SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
October 21, 2004, between eMagin Corporation, a Delaware corporation (the
"Company"), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a "Purchaser" and collectively the
"Purchasers"); and
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, shares of
Common Stock and a Warrant on the Closing Date pursuant to an effective
Registration Statement on Form S-3, registration file no. 333-115161. The
Company has engaged W.R. Hambrecht + Co., LLC as its placement agent (the
"Placement Agent") in connection with such issuance and sale to the Purchasers.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Affiliate" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule
144. With respect to a Purchaser, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as
such Purchaser will be deemed to be an Affiliate of such Purchaser.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in
the State of New York are authorized or required by law or other
governmental action to close.
"Closing" means the closing of the purchase and sale of the Common
Stock and the Warrants pursuant to Section 2.1.
"Closing Date" means the Business Day on which the purchase and sale
of the Securities contemplated by this Agreement occurs.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, $0.001 par value
per share, and any securities into which such common stock may hereafter be
reclassified.
"Company Counsel" means Sichenzia Ross Friedman Ference LLP.
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"Escrow Agent" means JP Morgan Chase Bank.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Governmental Authority" means any nation or government, any state,
provincial or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government, including without limitation the Commission
and any stock exchange, securities market or self-regulatory organization.
"Lien" means, with respect to any property, any mortgage or mortgages,
pledge, hypothecation, assignment, deposit arrangement, security interest,
tax lien, financing statement, pledge, charge, or other lien, charge,
easement, encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with
respect to such property (including, without limitation, any conditional
sale or other title retention agreement having substantially the same
economic effect as any of the foregoing).
"Per Share Purchase Price" means $1.05, subject to adjustment for
reverse and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the date of
this Agreement and prior to the Closing.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"Registration Statement" has the meaning set forth in Section 3.1(a).
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as Rule 144.
"SEC Reports" shall have the meaning ascribed to such term in Section
3.1(i).
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable to each
Purchaser pursuant to this Agreement.
"Subscription Amount" means, as to each Purchaser, the amount set
forth below such Purchaser's signature block on the signature page hereto,
in United States dollars and in immediately available funds.
"Subsidiary" means, with respect to the Company, any corporation or
other entity of which at least a majority of the outstanding shares of
stock or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors (or Persons
performing similar functions) of such corporation or entity (regardless of
whether, in the case of a corporation, stock of any other class or classes
of such corporation shall or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
or controlled by the Company and/or one or more of its Affiliates.
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"Trading Market" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
American Stock Exchange ("AMEX"), the New York Stock Exchange, Nasdaq
National Market or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Warrants, the Escrow
Agreement, and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
"Warrants" means the Series F common stock purchase warrants, in the
form of Exhibit A, issuable to the Purchasers at the Closing.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. At the Closing, each Purchaser shall purchase from the
Company, severally and not jointly with the other Purchasers, and the Company
shall issue and sell to each Purchaser, (a) a number of Shares equal to such
Purchaser's Subscription Amount divided by the Per Share Purchase Price and (b)
a Warrant covering the number of Warrant Shares and with an exercise price as
determined pursuant to Section 2.2(a)(iii). The maximum aggregate number of
Shares to be sold to the Purchasers hereunder shall not exceed 13,000,000 Shares
and, if such number of Shares would exceed 13,000,000, (i) each Purchaser's
Subscription Amount shall be reduced on a pro rata basis so that such aggregate
number of Shares will equal 13,000,000 Shares and (ii) to the extent that any
Purchaser has delivered to the Company funds in excess of such Purchaser's
Subscription Amount after giving effect to such reduction, the Company shall
remit such excess to such Purchaser as promptly as reasonably practicable (but
in no event later than the Business Day following the Closing). Upon
satisfaction, or waiver by the appropriate party, of the conditions set forth in
Section 2.2, the Closing shall occur at the offices of the Company Counsel, or
such other location as the parties shall mutually agree.
2.2 Closing Conditions.
(a) At the Closing the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a number of Shares determined in accordance with
Section 2.1 above, registered in the name of such Purchaser, such
delivery to be made by crediting the account of such Purchaser or
its nominee at the Depository Trust Company with the number of
Shares required by this Agreement to be delivered (without any
restriction on further transfer or resale); provided, however,
that if a Purchaser so notifies the Company in writing on or
before the Closing Date, the Company shall effect delivery of the
Shares by delivering to such Purchaser or its nominee physical
certificates representing such Shares (without any restrictive or
other legend thereon);
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(iii) a Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to purchase
up to a number of shares of Common Stock equal to 50% of the
Shares to be issued to such Purchaser at the Closing, which
Warrant shall have an exercise price equal to $1.21 per share of
Common Stock, subject to adjustment as described therein, and be
exercisable on or after the six month anniversary of the Closing
Date until five (5) years from anniversary date;
(iv) an opinion of Company Counsel, dated as of the Closing
Date, in substantially the form set forth on Exhibit B;
(v) a certificate, signed by the Chief Executive Officer and
Chief Financial Officer of the Company, certifying that the
conditions specified in paragraphs (a) and (d) of this Section
2.2 have been fulfilled as of the Closing Date, it being
understood that such Purchaser may rely on such certificate as a
representation and warranty of the Company made herein; and
(vi) a certificate, signed by the Secretary or an Assistant
Secretary of the Company, attaching (i) the Certificate of
Incorporation and By-Laws of the Company, and (ii) resolutions
passed by its Board of Directors to authorize the transactions
contemplated hereby and by the other Transaction Documents, and
certifying that such documents are true and complete copies of
the originals and that such resolutions have not been amended or
superseded, it being understood that such Purchaser may rely on
such certificate as a representation and warranty of the Company
made herein.
(b) At or prior to the Closing each Purchaser shall deliver or
cause to be delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser; and
(ii) such Purchaser's Subscription Amount by wire transfer,
either directly or pursuant to an escrow agreement (the "Escrow
Agreement") (it being understood that such delivery shall be
deemed to have been made upon receipt by the Company from such
Purchaser of a fed wire number for such transfer).
(c) The Company's obligations to effect the Closing with each
Purchaser are conditioned upon the fulfillment (or waiver by the
Company in its sole and absolute discretion) of each of the following
events as of the Closing Date:
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(i) such Purchaser shall have made the deliveries required
by Section 2.2(b);
(ii) the Closing shall have occurred on or prior to October
25, 2004;
(iii) the representations and warranties of such Purchaser
set forthI in this Agreement shall be true and correct in all
material respects as of such date as if made on such date (except
that to the extent that any such representation or warranty
relates to a particular date, in which case such representation
or warranty shall be true and correct in all respects as of that
particular date);
(iv) such Purchaser shall have complied with or performed
all of the agreements, obligations and conditions set forth in
this Agreement that are required to be complied with or performed
by such Purchaser on or before the Closing; and
(v) there shall be no injunction, restraining order or
decree of any nature of any court or Government Authority of
competent jurisdiction that is in effect that restrains or
prohibits the consummation of the transactions contemplated
hereby or by the other Transaction Documents;
(d) Each Purchaser's obligations to effect the Closing, including
without limitation its obligation to purchase Shares and a Warrant at
the Closing, are conditioned upon the fulfillment (or waiver by such
Purchaser in its sole and absolute discretion) of each of the
following events as of the Closing Date:
(i) the Company shall have made the deliveries required by
Section 2.2(a);
(ii) the Closing shall have occurred on or prior to October
25, 2004;
(iii) the representations and warranties of the Company set
forth in this Agreement and in the other Transaction Documents
shall be true and correct in all material respects as of such
date as if made on such date (except that to the extent that any
such representation or warranty relates to a particular date, in
which case such representation or warranty shall be true and
correct in all material respects as of that particular date);
(iv) the Company shall have filed the Prospectus (as defined
below) with the Commission pursuant to Rule 424(b) of the Rules
and Regulations (as defined below), and provided such Purchaser
with a copy thereof;
(v) the Company shall have complied with or performed in all
material respects all of the agreements, obligations and
conditions set forth in this Agreement or the other Transaction
Documents that are required to be complied with or performed by
the Company on or before such date;
(vi) the Company and the Placement Agent shall have executed
a placement agency agreement (the "Placement Agency Agreement");
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(vii) the Company, the Placement Agent, and the Escrow
Agent, shall have entered into an escrow agreement for the
benefit of the Purchasers (the "Escrow Agreement");
(viii) there shall have occurred no material adverse change
in the Company's consolidated business or financial condition
since the date of the Company's most recent financial statements
contained in the SEC Reports;
(ix) the Common Stock shall be listed on the AMEX and the
Company shall have made or obtained any applications, filings or
approvals required in order for the Shares and Warrant Shares to
be traded on such exchange, and reasonable evidence thereof shall
have been provided to such Purchaser at or prior to the Closing;
(x) there shall be no injunction, restraining order or
decree of any nature of any court or Government Authority of
competent jurisdiction that is in effect that restrains or
prohibits the consummation of the transactions contemplated
hereby or by the other Transaction Documents; and
(xi) from the date hereof to the Closing Date, trading in
the Common Stock shall not have been suspended by the Commission
or the American Stock Exchange (except for any suspension of
trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally
or on any Trading Market, as reported by Bloomberg Financial
Markets shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are reported by such service, nor shall a banking moratorium have
been declared either by the United States or New York State
authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in
the reasonable judgment of each Purchaser, makes it impracticable
or inadvisable to purchase the Shares and the Warrants at the
Closing.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each Purchaser, as of the date of this Agreement, as
set forth below.
(a) The Company has filed with the Commission, on May 5, 2004, a
"shelf" registration statement on Form S-3 (Registration No.
333-115161), relating to the Common Stock and certain other securities
of the Company, under the Securities Act, and the rules and
regulations (collectively, the "Rules and Regulations") of the
Commission promulgated thereunder. Such registration statement, as
amended at the time it became effective, including the exhibits and
information (if any) deemed to be part of such registration statement
at the time of effectiveness pursuant to Rule 430A or 434(d) under the
Securities Act, is hereinafter referred to as the "Registration
Statement." The Registration Statement was declared effective by the
Commission on June 10, 2004, and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to
the Company's knowledge, no proceeding for that purpose has been
initiated or threatened by the Commission. The Company proposes to
file the Prospectus (as defined below) with the Commission pursuant to
Rule 424(b) of the Rules and Regulations. The Prospectus, in the form
in which it is to be filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations, is hereinafter referred to as the
"Prospectus," except that if any revised prospectus or prospectus
supplement shall be provided to the Placement Agent by the Company for
use in connection with the offering and sale of the Securities which
differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant
to Rule 424(b) of the Rules and Regulations), the term "Prospectus"
shall refer to such revised prospectus or prospectus supplement, as
the case may be, from and after the time it is first provided to the
Placement Agent for such use. Any preliminary prospectus or prospectus
subject to completion included in the Registration Statement or filed
with the Commission pursuant to Rule 424 under the Act is hereafter
called a "Preliminary Prospectus." Any reference herein to the
Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed
under the Exchange Act on or before the last to occur of the effective
date of the Registration Statement, the date of the Preliminary
Prospectus, or the date of the Prospectus, and any reference herein to
the terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include (i) the filing of any document
under the Exchange Act after the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated therein by
reference and (ii) any such document so filed.
(b) When the Registration Statement became effective, upon the
filing or first delivery to the Purchasers of the Prospectus, as of
the date hereof, and at the Closing Date, the Registration Statement
(and any post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration Statement
or the Prospectus) contained and will contain all statements which are
required to be stated therein in accordance with the Securities Act
and the Rules and Regulations, complied and will comply in all
material respects with the Securities Act and the Rules and
Regulations, and did not and will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein (in the
light of the circumstances under which they were made, in the case of
the Prospectus) not misleading; each Preliminary Prospectus, as of the
date filed with the Commission, did not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
except that no representation or warranty is made in this Section
3.1(b) with respect to statements or omissions made in reliance upon
and in conformity with written information furnished to the Company
expressly for inclusion in the Prospectus by a Purchaser. The Company
has not distributed any offering material in connection with the
offering and sale of the Securities, other than the Registration
Statement, the Preliminary Prospectus and the Prospectus.
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(c) Subsidiaries. The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary free
and clear of any Liens, and all the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights.
(d) Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to do business and is
in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be,
could not, individually or in the aggregate: (i) adversely affect the
legality, validity or enforceability of any Transaction Document, (ii)
have or result in or be reasonably likely to have or result in a
material adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) adversely
impair the Company's ability to perform fully on a timely basis its
obligations under any of the Transaction Documents (any of (i), (ii)
or (iii), a "Material Adverse Effect").
(e) Authorization; Enforcement. The Company has the requisite
legal and corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder or
thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized
by all necessary action on the part of the Company and no further
consent or action is required by the Company. Each of the Transaction
Documents has been (or upon delivery will be) duly executed by the
Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and general principles of equity.
Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation,
by-laws or other organizational or charter documents.
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(f) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not and
will not: (i) conflict with or violate any provision of the Company's
or any Subsidiary's certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with,
or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company
or any Subsidiary is bound or affected, or (iii) result, in a
violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or Governmental Authority to
which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or
asset of the Company or a Subsidiary is bound or affected.
(g) Issuance of the Securities. The Shares, the Warrants and the
Warrant Shares are duly authorized and, when issued and paid for in
accordance with this Agreement and the other the Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company. The
Company has reserved from its duly authorized capital stock such
number of shares of Common Stock as are issuable pursuant to this
Agreement and the Warrants.
(h) Capitalization. The capitalization of the Company is as
described in the Company's Quarterly Report on Form 10-QSB filed with
the Commission on August 16, 2004. The Company has not issued any
capital stock since such filing other than pursuant to the exercise of
employee stock options under the Company's stock option plans, the
issuance of shares of Common Stock to employees pursuant to the
Company's employee stock purchase plan and pursuant to the conversion
or exercise of outstanding options, warrants or other securities or
rights convertible or exercisable into shares of Common Stock, the
issuance of shares of Common Stock to consultants, professionals and
service providers pursuant to the Company's 2004 non-employee
compensation plan and that were specifically disclosed in such SEC
Report. Except for rights of participation granted to the persons that
participated in (i) the private placement offering completed in
January 2004, and (ii) the conversion of secured convertible notes
completed pursuant to the Master Amendment Agreement, dated as of
February 17, 2004 (as amended by Letter Agreement dated March 1,
2004), no shares of the capital stock of the Company are subject to
preemptive rights or any other similar rights of security holders of
the Company or any Liens created by or through the Company. Except as
specifically disclosed in such SEC Report, there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of
capital stock of the Company, or arrangements by which the Company is
or may become bound to issue additional shares of capital stock of the
Company or any of the Subsidiaries (whether pursuant to anti-dilution,
"reset" or other similar provisions).
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(i) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the "SEC Reports")
on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of
any such extension. The Company has identified and made available to
the Purchasers a copy of all SEC Reports filed within the 10 days
preceding the date hereof. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of
the Commission promulgated thereunder, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and
the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved ("GAAP"),
except as may be otherwise specified in such financial statements or
the notes ---- thereto, and fairly present in all material respects
the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments.
(j) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports filed with the Commission
since such date and publicly available at least two (2) Business Days
prior to the date hereof through the Commission's EDGAR database: (i)
there has been no event, occurrence or development that has had or
that could result in a Material Adverse Effect, (ii) the Company has
not incurred any liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements
pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting
or the identity of its auditors, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option or similar plans, and
(v) neither the Company nor Subsidiary has sustained or will sustain
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action,
order or decree of any court or arbitrator or Governmental Authority.
(k) Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any
court, arbitrator, or Governmental Authority (federal, state, county,
local or foreign) (collectively, an "Action") which: (i) adversely
affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there
were an unfavorable decision, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. The Company does not have pending
before the Commission any request for confidential treatment of
information. There has not been, and to the knowledge of the Company,
there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or
officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
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(l) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result
in a Material Adverse Effect.
(m) Compliance. Neither the Company nor any Subsidiary: (i) is in
default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has
the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not
such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is
or has been in violation of any statute, rule or regulation of any
Governmental Authority, except in each case as could not, individually
or in the aggregate, have or result in a Material Adverse Effect.
(n) Regulatory Permits. The Company and the Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect ("Material Permits"), and neither
the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(o) Title to Assets. The Company and the Subsidiaries have good
and marketable title in fee simple to all real property owned by them
that is material to the business of the Company and the Subsidiaries
and good and marketable title in all personal property owned by them
that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in compliance, except where the failure to be
in compliance would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(p) Patents and Trademarks. The Company and the Subsidiaries
have, or have obtained valid and enforceable licenses or options or
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and
other similar rights necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which
the failure to so have could have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). The Company is in
compliance with its license agreement with Eastman Kodak, is not in
receipt of any notices from Eastman Kodak as to any failure to be in
compliance and, to its knowledge, Eastman Kodak has not licensed the
OLED technology to any other party other than the Company. Neither the
Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights.
(q) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged. To
the best of Company's knowledge, such insurance contracts and policies
are accurate, complete and in full force and effect. Neither the
Company nor any Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant
increase in cost.
11
(r) Transactions With Affiliates and Employees. Except as set
forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer,
director, trustee or partner, in each case in excess of $200,000 in
the aggregate other than (i) for payment of salary or consulting fees
for services rendered, (ii) reimbursement for expenses incurred on
behalf of the Company and (iii) for other employee benefits, including
stock option agreements under any stock option plan duly adopted by
the Company.
(s) Sarbanes-Oxley; Internal Accounting Controls. The Company is
in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 which are applicable to it as of the date of this Agreement.
The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosures controls and procedures to ensure that
material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others
within those entities, particularly during the period in which the
Company's most recently filed periodic report under the Exchange Act
was being prepared. The Company's certifying officers have evaluated
the effectiveness of the Company's controls and procedures as of the
date prior to the filing date of the most recently filed periodic
report under the Exchange Act (such date, the "Evaluation Date"). The
Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers regarding the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date,
there have been no material changes in the Company's internal controls
(as such term is defined in Item 307(b) of Regulation S-K under the
Exchange Act) or, to the Company's knowledge, in other factors that
could materially affect the Company's internal controls.
(t) Certain Fees. Except for W.R. Hambrecht + Co., LLC and
Larkspur Capital Corporation, no brokerage or finder's fees or
commissions are or will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions
contemplated by this Agreement, and the Company has not taken any
action that would cause any Purchaser to be liable for any such fees
or commissions. The Company agrees that the Purchasers shall have no
obligation with respect to any fees or with respect to any claims made
by or on behalf of any Person for fees of the type contemplated by
this Section in connection with the transactions contemplated by this
Agreement.
(u) Compliance with Securities Act; Listing Requirements;
Registration Rights.
(i) The offer and sale of the Shares and the Warrants by the
Company to the Purchasers at the Closing, and the Warrant Shares
upon exercise of the Warrants, will be made pursuant to the
Registration Statement and the Prospectus, and will comply in all
material respects with the requirements of the Securities Act,
the Exchange Act and the Rules and Regulations.
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(ii) At the Closing, the Shares and the Warrants, and upon
exercise of the Warrants, the Warrant Shares shall be issued to
each Purchaser without any restrictive or other legend and, at
all times following the Closing, there shall exist no restriction
on, or any requirement imposed by the Company or its transfer
agent with respect to, the offer or sale of Shares, the Warrants
or the Warrant Shares by any Purchaser, regardless of whether
such offer or sale is made to the public, on an exchange (in
which the case the rules of such exchange shall apply), in a
private transaction, or otherwise.
(iii) The Company's Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on the American
Stock Exchange. Except as set forth in the SEC Reports, the
Company currently meets the continuing eligibility requirements
for listing on the American Stock Exchange and has not received
any notice from such market that it does not currently satisfy
such requirements or that such continued listing is in any way
threatened. The Company has taken no action designed to, or
which, to the knowledge of the Company, would reasonably be
expected to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common
Stock from the American Stock Exchange. The issuance and sale of
the Securities hereunder does not and will not contravene the
rules and regulations, or any listing criteria, of the American
Stock Exchange.
(iv) The Company has not granted or agreed to grant to any
person or entity any rights (including "piggy-back" registration
rights) to have any securities of the Company registered with the
Commission or any other Governmental Authority which has not been
satisfied in full prior to the date hereof; provided, however
that in the event that any of the Company's currently effective
registration statements do not remain effective or current,
certain of the persons with rights thereunder will have
additional rights to registration.
(v) Investment Company. The Company is not, and is not an
Affiliate of, and will not be immediately following the Closing, an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(w) Tax Status. The Company and each of its Subsidiaries has made
or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company
and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, and shown or determined to be due
on such returns, reports and declarations, except those being
contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim. The
Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign,
federal, statue or local tax. None of the Company's tax returns is
presently being audited by any taxing authority.
(x) Disclosure. The Company confirms that, neither the Company
nor any other Person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that
constitutes or might constitute material, non-public information and
that, following the issuance of the press release or Form 8-K
described in Section 4.3 below, no Purchaser shall be in possession of
any material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing
representations and covenants in effecting transactions in securities
of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby,
furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with
respect to such representations and warranties and do not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. The
Company acknowledges and agrees that no Purchaser makes or has made
any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section
3.2 hereof.
13
(y) No Integrated Offering. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting
on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of
the Securities Act or any applicable shareholder approval provisions,
including, without limitation, under the rules and regulations of any
exchange or automated quotation system on which any of the securities
of the Company are listed or designated.
(z) Solvency. Based on the financial condition of the Company as
of the Closing Date after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder, (i) the
Company's fair saleable value of its assets exceeds the amount that
will be required to be paid on or in respect of the Company's existing
debts and other liabilities (including known contingent liabilities)
as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including
its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected
capital requirements and capital availability thereof; and (iii) the
current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such
amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in respect
of its debt).
(aa) Acknowledgment Regarding Purchasers' Purchase of Securities.
The Company acknowledges and agrees that the Purchasers are acting
solely in the capacity of arm's length purchasers with respect to this
Agreement and the transactions contemplated hereby. The Company
further acknowledges that no Purchaser is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and
any statement made by any Purchaser or any of their respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and
is merely incidental to the Purchasers' purchase of the Securities.
The Company further represents to each Purchaser that the Company's
decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.
(bb) Certificates. No statement, representation or warranty made
by the Company in this Agreement or made in any certificate or
document required by the Transaction Documents to be delivered was or
will be, when made, inaccurate, untrue or incorrect in any material
respect.
(cc) No Stabilization. The Company and its directors, officers or
controlling persons have not taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result
in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities.
(dd) Compliance with Environmental Laws. The business and
operations of the Company have been and are being conducted in
compliance with all applicable laws, ordinances, rules, regulations,
licenses, permits, approvals, plans, authorizations or requirements
relating to occupational safety and health, or pollution, or
protection of health or the environment (including, without
limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water,
groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in
nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, and all applicable
judicial or administrative agency or regulatory decrees, awards,
judgments and orders relating thereto, except where the failure to be
in such compliance will not, individually or in the aggregate, have a
Material Adverse Effect; and the Company has not received any notice
from any governmental instrumentality or any third party alleging any
material violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites
containing hazardous substances and/or damages to natural resources).
14
(ee) No Unlawful Payments. The Company and Subsidiary have not at
any time since their respective incorporations, directly or
indirectly, (i) made any unlawful contribution to any candidate for
public office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction
thereof.
(ff) Compliance with ERISA. Each material employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that is maintained,
administered or contributed to by the Company or any of its affiliates
for employees or former employees of the Company and Subsidiary has
been maintained in material compliance with its terms and the
requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, has occurred which would result in a material
liability to the Company with respect to any such plan excluding
transactions effected pursuant to a statutory or administrative
exemption; and for each such plan that is subject to the funding rules
of Section 412 of the Code or Section 302 of ERISA, no "accumulated
funding deficiency" as defined in Section 412 of the Code has been
incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but
unpaid contributions) exceeds the present value of all benefits
accrued under such plan determined using reasonable actuarial
assumptions.
3.2 Representations and Warranties of the Purchasers. Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser, if applicable, is an
entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Such Purchaser has the
full right, corporate or partnership power and authority to enter into
and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized
by all necessary action on the part of such Purchaser. Each
Transaction Document to which it is party has been duly executed by
such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance
with its terms except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors'
rights generally, (ii) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies
and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.
(b) Experience of such Purchaser. Such Purchaser, alone or
together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable
of evaluating the merits and risks of the prospective investment in
the Securities, and has so evaluated the merits and risks of such
investment. Such Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
(c) Residence. If such Purchaser is an individual, then such
Purchaser resides in the state or province identified in the address
of such Purchaser set forth on the signature page hereto; if such
Purchaser is a partnership, corporation, limited liability company or
other entity, then the office or offices of such Purchaser in which
its investment decision was made is located at the address or
addresses of such Purchaser set forth on the signature page hereto.
15
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 No Transfer Restrictions. Certificates evidencing the Shares, the
Warrants and the Warrant Shares shall not contain any legend restricting their
transferability by the Purchaser. The Company shall cause its counsel to issue a
legal opinion to the Company's transfer agent if required by the Company's
transfer agent to effect a transfer of any of the Securities.
4.2 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants (the
"Reserved Amount"). The Reserved Amount shall be allocated pro rata among the
Purchasers on the basis of the number of Shares purchased by each Purchaser at
the Closing. In the event that a Purchaser shall sell or otherwise transfer any
of such Purchaser's Warrant, each transferee shall be allocated a pro rata
portion of such transferor's Reserved Amount. Any portion of the Reserved Amount
allocated to a Purchaser or other Person which no longer holds any Warrants
shall be reallocated to the remaining Purchasers pro rata based on the number of
Warrant Shares issuable to each such Purchaser at such time. In the event that
the Reserved Amount is insufficient at any time to cover one hundred percent
100% of the Warrant Shares issuable upon exercise of the Warrants (without
regard to any restriction on such exercise), the Company shall take such action
(including without limitation holding a meeting of its stockholders) to increase
the Reserved Amount to cover 100% of such Warrant Shares, such increase to be
effective not later than the thirtieth (30th) day (or sixtieth (60th) day, in
the event stockholder approval is required for such increase) following the
Company's receipt of written notice of such deficiency. While any Warrants are
outstanding, the Company shall not reduce the Reserved Amount without obtaining
the prior written consent of each Purchaser then holding a Warrant.
4.3 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
eastern time on the first (1st) Business Day following the Closing Date, issue a
press release or file a Current Report on Form 8-K reasonably acceptable to each
Purchaser disclosing all material terms of the transactions contemplated hereby.
4.4 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information in which such Purchaser specifically agrees to receive such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenants in effecting transactions in securities of
the Company.
4.5 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities in the ordinary course of its business and consistent with
past practice; provided, however, that the Company shall not use such proceeds
(i) to pay down, repurchase or redeem any debt or securities issued by the
Company or any Subsidiary, (ii) to pay any dividend or make any distribution on
any such securities, or (iii) to repay any loan made to or incurred by any
employee or Affiliate of the Company.
16
4.6 Indemnification.
(a) The Company shall indemnify and hold harmless each Purchaser,
each officer, director, employee, agent and representative of such
Purchaser, and each person, if any, who controls such Purchaser within
the meaning of the Securities Act or the Exchange Act against any
losses, claims, damages, liabilities or reasonable out-of-pocket
expenses (whether joint or several) (collectively, including legal or
other expenses reasonably incurred in connection with investigating or
defending same, "Losses"), insofar as any such Losses arise out of or
are based upon (i) any misrepresentation, breach or inaccuracy, or any
allegation by a third party that, if true, would constitute a breach
or inaccuracy, of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or any other
Transaction Document; (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or (iii) the
omission or alleged omission to state therein a material fact required
to be stated in the Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Subject to the provisions of paragraph (c) below, the Company will
reimburse such Purchaser, and each such officer, director, employee,
agent, representative or controlling person, for any legal or other
out-of-pocket expenses reasonably incurred by any such entity or
person in connection with investigating or defending any Loss as such
expenses are incurred. The foregoing indemnity shall not apply to
amounts paid in settlement of any Loss if such settlement is effected
without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be obligated to
indemnify any person for any Loss to the extent that such Loss is (x)
based upon and is in conformity with written information furnished by
such person expressly for use in the Registration Statement or (y)
based on a failure of such person to deliver or cause to be delivered
the final prospectus contained in the Registration Statement and made
available by the Company, if such delivery is required by applicable
law. The Company shall not enter into any settlement of a Loss that
does not provide for the unconditional release of such Purchaser from
all liabilities and obligations relating to such Loss.
(b) To the extent permitted by law, each Purchaser, acting
severally and not jointly, shall indemnify and hold harmless the
Company, each officer, director, employee, agent and representative of
the Company, and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any
Losses to the extent (and only to the extent) that any such Losses
arise out of or are based upon (i) any misrepresentation, breach or
inaccuracy, or any allegation by a third party that, if true, would
constitute a breach or inaccuracy, of any of the representations,
warranties, covenants or agreements made by such Purchaser in this
Agreement; or (ii) written information furnished by such Purchaser
expressly for use in the Registration Statement. Subject to the
provisions of paragraph (c) below, such Purchaser will reimburse any
legal or other expenses as reasonably incurred by the Company and any
such officer, director, employee, agent, representative, or
controlling person, in connection with investigating or defending any
such Loss; provided, however, that the foregoing indemnity shall not
apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of such Purchaser (which
consent shall not be unreasonably withheld); and provided, further,
that, in no event shall any indemnity under clause (ii) of this
paragraph exceed the net proceeds resulting from the sale of Warrant
Shares sold by such Purchaser under the Registration Statement.
17
(c) Promptly after receipt by an indemnified party under this
Section 4.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 4.6, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the
right to participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with
the reasonably incurred fees and expenses of one such counsel for all
indemnified parties to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate under applicable
standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, to the extent prejudicial
to its ability to defend such action, shall relieve such indemnifying
party of any liability to the indemnified party under this Section 4.6
with respect to such action, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this
Section 4.6 or with respect to any other action unless the
indemnifying party is materially prejudiced as a result of not
receiving such notice.
(d) In the event that the indemnity provided in paragraph (a)(ii)
or (iii) or paragraph (b)(ii) of this Section 4.6 is unavailable or
insufficient to hold harmless an indemnified party for any reason, the
Company and each Purchaser agree, severally and not jointly, to
contribute to the aggregate Losses to which the Company or such
Purchaser may be subject in such proportion as is appropriate to
reflect the relative fault of the Company and such Purchaser in
connection with the statements or omissions which resulted in such
Losses; provided, however, that in no case shall such Purchaser be
responsible for any amount in excess of the net proceeds resulting
from the sale of the Warrant Shares sold by it under the Registration
Statement. Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to information
provided by the Company or by such Purchaser. The Company and each
Purchaser agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 4.6, each
person who controls a Purchaser within the meaning of either the
Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of such Purchaser shall have the
same rights to contribution as such Purchaser, and each person who
controls the Company within the meaning of either the Securities Act
or the Exchange Act and each officer, director, employee, agent or
representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).
4.7 Registration Statement.
(a) The Company will maintain the effectiveness of the
Registration Statement until the earlier to occur of (i) the date that
is five and a half years from the Closing Date, and (ii) the date on
which no Warrants are outstanding.
(b) While any Warrants are outstanding, the Company will:
(i) use commercially reasonable efforts to register or
qualify the Warrant Shares under the securities or "blue sky"
laws of the State of New York and such other jurisdictions within
the United States as shall be reasonably requested from time to
time by a Purchaser, and do any and all other acts or things
which may be necessary or advisable to enable such Purchaser to
consummate the public sale or other disposition of the Warrant
Shares in such jurisdictions; provided that the Company shall not
be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such jurisdiction;
18
(ii) notify each Purchaser immediately after becoming aware
of the occurrence of any event (but shall not, without the prior
written consent of such Purchaser, disclose to such Purchaser any
facts or circumstances constituting material non-public
information) as a result of which the prospectus included in the
Registration Statement, as then in effect, contains an untrue
statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing, and as promptly as practicable prepare and file with
the Commission and furnish to each Purchaser a reasonable number
of copies of a supplement or an amendment to such prospectus as
may be necessary so that such prospectus does not contain an
untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
then existing;
(iii) use commercially reasonable efforts to prevent the
issuance of any stop order or other order suspending the
effectiveness of the Registration Statement and, if such an order
is issued, to obtain the withdrawal thereof at the earliest
possible time and to notify each Purchaser of the issuance of
such order and the resolution thereof;
(iv) permit counsel for each Purchaser to review the
Registration Statement and all amendments and supplements
thereto, and any comments made by the staff of the Commission
with respect thereto, and the Company's responses thereto, within
a reasonable period of time prior to the filing thereof with the
Commission (or, in the case of comments made by the staff of the
Commission, within a reasonable period of time following the
receipt thereof by the Company), but only to the extent that such
comments concern such Purchaser and/or the transactions
contemplated by the Transaction Documents; and
(v) in the event that, at any time, the number of shares
available under the Registration Statement is insufficient to
cover all of the Warrant Shares issuable under the Warrants
(without regard to any restriction on the exercise thereof) the
Company shall promptly amend the Registration Statement or file a
new registration statement, in any event as soon as practicable,
but not later than the tenth (10th) day following notice from a
Purchaser of the occurrence of such event, so that the
Registration Statement or such new registration statement, or
both, covers no less than one hundred percent (100%) of the
Warrant Shares issuable under the Warrants (without regard to any
restriction on the exercise of such Warrants). The Company shall
use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable
following the filing thereof.
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ARTICLE V.
MISCELLANEOUS
5.1 Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.2 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Business Day or later than 6:30 p.m. (New York City time) on any
Business Day, (c) the second Business Day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given, addressed as
follows:
If to the Company:
2070 Route 52
Hopewell Junction, NY 12533
Attn: Chief Financial Officer
Tel: (845) 838-7900
Fax: (914) 892-1901
With a copy to:
Richard A. Friedman, Esq.
Darrin M. Ocasio, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of Americas
New York, NY 10018
and if to a Purchaser, to such Purchaser's address appearing on the
signature page hereof executed by such Purchaser, or as shall be designated by
such Purchaser in writing to the Company in accordance with this Section 5.2.
5.3 Amendments; Waivers; Assignment. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. Upon
the transfer of any Warrant or Warrant Shares by a Purchaser, the rights of such
Purchaser hereunder with respect to the securities so transferred shall be
assigned automatically to the transferee thereof, and such transferee shall
thereupon be deemed to be a "Purchaser" for purposes of this Agreement, as long
as: (i) the Company is, within a reasonable period of time following such
transfer, furnished with written notice of the name and address of such
transferee, (ii) the transferee agrees in writing with the Company to be bound
by all of the provisions hereof, and (iii) such transfer is made in accordance
with the applicable requirements of the Securities Purchase Agreement.
5.4 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
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5.5 Governing Law; Venue; Waiver of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, borough of
Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper or inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. The parties hereby waive all rights to a trial
by jury. If either party shall commence an action or proceeding to enforce any
provisions of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorney's fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.6 Survival. The representations, warranties and covenants contained
herein shall survive the Closing and delivery and/or exercise of the Securities,
as applicable.
5.7 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.8 Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.9 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
investor hereunder. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant hereto or thereto, shall
be deemed to constitute any Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or a "group" as described in Section 13(d)
of the Exchange Act, or create a presumption that any Purchasers are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled individually to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose.
5.10 Injunctive Relief. The parties hereto acknowledge and agree that a
breach by either of their obligations hereunder will cause irreparable harm the
other party and that the remedy or remedies at law for any such breach will be
inadequate and agrees, in the event of any such breach, in addition to all other
available remedies, the non-breaching party shall be entitled to an injunction
restraining any breach and requiring immediate and specific performance of such
obligations without the necessity of showing economic loss.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
EMAGIN CORPORATION
By:
--------------------
Name: JOHN ATHERLY
Title: Chief Financial Officer
PURCHASER
By:
ADDRESS:
________________________
________________________
With a copy to:
________________________
________________________
Number of Shares to be Purchased:
Number of Warrants to be Purchased:
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