EXHIBIT B
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (this "Agreement") is made as of March 3, 2002,
by and among eMagin Corporation, a corporation incorporated under the laws of
Delaware (the "Company"), Northwind Associates, Inc., a Cayman Islands
corporation ("Purchaser"), and Feldman Weinstein, LLP, 36 West 44th Street, New
York, New York 10036 (the "Escrow Agent"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Common Stock Purchase
Agreement referred to in the first recital.
WHEREAS, the Purchaser will from time to time as requested by the
Company, purchase shares of the Company's Common Stock from the Company as set
forth in that certain Common Stock Purchase Agreement (the "Purchase Agreement")
dated the date hereof between the Purchaser and the Company, which shares shall
be issued pursuant to the terms and conditions contained herein and in the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have requested that the Escrow
Agent hold in escrow and then distribute the initial documents and certain funds
which are conditions precedent to the effectiveness of the Purchase Agreement,
and have further requested that upon each exercise of a Draw Down, the Escrow
Agent hold the relevant documents and the applicable purchase price pending
receipt by Purchaser of the securities issuable upon such Draw Down;
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
TERMS OF THE ESCROW FOR THE INITIAL CLOSING
1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds and documents which
are referenced in Section 4.2 of the Purchase Agreement.
1.2. At the Initial Closing, the Company shall deliver to the Escrow
Agent:
(i) the original executed Registration Rights Agreement in the
form of Exhibit A to the Purchase Agreement;
(ii) the original executed opinion of White & Case LLP in the
form of Exhibit C to the Purchase Agreement;
(iii)the Transfer Agent Letter (as that term is defined in
Section 8.1 of the Purchase Agreement);
(iv) the original executed Company counterpart of this Escrow
Agreement;
(v) the original executed Company counterpart of the Purchase
Agreement; and
(vi) the original executed Warrant.
1.3. Upon notice from the Company and the Purchaser that each is
satisfied that the conditions to closing in the Purchase Agreement have been
met, the Escrow Agent shall arrange to have the Purchase Agreement, this Escrow
Agreement, the Registration Rights Agreement, the Warrant, the Transfer Agent
Letter and the opinion of counsel delivered to the appropriate parties.
1.4 Wire Transfers to the Escrow Agent (not address for notice or
delivery of documents) shall be made as follows:
Chase Manhattan Bank, NA
510 Fifth Avenue
New York, NY 10036 USA
ABA Routing Number: 021000021
Account Number: 987074342668
Name of Account: Feldman Weinstein LLP Master Escrow Account
Remark: EMA
ARTICLE II
TERMS OF THE ESCROW FOR EACH DRAW DOWN
2.1. Each time the Company or Purchaser uses the escrow provision as
provided on the Purchase agreement, the Company shall send a Draw Down Notice to
the Purchaser as provided in the Purchase Agreement, it shall send a copy, by
facsimile, to the Escrow Agent.
2.2. Each time the Purchaser or Company uses the escrow provision as
provided on the Purchase agreement, and the Purchaser purchases Shares pursuant
to a Draw Down, the Purchaser shall send the applicable Purchase Price of the
Draw Down Shares to the Escrow Agent. Upon receipt of such funds, the Escrow
Agent shall advise the Company that it has received the funds for such Draw Down
Shares. The Company shall promptly, but no later than two (2) Trading Days after
receipt of such funding notice from the Escrow Agent:
(i) cause its transfer agent to issue the Draw Down Shares to
the Purchaser via DTC's DWAC system to the account specified
by the Purchaser from time to time;
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(ii) deliver the original executed attorney's opinion in the form
of Exhibit C to the Purchase Agreement to the Purchaser; and
(iii)deliver a Form 424(b) supplemental prospectus to the
Purchaser.
2.3. Upon receipt of written confirmation from the Purchaser that such
Draw Down Shares have been so deposited and the opinion and the supplemental
prospectus have been so delivered, the Escrow Agent shall, within two (2)
Trading Days, wire the Purchase Price of such Draw Down Shares per the written
instructions of the Company, net of $1,000 as escrow expenses to the Escrow
Agent.
2.4. In the event that such Draw Down Shares are not in the
Purchaser's DTC account and the opinion and supplemental prospectus are not
delivered to the Purchaser within three (3) Trading Days of the date of the
Escrow Agent's notice, then Purchaser shall have the right to demand, by notice,
the return of the Purchase Price, and such Draw Down Notice shall be deemed
cancelled.
ARTICLE III
MISCELLANEOUS
3.1. No waiver of any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
3.2. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as set forth in the Purchase
Agreement.
3.3. This Escrow Agreement shall be binding upon and shall inure to
the benefit of the permitted successors and permitted assigns of the parties
hereto.
3.4. This Escrow Agreement is the final expression of, and contains
the entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by their respective agents duly authorized in writing
or as otherwise expressly permitted herein.
3.5. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had
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prepared the same. Unless otherwise indicated, all references to Articles are to
this Escrow Agreement.
3.6. The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Except as expressly set forth herein,
any action to enforce, arising out of, or relating in any way to, any provisions
of this Escrow Agreement shall be brought as set forth in the Purchase
Agreement.
3.7. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, Purchaser and the
Escrow Agent.
3.8. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, excepting only its own gross negligence or willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent's attorneys-at-law (other than Escrow Agent itself)
shall be conclusive evidence of such good faith.
3.9. The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
3.10. The Escrow Agent shall not be liable in any respect on account
of the identity, authorization or rights of the parties executing or delivering
or purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder or hereunder.
3.11. The Escrow Agent shall be entitled to employ such legal counsel,
and other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Purchaser, and may continue to act as legal counsel for the Purchaser, from time
to time, notwithstanding its duties as the Escrow Agent hereunder. The Company
consents to the Escrow Agent in such capacity as legal counsel for the Purchaser
and waives any claim that such representation represents a conflict of interest
on the part of the Escrow Agent. The Company understands that the Purchaser and
the Escrow Agent are relying explicitly on the foregoing provision in entering
into this Escrow Agreement.
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3.12. The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Purchaser. In the event of any such resignation, the Purchaser
and the Company shall appoint a successor Escrow Agent.
3.13. If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
3.14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (i) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment of a board of arbitration or a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but the Escrow Agent shall be under no duty whatsoever to institute
or defend any such proceedings, or (ii) to deliver the escrow funds and any
other property and documents held by the Escrow Agent hereunder to a state or
Federal court having competent subject matter jurisdiction and located in the
State and City of New York in accordance with the applicable procedure therefor.
3.15. The Company and the Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses
(including reasonable attorneys' fees) in any way arising from or relating to
the duties or performance of the Escrow Agent hereunder or the transactions
contemplated hereby or by the Purchase Agreement other than any such claim,
liability, cost or expense to the extent the same shall have been determined by
final, unappealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Escrow Agent.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO ESCROW AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
this __ day of March, 2002.
eMAGIN CORPORATION
By:
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Name:
Title:
NORTHWIND ASSOCIATES, INC.
By:
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Name:
Title:
ESCROW AGENT:
FELDMAN WEINSTEIN, LLP
By:
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Name:
Title: