AMENDMENT NO. 1 TO PLEDGE AND SECURITY AGREEMENT
Exhibit
10.5
AMENDMENT
NO. 1 TO PLEDGE AND SECURITY AGREEMENT
THIS
AMENDMENT NO. 1 TO PLEDGE AND SECURITY AGREEMENT,
dated as
of July 23, 2007 (this “Agreement”), by and between EMAGIN
CORPORATION,
a
Delaware corporation (the “Grantor”), to ALEXANDRA
GLOBAL MASTER FUND LTD.,
a
British Virgin Islands international business company, as collateral agent
(in
such capacity, the “Collateral Agent”) on behalf of the Holders (such
capitalized term and all other capitalized terms used herein having the
respective meanings provided herein), amends the PLEDGE
AND SECURITY AGREEMENT,
dated
as of July 21, 2006 (the “Pledge and Security Agreement”), made by the
Grantor to the Collateral Agent.
W I T N E S S E T H:
WHEREAS,
the
Grantor and the Collateral Agent are parties to the Pledge and Security
Agreement;
WHEREAS,
the
Grantor and the Collateral Agent wish to amend the Pledge and Security Agreement
as provided in this Agreement; and
NOW
THEREFORE, in
consideration of the premises and the mutual covenants made herein and for
other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
1.1 As
used
in this Agreement, the terms “Agreement”, “Grantor”, “Collateral Agent” and
“Pledge and Security Agreement” shall have the respective meanings assigned to
such terms in the introductory paragraph of this Agreement.
1.2 Capitalized
terms used in this Agreement and not defined in this Agreement shall have the
respective meanings provided in the Pledge and Security Agreement.
1.3 All
the
agreements or instruments herein defined shall mean such agreements or
instruments as the same may from time to time be supplemented or amended or
the
terms thereof waived or modified to the extent permitted by, and in accordance
with, the terms thereof and of this Agreement.
1.4 The
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
“Amended
Lockbox Agreement” means the Lockbox Agreement, dated as of July 21, 2006, by
and between the Grantor, the Lockbox Agent and the Collateral Agent, as amended
by Amendment No. 1 to Lockbox Agreement, dated as of July 23, 2007, by and
between the Grantor and the Collateral Agent.
“Amended
Notes” means the Amended and Restated 8% Senior Secured Convertible Notes due
2008 issued by the Grantor upon amendment and restatement of the
Notes.
“Amended
Patent and Trademark Security Agreement” means the Patent and Trademark Security
Agreement, dated as of July 21, 2006, by and between the Grantor and the
Collateral Agent, as amended by Amendment No. 1 to the Patent and Trademark
Security Agreement, dated as of July 23, 2007 by and between the Grantor and
the
Collateral Agent.
“Amended
Pledge and Security Agreement” means the Pledge and Security Agreement as
amended by this Agreement.
“Amendment
Agreements” means the several Amendment Agreements, dated as of July 23, 2007 by
and between the Grantor and the Holders.
“Amendment
Transaction Documents” means the Amended Notes, the Amended Warrants, the
Certificate Designations, the Amended Patent and Trademark Security Agreement,
the Amended Pledge and Security Agreement, the Amended Lockbox
Agreement and
the
other agreements, instruments and documents contemplated hereby and
thereby.
“Certificate
of Designations” means the Certificate of Designations of Series A Senior
Secured Convertible Preferred Stock of the Grantor as filed with the Secretary
of State of the State of Delaware.
“Effective
Date” shall have the meaning provided in Section 4.
“Effective
Time” shall have the meaning provided in Amendment Agreements.
“Holders”
means with respect to any time prior to the Effective Time on the Effective
Date
the holders of Notes and with respect to any time after the Effective Time
on
the Effective Date, the holders from time to time of any Amended Notes or shares
of Series A Preferred Stock.
“Series
A
Preferred Stock” means the Series A Senior Secured Convertible Preferred Stock,
par value $0.001 per share, of the Grantor.
2. Amendments.
2.1 Amendments
to Pledge and Security Agreement. Upon
the
terms and subject to the conditions of this Agreement, the Pledge and Security
Agreement is hereby amended as follows:
(a) Amendment
of Certain Definitions.
Section
1(d) of the Pledge and Security Agreement shall be amended by deleting the
terms
“Additional Note Purchase Agreement”, “Event of Default”, “Holder”, “Note
Purchase Agreements”, “Majority Holders”, “Notes”, “Obligations” and
“Transaction Documents” and the accompanying definitions thereof and
substituting in lieu thereof in their respective alphabetical order the
following:
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“Additional
Note Purchase Agreement” means the Note Purchase Agreement, dated as of July 21,
2006, as amended on March 28, 2007, by and between the Company and Stillwater
LLC, as amended by the Amendment Agreement, pursuant to which the Company issued
the Additional Note.
“Event
of
Default” means:
(1) the
failure by the Grantor to perform in any material respect any obligation of
the
Grantor under this Agreement as and when required by this Agreement;
or
(2) the
failure by the Grantor to pay the Optional Redemption Price or the Mandatory
Redemption Price; or
(3) the
breach by the Grantor of any other material covenant or other term or condition
of the Certificate of Designations; or
(4) any
representation or warranty made by the Grantor pursuant to this Agreement shall
have been untrue in any material respect when made or deemed to have been made;
or
(5) the
failure by the Grantor to perform in any material respect any obligation of
the
Grantor under the Patent and Trademark Security Agreement as and when required
by the Patent and Trademark Security Agreement;
(6) any
representation or warranty made by the Grantor pursuant to the Patent and
Trademark Security Agreement shall have been untrue in any material respect
when
made or deemed to have been made;
(7) the
failure by the Grantor to perform in any material respect any obligation of
the
Grantor under the Lockbox Agreement as and when required by the Lockbox
Agreement;
(8) any
representation or warranty made by the Grantor pursuant to the Lockbox Agreement
shall have been untrue in any material respect when made or deemed to have
been
made; or
(9) any
Event
of Default, as that term is defined in any of the Notes.
“Holder”
means any Buyer or any holder from time to time of any Note or any Preferred
Shares.
“Majority
Holders” means at any time (i) such of the holders of Notes who hold Notes
which, based on the outstanding principal amounts thereof, represent a majority
of the aggregate outstanding principal amount of the Notes at such time, and
(ii) such of the holders of Preferred Shares which shares constitute a majority
of the outstanding Preferred Shares at such time.
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“Note
Purchase Agreements” means the several Note Purchase Agreements, dated as of
July 21, 2006, by and between the Grantor and the respective Buyer party
thereto, as amended by the Amendment Agreement, pursuant to which the Grantor
issued the Notes, including, without limitation, the Additional Note Purchase
Agreement.
“Notes”
means the Amended and Restated 8% Senior Secured Convertible Notes due 2008
issued by the Grantor upon amendment and restatement of the Grantor’s 6% Senior
Secured Convertible Notes due 2007-2008, as amended, originally issued pursuant
to the Note Purchase Agreements, including, without limitation, the Additional
Note.
“Obligations”
means:
(1) the
full
and prompt payment when due of all obligations and liabilities to the Holders,
whether now existing or hereafter arising, under the Transaction Documents
and
the due performance and compliance with the terms of the Transaction
Documents;
(2) the
full
and prompt payment when due of all obligations and liabilities of the Grantor
to
pay the Optional Redemption Price and Mandatory Redemption Price pursuant to
the
Preferred Shares and the due performance and compliance with the terms of the
Certificate of Designations;
(3) any
and
all sums advanced by the Collateral Agent or any Holder in order to preserve
the
Collateral or to preserve the Security Interest;
(4) in
the
event of any proceeding for the collection or enforcement of any obligations
or
liabilities of the Grantor referred to in the immediately preceding clauses
(1)
and (2) in accordance with the terms of the Transaction Documents, the
reasonable expenses of re-taking, holding, preparing for sale, selling or
otherwise disposing of or realizing on the Collateral, or of any other exercise
by the Collateral Agent of its rights hereunder, together with reasonable
attorneys' fees and court costs; and
(5) any
amounts for which the Collateral Agent or any Holder is entitled to
indemnification under Section 5(j).
(b) Additional
Defined Terms. Section
1(d) of the Pledge and Security Agreement shall be amended by adding new defined
terms and definitions thereof, in the places constituting their respective
alphabetical orders, as follows:
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“Amendment
Agreement” means the several Amendment Agreements, dated as of July 23, 2007, by
and between the Grantor and the Holders.
“Certificate
of Designations” means the Certificate of Designations of Series A Senior
Secured Convertible Preferred Stock of the Grantor as filed with the Secretary
of State of the State of Delaware.
“Mandatory
Redemption Price” shall have the meaning assigned to such term in the
Certificate of Designations.
“Optional
Redemption Price” shall have the meaning assigned to such term in the
Certificate of Designations.
“Preferred
Shares” means shares of Series A Senior Secured Convertible Preferred Stock
issued by the Grantor.
(c)
Amendment of Section 15(b).
Section
15(b) of the Pledge and Security Agreement shall be amended by deleting Section
15(b) of the Pledge and Security in its entirety and substituting in lieu
thereof the following:
(b) If
an
Event of Default shall have occurred and be continuing, the Collateral Agent
shall disburse the funds held by it pursuant to this Agreement as
follows:
(i) First,
to
pay any amounts payable to the Collateral Agent pursuant to Section 17 that
have
not been paid by the Grantor; and then
(ii) Second,
to pay each Holder on a pro rata basis the amount of all accrued and unpaid
interest (and interest, if any, thereon at the Default Rate) then due each
Holder in accordance with the terms of their respective Notes through the most
recent Interest Payment Date; and then
(iii)
Third,
to
pay each Holder on a pro rata basis the amount, if any, of unpaid principal
then
due on the Maturity Date of any installment of principal of such Holder’s Notes
and the unpaid Mandatory Redemption Price for the Preferred Shares required
to
be redeemed on the Mandatory Redemption Date; and then
(iv) Fourth,
to pay each Holder, on a pro rata basis, the amount then due upon acceleration,
if any, pursuant to Section 5 of such Holder’s Note(s); and then
(v) Fifth,
to
pay each Holder who has exercised its repurchase rights under Section 5 of
the
Notes or its optional redemption rights under Section 11 of the Certificate
of
Designations, on a pro rata basis, all of the applicable unpaid Repurchase
Price
for each of the Notes or portions thereof required to be repurchased and all
of
the applicable and unpaid Optional Redemption Price for the Preferred Shares
required to be redeemed; and then
(vi) Sixth,
to
pay each Holder any other amount due and payable to such Holder under the
Transaction Documents; and then
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(vii) Seventh,
the remaining amount, if any, to the Grantor.
provided,
however,
that if
the amount of funds held by the Collateral Agent is insufficient to pay all
amounts due to the Holders pursuant to clauses (ii) and (iv) above, then the
amount paid to the Holders pursuant to this Section 15(b) shall be prorated
among the Holders in proportion to the respective amounts due each Holder
pursuant to the particular such clause or clauses for which such funds are
insufficient.
3. Effect
of Amendment; Confirmation.
(a) From
and
after the Effective Date, the rights and obligations of the Grantor, the
Collateral Agent and the Holders under the Pledge and Security Agreement and
the
Transaction Documents and all other agreements, documents and instruments
contemplated hereby and thereby shall apply with full force and effect to the
Pledge and Security Agreement, as amended by this Agreement, and each reference
to the Pledge and Security Agreement in the Transaction Documents shall be
deemed to be a reference to the Pledge and Security Agreement, as amended by
this Agreement and each reference in the Pledge and Security Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean
and be a reference to the Pledge and Security Agreement as amended hereby,
and
this Agreement and the Pledge and Security Agreement shall be read together
and
construed as a single instrument.
(b) Except
as
amended by this Agreement, the Pledge and Security Agreement shall remain in
full force and effect in accordance with its respective terms.
(c) The
execution, delivery and effectiveness of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy
of
the Collateral Agent, the Grantor or the Holders under the Pledge and Security
Agreement or any of the Transaction Documents, nor constitute a waiver or
amendment of any other provision of the Pledge and Security Agreement or any
of
the Transaction Documents or for any purpose except as expressly set forth
herein.
(d) Nothing
in this Agreement or in connection with the transactions contemplated by this
Agreement or otherwise shall be construed, directly or indirectly, by
implication or otherwise to impair the validity, enforceability, priority,
perfection or other attributes of the security interest granted pursuant to
the
Pledge and Security Agreement.
4. Effectiveness.
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The
amendment of the Pledge and Security Agreement pursuant to this Agreement shall
become effective on the date (the “Effective Date”) when all of the following
conditions are satisfied:
(a) The
Collateral Agent shall have received Acknowledgement and Consents, in the form
attached hereto as Exhibit
A,
from
the Majority Holders; and
(b) On
the
Effective Date the Effective Time under all of the Amendment Agreements shall
have occurred.
5. Miscellaneous.
5.1 Waiver
and Amendments; Successors and Assigns.
The
provisions of Section 14 of the Pledge and Security Agreement shall be
applicable to this Agreement as if this Agreement were the “Agreement” referred
to in Section 14 of the Pledge and Security Agreement.
5.2 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
5.3 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
5.4 Notices.
Any
notice required or permitted under this Agreement shall be given as provided
in
the Pledge and Security Agreement.
5.5 Severability.
If
one or
more provisions of this Agreement are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement and the balance of
this Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
5.6 Entire
Agreement.
This
Agreement and the other Amendment Transaction Documents and other documents
contemplated hereby and thereby constitute the entire agreement among the
parties hereof with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and
thereof.
5.7 Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
5.8 Applicable
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York without regard to principles of conflicts of laws, except
to the extent that under the New York Uniform Commercial Code the laws of
another jurisdiction govern matters of perfection and the effect of perfection
or non-perfection of any security interest granted under the Pledge and Security
Agreement, as amended by this Agreement.
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5.9 Counterparts;
Execution.
This
Agreement may be executed in any number of counterparts and by the parties
hereto on separate counterparts, but all the counterparts taken together shall
be deemed to constitute one and the same instrument. This Agreement, once
executed by a party, may be delivered to the other party hereto by electronic
or
telephone line facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
5.10 Construction.
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.
[Signature
Pages Follow]
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IN
WITNESS WHEREOF,
the
Grantor and Collateral Agent have caused this Agreement to be duly executed
and
delivered by their respective officers or other representatives thereunto duly
authorized as of the date first above written.
| EMAGIN CORPORATION | ||
| |
|
|
| By: | /s/ | |
|
Name: |
||
| Title: | ||
|
ALEXANDRA
GLOBAL MASTER
FUND
LTD., as Collateral Agent
|
||
| |
|
ALEXANDRA
INVESTMENT MANAGEMENT, LLC,
as Investment Advisor |
| By: | /s/ | |
|
|
||
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EXHIBIT
A
ACKNOWLEDGEMENT
AND CONSENT
To:
ALEXANDRA GLOBAL MASTER FUND LTD.,
As
Collateral Agent
c/o
Alexandra Investment Management, LLC
000
Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Re:
eMagin Corporation
Reference
is made to the Pledge and Security Agreement, dated as of July 21, 2006 (as
amended, supplemented or otherwise modified from time to time, the “Pledge and
Security Agreement”) by and between eMagin Corporation, a Delaware corporation
(the “Grantor”), to Alexandra Global Master Fund Ltd., a British Virgin Islands
international business company, as collateral agent (in such capacity, the
“Collateral Agent”) on behalf of the Holders. Capitalized terms used herein and
not otherwise defined herein are used herein as defined in the Pledge and
Security Agreement.
The
Grantor has requested that the Holders consent to an Amendment to the Pledge
and
Security Agreement on the terms described in that certain Amendment No. 1 to
the
Pledge and Security Agreement (“Amendment No. 1 to Pledge and Security
Agreement”), the form of which is attached hereto.
Pursuant
to Section 14 of the Pledge and Security Agreement, the undersigned Holder
hereby consents to the terms of Amendment No. 1 to Pledge and Security Agreement
and authorizes the Collateral Agent to execute and deliver Amendment No. 1
to
Pledge and Security Agreement on its behalf.
| Very truly yours, | ||
| Dated as of July 23, 2007 | NAME OF HOLDER: | |
| |
|
|
| By: | /s/ | |
|
Name:
|
||
| Title: | ||
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