorable terms of such Company Warrants;*provided, however,*that the Shell Warrants granted to CNL pursuant to this Sectionl.F(5)(f) may be exercised only when the corresponding number of such converted CompanyWarrants are exercised.               (g) CNL Options. At the Closing of the Merger, CNL will be granted Shell Options topurchase a number of validly issued, fully paid and non-assessable Shell Shares equal to theaggregate number of Shell Shares into which any Company Options outstanding as of the Closing areconvertible, at prices per share equal to the prices per share of all such Company Options, andotherwise on terms equal to or better than the most favorable terms of such Company Options;*provided, however,*that the Shell Options granted to CNL pursuant to this Section l.F(5)(g)may be exercised only when the corresponding number of such converted Company Options areexercised.               (h) Technology Shares. At the Closing of the Technology Transaction, Shell shallissue and deliver to the Company the number of Shell Shares set forth in Section 6.B(2).**2.****Conditions To Obligations To Close****.**     A. Conditions to Shell’s Obligation. The obligation of each of Shell and, in the caseof the closing of the Merger, Merger Subsidiary to consummate the transactions to be performed byit in connection with the Closing is subject to satisfaction of the following conditions:          (1) The representations and warranties set forth in Section 4 will be true andcorrect in all material respects as if made at and as of the Closing, except to the extent thatsuch representations and warranties are qualified by the term “material,” or contain terms such as“Adverse Effect” or “Adverse Change,” in which case such representations and warranties as so
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written, including the term “material” or “Material,” will be true and correct in allrespects at and as of the Closing;          (2) Company will have performed and complied with all of its covenants hereunder in allmaterial respects through the Closing, except to the extent that such covenants are qualified bythe term “material,” or contain terms such as “Adverse Effect” or “Adverse Change,” in which caseCompany will have performed and complied with all of such covenants as so written, including theterm “material” or “Material,” in all respects through the Closing;          (3) There will not be any judgment, order, decree or injunction in effect that would (a)prevent consummation of any of the transactions contemplated by this Agreement, (b) cause any ofthe transactions contemplated by this Agreement to be rescinded following consummation, (c)adversely affect the right of Shell to own the capital stock of Surviving Corporation and tocontrol Surviving Corporation and its Subsidiaries, or (d) adversely affect the right of any ofSurviving Corporation and its Subsidiaries to own its assets and to operate its business;          (4) Company will have delivered to Shell a certificate to the effect that each of theconditions specified in Sections 2.A(l)-(3) is satisfied in all respects;          (5) In the case of the Closing of the Merger, Company will have delivered to Shell an executedcounterpart of the Merger Certificate;          (6) Shell will have received from counsel to Company an opinion in form and substance as setforth in **Exhibit H** attached hereto;          (7) At least twenty (20) calendar days will have passed since a definitive written informationstatement pursuant to Rule 14c-2 under the Exchange Act **(“****Company Statement****”),**which willinclude the information required to be disclosed under Rule 14f-l under the Exchange Act, has beenfiled with the SEC and transmitted to every record holder of Company Shares from whom proxyauthorization or consent is not solicited;          (8) At least twenty (20) calendar days will have passed since a definitive written informationstatement pursuant to Rule 14c-2 under the Exchange Act **(“****Shell Statement****”)**has been filedwith the SEC and transmitted to every record holder of Company Shares from whom proxy authorizationor consent is not solicited;          (9) In the case of the Closing of the Merger, a registration statement relating to theoffering and issuance of the Shell Shares **(“****Registration Statement****”)**will have becomeeffective under the Securities Act, and no stop order suspending the effectiveness of theRegistration Statement or any part thereof shall have been issued and no proceeding for thatpurpose, and no similar proceeding in respect of the Company Statement shall have been initiated orthreatened in writing by the SEC or any other Governmental Authority; and all requests foradditional information on the part of the SEC or any other Governmental Authority shall have beencomplied with to the reasonable satisfaction of the parties hereto, or an exemption from theSecurities Act and applicable state securities laws is available;
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          (10) In the case of the Closing of the Merger, all of Company’s debt securities that give theholder of such debt security the right to purchase a specified number of Company Shares**(“****Convertible Debt****”),**as set forth in **Exhibit J,** shall have been converted toCompany Shares as part of the Conversion Ratio. All other Company debt obligations shall have beeneither retired by Company or converted to Company Shares prior to the Closing;          (11) In the case of the Closing of the Merger, Shell will have received the resignations,effective as of the Closing, of each director and officer of Company and its Subsidiaries,other than those set forth in **Exhibit E** attached hereto;          (12) As of the date of execution of this Agreement, Company shall have obtained an executedAffiliate Agreement in the form of **Exhibit I**hereto (the **“****Affiliate Agreement****”)**from all Persons who may be deemed to be an “Affiliate” of Company within the meaning of Rule 145promulgated under the Securities Act, as listed on Section 2.A(11) of the CompanyDisclosure Schedule. Shell shall be entitled to place legends, as specified in the AffiliateAgreement, on the certificates evidencing the Shell Shares to be received by any Affiliate ofCompany and to issue appropriate stop transfer instructions to the transfer agent for such ShellShares consistent with the terms of the Affiliate Agreement, regardless of whether such Person hasexecuted an Affiliate Agreement;          (13) As of the date of execution of this Agreement, Company, Shell, CNL and each of theMajority Stockholders shall have entered into the Voting Agreements;          (14) In the case of the Closing of the Merger, prior to the Closing the Parties and theDirectors named therein shall have executed an Asset Assignment and Debt Payment Agreement (the**“****AADP Agreement****”),**in the form attached as **Exhibit J** hereto, pursuant to which,among other provisions, LACD shall have assumed all of Company’s accounts payable and accountsreceivable which, together with LACD’s liabilities, accounts payable and accounts receivable, shallbe disclosed to Shell in writing within thirty (30) days of the date hereof;          (15) In the case of the Closing of the Merger, prior to the Closing Company shall have soldall assets of Los Angeles Community Dialysis, Inc., a California corporation and wholly-ownedSubsidiary of Company **(“****LACD****”),**with the exception of LACD’s accounts receivable, and LACDshall have no outstanding liabilities of any kind except as scheduled in the AADP Agreement;          (16) The Parties shall have executed the License Agreement; and          (17) This Agreement shall have been adopted by the requisite vote of the stockholders ofeach of Shell, and, if required, Merger Sub, and Company.Shell and Merger Subsidiary may waive any condition specified in this Section 2.A if it orthey execute a writing so stating at or prior to the Closing.     B. Conditions to Company’s Obligation. The obligation of Company to consummatethe transactions to be performed by it in connection with the Closing is subject to satisfaction ofthe following conditions:
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          (1) The representations and warranties set forth in Section 5 will be true and correctin all material respects at and as of the Closing, except to the extent that such representationsand warranties are qualified by the term “material,” or contain terms such as “Adverse Effect” or“Adverse Change,” in which case such representations and warranties as so written, including theterm “material” or “Material,” will be true and correct in all respects at and as of the Closing;          (2) Each of Shell and, in the case of the Closing of the Merger, Merger Subsidiary will haveperformed and complied with all of its covenants hereunder in all material respects through theClosing, except to the extent that such covenants are qualified by the term “material,” or containterms such as “Adverse Effect” or “Adverse Change,” in which case Shell and, in the case of theClosing of the Merger, Merger Subsidiary will have performed and complied with all of suchcovenants as so written, including the term “material” or “Material,” in all respects through theClosing;          (3) There will not be any judgment, order, decree or injunction in effect that would (a)prevent consummation of any of the transactions contemplated by this Agreement, or (b) cause any ofthe transactions contemplated by this Agreement to be rescinded following consummation;          (4) Shell will have delivered to Company a certificate to the effect that each of theconditions specified in Sections 2.B(1)-(3) is satisfied in all respects;          (5) In the case of the Closing of the Merger, Shell will have delivered to Company anexecuted counterpart of the Merger Certificate;          (6) Company will have received from counsel to Merger Subsidiary an opinion in form andsubstance as set forth in **Exhibit K** attached hereto.          (7) At least twenty (20) calendar days will have passed since the Company Statement has beenfiled with the SEC and transmitted to every record holder of Company Shares from whom proxyauthorization or consent is not solicited;          (8) The Registration Statement will have become effective under the Securities Act, or anexemption from the Securities Act and applicable state securities laws is available;          (9) At least twenty (20) calendar days will have passed since the Shell Statement, if requiredunder applicable law, has been filed with the SEC and transmitted to every record holder of ShellShares from whom proxy authorization or consent is not solicited;          (10) As of the date of execution of this Agreement, CNL shall have entered into the CNLAgreement;          (11) The Parties shall have executed the License Agreement;**