Document:

Unassociated Document

    SHAREHOLDERS
      AGREEMENT

    

    THIS
      AGREEMENT is made as of the date last below written by and among FARMERGY,
      INC.
      (the “Company”),
      Mark
      Green, Steve Barr and Solar Night Industries, Inc. (collectively the
“Shareholders”
      or
      individually each a “Shareholder”).
      The
      following recitals form the basis of this Agreement and are made a material
      part
      hereof:

    

    A. The
      Shareholders own the respective number of shares of the Common Stock of the
      Company set forth on Exhibit
      A
      to this
      Agreement, as may be amended, which shares constitute all of the current equity
      securities of the Company (together with any other equity securities of the
      Company which hereafter may be owned by Shareholders, the “Shares”);
      and

    

    B. The
      Shareholders and the Company desire to make certain provisions relating to
      the
      rights of the Shareholders to purchase, transfer, encumber or otherwise acquire
      or dispose of the Shares.

    

    NOW,
      THEREFORE, in consideration of the premises and of the mutual agreements herein
      contained, the parties hereto, each intending to be legally bound hereby, agree
      as follows: 

    

    
      	1.  	
              Restrictions
                on Transfer and Issuance.
                

            

    

    

    (a) General
      Restriction on Transfer.
      No
      Shareholder shall voluntarily or involuntarily sell, assign, transfer, give,
      bequeath, devise, donate or otherwise dispose of, or pledge, or otherwise
      encumber, in any manner, (each a “Transfer”)
      any of
      the Shares now or hereafter owned by such Shareholder except as expressly
      provided in this Agreement and in accordance with its terms and
      conditions.

    

    (b) Permitted
      Transfer.
      Notwithstanding any other provision of this Agreement, a Shareholder may
      Transfer Shares if such Transfer is made to a revocable inter-vivos trust with
      respect to which the Shareholder is the grantor and sole trustee, or from such
      an inter-vivos trust which is a Shareholder to its grantor, without consent
      of
      the other Shareholders. For all purposes hereunder, a grantor of a revocable
      living trust and such trust shall be considered the same person. Any Shares
      Transferred pursuant to this Section shall continue to be subject to the
      provisions of this Agreement as if owned by the Shareholder from whom such
      Shares were originally Transferred. 

    

    2.  Right
      of First Refusal.

    

    (a)  Bona
      Fide Offer to Purchase Shares.
      If any
      Shareholder desires to Transfer all or any of such Shareholder’s Shares, such
      Shareholder (the “Selling
      Shareholder”)
      shall
      first obtain a bona
      fide
      written
      offer, which such Shareholder desires to accept (the “Offer”)
      to
      purchase any of such Shareholder’s Shares for a fixed price. The Offer shall set
      forth its date, the proposed price per Share, and the other terms and conditions
      upon which the purchase is proposed to be made, as well as the name and address
      of the prospective purchaser (the “Transferee”).
      The
      Selling Shareholder shall transmit copies of the Offer to the Company and to
      the
      other Shareholder(s) within 10 days after the Selling Shareholder’s receipt of
      the Offer.

    

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    (b)  Option
      of the Company.
      Transmittal of the Offer to the Company by the Selling Shareholder shall
      constitute an offer by the Selling Shareholder to sell all of such Shareholder’s
      Shares to the Company at the price and upon the terms set forth in the Offer,
      except that the closing of any such sale shall be in accordance with Section
      8
      hereof. For a period of 30 days after the submission of the Offer to the
      Company, the Company shall have the option, exercisable by written notice to
      the
      Selling Shareholder, to accept the Selling Shareholder’s offer as any or all of
      the Selling Shareholder’s Shares, or the Company’s option pursuant to this
      Subsection 3(b) shall lapse.

    

    (c)  Options
      of Offeree Shareholders.
      In the
      event that the Company does not exercise its option with respect to all of
      the
      Shares in accordance with Subsection 3(b), the Selling Shareholder shall, within
      five (5) days following the earlier of: (i) notice from the Company of the
      Company’s decision not to accept the Selling Shareholder’s offer as to all of
      the Selling Shareholder’s Shares or (ii) expiration of the 30-day option period
      referred to in Subsection 3(b), give notice to the other Shareholder(s) of
      the
      Company’s action or failure to take action. By the giving of such notice, the
      Selling Shareholder shall be deemed to have offered in writing to sell all
      of
      the Selling Shareholder’s remaining Shares (those not to be sold to the Company)
      to the other Shareholder(s) (“Offeree
      Shareholders”)
      at the
      price and upon the terms set forth in the Offer, except that the closing of
      any
      such sale shall be in accordance with Section 8 hereof. For a period of 30
      days
      after such offer by the Selling Shareholder to the Offeree Shareholder(s),
      the
      Offeree Shareholder(s) shall have options, exercisable by written notice to
      the
      Selling Shareholder to accept the Selling Shareholder’s Offer as to any
      remaining Selling Shareholder’s Shares. The Selling Shareholder’s Shares shall
      be allocated to and purchased by the Offeree Shareholders pro
      rata
      in the
      proportion that such Offeree Shareholder’s Shares bears to the Shares of all
      Shareholder(s) (or in such other proportions as the surviving Shareholders
      may
      agree upon among themselves).

    

    (d)  Acceptance
      of the Offer.
      If, at
      the end of the option periods described in Subsections 2(b) and 2(c) options
      have not been exercised by the Company and/or the Offeree Shareholders to
      purchase any of the Selling Shareholder’s Shares, then any exercise of such
      options shall be null and void and the Selling Shareholder shall be free for
      a
      period of 40 days thereafter to close the sale of any of Selling Shareholder’s
      remaining Shares to the Transferee at the price and upon the terms and
      conditions set forth in the Offer. If the sale of such Shares is not closed
      within the aforesaid 40-day period, the Selling Shareholder shall not be
      permitted to sell such Shares without again complying with this Section
      3.

    

    3.  Closing.
      Unless
      otherwise agreed to by the parties or otherwise provided for herein, the closing
      of the sale and purchase of any Shares pursuant to the provisions of this
      Agreement (“Closing”)
      shall
      take place at the primary offices of the Company at 10:00 a.m. on the following
      applicable date, or at such other time and place as all parties to the Closing
      unanimously agree:

    

    
      	(a)  	
              In
                the event of a purchase pursuant to Section 4 hereof, no later than
                60
                days after the appointment of a personal representative or administrator
                for the deceased Shareholder’s estate;
                or

            

    

     

     

    
      
        
        

      

      
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      	(b)  	
              In
                the event of a purchase under any other Section of this Agreement,
                no
                later than 60 days after the sooner to occur of the expiration or
                exercise
                of the Shareholder’s option to purchase pursuant to such Section.
                

            

    

    

    
      	4.  	
              Right
                of Co-Sale.

            

    

     

    (a) To
      the
      extent the Company and the Shareholders do not exercise their respective rights
      of refusal as to all of the Shares owned by a Selling Shareholder pursuant
      to
      Section 3, then each Shareholder (a "Tag Along Seller" for purposes of this
      Section 4) which notifies the Selling Shareholder in writing within thirty
      (30)
      days after receipt of the Transfer Notice referred to in Section 3, shall have
      the right to participate in such sale of Shares on the same terms and conditions
      as specified in the Transfer Notice. Such Tag Along Seller's notice to the
      Selling Shareholder shall indicate the number of Shares the Tag Along Seller
      wishes to sell under his, her or its right to participate. To the extent one
      or
      more of the Shareholders exercise such right of participation in accordance
      with
      the terms and conditions set forth below, the number of Shares that the Selling
      Shareholder may sell in the Transfer shall be correspondingly
      reduced.

     

    (b) Each
      Tag
      Along Seller may sell all or any part of that number of Shares equal to the
      product obtained by multiplying (i) the aggregate number of Shares covered
      by
      the Transfer Notice by (ii) a fraction, the numerator of which is the number
      of
      shares of Common Stock owned by the Tag Along Seller on the date of the Transfer
      Notice and the denominator of which is the total number of shares of Common
      Stock owned by the Selling Shareholder and all Tag Along Sellers combined on
      the
      date of the Transfer Notice.

    

    

    5.  Stock
      Certificates to be Marked with Legend.
      All
      certificates representing Shares now outstanding or hereafter issued by the
      Company shall be marked with the following legend for so long as the owner
      or
      the Shares are subject to any provision of this Agreement:

    

    
      	 	 	
              “THE
                SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
                ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH
                THE
                TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
                HOLDER
                OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH
                AGREEMENT GRANTS TO THE COMPANY AND OTHER SHAREHOLDERS OF THE COMPANY
                CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE
                SHARES
                AND CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE
                COMPANY. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH
                A
                COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE. THE SHARES
                REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                ACT OF
                1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
                WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION
                OF
                COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
                REGISTRATION IS NOT REQUIRED.”

            

    

     

     

    
      
        
        

      

      
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    6.  Subsequent
      Shareholders to Become Bound.
      Before
      any person or entity not a party to this Agreement, including any person or
      entity to whom transfers of Shares may be made hereunder, may be entitled to
      be
      a Shareholder of the Company, such person or entity shall be required first
      to
      execute and deliver to the Company an agreement pursuant to which such person
      or
      entity agrees to be bound by all of the terms and conditions of this Agreement
      (as it may have then been amended), thereby becoming a party to this Agreement
      as though named herein as a “Shareholder,” and the failure of any such person or
      entity so to do shall preclude such person or entity from becoming a Shareholder
      of the Company. The Company shall update Exhibit
      A
      attached
      hereto upon the addition of any Shareholders.

    

    
      	7.  	
              Termination
                of Agreement.

            

    

    

    (a) Termination
      Events.
      This
      Agreement and all restrictions on Transfer created hereby shall terminate on
      the
      occurrence of any of the following events: (i) the
      bankruptcy or dissolution of the Company, (ii) a single Shareholder becoming
      the
      owner of all of the Shares of the Company which are then subject to this
      Agreement, or (iii) the written consent of the Company and all of the
      Shareholders.

    

    (b) Option
      to Purchase Policies Upon Termination.
      Upon
      the termination of this Agreement, each Shareholder shall have the right within
      30 days after termination to purchase from the Company any insurance policy
      or
      policies on such Shareholder’s life or insuring such Shareholder from disability
      owned by the Company, for cash in the amount equal to the interpolated terminal
      reserve and any dividend credits outstanding as of the date of the termination
      of this Agreement, less any indebtedness against such policies, plus the
      proportionate part of the gross premium last paid before such date which covers
      the period extending beyond that date. This right may be exercised at any time
      by the payment of the purchase price to the Company, and, if the right is not
      so
      exercised within the time allowed, it shall lapse. Upon receipt of the purchase
      price, the Company shall execute and deliver to the purchasing Shareholder
      all
      instruments necessary to transfer the policies to the purchasing Shareholder.
      If
      the policy or policies have no outstanding cash surrender value, then the
      purchasing Shareholder shall be entitled to receive the policy or policies
      without cost to that Shareholder (except for the payment of any unearned portion
      of any premium that may have been paid thereon). Notwithstanding the foregoing,
      the insurance policies which the various parties may from time to time have
      the
      right to purchase from the Company pursuant to the provisions of this Section
      shall not include any insurance policy owned by the Company and held or
      designated by the Company for use for some definite purpose other than funding
      the purchase of Shares pursuant to this Agreement.

    

    
      
        
        

      

      
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    (c)  Effect
      of Termination. The
      termination of this Agreement for any reason shall not affect any right or
      remedy existing hereunder prior to the effective date of termination
      hereof. 

    

    
      	8.  	
              Miscellaneous.

            

    

    

    (a) Indulgences.
      Neither
      the failure nor any delay on the part of either party to exercise any right,
      remedy, power or privilege under this Agreement shall operate as a waiver
      thereof, nor shall any single or partial exercise of any right, remedy, power
      or
      privilege preclude any other or further exercise of the same or of any other
      right, remedy, power or privilege, nor shall any waiver of any right, remedy,
      power or privilege with respect to any occurrence be construed as a waiver
      of
      such right, remedy, power or privilege with respect to any other occurrence.
      No
      waiver shall be effective unless it is in writing and is signed by the party
      asserted to have granted such waiver.

    

    (b) Controlling
      Law.
      This
      Agreement and all questions relating to its validity, interpretation,
      remediation and enforcement (including, without limitation, provisions
      concerning limitations of actions) shall be governed by and construed in
      accordance with the domestic laws of the State of Missouri, notwithstanding
      any
      choice-of-laws doctrines of such jurisdiction or any other jurisdiction which
      ordinarily would cause the substantive law of another jurisdiction to apply,
      without the aid of any canon, custom or rule of law requiring construction
      against the draftsman.

    

    (c) Notices.
      All
      notices, requests, demands and other communications required or permitted under
      this Agreement shall be in writing and shall be deemed to have been duly given,
      made and received only when delivered (personally, by courier service such
      as
      FedEx, or by other messenger) or when deposited in the United States mails,
      registered or certified mail, postage prepaid, return receipt requested, to
      the
      Company at its primary business address, and to the Shareholders at each
      Shareholders mailing address as listed with the records of the Company. Any
      party may alter the address to which communications or copies are to be sent
      by
      giving notice of such change of address to the other parties in conformity
      with
      the provisions of this Section for the giving of notice.

    

    (d)  Binding
      Nature of Agreement.
      This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and assigns.

    

    (e)  Assignments
      Prohibited.
      No
      party shall assign or suffer or permit an assignment, by operation of law or
      otherwise, of its rights or obligations under or interest in this Agreement
      without the prior written consent of the other party.

    

    (f)  Entire
      Agreement.
      This
      Agreement together with the related agreements referred to herein contains
      the
      entire understanding among the parties hereto with respect to the subject matter
      hereof, and supersedes all prior and contemporaneous agreements and
      understandings, inducements or conditions, express or implied, oral or written.
      The express terms hereof control and supersede any course of performance and/or
      usage of the trade inconsistent with any of the terms hereof.

    

    
      
        
        

      

      
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    (g)  Amendments
      and Modifications.
      This
      Agreement may not be amended or modified other than by an agreement in writing
      signed by all of the parties.

    

    (h)  Specific
      Enforcement.
      The
      parties agree that irreparable damage would occur in the event that any of
      the
      provisions of this Agreement were not performed in accordance with their
      specific terms or were otherwise breached. Accordingly, it is agreed that the
      parties shall be entitled to an injunction or injunctions to prevent breaches
      of
      this Agreement and to enforce specifically the terms and provisions of this
      Agreement.

    

    (i)  Further
      Assurances.
      Each
      party agrees (a) to furnish upon request to each other party such further
      information, (b) to execute and deliver to each other party such other
      documents, and (c) to do such other acts and things, all as the other party
      may
      reasonably request for the purpose of carrying out the intent of this
      Agreement.

    

    (j)  Wills;
      Spousal Consents.
      Each
      Shareholder shall insert in such Shareholder’s will or revocable living trust,
      or execute a codicil or amendment thereto, directing and authorizing the
      personal representative or trustee to cause the estate of the Shareholder to
      fulfill and comply with all the provisions of this Agreement. Each married
      Shareholder shall obtain the consent and approval of such Shareholder’s spouse
      to the provisions of this Agreement.

    

    (k)  Agreement
      Drafted by Attorney Representing the Company. The
      Shareholders each acknowledge that the law firm of Sauerwein, Simon, Blanchard
      & Kime, P.C. prepared this Shareholder Agreement in a capacity as counsel to
      the Company and that each Shareholder: (i) has
      been
      advised that a conflict may exist among the interests of different Shareholders
      regarding this agreement; and (ii) has had the opportunity to seek the advice
      of
      independent counsel.

    

    (l)  Shareholder
      Agreement Regarding Mark Green; Salary. Commencing
      January 1, 2007, Mark Green’s annual salary as an employee of the Company shall
      initially be set at $75,000, and may be increased or decreased only upon the
      vote of all of the Shareholders.

    

    (m)  Shareholder
      Agreement Regarding Board of Directors.
      At all
      times during the term of this Agreement, the Shareholders shall vote their
      Shares to elect Steve Barr, Mark Green and Jason Loyet as members of the Board
      of Directors and shall not vote to remove any of such.

    

    (n)  Officers.
      The
      Shareholders shall be entitled to appoint officers to the Company, provided
      that
      if there is any change in the President of the Company all of the Shareholders
      shall be required to approve such change. 

    

    (o)  Additional
      Capital Contributions. No
      Shareholder shall have any obligation to contribute any further capital to
      the
      capital to the Company.

    

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of October 13
      2006.

    

    

    COMPANY:                                                                        FARMERGY,
      INC.

    

    

     

    By:
      Mark
      Green, President

    

    

    SHAREHOLDERS:                                                            __________________________________________

    Mark
      Green

    

    __________________________________________

    Steve
      Barr

    

    SOLAR
      NIGHT INDUSTRIES, INC.

    

    

    __________________________________________

    Jason
      Loyet, President

    

    
      
         

        
        

      

      
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    Exhibit
      A

    

    Shareholders

     

    
 

     

    
      	
               Shareholder

            	 	
                Number
                of Shares Owned

            
	 	 	 
	 1. Steve
              Barr     	 	
               40,000

            
	 2. Mark
              Green     	 	
               40,000

            
	 3. Solar
              Night Industries, Inc.	 	
               20,000

            

    

    

       

    8Exhibit 10.1

    

    

    EXECUTIVE
      SEPARATION AND CONSULTING AGREEMENT

    

    

    This
      Executive Separation and Consulting Agreement (the "Agreement") made and entered
      into as of the 11th
      day of
      January 2007, between eMagin Corporation, a Delaware corporation (the
      "Company"), and Gary Jones (the "Executive").

    

    

    WITNESSETH:

    

    WHEREAS,
      the Company and the Executive entered into an Executive Employment Agreement
      effective January 1, 2006 (“Agreement A”) and an Amendment No. 1 to the
      Executive Employment Agreement dated April 17, 2006 (“Agreement B”),
      cumulatively referred to as the “Employment Agreements”.

    

    WHEREAS,
      by mutual agreement with the Company, the Executive will terminate employment
      with the Company by the terms of this Agreement that will amend and, to the
      extent provided herein, supersede all prior Employment agreements, effective
      as
      of January 11, 2007 (the “Effective Date”), and provide for the Executive to
      remain available as a consultant to advise the Company on M&A and other
      matters as long as both the Executive and a majority of the Board of Directors
      of the Company agree to continuing the consultancy.

    

    NOW,
      THEREFORE, 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 Executive Employment Agreement is hereby
      amended to incorporate terms as follows:

    

    

    1.
      Consideration and Terms of Compensation

    

    The
      Company hereby agrees to award the Executive certain payments in exchange for
      the Executive’s agreement to terminate his employment with the Company in
      accordance with this Agreement, as well as for amounts that are currently owed
      to the Executive prior to the termination of employment.. In addition, to better
      enable and encourage the Executive to assist the Company as a consultant,
      certain post-termination arrangements are provided in this
      Agreement.

    

    1.1
      Cash
      Amounts owed to Executive at time of termination of Employment: 

    Executive
      will be paid the following in cash (or as a confirmation of a credit against
      any
      withholding taxes owed by the employee) within 4 business days of the Effective
      Date: (a) all salary accrued as of the Effective Date plus the equivalent of
      30
      days of salary; (b) the equivalent of salary for all unused sick, personal
      choice holidays, and personal days accrued as of the Effective Date; (c) payment
      for accrued vacation equaling 360 hours of vacation time as of the Effective
      Date. Any other amounts due the Executive on the Effective Date will also be
      paid within 4 days (or as a confirmation of a credit against any withholding
      taxes owed by the employee) of the Effective Date.

    

    1.2
      Tax
      overpayments previously paid by the Executive which have been or will be
      refunded directly to the Company, per written notice received from the Company’s
      tax accountant, will be paid to the Executive within 4 days of the Effective
      Date.

    

    1.3
      Stock
      paid to Executive at time of termination of Employment

    The
      Company agrees to grant Executive 500,000 registered shares of common stock
      in
      eMagin Corporation from the Employee Stock Plan (“the Plan”) or other
      unrestricted stock plan. Such shares shall be DWAC-wired to the broker
      designated by the Executive on the Effective Date, 11:00AM EST. The Company
      will
      arrange with the transfer agent to ensure compliance with this delivery
      date.

    

    1.4
      Executive will be granted a cash payment of $460,000 upon a change of control
      event, whether occurring as a result of single or multiple events, such as
      sale
      of the Company through the sale of stock or equivalent interest representing
      a
      majority of the Company from the Effective Date, a sale or transfer of all,
      or a
      majority of the Company’s assets reported by the Company in a SEC filing or
      press release, equity or debt financing resulting in an effective change of
      control in
      one or
      more steps
      (calculated as if fully converted), or effective change of control by way of
      a
      sale or transfer of rights to a substantial portion of the future product output
      or intellectual property of the Company (e.g., providing another company an
      exclusivity for any major markets or providing rights to another company to
      produce products using the company’s OLED technology (collectively, a “Change of
      Control”). The foregoing Change of Control payment shall be due and payable only
      if, and when, such Change of Control of the Company results in the payment
      of
      the Company’s senior secured debt, when such debt is converted to equity, or
      there is a restructuring of the Company where the majority of the debt amounts
      due the lenders is agreed to be restructured by the lenders all or in part.
      

    

    
      
        
        

      

      
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    1.5
      In
      addition, Executive agrees to reasonably pursue the general type Change of
      Control transactions listed in Section 1.4 and to devote reasonable best
      efforts, time and attention, unless otherwise mutually agreed by the Executive
      and the Chairman of the Board of Directors of the Company, or if there is any
      change in direction of the Company away from actively pursuing such a long
      term
      or short term Change of Control as a primary effort. Any such effort by the
      Executive requires reasonable support to the Executive by the Company,
      attorneys, and bankers toward the pursuit of such a Change of Control. Moreover,
      Executive shall provide the Board of Directors of the Company with weekly
      reports describing Executive’s activities during the prior calendar week with
      respect to his consulting efforts on behalf of the Company in accordance with
      this Agreement. 

    

    1.6
      Section 16 Filings

    The
      Company will provide the highest priority and conscientious support in issuing
      all shares as specified in this Agreement, with all transfer and registration
      costs borne by the Company. Unlimited registration rights are provided for
      all
      stock granted to the Executive. The Company’s attorneys will, at Company
      expense, provide prompt assistance to convert all Executive’s stock to free
      trading status and to file the necessary Form 4 paperwork to complete the stock
      issuances properly and fully assist the Executive with his Section 16 filing
      requirements consistent with the Company’s past practices.

    

    1.7
      Withholdings for Taxes:

    Taxes
      will be withheld and paid in a standard manner for ordinary income in 2007
      for
      all cash payments made pursuant to this Agreement consistent with the Company’s
      past practices. Stock issuance withholdings will be based on a Moss Adams report
      discount valuation of the market closing bid price as reported by the American
      Stock Exchange on the day of issuance to take into account block discount
      valuation reduction effects.

    

    1.8
      Voluntary Forfeiture of Executive’s Options

    Upon
      the
      execution of this Agreement, Executive agrees to forfeit all of the options
      currently held by the Executive in the Company. (Approximately 230,000
      options).

    

    2.0
      Use of Office and Equipment

    

    The
      Executive will retain use of his current Company offices and 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, and
      other Executive support provided at Company expense by the Company, until the
      earlier of (i) end of calendar year 2007, (ii) a change of control, or (iii)
      when 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, and supplies provided by the company
      for
      use primarily by the employee for up to 28 months from the Effective Date,
      provided that Company data is copied for the Company’s use.

    

    3.0
      Provisions for Moving Personal Effects

    

    The
      Company will provide up to $7,500 for reasonable packing of all of Executive’s
      personal effects currently located in New York Company offices or storage space
      and shipping such items to up to two locations within the general area of the
      Company’s Bellevue Offices, to be specified by the Executive. All personal
      effects and files on the premises or in storage will remain confidential to
      the
      Executive. Travel associated with assisting in the clearing out this space
      will
      also be a permissible expense to the Company or its acquirer. To the extent
      the
      foregoing payment is deemed to 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 the Executive in connection
      with this payment.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    4.0
      Personal Benefits

    

    Executive
      will be provided all insurance benefits as when previously employed through
      the
      earlier of March 31, 2007, or the Sale of the Company or substantially all
      of
      the Company’s assets, at Company expense free of any cost or tax to the
      Executive. All medical, insurance, and dental benefits will be covered during
      this period. Thereafter, Executive will be provided with right to participate
      in
      full COBRA (or equivalent) Company insurance plans.

    

    5.0
      No
      Arbitration; Time is of the Essence

    

    5.1
      This
      Agreement is hereby agreed to and is not subject to arbitration to negotiate
      the
      stated terms or validity. The Company agrees that payment of all cash due to
      the
      Executive and payment of stock in DWAC or DTC form will be made on the dates
      designated elsewhere in this Agreement, or within 2 days of the Effective Date,
      whichever is later. 

    

    Time
      is of the essence
      for all
      payments due within 10 business days of the Effective Date (namely, payments
      due
      under section 1.0) and no arbitration or legal issues shall in any way be
      permitted to delay these required payments. Financial compensation alone would
      not be sufficient compensation for breach of the Company’s duty to make these
      payments.

    

    Additionally,
      a 12% initial penalty on the 1st late business day a payment is late plus an
      interest rate equal to the maximum fee and penalty limits of Washington State
      law plus any other losses incurred by the Executive due to the delayed payments
      due within 10 business days of the Effective Date. These fees and penalties
      would apply to the entire value of any delayed cash or stock payments due within
      10 business days of the Effective Date, with the stock pricing value being
      the
      most recent AMEX closing price as of the date of this agreement or the date
      of
      each late assessment, whichever is higher based on the most recent quoted
      closing price of the Company’s common stock quoted by the American Stock
      Exchange or whatever exchange or quotation system the Company’s common stock may
      then be listed or quoted on. 

    

    All
      late
      fees and penalties, including all costs of collection and legal costs, arising
      from non-payment of the amounts due (either by direct payment or by way of
      credit against the Executive’s liabilities at the time of the termination of
      Executive’s employment, will be paid in cash immediately when due and any late
      fees or penalties will accrue the same fees and penalties as other late payments
      in this Agreement.

    

    6.0
      Non-Competition and Non-Solicitation

    

    6.1
      The
      following modification replaces and supersedes Section 4.1 of Agreement A.
      The
      Executive hereby agrees that for a period of one year following the Effective
      Date, the Executive will not, without the prior written consent of the Company,
      have any direct interest in any person, firm, corporation or business competing
      with the Company in the Covered Area. For purposes of this Section 6.1
      (i)“Competing Business” means any company engaging directly in the manufacturing
      of OLED on single crystal silicon microdisplays. For purposes of this Section
      7.1 (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 of any kind. Furthermore, for a
      period of one (1) year following the Effective Date, 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 or the employee prior
      to
      commencement of employment discussions between Executive and such employee,
      (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 (ii)
      any such employee that responds to a general advertisement and other similar
      broad forms of solicitation (including solicitations by a recruiting firm hired
      by Executive). 

    

    7.0
      Release by the Executive

    

    In
      consideration for the promises and undertakings of the Company under this
      Agreement, the Executive hereby unconditionally releases and forever discharges
      the Company from any and all claims, demands, causes of action, suits, damages,
      remedies, obligations, debts and liabilities whatsoever, whether known or
      unknown, suspected or unsuspected, both at law and in equity, except for any
      claim which arises out of or is in any way related to this Agreement, which
      the
      Executive now has, has ever had or may hereafter have against the Company
      arising contemporaneously with or prior to the Effective Date or on account
      of
      or arising out of any matter, cause or event occurring contemporaneously with
      or
      prior to the Effective Date.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    8.0
      Publicity

    

    The
      Company and Executive agree that all publicity or other public statements
      related to Executive will be mutually approved by both the Executive and the
      Chairman of the Board of the Company prior to issuance; provided, however,
      that
      the Company shall be entitled to make all public statements and disclosures
      it
      reasonably determines is necessary to comply with all applicable
      laws.

    

    9.
      Other Provisions

    

    9.1
      The
      parties acknowledge that while the Executive will be acting following the
      termination of his employment as a consultant to the Company, he will serve
      as
      an independent advisor and not in any other capacity including as a fiduciary,
      except to the extent of fiduciary duties arising from the Executive’s duties (if
      any) as a Director of the Company. Neither this Agreement nor the delivery
      of
      any advice in connection with this engagement is intended to confer rights
      upon
      any persons not a party hereto (including security holders, employees or
      creditors of the Company) as against the Executive or the Company. The Company
      agrees to indemnify the Executive against any claims related to the Company
      and
      the Company’s actions, other
      than claims of gross negligence or willful misconduct specifically by the
      Executive.

    

    10.
      Entire Agreement and Other Provisions

    

    This
      is
      the entire agreement, this Agreement supersedes all prior agreements related
      to
      this matter, and this Agreement may only be formally modified when a
      modification is duly executed by the Executive, and the Board of Directors
      of
      the Company, or such employees, agents or representatives that the Board shall
      have appointed to make such modifications. The parties hereby acknowledge and
      agree that the Confidential Information and Invention Assignment Agreement
      executed by the Executive in favor of the Company shall remain in full force
      and
      effect after the Effective Date for one year.

    

    This
      Agreement is governed by the laws of the Washington, U.S.A. without regard
      to
      conflicts of law principles. The Company and the Executive agree to waive trial
      by jury in any action, proceeding or counterclaim brought by or on behalf of
      either party with respect to any matter whatsoever relating to or arising out
      of
      any actual or proposed transaction or the engagement of or performance by the
      Executive hereunder. With respect to all matters relating to this Agreement,
      the
      Company hereby irrevocably (a) submits to the non-exclusive jurisdiction of
      any
      Washington State or Federal Court sitting in the State of Washington, County
      of
      King, U.S.A.; (b) agrees that all claims related hereto may be heard and
      determined in such courts; (c) waives the defense of an inconvenient forum;
      (d)
      agrees that a final judgment of such courts shall be conclusive and may be
      enforced in another jurisdiction by suit on the judgment or in any other manner
      provided by law; and (e) waives any immunity (sovereign or otherwise) from
      jurisdiction of any court or from any legal process that it or its properties
      or
      assets has or may acquire. 

    

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original and all of which taken together shall constitute a single
      agreement. The Agreement may be deemed as executed upon receipt of email
      affirmation, to be followed by execution of physically signed documents within
      five (5) business days.

    

    

    IN
      WITNESS WHEREOF, the
      parties hereto have executed this agreement as of the date first stated
      above.

    

    

    “EXECUTIVE”

    

    

    By
      /s/
      Gary
      Jones

    
      
        

      

    

    Gary
      Jones 

    

    

    

    “COMPANY”

    eMagin
      Corporation

    

    

    By
      /s/
      Thomas Paulsen

    
      
        

      

    

    Thomas
      Paulsen 

    Chairman
      of the Board and Chairman of the Compensation Committee

    

    

    By
      /s/
      Jack
      Goldman

    
      
        

      

    

    Jack
      Goldman

    Compensation
      Committee

    

    

    By
      /s/
      David
      Gottfried

    
      
        

      

    

    David
      Gottfried

    Compensation
      Committee

     

     

     

    5

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