Exhibit 10.31
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of February 7, 2007, is made
and entered into by and between NxStage Medical, Inc., a Delaware corporation
(the "Company"), and DaVita Inc., a Delaware corporation (the "Purchaser"). The
Company and the Purchaser are collectively referred to as the "parties."
WHEREAS, concurrently herewith, the parties have entered into a
National Service Provider Agreement (the "Service Provider Agreement"); and
WHEREAS, in connection with, and as a condition of the parties entering
into the Service Provider Agreement, the Company desires to issue and sell, and
the Purchaser desires to purchase, shares of the Company's common stock, $0.001
par value per share (the "Common Stock"); and
NOW THEREFORE, in consideration of the representations, warranties and
covenants herein contained, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Company and the
Purchaser agree as follows:
1. Sale of Shares. Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 2 hereof) the Purchaser agrees
to purchase, and the Company agrees to sell and issue to the Purchaser, that
number of shares ("Shares") equal to the quotient of $20,000,000 divided by the
higher of (i) $10.00 and (ii) the average of the closing sales prices per share
of the Common Stock on the NASDAQ Global Market for the twenty (20) consecutive
trading days immediately preceding the Effective Date (as defined in the Service
Provider Agreement").
2. The Closing.
2.1 Closing. The closing (the "Closing") of the sale and
purchase of the Shares under this Agreement will take place at the offices of
WilmerHale, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00 a.m. on February 7,
2007, or at such other time, date and place as are mutually agreeable to the
Company and the Purchaser. The date of the Closing is hereinafter referred to as
the "Closing Date."
2.2 Delivery of Shares; Payment of Purchase Price. At the
Closing, the Company will deliver to the Purchaser a certificate registered in
the name of the Purchaser representing the Shares against payment therefor by
the Purchaser to the Company by wire transfer of $20,000,000.
3. Representations of the Company. The Company hereby makes the
following representations and warranties to the Purchaser:
3.1 Charter and By-laws. The Company has made available
to the Purchaser true, correct and complete copies of the Company's Restated
Certificate of Incorporation and By-laws, each as in effect on the date hereof.
3.2 Valid Issuance of Common Stock. When issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed in this Agreement, the Shares will be duly authorized, validly issued,
fully paid, non-assessable and free of restrictions on transfer other than
restrictions imposed or created under this Agreement, by applicable law or by
the Purchaser and, based in part upon the representations of the Purchaser in
this Agreement, will be issued in compliance in all material respects with
applicable U.S. federal securities laws.
3.3 Capitalization. The authorized capital stock of the
Company, as of December 31, 2006, consists of 100,000,000 shares of Common
Stock, of which 28,806,543 shares are issued and outstanding and 5,000,000
shares of blank check Preferred Stock, $0.001 par value per share, none of which
have been designated. Options to purchase an aggregate of 3,068,430 shares of
Common Stock were outstanding as of December 31, 2006. Except as set forth
herein and in the Company SEC Documents (as defined below), there are no
outstanding, rights (including conversion rights or preemptive rights and rights
of first refusal), options, warrants, instruments, or other agreements or
instruments of any kind to which the Company is a party for the purchase or
acquisition from the Company of any securities of the Company.
3.4 Financial Statements and SEC Filings. Since January
1, 2006, the Company has filed all required reports, schedules, forms, financial
statements and other documents (including exhibits and all other information
incorporated therein) with the Securities and Exchange Commission (the "Company
SEC Documents"). As of their respective dates, the Company SEC Documents
complied as to form in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Company SEC Documents. At the time they were filed with the SEC, the Company SEC
Documents did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. As of their respective dates, the financial
statements of the Company included in the Company SEC Documents, as amended,
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, as permitted by the SEC on Form 10-Q) and fairly presented in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
3.5 NASDAQ Listing. As of the date hereof, the Common
Stock is listed on the NASDAQ Global Market and the Company has not received any
notification that the NASDAQ Global Market is contemplating terminating such
listing.
3.6 No Material Adverse Change. Since the filing of the
Company's most recent Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as the case may be, except as described or referred to in the Company SEC
Documents, there has not been any
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material adverse change in the assets, business, properties, financial condition
or results of operations of the Company.
3.7 Corporate Power/Authorization. The Company has all
requisite corporate power and authority and has taken all necessary corporate
action to execute and deliver this Agreement, to issue the Shares and to carry
out and perform its obligations hereunder. The execution, delivery and
performance of this Agreement constitutes the valid and binding obligations of
the Company, enforceable, in accordance with its terms.
3.8 Form S-3 Eligibility. As of the date hereof, the
Company is eligible to register the Shares for resale by the Purchaser using
Form S-3 promulgated under the 1933 Act, as such form is in effect on the date
hereof.
3.9 No General Solicitation. Neither the Company nor any
person acting on its behalf have engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Shares.
3.10 Brokers' Fees. The Company has no liability or
obligations to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
3.11 No Integrated Offering. Neither the Company, any
subsidiary of the Company, nor any person acting on its behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Shares under the Securities Act or cause this offering of the Shares to be
integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of Company are listed or
designated. None of Company, any subsidiary of the Company or any Person acting
on their behalf will take any action or steps referred to in the preceding
sentence that would require registration of any of the Shares under the
Securities Act or cause the offering of the Shares to be integrated with other
offerings.
3.12 Xxxxxxxx-Xxxxx Act. The Company is in material
compliance with applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that
are effective as of the date hereof, and applicable rules and regulations
promulgated by the SEC thereunder that are effective as of the date hereof.
3.13 Absence of Litigation. There is no action, suit or
proceeding, or governmental inquiry or investigation, pending, or, to the best
of the Company's knowledge, any basis therefore or threat thereof, against the
Company or any subsidiary of the Company, which would be reasonably likely to
have a material adverse effect on the assets, business, properties, financial
condition or results of operations of the Company or any subsidiary of the
Company (a "Material Adverse Effect").
3.14 Intellectual Property Rights. The Company and its
subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses,
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approvals, governmental authorizations, trade secrets and other intellectual
property rights ("Intellectual Property Rights") necessary to conduct their
respective businesses, in all material respects, as now conducted. The Company
has no knowledge of any infringement by the Company or any Company subsidiaries
of Intellectual Property Rights of others, which would be reasonably likely to
result in a Material Adverse Effect. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company, being threatened,
against the Company or any Company subsidiary regarding its Intellectual
Property Rights, which would be reasonably likely to result in a Material
Adverse Effect. The Company is unaware of any facts or circumstances, which
would be reasonably likely to give rise to any of the foregoing infringements or
claims, actions or proceedings.
3.15 Internal Accounting and Disclosure Controls. The
Company maintains accurate books and records reflecting its assets and
liabilities and maintains proper and adequate control over financial reporting
to provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of the financial statements of the
Company and to maintain accountability for the assets of the Company, (iii)
access to the assets of the Company is permitted only in accordance with
management's general or specific authorization, (iv) the reporting of the assets
of the Company is compared with the existing assets of the Company at reasonable
intervals and (v) accounts, notes and other receivables and inventory were
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis. The Company
maintains disclosure controls and procedures (as such term is defined in Rule
13a-15 under the 0000 Xxx) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to Company's management, including
its principal executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding required
disclosure.
3.14 Compliance. The Company has, in all material
respects, complied with all laws, regulations and orders applicable to its
business and has all necessary permits and licenses required thereby.
4. Representations of the Purchaser. The Purchaser represents and
warrants to the Company as follows:
4.1 No Current Ownership in the Company. The Purchaser
does not own of record or beneficially own (as defined in Rule 13d-3 of the
Exchange Act) any voting securities of the Company, or any securities
convertible or exercisable for any such voting securities. The Purchaser is the
sole acquirer of the Shares and no officer, director or substantial shareholder
of the Company has, to the knowledge of the Purchaser, a 5% or greater interest
in the Purchaser or in the consideration to be paid for the Shares.
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4.2 Purchase Entirely for Own Account. The Purchaser is
acquiring the Shares for investment for its own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and it has no present intention of selling, granting any participation in, or
otherwise distributing any of the Shares. The Purchaser has no current
agreement, arrangement, undertaking, obligation or commitment providing for the
disposition of the Shares and has not been organized, reorganized or
recapitalized specifically for the purpose of acquiring the Shares.
4.3 Disclosure of Information. The Purchaser has received
all the information that it has requested and that it considers necessary or
appropriate for deciding whether to enter into this Agreement and to acquire the
Shares. The Purchaser has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Shares.
4.4 Investment Experience. The Purchaser acknowledges
that it is able to fend for itself, can bear the economic risk of its investment
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment in the Shares.
4.5 Accredited Investor. The Purchaser is an "accredited
investor" as such term is defined in Rule 501(a) under the Securities Act.
4.6 Shares Not Registered. The Purchaser understands that
the Shares have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Shares must continue to be held
by the Purchaser unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration. The Purchaser understands
that the exemptions from registration afforded by Rule 144 (the provisions of
which are known to it) promulgated under the Securities Act depend on the
satisfaction of various conditions, and that, if applicable, Rule 144 may afford
the basis for sales only in limited amounts.
5. Conditions to the Obligations of the Company and the
Purchaser. The respective obligations of the Company and the Purchaser to
consummate the transactions contemplated by this Agreement at the Closing are
subject to the satisfaction of the following conditions:
5.1 Service Provider Agreement. As of the Closing Date,
the Service Provider Agreement will be in full force and effect.
5.2 No Governmental Proceedings. No proceeding
challenging this Agreement or the transactions contemplated hereby, or seeking
to prohibit, alter, prevent or materially delay the Closing, shall have been
instituted before any governmental entity and shall be pending.
6. Conditions to the Obligations of the Purchaser. The obligation
of the Purchaser to purchase the Shares at the Closing is subject to the
fulfillment, or the waiver by the Purchaser, of each of the following conditions
on or before the Closing:
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6.1 Accuracy of Representations and Warranties. Each
representation and warranty contained in Section 3 shall be true and correct on
and as of the Closing Date with the same effect as though such representation
and warranty had been made on and as of that date.
6.2 Qualifications. All authorizations, approvals or
permits, if any, of any governmental entity that are required as of the Closing
Date in connection with the issuance and sale of the Shares to the Purchaser
pursuant to this Agreement shall be duly obtained and effective as of the
Closing Date.
6.3 Registration Rights Agreement. The Company shall have
entered into a registration rights agreement, substantially in the form attached
hereto as Exhibit A, pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act with respect to the Shares.
6.4 Opinion. Purchaser shall have received the opinion of
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, dated as of the Closing, in the form
attached hereto as Exhibit B.
7. Condition to the Obligations of the Company. The obligations
of the Company under Section 1 of this Agreement are subject to fulfillment of
the following condition on or before the Closing:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained in Section 4 shall be
true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of that date.
8. Limitations on Transfer and Trading.
8.1 Restricted Shares. "Restricted Shares" means (a) the
Shares and (b) any other shares of capital stock of the Company issued in
respect of such shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations or similar events); provided, however, that
shares of Common Stock which are Restricted Shares shall cease to be Restricted
Shares (x) upon any sale pursuant to an effective registration statement under
the Securities Act or Rule 144 under the Securities Act or (y) at such time as
they become eligible for sale under Rule 144(k) under the Securities Act.
8.2 Requirements for Transfer. The Purchaser acknowledges
and agrees that the Restricted Shares shall not be sold or transferred unless
either (a) they first shall have been registered under the Securities Act or (b)
the Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Securities Act.
8.3 Legend. Each certificate representing Restricted
Shares shall bear a legend substantially in the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such
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shares are registered under such Securities Act or an opinion
of counsel satisfactory to the Company is obtained to the
effect that such registration is not required."
The Purchaser acknowledges and agrees that the Company, in its discretion, may
cause stop transfer orders to be placed with its transfer agent with respect to
the certificates representing any Restricted Shares in order to facilitate the
transfer restrictions referred to in Section 8.2. The Company shall remove the
legend from the certificates representing any Restricted Shares, at the request
of the holder thereof, at such time as they become eligible for resale pursuant
to Rule 144(k) under the Securities Act; are sold pursuant to Rule 144; or are
sold pursuant to an effective registration statement under the Securities Act.
8.4 Additional Limitations on Transfer.
(a) The Purchaser agrees not to dispose of the
Shares in (i) short sales or, (ii) without the Company's prior written consent,
which consent shall not be unreasonably withheld, in trades to a single party
exceeding 250,000 Shares. The Company and the Purchaser agree that the intent of
Section 8.4(a)(ii) is to require the Purchaser to obtain the Company's consent
before selling a significant number of Shares to a strategic investor.
(b) Except as otherwise provided in the
Registration Rights Agreement, the Purchaser, if requested by the Company and
the managing underwriter of a public offering by the Company, shall not sell or
otherwise transfer or dispose of any Shares or other securities of the Company
(excluding securities acquired in such offering or in the public market after
such offering) held by the Purchaser for a period of 30 days following the
effective date of the registration statement for such offering; provided, that
all officers and directors of the Company enter into similar agreements.
(c) The Purchaser agrees not to directly or
indirectly, sell, transfer or otherwise dispose of the Shares at any other time
when it is in possession of material non-public information about the Company.
9. Standstill.
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9.1 Standstill Agreement. Provided that nothing contained
herein will prevent or prohibit the Purchaser from acquiring the Shares as
contemplated by this Agreement or selling shares of Common Stock, the Purchaser
will not, directly or indirectly, without the prior consent of a majority of the
Board of Directors of the Company (the "Company Board"), (i) acquire (or offer
or agree to acquire) any shares of Common Stock; (ii) engage or become a
participant in any "solicitation" of "proxies" (as such terms are defined in
Regulation 14A under the Exchange Act) or consents to vote any shares of Common
Stock; or (iii) transfer to any third party (other than to its "affiliates,"
"associates" (as such terms are defined in Rule 12b-2 under the Exchange Act),
officers, directors or employees and other than pursuant to a proxy solicitation
conducted by or on behalf of the Company Board), the right to vote any shares of
Common Stock. The Purchaser also agrees that it will not advise, assist or
encourage any third party to do any of the foregoing. The covenants in this
Section 9.1 shall remain in effect until the third anniversary of the Closing
Date.
9.2 Termination of Standstill. Notwithstanding the
foregoing, the obligations of the Purchaser under this Section 9 shall terminate
in the event of (i) any bona fide third party tender or exchange offer for at
least 50% of the outstanding Common Stock, (ii) it is publicly disclosed that
more than 30% of the Common Stock then outstanding has been acquired or is
proposed to be acquired by any person or corporate or governmental entity (a
"Person") or group unaffiliated with the Purchaser, (iii) the Company enters
into any agreement to merge with any Person not affiliated with the Purchaser,
or (iv) the Purchaser enters into any agreement to sell all or substantially all
of its assets to any Person not affiliated with the Purchaser. All of the
provisions of Section 9 shall be reinstated and shall apply in full force
according to their terms in the event that: (x) if the provisions of Section 9
shall have terminated as the result of a tender or exchange offer, such tender
or exchange offer (as originally made or as amended or modified) shall have
terminated (without closing) prior to the commencement of a tender or exchange
offer by the Purchaser that would have been permitted to be made pursuant to the
first sentence of this Section 9.2 as a result of such third-party tender or
exchange offer; (y) any tender or exchange offer by the Purchaser (as originally
made or as extended or modified) that was permitted to be made pursuant to this
Section 9.2 shall have terminated (without closing); or (z) if the provisions of
Section 9 shall have terminated as a result of any action by the Company
referred to in this Section 9.2, the Company shall have determined not to take
any of such actions (and no such transaction shall have closed) prior to the
commencement of a tender or exchange offer by the Purchaser that would have been
permitted to be made pursuant to this Section 9.2 as a result of the initial
determination of the Company referred to in this Section 9.2. Upon reinstatement
of the provisions of Section 9, the provisions of this Section 9.2 shall
continue to govern in the event that any of the events described in this Section
9.2 shall occur.
10. Miscellaneous.
10.1 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Company and the Purchaser and their
respective successors and permitted assigns.
10.2 Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
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10.3 Specific Performance. In addition to any and all
other remedies that may be available at law in the event of any breach of this
Agreement, each party shall be entitled to specific performance of the
agreements and obligations of the other party hereunder and to such other
injunctive or other equitable relief as may be granted by a court of competent
jurisdiction.
10.4 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Delaware
(without reference to the conflicts of law provisions thereof).
10.5 Notices. All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be deemed
delivered (a) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (b) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at 000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxxxx, XX 00000, Attention: President, with a copy to the General Counsel, or
at such other address or addresses as may have been furnished in writing by the
Company to the Purchaser, with a copy to Xxxxx X. Xxxxxx, Esq., WilmerHale, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000-0000; and
If to the Purchaser, at 000 Xxxxxx Xxxxxx, Xx Xxxxxxx, XX
00000, Attention: Vice President, Finance and Purchasing, with a copy to the
General Counsel, or at such other address or addresses as may have been
furnished in writing by the Purchaser to the Company, with a copy to Xxxxx X.
Xxxxxx, Esq., Faegre & Xxxxxx LLP, 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx
00000-0000.
Either party may give any notice, request, consent or other
communication under this Agreement using any other means (including, without
limitation, personal delivery, messenger service, telecopy, first class mail or
electronic mail), but no such notice, request, consent or other communication
shall be deemed to have been duly given unless and until it is actually received
by the other party. Either party may change the address to which notices,
requests, consents or other communications hereunder are to be delivered by
giving the other party notice in the manner set forth in this Section 10.5
10.6 Indemnification. In consideration of Purchaser's
execution and delivery of this Agreement and acquisition of the Shares
hereunder, the Company shall jointly and severally defend, protect, indemnify
and hold harmless the Purchaser and all of its officers, directors, employees
and any agents or other representatives of the forgoing (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith, and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any material misrepresentation or breach of
any representation or warranty made by the Company in this Agreement or (b) any
material breach of any covenant, agreement or obligation of the Company
contained in this Agreement. To the extent that the foregoing undertakings by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
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Notwithstanding anything to the contrary contained herein, the Company shall not
be liable for the payment and satisfaction of Indemnified Liabilities exceeding
an aggregate of $20,000,000.
10.7 Complete Agreement. This Agreement constitutes the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
10.8 Amendments and Waivers. Except as otherwise expressly
set forth in this Agreement, any term of this Agreement may be amended or
terminated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Purchaser.
10.9 Counterparts; Facsimile Signatures. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, and all of which shall constitute one and the same document. The
delivery of a signature page of this Agreement by one party to the other party
via facsimile transmission shall constitute the execution and delivery of this
Agreement by the transmitting party.
10.10 Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
10.11 Legal Fees and Expenses. Each of the parties to this
Agreement will bear its own legal fees and other expenses with respect to the
transaction contemplated by this Agreement.
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Executed as of the date first written above.
THE COMPANY:
NXSTAGE MEDICAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President, Chief Executive Officer
THE PURCHASER:
DAVITA INC.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
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