Exhibit 10.1


    
      

        EMAGIN
          CORPORATION

         

        EXECUTIVE
          EMPLOYMENT AGREEMENT

        _______________________________________

         

         

        
          	Executive Name: 	Gary Jones  
	Title(s): 	Chief Executive Officer;
                  President 
	Effective Date: 	January 1,
                  2006 


        

        


        For
          good
          consideration, the Company employs the Employee on the following terms
          and
          conditions (the “Agreement”)
          as of
          the above date between EMAGIN CORPORATION, a Delaware corporation (the
          “Company”),
          and
          the above named executive (“Executive”).

         

        1.     
          EMPLOYMENT
          AGREEMENT

         

        
          	1.1.      
                  	
                  Employment;
                    Duties and Responsibilities

                


        

        The
          Company hereby employs Executive as its President and Chief Executive Officer
          and Executive accepts such employment on the terms contained in this Agreement.
          Within limitations established by the Bylaws of the Company, Executive
          shall
          have each and all of the duties, responsibilities and authorities that
          are
          consistent with his title(s). Executive shall report to the Board of Directors.
          

         

        
          	1.2       
                  	
                  Term

                


        

        This
          Agreement shall commence on the date hereof and shall continue hereafter
          unless
          terminated pursuant to this Section 3 for a period of thirty six (36) months
          beginning on January 1, 2006.

         

        
          	1.3.      
                  	
                  
                    Time
                      and Effort.

                  

                


        

        Executive
          shall use his best efforts to carry out the duties and responsibilities
          that are
          consistent with his title(s) and devote the substantial portion of his
          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 compete with the Company, and may participate
          in other
          professional, civic, governmental organizations and activities that do
          not
          materially affect his ability to carry out his duties.

         

         

        
          	1.4       
                  	
                  Service
                    on Board of Directors.

                


        

        For
          as
          long as Executive is an employee of the Company, Executive shall receive
          no
          additional compensation for serving as Chairman or a member of the Company’s
          Board of Directors. 

         

        
          	1.5.      
                  	
                  
                    Location

                  

                


        

        Unless
          otherwise voluntarily agreed to, the locations at which Executive shall
          perform
          services for the Company shall be Bellevue, Washington and Hopewell Junction,
          New York.

         

        2.     
          COMPENSATION

        
          	2.1.      
                  	
                  
                    Base
                      Salary.

                  

                


        

        


        2.1.1
          As
          compensation for performing services for the Company, Executive shall be
          entitled to retain his current salary as of the date of this Agreement,
          payable
          in bi-weekly installments consistent with the Company’s payroll practices. The
          annual base salary will be reviewed on or before January 1 of each year
          by the
          Compensation Committee to determine if such base salary should be increased
          due
          to inflation or in recognition of Executive’s services to the Company.


         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          	2.1.2   
                  	
                  
                    The
                      Board or Compensation Committee of the Board may provide additional
                      bonuses for accomplishment of various objectives from time
                      to time, at
                      their discretion.

                  

                


        

         

        2.1.3   Executive
          shall accrue personal time off for vacation, sick leave, or personal reasons
          upon completion of each month following the date of this Agreement in accordance
          with his current accrual rates. The limits for this personal time shall
          be
          subject to an annual review by the Board or Compensation Committee of the
          Board.

         

        
          
            
              	2.2.      
                      	
                      
                        Benefit
                          Plans.

                      

                    


            

            During
              Executive’s employment, Executive shall be entitled to participate, to the
              extent of Executive’s eligibility, in the employee fringe benefits made
              available by the Company to its employees. Nothing in this Agreement
              shall
              preclude the Company from terminating or amending any employee benefit
              plan or
              program as a whole from time to time.

          

        

         

        
           

          
            
              	2.3.      
                      	
                      
                        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 his duties under this Agreement, or as agreed to by
          the Board
          of Directors.

         

        
          
            	2.4.      
                    	
                    
                      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 salary, vacation, benefits and other compensation on the date of
          voluntary termination. Accrued benefits, if any, will be payable in accordance
          with applicable benefit plan provisions.

         

        
          	3.2.      
                  	
                  
                    With
                      Cause

                  

                


        

        Notwithstanding
          anything herein to the contrary, the Company may terminate Executive’s
          employment hereunder for cause for any one of the following reasons: (a)
          failure
          to devote substantially all of Executive’s full professional time, attention,
          energies, and abilities to Executive’s employment duties for the Company, which
          failure is not cured within two weeks after the Company gives Executive
          written
          notice of the failure; (b) inducement of any customer, consultant, employee,
          or
          supplier of the Company to unreasonably breach any contract with the Company
          or
          cease its business relationship with the Company; (c) willful, deliberate,
          and
          persistent failure by Executive to reasonably perform the duties and obligations
          of Executive’s employment which are not remedied in a 90 day period of time
          after receipt of written notice from the Company; (d) an act or acts of
          dishonesty undertaken by Executive resulting in substantial personal gain
          by the
          Executive at the expense of the Company; (e) material breach of a fiduciary
          or
          contractual duty to the Company; (f) conviction of a felony, or (g) commission
          of an act that results in material long term harm to the goodwill or reputation
          of the Company. To be deemed terminated for Cause, the Company shall have
          given
          Employee written notice stating the alleged Cause and shall have provided
          Employee an opportunity to present evidence to the Board of Directors,
          at the
          Company’s offices on a date and time mutually convenient to the Board, no sooner
          than one and not later than two weeks after the foregoing notice, to refute
          the
          claim of Cause. Executive shall cease to accrue salary, vacation, benefits
          and
          other compensation on the date of “with cause” termination by the Company.
          Accrued benefits, if any, will be payable in accordance with applicable
          benefit
          plan provisions of the Company.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                  3.3       
                    

                	
                  
                    Without
                      Cause.

                  

                


        

        The
          Company may terminate the employment of Executive at any time without notice
          and
          without cause (as defined in Section 3.2) In such event, Executive shall
          be
          entitled to (i) salary until the end of this agreement’s full term or twelve
          (12) months, whichever is greater, based on Executive’s monthly rate of base
          salary at the date of such termination, (ii) payment for accrued vacation
          days,
          including personal choice holidays and (iii) all bonuses that would otherwise
          have been accrued during the term of this agreement. The Company shall
          pay such
          sum of salary and vacation accrual in one payment within thirty (30) business
          days following the effective date of termination and shall pay merit or
          revenue-based bonuses on the dates on which they would have normally occurred
          throughout the full term of this agreement. 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
          cause. Executive will otherwise cease to accrue salary and other benefits
          upon
          the date of such final payment, other than the Company’s normal insurance
          policies for terminated employees. Notwithstanding the foregoing, the Company
          shall have no obligation to pay Executive any of such salary or such benefits
          that may accrue after the Company ceases to do business, liquidates
          substantially all of its assets (except in connection with a sale of
          substantially all of the assets of the Company as a going concern), or
          voluntarily or involuntarily becomes the subject of a proceeding under
          the
          Bankruptcy Code that is not dismissed within 60 days.

         

        
          	3.4.      
                  	
                  
                    Termination
                      for Good Reason 

                  

                


        

        If
          Executive terminates his employment with the Company for Good Reason (as
          hereinafter defined), such termination will be considered to be effectively
          the
          same as termination without cause; he shall be entitled to the severance
          benefits set forth in Section 3.3 and vesting benefits set forth in Section
          3.8.
          For purposes of this Agreement, “Good Reason” shall mean any of the following
          unless such change was initiated by or voluntarily agreed to by Executive:
          (a)
          any significant change in the Executive’s title, or position, or duties and
          responsibilities not voluntarily made; (b) any involuntary decrease in
          base
          salary (other than any which may be assessed on a percentage basis to the
          company as a whole); or (c) any material breach by the Company of this
          Agreement. 

         

        
          	3.5.      
                  	
                  
                    Change
                      of Control

                  

                


        

        If
          the
          Executive’s employment is terminated or his position significantly changed or
          salary decreased as a result of the acquisition of the Company by merger,
          sale
          of all or substantially all of the Company’s assets, or other reorganization
          resulting in a change of 50% or more in the ownership of the Company’s stock, he
          shall be entitled to the severance benefits set forth in Section 3.3 and
          vesting
          benefits set forth in Section 3.8. 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.

         

        
          	3.6.      
                  	
                  
                    Disability.

                  

                


        

        The
          Company may terminate this Agreement without liability if Executive shall
          be
          permanently prevented from properly performing his essential duties with
          reasonable accommodation by reason of illness or other physical or mental
          incapacity for a period of more than 90 consecutive days. Upon such termination,
          Executive shall be entitled to all accrued but unpaid Base Salary, accrued
          bonus
          (if any), and accrued vacation. 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, the Company’s obligations hereunder shall
          automatically cease and terminate; provided, however, that within 15 days
          the
          Company shall pay to Executive’s heirs or personal representatives Executive’s
          Base Salary and accrued vacation accrued to the date of death. All other
          amounts
          due Executive, including bonuses, shall be paid to Executive’s estate in
          accordance with the full term of this Agreement. 

         

        
          	3.8.      
                  	
                  
                    Effect
                      of Termination without “Cause” on Employee Stock
                      Options.

                  

                


        

        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.

         

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

         

        4.    
          NON COMPETITION, NON SOLICITATION, BANKRUPTCY

         

        
          	4.1.      
                  	
                  
                    Non
                      Compete

                  

                


        

         The
          Executive hereby covenants and agrees that during the term of this Agreement
          and
          for a period of one year following the end of the employment term, the
          Executive
          will not, without the prior written consent of the Company, indirectly
          or
          directly, on his own behalf or in the service or on behalf of others, whether
          or
          not for compensation, engage in any business activity, or have any interest
          in
          any person, firm, corporation or business, through a subsidiary or parent
          entity
          or other entity (whether as a shareholder, agent, joint venturer, security
          holder, trustee, partner, consultant, creditor lending credit or money
          for the
          purpose of establishing or operating any such business, partner or otherwise)
          with any competing business of the Company in the Covered Area. For purposes
          of
          the Section 4.1 (i) “Competing Business” means any company engaging in the
          design, development, manufacturing, and marketing of virtual imaging products
          which utilize OLEDs, or organic light emitting diodes, OLED on silicon
          micro
          displays and related information technology solutions. For purposes of
          Section
          4.1 (ii) “Covered Area” means all geographical areas of the United States and
          other Foreign jurisdictions where the Company has offices, manufactures
          or may
          contemplate offices or manufacturing of related products and/or sells its
          products directly or in-directly through distributors and/or other sales
          agents.

         

        
          	4.2.      
                  	
                  
                    Non
                      Solicitation

                  

                


        

        The
          Executive further agrees that the Executive will not divert any business
          of the
          Company and/or its affiliates or any customers or suppliers of the Company
          and/or the Company’s and/or its affiliates’ business to any other person, entity
          or competitor, or induce or attempt to induce, directly or indirectly,
          any
          person to leave his or her employment with the Company.

         

        
          	4.3.      
                  	
                  
                    Bankruptcy

                  

                


        

        In
          the
          event that the Company voluntarily or involuntary files for bankruptcy
          under the
          Bankruptcy Code, the Executive shall use his best efforts in keeping the
          Company
          solvent and in assisting the Company emerge from bankruptcy as a reorganized
          entity, unless the Company is liquidated.

         

        
          	4.4.      
                  	
                  
                    Remedies

                  

                


        

        The
          Executive acknowledges and agrees that his obligations provided herein
          are
          necessary and reasonable in order to protect the Company and its affiliates
          and
          their respective business and the Executive expressly agrees that monetary
          damages would be inadequate to compensate the Company and/or its affiliates
          for
          any breach by the Executive of his covenants and agreements set forth herein.
          Accordingly, the Executive agrees and acknowledges that any such violation
          or
          threatened violation of this Section 4 will cause irreparable injury to
          the
          Company and that in addition to any other remedies that may be available,
          in
          law, in equity or otherwise, the Company and its affiliates shall be entitled
          to
          obtain injunctive relief against the threatened breach of this Section
          4 or the
          continuation of any such breach by the Executive without the necessity
          of
          proving actual damages. 

         

        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
          himself available to the Company in the defense of any patent owned by
          the
          Company in which he assisted, provided, however, that the Company shall
          allow
          Executive to fulfill any other obligations he may have at such time and
          that the
          Company shall pay the Executive compensation as an “expert,” as well as his
          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
          signature of an officer to whom authority to modify this Agreement has
          been
          delegated.

         

        8.    
          ARBITRATION

         

        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 negotiation and mediation fail, 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.

         

        9.  
           ATTORNEY’S FEES

         

        If
          any
          action at law or inequity is necessary to enforce or interpret the terms
          of this
          Agreement, the prevailing party shall be entitled to reasonable attorney’s fees,
          costs, and necessary disbursements, in addition to any other relief to
          which the
          party may be entitled.

         

        10.   
          ENTIRE AGREEMENT

         

        This
          Agreement constitutes the entire agreement respecting Executive’s employment
          with the Company 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.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        IN
          WITNESS WHEREOF, the undersigned have executed this Executive Employment
          Agreement as of the date first referenced above.

         

         

         

        
          
            	
                    “EXECUTIVE” 

                  	 
	 	 
	
                    By /s/
                      Gary Jones

                    
                      
Gary
                      Jones    

                  	
                    January 24, 2006 

                    
                      

                    

                    Date

                  
	 	 
	
                    “COMPANY”  

                  	 
	 	 
	
                    eMagin
                      Corporation 

                  	 
	 	 
	 	 
	
                    By /s/
                      Thomas Paulsen

                    
                      
Thomas
                      Paulsen 

                  	
                    January 24, 2006

                    
                      

                    

                    
                      Date

                    

                  
	Compensation Committee 	 
	 	 
	 	 
	
                    By /s/
                      Jack Goldman

                    
                      

                      Jack Goldman      

                  	
                    January 24, 2006

                    
                      

                    

                    
                      Date

                    

                  
	Compensation Committee