Document:

<PAGE>

                                                                   EXHIBIT 10.49

                                                               November 19, 2001

                               PLIANT CORPORATION
                            MANAGEMENT INCENTIVE PLAN
                                     ("MIP")
                                     (2002)
=====================================      =====================================

Purpose         To provide an attractive and competitive at-risk incentive that
                recognizes the achievements of individuals and team work groups
                in the attainment of corporate financial and operating goals.

                ================================================================

Eligibility     Officers of Pliant Corporation (the "Company"), Directors, and
                Plant Managers ("Participants"). At the option of the Chief
                Executive Officer ("CEO"), other employees not normally eligible
                for this program, may be included. Bonus Plan Payment Levels for
                the plan are as follows:

<TABLE>
<S>                                                  <C>
                           President & COO           100% of Base Salary
                           Executive Vice President  65% of Base Salary
                           Senior Vice President     55% of Base Salary
                           Vice President            45% of Base Salary
                           Director/Plant Manager    35% of Base Salary
</TABLE>

                ================================================================

Summary         The 2002 Management Incentive Plan ("MIP") is designed to
                provide incentive compensation based on the alignment and
                combination of three factors: achievement of individual goals,
                the Team Work Group Goal, and Company EBITDA goals.

                The 2002 Company Operational Plan is the result of the
                collective input of the MIP Participants' individual goals and
                Team Work Group Goals. Each Participant's individual goals and
                Team Work Group Goal have been extracted from the Operational
                Plan, are developed by the Plan Participant and his/her
                supervisor and are approved by the President and COO. The goals
                are submitted for approval prior to the beginning of the Plan
                Term and will be referred to as Exhibit A (see "Individual Goals
                and Team Work Group Goal for 2002"). Also shown on Exhibit B are
                the Company's EBITDA goals (see "2002 EBITDA Goals").

                In order to receive an award under the MIP a Participant must
                first be able to demonstrate achievement of his/her individual
                goals. The Participant and his/her supervisor should meet
                monthly, and after the end of the calendar quarter, to discuss
                achievements of the goals outlined under the "Individual Goals
                and Team Work Group Goal for 2002" portion of Exhibit A. If
                these goals have not been met, the Participant will not be
                eligible to receive an award under the MIP.

                Once the Participant has established achievement of the
                individual goals, the MIP award will be determined by the
                Company's level of achievement

<PAGE>

Management Incentive Plan (MIP) 2002
Page 2-

                relative to the EBITDA goals for the quarter. Awards will be
                paid at the Participant's Bonus Threshold Payment Level when the
                EBITDA Threshold Level has been reached. IF THE COMPANY'S EBITDA
                THRESHOLD LEVEL IS NOT MET, NO BONUS AWARDS WILL BE PAID.
                Additional percentages will be added to the Bonus Award for
                levels above the Threshold. Exhibit B outlines these increases
                in the Participant's Bonus Award percentages when achievements
                greater than the EBITDA Threshold Level are reached. Awards
                under the Plan will be distributed on a quarterly basis.

                An additional component to the Bonus Award is the achievement of
                the Team Work Group Goal. Individual goals and the Team Work
                Group Goal are combined to comprise the percentage of the
                Participant's Bonus Award according to the Bonus Threshold
                Payment Level shown below:

                        DIRECTOR/PLANT MANAGER LEVEL AT 100% OF PLAN

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                    % EMPHASIS             X PLAN BONUS LEVEL       PERCENT OF BONUS AWARD
                                                              PERCENTAGE =
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>                         <C>                       <C>
INDIVIDUAL GOALS +                     50 *                        35                        17.5
-------------------------------------------------------------------------------------------------------------
TEAM WORK GROUP GOAL =                 50 *                        35                        17.5
-------------------------------------------------------------------------------------------------------------
   TOTAL                               100                         35                         35
-------------------------------------------------------------------------------------------------------------
</TABLE>

                        VICE PRESIDENT LEVEL AT 100% OF PLAN

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                    % EMPHASIS             X PLAN BONUS LEVEL       PERCENT OF BONUS AWARD
                                                              PERCENTAGE =
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>                         <C>                       <C>
INDIVIDUAL GOALS +                     25 *                        45                        11.25
-------------------------------------------------------------------------------------------------------------
TEAM WORK GROUP GOAL =                 75 *                        45                        33.75
-------------------------------------------------------------------------------------------------------------
   TOTAL                               100                         45                         45
-------------------------------------------------------------------------------------------------------------
</TABLE>

                        SR. VICE PRESIDENT AND ABOVE LEVEL AT 100% OF PLAN

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                    % EMPHASIS             X PLAN BONUS LEVEL       PERCENT OF BONUS AWARD
                                                              PERCENTAGE =
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>                         <C>                       <C>
INDIVIDUAL GOALS +                       0                        55**                         0
-------------------------------------------------------------------------------------------------------------
TEAM WORK GROUP GOAL =                  100                       55**                        55
-------------------------------------------------------------------------------------------------------------
   TOTAL                                100                       55**                        55
-------------------------------------------------------------------------------------------------------------
</TABLE>

*The emphasis for the Director level may be 50% individual and 50% team or 75%
individual and 25% team. For the Vice President level the emphasis may be
25%/75%; 50%/50% or 75%/25%. The emphasis level will be determined by the
Participant's supervisor and included on Exhibit A when submitted prior to the
beginning of the Plan Term.

<PAGE>

Management Incentive Plan (MIP), 2002
Page 3-

**At the EVP level this payment is 65%; The COO level is based on achievement of
EBITDA threshold and the payment level at 100% of plan is 100%..

                Once the EBITDA Threshold Level is reached a Participant may
                receive a Bonus Award based on achievement of Individual Goals,
                if they are met, but may not receive a Bonus Award on the Team
                Work Group Goal, if that goal is not met.

                Lack of achievement under the "Individual Goals and Team Work
                Group Goal for 2002" portion of the plan during one quarter of
                the year will not preclude a Bonus Award being paid during
                subsequent calendar quarters of the year if the individual goals
                and Team Work Group Goal are met during those quarters. However,
                there are no "clawback rights" for quarters where achievement is
                not reached.

                Upon achievement of 100% or greater of the 2002 full year Plan
                EBITDA including any adjustments due to acquisitions,
                divestitures or other changes approved by the Board of
                Directors, an additional payment will be made to Participants
                equal to the individual payment made to the Participant for the
                quarter during which the greatest percentage of Plan EBITDA was
                achieved in 2002. Any Participant that did not receive a payment
                during the quarter used to determine this additional payment
                (due to not achieving his/her goals or to not being a
                participant in that quarter) will not be eligible of this
                additional payment.

                ================================================================

Plan Term       The MIP for 2002 shall be in effect from January 1, 2002 to
                December 31, 2002 (the "Plan Term").

                ================================================================

Distribution    Quarterly Bonus Award distributions will be paid within 45 days
                of the close of the calendar quarter.

                ================================================================

Separations     Except as set forth below, in order to be eligible to receive
                Bonus Awards under the MIP, a Participant must be employed by
                the Company on the last day of the calendar quarter for which an
                award is payable to receive a Quarterly Bonus Award. If a
                Participant retires during the Plan Term (and qualifies for an
                immediate pension under the Pliant Corporation Defined Benefit
                Pension Plan), dies, or becomes disabled (as defined under the
                Company's Long Term Disability Plan), he/she will receive a pro
                rata portion of the MIP Bonus Award on the actual days worked
                during the Plan Term. Distributions will be made at the same
                time as for all other Participants in the MIP. If a
                Participant's employment is terminated at any time prior to the
                end of the quarter or the Plan Term, by the employee or by the
                Company, with or without cause, for any reason other than

<PAGE>

Management Incentive Plan (MIP), 2002
Page 4-

                retirement, death, or disability, the Participant shall not be
                eligible to participate in the MIP, shall not receive any MIP
                Award for such calendar quarter or thereafter, and shall forfeit
                any rights he/she may have had in the MIP.

                ================================================================

General Provisions

                1.      Job Change. Eligible officers and executives who become
                        eligible to participate in the MIP by reason of a job
                        change will be eligible for a prorated bonus Award based
                        on the actual days worked during the Plan Term. In the
                        case of job changes involving a change in the Bonus Plan
                        Payment level, the Participant will receive the new
                        level based on the actual days worked during the Plan
                        Term at the new level.

                2.      Disciplinary Action. In order to participate in the MIP,
                        the Participant must not have been subject to any
                        disciplinary action during the Plan Term.

                3.      No Employment Right. Participation in the MIP shall not
                        confer on a Participant any right to continue in the
                        employment of the Company, nor shall it interfere with
                        the Company's right to terminate the employment of a
                        Participant at any time, for any reason.

                4.      Non-transferability. A Participant shall not have any
                        right to assign, transfer, pledge, or hypothecate any
                        benefits or payments under the MIP, other than by will
                        or by the laws of descent and distribution.

                5.      Creditors. Award payments held by the Company before
                        distribution shall not be subject to execution,
                        attachment or similar process at law or in equity.

                6.      Withholding. The Company will deduct and withhold all
                        federal, state, and local taxes, and any employee
                        benefit related withholdings, required to be withheld
                        with respect to the payment of any award.

<PAGE>

Management Incentive Plan (MIP), 2002
Page 5-

                7.      Definitions.

                                EBITDA          Earnings calculated in
                                                accordance with GAAP, before
                                                interest expense, income taxes,
                                                depreciation and amortization
                                                (and after accruals for Awards
                                                paid under the MIP).

                                Team Work       A goal assigned to members of a
                                Group Goal      particular work group. This goal
                                                is a part of the Company's
                                                overall Operational Plan.

                ================================================================

Modification    The Company may modify, supplement, suspend, or terminate the
of the MIP      MIP at any time without the authorization of Participants, to
                the extent allowed by the law. No modification, suspension, or
                termination shall adversely alter or affect any right or
                obligation under the MIP that existed prior to such
                modification, supplement, suspension or termination. The
                Company's Board of Directors will determine the effect on
                incentives of any such event and make adjustments and/or
                payments as it, in its sole discretion, determines appropriate.

                ================================================================

Other           Subject to the control of the Executive Committee of the Board
                of Directors, the Company's CEO will exercise exclusive control
                over the MIP. The CEO will have sole discretion to calculate and
                adjust EBITDA amounts used in calculating MIP Bonus Awards.

                The MIP shall be governed by and construed under the laws of the
                State of Illinois.Exhibit A - Form of Warrant

NEITHER  THIS WARRANT NOR THE SHARES  ISSUABLE  UPON  EXERCISE  HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT")
OR ANY  OTHER  APPLICABLE  SECURITIES  LAWS.  THIS  WARRANT  HAS BEEN  ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION  REQUIREMENTS OF THE SECURITIES
ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED,  ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE
SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM  REGISTRATION  UNDER THE
PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE LAWS.

                             STOCK PURCHASE WARRANT

                      To Purchase Shares of Common Stock of

                               eMAGIN CORPORATION

          THIS CERTIFIES that, for value received, (the "Holder"),  is entitled,
upon the terms and subject to the  limitations  on exercise  and the  conditions
hereinafter  set forth,  at any time on or after February 27, 2002 (the "Initial
Exercise  Date") and on or prior to the close of business  on February  27, 2005
(the "Termination Date") but not thereafter,  to subscribe for and purchase from
eMagin  Corporation,  a corporation  incorporated  in the State of Delaware (the
"Company"), up to shares (the "Warrant Shares") of Common Stock, $.001 par value
per share, of the Company (the "Common Stock").  The purchase price of one share
of Common Stock (the "Exercise  Price") under this Warrant shall be $0.7542 USD.
The  Exercise  Price and the number of Warrant  Shares for which the  Warrant is
exercisable  shall be subject to adjustment as provided herein.  In the event of
any  conflict  between  the terms of this  Warrant and the  Securities  Purchase
Agreement  dated as of February 27, 2002 pursuant to which this Warrant has been
issued  (the  "Purchase  Agreement"),  the  Purchase  Agreement  shall  control.
Capitalized  terms used and not otherwise defined herein shall have the meanings
set forth for such terms in the Purchase Agreement.

                                       1

<PAGE>

          1. Title to  Warrant.  Prior to the  Termination  Date and  subject to
compliance  with  applicable  laws,  this Warrant and all rights  hereunder  are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney,  upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed.

          2.  Authorization  of Shares.  The Company  covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights  represented
by this Warrant will, upon exercise of the purchase  rights  represented by this
Warrant,  be duly authorized,  validly issued,  fully paid and nonassessable and
free from all taxes,  liens and charges in respect of the issue  thereof  (other
than (x) taxes in respect of any transfer occurring  contemporaneously with such
issue) and (y) liens and  charges  created by the  then-current  Holder,  or any
former Holder of this Warrant).

          3. Exercise of Warrant.

          (a) Except as provided in Section 4 herein,  exercise of the  purchase
rights  represented by this Warrant may be made at any time or times on or after
the  Initial  Exercise  Date  and on or  before  the  close of  business  on the
Termination  Date by the  surrender  of this  Warrant and the Notice of Exercise
Form annexed hereto duly  executed,  at the office of the Company (or such other
office or agency of the Company as it may  designate by notice in writing to the
registered  Holder at the address of such Holder  appearing  on the books of the
Company)  and upon  payment on or before the  Termination  Date of the  Exercise
Price of the shares thereby  purchased by wire transfer or cashier's check drawn
on a United States bank, or by means of a cashless exercise, the Holder shall be
entitled to receive a certificate for the number of Warrant Shares so purchased.
Certificates  for shares  purchased  hereunder  shall be delivered to the Holder
within five (5)  Trading  Days after the date on which this  Warrant  shall have
been exercised as aforesaid. This Warrant shall be deemed to have been exercised
and such  certificate or certificates  shall be deemed to have been issued,  and
Holder or any other person so  designated to be named therein shall be deemed to
have become a holder of record of such shares for all  purposes,  as of the date
the Warrant has been  exercised by payment to the Company of the Exercise  Price
and all taxes required to be paid by the Holder,  if any,  pursuant to Section 5
prior to the issuance of such shares,  have been paid.  If the Company  fails to
deliver to the Holder a certificate  or  certificates  representing  the Warrant
Shares  pursuant to this Section 3(a) by the fifth Trading Day after the date of
exercise,  then the Holder  will have the right to  rescind  such  exercise.  In
addition to any other rights  available to the Holder,  if the Company  fails to
deliver to the Holder a certificate  or  certificates  representing  the Warrant
Shares  pursuant  to an  exercise  by the eighth  Trading  Day after the date of
exercise,  and if after such eighth Trading Day the Holder purchases (in an open
market   transaction  or  otherwise)  shares  of  Common  Stock  to  deliver  in
satisfaction  of a sale by the  Holder of the  Warrant  Shares  which the Holder
anticipated  receiving  upon such exercise (a "Buy-In"),  then the Company shall
(1) pay in cash to the  Holder  the  amount  by  which  (x) the  Holder's  total
purchase  price  (including  brokerage  commissions,  if any) for the  shares of
Common Stock so purchased exceeds (y) the amount obtained by

                                       2

<PAGE>

multiplying  (A) the number of Warrant  Shares that the Company was  required to
deliver to the Holder in  connection  with the  exercise  at issue times (B) the
closing bid price of the Common Stock at the time of the obligation  giving rise
to  such  purchase  obligation,  and (2) at the  option  of the  Holder,  either
reinstate the portion of the Warrant and equivalent number of Warrant Shares for
which  such  exercise  was not  honored  or  deliver to the Holder the number of
shares of Common  Stock  that  would have been  issued  had the  Company  timely
complied with its exercise and delivery obligations  hereunder.  For example, if
the Holder  purchases  Common Stock having a total  purchase price of $11,000 to
cover a Buy-In with respect to an  attempted  exercise of shares of Common Stock
with a market price on the date of exercise totaled $10,000, under clause (1) of
the  immediately  preceding  sentence  the Company  shall be required to pay the
Holder $1,000.  The Holder shall provide the Company  written notice  indicating
the amounts payable to the Holder in respect of the Buy-In. Nothing herein shall
limit a Holder's right to pursue any other  remedies  available to it hereunder,
at  law or in  equity  including,  without  limitation,  a  decree  of  specific
performance  and/or  injunctive  relief with respect to the Company's failure to
timely deliver certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.

          (b) If this Warrant  shall have been  exercised  in part,  the Company
shall, at the time of delivery of the  certificate or certificates  representing
Warrant Shares,  deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.

          (c) This  Warrant  shall also be  exercisable  by means of a "cashless
exercise" in which the Holder shall be entitled to receive a certificate for the
number of Warrant Shares equal to the quotient  obtained by dividing [(A-B) (X)]
by (A), where:

          (A) = the closing  price per share of Common Stock (as reported by the
          American  Stock  Exchange  (or  principal  market)) on the Trading Day
          preceding the date of such election on the American Stock Exchange, or
          if the Common Stock is not traded on the American Stock Exchange, then
          the Principal Market in terms of volume;

          (B) = the Exercise Price of this Warrant; and

          (X) = the number of Warrant  Shares  issuable  upon  exercise  of this
          Warrant in accordance with the terms of this Warrant and the Notice of
          Exercise.

          4. No  Fractional  Shares  or  Scrip.  No  fractional  shares or scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  As to any fraction of a share which Holder would otherwise be entitled
to purchase  upon such  exercise,  the Company  shall pay a cash  adjustment  in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

          5. Charges,  Taxes and Expenses.  Issuance of certificates for Warrant
Shares shall be made without  charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate,  all
of which taxes and expenses shall be

                                       3

<PAGE>

paid by the Company,  and such  certificates  shall be issued in the name of the
Holder  or in such name or names as may be  directed  by the  Holder;  provided,
however, that in the event certificates for Warrant Shares are to be issued in a
name  other than the name of the  Holder,  this  Warrant  when  surrendered  for
exercise  shall be  accompanied  by the  Assignment  Form  attached  hereto duly
executed by the Holder; and the Company may require, as a condition thereto, the
payment of a sum  sufficient  to reimburse  it for any  transfer tax  incidental
thereto.

          6. [Reserved].

          7. Transfer, Division and Combination.

          (a)  Subject  to  compliance  with  any  applicable  securities  laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained  for such purpose,  upon
surrender of this Warrant at the principal office of the Company,  together with
a written  assignment of this Warrant  substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such  transfer.  In the event that
the  Holder  wishes to  transfer  a portion of this  Warrant,  the Holder  shall
transfer at least 25,000 shares  underlying this Warrant to any such transferee.
Upon such  surrender and, if required,  such payment,  the Company shall execute
and deliver a new Warrant or Warrants in the name of the  assignee or  assignees
and in the  denomination  or  denominations  specified  in  such  instrument  of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant  Shares  without  having a new Warrant  issued.  Notwithstanding  the
above, the Holder shall not transfer this warrant or any rights hereunder to any
person  or entity  which is  engaged  in a  business  that is in the  reasonable
judgment of the Company is in competition with the Company.

          (b) This Warrant may be divided or combined  with other  Warrants upon
presentation  hereof at the  aforesaid  office of the Company,  together  with a
written notice  specifying the names and denominations in which new Warrants are
to be  issued,  signed  by the  Holder  or its  agent or  attorney.  Subject  to
compliance  with Section 7(a), as to any transfer  which may be involved in such
division or combination,  the Company shall execute and deliver a new Warrant or
Warrants  in  exchange  for the Warrant or Warrants to be divided or combined in
accordance with such notice.

          (c) The Company  shall  prepare,  issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.

          (d) The Company agrees to maintain, at its aforesaid office, books for
the registration and the registration of transfer of the Warrants.

          8. No Rights as  Shareholder  until  Exercise.  This  Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price or by means of a cashless exercise,  the
Warrant  Shares so purchased  shall be and be deemed to be

                                       4

<PAGE>

issued to such  Holder  as the  record  owner of such  shares as of the close of
business on the later of the date of such surrender or payment.

          9. Loss,  Theft,  Destruction  or Mutilation  of Warrant.  The Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate  relating  to the  Warrant  Shares,  and in case of  loss,  theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond),  and upon  surrender and  cancellation  of
such  Warrant or stock  certificate,  if  mutilated,  the Company  will make and
deliver a new  Warrant or stock  certificate  of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

          10. Saturdays,  Sundays,  Holidays,  etc. If the last or appointed day
for the taking of any action or the  expiration of any right required or granted
herein shall be a Saturday,  Sunday or a legal holiday,  then such action may be
taken or such right may be exercised on the next  succeeding day not a Saturday,
Sunday or legal holiday.

          11.  Adjustments  of Exercise  Price and Number of Warrant  Shares for
Stock  Splits,  etc.  The number  and kind of  securities  purchasable  upon the
exercise of this Warrant and the Exercise  Price shall be subject to  adjustment
from  time to time  upon  the  happening  of any of the  following.  In case the
Company  shall  (i)  pay a  dividend  in  shares  of  Common  Stock  or  make  a
distribution  in shares of Common  Stock to  holders of its  outstanding  Common
Stock,  (ii)  subdivide  its  outstanding  shares of Common Stock into a greater
number of shares,  (iii) combine its  outstanding  shares of Common Stock into a
smaller  number  of  shares of Common  Stock,  or (iv)  issue any  shares of its
capital  stock in a  reclassification  of the Common  Stock,  then the number of
Warrant  Shares  purchasable  upon  exercise of this Warrant  immediately  prior
thereto  shall be adjusted  so that the Holder  shall be entitled to receive the
kind and number of Warrant  Shares or other  securities  of the Company which it
would  have  owned or have  been  entitled  to  receive  had such  Warrant  been
exercised in advance  thereof.  Upon each such adjustment of the kind and number
of Warrant  Shares or other  securities  of the  Company  which are  purchasable
hereunder,  the Holder  shall  thereafter  be entitled to purchase the number of
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security  obtained by multiplying  the Exercise
Price in effect  immediately  prior to such  adjustment by the number of Warrant
Shares  purchasable  pursuant  hereto  immediately  prior to such adjustment and
dividing  by the number of Warrant  Shares or other  securities  of the  Company
resulting from such  adjustment.  An adjustment  made pursuant to this paragraph
shall  become  effective  immediately  after the  effective  date of such  event
retroactive to the record date, if any, for such event.

          12.  Reorganization,   Reclassification,   Merger,   Consolidation  or
Disposition  of  Assets.  In case the  Company  shall  reorganize  its  capital,
reclassify  its  capital  stock,  consolidate  or  merge  with or  into  another
corporation  (where the Company is not the surviving  corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business  to another  corporation  and,  pursuant to the terms of such
reorganization,   reclassification,  merger,  consolidation  or  disposition  of
assets, shares of common stock of the successor or acquiring

                                       5

corporation, or any cash, shares of stock or other securities or property of any
nature whatsoever  (including warrants or other subscription or purchase rights)
in  addition  to or in  lieu of  common  stock  of the  successor  or  acquiring
corporation  ("Other  Property"),  are to be received by or  distributed  to the
holders of Common  Stock of the  Company,  then the Holder  shall have the right
thereafter  to elect  to  receive,  (i) upon  exercise  of this  Warrant  at the
Exercise Price written herein and  consummation  of the  applicable  event,  the
number of shares of Common Stock of the successor or acquiring corporation or of
the Company, if it is the surviving  corporation,  and Other Property receivable
upon  or  as  a  result  of  such  reorganization,   reclassification,   merger,
consolidation  or  disposition  of assets by a Holder of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
event,  or (ii)  cash  equal  to the  value of this  Warrant  as  determined  in
accordance with the  Black-Scholes  option pricing formula.  In case of any such
reorganization,   reclassification,  merger,  consolidation  or  disposition  of
assets, the successor or acquiring corporation (if other than the Company) shall
expressly  assume the due and punctual  observance  and  performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company  and all the  obligations  and  liabilities  hereunder,  subject to such
modifications  as may be deemed  appropriate  (as  determined  in good  faith by
resolution  of the Board of  Directors  of the  Company) in order to provide for
adjustments of Warrant Shares for which this Warrant is exercisable  which shall
be as nearly  equivalent as practicable to the adjustments  provided for in this
Section 12. For purposes of this Section 12,  "common  stock of the successor or
acquiring  corporation"  shall  include stock of such  corporation  of any class
which is not  preferred  as to dividends or assets over any other class of stock
of such  corporation  and which is not  subject  to  redemption  and shall  also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock,  either  immediately or
upon the arrival of a specified  date or the happening of a specified  event and
any warrants or other rights to  subscribe  for or purchase any such stock.  The
foregoing  provisions  of this Section 12 shall  similarly  apply to  successive
reorganizations,  reclassifications,  mergers,  consolidations or disposition of
assets.

     13. Voluntary Adjustment by the Company. The Company may at any time during
the term of this Warrant  reduce the then current  Exercise  Price to any amount
and for any period of time deemed  appropriate  by the Board of Directors of the
Company.

     14. Notice of  Adjustment.  Whenever the number of Warrant Shares or number
or kind of securities or other  property  purchasable  upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested,  to the
Holder  notice of such  adjustment  or  adjustments  setting forth the number of
Warrant Shares (and other securities or property)  purchasable upon the exercise
of this  Warrant  and the  Exercise  Price of such  Warrant  Shares  (and  other
securities or property) after such  adjustment,  setting forth a brief statement
of the facts  requiring  such  adjustment  and setting forth the  computation by
which such adjustment was made.  Such notice,  in the absence of manifest error,
shall be conclusive evidence of the correctness of such adjustment.

     15. Notice of Corporate Action. If at any time:

          (a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling  them to receive a dividend or other  distribution,

                                       6

<PAGE>

or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property,  or to receive
any other right, or

          (b) there  shall be any capital  reorganization  of the  Company,  any
reclassification  or recapitalization of the capital stock of the Company or any
consolidation  or merger of the  Company  with,  or any sale,  transfer or other
disposition of all or substantially all the property,  assets or business of the
Company to, another corporation or,

          (c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder, if
lawful and practicable to do so, (i) at least 10 days' prior written notice of
the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 10 days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their Warrant Shares
for securities or other property deliverable upon such disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently given
if addressed to Holder at the last address of Holder appearing on the books of
the Company and delivered in accordance with Section 17(d).

          16.  Authorized  Shares.  The Company covenants that during the period
the Warrant is  outstanding,  it will reserve from its  authorized  and unissued
Common  Stock a  sufficient  number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant.  The
Company  represents  that its issuance of this  Warrant  shall  constitute  full
authority  to its  officers  who are charged  with the duty of  executing  stock
certificates  to execute and issue the  necessary  certificates  for the Warrant
Shares upon the exercise of the purchase rights under this Warrant.  The Company
will take all such  reasonable  action as may be  necessary  to assure that such
Warrant  Shares  may be issued  as  provided  herein  without  violation  of any
applicable law or regulation,  or of any  requirements  of the Principal  Market
upon which the Common Stock may be listed.

          The Company shall not by any action,  including,  without  limitation,
amending  its  certificate  of  incorporation  or  through  any  reorganization,
transfer  of  assets,  consolidation,  merger,  dissolution,  issue  or  sale of
securities or any other voluntary action,  avoid or seek to avoid the observance
or  performance  of any of the terms of this  Warrant,  but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or  appropriate to protect the rights of Holder
against  impairment.  Without  limiting the  generality  of the  foregoing,  the
Company  will (a) not  increase  the par value of any

                                       7

<PAGE>

Warrant Shares above the amount payable therefor upon such exercise  immediately
prior to such increase in par value, (b) use commercially  reasonable efforts to
take all such  action  as may be  necessary  or  appropriate  in order  that the
Company  may validly and  legally  issue  fully paid and  nonassessable  Warrant
Shares upon the exercise of this Warrant,  and (c) use  commercially  reasonable
efforts to obtain  all such  authorizations,  exemptions  or  consents  from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.

          Before  taking any action which would result in an  adjustment  in the
number of  Warrant  Shares  for which  this  Warrant  is  exercisable  or in the
Exercise Price, the Company shall obtain all such  authorizations  or exemptions
thereof,  or consents  thereto,  as may be necessary from any public  regulatory
body or bodies having jurisdiction thereof.

17.       Miscellaneous.

          (a)  Jurisdiction.  This Warrant shall constitute a contract under the
laws of New York,  without  regard to its conflict of law,  principles or rules,
and be subject to  arbitration  pursuant to the terms set forth in the  Purchase
Agreement.

          (b)  Restrictions.  The Holder  acknowledges  that the Warrant  Shares
acquired  upon the  exercise  of this  Warrant,  if not  registered,  will  have
restrictions upon resale imposed by state and federal securities laws.

          (c)  Nonwaiver  and  Expenses.  No course of  dealing  or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding  all rights hereunder  terminate on the Termination Date. If the
Company  willfully  and  knowingly  fails to comply with any  provision  of this
Warrant,  which results in any material damages to the Holder, the Company shall
pay to  Holder  such  amounts  as shall be  sufficient  to cover  any  costs and
expenses including,  but not limited to, reasonable  attorneys' fees,  including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights,  powers or remedies
hereunder.

          (d)  Notices.  Any  notice,  request  or other  document  required  or
permitted  to be  given or  delivered  to the  Holder  by the  Company  shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

          (e) Limitation of Liability.  No provision  hereof,  in the absence of
affirmative  action by Holder to purchase  Warrant  Shares,  and no  enumeration
herein of the rights or privileges  of Holder,  shall give rise to any liability
of Holder for the purchase  price of any Common Stock or as a stockholder of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the Company.

          (f) Remedies.  Holder,  in addition to being  entitled to exercise all
rights  granted by law,  including  recovery  of  damages,  will be  entitled to
specific  performance of its rights under this Warrant.  The Company agrees that
monetary  damages  would not be adequate  compensation  for any loss incurred by
reason of a breach by it of the  provisions of this Warrant

                                       8

<PAGE>

and hereby  agrees to waive the defense in any action for  specific  performance
that a remedy at law would be adequate.

          (g) Successors and Assigns.  Subject to applicable securities laws and
the  provisions  of this  Warrant,  this Warrant and the rights and  obligations
evidenced  hereby  shall  inure  to  the  benefit  of and be  binding  upon  the
successors of the Company and the  successors  and permitted  assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by any such Holder or
holder of Warrant Shares.

          (h)  Amendment.  This  Warrant  may  be  modified  or  amended  or the
provisions hereof waived with the written consent of the Company and the Holder.

          (i) Severability.  Wherever  possible,  each provision of this Warrant
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

          (j)  Headings.   The  headings  used  in  this  Warrant  are  for  the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                                       9

<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.

Dated: February 27, 2002
                                eMAGIN CORPORATION

                                By:____________________________________
                                   Name:  Gary W. Jones
                                   Title:  Chief Executive Officer

<PAGE>

                               NOTICE OF EXERCISE

To:      eMagin Corporation

          (1) The undersigned  hereby elects to purchase ________ Warrant Shares
(the  "Common  Stock"),  of  eMagin  Corporation  pursuant  to the  terms of the
attached  Warrant,  and tenders  herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

          (2) Please  issue a  certificate  or  certificates  representing  said
Warrant  Shares  in the  name of the  undersigned  or in such  other  name as is
specified below:

                           --------------------------

The Warrant Shares shall be delivered to the following:

                           --------------------------

                           --------------------------

                           --------------------------

                                   [PURCHASER]

                                   By:
                                      ------------------------------
                                      Name:
                                      Title:

                                   Dated:
                                         ------------------------------

<PAGE>

                   NOTICE OF EXERCISE OF COMMON STOCK WARRANT
                    PURSUANT TO CASHLESS EXERCISE PROVISIONS

To: eMagin Corporation

Aggregate Price of Warrant Before Exercise:  $
                                              ------------------
Aggregate Price Being Exercised:  $
                                   ----------
Exercise Price:  $      per share
                  ------
Number of Shares of Common Stock to be Issued Under this Notice:
                                                                 ---------

Remaining Aggregate Price (if any) After Issuance:  $
                                                     -----------

Gentlemen:
The undersigned,  registered  Holder of the Warrant delivered  herewith,  hereby
irrevocably exercises such Warrant for, and purchases thereunder,  shares of the
Common Stock of eMagin Corporation,  a Delaware corporation,  as provided below.
Capitalized terms used herein,  unless otherwise defined herein,  shall have the
meanings  given in the  Warrant.  Holder  hereby  exercises  this Warrant for an
aggregate  of  __________  shares,  leaving  __________  shares  remaining to be
exercised.  Such exercise shall be pursuant to the cashless exercise  provisions
of Section 3 of the Warrant; therefore, Holder makes no payment with this Notice
of Exercise and  authorizes the Company to reduce the number of shares of Common
Stock  to be  delivered  pursuant  to  the  immediately  preceding  sentence  in
accordance  with  Section  3.  Holder  requests  that the  certificates  for the
purchased    shares   of    Common    Stock   be   issued   in   the   name   of
_________________________ and delivered to ____________________________________.
To the extent the foregoing  exercise is for less than the full Aggregate  Price
of  the  Warrant,  a  replacement  Warrant  representing  the  remainder  of the
Aggregate  Price  (and  otherwise  of like  form,  tenor  and  effect)  shall be
delivered to Holder along with the share certificate evidencing the Common Stock
issued in response to this Notice of Exercise.

                                   [Purchaser]

                                   By:
                                      --------------------------------
                                      Name:
                                      Title:

                                   Date:

                                      NOTE
          The  execution  to the  foregoing  Notice  of  Exercise  must  exactly
correspond to the name of the Holder on the Warrant

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

          FOR VALUE  RECEIVED,  the foregoing  Warrant and all rights  evidenced
thereby are hereby assigned to

_______________________________________________ whose address is

________________________________________________________.

________________________________________________________

                                          Dated:  ______________, _______

         Holder's Signature: _____________________________

         Holder's Address:   _____________________________

                             _____________________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of  corporations  and  those  acting  in an  fiduciary  or other  representative
capacity  should  file  proper  evidence of  authority  to assign the  foregoing
Warrant.

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