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):
April 25, 2003
eMagin Corporation
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(Exact name of registrant as specified in its charter)
Delaware 000-24757 56-1764501
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Identification
Incorporation) Number)
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2070 Route 52, Hopewell Junction, New York 12533
(Address of principal executive offices) (zip code)
(845) 892-1900
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
eMagin Corporation ("eMagin" or the "Company") and a group of several accredited
institutional and individual investors (collectively, the "Investors") entered
into a Global Restructuring and Secured Note Purchase Agreement (the "Secured
Note Purchase Agreement") dated as of April 25, 2003 (the "Closing Date")
whereby Investors agreed to lend eMagin $6,000,000 in exchange for (i) the
issuance of $6,000,000 principal amount of 9.00% Secured Convertible Promissory
Notes due on November 1, 2005 (the "Secured Notes") and (ii) Warrants (the
"Warrants") to purchase an aggregate of 7,749,921 shares of common stock of
eMagin (subject to certain customary anti-dilution adjustments), which Warrants
are exercisable for a period of three (3) years.
Interest is payable on the Notes at a rate of 9% per annum and, at the option of
the Company, may be paid through the delivery of shares of common stock of the
Company (registered pursuant to the Registration Rights Agreement referred to
below) in lieu of cash interest payments. Subject to certain limitations, the
Notes may be converted, at the option of the holder, in whole or in part, into
common shares with a conversion price equal to 105% of the volume weighted
average of the closing price of the Company's common shares as reported on The
American Stock Exchange by the Wall Street Journal, New York City edition, for
the five (5) trading days immediately preceding the Closing Date (the
"Conversion Price").
The exercise price of the warrants on a per share basis is $.8110, an amount
equal to 110% of the volume weighted average of the closing price of the
Company's common shares as reported on The American Stock Exchange by the Wall
Street Journal, New York City edition, for the five (5) trading days immediately
preceding the Closing Date.
As part of the Transactions, the existing the holders of an aggregate of
$1,625,000 principal amount of secured notes that were purchased pursuant to a
secured note purchase agreement entered into as of November 27, 2001
(collectively, the "Original Secured Notes"), and the holder of a $200,000
principal amount secured note that was purchased pursuant to a Secured Note
Purchase Agreement entered into as of June 20, 2002 (the "Bridge Note"), agreed
to (a) amend their respective Original Secured Notes and Bridge Note issued to
them, (b) terminate the Security Agreement dated November 20, 2001 that was
entered into in connection with the purchase of the Original Secured Notes and
the Security Agreements dated June 20, 2002 that were entered into in connection
with the purchase of the Bridge Note and allow the new investors to enter into a
New Security Agreement (as defined below) with them on a pari passu basis in
order for the Company to continue its operations as a developer of virtual
imaging technology, and (c) simultaneously participate in this new round of
financing (subject to the terms and conditions set forth in the Secured Note
Purchase Agreement). The amendments to the Original Secured Notes and Bridge
Note included (i) amending the Bridge Note so as to provide that the Bridge Note
shall be convertible and will have the same Conversion Price (as defined above)
as the Notes issued pursuant to the Secured Note Purchase Agreement, (ii)
extending the maturity dates of the Original Secured Notes and Bridge Note from
June 30, 2003 to November 1, 2005, and (iii) revising and clarifying certain of
the other terms and conditions of the Original Secured Notes and Bridge Note,
including provisions relating to interest payments, conversions, default and
assignments of the Original Secured Notes and Bridge Note.
In connection with the completion of the transactions under the Securities
Purchase Agreement, eMagin and the investors also entered into a Security
Agreement dated as of April 25, 2003 (the "New Security Agreement"), and a
Registration Rights Agreement dated as of April 25, 2003 providing the investors
with certain registration rights under the Securities Act of 1933, as amended,
with respect to the Company's common stock issued or issuable in lieu of cash
interest payments on the Notes, upon conversion of the Notes and/or exercise of
the Warrants.
The issuance of the shares and the warrants was exempt from registration
requirements of the Securities Act of 1933 pursuant to Section 4(2) of such
Securities Act and Regulation D promulgated thereunder based upon the
representations of each of the Investors that it was an "accredited investor"
(as defined under Rule 501 of Regulation D) and that it was purchasing such
securities without a present view toward a distribution of the securities. In
addition, there was no general advertisement conducted in connection with the
sale of the securities.
In addition to the foregoing, as a condition to and simultaneously with the
closing of the transaction pursuant to the Secured Note Purchase Agreement,
certain holders of convertible notes issued by the Company agreed to convert
approximately $4.9 million of notes and accrued interest into shares of the
Company's common stock, subject to a "lock up" arrangement allowing only limited
sales through private transactions for their remaining shares through December
31, 2003. Specifically, The Travelers Insurance Company agreed to convert their
$1 million convertible note plus related interest into common stock of eMagin
(at a conversion price of approximately $0.53 per share), and SK Corporation has
agreed to convert its $3 million Convertible Note and accrued interest into the
common stock of eMagin (at an approximate conversion price of approximately
$1.28 per share). As further conditions to the closing of the transaction
pursuant to the Secured Note Purchase Agreement, the Company has also entered
into settlement or restructuring agreements with certain of its other creditors
to whom it owed approximately $5.2 million of current payables, pursuant to
which the creditors have agreed to accept shares of common stock of the Company
in full or partial satisfaction of the amount owed to them, or which allow the
Company to either make discounted payments to them or to make payments under
more favorable payment terms than previously were in place.
The foregoing is not intended to be a full and complete description of the
transaction. Terms of the transaction are more fully described in the copies of
the Secured Note Purchase Agreement, the form of Secured Convertible Promissory
Note, the form of Stock Purchase Warrant, the Security Agreement and the
Registration Rights Agreement attached as exhibits to this Form 8-K.
The Company issued a press release on April 28, 2003 announcing the transactions
described above which is also attached hereto as Exhibit 99.1.
ITEM 7. EXHIBITS.
Exhibit
Number Description
10.1 Securities Purchase Agreement dated as of April 25, 2003 by and
among eMagin and the investors identified on the signature pages
thereto.
10.2 Security Agreement dated as of April 25, 2003 by and among eMagin
and certain initial investors identified on the signature pages
thereto.
10.3 Registration Rights Agreement dated as of April 25, 2003 by and
among eMagin and certain initial investors identified on the
signature pages thereto.
4.1 Form of Secured Convertible Promissory Note
dated as of April 25, 2003.
4.2 Form of Amended and Restated Secured Convertible Promissory Note
dated as of April 25, 2003.
4.3 Form of Warrant dated as of April 25, 2003.
99.1 Press Release of the Company dated April 28, 2003, announcing the
subscription by the Investors of the purchased notes and warrants.
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/ Gary W. Jones
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Name: Gary W. Jones
Title: President and
Chief Executive Officer
Dated: April 28, 2003