STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (“Agreement”) is entered into as of November ___, 2006,
between Xcorporeal, Inc., a Delaware corporation (“Company”), and the person named on the
signature page of this Agreement (“Investor”).
WHEREAS, Company desires to sell and a limited number of accredited investors desire to
purchase an aggregate of up to $25,000,000.00 of unregistered shares of Company’s common stock, par
value $0.0001 per share, subject to the terms and conditions set forth herein; and
WHEREAS, the Shares purchased by Investor will be issued in a private placement without
registration under the Securities Act of 1933, as amended (“Act”), in reliance on one or
more exemptions from the registration requirements under the Act;
NOW THEREFORE, in consideration of the foregoing recitals and the respective covenants and
representations contained herein, the parties hereto, intending to be legally bound, agree as
follows:
1. Stock Purchase.
(a) Purchase. Investor agrees to purchase, and Company agrees to authorize, issue and
deliver to Investor, that number of shares of its common stock (the “Shares”) at a price of
Seven Dollars ($7.00) per share, equal to an aggregate purchase price (the “Purchase
Price”) in the dollar amount set forth on the signature page of this Agreement.
(b) Anti-Dilution Protection. In the event the Company issues shares of its common
stock (i) in exchange for the sale or transfer of the technology relating to the Wearable
Artificial Kidney and other medical devices licensed by the Company pursuant to the License
Agreement dated September 1, 2006, or (ii) in any transaction resulting in the cancellation or
termination of the Royalty payable pursuant to the License Agreement, all stockholders of the
Company (including Investors) will be diluted equally up to 20% of the then fully-diluted
outstanding shares, and if Company issues more than 20% of its common stock Investor will be issued
additional Shares such that Investor’s proportionate ownership will not be further decreased by any
issuance above 20%) in such transaction.
(c) Registration Rights. In connection with the purchase of the Shares, Company and
Investor will execute and deliver a Registration Rights Agreement concurrently herewith.
(d) Payment and Delivery.
(i) Deliveries By Investor. As soon as practicable after the execution hereof
(“Closing”), Investor will deliver to Company: (A) the total Purchase Price, by cashier’s
check or wire transfer of immediately available funds to an account designated by Company, (B) an
original of this Agreement and the Registration Rights Agreement fully executed by Investor, and
(C) all other documents, instruments and writings required to be delivered by Investor to Company
hereunder or otherwise required in connection herewith.
1
(ii) Deliveries By Company. At Closing, Company will deliver to Investor: (A) a stock
certificate evidencing the number of Shares to be purchased by Investor hereunder, or an
irrevocable instruction to its stock transfer agent, to issue same, (B) an original of this
Agreement and the Registration Rights Agreement fully executed by Company, and (C) all other
documents, instruments and writings required to be delivered by Company to Investor hereunder or
otherwise required in connection herewith.
(e) Limited Lock-Up Periods.
(i) Until the Closing, Investor will not directly or indirectly make or participate in any
sale of shares of the Company’s common stock, including without limitation any “short sales” as
defined in Rule 200 under Regulation SHO, whether or not short exempt, or sales of a long position.
(ii) Until a registration statement covering the Shares is declared effective, Investor will
not directly or indirectly make or participate in any short sale of shares of the Company’s common
stock, whether or not short exempt.
2. Representations and Warranties of Company. Company represents and warrants to Investor
that:
(a) Corporate Power and Authority. Company has the corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The execution and delivery by
Company of this Agreement, and the consummation by Company of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on the part of Company. This Agreement
has been duly executed and delivered by Company and constitutes a valid and binding obligation of
Company enforceable against it in accordance with its terms, subject to the effects of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and to the application of equitable principles in any proceeding, legal or
equitable.
(b) Shares. Upon authorization, issuance and delivery as contemplated hereunder, the
Shares will be duly authorized, validly issued, fully paid and non-assessable, free of all
preemptive and similar rights and other restrictions on transfer, other than those arising under
applicable state and federal securities laws.
(c) Organization and Qualification. Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, and has all necessary
corporate power and authority to carry on its business as it is now being conducted. Company is
duly qualified as a foreign Company to do business, and is in good standing, in each jurisdiction
where it is doing or will do business, or the character of its properties owned or held under lease
or the nature of its activities makes such qualification necessary, except where the failure to be
so qualified will not have a material adverse effect on Company.
(d) No Material Adverse Change. Each of the Company’s periodic and current reports
(the “Reports”) as filed with the Securities and Exchange Commission (“SEC”)
presents fairly and accurately the financial condition, assets, liabilities, and stockholders’
equity of the Company as of its date. Except as disclosed in the Reports, there has been no
material adverse change in the
2
management, assets, liabilities, properties, business, operations, financial condition, or results
of operations of the Company.
(e) Non-Contravention. The execution, delivery and performance by Company of this
Agreement and the consummation of the transactions contemplated hereby will not, to Company’s
knowledge: (i) violate any provision of Company’s articles or bylaws, each as currently in effect,
(ii) violate, conflict with or result in the breach of any of the terms of, result in a material
modification of the effect of, otherwise, give any other contracting party the right to terminate,
or constitute (or with notice or lapse of time or both constitute) a default under, any material
contract or other agreement to which Company is a party or by or to which Company or any of
Company’s assets or properties may be bound or subject, (iii) violate any order, judgment,
injunction, award or decree of any court, arbitrator or governmental or regulatory body by which
Company, or the assets or properties of Company are bound, or (iv) violate any statute, law or
regulation.
3. Representations and Warranties of Investor. Investor hereby represents and warrants to
Company that:
(a) No Prior Sales of Company Stock. Investor has not directly or indirectly made or
participated in any sale of shares of the Company’s common stock within thirty (30) days prior to
the date of execution of this Agreement, including without limitation any short sales or sales of a
long position.
(b) Authority Relative to Agreement. Investor has all requisite power and authority to
enter into this Agreement and to perform its obligations hereunder. The execution and delivery by
Investor of this Agreement and the consummation by Investor of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Investor. This Agreement has been
duly executed and delivered by Investor and constitutes a valid and binding obligation of Investor,
enforceable against Investor in accordance with its terms, subject to the effects of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights
generally and to the application of equitable principles in any proceeding, legal or equitable.
(c) Accredited Investor Status.
(i) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D promulgated under the Act, and is highly sophisticated in business and financial matters
including, without limitation, private equity investments in healthcare and biotechnology startup
companies.
(ii) Investor is acquiring the Shares for Investor’s own account, for investment purposes only
and without a view toward the further sale or distribution.
(iii) Investor has made an independent due diligence investigation of Company at a reasonable
time prior to the execution of this Agreement, and has had the opportunity to ask questions and
receive answers concerning the business and affairs of Company and the terms and conditions of the
sale of the Shares, and to obtain any additional information deemed necessary by Investor.
3
(iv) Investor (A) has such knowledge and experience in financial and business matters that
Investor is capable of evaluating the merits and risks of making an investment in the Securities,
and of protecting Investor’s own interests in connection with the investment, (B) has read and
fully understands this Agreement and the transactions described therein, (C) is aware that the
Company is subject to substantial risks and uncertainties, including without limitation those set
forth as Risk Factors in the Reports, which could cause actual results to differ materially from
those stated, (D) realizes that an investment in the Shares is speculative and includes a high
degree of risk, and (E) is able to bear the loss of the entire amount of Investor’s investment in
the Shares.
(d) Restricted Securities. Investor understands that the Shares are characterized as
“restricted securities” under the federal securities laws inasmuch as they are being acquired from
Company in a transaction not involving a public offering and that under such laws and applicable
regulations the Shares may be resold without registration under the Act and applicable state law
only in certain limited circumstances. Investor understands that Investor is accepting the Shares
for investment purposes only and without the view toward the further distribution of such
securities except pursuant to a registration statement that may be effective permitting the public
offer or sale of such securities, or pursuant to an exemption from registration under federal and
applicable state laws. In the event Investor does attempt to offer or sell the Shares in the
circumstances contemplated by the preceding sentence, Investor will do so only in accordance with
the requirements of federal and applicable state laws and interpretations thereof.
(e) No Brokers or Finders. Except as disclosed in writing to Company, no person,
entity, broker, finder, investment banker or other intermediary, has been retained by or is
authorized to act on behalf of Investor, or is entitled to or could reasonably be expected to be
entitled to any brokerage, finder’s or other fee or commission from Company or Investor in
connection with the negotiation, preparation, execution or delivery of this Agreement or the
transactions contemplated hereby.
4. General.
(a) Restrictive Legends. Until such time that a registration statement covering the
Securities is filed and declared effective by the SEC. Each certificate representing the Shares
will contain, in addition to any legends required under applicable securities laws, a legend
substantially to the following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION, OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT, AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY ALSO BE SUBJECT TO OTHER CONDITIONS AND
RESTRICTIONS.
4
(b) State Securities Laws. The sale of the securities which are the subject of this
agreement has not been qualified with the commissioner of Corporations of the State of California
and the issuance of the securities or the payment or receipt of any part of the consideration
therefor prior to the qualification is unlawful, unless the sale of securities is exempt from the
qualification by section 25102 of the California Corporations Code. The rights of all parties to
this agreement are expressly conditioned upon the qualification being obtained unless the sale is
so exempt.
(c) Amendments and Waivers. No modifications or amendments to, or waivers of, any
provision of this Agreement may be made, except pursuant to a document signed by Company and
Investor.
(d) Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, then, if possible, such illegal, invalid or
unenforceable provision will be modified to such extent as is necessary to comply with such present
or future laws and such modification will not affect any other provision hereof; provided that if
such provision may not be so modified, such illegality, invalidity or unenforceability will not
affect any other provision, but this Agreement will be reformed, construed and enforced as if such
invalid, illegal or unenforceable provision had never been contained herein.
(e) Expenses. Each party will pay all costs and expenses incurred by it in connection
with the execution and delivery of this Agreement and the transactions contemplated hereby,
including fees of legal counsel.
(f) Further Assurances. Each party to this Agreement will do and perform or cause to
be done and performed all such further acts and things and will execute and deliver all such
agreements, certificates, instruments and documents as the other party hereto may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
(g) Arbitration. Any controversy, dispute or claim of any nature whatsoever arising
out of, in connection with or in relation to this Agreement, including the issue of arbitrability
of any such disputes, will be resolved by binding arbitration before a retired judge at JAMS in
Santa Monica, California. If Investor is not a United States resident the UNCITRAL Arbitration
Rules will apply. The prevailing party in any dispute will be entitled to recover all attorney’s
fees, costs and expenses in addition to other allowable costs.
(h) Governing Law. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto will be governed by, and construed in accordance
with, the internal law of the State of Delaware, without regard to conflicts of laws.
(i) Counterparts. This Agreement may be executed in counterparts, each of which will
be an original and all of which together will constitute one and the same instrument.
5
(j) Entire Agreement. This Agreement and its Exhibits and the Related Agreements
collectively constitute the entire agreement among the parties with respect to the transactions
contemplated hereby, thereby and related matters and collectively supersede any prior or
contemporaneous negotiations, understandings or agreements, both oral and written, with respect
hereto or thereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth
above.
| Investor: | ||||||
By: |
||||||
Its: |
||||||
| Purchase Price: $ | ||||||
| Company: | ||||||
| XCORPOREAL, INC. | ||||||
| By: | ||||||
| Its Chairman | ||||||
6
