eMagin Corporation Form 8-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): August 7,
2007
eMagin
Corporation
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-24757
|
56-1764501
|
|
(State
or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
|
|
|
10500
N.E. 8th Street,
Suite 1400, Bellevue, WA 98004
(Address
of principal executive offices and Zip Code)
Registrant's
telephone number, including area code (425)-749-3600
Copies
to:
Richard
A. Friedman, Esq.
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32nd
Floor
New
York,
New York 10006
Phone:
(212) 930-9700
Fax:
(212) 930-9725
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
ITEM
1.01. Entry into a Material Definitive Agreement.
eMagin
Corporation (the “Company”) has entered into agreements, effective as of August
7, 2007 (the “Closing Date”), with Moriah Capital, L.P. (“Moriah”), pursuant to
which the Company may borrow an amount not to exceed $2,500,000. Such
funds may be drawn down by the Company in tranches of at least $25,000 up to
five times each month. In connection with the transaction, the Company issued,
executed and delivered to Moriah the following:
|
·
|
A
Loan and Security Agreement;
|
|
·
|
A
Secured Convertible Revolving Loan Note with a principal amount not
to
exceed $2,500,000;
|
|
·
|
A
Loan Conversion Agreement;
|
|
·
|
A
Securities Issuance Agreement pursuant to which the Company issued
162,500
shares of its common stock, which shares have an aggregate market
value on
the Closing Date of $195,000;
|
| ·
|
A
Registration Rights Agreement;
|
| ·
|
An
Intercreditor
Agreement; and
|
|
·
|
A
Post-Closing Agreement.
|
Pursuant
to the Loan and Security
Agreement, the Company is permitted to borrow an amount not to exceed 90% of
its
eligible accounts (as defined in the agreements), net of all taxes, discounts,
allowances and credits given or claimed, plus 50% of its eligible inventory
capped at $600,000. As of August 9, 2007, pursuant to the Loan
and Security Agreement, the Company has borrowed $607,500. The Company's
obligations under the loans are secured by all of the assets of the Company,
including but not limited to inventory and accounts receivable; provided,
however, that Moriah’s lien on the collateral other than Accounts and Inventory
(as such terms are defined in the agreements) are subject to the prior lien
of
the holders of the Company’s outstanding Amended and Restated 8% Senior Secured
Convertible Notes Due 2008 in accordance with the terms of, and subject to
the
conditions set forth in the Intercreditor Agreement.
The
Loan and Security Agreement expires
on August 7, 2008, but may be extended at the Company’s option for an
additional one year period with the Company issuing additional shares of common
stock to Moriah having 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 the effective date of the extension of the
initial term of the loan. Annual interest on the loans is equal to
the greater of (i) the sum of (A) the Prime Rate as reported in the “Money
Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate
changes plus (B) 2% or (ii) 10%, and shall be payable in arrears prior to
the Maturity Date, on the first Business Day of each calendar month, and in
full
on the Maturity Date.
As
part
of the transaction, up to $2,000,000 of the amount of the loan that the Company
actually borrows may be converted to shares of the Company's common stock
pursuant to the terms of the Loan Conversion Agreement. The conversion price
is
$1.50, subject to adjustment as provided in the Conversion Agreement.
Notwithstanding
the foregoing, Moriah has contractually agreed to restrict its ability to
convert the convertible notes evidencing the loans made to the
Company pursuant to the Loan Agreement if such conversion would result in
Moriah’s share ownership exceeding the difference between 4.99% of the
outstanding shares of common stock of the Company and the number of shares
of
common stock beneficially owned by Moriah.
The
Company has also agreed to file a
registration statement to register the resale of shares of the Company's common
stock issuable under the Securities Issuance Agreement and the shares issuable
upon conversion of the convertible note, although the Company is not subject
to
penalties for failure to register such shares.
In
the event that Moriah accelerates
the Loans due to an event of default, the Company shall pay to Moriah an early
payment fee in an amount equal to (i) two percent (2%) of the maximum credit
if
such acceleration occurs prior to the first anniversary of the Closing Date,
and
(ii) one percent (1%) of the maximum credit if such acceleration occurs on
or
after the first anniversary of the Closing Date.
As
part
of the transaction, the Company is paying Moriah a servicing fee of
$82,500.
The
Company has also granted Moriah a put option pursuant to the Securities Issuance
Agreement pursuant to which Moriah can sell the shares issued to Moriah under
the Securities Issuance Agreement back to the Company for $195,000 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 of the Closing Date, 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 Securities and Exchange Commission.
In
addition to the foregoing, as part
of the transaction, the Intercreditor Agreement was entered into between Moriah
and Alexandra Global Master Fund Ltd.
In
connection with the transaction, the parties executed a Post-Closing Agreement
pursuant to which the parties agreed to enter into certain agreements and
exchange certain documents after the closing for the
transaction. Pursuant to the Post-Closing Agreement, the Company
shall (i) provide to Moriah certain landlord consents, (ii) execute patent
and
trademark security and pledge agreements in form and substance not inconsistent
with the existing security and pledge agreements executed by the Company in
favor of Alexandra Global Master Fund Ltd. (with the sole exception that such
agreements shall be subordinate to the existing pledge and security agreements
executed by the Company in favor of Alexandra Global Master Fund Ltd.) and
(iii)
execute a Depository Account Agreement (“Lockbox Agreement.) Pursuant to the
Lockbox Agreement, until the revolving loan is repaid and the Loan and Security
Agreement is terminated, remittances and all other proceeds of the Company’s
accounts receivables shall be deposited into a bank account controlled by
Moriah.
ITEM
2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
See
Item 1.01 abvoe.
ITEM
3.02 Unregistered Sales of Equity
Securuties.
See
Item 1.01 above.
ITEM
9.01. Financial Statements and Exhibits.
(d)
Exhibits. The following documents are filed as exhibits to this
report:
| |
10.1
|
|
Loan
and Security Agreement between Moriah Capital, L.P. and eMagin
Corporation
|
| |
10.2
|
|
Securities
Issuance Agreement between eMagin Corporation and Moriah Capital,
L.P.
|
| |
10.3
|
|
Secured
Convertible Revolving Loan Note
|
| |
10.4
|
|
Loan
Conversion Agreement between eMagin Corporation and Moriah Capital,
L.P.
|
| |
10.5
|
|
Post-Closing
Agreement between eMagin Corporation and Moriah Capital,
L.P.
|
| |
10.6
|
|
Registration
Rights Agreement between eMagin Corporation and Moriah Capital,
L.P.
|
| |
10.7
|
|
Intercreditor
Agreement between Alexandra Global Master Fund Ltd., Moriah Capital,
L.P. and eMagin Corporation
|
| |
99.1 |
|
Press
release of eMagin Corporation dated August 9,
2007 |
SIGNATURES
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| |
EMAGIN
CORPORATION |
|
| |
|
|
|
|
|
By:
|
/s/ John
Atherly |
|
| |
|
Name:
John Atherly
|
|
| |
|
Title:
Chief Financial Officer
|
|
| |
|
|
|
4