SECOND AMENDMENT Dated as of May 30, 2008 to SERIES A PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF MARCH 14, 2007
Exhibit
10.5
EXECUTION COPY
SECOND AMENDMENT
Dated as of May 30, 2008
to
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 14, 2007
Dated as of May 30, 2008
to
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 14, 2007
THIS SECOND AMENDMENT TO SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “Amendment”) is
entered into as of this 30th day of May, 2008 among XStream Systems, Inc., a Delaware
corporation (“Company”), the investors identified as “Third Closing Investors” on Appendix I-C
hereto.
WITNESSETH:
WHEREAS, the Company is a party to a certain Series A Preferred Stock Purchase Agreement dated
as of March 14, 2007, as amended by a First Amendment dated as of December 19, 2007 (as so amended,
the “Series A Preferred Stock Purchase Agreement”), which it desires to amend further in order to
provide for, among other things, (i) an amendment of the terms of the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock (as those terms are defined in the Series
A Preferred Stock Purchase Agreement) of the Company, (ii) the issuance, as provided herein, of
additional shares of Series B Preferred Stock, along with warrants to purchase common stock of the
Company, to the Third Closing Investors and (iii) the possible issuance, as provided herein, of
additional shares of Series C Preferred Stock of the Company, along with warrants to purchase
common stock of the Company, to the Third Closing Investors;
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth,
the parties to this Amendment hereby agree as follows:
1. Amendments to the Series A Preferred Stock Purchase Agreement. The Series A
Preferred Stock Purchase Agreement shall be amended as follows:
(a) Section 1.1 (Definitions) of the Series A Preferred Stock Purchase Agreement shall
be amended as follows:
(i) to amend the existing definitions of the terms “Equity Participation
Investor,” “Investors,” “Pro Rata Share,” “Series B Warrant Agreement” and “Series C
Warrant Agreement” to read in their entirety as follows:
“Equity Participation Investor” means (i) each Second Closing Investor for whom
“Cash” or “Notes” is specified opposite such Second Closing Investor’s name in the
column labeled “Form of Consideration” on Appendix I-B to the First
Amendment as the form of consideration to be used to pay the amount of the purchase
price set forth opposite such Second Closing Investor’s name in the column labeled
“Purchase Price for Series B Units to be purchased at Second Closing” on such
Appendix I-B and (ii) each Third Closing Investor.
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“Investors” means the First Closing Investors, the Second Closing Investors and
the Third Closing Investors.
“Pro Rata Share” means (i) with respect to a Second Closing Investor, the
result obtained by dividing the number of Series B Units purchased by such Second
Closing Investor by the aggregate number of Series B Units purchased by all Second
Closing Investors and all Third Closing Investors and (ii) with respect to a Third
Closing Investor, the result obtained by dividing the number of Series B Units
purchased by such Third Closing Investor by the aggregate number of Series B Units
purchased by all Second Closing Investors and all Third Closing Investors.
“Series B Warrant Agreement” means the Series B Warrant Agreement dated as of
December 19, 2007, as amended.
“Series C Warrant Agreement” means the Series B Warrant Agreement dated as of
December 19, 2007, as amended.
(ii) to add the following definitions:
“Equity Call Right” has the meaning set forth in Section 2.1(c).
“Securityholders Agreement Amendment” means the amendment to the Amended and
Restated Shareholders Agreement in the form attached as Exhibit K-1.
“Series A Designations Amendment” means the amendment to the Series A
Certificate of Designations, substantially in the form attached as Exhibit
A-4.
“Series B Designations Amendment” means the amendment to the Series B
Certificate of Designations, substantially in the form attached as Exhibit
A-5.
“Series C Designations Amendment” means the amendment to the Series C
Certificate of Designations, substantially in the form attached as Exhibit
A-6.
“Series B Warrant Amendment” means the Amendment dated as of the Third Closing
Date in substantially the form attached hereto as Exhibit I-1.
“Series C Warrant Amendment” means the Amendment dated as of the Third Closing
Date in substantially the form attached hereto as Exhibit J-1.
(b) Section 2.1 (Authorization of Preferred Shares) of the Series A Preferred Stock
Purchase Agreement shall be amended (i) to amend and restate existing subsections (b) and
(c) thereof and (ii) to add subsections (e) and (f) thereto as follows:
(b) Prior to the Second Closing, the Company authorized (i) the issuance and
sale to the Second Closing Investors of an aggregate of up to 1,450,000 Series B
Preferred Shares having the rights and preferences set forth in
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the Series B Certificate of Designations, (ii) the reservation for issuance of
an additional 1,450,000 shares of Common Stock upon conversion or redemption of the
Series B Preferred Shares issued in connection with the Second Closing and (iii) the
reservation for issuance of an additional 7,250,000 shares of Common Stock upon
exercise of the Series B Warrants issued in connection with the Second Closing.
(c) Prior to the Second Closing, the Company authorized (i) the issuance and
sale of an aggregate of up to 1,000,000 Series C Preferred Shares having the rights
and preferences set forth in the Series C Certificate of Designations in connection
with the exercise by the Equity Participation Investors of their rights under
Section 3.5 (the “Equity Call Right”), (ii) the reservation for issuance of
an additional 1,000,000 shares of Common Stock upon conversion or redemption of the
Series C Preferred Shares issued upon exercise of the Equity Call Right and (iii)
the reservation for issuance of an additional 5,000,000 shares of Common Stock upon
exercise of the Series C Warrants issued upon exercise of the Equity Call Right.
(e) Prior to the Third Closing, the Company shall authorize (i) the issuance
and sale to the Third Closing Investors of an aggregate of up to 350,000 Series B
Preferred Shares having the rights and preferences set forth in the Amended and
Restated Series B Certificate of Designations, (ii) the reservation for issuance of
an additional 350,000 shares of Common Stock upon conversion or redemption of such
Series B Preferred Shares issued in connection with the Third Closing and (iii) the
reservation for issuance of an additional 1,750,000 shares of Common Stock upon
exercise of the Series B Warrants issued in connection with the Third Closing.
(f) Prior to the Third Closing, the Company shall authorize (i) the issuance
and sale of an aggregate of up to 1,350,000 Series C Preferred Shares having the
rights and preferences set forth in the Series C Certificate of Designations in
connection with the exercise by the Equity Participation Investors of their rights
under Section 3.5, (ii) the reservation for issuance of an aggregate of
1,350,000 shares of Common Stock upon conversion or redemption of the Series C
Preferred Shares issued upon exercise of the Equity Call Right and (iii) the
reservation for issuance of an aggregate of 6,750,000 shares of Common Stock upon
exercise of the Series C Warrants issued upon exercise of the Equity Call Right .
(c) Section 2.2 (Purchase and Sale of Preferred Shares) of the Series A Preferred Stock
Purchase Agreement shall be amended (i) to amend and restate existing subsection (b) thereof
and (ii) to add subsection (c) thereto, as follows:
(b) Subject to the terms and the conditions set forth herein, and in reliance
upon the representations and warranties of the Company and the Second Closing
Investors set forth herein or in any certificate or other document delivered
pursuant hereto, the Company issued, sold and delivered to each Second Closing
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Investor, free and clear of all Liens (except as set forth in the Registration
Rights Agreement and the Shareholders Agreement), and each Second Closing Investor
purchased at the Second Closing, the number of Series B Units set opposite such
Second Closing Investor’s name in the column labeled “Series B Units to be purchased
at the Second Closing” on Appendix I-B from the Company at a purchase price
of $3.00 per Series B Unit, subject to the limitation set forth in Section
2.5 with respect to the Debenture Holder Investors. The Series B Preferred
Shares shall accrue dividends from the date of issuance.
(c) Subject to the terms and the conditions set forth herein, and in reliance
upon the representations and warranties of the Company and the Third Closing
Investors set forth herein or in any certificate or other document delivered
pursuant hereto, the Company shall issue, sell and deliver to each Third Closing
Investor, free and clear of all Liens (except as set forth in the Registration
Rights Agreement and the Shareholders Agreement), and each Third Closing Investor
shall purchase at the Third Closing, the number of Series B Units set opposite such
Third Closing Investor’s name in the column labeled “Series B Units to be purchased
at the Third Closing” on Appendix I-C from the Company at a purchase price
of $3.00 per Series B Unit. The Series B Preferred Shares shall accrue dividends
from the date of issuance.
(d) Section 2.3 (Closings) of the Series A Preferred Stock Purchase Agreement shall be
amended (i) to amend and restate existing subsection (b) thereof and (ii) to add subsection
(c) thereto, as follows:
(b) The second closing took place at the offices of Blank Rome LLP, 0000 Xxxxx
Xxxxxxx Xxxxxxx — Xxxxx 000, Xxxx Xxxxx, Xxxxxxx at 10:00 a.m., local time, on
December 19, 2007 (the “Second Closing”). The time and date on which the Second
Closing was held is sometimes referred to herein as the “Second Closing Date.”
(c) The third closing shall take place at the offices of Xxxxxxxxx Xxxxxxx,
P.A., 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx at 10:00 a.m., local
time, on May 30, 2008, or at such other place or time or on such other date as shall
be agreed to by the Company and the Third Closing Investors (the “Third Closing”).
The time and date on which the Third Closing is actually held is sometimes referred
to herein as the “Third Closing Date.”
(e) Section 2.4 (Delivery of Securities; Payment of Purchase Price) of the Series A
Preferred Stock Purchase Agreement shall be amended (i) to amend and restate existing
subsection (b) thereof and (ii) to add subsection (c) thereto, as follows:
(b) Subject to satisfaction or waiver of the conditions set forth in
Article IV, at the Second Closing, the Company issued and delivered to each
Second Closing Investor purchasing Series B Units, free and clear of all Liens
(except as set forth in the Registration Rights Agreement and the Shareholders
Agreement), (i) a stock certificate, duly executed by the Company and registered
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in the Company’s stock ledger in the name of such Second Closing Investor or
such Second Closing Investor’s nominee, evidencing all of the Series B Preferred
Shares purchased by such Second Closing Investor at the Second Closing and (ii) a
warrant certificate, duly executed by the Company and registered in the Company’s
ledger in the name of such Second Closing Investor or such Second Closing Investor’s
nominee, evidencing all of the Series B Warrants purchased by such Second Closing
Investor at the Second Closing. Subject to satisfaction or waiver of the conditions
set forth in Article III, as payment in full for the Series B Units
purchased by a Second Closing Investor at the Second Closing under this Agreement,
and against delivery of the stock and warrant certificates therefor as described in
this subparagraph (b), such Second Closing Investor delivered at the Second Closing
the amount set opposite such Investor’s name in the column labeled “Purchase Price
for Series B Units to be purchased at the Second Closing” on Appendix I-B
hereto to the account of the Company by wire transfer of immediately payable funds,
check or, if “Debentures” or “Notes” is the form of consideration specified in the
column labeled “Form of Consideration” on Appendix I-B hereto, cancellation
of outstanding debentures or promissory notes issued by the Company (the sum of such
amounts being referred to as the “Second Purchase Price”).
(c) Subject to satisfaction or waiver of the conditions set forth in
Article IV, at the Third Closing, the Company shall issue and deliver to
each Third Closing Investor purchasing Series B Units, free and clear of all Liens
(except as set forth in the Registration Rights Agreement and the Shareholders
Agreement), (i) a stock certificate, duly executed by the Company and registered in
the Company’s stock ledger in the name of such Third Closing Investor or such Third
Closing Investor’s nominee, evidencing all of the Series B Preferred Shares being
purchased by such Third Closing Investor at the Third Closing and (ii) a warrant
certificate, duly executed by the Company and registered in the Company’s ledger in
the name of such Third Closing Investor or such Third Closing Investor’s nominee,
evidencing all of the Series B Warrants being purchased by such Third Closing
Investor at the Third Closing. Subject to satisfaction or waiver of the conditions
set forth in Article III, as payment in full for the Series B Units being
purchased by a Third Closing Investor at the Third Closing under this Agreement, and
against delivery of the stock and warrant certificates therefor as described in this
subparagraph (c), such Third Closing Investor shall deliver at the Third Closing the
amount set opposite such Investor’s name in the column labeled “Purchase Price for
Series B Units to be purchased at the Third Closing” on Appendix I-C hereto
to the account of the Company by wire transfer of immediately payable funds (the
“Third Purchase Price”).
(f) Section 3.2A shall be added to the Series A Preferred Stock Purchase Agreement as
follows:
3.2A Third Closing. The obligation of a Third Closing Investor to
purchase Series B Units at the Third Closing is subject to the fulfillment to the
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satisfaction of such Third Closing Investor, at or prior to the Third Closing
of each of the following conditions:
(a) Each of the representations and warranties of the Company contained in
Article VII (other than Section 7.25 (Projections), which is hereby
excluded) shall be true, correct and complete in all material respects on and as of
the Third Closing Date as though then made, except for (i) such representations and
warranties which expressly speak as of a certain date, which representations and
warranties shall be true, correct and complete in all material respects as of the
date specified and (ii) for purposes of the representations and warranties contained
in Sections 7.5, 7.6, 7.7 and 7.8, the date of the Latest Balance Sheet shall be
deemed to be March 31, 2008 (the date of the most recent unaudited financial
statements provided to the Third Closing Investors);
(b) All covenants, agreements and conditions contained in this Agreement to be
performed or complied with by the Company on or prior to, or in connection with, the
Third Closing Date shall have been performed or complied with;
(c) No Event of Noncompliance (as defined in Series A Certificate of
Designations), or event which with notice or lapse of time or both would constitute
such an event, shall have occurred;
(d) Since March 31, 2008 (the date of the most recent unaudited financial
statements provided to the Third Closing Investors), there shall not have been any
effect, change or development that, individually or in the aggregate with such other
effects, changes or developments, has had, or could reasonably be expected to have,
a Material Adverse Effect;
(e) The Company shall have delivered to Sidley Austin LLP each of the
following:
(i) copy of the Certificate of Incorporation, as amended, certified as
of a recent date by the Secretary of State of Delaware, including evidence
of the filing of the Series A Designations Amendment relating to the Series
A Preferred Stock, the Series B Designations Amendment relating to the
Series B Preferred Stock and the Series C Designations Amendment relating to
the Series C Preferred Stock;
(ii) certificates of good standing and certificate of status of the
Company, as applicable, issued as of a recent date by the Secretaries of
State of Delaware and Florida;
(iii) certificate of the Chief Executive Officer or the President of
the Company, dated the Third Closing Date, to the effect that the conditions
specified in Sections 3.2A(a) through 3.2A(d) have been
satisfied fully;
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(iv) certificate of the Secretary or an Assistant Secretary of the
Company, dated the Third Closing Date, in form and substance reasonably
satisfactory to Sidley Austin LLP, as to: (1) no amendments to the
Certificate of Incorporation since the date of certification referenced in
subparagraph (i) above; (2) the By-laws; (3) the resolutions duly adopted by
the Board and shareholders authorizing and approving, as appropriate, the
execution, delivery and performance of this Agreement and each of the
Transaction Documents to which the Company is a party and the transactions
contemplated hereby and thereby, including the authorization, issuance, sale
and delivery of the Series B Units and the Series C Units and the
reservation for issuance of the Conversion Common Shares; and (4) complete
and accurate copies of the Series B Warrant Agreement, the Series C Warrant
Agreement, the Amended and Restated Shareholders Agreement and the
Registration Rights Agreement;
(v) stock certificates, duly executed by the Company and registered in
the names of the Third Closing Investors (or their nominees) for the
respective number of Series B Preferred Shares set forth on Appendix
I-C;
(vi) its executed counterpart to this Amendment;
(vii) executed copies of each of the Series B Warrant Amendment and the
Series C Warrant Amendment;
(viii) the Warrant Certificates (as defined in the Series B Warrant
Agreement), duly executed by the Company and registered in the names of the
Third Closing Investors (or their nominees) for the respective number of
Warrants set forth on Appendix I-C;
(ix) its executed counterpart to the Securityholders Agreement
Amendment;
(x) satisfactory evidence that this Amendment, the Series A
Designations Amendment, the Series B Designations Amendment, the Series C
Designations Amendment, the Series B Warrant Amendment, the Series C Warrant
Amendment and the Securityholders Agreement Amendment have been approved as
required by law, the Company’s charter documents and, in cases of amendments
to agreements, the provisions of the underlying agreements;
(xi) if a Third Closing Investor is not currently a party to the
Amended and Restated Shareholders Agreement and the Registration Rights
Agreement, a joinder agreement providing that such Third Closing Investor
shall be a party to such agreements, signed by the Company;
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(xii) legal opinion of Xxxxxxxxx Xxxxxxx. P.A., counsel for the
Company, dated the Third Closing Date, addressed to the Third Closing
Investors and substantially in the form attached hereto as Exhibit
M; and
(xii) such other documents, instruments, approvals or opinions relating
to the transactions contemplated by this Agreement as the Third Closing
Investors or Sidley Austin LLP may reasonably request.
(g) Sections 3.3 (Waiver) and 3.5 (Equity Participation Right) of the Series A
Preferred Stock Purchase Agreement shall be amended to read in their entirety as follows:
3.3 Waiver. (a) Any condition specified in this Article III
may be waived by an Investor if consented to in writing by such Investor;
provided, however, that in the event that an Investor declines to
waive a condition specified in this Article III (a “Non-Participating
Investor”), the Company and the remaining Investors may elect to proceed with the
First Closing, the Second Closing or the Third Closing, as the case may be, with the
aggregate number of Series A Preferred Shares purchased and sold on the First
Closing Date, the aggregate number of Series B Units to be purchased and sold on the
Second Closing Date or the aggregate number of Series B Units to be purchased and
sold on the Third Closing Date, as the case may be, being reduced by the number of
Series A Preferred Shares or Series B Units that otherwise would have been purchased
by the Non-Participating Investor, as set forth on Appendix I-A,
Appendix I-B or Appendix I-C, as the case may be; provided that the
remaining Investors may, in their sole discretion, elect to purchase, pro rata or
otherwise, the Series A Preferred Shares or Series B Units, as the case may be, that
otherwise would have been purchased by the Non-Participating Investor; and the
Non-Participating Investor shall be deemed removed from this Agreement and all other
Transaction Agreements, if such non-participation occurs at the First Closing, the
Non-Participating Investor shall be deemed removed from the Second Closing, if such
non-participation only occurs at the Second Closing, and the Non-Participating
Investor shall be deemed removed from the Third Closing, if such non-participation
only occurs at the Third Closing.
(b) In the event that (i) either or both of the conditions specified in
Sections 3.1(a) or 3.1(b) is waived in writing by an Investor in
connection with the First Closing, (ii) either or both of the conditions specified
in Sections 3.2(a) or 3.2(b) is waived in writing by an Investor in
connection with the Second Closing, or (iii) either or both of the conditions
specified in Sections 3.2A(a) or 3.2A(b) is waived in writing by an
Investor in connection with the Third Closing, such waiver shall serve as a waiver
of such Investor’s (but not any other Investor’s) rights or remedies against the
Company for any claims or losses based solely on such waived condition not being
satisfied at the applicable Closing, but shall not constitute a waiver by such
Investor of any rights or remedies accruing to such Investor thereafter.
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3.5 Equity Participation Right. (a) During the period from December
19, 2007 until (and including) October 19, 2008 (the “Equity Participation Period”),
each Equity Participation Investor shall have the right (but not the obligation) to
purchase from time to time during the Equity Participation Period up to such Equity
Participation Investor’s Pro Rata Share of up to 1,350,000 Series C Units at a
purchase price of $3.00 per Series C Unit. If an Equity Participation Investor
shall desire to exercise the right granted by this Section 3.5, such Equity
Participation Investor shall notify the Company in writing of such exercise within
the Equity Participation Period, which notice (an “Exercise Notice”) shall specify
the number of Series C Units that such Equity Participation Investor intends to
purchase and the name(s) in which the securities constituting the Series C Units are
to be issued. Each Equity Participation Investor who submits an Exercise Notice to
the Company in accordance with this Section 3.5(a) is referred to herein as
a “Series C Purchaser.”
(b) In the event that the Company receives one or more Exercise Notices during
a calendar month, it shall schedule a closing for the purchase and sale of all
Series C Units covered by such Exercise Notices as of the first business day of the
month immediately following the receipt of such notices or on such other date as the
Series C Purchasers who sent such Exercise Notices and the Company shall mutually
agree (each such date, an “Equity Participation Closing”). The Company shall not be
obligated to schedule more than one Equity Participation Closing in any calendar
month. At each such scheduled Equity Participation Closing:
(i) the Company shall issue and deliver to each Series C Purchaser (x)
a certificate for the number of shares of Series C Preferred Stock purchased
by such Series C Purchaser, issued as directed by such Series C Purchaser,
and a certificate for the number of Series C Warrants purchased by such
Series C Purchaser, issued as directed by the Series C Purchaser, (y) a
certificate of the Secretary, or an assistant secretary, of the Company
substantially in the form of the certificate described in Section
3.2A(e)(iv), but dated as of the date of such Equity Participation
Closing of the issuance of such Series C Units, and (z) an opinion of
Xxxxxxxxx Xxxxxxx, P.A. substantially similar to the form of the opinion
attached hereto as Exhibit M, but revised to address the issuance of
the Series C Units; and
(ii) each Series C Purchaser shall deliver the purchase price for the
Series C Units to be purchased by such Series C Purchaser at such Equity
Participation Closing.
(h) Section 4.2A shall be added to the Series A Preferred Stock Purchase Agreement as
follows:
4.2A Third Closing. The obligation of the Company to issue, sell and
deliver the Series B Preferred Shares at the Third Closing is subject to the
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fulfillment to the reasonable satisfaction of the Company at or prior to the
Third Closing of the following conditions:
(a) The Third Closing Investors shall have delivered the Third Purchase Price
in accordance with Section 2.4(c);
(b) Each Third Closing Investor shall have delivered its executed counterpart
signature page to this Amendment;
(c) If a Third Closing Investor is not a party to the Amended and Restated
Shareholders Agreement, a joinder agreement to that agreement executed by such Third
Closing Investor;
(d) If a Third Closing Investor is not a party to the Registration Rights
Agreement, a joinder agreement to that agreement executed by such Third Closing
Investor;
(e) Each of the representations and warranties of the Investors contained in
Article VIII shall be true, correct and complete in all material respects on
and as of the Third Closing Date as though then made, except for such
representations and warranties which expressly speak as of a certain date, which
representations and warranties shall be true, correct and complete in all material
respects as of the date specified.
(i) Section 5.1(a)(iii) (Financial Statements and Other Information) of the Series A
Preferred Stock Purchase Agreement shall be amended to read in its entirety as follows:
(iii) as soon as available but in any event within 90 days after the end of
each fiscal year, audited statements of income and cash flows of the Company for
such fiscal year, and an audited balance sheet of the Company as of the end of such
fiscal year prepared in accordance with GAAP, and accompanied by, with respect to
the consolidated portions of such statements, an opinion of an independent
accounting firm of recognized regional standing selected by the Board (including the
approval of at least one of the Investor Directors), together with comparisons to
the Company’s annual budget and to the preceding fiscal year;
(j) Section 5.15(a) (Certain Insurance Coverage) of the Series A Preferred Stock
Purchase Agreement shall be amended to read in its entirety as follows:
(a) The Company shall at all times maintain in full force and effect the
key-man life insurance policies on the lives of each of Xxxxx Xxxx and Xxxxxxx Xxxx
in an aggregate face amount of not less than $1,000,000 for each such policy, and
the Company shall at all times be named as the beneficiary under each such policy;
provided, however, that the foregoing requirements may be modified or waived with
the approval of the Board (including the approval of at least one of the Investor
Directors).
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(k) Section 7.4(a) (Authorized Capital Stock) of the Series A Preferred Stock Purchase
Agreement shall be amended to add subparagraph (iii) thereto as follows:
(iii) As of the Third Closing and immediately prior to the issuance of any
Series B Preferred Stock at the Third Closing, the authorized capital stock of the
Company shall consist solely of (1) Thirty Million (30,000,000) shares of Common
Stock, of which 1,702,156 shares are issued and outstanding; and (2) Six Million
(6,000,000) shares of preferred stock, $.0001 par value per share, of which (A) Nine
Hundred Sixty Two Thousand One Hundred One (962,101) shares have been designated
Series A Preferred Stock and all of which are issued and outstanding, (B) One
Million Eight Hundred Thousand (1,800,000) shares have been designated Series B
Preferred Stock of which 1,311,135 are issued and outstanding and (C) One Million
Three Hundred Fifty Thousand (1,350,000) shares have been designated as Series C
Preferred Stock of which none are issued and outstanding. The Company has reserved
for issuance (v) sufficient shares of Common Stock for issuance upon conversion or
redemption of all outstanding or authorized Series A Preferred Shares, Series B
Preferred Shares and Series C Preferred Shares, (x) 2,100,000 shares of Common
Stock upon exercise of options pursuant to its 2004 Stock Option Incentive Plan, (y)
Nine Million (9,000,000) shares of Common Stock upon exercise of the Series B
Warrants and (z) Six Million Seven Hundred Fifty Thousand (6,750,000) shares of
Common Stock upon exercise of the Series C Warrants. Immediately after the Third
Closing, the capitalization of the Company shall be as set forth in the Third
Closing Capitalization Schedule attached to Schedule 7.4, which Third
Closing Capitalization Schedule and Schedule 7.4 (A) reflects the
capitalization of the Company both on an actual shares outstanding basis and on a
fully diluted basis assuming conversion of all convertible securities and the
exercise of all outstanding options and warrants and all options reserved for future
grant under any stock option plans and (B) sets forth (I) each outstanding option,
warrant or other right to purchase shares of capital stock of the Company or any of
its Subsidiaries and (II) for each such option, warrant or right, the holder
thereof, the date of grant, the exercise price and the number of shares subject
thereto.
(l) Section 9.7 (Notices) of the Series A Preferred Stock Purchase Agreement shall be
amended to read in its entirety as follows:
All notices or other communications required or permitted hereunder shall be in
writing and shall be deemed given or delivered (a) when delivered personally, (b) if
transmitted by facsimile when confirmation of transmission is received, (c) if sent
by registered or certified mail, postage prepaid, return receipt requested, three
business days after mailing or (d) if sent by reputable overnight courier service,
one business day after delivery to such service; and shall be addressed as follows:
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If to the Company, to:
XStream Systems, Inc.
00000 000xx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
00000 000xx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx, P.A.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
If to any Investor, to such Investor’s address as set forth on Appendix
II or, in the case of Investors who were Debenture Holders, Appendix III
hereto.
(m) The Series A Preferred Stock Purchase Agreement is hereby further amended to add
Appendix I-C in the form attached to this Amendment as Appendix I-C.
(n) Appendix II to the Series A Preferred Stock Purchase Agreement shall be amended to
read in its entirety as set forth on Appendix II to this Amendment.
(o) The Series A Preferred Stock Purchase Agreement is hereby further amended to add
Exhibits X-0, X-0, X-0, X-0, X-0 and M in the respective forms attached to this Amendment as
Exhibits X-0, X-0, X-0, X-0, X-0 and M.
(p) Schedule 7.4 to the Series A Preferred Stock Purchase Agreement is hereby amended
to include the Third Closing Capitalization Schedule in the form attached to this Amendment
as the “Third Closing Capitalization Schedule.”
2. Waiver Regarding Delayed Delivery of Financial Statements. Pursuant to the request
of the Company and in accordance with Section 9.2 of the Series A Preferred Stock Purchase
Agreement, the holders of Preferred Stock and Conversion Common Shares hereby consent to, and waive
(i) any Event of Noncompliance resulting from any noncompliance by the Company solely with respect
to the provision of Section 5.1(iii) of the Series A Preferred Stock Purchase Agreement by reason
of the failure of the Company to deliver the financial statements described therein for the year
ended December 31, 2007 on or before June 30, 2008.
3. Reference to and Effect on Series A Preferred Stock Purchase Agreement;
Reaffirmation.
(a) Upon the effectiveness of this Amendment, each reference in the Series A Preferred
Stock Purchase Agreement to “this Agreement,” “hereunder,” “hereof,”
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“herein,” “hereby” or words of like import shall mean and be a reference to the Series
A Preferred Stock Purchase Agreement as amended hereby, and each reference to the Series A
Preferred Stock Purchase Agreement in any other document, instrument or agreement executed
and/or delivered in connection with the Series A Preferred Stock Purchase Agreement shall
mean and be a reference to the Series A Preferred Stock Purchase Agreement as amended
hereby.
(b) Except as specifically amended hereby, the Series A Preferred Stock Purchase
Agreement shall remain in full force and effect and is hereby ratified and confirmed. The
execution, delivery and effectiveness of this Amendment shall not constitute a waiver of any
provision contained in the Series A Preferred Stock Purchase Agreement, except as
specifically set forth herein.
4. Execution in Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be considered an original instrument, but all of which shall be
considered one and the same agreement, and shall become binding when one or more counterparts have
been signed by and delivered to each of the parties hereto. Delivery of an executed counterpart of
a signature page to this Amendment, whether manually executed or a facsimile of a manually executed
signature page, shall be as effective as delivery of a manually executed counterpart of this
Amendment.
5. Governing Law. This Amendment and the appendices, exhibits and schedules hereto
shall be governed by, and construed in accordance with, the laws of the State of Florida, without
giving effect to any choice of law or conflict of law rules or provisions (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Florida. In furtherance of the foregoing, the internal law of the State of
Florida shall control the interpretation and construction of this Amendment (and all schedules and
exhibits hereto), even though under that jurisdiction’s choice of law or conflict of law analysis,
the substantive law of some other jurisdiction would ordinarily apply.
6. Transaction Expenses. Irrespective of whether the Third Closing is consummated,
the Company shall pay all costs and expenses that it incurs in connection with the negotiation,
execution, delivery and performance of this Amendment and the transactions contemplated hereby. If
the Third Closing is consummated, the Company shall pay the reasonable fees and expenses of Sidley
Austin LLP, special legal counsel to the Original Series A Investors, and the reasonable fees and
expenses of Xxxxxxxxx Xxxxxxx, P.A., counsel to the Company. In addition, the Company shall
reimburse the Investors for reasonable legal expenses incurred in connection with any amendment of,
or waiver or consent requested under, this Amendment or any Transaction Document, except for
waivers, amendments or consents (a) not originally requested by the Company and (b) not involving a
change to or modification of any of the Company’s obligations, covenants or agreements hereunder.
7. Interpretation.
(a) Capitalized terms used herein without definition shall have the respective
definitions assigned to those terms in the Series A Preferred Stock Purchase Agreement.
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(b) For purposes of this Amendment, (i) the words “include,” “includes” and “including”
mean “including without limitation,” (ii) the word “or” is not exclusive and (iii) the words
“herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Amendment as a whole.
(c) Unless the context otherwise requires, references herein to Sections, Exhibits and
Schedules mean the Sections of, and the Exhibits and Schedules attached to, this Amendment.
Headings of Sections are inserted for convenience of reference only and shall not be deemed
a part of or to affect the meaning or interpretation of this Amendment. The Schedules and
Exhibits referred to herein shall be construed with and as an integral part of this
Amendment to the same extent as if they were set forth verbatim herein.
(d) Each of the parties to this Amendment has had the benefit of counsel in connection
with its review and negotiation of this Amendment. Consequently, the parties confirm that
this Amendment shall not be construed on the basis of any presumption or rule requiring
construction or interpretation against the party drafting an agreement or instrument or
causing any agreement or instrument to be drafted.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day
and year first above written.
| XSTREAM SYSTEMS, INC. |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | CFO | |||
Signature Page to Second Amendment to
Series A Preferred Stock Purchase Agreement dated as of March 14, 2007
Series A Preferred Stock Purchase Agreement dated as of March 14, 2007
| INVESTOR: |
||||
| Name: | ||||
Signature Page to Second Amendment to
Series A Preferred Stock Purchase Agreement dated as of March 14, 2007
Series A Preferred Stock Purchase Agreement dated as of March 14, 2007
