Exhibit 10.2

 
SECURITIES ISSUANCE AGREEMENT
 

 
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.

 
 
 
2

--------------------------------------------------------------------------------

(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:

10500 N.E. 8th Street
Suite 1400
Bellevue, Washington 12533
Attention: John Atherly
 
With a copy to:
 
Sichenzia Ross Friedman Ference LLP
61 Broadway
New York, New York 10006
Attention: Richard A. Friedman, Esq.
 
6

--------------------------------------------------------------------------------

If to Lender:
 
685 Fifth Avenue
New York, New York 10022
Attention: Greg Zilberstein
 
With a copy to:
 
Cohen Tauber Spievack & Wagner LLP
420 Lexington Avenue, Suite 2400
New York, New York 10170
Attention: Adam Stein, 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]

 

8

--------------------------------------------------------------------------------

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
         

 

9