FIRST AMENDMENT Dated as of December 19, 2007 to SERIES A PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF MARCH 14, 2007
Exhibit
10.4
EXECUTION COPY
FIRST AMENDMENT
Dated as of December 19, 2007
to
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 14, 2007
Dated as of December 19, 2007
to
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 14, 2007
THIS FIRST AMENDMENT TO SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “Amendment”) is
entered into as of this 19th day of December, 2007 among XStream Systems, Inc., a
Delaware corporation (“Company”), the investors identified as “Original Series A Investors” on
Appendix I-B hereto and the investors identified as “New Series B Investors” on Appendix I-B hereto
(together with the Original Series A Investors, the “Second Closing Investors”).
WITNESSETH:
WHEREAS, the Company and the Original Series A Investors, among others, are parties to a
certain Series A Preferred Stock Purchase Agreement dated as of March 14, 2007 (the “Series A
Preferred Stock Purchase Agreement”), which they desire to amend in order to provide for, among
other things, (i) the amendment of the terms of the Series A Redeemable Convertible Preferred
Stock, $.0001 par value per share of the Company, (ii) the issuance, as provided herein, of shares
of Series B Redeemable Convertible Preferred Stock, $.0001 par value per share of the Company,
along with warrants to purchase common stock of the Company, to the Second Closing Investors and
(iii) the possible issuance, as provided herein, of shares of Series C Redeemable Convertible
Preferred Stock, $.0001 par value per share of the Company, along with warrants to purchase common
stock of the Company, to certain of the Second 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 of the Series A Preferred Stock Purchase Agreement shall be amended as
follows:
(i) to delete the existing definitions of the terms “Additional Preferred
Stock,” “Additional Preferred Shares,” “Certificate of Designations” and “Defaulted
Shares”; and
(ii) to amend the existing definitions of the terms “Business Plan,” “Common
Stock,” “Conversion Common Shares,” “Investors,” “Registration Rights Agreement,”
“Restricted Securities,” “Series A Preferred Shares,” “Series A Preferred Stock,”
“Shareholders Agreement” and “Transaction Documents” to read in their entirety as
follows:
1
“Business Plan” means the Company’s Business Plan dated December 5, 2007, a
copy of which has been provided to each Investor.
“Common Stock” means the common stock, $.0001 par value per share of the
Company.
“Conversion Common Shares” means (i) the Common Stock issued or issuable upon
conversion or redemption of the Preferred Stock, (ii) the Common Stock issued or
issuable upon the exercise of the Warrants and (iii) any Common Stock issued or
issuable with respect to the securities referred to in clauses (i) or (ii) above by
way of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reincorporation. For purposes of
this Agreement, any Person who holds Preferred Stock or Warrants shall be deemed to
be the holder of the Conversion Common Shares obtainable upon conversion of the
Preferred Stock or exercise of the Warrants, regardless of any restriction or
limitation on the conversion of the Preferred Stock or exercise of the Warrants;
such Conversion Common Shares shall be deemed to be in existence; and such Person
shall be entitled to exercise the rights of a holder of Conversion Common Shares
hereunder. As to any particular Conversion Common Shares, such shares shall cease
to be Conversion Common Shares when they have been (x) effectively registered under
the Securities Act and disposed of in accordance with the registration statement
covering them, (y) distributed to the public through a broker, dealer or market
maker pursuant to Rule 144 under the Securities Act (or any similar provision then
in force) or (z) repurchased by the Company.
“Investors” means the First Closing Investors and the Second Closing Investors.
“Registration Rights Agreement” means the Original Registration Rights
Agreement, as amended by the First Amendment to Registration Rights Agreement.
“Restricted Securities” means (i) the Preferred Stock issued hereunder, (ii)
the Common Stock issued upon conversion or redemption of the Preferred Stock, (iii)
the Warrants issued hereunder, (iv) the Common Stock issued upon exercise of the
Warrants and (v) any securities issued with respect to the securities referred to in
clauses (i), (ii), (iii) or (iv) above by way of a stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger, consolidation
or other reincorporation. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securities when they have been (a)
effectively registered under the Securities Act and disposed of in accordance with
the registration statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 (or any similar provision then
in force) under the Securities Act or become eligible for sale pursuant to Rule
144(k) (or any similar provision then in force) under the Securities Act or (c)
otherwise transferred and new certificates for them not bearing the Securities Act
2
legend prescribed by Section 6.3 have been delivered by the Company in
accordance with Section 6.4. Whenever any particular securities cease to be
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without being charged therefor by the Company, new securities of like tenor
not bearing a Securities Act legend of the character prescribed by Section
6.3.
“Series A Preferred Shares” means shares of Series A Preferred Stock.
“Series A Preferred Stock” means the Series A Redeemable Convertible Preferred
Stock, $.0001 par value per share of the Company.
“Shareholders Agreement” means, as the context may require, the Original
Shareholders Agreement or the Amended and Restated Shareholders Agreement.
“Transaction Documents” means this Agreement, the Shareholders Agreement, the
Registration Rights Agreement, the Series B Warrant Agreement, the Series C Warrant
Agreement and each of the other agreements, documents and instruments expressly
contemplated hereby and thereby.
(iii) to add the following definitions:
“Amended and Restated Shareholders Agreement” means the Amended and Restated
Securityholders Agreement to be dated as of the Second Closing Date among the
Company, the Investors and the other parties thereto, the form of which is attached
as Exhibit K.
“Debenture Holder” has the meaning set forth in Section 2.5.
“Debenture Holder Investors” means the Debenture Holders who are listed on
Appendix I-B as a New Series B Investor and become a party to this Agreement in
accordance with Section 2.5.
“Equity Participation Investor” means 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 hereto 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 Appendix I-B hereto.
“Equity Participation Period” has the meaning set forth in Section
3.5(a).
“Equity Participation Closing” has the meaning set forth in Section
3.5(b).
“Exercise Notice” has the meaning set forth in Section 3.5(a).
3
“First Amendment to Registration Rights Agreement” means the First Amendment to
Registration Rights Agreement dated as of the date of the Second Closing among the
Company and the Investors, the form of which is attached as Exhibit L.
“First Closing Investors” means the Investors listed on Appendix I-A.
“New Series B Investors” means the Persons identified as such on Appendix
I-B.
“Original Certificate of Designations” means the Certificate of Designations
relating to the Series A Preferred Stock, filed with the Delaware Secretary of State
on March 14, 2007 in connection with the First Closing.
“Original Registration Rights Agreement” means the Registration Rights
Agreement dated as of March 14, 2007 among the Company, the Original Series A
Investors and the other parties thereto, the form of which is attached as
Exhibit C.
“Original Series A Investors” means the Persons identified as such on
Appendix I-B.
“Original Shareholders Agreement” means the Shareholders Agreement dated as of
March 14, 2007 among the Company, the Original Series A Investors and the other
parties thereto.
“Preferred Stock” means shares of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock.
“Pro Rata Share” means, 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.
“Second Closing Investors” means the Persons listed on Appendix I-B.
“Series A Certificate of Designations” means the Amended and Restated
Certificate of Designations relating to the Series A Preferred Stock, substantially
in the form attached as Exhibit A-1.
“Series B Certificate of Designations” means the Certificate of Designations
relating to the Series B Preferred Stock, substantially in the form attached as
Exhibit A-2.
“Series B Preferred Shares” means shares of Series B Preferred Stock.
“Series B Preferred Stock” means the Series B Redeemable Convertible Preferred
Stock, $.0001 par value per share of the Company.
4
“Series B Unit” means one Series B Preferred Share and five (5) Series B
Warrants.
“Series B Warrant” means a warrant to purchase one share of Common Stock in the
form attached as Exhibit A to the Series B Warrant Agreement.
“Series B Warrant Agreement” means the Warrant Agreement dated as of the Second
Closing Date in substantially the form attached hereto as Exhibit I under
which the Series B Warrants will be issued.
“Series C Certificate of Designations” means the Certificate of Designations
relating to the Series C Preferred Stock, substantially in the form attached as
Exhibit A-3.
“Series C Preferred Shares” means shares of Series C Preferred Stock.
“Series C Preferred Stock” means the Series C Redeemable Convertible Preferred
Stock, $.0001 par value per share of the Company.
“Series C Purchaser” has the meaning set forth in Section 3.5(a).
“Series C Unit” means one Series C Preferred Share and five (5) Series C
Warrants.
“Series C Warrant” means a warrant to purchase one share of Common Stock in the
form attached as Exhibit A to the Series C Warrant Agreement.
“Series C Warrant Agreement” means the Warrant Agreement dated as of the Second
Closing Date in substantially the form attached hereto as Exhibit J under
which the Series C Warrants will be issued.
“Warrant” means any of, and “Warrants” means all of, the Series B Warrants and
the Series C Warrants.
(b) Sections 2.1, 2.2, 2.3, 2.4 and 2.5 of the Series A Preferred Stock Purchase
Agreement shall be amended to read in their entirety as follows:
2.1 Authorization of Preferred Shares. (a) Prior to the First
Closing, the Company authorized (i) the issuance and sale to the Investors of an
aggregate of up to 2,250,000 Series A Preferred Shares having the rights and
preferences set forth in the Original Certificate of Designations, and (ii) the
reservation for issuance of 2,250,000 shares of Common Stock upon conversion or
redemption of the Series A Preferred Shares.
(b) Prior to the Second Closing, the Company shall authorize (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 the Series B
Certificate of Designations, (ii) the reservation for issuance of an
5
additional 1,450,000 shares of Common Stock upon conversion or redemption of
such Series B Preferred Shares and (iii) the reservation for issuance of an
additional 7,250,000 shares of Common Stock upon exercise of the Series B Warrants.
(c) Prior to the Second Closing, the Company shall authorize (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, (ii) the reservation for issuance of an additional
1,000,000 shares of Common Stock upon conversion or redemption of such Series C
Preferred Shares and (iii) the reservation for issuance of an additional 5,000,000
shares of Common Stock upon exercise of the Series C Warrants.
(d) Upon delivery of its executed counterpart to this Agreement in accordance
with Section 4.2(b), each of the Original Series A Investors consents to the
issuance by the Company of, and waives its preemptive rights in respect of, the
Series B Preferred Stock and the Series C Preferred Stock.
2.2 Purchase and Sale of Preferred Shares. (a) Subject to the terms
and the conditions set forth herein, and in reliance upon the representations and
warranties of the Company and the First Closing Investors set forth herein or in any
certificate or other document delivered pursuant hereto, the Company issued, sold
and delivered to each First Closing Investor, free and clear of all Liens (except as
set forth in the Registration Rights Agreement and the Shareholders Agreement), and
each First Closing Investor purchased at the First Closing, the number of Series A
Preferred Shares set opposite such First Closing Investor’s name in the column
labeled “Series A Preferred Shares purchased at the First Closing” on Appendix
I-A from the Company at a purchase price of $3.7999696 per share.
(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 shall issue, sell and deliver to each Second Closing
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
shall purchase 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.
2.3 Closings. (a) The first closing took place at the offices of
GY&S, 000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000-Xxxx, Xxxx Xxxx Xxxxx, Xxxxxxx at 10:00
a.m., local time, on March 14, 2007 (the “First Closing”). The time and date on
which
6
the First Closing was held is sometimes referred to herein as the “First
Closing Date.”
(b) The second closing shall take 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, or at such other place or time or on such other date as shall
be agreed to by the Company and the Second Closing Investors (the “Second Closing”).
The time and date on which the Second Closing is actually held is sometimes
referred to herein as the “Second Closing Date.”
2.4 Delivery of Securities; Payment of Purchase Price. (a) Subject to
satisfaction or waiver of the conditions set forth in Article IV, at the
First Closing, the Company issued and delivered to each First Closing Investor
purchasing Series A Preferred Shares, free and clear of all Liens (except as set
forth in the Registration Rights Agreement and the Shareholders Agreement), a stock
certificate, duly executed by the Company and registered in the Company’s stock
ledger in the name of such First Closing Investor or such First Closing Investor’s
nominee, evidencing all of the Series A Preferred Shares purchased by such First
Closing Investor at the First Closing. Subject to satisfaction or waiver of the
conditions set forth in Article III, as payment in full for the Series A
Preferred Shares purchased by a First Closing Investor at the First Closing under
this Agreement, and against delivery of the stock certificate therefor as described
in this subparagraph (a), such First Closing Investor delivered at the First Closing
the amount set opposite such First Closing Investor’s name in the column labeled
“Purchase Price for Series A Preferred Shares to be purchased at the First Closing”
on Appendix I-A hereto to the account of the Company by wire transfer of
immediately payable funds, check or, if specified on Appendix I-A hereto,
exchange of outstanding promissory notes issued by the Company (the sum of such
amounts being referred to as the “First Purchase Price”).
(b) Subject to satisfaction or waiver of the conditions set forth in
Article IV, at the Second Closing, the Company shall issue and deliver 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 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
being 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 being 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 being 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 shall deliver at
the Second Closing the amount set opposite such
7
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”).
2.5 Debentures. Subject to the conditions of this Section 2.5,
the Parties have agreed that Persons listed in Appendix III (each, a
“Debenture Holder”) may become parties to this Agreement as “New Series B Investors”
for the purpose of purchasing Series B Units at the Second Closing on the terms, and
subject to the conditions, specified in this Agreement. The Company shall provide
written notice to each Debenture Holder, at such Debenture Holder’s address listed
on Appendix III, as to (i) the date scheduled for the Second Closing, (ii)
the opportunity for such Debenture Holder to become a party to this Agreement as a
“New Series B Investor” in accordance with this Section and (iii) the manner and
deadline for accepting such opportunity (as described in the next sentence). If any
such Debenture Holder shall determine to become a party to this Agreement as a “New
Series B Investor,” then such Debenture Holder shall, on or prior to the scheduled
date for the Second Closing, authorize the Company to cancel its original debenture
by delivering (1) its executed counterpart to this Agreement whereby such Debenture
Holder (i) agrees to observe and to be bound by, and to be entitled to the rights
provided by, this Agreement as if such Debenture Holder were named herein originally
as a “New Series B Investor,” (ii) confirms the aggregate consideration to be paid
by such Debenture Holder for Series B Units at the Second Closing by tendering an
equivalent principal amount of the debentures identified opposite such Debenture
Holder’s name on Appendix III (but excluding any warrants associated with
the tendered principal amount of debentures), (iii) confirms such Debenture Holder’s
agreement to deliver the agreed portion of the tendered principal amount of the
debentures at the Second Closing against the delivery of the Series B Units at a
purchase price of $3.00 per Series B Unit, (2) its executed joinder to the Amended
and Restated Shareholders Agreement and (3) its executed counterpart to the First
Amendment to Registration Rights Agreement. Notwithstanding the foregoing, the
ability of the Debenture Holders to become a party to this Agreement shall be
limited to no more than $1,450,000 aggregate principal amount of debentures of all
such Debenture Holders so electing to participate, with the right of the Company in
its sole discretion to allocate among such Debenture Holders as necessary in order
to meet such limitation.
(c) Sections 3.2, 3.3 and 3.4 of the Series A Preferred Stock Purchase Agreement shall
be amended to read in their entirety as follows:
3.2 Second Closing. The obligation of a Second Closing Investor to
purchase Series B Units at the Second Closing is subject to the fulfillment to the
8
satisfaction of such Second Closing Investor, at or prior to the Second Closing
of each of the following conditions:
(a) Each of the representations and warranties of the Company contained in
Article VII shall be true, correct and complete in all material respects on
and as of the Second 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;
(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
Second 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 October 31, 2007 (the date of the most recent financial statements
provided to the Second 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 performed and operated its business in accordance
with the Business Plan, and in addition shall have satisfied the following
milestones:
(i) At least eight (8) prototype units of the XT250 shall have been
manufactured and built by the Company and/or its third party manufacturer,
Xxxxxxx Electronics Group, Inc.;
(ii) At least three (3) field test units of the XT250 shall have been
installed and in operation at major distributors and/or customers, including
the U.S. Drug Enforcement Agency, Intelligent Decisions and Remetronix;
(iii) Final, operable versions of the mechanical, hardware and software
designs of the XT250 production unit shall have been formally released by
the Company and delivered to Xxxxxxx Electronics Group, Inc.;
(iv) The Company shall have obtained necessary approval relating to the
XT250 from the Federal Communications Commission;
(v) The Company shall have developed and deployed a customer field
service team reasonably capable of supporting the number
9
of XT250 production units sold and delivered to customers, or reasonably
anticipated to be sold and delivered to customers by December 31, 2007;
(vi) Completion of the planned MRI Phase 2 testing in a manner that
satisfies the objectives set forth on Appendix IV attached hereto;
(f) The Debenture Holder Investors shall, subject to the limitation set forth
in Section 2.5, have authorized the cancellation of their debentures by
delivering their counterpart signature page to this Agreement, their executed
joinder to the Amended and Restated Shareholders Agreement and their executed
counterpart to the First Amendment to Registration Rights Agreement; provided that
holders of a minimum of $1,225,000 of aggregate face principal amount of debenture
shall have either so authorized the cancellation of their debentures or shall have
shall have agreed to extend the maturity date of their debentures to December 31,
2009 and to change the interest rate thereon to 8% per annum;
(g) Each Second Closing Investor who is a holder of the notes issued by the
Company maturing on December 31, 2007 shall have authorized the cancellation of
their notes by delivering their counterpart signature page to this Agreement, their
joinder to the Amended and Restated Shareholders Agreement and their executed
counterpart to the First Amendment to Registration Rights Agreement; and
(h) 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 Certificate of Designations relating to the
Series A Preferred Stock, the Series B Certificate of Designations relating
to the Series B Preferred Stock and the Series C Certificate of Designations
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 Second Closing Date, to the effect that the
conditions specified in Sections 3.2(a) through 3.2(e) have
been satisfied fully;
(iv) certificate of the Secretary or an Assistant Secretary of the
Company, dated the Second 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; and (3) the resolutions duly
10
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;
(v) stock certificates, duly executed by the Company and registered in
the names of the Second Closing Investors (or their nominees) for the
respective number of Series B Preferred Shares set forth on Appendix
I-B, except, in the case of the Debenture Holder Investors, subject to
any allocation by the Company as permitted by Section 2.5;
(vi) its executed counterpart to this Agreement;
(vii) the Series B Warrant Agreement, duly executed by the Company,
together with Warrant Certificates (as defined in the Series B Warrant
Agreement), duly executed by the Company and registered in the names of the
Second Closing Investors (or their nominees) for the respective number of
Warrants set forth on Appendix I-B, except, in the case of the
Debenture Holder Investors, subject to any allocation by the Company as
permitted by Section 2.5);
(viii) the Series C Warrant Agreement, duly executed by the Company;
(ix) the Amended and Restated Shareholders Agreement, duly executed by
the Company and the New Series B Investors, together with satisfactory
evidence that such amendment and restatement has been approved by the
holders of at least a majority of the outstanding shares of Common Stock on
a fully-diluted basis, including a majority of the Series A Preferred Stock
voting as a separate class and on a fully-diluted and as converted basis;
(x) the First Amendment to Registration Rights Agreement, duly executed
by the Company, First Closing Investors who hold a majority of the
Registrable Securities (as defined the Original Registration Rights
Agreement) and the Second Closing Investors;
(xi) legal opinion of Blank Rome LLP, counsel for the Company, dated
the Second Closing Date, addressed to the Second Closing Investors and
substantially in the form attached hereto as Exhibit H; and
(xii) such other documents, instruments, approvals or opinions relating
to the transactions contemplated by this Agreement as the Second Closing
Investors or Sidley Austin LLP may reasonably request.
11
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 or the Second Closing, as the case may be, with the aggregate number
of Series A Preferred Shares purchased and sold on the First Closing Date or the
aggregate number of Series B Units to be purchased and sold on the Second 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 or Appendix I-B, 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, and the Non-Participating Investor
shall be deemed removed from the Second Closing, if such non-participation only
occurs at the Second 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 or (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, 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.
3.4 Default by an Investor. [Omitted].
(d) Section 3.5 shall be added to the Series A Preferred Stock Purchase Agreement as
follows:
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 1,000,000 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
12
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
3.2(h)(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 Blank
Rome LLP substantially similar to the form of the opinion attached hereto as
Exhibit H, 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.
(e) Section 4.2 of the Series A Preferred Stock Purchase Agreement shall be amended to
read in its entirety as follows:
4.2 Second Closing. The obligation of the Company to issue, sell and
deliver the Series B Preferred Shares at the Second Closing is subject to the
fulfillment to the reasonable satisfaction of the Company at or prior to the Second
Closing of the following conditions:
(a) The Second Closing Investors shall have delivered the Second Purchase Price
in accordance with Section 2.4(b);
(b) Each Second Closing Investor shall have delivered its executed counterpart
signature page to this Agreement;
(c) The Amended and Restated Shareholders Agreement, duly executed by the New
Series B Investors and the holders of at least a majority of the outstanding shares
of Common Stock on a fully-diluted basis, including a majority of the Series A
Preferred Stock voting as a separate class and on a fully-diluted and as converted
basis;
13
(d) The First Amendment to Registration Rights Agreement, duly executed by a
majority of the holders of Registrable Securities (as defined the Original
Registration Rights Agreement);
(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 Second 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.
(f) Section 7.4(a) of the Series A Preferred Stock Purchase Agreement shall be amended
to read in its entirety as follows:
(a)(i) As of the First Closing, the authorized capital stock of the Company
consisted solely of (1) ten million (10,000,000) shares of Common Stock, of which
1,696,284 shares were issued and outstanding; and (2) three million (3,000,000)
shares of preferred stock, $.0001 par value per share, of which 2,250,000 shares had
been designated as Series A Preferred Stock and 962,101 shares were issued and
outstanding. The Company had reserved for issuance (x) sufficient shares of Common
Stock for issuance upon conversion or redemption of all outstanding or authorized
Series A Preferred Shares and (y) 2,100,000 shares of Common Stock upon exercise of
options pursuant to its 2004 Stock Option Incentive Plan. Immediately after the
First Closing, the capitalization of the Company was as set forth in the
Capitalization Schedule attached to Schedule 7.4, which Capitalization
Schedule and Schedule 7.4 (A) reflected 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) set 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.
(ii) As of the Second Closing and immediately prior to the issuance of any
Series B Preferred Stock, 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 Four Hundred
Fifty Thousand (1,450,000) shares have been designated Series B Preferred Stock of
which none are issued and outstanding and (C) One Million (1,000,000) 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
14
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) Seven Million Two Hundred Fifty Thousand (7,250,000)
shares of Common Stock upon exercise of the Series B Warrants and (z) Five Million
(5,000,000) shares of Common Stock upon exercise of the Series C Warrants.
Immediately after the Second Closing, the capitalization of the Company shall be as
set forth in the Second Closing Capitalization Schedule attached to Schedule
7.4, which Second 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.
(g) References to “Series A Preferred Shares” shall be changed to read “Preferred
Stock” in each of the following Articles or Sections of the Series A Preferred Stock
Purchase Agreement: 5.1, 5.2, 5.4, 5.5, 5.9, 5,11, 5.12 (second sentence only), 5.13, 5.14,
5.17, Article VII (introductory paragraph), 7.1, 7.2, 7.4(b), 7.4(c), 7.4(g), 7.4(h), 7.15,
Article VIII, 9.2, 9.3, 9.4 and 9.5.
(h) Section 9.1 of the Series A Preferred Stock Purchase Agreement shall be amended by
inserting the phrase “expire on December 31, 2008” in lieu of the phrase “expire on August
31, 2008”.
(i) Section 9.7 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:
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
15
with a copy to:
Blank Rome LLP
0000 Xxxxx Xxxxxxx Xxxxxxx — Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
0000 Xxxxx Xxxxxxx Xxxxxxx — Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
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.
(j) Appendix I to the Series A Preferred Stock Purchase Agreement shall be amended to
rename it “Appendix I-A” and to delete in their entirety the columns labeled “Series A
Preferred Shares to be purchased at the Second Closing” and “Purchase Price for Series A
Preferred Shares to be purchased at the Second Closing”.
(k) The Series A Preferred Stock Purchase Agreement is hereby further amended to add
Appendix I-B in the form attached to this Amendment as Appendix I-B.
(l) 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.
(m) Appendix III to the Series A Preferred Stock Purchase Agreement shall be amended to
read in its entirety as set forth on Appendix III to this Amendment.
(n) Exhibit A to the Series A Preferred Stock Purchase Agreement shall be amended to
read in its entirety in the form attached to this Amendment as Exhibits A-1 through A-3.
(o) Exhibit H to the Series A Preferred Stock Purchase Agreement is hereby amended to
read in its entirety in the form attached to this Amendment as Exhibit H.
(p) The Series A Preferred Stock Purchase Agreement is hereby further amended to add
Exhibits I, J, K and L in the respective forms attached to this Amendment as Exhibits I, J,
K and L.
(q) Schedule 7.4 to the Series A Preferred Stock Purchase Agreement is hereby amended
to include the Second Closing Capitalization Schedule in the form attached to this Amendment
as the “Second Closing Capitalization Schedule.”
2. 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,” “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
16
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.
3. 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.
4. 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.
5. Transaction Expenses. Irrespective of whether the Second 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 Second Closing is consummated, the Company shall pay the reasonable fees (not to exceed
$50,000) and expenses of Sidley Austin LLP, special legal counsel to the Original Series A
Investors, and the reasonable fees and expenses of Blank Rome LLP, 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.
6. 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.
17
(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]
18
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/ Xxxxxx X. Xxxx | |||
| Name: | Xxxxxx X. Xxxx | |||
| Title: | Chairman and CEO | |||
Signature Page to First 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 First 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
