SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
October 29, 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
November 3, 2004;
(iii) the representations and warranties of such
Purchaser set forth 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
November 3, 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), and a prospectus dated June 10, 2004, as
supplemented on October 25, 2004, 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.
(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.
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(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. Except as disclosed in
the Form 8-K filed by the Company with the Commission on October
26, 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.
11
(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.
(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.
12
(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.
(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.
13
(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.
14
(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, except as disclosed in the Form 8-K filed by
the Company with the Commission on October 26, 2004, 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.
15
(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).
(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.
16
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.
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.
17
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.
18
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.
19
(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.
20
(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;
(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.
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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.
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.
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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:
Title:
PURCHASER
By: __________________________
ADDRESS:
________________________
________________________
Attn: ________________________
Tel:____________________
Fax:____________________
With a copy to:
Attn:
Tel:
Fax:
Number of Shares to be Purchased:__________________
Number of Warrants to be Purchased:________________
25