SECURITIES ISSUANCE AGREEMENT
Exhibit
10.2
THIS
SECURITIES ISSUANCE AGREEMENT (this “Agreement”)
is
made and entered into as of August 7, 2007, by and between eMagin
Corporation,
a
Delaware corporation (the “Company”),
and
Moriah Capital, L.P., a Delaware limited partnership (the “Lender”).
Capitalized
terms not otherwise defined herein have the meaning set forth in that certain
Loan and Security Agreement by and between Lender, as lender, and the Company,
as borrower, of even date herewith (the “Loan
Agreement”).
RECITALS
WHEREAS,
the Company has authorized the issuance to Lender on the date hereof of shares
of the Company’s common stock, $0.001 par value per share (“Common
Stock”),
with
an aggregate market value on the Closing Date of $195,000, based on the closing
price of the Common Stock on the OTC Bulletin Board on the Closing Date (the
“Initial
Issued Shares”);
WHEREAS,
the Company wishes to issue the Issued Shares (as defined below) to
Lender;
WHEREAS,
the Company has authorized the issuance to Lender, pursuant to the terms of
the
Loan Agreement, on the effective date of extension of the initial term of the
Loan (if so extended), Common Stock with an aggregate market value of $195,000
based on the average closing price of the Common Stock on the OTC Bulletin
Board
or such other trading market which such Common Stock is then listed or traded,
for the ten (10) trading days preceding such effective date(the “Contingent
Issued Shares”)
(the
Contingent Shares, together with the Initial Issued Shares, are referred to
herein as the “Issued
Shares”);
and
WHEREAS,
the issuances and other obligations and transactions described and contemplated
hereby are in partial consideration for Lender agreeing to enter into, perform
or accept, as applicable, the Loan Agreement and the other Loan
Documents;
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises,
representations, warranties and covenants set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Issuance.
| 1.1 |
On
the date of execution of this Agreement, also known as the Closing
Date,
the Company agrees to issue to Lender, and Lender agrees to acquire
from
the Company, the Initial Issued Shares.
|
| 1.2 |
On
the date of extension of the initial term of the Loan, also known
as the
Extension Date, the Company agrees to issue to Lender, and Lender
agrees
to acquire from the Company, the Contingent Issued Shares, the certificate
for which shares shall be delivered to Lender within five (5) days
of such
date.
|
2. Closing;
Delivery. (a)
Closing
Obligations of Company.
At the
Closing Date, except as set forth below, the Company shall have taken and shall
take all actions necessary to issue the Issued Shares to Lender and to
consummate the transactions contemplated
hereby, including, without limitation, delivery or causing to be delivered
to
Lender the following:
| (a) |
A
certificate for the Initial Issued Shares within five (5) days of
the
Closing Date;
|
| (b) |
executed
originals, and delivery of, all of the Loan Documents;
and
|
| (c) |
such
other certificates, documents, receipts and instruments as Lender
or its
legal counsel may request.
|
(b)
Closing
Obligations of Lender.
At the
Closing Date, Lender shall have taken and shall take all actions necessary
for
its acquisition of the Initial Issued Shares, and to consummate the transactions
contemplated hereby.
3. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to Lender as follows:
|
3.1
|
Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Each of the Company and its Subsidiaries has the corporate power and authority to own and operate its properties and assets; to execute, deliver and perform or cause to be executed, delivered and performed this Agreement ; and to carry on its business as presently conducted. |
| 3.2 |
Capitalization;
Voting Rights.
|
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(a) The
authorized and issued capital stock of the Company as of the date hereof is
as
disclosed in the Company’s filings that are required by the Securities Act of
1933, as amended (the “Securities
Act”)
and
the Securities Exchange Act of 1934, as amended (the “Securities
Exchange Act”)
(the
“SEC
Reports”)
to be
filed with the Securities and Exchange Commission (“SEC”).
(b) Except
as
disclosed in the SEC Reports, other than: (i) Common Stock reserved for issuance
under the Company’s stock option plans and (ii) the Issued Shares, there are no
outstanding options, warrants, rights (including, but not limited to, conversion
or preemptive rights and rights of first refusal), proxy or stockholder
agreements, or other arrangements or agreements of any kind for the purchase
or
acquisition from the Company or its Subsidiaries, of any of their securities.
Neither the offer, issuance or sale of any of, or the issuance of any of, the
Issued Shares, nor the consummation of any transactions contemplated hereby,
will result in a change in the price or number of any securities of the Company
or its Subsidiaries authorized or issued.
(c) All
issued and outstanding securities: (i) have been duly authorized and validly
issued and are fully paid and nonassessable and (ii) were issued in compliance
with all applicable state and federal laws.
(d) The
Issued Shares have been duly and validly reserved for issuance. When issued
in
compliance with the provisions of this Agreement, the Issued Shares will be
validly issued, fully paid and nonassessable, and will be free of any
liens,
charges, encumbrances, options, rights of first refusal, security interests,
claims, mortgages, pledges, charges, easements, covenants, restrictions, (except
as contained herein) obligations, or any other encumbrances (including, without
limitation, any conditional sale or other title retention agreement or any
lease
in the nature thereof and any agreement to grant or to permit or suffer to
exist
any of the foregoing) or third party rights or equitable interests of any nature
whatsoever
or any
Liens all of the above shall be referred to herein as a “Lien”.
3.3 Authorization;
Binding Obligations.
All
corporate action on the part of the Company necessary for the authorization
of
the Loan Documents, and the performance of the same, has been taken or will
be
taken prior to the Closing Date. The Loan Documents, when executed and
delivered, will be valid and binding obligations of the Company, enforceable
against it in accordance with their terms.
3.4 Title
to Properties and Assets; Liens, Etc.
Except
for Permitted Encumbrances, each of the Company and each of its Subsidiaries
has
good and marketable title to its properties and assets, and good title to its
leasehold estates, in each case not subject to any Liens.
3.5 No
Conflicts.
Neither
the Company nor any of its Subsidiaries is in violation or default of (a) any
term of its formation documents or by-laws or (b) of any provision of any
indebtedness for borrowed money, Contract any mortgage, indenture, lease,
license, agreement or contract (collectively, “Contracts”)
or
judgment, order, writ, injunction, or decree (“Orders”).
The
execution, delivery and performance of this Agreement and the Loan Documents
will not, with or without the passage of time or giving of notice, result in
any
violation, or be in conflict with, or constitute a default under, any such
term
or provision of indebtedness for borrowed money, Contract or Order, or result
in
the creation of any Lien upon any of the securities, properties or assets of
the
Company or any of its Subsidiaries, or the suspension, revocation, impairment,
forfeiture or nonrenewal of any licenses, permits, franchises, approvals,
consents, waiver, notices, authorizations, qualifications, concessions, or
the
like.
3.6 Registration
Rights and Voting Rights.
Except
as disclosed in the Registration Rights Agreement, neither the Company nor
any
of its Subsidiaries is presently under any obligation, and neither the Company
nor any of its Subsidiaries has granted any rights, to register any of the
Company’s or its Subsidiaries’ securities. Except as disclosed in any SEC
Reports, to the Company’s best knowledge, no stockholder of the Company or any
of its Subsidiaries has entered into any agreement with respect to the voting
of
equity securities of the Company or any of its Subsidiaries.
3
3.7 Valid
Offering.
Assuming the accuracy of the representations and warranties of Lender contained
in this Agreement, the offer, sale and issuance of the Issued Shares will be
exempt from the registration requirements of the Securities Act, and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
3.8 SEC
Reports.
The
Company’s SEC Reports do not contain any untrue statement of a material fact nor
omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
3.9 Fees;
Brokers; Finders.
There
are no fees, commissions or other compensation due to any third party in
connection with the Loan Documents. All negotiations relative to the Loan
Documents, and the transactions contemplated thereby, have been carried on
by
the Company with Lender and without the intervention of any other person or
entity acting on behalf of the Company, and in such manner as not to give rise
to any claim against the Company or Lender for any finder's fee, brokerage
commission or like payment, and if any such fee, commission or payment is
payable, it shall be the sole responsibility of the Company and the Company
shall pay, and indemnify Lender for, the same.
4. Representations
and Warranties of Lender.
The
Lender hereby represents and warrants to the Company that (a) the Lender has
the
power and authority to execute, deliver and perform this Agreement, (b) all
partnership or corporate action on Lender’s part required for the execution,
delivery and performance of this Agreement has been or will be taken on or
prior
to the Closing Date, (c) upon execution and delivery, this Agreement will be
valid and binding obligations of Lender, enforceable in accordance with its
terms, and (d)
the
Lender will not engage in “short sales” of the issued and outstanding Common
Stock during the Term.
5. Covenants
of the Company.
The
Company covenants and agrees with Lender as follows:
5.1 Reporting
Requirements.
The
Company and its Subsidiaries will timely file with the SEC and state regulatory
authorities all reports, documents, information and other material required
to
be filed or disclosed thereto.
5.2 Confidentiality.
The
Company agrees that it will not disclose, and will not include in any public
announcement, the name of Lender or the terms of this Agreement other than
as
permitted under the Loan Agreement or as required by law.
5.3 SEC
Reporting.
The
Company shall comply with all reporting requirements under the Securities
Exchange Act, including, but not limited to, making available all required
current information regarding the Company under Rule 144(c) under the Securities
Act, so as to enable Lender to effect resales of the Issued Shares under Rule
144. The Company shall cooperate with Lender in connection with all resales
pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary
to
allow such resales, provided the Company and its counsel receive reasonably
requested representations from Lender and broker, if any.
4
5.4 Indemnification.
The
Company and its Subsidiaries agree, jointly and severally, to indemnify, hold
harmless, reimburse and defend Lender, and Lender’s partners, officers,
directors, agents, representatives, affiliates, members, managers, and
employees, against any claim, cost, expense, liability, obligation, loss or
damage (including, without limitations, reasonable legal fees) of any nature,
incurred by or imposed upon them which results, arises out of, or is based
upon:
(a) any misrepresentation by the Company or any of its Subsidiaries, or breach
of any warranty by the Company or any of its Subsidiaries in this Agreement,
or
in any exhibits or schedules attached hereto, and (b) any breach or default
in
performance by Company or any of its Subsidiaries of the their obligations
hereunder.
6. Put
Option.
The
Company hereby grants to Lender an option (the “Put
Option”)
to
sell all or any portion of the Issued Shares (the “Put
Shares”)
to the
Company for a total purchase price of $195,000, pro-rated for any portion
thereof (the “Put
Price”).
The
Put Option may be exercised with respect to any amount that is equal to or
less
than the entire balance of the outstanding Put Shares, at any time during the
earlier to occur of the following Put Option exercise periods (the “Put
Period”): (a) the ten (10) Business Day period commencing on the first
anniversary hereof, or (b) the ten (10) Business Day period commencing on the
date which is nine (9) months after the date that the registration statement
for
the registration of the Issued Shares is declared effective by the SEC . If
not
exercised during the Put Period, the Put Option shall terminate and shall be
of
no further force or effect. The Put Option shall be exercisable by Lender’s
delivery of written notice to the Company (the “Put
Notice”).
The
Put Notice shall specify the date on which the closing of the purchase of the
Put Shares shall take place (the “Put
Closing Date”),
which
such date shall be no earlier than ten (10) days but no later than thirty (30)
days from the date of the Put Notice. On or before the Put Closing Date, Lender
will deliver to the Company the certificate(s) representing the Put Shares
(duly
endorsed for transfer by Lender or accompanied by duly executed stock powers
in
blank) and the Company shall tender to Lender the Put Price in cash by wire
transfer of immediately available funds to an account at a bank designated
by
Lender. The Company and Lender acknowledge and agree that the Company’s
obligation to purchase the Issued Shares from Lender pursuant to the Put Option
is an Obligation secured by the Collateral and any related guarantees under
the
Loan Documents, and for so long as the Put Option is outstanding and, if
exercised, the Put Price is not yet tendered, the Lender’s right to receive the
Put Price shall be secured by the Collateral and any related guarantees under
the Loan Documents. Lender’s right to exercise the Put Option shall not be
transferred or assigned to any third party.
6.1 Notwithstanding
the foregoing, Lender shall have the right, but not the obligation, to
accelerate the exercise of the Put Option upon a Fundamental Transaction (as
defined in the Loan Agreement), as follows: The Company shall send
written notice of the proposed Fundamental Transaction (“Fundamental
Transaction
Notice”)
no
later than thirty (30) days prior to the date of the proposed consummation
of
the Fundamental Transaction, together with all relevant information relating
thereto, in form sufficient to enable Lender to make an informed decision as
to
whether it should accelerate the Put Option. Within fifteen (15) days of
Lender’s receipt of the Fundamental Transaction Notice, Lender shall advise the
Company whether the Lender has elected to accelerate the exercise of the Put
Option. Lender’s failure to timely notify the Company of Lender’s intention to
accelerate the Put Option shall be deemed an intention to decline to accelerate
the Put Option.
5
6.2 In
addition, notwithstanding the foregoing, Lender shall
have the right, but not the obligation, to accelerate the exercise of the Put
Option following an Event
of
Default under the Loan Documents (which acceleration right shall not be waived
if not exercised following a prior Event of Default), in which event the Put
Price shall be added to the Obligations under the Loan Agreement and secured
by
the Collateral thereunder, and shall be immediately due and payable to Lender.
6.3 If
any
portion of the Note is converted into Common Stock pursuant to the Loan
Documents, the Put Option set forth hereinabove, if not terminated by its terms
herein, shall terminate.
7. Miscellaneous.
7.1 Notices.
All
notices, requests and demands to or upon the respective parties hereto shall
be
given in writing and shall be deemed to have been duly given or made upon
receipt by the receiving party. All notices, requests and demands are to be
given or made to the respective parties at the following addresses (or to such
other addresses as either party may designate by notice in accordance with
the
provisions of this paragraph):
If
to the
Company:
00000
X.X. 0xx
Xxxxxx
Xxxxx
0000
Xxxxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxx Xxxxxxx
With
a
copy to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx, Esq.
6
If
to
Lender:
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxxxxxx
With
a
copy to:
Xxxxx
Xxxxxx Xxxxxxxx & Xxxxxx LLP
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx Xxxxx, Esq.
7.2 Amendment.
Any
modification or amendment shall be in writing and signed by the parties hereto,
and any waiver of, or consent to any departure from, any representation,
warranty, covenant or other term or provision shall be in writing and signed
by
each affected party hereto or thereto, as applicable.
7.3 Construction.
No
provision of this Agreement shall be construed against or interpreted to the
disadvantage of any party hereto by reason of such party or its counsel having,
or being deemed to have, structured or drafted such provision.
7.4 Entire
Agreement.
This
Agreement contains the entire agreement of the parties with respect to the
subject matter hereof and supersedes all other negotiations, representations,
warranties, agreements and understandings, oral or otherwise, between the
parties with respect to the matters contained herein.
7.5 Headings.
Section
and paragraph headings are for convenience only and shall not be construed
as
part of this Agreement.
7.6 Severability.
Every
provision of this Agreement is intended to be severable. If, in any
jurisdiction, any term or provision hereof is determined to be invalid or
unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired, (b) any such invalidity or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such term or provision in any
other
jurisdiction, and (c) the invalid or unenforceable term or provision shall,
for
purposes of such jurisdiction, be deemed replaced by a term or provision that
is
valid and enforceable and that comes closest to expressing the intention of
the
invalid or unenforceable term or provision. If a court of competent jurisdiction
determines that any covenant or restriction, by the length of time or any other
restriction, or portion thereof, set forth in this Agreement is unreasonable
or
unenforceable, the court shall reduce or modify such covenants or restrictions
to those which it deems reasonable and enforceable under the circumstances
and,
as so reduced or modified, the parties hereto agree that such covenants and
restrictions shall remain in full force and effect as so modified. In the event
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or against public policy and cannot be so reduced or
modified so as to be made enforceable, the remaining provisions of this
Agreement shall not be affected thereby, and shall remain in full force and
effect.
7
7.7 Successors
and
Assigns.
All
covenants, promises and agreements by or on behalf of the parties contained
in
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns;
provided,
however,
that
nothing in this Agreement, express or implied, shall confer on the Company
the
right to assign any of its rights or obligations hereunder at any
time.
7.8 Survival.
All
covenants, agreements, representations and warranties made by the Company herein
or in any certificate, report or instrument contemplated hereby shall survive
any independent investigation made by Lender and the execution and delivery
of
this Agreement, and such certificates, reports or instruments and shall continue
so long as any Obligations are outstanding and unsatisfied, applicable statutes
of limitations to the contrary notwithstanding.
7.9 No
Waiver;
Rights and Remedies.
A
waiver
of a breach of any term, covenant or condition of this Agreement shall not
operate or be construed as a continuing waiver of such term, covenant or
condition, or breach, or of any other term, covenant or condition, or breach
by
such party. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall preclude any other or further exercise of any other right,
remedy or power provided herein or by law or in equity. Lender is entitled
to
exercise all rights and remedies available to it at law or in equity in
connection with this Agreement. The rights and remedies of Lender hereunder
are
several and cumulative at Lender’s discretion and may be exercised at Lender’s
discretion.
7.10 Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the applicable
laws pertaining in the State of New York (without giving effect to New York's
principles of conflicts of law). The parties hereby (a)
irrevocably submit and consent to the exclusive jurisdiction of the Supreme
Court for New York County, State of New York, and the United State District
Court for the Southern District of New York with respect to any action or
proceeding arising out of this Agreement and (b)
waive
any objection based on venue or forum non conveniens
with
respect hereto. In any such action or proceeding, the Company waives personal
service of the summons and complaint or other process and papers therein and
agrees that the service thereof may be made by mail directed to the Company
at
its office set forth herein or other address thereof of which Lender has
received notice as provided herein, service to be deemed complete as permitted
under the rules of either of said Courts. Any such action or proceeding
commenced by the Company against Lender will be litigated only in the New York
Supreme Court for New York County, State of New York, and the United States
District Court for the Southern District of New York.
7.11 Counterparts.
This
Agreement may be executed in counterparts and by facsimile or electronic
signature, each of which when so executed, shall be deemed an original, but
all
of which shall constitute but one and the same instrument.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have executed this Securities Issuance
Agreement as of the date set forth in the first paragraph hereof.
| EMAGIN CORPORATION | |||
|
|
By:
|
/s/ K.C. Park | |
|
Name:
K.C. Park
|
|||
|
Title: Interim
CEO
|
|||
| MORIAH CAPITAL, L.P. | |||
| By:
Moriah Capital Management, L.P.,
General
Partner
|
|||
|
By:
Moriah Capital Management, GP, LLC,
General
Partner
|
|||
|
|
By:
|
/s/ Alexandre Speaker | |
| Name: Alexandre Speaker | |||
| Title: General Partner | |||
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