PLACEMENT AGENCY AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made as of the 21st day of October
2004, by and between eMagin Corporation (the "COMPANY") and W.R. Hambrecht +
Co., LLC (the "AGENT").
WITNESSETH:
WHEREAS, the Company desires to consider strategic alternatives
available to it which include, but are not limited to, issuing and selling
equity of the Company in the amount of $10,772,500.
WHEREAS, the Agent has offered to assist the Company in identifying
potential purchasers of 10,259,524 shares (the "Shares") of the Company's common
stock, $0.001 par value per share (the "Common Stock"), and warrants to purchase
5,129,762 shares of Common Stock (the "Warrants", and together with the Shares,
the "Securities") and the Company desires to secure the services of the Agent on
the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:
All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Securities Purchase Agreement (the "Securities
Purchase Agreement"), dated as of October 21, 2004, between the Company and the
Purchasers identified on the signature pages thereto.
1. ENGAGEMENT OF AGENT. The Company hereby appoints the Agent as
exclusive agent to procure potential purchasers of the Company's Securities. The
Agent, on the basis of the representations and warranties contained herein and
in the Securities Purchase Agreement, but subject to the terms and conditions
herein and therein set forth, accepts such appointment. This appointment shall
be irrevocable for the period commencing as of the date hereof and ending upon
the termination of the Agreement in accordance with Section 8 hereof.
2. DELIVERY AND PAYMENT. Concurrently with the execution and delivery
of this Agreement, the Company, the Agent, and JP Morgan Chase Bank as escrow
agent (the "Escrow Agent"), shall enter into an Escrow Agreement substantially
in the form of Exhibit A attached hereto (the "Escrow Agreement"), pursuant to
which an escrow account will be established, at the Company's expense, for the
benefit of the Purchasers (the "Escrow Account"). Prior to the Closing Date, (i)
each of the Purchasers will deposit an amount equal to the price per Share as
shown on the cover page of the Prospectus multiplied by the number of Shares
purchased by it in the Escrow Account, and (ii) the Escrow Agent will notify the
Company and the Agent in writing whether the Purchasers have deposited in the
Escrow Account funds in the amount equal to the number of Shares purchased by
them (the "Subscriber's Funds") into the Escrow Account. At the Closing Date, or
at such other time on such other date as may be agreed upon by the Company and
the Agent but in no event prior to the date on which the Escrow Agent shall have
received any or all of the Subscriber's Funds, the Escrow Agent will release the
Subscriber's Funds that have been received from the Escrow Account for
collection by the Company and the Agent as provided in the Escrow Agreement and
the Company shall deliver the Securities to the Purchasers, which delivery may
be made through the facilities of the Depository Trust Company.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In order to induce
the Agent to enter into this Agreement, the Company hereby represents and
warrants to and agrees with the Agent as follows:
(a) ACCURACY OF INFORMATION. All information provided by the Company
to the Agent regarding the Company is true and does not omit any material fact
necessary to make such information, in light of the circumstances under which it
was made, not misleading. If, prior to Closing, any event occurs or any event
known to the Company relating to or affecting the Company and/or the Agent shall
occur as a result of which the information provided to the Agent becomes
incorrect or misleading, the Company shall inform the Agent of such occurrence
promptly, and will, if requested, confirm such notification in writing.
(b) NO DEFAULTS. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated herein, and
compliance with the terms of this Agreement do not and will not (i) conflict
with or violate any provision of the Company's or the Subsidiary's certificate
or articles of incorporation, by-laws 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 Subsidiary is a party or by which
any property or asset of the Company or 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 Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or Subsidiary is bound or affected.
(c) INCORPORATION AND AUTHORIZATION. The Company is duly formed and
validly existing and in good standing as a corporation under the laws of the
State of its incorporation. The execution and delivery by the Company of this
Agreement and the Escrow Agreement and the consummation by it of the transaction
contemplated hereby have been duly authorized by all necessary action, and no
further consent or action is required by the Company. This Agreement and the
Escrow Agreement are the valid, binding and legally enforceable obligations of
the Company.
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(d) RELIANCE BY AGENT. The Company hereby acknowledges that the
Agent may rely on the representations, warranties and covenants set forth in
Articles III and V of the Securities Purchase Agreement as if such
representations, warranties and covenants were made to the Agent directly.
4. AGREEMENTS OF THE COMPANY. The Company covenants and agrees with
the Agent as follows:
(a) The Registration Statement has become effective, and if Rule
430A is used or the filing of the Prospectus is otherwise required under Rule
424(b), the Company will file the Prospectus (properly completed if Rule 430A
has been used) pursuant to Rule 424(b) within the prescribed time period and
will provide a copy of such filing to the Agent promptly following such filing.
(b) The Company will not, during such period as the Prospectus would
be required by law to be delivered in connection with sales of the Securities by
an underwriter or dealer in connection with the offering contemplated by this
Agreement and the Securities Purchase Agreement, file any amendment or
supplement to the Registration Statement or the Prospectus, except as required
by law, unless a copy thereof shall first have been submitted to the Agent
within a reasonable period of time prior to the filing thereof and the Agent
shall not have reasonably objected thereto in good faith.
(c) The Company will notify the Agent promptly, and will, if
requested, confirm such notification in writing, (1) when any post-effective
amendment to the Registration Statement becomes effective, but only during the
period mentioned in Section 4(b); (2) of any request by the Commission for any
amendments to the Registration Statement or any amendment or supplements to the
Prospectus or for additional information, but only during the period mentioned
in Section 4(b); (3) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, but only during the
period mentioned in Section 4(b); (4) of becoming aware of the occurrence of any
event during the period mentioned in Section 4(b) that in the judgment of the
Company makes any statement made in the Registration Statement or the Prospectus
untrue in any material respect or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading;
and (5) of receipt by the Company of any notification with respect to any
suspension of the qualification of the Securities for offer and sale in any
jurisdiction, but only during the period commencing on the date of this
Agreement and ending on the fifth anniversary following the date of this
Agreement. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement in connection with the offering
contemplated hereby, the Company will make every reasonable effort to obtain the
withdrawal of any such order at the earliest possible moment. If the Company has
omitted any information from the Registration Statement, pursuant to Rule 430A,
it will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to said Rule 430A and to notify
the Agent promptly of all such filings.
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(d) If, at any time when a Prospectus relating to the Securities is
required to be delivered under the Act, the Company becomes aware of the
occurrence of any event as a result of which the Prospectus, as then amended or
supplemented, would, in the reasonable judgment of counsel to the Company or
counsel to the Agent, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would, in the
reasonable judgment of counsel to the Company or counsel to the Agent, include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, or if for any other
reason it is necessary, in the reasonable judgment of counsel to the Company or
counsel to the Agent, at any time to amend or supplement the Prospectus or the
Registration Statement to comply with the Act or the Rules and Regulations, the
Company will promptly notify the Agent and, subject to Section 4(b) hereof, will
promptly prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance
and will deliver to the Agent, without charge, such number of copies thereof as
the Agent may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Agent, and the Agent
agrees to provide to each Purchaser, prior to the Closing, a copy of the
Prospectus and any amendments or supplements thereto.
(e) The Company will furnish to the Agent and its counsel, without
charge, with (i) one copy of the Registration Statement, including financial
statements and schedules, and all exhibits thereto and (ii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of each Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto as the Agent may reasonably request.
(f) The Company will comply with all the undertakings contained in
the Registration Statement.
(g) Prior to the sale of the Securities to the Purchasers, the
Company will cooperate with the Agent and its counsel in connection with the
registration or qualification of the Securities for offer and sale under the
state securities or blue sky laws of such jurisdictions as the Agent may
reasonably request; provided, that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject.
(h) The Company will apply the net proceeds from the offering and
sale of the Securities in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
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(i) The Company will use its best efforts to ensure that the
Securities are listed on AMEX at the time of the Closing.
(j) For a period of two years from the Closing Date, the Company
will furnish to the Agent, as soon as they are available, copies of all reports
or other communications (financial or other) furnished to holders of the
Securities, other than any such reports or communications filed with the
Commission pursuant to the Commission's EDGAR system.
(k) The Company will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the Common Stock to
facilitate the sale or resale of any of the Securities.
5. AGENT'S FEE; EXPENSES.
(a) The Company shall pay the Agent a cash fee equal to six percent
(6%) of the gross proceeds received by the Company from the sale of the
Securities as set forth on the cover page of the Prospectus; provided such
subscriptions are accepted by the Company.
(b) Whether or not the transactions contemplated by this Agreement or
the Securities Purchase Agreement are consummated or this Agreement is
terminated, the Company will pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement or the
Securities Purchase Agreement, including but not limited to costs and expenses
of or relating to (1) the preparation, printing and filing of the Registration
Statement (including each pre- and post-effective amendment thereto) and
exhibits thereto, each Preliminary Prospectus, the Prospectus and any amendment
or supplement to the Prospectus, including all fees, disbursements and other
charges of counsel to the Company, (2) the preparation and delivery of the
Warrants and the certificates representing the Warrant Shares and the Shares,
(3) furnishing (including costs of shipping and mailing) such copies of the
Registration Statement (including all pre- and post-effective amendments
thereto), the Prospectus and any Preliminary Prospectus, and all amendments and
supplements to the Prospectus, as may be requested for use in connection with
the direct placement of the Securities, (4) the listing of the Securities on
AMEX, (5) any filings required to be made by the Agent with the NASD, and the
fees, disbursements and other reasonable charges of counsel for the Agent in
connection therewith (6) the registration or qualification of the Securities for
offer and sale under the securities or blue sky laws of such jurisdictions
designated by the Agent, including the reasonable fees, disbursements and other
charges of counsel to the Agent in connection therewith and the preparation and
printing of preliminary, supplemental and final blue sky memoranda, (7) fees,
disbursements and other charges of counsel to the Company, and (8) fees and
disbursements of the Accountants incurred in delivering the letter(s) described
in Section 6(f) below and the fees of the Escrow Agent. The Company shall
reimburse the Agent, on a fully accountable basis, for all reasonable travel,
legal and other out-of-pocket expenses; provided, however that the Company shall
not be obligated to reimburse the Agent for any costs and expenses to the extent
that the aggregate amount of such costs and expenses exceeds $50,000 without the
Company's prior written consent.
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6. CONDITIONS TO THE OBLIGATIONS OF THE AGENT. The obligations of
the Agent hereunder are subject to the following conditions:
(a) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Securities under the securities or blue sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by any securities or other
governmental authority (including, without limitation, the Commission), (iii)
any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission or such authorities and (iv) after the date hereof no amendment
or supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Agent and the Agent did
not object thereto in good faith, and the Agent shall have received certificates
of the Company, dated the Closing Date and signed by the President and Chief
Executive Officer or the Chairman of the Board of Directors of the Company, and
the Chief Financial Officer of the Company, to the effect of clauses (i), (ii)
and (iii).
(b) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii) the
Company shall not have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in the judgment of the Agent any
such development makes it impracticable or inadvisable to consummate the sale
and delivery of the Securities to Purchasers at the public offering price.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers or directors in their capacities as such, before or by any Federal,
state or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, which litigation or proceeding is
reasonably expected by management to have a Material Adverse Effect.
(d) Each of the representations and warranties of the Company
contained herein and in the Securities Purchase Agreement shall be true and
correct in all material respects at the Closing Date, as if made on such date,
and all covenants and agreements herein contained and in the Securities Purchase
Agreement to be performed on the part of the Company and all conditions herein
contained and in the Securities Purchase Agreement to be fulfilled or complied
with by the Company at or prior to the Closing Date shall have been duly
performed, fulfilled or complied with in all material respects.
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(e) The Agent shall have received an opinion, dated the Closing Date
(or such other date as may be set forth in a representation or warranty), of
Sichenzia Ross Friedman Ference LLP, as counsel to the Company, in form and
substance reasonably satisfactory to the Agent.
(f) At the Closing Date, the Accountants shall have furnished to the
Agent a letter, dated the date of its delivery (the "Letter"), addressed to the
Agent and in form and substance satisfactory to the Agent, confirming that (i)
they are independent public accountants with respect to the Company within the
meaning of the Act and the Rules and Regulations; (ii) in their opinion, the
financial statements and any supplementary financial information included in the
Registration Statement and examined by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations; (iii) on the basis of procedures, not constituting an
examination in accordance with generally accepted auditing standards, set forth
in detail in the Original Letter, a reading of the latest available interim
financial statements of the Company, inspections of the minute books of the
Company since the latest audited financial statements included in the
Prospectus, inquiries of officials of the Company responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in the Letter to a date not more than five days prior to the date of the Letter,
nothing came to their attention that caused them to believe that: (A) as of a
specified date not more than five days prior to the date of the Letter, there
have been any changes in the capital stock of the Company or any increase in the
long-term debt of the Company, or any decreases in net current assets or net
assets or other items specified by the Agent, or any increases in any items
specified by the Agent, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in the Letter; and (B) for the period from the
date of the latest financial statements included in the Prospectus to the
specified date referred to in Clause (A), there were any decreases in revenues
or the total or per share amounts of net income or other items specified by the
Agent, or any increases in any items specified by the Agent, in each case as
compared with the comparable period of the preceding year and with any other
period of corresponding length specified by the Agent, except in each case for
decreases or increases which the Prospectus discloses have occurred or may occur
or which are described in the Original Letter; and (iv) in addition to the
examination referred to in their reports included in the Prospectus and the
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Agent, which are derived
from the general accounting, financial or other records of the Company, as the
case may be, which appear in the Prospectus or in Part II of, or in exhibits or
schedules to, the Registration Statement, and have compared such amounts,
percentages and financial information with such accounting, financial and other
records and have found them to be in agreement.
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(g) At the Closing Date, there shall be furnished to the Agent a
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Agent to the effect that each signer has carefully
examined the Registration Statement and that to each of such person's knowledge:
(i) As of the date of such certificate, (x) the Registration
Statement does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading and (y) the Prospectus does not
contain any untrue statement of a material fact or omit 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 and (B) no event has occurred as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect.
(ii) Each of the representations and warranties of the Company
contained in this Agreement and the Securities Purchase Agreement were, when
originally made, and are, at the time such certificate is delivered, true and
correct in all material respects.
(iii) Each of the covenants required herein and in the Securities
Purchase Agreement to be performed by the Company on or prior to the date of
such certificate has been duly, timely and fully performed and each condition
herein required to be complied with by the Company on or prior to the delivery
of such certificate has been duly, timely and fully complied with.
(iv) No stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no proceedings
for that purpose have been instituted or are contemplated by the Commission.
(v) Subsequent to the date of the most recent financial statements
in the Prospectus, there has been no material adverse change.
(h) The Securities shall be qualified for sale in such states as the
Agent may reasonably request, and each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing Date; provided
that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to taxation or general service of process in any jurisdiction where
it is not now so subject.
(i) The Company shall have furnished or caused to be furnished to
the Agent such certificates, in addition to those specifically mentioned herein,
as the Agent may have reasonably requested as to the accuracy and completeness
at the Closing Date of any statement in the Registration Statement or the
Prospectus, as to the accuracy at the Closing Date of the representations and
warranties of the Company as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Agent.
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(j) Each officer and director of the Company listed on Exhibit B
hereto has delivered to the Agent an agreement in the form of Attachment A
hereto to the effect that he or she will not, for a period of 60 days after the
date hereof, without the prior written consent of the Agent, offer to sell,
sell, contract to sell, grant any option to purchase or otherwise dispose (or
announce any offer, sale, grant of any option to purchase or other disposition)
of any shares of capital stock, directly or indirectly, of the Company or
securities convertible into, or exchangeable or exercisable for, shares of
capital stock of the Company; provided, however, that K.C. Park may sell 150,000
shares.
(k) The Company has delivered to the Agent an agreement in the form
of Attachment B hereto to the effect that it will not, for a period of 60 days
after the date hereof, without the prior written consent of the Agent, offer to
sell, sell, contract to sell, grant any option to purchase or otherwise dispose
(or announce any offer, sale, grant of any option to purchase or other
disposition) of any shares of capital stock of the Company or securities
convertible into, or exchangeable or exercisable for, shares of capital stock of
the Company, except with respect to (i) up to an additional $3 million of
securities that may be directly placed by the Company with its existing
shareholders, within 45 days from the date hereof, on the same terms and
conditions as the sale of the Securities pursuant to the Securities Purchase
Agreement, (ii) the issuance of shares to legal counsel for services rendered or
to be rendered, and (iii) the issuance of shares of Common Stock upon the
exercise of stock options and warrants outstanding as of the date hereof the and
the issuance of Common Stock or stock options under any benefit plan of the
Company.
7. NON-CIRCUMVENTION. The Company agrees to maintain the
confidentiality of the Agent's clients, except as required by applicable law.
Such clients shall be those entities or individuals that the Agent has procured
for investment in the Company, which are identified on Schedule 7 hereto.
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8. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless the Agent, the
directors, officers, employees and agents of the Agent and each person, if any,
who controls the Agent within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, from and against any and all losses, claims, liabilities,
expenses and damages, joint or several, (including any and all investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which it, or any of them, may become subject under the Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement made by the Company in
Section 3 of this Agreement or the Securities Purchase Agreement, (ii) any
untrue statement or alleged untrue statement of any material fact contained in
(A) any Preliminary Prospectus, the Registration Statement or the Prospectus or
any amendment or supplement to the Registration Statement or the Prospectus and
(B) any application or other document, or any amendment or supplement thereto,
executed by the Company based upon written information furnished by or on behalf
of the Company filed in any jurisdiction in order to qualify the Securities
under the securities or blue sky laws thereof or filed with the Commission or
any securities association or securities exchange (each, an "Application"), or
(iii) the omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any supplement to the
Registration Statement or the Prospectus or any Application a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable to the extent that such loss,
claim, liability, expense or damage arises from the sale of the Securities in
the public offering to any person and is based solely on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Agent furnished in writing to the
Company by the Agent expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus; and provided further, that such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any Agent (or any person controlling such Agent) from whom the person
asserting any such loss, claim, damage, liability or action purchased Securities
which are the subject thereof to the extent that any such loss, claim, damage or
liability (i) results from the fact that such Agent failed to send or give a
copy of the Prospectus (as amended or supplemented) to such person at or prior
to the confirmation of the sale of such Securities to such person in any case
where such delivery is required by the Act and (ii) arises out of or is based
upon an untrue statement or omission of a material fact contained in such
Preliminary Prospectus that was corrected in the Prospectus (or any amendment or
supplement thereto), unless such failure to deliver the Prospectus (as amended
or supplemented) was the result of noncompliance by the Company with Section
4(d). This indemnity agreement will be in addition to any liability which the
Company may otherwise have. The Company will not, without the prior written
consent of the Agent (which will not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not such Agent or any person who controls such
Agent within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act is a party to each claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the Agent
and each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
(b) The Agent will indemnify and hold harmless the directors,
officers, employees and agents of the Company, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, to the same extent as the foregoing indemnity from the
Company to the Agent, but only insofar as losses, claims, liabilities, expenses
or damages arise out of or are based on any untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to the Agent furnished in writing to the Company by the
Agent expressly for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus. This indemnity agreement will be in addition to
any liability that the Agent might otherwise have. The Company acknowledges
that, for all purposes under this Agreement, the statements set forth under the
heading "Plan of Distribution" in any Preliminary Prospectus and the Prospectus
constitute the only information relating to the Agent furnished in writing to
the Company by the Agent expressly for inclusion in the Registration Statement,
any Preliminary Prospectus or the Prospectus.
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(c) Any party that proposes to assert the right to be indemnified
under this Section 8 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 8, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 8 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that a conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party that would prevent the counsel
selected by the indemnifying party from representing the indemnified party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. The
Company will not, without the prior written consent of the Agent (which consent
will not be unreasonably withheld), settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification has been sought hereunder (whether or not
the Agent or any person who controls the Agent within the meaning of Section 15
of the Act or Section 20 of the Exchange Act is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Agent and each such controlling person from all
liability arising out of such claim, action, suit or proceeding. An indemnifying
party will not be liable for any settlement of any action or claim effected
without its written consent (which consent will not be unreasonably withheld).
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(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 8 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Agent, the Company
and the Agent will contribute to the total losses, claims, liabilities, expenses
and damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Agent such as persons who
control the Company within the meaning of the Act or the Exchange Act, officers
of the Company who signed the Registration Statement and directors of the
Company, who also may be liable for contribution) to which the Company and the
Agent may be subject in such proportion as shall be appropriate to reflect the
relative benefits received by the Company on the one hand and the Agent on the
other. The relative benefits received by the Company on the one hand and the
Agent on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting Company expenses) received by the
Company as set forth in the table on the cover page of the Prospectus bear to
the fee received by the Agent hereunder. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and the Agent on the
other, with respect to the statements or omissions which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Agent, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Agent agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 8(d) shall be deemed to
include, for purpose of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), the Agent shall not be required to contribute any amount in excess
of the fee received by it, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(d), any person who controls a
party to this Agreement within the meaning of the Act or the Exchange Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for contribution
may be made under this Section 8(d), will notify any such party or parties from
whom contribution may be sought, but the omission so to notify will not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have under this Section 8(d). No party will be liable
for contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
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7. TERMINATION.
(a) The obligations of the Agent under this Agreement may be
terminated at any time prior to the Closing Date, by notice to the Company from
the Agent, without liability on the part of the Agent to the Company if, prior
to delivery and payment for the Securities, in the sole judgment of the Agent
(i) trading in the Common Stock of the Company shall have been suspended by the
Commission or by the AMEX, (ii) trading in securities generally on the AMEX
shall have been suspended or limited or minimum or maximum prices shall have
been generally established on any of such exchanges, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by any of such exchanges
or by order of the Commission or any court or other governmental authority,
(iii) a general banking moratorium shall have been declared by Federal or New
York State authorities, or (iv) any material adverse change in the financial or
securities markets in the United States or any outbreak or material escalation
of hostilities or declaration by the United States of a national emergency or
war or other calamity or crisis shall have occurred, the effect of any of which
is such as to make it, in the sole judgment of the Agent, impracticable or
inadvisable to market the Securities on the terms and in the manner contemplated
by the Prospectus.
(b) The obligations of the parties under this Agreement shall be
automatically terminated in the event that notice is given to the Escrow Agent
as determination prior to the close of business on the date scheduled for
receipt of the Subscriber's Funds, that the Subscriber's Funds have not been
deposited by the Purchasers into the Escrow Account by the close of business on
the Closing Date.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to Section 8(b)), or if the sale of
the Securities provided for herein and in the Securities Purchase Agreement is
not consummated because any condition to the obligations of the Agent set forth
herein or therein is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or therein or
comply with any provision hereof or thereof, the Company will, subject to demand
by the Agent, reimburse the Agent for all out-of-pocket expenses incurred in
connection herewith.
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8. BEST EFFORTS. The Company expressly acknowledges and agrees that
Agent's obligations hereunder are on a reasonable best efforts basis only and
that the execution of this Agreement does not constitute a commitment by Agent
to purchase any securities and does not ensure the successful placement of any
securities or any portion thereof or the success of Agent with respect to
securing any other financing on behalf of the Company.
9. MISCELLANEOUS.
(a) NOTICE. Whenever notice is required by the provisions of this
Agreement to be given to the Company, such notice shall be in writing, addressed
to the Company, at:
If to Company: eMagin Corporation
2070 Route 52
Hopewell Junction, New York 12533
Attn: Gary Jones
Fax: (845) 838-7901
Whenever notice is required by the provisions of this Agreement to be given to
the Agent, such notice shall be given in writing, addressed to the Agent, at:
If to the Agent: W.R. Hambrecht + Co., LLC
539 Bryant Street, Suite 100
San Francisco, CA 94107
Attn: John Schneider
Fax: (415) 551-3242
(b) GOVERNING LAW. The validity, interpretation, and construction of
this Agreement will be governed by the laws of the State of New York.
(c) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
(d) CONFIDENTIAL INFORMATION. All confidential financial or business
information (except publicly available or freely usable material otherwise
obtained from another source) respecting either party will be used solely by the
other party in connection with the within transactions, be revealed only to
employees or contractors of such other party who are necessary to the conduct of
such transactions, and be otherwise held in strict confidence.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly caused this
Agreement to be executed as of the day and year first above written.
EMAGIN CORPORATION.
By: /s/John Atherly
------------------------------------
Name: John Atherly
Title: Chief Financial Officer
W.R. HAMBRECHT + CO., LLC
By: Kenneth Bochat
------------------------------------
Name:Kenneth Bochat
Title:Senior Managing Director
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