Exhibit 10.77
 
EMAGIN CORPORATION
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
This Amendment No. 2 to the Employment Agreement (the "Agreement").made and
entered into this 30 day of January 2008, between eMagin Corporation, a Delaware
Company (the "Company") and Susan Jones, an individual residing in Newcastle, WA
98059 (the "Executive").
 
WITNESSETH:
WHEREAS, on January 24, 2006 the Company and the Executive entered into an
Employment Agreement which was amended April 17, 2006 (collectively, the
"Employment Agreement"); and from time to time also entered into additional
agreements or provisions outlining rights or responsibilities, whether
referenced or not in said Employment Agreements, which shall also remain
separately valid unless encompassed herein.
 
WHEREAS, the Company has determined that it is in the best interests of the
Company and its shareholders to assure that the Company will have the continued
dedication of the Executive,
 
WHEREAS, Executive has agreed to continue to serve as an Employee of Employer,
and Employer has agreed to continue to employee the Executive as such, pursuant
to the terms and conditions of this Amendment and Restated Employment Agreement
(the "Amended Employment Agreement")
 
NOW, THEREFORE, to accomplish these objectives and in consideration of and for
the mutual promises and covenants contained herein, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Employment Agreement is hereby amended and restated as follows.
 
I . EMPLOYMENT AGREEMENT
 
I. I Employment; Duties and Responsibilities. The Company hereby employs
Executive as its Executive Vice President, Chief Business Officer (or other
equivalent C-level title), and Secretary of the Board of Directors and Executive
accepts such employment on the terms contained in this Agreement, Executive
shall report to the Chief Executive Officer. In any event that the Chief
Executive Officer is no longer serving as such the Executive shall report to the
Chairman of the Board. Specifically for duties as Secretary or as related to
Governance for the Company, Executive will report to the Chairman of the Board,
if he is an Independent Director, and/or the Chairman of the Governance
committee if the Chairman not be an Independent Director.
 
1.2 Duties and Responsibilities Employee shall have those duties and powers as
generally pertain to each of the positions of which she holds pursuant to
working titles of chief business officer, including managing (i) business
development including sales, marketing, development contracts and agreements,
government contracts, and government relations, (ii) intellectual property and
information technology, (iii) public relations including oversight of media,
press releases, and public presentations. Executive will also continue to record
the minutes of the meetings of the Board of Directors and its committees,
oversee stock issuance matters for Directors and other parties; oversee filings
with the Securities and Exchange Commission; provide oversight for corporate
governance matters, and undertake other duties, if and as requested by the
Chairman of the Board and mutually agreed to.
 
1.3 Term of Agreement. This Agreement, as amended and restated, shall be
effective as of the date first written above (the "Effective Date") and ending
on the second anniversary date thereof (such period, as it may be extended, the
"Term"), unless sooner terminated in accordance with this Amended Employment
Agreement. The Term shall be automatically renewed for successive one year terms
(each such renewal, a "Renewal Term"), unless either party provides the other
party with written notice no less than sixty (60) days prior to the end of the
then current Term or Renewal Term, of her or its intent not to renew this
Agreement; Notwithstanding the foregoing, the parties may subsequently mutually
agree, in writing, to reduce the term of this Agreement, provided that any such
reduction is agreed to in writing. Each of these terms may be referenced herein
as the "Employment Period."
 
1.4 Time and Effort. Executive shall use her best efforts to carry out the
duties and responsibilities that are consistent with her title(s) and devote the
substantial portion of her entire business time, attention, and energy
exclusively to the business and affairs of the Company. During Executive's
employment Executive shall not engage in any business activities outside those
of the Company to the extent that such activities would interfere with or
prejudice Executive's obligations to the Company. Executive may serve as a
member of the Board of Directors of other organizations that do not directly and
compete with the Company, and may participate in other professional, civic,
governmental organizations and activities that do not materially affect her
ability to carry out her duties.
 
 
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1.5  Location. Unless otherwise voluntarily agreed to, the locations at which
Executive shall perform services for the Company shall primarily be Bellevue,
Washington with periodic travel to Hopewell Junction, New York.
 
1.6 Other Provisions.  During the Employment Period and for three years after
the date of termination for any reason, Executive is to be covered under
Directors and Officers Insurance, and will be fully indemnified by the Company
against any action by creditors, investors, and other parties related to the
business and actions of the Company to the same level as any other senior
manager, Officer or Director.
 
2. COMPENSATION DURING EMPLOYMENT PERIOD
 
2.1 Salary Compensation. As compensation for performing services for the
Company, Executive shall be entitled to compensation as of the date of this
Agreement which is comprised of each of a (i) fixed base salary and (ii)
variable incentive which is based on performance. The fixed base salary shall be
$315,000 per annum, payable in bi-weekly installments consistent with the
Company's payroll practices. The variable incentive shall be remuneration of I.%
of total cash resulting from sales of products and prototypes, services,
non-recurring engineering, and all classifications of research or development
contracts, as well as any other items defined as revenue as reported to the
Securities and Exchange commission (but not inclusive of revenue generated by
sales of intellectual property, or manufacturing equipment or materials) to be
paid no later than 2 business days after each quarterly report has been filed.
For Congressional plus-ups, 1/3 of the variable incentive shall be paid upon
enactment of the appropriations legislation, 1./3 upon commencement of the
related technical program with the service agency managing the technical
program, and the remainder upon receipt of the resultant revenue each quarter
for the term of this employment agreement, including, retroactively, any
plus-ups enacted during the period of negotiation of this Employment Agreement
from May 2007 to the Effective Date. Variable compensation shall be paid, at the
option of the Compensation committee, either by (a) 100% cash or (b) 50%
unrestricted stock and 50% cash. Taxes shall be deducted from the cash portion
and the stock payment shall be grossed up for taxes, via cash. The stock will be
priced using the 5 trading day weighted average pricing just prior to the date
the shares are issued to the Executive.
 
During the Employment Period, the annual fixed base salary and variable
incentive plan will be reviewed on or before June 30 of each year by the
Compensation Committee to determine if such base salary or variable incentive
basis should be increased due to inflation or in recognition of Executive's
services to the Company. The Board or Compensation Committee of the Board may
provide additional bonuses for accomplishment of various objectives from time to
time, at their discretion.
 
Payment of all previously unpaid amounts of the variable incentive due as of the
Effective Date of this Amended Employment Agreement shall be made by monthly
cash payments until all past due amounts are paid in full by no later than July
31, 2008 and will be treated as an unsecured loan to the company. All prior
deferred base salary will be paid back in full and continue to be paid out in
equal monthly installments as an unsecured loan to the company for a total of
twelve months from the execution date of the note restructuring, as already
initiated. The Executive will be provided with a detailed accounting of payment
of all deferred and past due payments on the fifth day following the end of each
month.
 
2.2 Employee Benefits. During Executive's employment, Executive shall be
entitled to participate, to the extent of Executive's eligibility, in each
qualified or non-qualified and supplemental employee benefit and perquisite
plan, policy, or arrangement of the Company applicable to the Company's
employees.
 
2.3 Time Off. Executive shall accrue personal time off for sick leave, personal
reasons, and holidays according to applicable company policy, except that
Executive shall accrue personal time off for vacation in accordance with the
employee's accrual rate of 35 days per each calendar year, with up to 45 days of
unused vacation brought forward for each year to be additive to each new
calendar year's fresh accrual. Upon termination for any reason other than
termination for cause, as defined herein, the Company shall pay the Executive
unused vacation accrual of no less than 45 days plus any hours accrued which
remain for the current year of the termination, as well as unused sick and
personal time, and any unused personal choice holidays.
 
2.4 Business Expenses. Upon submission of itemized expense statements in the
manner specified by the Company, Executive shall be entitled to reimbursement
for reasonable travel, relocation, and other reasonable business expenses
incurred by the Executive in the performance of her duties under this Agreement.
Each expense statement submitted by Executive to the Chief Executive Officer (or
to the Chairman of the Board) shall be reviewed and approved, including receipt
of timely notification of any questions or errors identified during internal
reviews, no later than fifteen business days after submission by Executive.
 
 
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Furthermore, all expense reports submitted, or to be resubmitted, for previously
unpaid expenses, whether by reason of loss or misplacement, will be repaid on
this schedule once submitted or resubmitted, including re-creation of those
shipped from New York to Washington accounting department in past years. Any
disagreement on advances or reimbursement with accounting regarding policies
will be resolved by the Chairman. Any expense reimbursements shall be paid
within five (5) business days of the date of date of termination and any
expenses submitted within one hundred twenty (120) days of the date of
termination shall be reimbursed as provided for in Section 2.4.
 
2.5 Stock Options and Grants. Executive shall be eligible to participate in the
Company's Stock Option and Stock Purchase Plans, as determined in the sole
discretion of the Board of Directors. The Board or Compensation Committee of the
Board may provide additional awards of stock options or stock grants from time
to time or on an incentive plan as deemed appropriate.
 
3. TERMINATION OF EMPLOYMENT
 
3.1 Voluntary. If Executive voluntarily terminates Executive's employment with
the Company, other than for Good Reason as defined in Section 3.4 herein,
Executive shall cease to accrue fixed base salary, vacation, benefits and other
compensation on the date of voluntary termination except that, in consideration
of her past contributions to the Company and to her continuing obligations under
Section 4 hereof, and to encourage and compensate Executive to assist with
transition requirements, Executive shall be entitled to receive six months of
base salary commencing upon her termination date, payable either on regularly
scheduled corporate payroll dates or as a lump sum. Variable incentive
compensation shall continue to accrue through the end of the third sequential
quarter following the date of termination by Executive, payable upon the normal
schedule when Executive was employed. Executive shall receive other accrued
benefits, if any, in accordance with applicable employee benefit plan
provisions, or as otherwise defined in the Amended and Restated Agreement.
 
3.2 For Cause. Notwithstanding anything herein to the contrary, the Company may
terminate its employment of Executive under this Agreement for cause without
liability (other than for base salary and other compensation provided in Section
2 accrued to the date of termination, or previously earned but not paid by the
date of termination) at any time by written notice to Executive. For purposes of
this Agreement, the term "cause" for termination by Employer shall be (a) a
conviction of or plea of guilty or nolo contendere by Executive to a felony, or
any crime involving fraud or embezzlement; (b) the willful and persistent
refusal by Executive to perform her material duties and obligations hereunder
(other than any such failure resulting from Executive's incapacity due to
physical or mental illness); (c) Executive's willful and intentional misconduct
in the performance of her material duties and obligations. For purposes of this
Section 3.2, no act, or failure to act, on Executive's part shall be deemed
"willful" unless done, or omitted to be done, by Executive not in good faith.
The written notice given hereunder by Company to Executive shall specify in
reasonable detail the cause for termination and the manner in which the Board
believes that Executive has not substantially or properly performed her duties.
In the case of a termination for the causes described in (a) above, such
termination shall be effective upon receipt of the written notice. In the case
of the causes described in (b) and (c) above, such termination notice shall not
be effective until sixty (60) days after Executive's receipt of notice, during
which time Executive shall be provided an opportunity to present evidence to a
majority of the Independent Directors at the Company's offices or other mutually
agreeable location on a date and time mutually convenient to the Board and
Executive, no sooner than two and not later than six weeks after the foregoing
notice, to refute the claim of Cause, and/or shall have the right to respond to
the Company's notice and cure the breach or other event giving rise to the
termination.
 
3.3 Termination of Executive without Cause.  In the event that Executive is
terminated without cause, Executive shall be paid as provided herein.
 
The Company may terminate the employment of Executive either by non-renewal of
this Agreement (as provided for in Section 1.3) or failure to elect or re-elect
Executive to office (as specified in Section 1.1) at any election held during
the Employment Period, or at any time without cause (as defined in Section 3.2)
by a written notice stating that such termination is without just cause. In such
event, Executive shall be entitled to receive the compensation and benefits set
forth in (i) through (v): (i) fixed base salary until the end of this
Agreement's full term or eighteen ( l 8) months, whichever is greater, based on
Executive's highest monthly rate of base salary during the twelve (12) months
prior to the date of such termination, (ii) variable incentive compensation that
otherwise would be payable during the full term of this Agreement, or eighteen
(18) months, whichever is greater; (iii) payment of any bonus amounts that the
Executive had previously earned from the Company, but which may not yet have
been paid as of the date of termination; (iv) payment for unused time off, as
provided for in Section 2.3, (v) payment for health coverage benefits equivalent
to medical and dental benefits provided during Executive's full time employment
for twenty-four (24) months after the date of termination. Any additional
health-related coverages the Executive had at termination, including dependent
coverage, will also be continued for such period on the same terms. Any costs
the Executive was paying for such coverages at the time of termination shall be
paid by the Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this paragraph do not
permit continued participation by the Executive the Company shall provide
Executive with substantially equivalent coverage through other sources or will
provide Executive with a lump sum payment in such amount that, after all income
and all taxes on that amount have been paid, shall be equal to the Executive's
costs of providing herself and her dependents with such benefit coverage. At the
termination of the benefits coverage provided herein, Executive and dependents
shall be entitled to continuation coverage pursuant to SectiOn 49980B of the
Code, Section 601-608 of the Employee Retirement Income Security Act of 1974, as
amended, and under any other applicable law, to the extent required by such
laws, as if Executive had termination employment with the Company on the date
such benefits coverage terminates.
 
 
 
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Unless otherwise provided for herein, Company shall pay all amounts due in one
payment within thirty (30) days following the effective date of termination and
shall pay variable incentive compensation on the dates on which they would have
normally occurred throughout the full term of this agreement. In addition, the
Company shall provide payment of any outstanding expense reimbursements within
five (5) business days following the effective date of termination.
 
Additional expense reports submitted by Executive within one hundred twenty
(120) calendar days following the effective date of termination shall be repaid
as provided in Section 2.4
 
3.4 Termination by Executive for Good Reason. Executive may terminate this
Agreement for Good Reason at any time upon 30 days written notice to the
Company. In this Amended Employment Agreement, "Good Reason" means, without
Employee's prior written consent, the occurrence of any of the following events,
unless Employer shall have fully cured all grounds for such termination within
thirty (30) days after Employee gives notice thereof: If Executive terminates
employment with the Company for Good Reason (as hereinafter defined), such
termination will be considered to be effectively the same as termination without
just cause; she shall be entitled to the severance benefits including those set
forth in Section 3.3 and stock-related provisions set forth in Section 3.8 as if
terminated by the Company without just cause. For purposes of this Agreement,
"Good Reason" shall mean the occurrence of any one or more of the following
events without Executive's prior written consent: (i) failure to renew this
Agreement or any failure to appoint, elect or reelect her to the positions of
Executive Vice President and Secretary of the Board of Directors, and her
working titles as of the Effective Date, unless such change is mutually agreed
to; the removal of her from such position; or any changes in the reporting
structure so that Employee reports to someone other than the Board of Directors,
or the Chief Executive Officer of the Company; (ii) the assignment to Executive
of any duties which, in Executive's reasonable judgment, are adversely
inconsistent with the position in the Company as defined herein, or a
significant adverse alteration in the nature or status of Executive's
responsibilities, including reporting status, or any other action by the Company
that results in a material diminution in Executive's position, authority, duties
or responsibilities; (iii) reduction of Executive's annual base salary or
incentive compensation or bonus opportunity, each as in effect on the date
hereof or as the same may be increased from time to time; (iv) the relocation of
the Company's offices at which Executive are principally employed such that
Executive's one-way daily commute from Executive's principal residence to the
Company's offices at which Executive are principally employed is increased by
more than twenty (20) miles; (v) the Company's failure to pay to Executive any
portion of Executive's then current compensation, whether base salary, incentive
compensation, expense reimbursement, or bonus, or any portion of an installment
of deferred compensation, in each case within seven (7) business days of the
date such compensation is due, or any material failure to timely grant, or
timely honor, any equity or long-term incentive award, unless other mutually
agreeable arrangements are made; (vi) the Company's failure to continue in
effect compensation and benefit plans which provide Executive with benefits
which are no less favorable on an aggregate basis, both in terms of the amount
of benefits provided and the level of Executive's participation relative to
other participants, to the benefits provided to under the Company's compensation
and benefit plans and practices as of the Effective Date; (vii) the Company's
failure to. obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, or to enter into a new employment agreement
with the Executive mutually acceptable to the Company or its successor and the
Executive in lieu of this Agreement; (viii) the continuation or repetition,
after written notice of objection from Executive, of harassing or denigrating
treatment of Executive which is inconsistent with Executive's position with the
Company; (ix) a determination by Executive made in good faith that, as a result
of a change of control or other material change, as defined herein, she is
unable to effectively carry out the authority, powers, functions or duties
attached to her position with the Company as referred to in Section 1 hereof,
and the situation is not remedied within thirty (30) calendar days after receipt
by the Company of written notice from Executive of such determination; (x) the
voluntary or involuntary dissolution of the Company, the filing of a petition in
bankruptcy by the Company or upon an assignment for the benefit of creditors of
the assets of the Company; (ix) Change of Control or Other Material Change as
defined below or (x) any material breach by the Company of this Agreement which
is not cured within fifteen (15) days after written notice is provided by
Executive to Company
 
An election by Executive to terminate her employment under the provision of this
Section 3.4 shall not be deemed a voluntary termination of employment by
Executive for the purpose of interpreting the provisions of any of the Company's
employee benefit plans, program or policies. Executive's right to terminate her
employment pursuant to this Section 3.4 shall not be affected by Executive's
incapacity due to physical or mental illness. Executive's continued employment
shall not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
 
 
 
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3.5 Change of Control or Other Material Change. In the event of termination of
Executive's employment with the Company for Good Reason or Change of Control,
Executive shall be entitled to receive the compensation and benefits set forth
in (i) through (v): (i) fixed base salary until the end of this Agreement's full
term or eighteen (18) months, whichever is greater, based on Executive's highest
monthly rate of base salary during the twelve (12) months prior to the date of
such termination, (ii) variable incentive compensation that otherwise would be
payable during the full term of this Agreement, or eighteen (18) months,
whichever is greater, in the event that the change of control results in
intentional cessation or diminution of the relevant base revenue or contracts,
then 3.5(ii) shall be calculated based on four times either the highest
quarterly revenue recorded during the twelve months prior to date of
termination, or the most current quarter, whichever amount is higher; (iii)
payment of any bonus amounts that the Executive had previously earned from the
Company, but which may not yet have been paid as of the date of termination;
(iv) payment for unused time off, as provided for in Section 2.3, (v) payment
for health coverage benefits equivalent to medical and dental benefits provided
during Executive's full time employment for twenty-four (24) months after the
date of termination. Any additional health-related coverages the Executive had
at termination, including dependent coverage, will also be continued for such
period on the same terms. Any costs the Executive was paying for such coverages
at the time of termination shall be paid by the Executive by separate check
payable to the Company each month in advance. If the terms of any benefit plan
referred to in this paragraph do not permit continued participation by the
Executive the Company shall provide Executive with substantially equivalent
coverage through other sources or will provide Executive with a lump sum payment
in such amount that, after all income and employment taxes on that amount have
been paid, shall be equal to the Executive's costs of providing herself and her
dependents with such benefit coverage. At the termination of the benefits
coverage provided herein, Executive and dependents shall be entitled to
continuation coverage pursuant to Section 49980B of the Code, Section 601-608 of
the Employee Retirement income Security Act of 1974, as amended, and under any
other applicable law, to the extent required by such laws, as if Executive had
termination employment with the Company on the date such benefits coverage
terminates.
 
Unless otherwise provided for herein, Company shall pay all amounts due in one
payment within thirty (30) days following the effective date of termination and
shall pay variable incentive compensation on the dates on which they would have
normally occurred throughout the full term of this agreement. In addition, the
Company shall provide payment of any outstanding expense reimbursements within
five (5) business days following the effective date of termination and
stock-related provisions set forth in Section 3.8 as if terminated by the
Company without just cause, Additional expense reports submitted by Executive
within one hundred twenty (120) calendar days following the effective date of
termination shall be repaid as provided in Section 2.4
 
Neither this Agreement nor its incorporated terms may be invalidated or deleted
or altered as part of the terms of any Change of Control actions. The Company's
rights and obligations under this Agreement will inure to the benefit and be
binding upon the Company's successors and assignees.
 
For the purpose of this Agreement, Change of Control shall mean any one or more
of the following: (i) a sale, lease or other disposition of all or substantially
all of the assets of the Company, (ii) a sale by the stockholders of the Company
of the voting stock of the Company to another Company and/or its subsidiaries
that results in the ownership by such Company and/or its subsidiaries of forty
percent (40%) or more of the combined voting power of all classes of the voting
stock of the Company entitled to vote; (iii) a merger or consolidation in which
the Company is not the surviving Company, (iv) a reverse merger in which the
Company is the surviving Company but the shares of Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; (v) if,
for any reason, during the Period of Employment the persons who were Independent
members of the Company's Board of Directors as of January 1, 2007 cease to
constitute a majority of the Company's Board of Directors..
 
 
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3.6 Disability. The Company may terminate this Agreement without liability if
Executive shall be permanently prevented from properly performing her essential
duties with reasonable accommodation by reason of illness or other physical or
mental incapacity for a period of more than six consecutive months. In such
event, unless the Company provides long term disability events providing at
least the equivalent of six months base salary, the Executive shall be entitled
to receive, and the Company agrees to continue to pay, in accordance with the
normal pay dates of the Company, the salary of Executive provided by Section 2.1
(i) and (ii) and the additional benefits, if any, provided by in each instance
for a period of six (6) month following the date of termination of Executive.
Upon such termination, Executive shall be entitled to all accrued but unpaid
Base Salary, accrued incentive compensation, bonus (if any), and accrued
vacation in accordance with Section 2.3 . In the event Executive's employment
terminates under this Section 3.6, Executive may pursue long term disability
benefits, if eligible, under any plan which the Company has provided for
Executive.
 
3.7 Death. In the event of the death of Executive during the Employment Period,
this Agreement and the employment of Executive hereunder shall terminate on the
date of the death of Executive. The estate of Executive (or such person(s) as
Executive shall designate in writing) shall be entitled to receive, and the
Company agrees to continue to pay, in accordance with the normal pay dates of
the Company, the salary of Executive provided by Section 2.1 (i) and (ii) and
the additional benefits, if any, provided by in each instance for a period of
six (6) month following the date of death of Executive. Within 15 days the
Company shall pay to Executive's heirs (or such person(s) as Executive shall
designate in writing) Executive's Base Salary accrued to the date of Executive's
death and accrued vacation as provided for in Section 2.3 in its entirety. This
Agreement shall inure to the benefit of and be enforceable by Executive and
Executive's personal or legal representative, executors, administrators,
successors, heirs, and legatees. If Executive should die while any amount would
still be payable to Executive hereunder had Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's devises, legatee or other designee
or, if there is no such designee, to Executive's estate.
 
3.8 Effect of Termination without Just Cause on Employee Stock Options and
Stock. The Company hereby irrevocably offers to amend any stock options granted
to Executive to permit the full exercise thereof following termination of
Executive's employment without Cause (as defined in Section 3.3) or because of
death or disability. The Company hereby also irrevocably offers to amend any
stock options granted to Executive to permit the immediate full vesting and
exercise thereof at any time after termination of Executive's employment without
Cause or because of death or Disability to the same extent as if Executive's
employment had not terminated. Executive or Executive's personal representative
may accept either or both of such offers at any time before such options
otherwise expire by giving written notice to the Company. To the extent that any
options held by Executive are not incentive stock options within the meaning of
Section 422 of the Internal Revenue Code, Executive hereby accepts both such
offers. In addition, the Executive shall have three (3) months from the date of
termination to exercise her rights to purchase stock in the Company pursuant to
any vested but unexercised option or warrant agreements. Furthermore, shares of
any of the Executive's stock subject to any lockups will be immediately released
from such restrictions and registered by the Company within 30 days of
termination without just cause. If, for any reason, registered and unrestricted
shares are not available to immediately allow exercise of options, then the
three month exercise period will begin when the options can be exercised into
unrestricted registered shares.
 
3.9 Other Provisions After Termination. Upon termination without Good Cause or
for Good Reason, the Executive is authorized to retain use of her current
Company offices, and confidential use of communications pathways in both
Hopewell Junction, NY and Bellevue, WA, including current office and
communications support, equipment, telephone access, Company-supported land line
or cell phones as has been done previously, paid parking, and other Executive
support provided at Company expense by the Company, until the earlier of (i) six
months after date of termination, (ii) the Company's loss of lease rights for
one or both location, or (iii) if the Executive begins full-time employment
elsewhere. The Executive will furthermore retain use of all mobile and home
based electronic and communications equipment, data, media, software, and
supplies provided by the Company for use primarily by Executive for up to 24
months following the Executive's termination date. No later than the end of such
period, Executive will be provided ninety (90) days to complete removal of
personal items from each of her offices and storage areas. Travel, packing,
shipping expenses not to exceed $7500 will be allocated to Executive for removal
of items and shipment to a location designated by Executive. Under no
circumstances will mail addressed to Executive be "returned to sender" without
consulting with Executive on each item and providing the Executive with this
mail or shipment.
 
 
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3.10 Notice and Date of Termination. Any purported termination of Executive's
employment by the Company or by the Executive (other than termination due to
Executive's death, which shall terminate Executive's employment automatically)
shall be communicated by a written Notice of Termination to the other party
hereto. For purposes of this Agreement, "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision to this Agreement
(if any) relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
 
4. NON COMPETITION, NON SOLICITATION, BANKRUPTCY; COOPERATION
 
4.1 Non-Compete and Non-Solicitation. The Executive hereby agrees that for a
period of one year following the date of this Amended Employment Agreement for
any reason, the Executive will not, without the prior written consent of the
Company, have any direct interest in any person, firm, Company or business
competing with the Company in the Covered Area. For purposes of this Section 4.1
(i) "Competing Business" means any company engaging directly in the
manufacturing of OLED on single crystal silicon microdisplays. For purposes of
this Section 4.1 (ii) "Covered Area" means all geographical areas of the United
States, and other foreign jurisdictions where the Company has offices or
manufactures OLED microdisplays. The Executive will not be restricted in
participating in businesses that may purchase, utilize, design products, sell or
resell any types of displays or related products, nor will the Executive be
restricted in any technology areas other than directly in OLED microdisplay
manufacturing. The Executive will also not be restricted in investing in or
managing investments in any display, lighting, or imaging companies.
Furthermore, Executive hereby agrees that, for the one (1) year period
immediately following the Date of Termination, Executive will not directly
solicit for employment any officer, director or senior level employee of the
Company except that Executive shall not be precluded from hiring (i) any such
employee who has been terminated by the Company, (ii) any such employee who
contacts Executive on his or her own initiative without any direct or indirect
solicitation by or encouragement from Executive, or (iii) any such employee that
responds to a general advertisement and other similar broad forms of
solicitation. Any violation of any part of this Amended and Restated Agreement,
including any delay in specified payments by the Company to the Executive, will
void the provisions of this Section 4.1.
 
4.2 Bankruptcy. In the event that the Company voluntarily or involuntarily files
for bankruptcy under the Bankruptcy Code during the Employment Period, the
Executive shall use her best reasonable efforts in assisting the Company emerge
from bankruptcy as a reorganized entity as long as the Executive is compensated
as specified by this Agreement, unless the Company is liquidated. All payments
due and unpaid to the Executive due to this Agreement or other obligations of
the Company to the Executive will be treated as unpaid employment compensation
and as unsecured debt, as determined by the bankruptcy court with jurisdiction
in the case, with the most favorable arrangement to the Executive being
requested. If reasonable security of payment is not available at any time during
this process, or in the event of voluntary bankruptcy proceedings of the
Company, the Executive will be considered to have terminated for Good Reason or
without just cause, and entitled to payment as described herein.
 
4.3 Cooperation in Future Matters. Executive hereby agrees that, for a period of
two (two) years following the date of her termination from employment for
whatever reason, she shall cooperate with the Company's reasonable requests
relating to matters that pertain to Executive's employment by the Company
including providing information of limited consultation as to such matters,
participating in legal proceedings, investigations or audits on behalf of the
Company, or otherwise making herself reasonably available to the Company for
other related purposes Any such cooperation shall be performed at times
scheduled taking into consideration Executive's other commitment, and Executive
shall be compensated at a reasonable hourly or per diem rate to be agreed by the
parties to the extent such cooperation is required on more than an occasional
and limited basis. This rate will be based on the most senior level consulting
rates of SRI in the flat panel display field. Executive shall also be reimbursed
for all travel and reasonable out of pocket expenses, grossed up for taxes.
Executive shall not be required to perform such
cooperation to the extent it conflicts with any requirement of exclusivity of
service for another employer or otherwise not in any manner that in the good
faith belief of Executive would conflict with her right under or ability to
enforce this Agreement.
 
 
 
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5. ASSIGNMENT OF INVENTIONS
 
Executive has executed a Confidential Information and Invention Assignment
Agreement. The obligations under such Confidential and Invention Assignment
Agreement shall survive the termination of this Agreement for any reason.
Following the termination of Executive's employment with the Company, Executive
shall make herself available to the Company in the defense of any patent owned
by the Company in which she assisted, provided, however, that the Company shall
allow Executive to fulfill any other obligations she may have at such time and
that the Company shall pay the Executive compensation as an "expert," as well as
her incurred expenses in assisting in such defense.
 
6. CONFIRMATION OF DISCLOSURES REQUIRED UNDER SECURITIES LAWS
 
Since January 1, 2000, Executive has not: (a) filed, or has had filed against
Executive, nor is Executive not presently contemplating a filing of, nor is
Executive aware that anyone else is presently contemplating a filing against
Executive, of a petition under the federal bankruptcy laws or any state
insolvency laws, nor has Executive had a receiver, fiscal agent, or similar
officer appointed by a court for the business or property of Executive, or any
partnership of which Executive was a general partner at or within two years
before the time of such filing, or of any corporation or business association of
which Executive was an executive officer at or within two years prior to such
filing; (b) been convicted in a criminal proceeding or been named as a subject
of a pending criminal proceeding (excluding traffic violations and other minor
offenses); (c) been subject to any order, judgment, or decree (not subsequently
reversed, suspended or vacated) of any court of competent jurisdiction
permanently or temporarily enjoining Executive from, or otherwise imposing
limits or conditions on Executive's engaging in any securities, investment
advisory, banking, insurance or other type of business or acting as an officer
or director of a public company; or (d) been found by a court of competent
jurisdiction in a civil action or by the Securities and Exchange Commission or
the Commodity Futures Trading Commission to have violated any federal or state
commodities, securities or unfair trade practices law, which such judgment or
finding has not been subsequently reversed, suspended, or vacated.
 
7. AMENDMENT AND WAIVER
 
This Agreement shall not be changed except in a writing signed by the parties.
No waiver shall be binding unless executed in writing by the party making the
waiver. No waiver shall be deemed a waiver of any other provision or constitute
a continuing waiver. Any consent under this Agreement shall be in writing and
shall be effective only to the extent specifically set forth in such writing.
The consent of the Company may only be manifested by a resolution of the
Compensation Committee of the eMagin Corporation Board of Directors or by the
Chairman of the Board or by signature of an officer to whom authority to modify
this Agreement has been delegated.
 
8. ARBITRATION
 
8.1  No Automatic Arbitration; Time of Essence. All terms of this Amended and
Restated Agreement are hereby agreed to and are not subject to arbitration to
negotiate the stated terms or validity. Payments of any amounts due to Executive
will be required within thirty (30) days of the Date of Termination and/or dates
of submission request for payment. The Company agrees that time is of the
essence for all payments and no arbitration or other issues shall in any way be
permitted to delay these required payments. The parties shall use reasonable
good faith efforts to resolve any dispute relating to the subject matter of this
Agreement or otherwise by negotiations or mediation. If there is any dispute
regarding the specific amounts due to Executive, the Company shall provide to
Executive any and all data and documentation which supports or explains the
Company's opinion if not in agreement with Executive
 
8.2  Compensation During Dispute. Executive's compensation during any
disagreement, dispute, controversy, claim, suit, action, or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows: If there is a termination
of Executive' employment with the Company followed by a Dispute as to whether
Executive is entitled to the payment and other benefits provided under this
Agreement, then, during the period of that Dispute the Company shall pay
Executive eight percent (80%) of any amounts under Dispute and the Company shall
provide Executive with all other benefits provided in this Agreement, if, but
only if, Executive agrees in writing that if the Dispute is resolved against
Executive, Executive shall promptly refund to the Company all payments Executive
received under Section 3 of this Agreement. If the Dispute is resolved in
Executive's favor, promptly after resolution of the Dispute the Company shall
pay Executive all amounts which were withheld during the period of the Dispute.
All collection effort expenses, including accounting, collection, or legal fees,
required to be undertaken by the Executive will be fully paid by the Company.
 
 
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8.3 Arbitration as Last Resort. Only if good faith direct negotiations fail
between the Executive and the Company and/or between legal counsel for each
party, any party may submit any dispute concerning this Agreement to final and
binding arbitration pursuant to the commercial rules of the American Arbitration
Association. At the request of any party, the arbitrators, attorneys, parties to
the arbitration, witnesses, experts, court reporters, or other persons present
at the arbitration shall agree in writing to maintain the strict confidentiality
of the arbitration proceedings. Arbitration shall be conducted by a single,
neutral arbitrator appointed in accordance with the rules of the American
Arbitration Association. Judgment upon the award rendered may be entered in any
court with jurisdiction.
 
8.4 Alternate Payment Negotiation. The Executive may agree to alternate forms of
compensation such as registered Company Stock instead of cash, but only if
mutually agreed and deemed by the Executive to be of equal or higher final worst
case estimated liquid cash value than the total amounts due to the Executive.
 
To the extent any of the foregoing insurance or expense reimbursement payments
are deemed to potentially constitute taxable income to the Executive by a tax
professional, the Company shall also pay to the Executive the amount of any
actual federal and State income taxes incurred by Executive in connection with
such payment.
 
9. LEGAL PEES AND PENALTIES
 
The Company agrees to pay as incurred, to the full extent permitted by law, all
legal and accounting fees and other expenses which Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company, Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by Executive about the amount of payment
pursuant to this Agreement), plus in each case interest on each and any delayed
payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code, or other Section of the Code as appropriate. These amounts will be
grossed up for taxes by the company.
 
10. ENTIRE AGREEMENT; OTHER PROVISIONS
 
10.1 Miscellaneous. No provision of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such Director or Officer as may be
specifically designated by the Compensation Committee of the Board. No waiver by
either party hereto at anytime of any breach by the other party hereto of or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provision or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. All references to sections of Exchange Act or the Code
shall be deemed also to refer to any successor or provisions to such sections.
The obligations of the Company shall survive the expiration of the term of this
Agreement.
 
10.2 Entire Agreement. This Agreement sets forth the entire of the parties
hereto in respect of the subject matter contained herein and supersedes the
terms of any prior or contemporaneous employment or other offer, oral or
written, with the exception of separately issued bonus or incentive plans which
shall remain in effect during the full term of this Agreement, or which may be
added at a later date. Any of Executive's rights hereunder shall be in addition
to any rights Executive may otherwise have under benefit plans or agreements of
the Company to which Executive is a party or in which Executive is a
participant, including , but not limited to, any Company sponsored employee
benefit plans and stock option plans. The provisions of this Agreement shall not
in any way abrogate Executive's rights under such other plans and agreements.
This Agreement may only be formally modified when a modification is duly
executed in writing by Executive, and the Compensation Committee and/or the
Chairman of the Board of Directors of the Company, or their duly appointed
representatives.
 
I0.3.Severability. The invalidity or uneriforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. If any term of
this Agreement is found by any court having jurisdiction to be too broad, then
and in that case, such term shall nevertheless remain effective, but shall be
considered amended (as to the time or area or otherwise, as the case may be) to
a point considered by said court as reasonable, and as so amended shall be fully
enforceable.
 
 
 
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10.4 Successors., Binding Agreement. The Company will use its best efforts to
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. Unless expressly provided
otherwise, "Company" as used herein shall mean the Company as defined in this
Agreement and any successor to its business and/or assets as aforesaid. Failure
of the Company to obtain such assumption and agreement prior to the effective of
any such succession shall be deemed to be a termination without Cause for
purposed of this Employment Agreement. For purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be the
date of termination.
 
10.5 Notices. Any notice required or permitted under this Agreement shall be
given in writing and shall be deemed to have been effectively made or given if
personally to the address as may be given by one party to the other.
 
10.6 Withholding. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law, or as
otherwise grossed up to cover tax payments or otherwise provided herein.
 
10.7 Governing Law. The validity, interpretation, construction, and performance
of this Agreement shall be governed by the laws of the State of Washington
without regard to its conflicts of law principles.
 
10.8 Failure to Enforce. The failure of either party hereto at any time, or for
any period of time, to enforce any of the provisions of this Agreement shall not
be construed as a waiver of such provision(s) or of the right of such party
hereafter to enforce each and every such provision.
 
10.9 .Headers and Interpretations. The section headings contained in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement. On and after the date of this agreement, each reference in the
Agreement to the "Agreement", "the Agreement, as amended and restated,"
"hereinafter", "herein", ''hereunder", "hereof', or words of like import shall
mean and be a reference to the Agreement as a whole as amended by this
agreement. Unless otherwise provided, "date" shall refer to calendar date.
 
10.10 Independent Legal and Accounting Advice. The Company has obtained legal
advice concerning this Agreement and has requested that Executive obtain
independent legal advice with respect to same before executing this Amended
Employment Agreement. The Company shall provide up to $20,000 to Executive for
such legal review, if requested. These legal service expenses will be fully
grossed up for taxes by the company.
 
10.11  Confidentiality. The Executive and the Company each agree that neither
the Executive or any representative of the Company will discuss Executive's
employment and resignation or termination (including terms of this Agreement)
with any representatives of the media, either directly or indirectly, without
the prior written consent and approval of the other party. Executive shall not,
in any manner, for any reasons, either directly or indirectly, divulge or
communicate to any person, firm or corporation, any confidential information
concerning any the Company not generally known i otherwise made public by
Company which affects or relates to Company's business, finances, marketing
and/or operations, research, development, inventions, products, designs, plans,
procedures, or other data (collectively, "Confidential Information") except in
the ordinary course of business or as required by applicable law. Without regard
to whether any item of Confidential Information is deemed or considered
confidential, material, or important, the parties hereto stipulate that as
between them, to the extent such item is not generally known in to the public
such item is important, material, and confidential and affects the successful
conduct of Company's business and goodwill, and that any breach of the terms of
this Section shall be a material and incurable breach of this Agreement.
Confidential Information shall not include: (i) information obtained or which
became known to Executive other than through his employment by Company (ii)
information in the ,public domain at the time of the disclosure of such
information by the Executive; (iii) information that the Executive can document
was independently developed by Executive ; (iv) information that is disclosed by
Executive with the prior written consent of Company and (v) information that is
disclosed by Executive as required by law, governmental regulation or court
order.
 
10.12  Counterparts and Execution. The Agreement may be executed in one of more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute a single Amendment. The Agreement may be deemed as
executed upon receipt of email affirmation, to be followed by execution of
physically signed documents within ten (10) business days.
 
 
 
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IN WITNESS WHEREOF, the undersigned have executed this Executive Employment
Agreement as of the date first referenced above.
 
 

"EXECUTIVE"                            
/s/ Susan K. Jones
   
1/31/2008
 
Susan K. Jones
   
Date
 
 
   
 
 

 

         
/s/ Thomas Paulsen
   
1/31/2008
 
Thomas Paulsen
   
Date
 
Chair, Compensation Committee 
   
 
 

 
 
 
 
 
 
 
 
 
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