WARRANT ISSUANCE AGREEMENT NO. 2
EXECUTION COPY
THIS
WARRANT ISSUANCE AGREEMENT NO. 2 (this “Agreement”) is made
and entered into on August 20, effective as of August 7, 2008, 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, dated as of August 7, 2007, as amended through the date hereof (as
so amended and as amended form time to time, the “Loan
Agreement”).
1. Issuance of Warrant; Termination of
Loan Conversion Agreement.
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1.1
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On
the date of execution of this Agreement, also known as the Closing Date,
the Company is hereby issuing to Lender, and Lender agrees to acquire from
the Company, a five-year warrant to acquire 370,000 shares of the
Company’s common stock at an exercise price of $1.30 per share, in the
form annexed hereto as Exhibit A (the
“Warrant”).
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2.1
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Closing Obligations of
Company. On or prior to the date hereof, the Company shall have
taken and shall take all actions necessary to issue the Warrant to Lender
and to consummate the transactions contemplated hereby, including, without
limitation, delivery or causing to be delivered to Lender on the date
hereof the following:
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(a)
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The Warrant,
duly executed and delivered by the Company;
and
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(b)
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such
other certificates, documents, receipts and instruments as Lender or its
legal counsel may reasonably
request.
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2.2
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Closing Obligations of
Lender. On or prior to the date hereof, Lender shall
have taken and shall take all actions necessary for consummation by Lender
of the transactions contemplated
hereby.
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3. No Increase in Warrant
Exercise Price. For the avoidance of doubt, the parties acknowledge and agree
that, notwithstanding anything to the contrary in the warrants issued by
the Company to Lender prior to the date hereof, in no event shall the Exercise
Price (as defined therein) be increased on account of any adjustment pursuant to
Section 5 thereof.
4. Representations and
Warranties of the Company. The Company hereby represents and
warrants to Lender as follows:
(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 Warrant, 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
Warrant Shares have been duly and validly reserved for issuance. When
issued in compliance with the provisions of this Agreement and the Warrant, the
Warrant 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”.
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4.3 Authorization; Binding
Obligations. All corporate action on the part of the Company
necessary for the authorization of the Warrant, and the performance of the same,
has been taken. The Warrant, when executed and delivered, will be the
valid and binding obligation of the Company, enforceable against it in
accordance with their terms.
4.4 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.
4.5 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) other than with respect to (i) any Event of Default arising out of the
Company’s failure to repay the Obligations under the Loan Agreement on August 7,
2008, which default has been waived by Lender, and (ii) any rights to
registration of shares of the Company’s common stock, 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 will not, with or without
the passage of time or giving of notice, result in 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.
4.6 Registration Rights and
Voting Rights. Except as disclosed in the Registration Rights
Agreement or the SEC Reports, 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.
4.7 Valid
Offering. Assuming the accuracy of the representations and
warranties of Lender contained in this Agreement, the offer, sale and issuance
of the Warrant and the Warrant 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.
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4.8 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.
5. 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 taken, (c) upon execution and delivery, this Agreement
is the valid and binding obligation of Lender, enforceable in accordance with
its terms, (d) Lender is either (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3),(a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act and (e) Lender understands that the Warrant and
Warrant Shares are restricted securities and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Warrant and Warrant Shares as principal for its own account and not with a view
to or for distribution or reselling such Warrant or Warrant Shares or any part
thereof in violation of the Securities Act or any applicable state securities
law.
6. Covenants of the
Company. The Company covenants and agrees with Lender as
follows:
6.1 Reporting
Requirements. So long as the Warrant has not been exercised or
terminated, 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.
6.2 SEC
Reporting. So long as the Warrant has not been exercised or
terminated, 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 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.
6.3 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.
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If to the Company:
00000
X.X. 0xx
Xxxxxx
Xxxxx
0000
Xxxxxxxx,
Xxxxxxxxxx 00000
Attention: Mr. Xxxx
Xxxxxxxx
With a copy to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx
LLP
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X.
Xxxxxxxx, Esq.
If to Lender:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx
Xxxxxxxxxxx
With a copy to:
Xxxxx Xxxxxx Xxxxxxxx & Xxxxxx
P.C.
000 Xxxxxxxxx Xxxxxx, Xxxxx
0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx,
Esq.
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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.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have executed this Warrant Issuance
Agreement No. 2 as of the date set forth in the first paragraph
hereof.
| EMAGIN CORPORATION | |||
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By:
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/s/ Xxxxxx Xxxxxxx | |
| Xxxxxx Xxxxxxx | |||
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CEO
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| MORIAH CAPITAL, L.P. | |||
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By:
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Moriah Capital Management, L.P., | |
| General Partner | |||
| By: Moriah Capital Management, GP, LLC, | |||
| General Partner | |||
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By:
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/s/ Xxxx Xxxxxxxxxxx | |
| Xxxx Xxxxxxxxxxx | |||
| Managing Partner | |||
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EXHIBIT
A
FORM
OF WARRANT
[ATTACHED]
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