REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of February 27, 2002
(this "Agreement"), by and among eMagin Corporation, a Delaware corporation,
with principal executive offices located at 0000 Xxxxx 00, Xxxxxxxx Xxxxxxxx, XX
00000 (the "Company"), and each of the undersigned investors, from time to time,
a signatory hereto pursuant to the terms of this Agreement (each an "Initial
Investor" or collectively, the "Initial Investors").
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement dated as of February 27, 2002, by and between the
Initial Investors and the Company (the "Securities Purchase Agreement"), the
Company has agreed to issue and sell to each Initial Investor (i) certain shares
(the "Shares") of the Company's common stock, par value $.001 per share (the
"Common Stock"), and (ii) three year Warrants (the "Warrants") to purchase
shares of Common Stock, in the amounts set forth on Schedule A of the Securities
Purchase Agreement; and
WHEREAS, to induce each of the Initial Investors to execute and
deliver the Securities Purchase Agreement, the Company has agreed to provide
with respect to the Shares and to the Common Stock issuable on the exercise of
the Warrants, certain registration rights under the Securities Act;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions
(a) As used in this Agreement, the following terms shall have the
meanings:
(i) "Affiliate," of any specified Person means any other Person who
directly, or indirectly through one or more intermediaries, is in control
of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, control of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether by contract, securities,
ownership or otherwise; and the terms "controlling" and "controlled" have
the respective meanings correlative to the foregoing.
(ii) "Closing Date" means the date and time of the issuance and sale
of the Shares and the Warrants.
(iii) "Commission" means the Securities and Exchange Commission.
(iv) "Current Market Price" on any date of determination means the
closing price of a share of the Common Stock in the regular day session on
such day as reported on the American Stock Exchange ("Amex"); provided, if
such security is not listed or admitted to trading on the Amex, as reported
on the principal national security exchange or quotation system on which
such security is quoted or listed or admitted to trading, or, if not quoted
or listed or admitted to
trading on any national securities exchange or quotation system, the
closing price of such security on the over-the-counter market in the
regular day session on the day in question as reported by Bloomberg LP, or
a similar generally accepted reporting service, as the case may be. If such
security has no quotes or listing as defined in this section 1 (iv), then
the Current Market Price shall be the price per Common Share on any date of
determination as determined by an independent third party appointed by
mutual agreement of the Company and the Holder.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
(vi) "Investor" means each of the Initial Investors and any transferee
or assignee of Registrable Securities which agrees to become bound by all
of the terms and provisions of this Agreement in accordance with Section 8
hereof.
(vii) "Person" means any individual, partnership, corporation, limited
liability company, joint stock company, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
(viii) "Prospectus" means the prospectus (including, without
limitation, any preliminary prospectus and any final prospectus filed
pursuant to Rule 424(b) under the Securities Act, including any prospectus
that discloses information previously omitted from a prospectus filed as
part of an effective registration statement in reliance on Rule 430A under
the Securities Act) included in the Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such
prospectus and all documents filed after the date of such prospectus by the
Company under the Exchange Act and incorporated by reference therein.
(ix) "Public Offering" means an offer registered with the Commission
and the appropriate state securities commissions by the Company of its
Common Stock and made pursuant to the Securities Act.
(x) "Registrable Securities" means (i) the Shares, (ii) the Common
Stock issued or issuable upon exercise of the Warrants, and (iii) the
Common Stock issued and issuable in lieu of Liquidated Damages until (x)
the Registration Statement has been declared effective by the Commission
and all such securities have been disposed of pursuant to the Registration
Statement, (y) all such securities have been sold under circumstances under
which all of the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act ("Rule 144") are met, or
(z) such time as, in the opinion of counsel to the Company reasonably
satisfactory to the Investors and upon delivery to the Investors of such
executed opinion, all such securities may be sold without any time, volume
or manner limitations pursuant to Rule 144(k) (or any similar
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provision then in effect) under the Securities Act. In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be
deemed to be made in the definition of "Registrable Security" as is
appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Agreement.
(xi) "Registration Statement" means a registration statement of the
Company filed on Form S-2 and/or Form S-3, or if then unavailable, another
appropriate form under the Securities Act providing for the registration
of, and the resale on a continuous or delayed basis by the holders of, all
of the Registrable Securities pursuant to Rule 415 under the Securities
Act, including the Prospectus contained therein and forming a part thereof,
any amendments to such registration statement and supplements to such
Prospectus, and all exhibits to and other material incorporated by
reference in such registration statement and Prospectus.
(xii) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, or any similar
successor statute.
(b) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Securities Purchase Agreement.
2. Registration
(a) Filing and Effectiveness of Registration Statement.
(i) The Company shall use its reasonable best efforts to prepare and
file with the Commission not later than 45 calendar days after the Closing
Date, a Registration Statement relating to the offer and sale of the
Registrable Securities and shall use its reasonable best efforts to cause
the Commission to declare such Registration Statement effective under the
Securities Act as promptly as practicable but in no event later than 90
calendar days (150 calendar days in the event of a "full review" by the
Commission) after the Closing Date. The number of Shares designated in the
Registration Statement to be registered shall include all the Registrable
Securities and shall include appropriate language regarding reliance upon
Rule 416 under the Securities Act to the extent permitted by the
Commission. The Company shall promptly (and, in any event, no more than 48
hours after it receives comments from the Commission), notify each of the
Investors when and if it receives any comments from the Commission on the
Registration Statement and promptly forward a copy of such comments, if
they are in writing, to the Investors. At such time after the filing of the
Registration Statement pursuant to this Section 2(a) as the Commission
indicates, either orally or in writing, that it has no further comments
with respect to such Registration Statement or that it is willing to
entertain appropriate requests for acceleration of effectiveness of such
Registration Statement, the Company shall promptly, and in no event later
than five (5) days after receipt of such indication from the Commission,
request that the effectiveness of such Registration Statement be
accelerated within 48 hours of the Commission's receipt of
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such request. The Company shall notify the Investors by written notice that
such Registration Statement has been declared effective by the Commission
within 24 hours of such declaration by the Commission.
(ii) In the event that (A) the Registration Statement is not filed by
the Company in a timely manner as set forth in Section 2(a)(i), (B) the
Registration Statement is not declared effective by the Commission within
the period of time set forth in Section 2(a)(i), or within five (5) days of
clearance by the Commission to request effectiveness, or (C) the
Registration Statement is not maintained as effective by the Company for
the period set forth in Section 3(a)(i) below (each a "Registration
Default"), then the Company will pay each Investor (pro-rata on a monthly
basis), for each Registration Default then in effect, as liquidated damages
and not as a penalty, during any period in which a Registration Default is
occurring, one percent (1%) per month of (A) the purchase price paid by
such Investor for the Registrable Securities, and (B) the value of any
outstanding Warrants (valued at the difference between the average Current
Market Price during the applicable month and the exercise price of the
Warrants multiplied by the number of shares of Common Stock the Warrants
are exercisable into), held by such Investor until such corresponding
Registration Default no longer exists ("Liquidated Damages"). Such payment
of the Liquidated Damages shall be made to the Investors in cash, or, at
the option of the Company, in registered shares of Common Stock (based on
the Purchase Price (as defined in the Securities Purchase Agreement)) on
the trading day prior to the date of payment) on the last day of each month
during which a Registration Default occurred or was continuing, without
demand therefor by the Investor; provided, however, that the payment of the
Liquidated Damages shall not relieve the Company from its obligations to
register the Securities pursuant to this Section.
If the Company does not remit the payment to the Investors as set
forth above, the Company will pay the Investors reasonable costs of
collection, including attorneys' fees, in addition to the Liquidated
Damages plus interest on any liquidated damage payments not made in a
timely manner as set forth above equal to the effective "Prime Rate" as
announced by Citibank at the time such payment is due hereunder plus 2% per
annum. The registration of the Registrable Securities pursuant to this
provision shall not affect or limit the Investors' other rights or remedies
as set forth in this Agreement.
(b) Piggyback Rights.
(i) Subject to Section 2(b)(ii), if the Company at any time proposes
to file any other registration statement under the Securities Act with
respect to an offering of securities for its own account or for the account
of another person (other than a registration statement on Form S-4 or S-8
(or any substitute form that may be adopted by the Commission) or any
registration statement associated with any equity line of credit and other
than a registration pursuant to Section 2(a) hereunder), the Company shall
give written notice of such proposed filing to each of the Investors at the
address set forth in the register of the Company as soon as reasonably
practicable (but in no event less than fourteen (14) days before the
anticipated date on which such registration will be first filed
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with the Commission), undertaking to provide each Investor the opportunity
to register on the same terms and conditions such number and type of
Registrable Securities as such Investor may request (a "Piggyback
Registration"). Such written notice shall be clearly marked and the Company
shall take reasonable steps to confirm receipt thereof from each such
Investor. Each Investor will have five (5) business days after receipt of
any such notice to notify the Company as to whether it wishes to
participate in a Piggyback Registration; provided that should an Investor
fail to provide timely notice to the Company, such Investor will forfeit
any rights to participate in the Piggyback Registration with respect to
such proposed offering. In the event that the registration statement is
filed on behalf of a person other than the Company, the Company will,
subject to Section 2(b)(ii), use its best efforts to have the shares of
Registrable Securities that the Investors wish to sell included in the
Registration Statement. If the Company shall determine in its sole
discretion not to register or to delay the proposed offering, the Company
shall provide written notice of such determination to the Investors and (i)
in the case of a determination not to effect the proposed offering, shall
thereupon be relieved of the obligation to register such Registrable
Securities in connection therewith, and (ii) in the case of a determination
to delay a proposed offering, shall thereupon be permitted to delay
registering such Registrable Securities for the same period as the delay in
respect of the proposed offering.
(ii) If a registration pursuant to this Section 2(b) involves an
underwritten offering, and the managing underwriter shall advise the
Company in writing, that, in its opinion, the number of securities
requested and otherwise proposed to be included in such registration
exceeds the number which can be sold in such offering within a price range
acceptable to the Company, or that the kind of securities requested or
otherwise proposed to be included in such registration statement would
materially and adversely effect the success of such offering, the Company
will include in such registration, to the extent of the number which the
Company is so advised can be sold in such offering, (A) if the registration
is a primary registration on behalf of the Company, (x) first, the
securities proposed to be registered by the Company, (y) second, the
securities and Registrable Securities which have been requested to be
included in such registration by the Investors and any other persons having
the right to include securities in such registration statement pro rata in
accordance with the aggregate number of securities requested to be included
by the Investors and such other persons; and (z) third, securities of other
persons, if any, requested to be included in such registration pro rata in
accordance with the number of other securities proposed to be registered by
such other persons, and (B) if the registration is a secondary registration
on behalf of other persons, (x) first, the securities proposed to be
registered by such other persons, (y) second, the securities and
Registrable Securities which have been requested to be included in such
registration by the Investors and any other persons having the right to
include securities in such registration statement pro rata in accordance
with the aggregate number of securities requested to be included by the
Investors and such other persons; and (z) third, securities which have been
requested to be included in such registration by the Company and by other
persons, if any, pro rata in accordance with the aggregate number of other
securities proposed to be registered by the Company and such other persons.
In the event a
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contemplated distribution does not involve an underwritten public offering,
the determinations contemplated by this Section 2(b)(ii) shall be made by
the Company's Board of Directors.
3. Obligations of the Company
In connection with the registration of the Registrable Securities, the
Company shall, subject to the Investors assistance and cooperation, as
reasonably requested:
(a) (i) Use its reasonable best efforts to prepare and file with the
Commission such amendments (including post-effective amendments) to the
Registration Statement and supplements to the Prospectus as may be necessary to
keep the Registration Statement continuously effective and in compliance with
the provisions of the Securities Act applicable thereto so as to permit the
Prospectus forming part thereof to be current and useable by Investors for
resales of the Registrable Securities for a period of three (3) years from the
date on which the Registration Statement is first declared effective by the
Commission (the "Effective Time") or such shorter period that will terminate
upon the earlier of there ceasing to be any Registrable Securities outstanding
or when all the Registrable Securities covered by the Registration Statement
have been sold pursuant thereto in accordance with the plan of distribution
provided in the Prospectus, transferred pursuant to Rule 144 under the
Securities Act or otherwise transferred in a manner that results in the delivery
of new securities not subject to transfer restrictions under the Securities Act
(the "Registration Period") and (ii) take all lawful action such that each of
(A) the Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, not misleading and (B) the Prospectus forming part of the
Registration Statement, and any amendment or supplement thereto, does not at any
time during the Registration Period include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) During the Registration Period, use its reasonable best efforts to
comply with the provisions of the Securities Act with respect to the Registrable
Securities of the Company covered by the Registration Statement until such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the Investors as set forth in the
Prospectus forming part of the Registration Statement;
(c) (i) Prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or delivery of
any Prospectus (including any supplements thereto), provide (A) draft copies
thereof to the Investors and give reasonable consideration to all such comments
as the Investors (and their counsel) reasonably may propose and (B) to the
Investors a copy of the accountant's consent letter to be included in the filing
and (ii) furnish to each Investor whose Registrable Securities are included in
the Registration Statement and its legal counsel identified to the Company, (A)
promptly after the same is prepared and publicly distributed, filed with the
Commission, or received by the Company, one copy of the Registration Statement,
each Prospectus, and each amendment or supplement thereto, and (B) such number
of copies of the Prospectus and all amendments and supplements thereto
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and such other documents, as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Investor;
(d) (i) Use its reasonable best efforts to register or qualify the
Registrable Securities covered by the Registration Statement under such
securities or "blue sky" laws of such jurisdictions as the Investors reasonably
request, (ii) prepare and file in such jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period, (iii) take all such other lawful actions
as may be necessary to maintain such registrations and qualifications in effect
at all times during the Registration Period, and (iv) take all such other lawful
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (A) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (B) subject itself to general taxation in any such
jurisdiction or (C) file a general consent to service of process in any such
jurisdiction;
(e) As promptly as practicable after becoming aware of such event,
notify each Investor of the occurrence of any event, as a result of which the
Prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each Investor as such
Investor may reasonably request;
(f) As promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the Commission of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time and take all lawful action
to effect the withdrawal, recession or removal of such stop order or other
suspension;
(g) Use its reasonable best efforts to cause all the Registrable
Securities covered by the Registration Statement to be listed on the principal
national securities exchange, and included in an inter-dealer quotation system
of a registered national securities association, on or in which securities of
the same class or series issued by the Company are then listed or included;
(h) Use its reasonable best efforts to maintain a transfer agent and
registrar, which may be a single entity, for the Registrable Securities not
later than the effective date of the Registration Statement;
(i) Use its reasonable best efforts to take all such other lawful
actions reasonably necessary to expedite and facilitate the disposition by the
Investors of their Registrable Securities in accordance with the intended
methods therefor provided in the Prospectus which are customary under the
circumstances;
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(j) Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement, and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158); and
(k) (i) Subject to the restrictions set forth in the Securities
Purchase Agreement, make reasonably available for inspection by Investors, and
any attorney, accountant or other agent retained by such Investors all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and (ii) use reasonable best efforts to cause the
Company's officers, directors and employees to supply all information reasonably
requested by such Investors or any such attorney, accountant or agent in
connection with the Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that all records,
information and documents that are designated in writing by the Company, in good
faith, as confidential, proprietary or containing any material nonpublic
information shall be kept confidential by such Investors and any such attorney,
accountant or agent (pursuant to an appropriate confidentiality agreement in the
case of any such holder or agent), unless such disclosure is made pursuant to
judicial process in a court proceeding (after first giving the Company an
opportunity promptly to seek a protective order or otherwise limit the scope of
the information sought to be disclosed) or is required by law, or such records,
information or documents become available to the public generally or through a
third party not in violation of an accompanying obligation of confidentiality;
and provided, further, that, if the foregoing inspection and information
gathering would otherwise disrupt the Company's conduct of its business, such
inspection and information gathering shall, to the maximum extent possible, be
coordinated on behalf of the Investors and the other parties entitled thereto by
one firm of counsel designed by and on behalf of the majority in interest of
Investors and other parties.
4. Obligations of the Investors
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. Unless otherwise
required by the Commission or any applicable law, nothing in this Agreement
shall obligate any Investor to consent to be named as an underwriter in any
Registration Statement pertaining to the Registrable Securities. At least
twenty-one (21) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company reasonably requires from each such Investor (the
"Requested Information") if such Investor elects to have any of its
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Registrable Securities included in the Registration Statement. Such notice shall
be clearly marked and the Company shall take reasonable steps to confirm receipt
thereof from such Investor. If at least five (5) business days prior to the
anticipated filing date the Company has not received the Requested Information
from an Investor (a "Non-Responsive Investor"), then the Company may file the
Registration Statement without including Registrable Securities of such
Non-Responsive Investor and have no further obligations to the Non-Responsive
Investor.
(b) Each Investor by its acceptance of the Registrable Securities
agrees to cooperate with the Company in connection with the preparation and
filing of the Registration Statement hereunder, unless such Investor has
notified the Company in writing of its election to exclude all of its
Registrable Securities from the Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in Section 3(e) or
3(f), it shall immediately discontinue its disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(e) and, if so directed by the Company, such
Investor shall deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a certificate of destruction) all copies in such
Investor's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice; provided, however, that, subject
to Section 5, the Company may not so suspend the right to such holders of
Registrable Securities for more than thirty (30) calendar days in the aggregate
during any twelve month period, during the period the Registration Statement is
required to be in effect, and if such period is exceeded, such event shall be a
Registration Default and subject to liquidated damages as set forth in Section
2(a)(ii) hereof.
5. Right to Suspend Registration Statement
The Company shall have the right at any time for up to 120 calendar
days to suspend any Registration Statement in the event that the Company
determines, in good faith, that it is in the best interests of the Company for
the Company to proceed with its own offering of equity securities; provided,
that, the Company shall use its commercially reasonable efforts to continue to
proceed forward in good faith with such Registration Statement during the period
of such suspension. The Company may so proceed by delivering written notice of
such intention to the Investors. The Company may exercise the right to suspend a
Registration Statement no more than twice in any 360-day period, provided that
the aggregate period of such suspensions shall not exceed 120 days, in the
aggregate, in any 360-day period.
6. Expenses of Registration
All expenses, other than underwriting discounts and commissions or
similar fees relating to the Registrable Securities, incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and qualifications fees, printing
and engraving fees, accounting fees, and the fees and disbursements of counsel
for the Company (but not of the Investors) shall be borne by the Company.
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7. Indemnification and Contribution
(a) The Company shall indemnify and hold harmless each Investor and
each of their respective officers and directors and each person who controls
such Investor within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (each such person being sometimes hereinafter referred to
as an "Indemnified Person") from and against any losses, claims, damages or
liabilities, joint or several, to which such Indemnified Person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or an omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, not misleading, or arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus or an omission or alleged omission to state therein a 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; and
the Company hereby agrees to reimburse such Indemnified Person for all
reasonable legal and other expenses incurred by them in connection with
investigating or defending any such action or claim as and when such expenses
are incurred; provided, however, that the Company shall not be liable to any
such Indemnified Person in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon (i) an untrue
statement or alleged untrue statement made in, or an omission or alleged
omission from, such Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by such Indemnified
Person expressly for use therein or (ii) in the case of the occurrence of an
event of the type specified in Section 3(e), the use by the Indemnified Person
of an outdated or defective Prospectus after the Company has provided to such
Indemnified Person an updated Prospectus correcting the untrue statement or
alleged untrue statement or omission or alleged omission giving rise to such
loss, claim, damage or liability.
(b) Indemnification by the Investors. Each Investor agrees, severally
and not jointly, as a consequence of the inclusion of any of its Registrable
Securities in a Registration Statement, to (i) indemnify and hold harmless the
Company, its directors (including any person who, with his or her consent, is
named in the Registration Statement as a director nominee of the Company), its
officers who sign any Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which the Company or such other persons may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement or Prospectus or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in light of the
circumstances under which they were made, in the case of the Prospectus), not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Investor expressly for use therein; provided,
however, no Investor shall be liable under this Section 7(b) for any amount in
excess of the net proceeds paid to such Investor in respect of shares sold by
it.
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(c) Notice of Claims, etc. Promptly after receipt by a party seeking
indemnification pursuant to this Section 7 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section 7 is being sought (the "Indemnifying Party") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is actually prejudiced by
reason of such failure. In connection with any Claim as to which both the
Indemnifying Party and the Indemnified Party are parties, the Indemnifying Party
shall be entitled to assume the defense thereof. Notwithstanding the assumption
of the defense of any Claim by the Indemnifying Party, the Indemnified Party
shall have the right to employ separate legal counsel and to participate in the
defense of such Claim, and the Indemnifying Party shall bear the reasonable
fees, out-of-pocket costs and expenses of one such separate legal counsel for
all Indemnified Parties in connection with any one action or series of
substantially related actions if (and only if): (x) the Indemnifying Party shall
have agreed in writing to pay such fees, costs and expenses, (y) the named
parties to any such action (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have been advised by such counsel in writing that there may be one or more legal
defenses available to the Indemnifying party different from or in conflict with
any legal defenses which may be available to the Indemnified Party (in which
case the Indemnifying party shall not have the right to assume the defense of
such action on behalf of the Indemnified party, or (z) the Indemnifying Party
shall have failed to employ legal counsel reasonably satisfactory to the
Indemnified Party within a reasonable period of time after notice of the
commencement of such Claim. If the Indemnified Party employs separate legal
counsel in circumstances other than as described in clauses (x), (y) or (z)
above, the fees, costs and expenses of such legal counsel shall be borne
exclusively by the Indemnified Party. Except as provided above, the Indemnifying
Party shall not, in connection with any Claim in the same jurisdiction, be
liable for the fees and expenses of more than one firm of counsel for the
Indemnified Party (together with appropriate local counsel). The Indemnified
Party shall not, without the prior written consent of the Indemnifying Party
(which consent shall not unreasonably be withheld), settle or compromise any
Claim or consent to the entry of any judgment that does not include an
unconditional release of the Indemnifying Party from all liabilities with
respect to such Claim or judgment.
(d) Contribution. If the indemnification provided for in this Section
7 is unavailable to or insufficient to hold harmless an Indemnified Person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a
11
material fact relates to information supplied by such Indemnifying Party or by
such Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation (even if
the Investors were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this Section 7(d). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. 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 was not
guilty of such fraudulent misrepresentation.
(e) Notwithstanding any other provision of this Section 7, in no event
shall any Investor be required to undertake liability to any person under this
Section 7 for any amounts in excess of the dollar amount of the proceeds to be
received by such Investor from the sale of such Investor's Registrable
Securities pursuant to any Registration Statement under which such Registrable
Securities are to be registered under the Securities Act.
(f) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 7 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
8. Rule 144
With a view to making available to the Investors the benefits of Rule
144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to
use its reasonable best efforts to:
(a) comply with the provisions of paragraph (c) (1) of Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required to be filed by the Company pursuant to Section 13 or 15(d)
under the Exchange Act; and, if at any time it is not required to file such
reports but in the past had been required to or did file such reports, it will,
upon the request of any Investor, make available other information as required
by, and so long as necessary to permit sales of, its Registrable Securities
pursuant to Rule 144; and
(c) upon request by the Company's transfer agent for its Common Stock,
the Company shall provide the transfer agent an opinion of counsel, which
opinion shall be reasonably acceptable to the transfer agent, that the Investor
has complied with the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act.
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9. Assignment
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the Investors to
any permitted transferee of all or a portion (which portion shall exceed 10% of
the Registrable Securities on an as-converted basis) of such Registrable
Securities (or all or a portion (which portion shall exceed 10% of the
Registrable Securities on an as-converted basis) of any Shares or Warrant of the
Company which is convertible into such securities) only if: (a) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment, (b) the Company is, within ten (10) business days of such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities, and
(d) at or before the time the Company receives the written notice contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein.
10. Amendment and Waiver
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold at least a majority in interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.
11. Changes in Common Stock
If, and as often as, there are any changes in the Common Stock by way
of stock split, stock dividend, reverse split, combination or reclassification,
or through merger, consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall continue
with respect to the Common Stock as so changed.
12. Miscellaneous
(a) A person or entity shall be deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) If, after the date hereof and prior to the Commission declaring
the Registration Statement to be filed pursuant to Section 2 effective under the
Securities Act, the Company grants to any Person any registration rights with
respect to any Company securities which are more favorable to such other Person
than those provided in this Agreement, then the Company
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forthwith shall grant (by means of an amendment to this Agreement or otherwise)
identical registration rights to all Investors hereunder.
(c) Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally recognized overnight courier service, and shall be deemed given
when so delivered personally or by overnight courier service, or, if mailed,
three days after the date of deposit in the United States mails, as follows:
(i) if to the Company, to:
eMagin Corporation
0000 Xxxxx 00
Xxxxxxxx Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
(000) 000-0000
(000) 000-0000 (Fax)
(ii) if to an Initial Investor, to the address set out for such
Initial Investor on Schedule A attached hereto; and
(iii) if to any other Investor, at such address as such Investor shall
have provided in writing to the Company.
The Company, the Initial Investors or any Investor may change the foregoing
address by notice given pursuant to this Section 12(c).
(d) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(e) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
(f) The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto
14
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(g) The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.
(h) This Agreement, the Securities Purchase Agreement and the Warrants
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement,
the Securities Purchase Agreement and the Warrants supersede all prior
agreements and undertakings among the parties hereto with respect to the subject
matter hereof.
(i) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(j) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(k) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
(l) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.
[SIGNATURE PAGE FOLLOWS.]
In witness whereof, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
EMAGIN CORPORATION
By:
-----------------------------
Name:
Title:
16
INITIAL INVESTORS: Vertical Ventures Investments, LLC
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Name:
Address:
Newington Invest Limited
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Name:
Address:
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Name: Xxxx Xxxxxxxxx
Address:
Rainbow Gate Corporation
----------------------------------
Name:
Address:
----------------------------------
Name: Xxxxx X. Xxxxx
Address:
----------------------------------
Name: Xxxxxx Xxxxx Xxxxx
Address:
Triton West Group, Inc.
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Name:
Address:
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Name: Xxx Xxxxxxx
Address:
