Document:

EMAGIN CORPORATION

                          SECURITIES PURCHASE AGREEMENT

          THIS SECURITIES  PURCHASE AGREEMENT (this "Agreement") is entered into
as of February 27, 2002 (the "Closing Date"), by and among eMagin Corporation, a
Delaware  corporation  (the  "Company"),  and each of the  investors  listed  on
Schedule  A  attached   hereto  (each  an   "Investor"  or   collectively,   the
"Investors").

          The parties hereby agree as follows:

          1.  Purchase  and  Sale  of  Common  Shares;   Issuance  of  Warrants.

          (a) Subject to the terms and conditions  set forth in this  Agreement,
the Company has duly  authorized  for sale,  issue and delivery to the Investors
and the Investors  shall,  severally and not jointly,  purchase from the Company
(i) shares of Common Stock, par value $.001 per share (the "Common  Stock"),  in
the amounts specified opposite each Investor's name under the heading "Amount of
Purchased  Shares" on Schedule A attached hereto (the  "Purchased  Shares") at a
purchase  price equal to $0.6913 per Purchased  Share,  which purchase price per
Purchased Share equals 110% of the daily volume  weighted  average closing price
per share of the Common  Stock on the American  Stock  Exchange for the five (5)
trading  days  immediately  preceding  the Closing Date as reported by Bloomberg
Professional  reporting  services,  and (ii) three year warrants (the "Warrants"
and  together  with the  Purchased  Shares and any shares of Common Stock issued
pursuant to the Warrants (such shares, the "Warrant Shares"),  the "Securities")
to purchase, as to each Investor, up to a number of shares of Common Stock equal
to 40% of the  number of  Purchased  Shares  purchased  by such  Investor,  such
Warrants to have an exercise  price per share equal to $0.7542,  which  exercise
price per share equals 120% of the daily volume  weighted  average closing price
per share of the Common  Stock on the American  Stock  Exchange for the five (5)
trading  days  immediately  preceding  the Closing Date as reported by Bloomberg
Professional  reporting  services,  each such Warrant to be substantially in the
form of Exhibit A attached hereto.

          (b) The purchase and sale of the Purchased  Shares and Warrants  shall
take place concurrently with the execution of this Agreement (the "Closing"). At
the  Closing,  the  Company  shall  deliver  to each  Investor  (i) an  executed
counterpart to this Agreement, (ii) the executed counterpart to the registration
rights agreement (the "Registration  Rights Agreement") in the form of Exhibit B
attached hereto,  (iii) the executed counterpart to the instructions to transfer
agent  (the  "Transfer  Agent  Instructions")  in the form of Exhibit C attached
hereto,  (iv) share  certificates for the amount of their  respective  Purchased
Shares, and (v) their respective  Warrant;  in all cases against delivery to the
Company by each Investor of (x) an executed  counterpart to this Agreement,  (y)
an executed  counterpart  to the  Registration  Rights  Agreement,  and (z) such
Investor's  respective  purchase price of the Securities in the amount specified
opposite such Investor's name under the heading  "Purchase  Price" on Schedule A
attached  hereto,  such payment to be made by bank wire transfer of  immediately
available funds to an account designated by the Company.

<PAGE>

          (c) The parties  hereto  acknowledge  and agree that the sums  payable
pursuant  to the  Registration  Rights  Agreement  shall  constitute  liquidated
damages and not penalties.  The parties further  acknowledge that (a) the amount
of loss or  damages  likely to be  incurred  is  incapable  or is  difficult  to
precisely estimate, (b) the amounts specified in such sections bear a reasonable
proportion and are not plainly or grossly  disproportionate to the probable loss
likely to be incurred by the  Investors  in  connection  with the failure by the
Company to timely  cause the  registration  of the  Registrable  Securities  (as
defined  in  the  Registration   Rights  Agreement)  and  (c)  the  parties  are
sophisticated  business parties and have been  represented by sophisticated  and
able legal and financial counsel and negotiated this Agreement at arm's length.

          2.  Representations  and Warranties of the  Investors.  As of the date
hereof,  each Investor  severally as to itself and not jointly hereby represents
and warrants to the Company as follows:

          (a) Such  Investor is  acquiring  its  respective  Securities  for the
Investor's own account,  not as nominee or agent,  for investment and not with a
view to, or for resale in connection  with, any  distribution or public offering
thereof  within  the  meaning of the  Securities  Act of 1933,  as amended  (the
"Securities Act"), provided, however, that by making the representations herein,
the  Investors  do not agree to hold  such  Securities  for a  minimum  or other
specific term and reserve the right to dispose of the  Securities at any time in
accordance   with  federal  and  state   securities   laws  applicable  to  such
disposition.  By executing this Agreement, such Investor further represents that
the Investor does not have any contract,  undertaking,  agreement or arrangement
with any person to sell,  transfer or grant  participation to any such person or
to any third person, with respect to the Securities.

          (b) Such Investor  understands  that (i) the Securities  have not been
registered  under either the Securities Act or the securities  laws of any state
of the  United  States by  reason of  specific  exemptions  therefrom,  (ii) the
Securities  must be held by the  Investor  indefinitely,  and,  therefore,  such
Investor must bear the economic risk of such investment  indefinitely,  unless a
subsequent  disposition  thereof is registered  under the Securities Act and the
securities  laws of any applicable  state or is exempt from such  registrations;
(iii) each  certificate  that  represents the  Securities  will be endorsed with
legends as required by  applicable  securities  laws;  and (iv) the Company will
instruct  any  transfer  agent  not  to  register  the  transfer  of  any of the
Securities  unless  the  conditions   specified  in  the  foregoing  legend  are
satisfied.  For greater certainty,  the restrictive legend referred to in clause
(iii) shall be substantially in the following form:

     THIS SECURITY (A) HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
     1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
     STATE, AND IS BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
     REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS, AND (B)
     MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR  HYPOTHECATED  IN THE
     ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES
     ACT OR AN OPINION OF COUNSEL IN A FORM  SATISFACTORY  TO THE  BORROWER
     THAT SUCH  REGISTRATION  IS NOT  REQUIRED.

                                      -2-

<PAGE>

          (c) Such Investor has been  furnished with such materials and has been
given  access to such  information  relating to the Company as the  Investor has
requested.  Such  Investor has been  afforded the  opportunity  to ask questions
regarding the Company and the Securities as the Investor has found  necessary to
make an informed investment decision.  Such Investor has been solely responsible
for its own due diligence investigation of the Company and its business, for its
own  analysis of the merits and risks of its  investment  made  pursuant to this
Agreement and for its own analysis of the terms of its investment.

          (d) Such Investor is an  "accredited  investor"  within the meaning of
Rule 501 under the Securities  Act. Such Investor is in a financial  position to
hold the  Securities  and is able to bear the  economic  risk  and  withstand  a
complete  loss of the  Investor's  investment in the  Securities.  Such Investor
recognizes that the Securities involve a high degree of risk. Such Investor is a
sophisticated   investor,  is  able  to  fend  for  itself  in  the  transaction
contemplated  by this  Agreement,  and has  such  knowledge  and  experience  in
financial and business  matters that the Investor is capable of  evaluating  the
merits and risks of the prospective investment in the Securities.

          (e) (i) Such Investor has the  requisite  power and authority to enter
into and perform its obligations  under this  Agreement,  (ii) the execution and
delivery of this  Agreement by such Investor and the  consummation  by it of the
transactions  contemplated  hereby have been duly  authorized  by all  necessary
action and no further  consent or  authorization  of the  Investor  (or,  to the
extent  applicable,  its Board of Directors or  stockholders)  is required,  and
(iii) this  Agreement  has been duly executed and delivered by such Investor and
constitutes a valid and binding obligation of the Investor,  enforceable against
the  Investor  in  accordance  with its terms,  except,  in each  case,  as such
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation,  conservatorship,   receivership  or
similar laws relating to, or affecting  generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.

          (f) During the period such Investor holds any Securities, neither such
Investor nor any person acting on its behalf has the  intention of entering,  or
will enter into, any put option,  short position or other similar  instrument or
position  with respect to the  Purchased  Shares or any Common Stock that may be
acquired upon exercise of the Warrants;  provided, that, nothing in this Section
2(f) shall restrict such Investor from exercising Warrants held by such Investor
and  simultaneously  selling the shares of Common Stock  receivable  pursuant to
such exercise.

          (g) Such Investor understands, acknowledges and agrees that:

          (i) the Securities are highly speculative  investments which involve a
     substantial  degree  of risk of loss  by such  Investor  of the  Investor's
     entire  investment  in the Company and that the  Investor  understands  and
     takes full  cognizance  of the risk factors  related to the purchase of the
     Securities;

          (ii) The  Company has been  operating  at a loss and may do so for the
     foreseeable future; and

                                      -3-

<PAGE>

          (iii) Any projections or predictions that may have been made available
     to such Investor are based on estimates,  assumptions  and forecasts  which
     may prove to be  incorrect;  and no assurance is given that actual  results
     will correspond with the results contemplated by the various projections.

          3. Representations and Warranties of the Company.  Except as set forth
in the SEC  Documents  (as  defined in  Section  3(f)  below)  and the  separate
disclosure  letter  (the  "Disclosure  Letter")  prepared  by  the  Company  and
delivered  concurrently  herewith,  as of the date hereof the Company represents
and warrants to each of the Investors as follows:

          (a)   Organization,   Good  Standing  and  Power.  The  Company  is  a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of Delaware and has all requisite  corporate authority to own,
lease and operate its  properties and assets and to carry on its business as now
being  conducted.  The Company is duly  qualified  to do business and is in good
standing as a foreign  corporation in every  jurisdiction in which the nature of
the  business  conducted  or  property  owned  by it  makes  such  qualification
necessary,  other than those in which the failure so to qualify would not have a
Material Adverse Effect. As used in this Agreement,  a "Material Adverse Effect"
shall  mean any  adverse  effect on the  business,  operations,  properties,  or
financial  condition  of the Company that is material and adverse to the Company
and its subsidiaries,  taken as a whole, and/or any condition,  circumstance, or
situation that would prohibit or otherwise materially interfere with the ability
of the Company to perform any of its material obligations under this Agreement.

          (b)  Authorization,  Enforcement.  (i) The Company  has the  requisite
corporate  power  and  corporate   authority  to  enter  into  and  perform  its
obligations  under  this  Agreement  and  the  Securities,   pursuant  to  their
respective  terms,  (ii) the  execution  and delivery of this  Agreement and the
Securities  by the  Company  and  the  consummation  by it of  the  transactions
contemplated  hereby and  thereby  have been duly  authorized  by all  necessary
corporate  action and no further consent or  authorization of the Company or its
Board  of  Directors  or  stockholders  is  required,  and  (iii)  each  of this
Agreement, the Purchased Shares, and the Warrants when executed and delivered by
the Company  will  constitute  a valid and binding  obligation  of the  Company,
enforceable  against the Company in accordance with its terms,  except,  in each
case,  as  such   enforceability  may  be  limited  by  applicable   bankruptcy,
insolvency,    reorganization,    moratorium,   liquidation,    conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditors'  rights and remedies or by other equitable  principles of general
application.

          (c)  Capitalization.  The  authorized  capital  stock  of the  Company
consists of 100,000,000  shares of Common Stock, of which 25,085,145  shares are
issued and outstanding and 10,000,000 shares of preferred stock, par value $.001
per share, of which no shares are issued and outstanding. All of the outstanding
shares of the  Company's  Common  Stock have been duly  authorized  and  validly
issued and are fully paid and  non-assessable and were issued in accordance with
the  registration  or  qualification  provisions of the  Securities  Act and any
relevant state securities laws or pursuant to valid exemptions therefrom. Except
as set  forth in this  Agreement,  no shares of  Common  Stock are  entitled  to
preemptive rights or registration  rights and there are no outstanding  options,
warrant,  scrip,  rights to subscribe to, calls or  commitments

<PAGE>

of any character  whatsoever  relating to, or  securities or rights  convertible
into,  any shares of capital  stock of the Company.  Furthermore,  except as set
forth in this Agreement, there are no contracts, commitments, understandings, or
arrangements  by which the  Company is or may become  bound to issue  additional
shares of the  capital  stock of the Company or  options,  securities  or rights
convertible  into shares of capital  stock of the Company.  The Company is not a
party to, and it has no knowledge  of, any agreement  restricting  the voting or
transfer of any shares of the capital  stock of the Company.  The offer and sale
of all capital stock,  convertible securities,  rights,  warrants, or options of
the Company issued prior to the Closing complied  materially with all applicable
federal and state  securities laws, and no stockholder has a right of rescission
or damages with respect thereto which would have a Material Adverse Effect.  The
Company has filed as exhibits to the SEC  Documents  true and correct  copies of
the Company's  articles or certificate of incorporation as in effect on the date
hereof (the "Charter"), and the Company's bylaws as in effect on the date hereof
(the  "Bylaws").  The  Company  has  not  received  any  notice  from  the  AMEX
questioning or threatening  the continued  inclusion of the Common Stock on such
market.

          (d) Issuance of Securities. The Purchased Shares, the Warrants and the
Warrant Shares to be issued under this  Agreement  have been duly  authorized by
all necessary  corporate action and, when paid for and issued in accordance with
the terms thereof,  the Purchased Shares,  the Warrants,  and the Warrant Shares
shall be validly issued and outstanding, fully paid and non-assessable.

          (e) No Conflicts.  The  execution,  delivery and  performance  of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated  herein  do not and  will  not (i)  violate  any  provision  of the
Company's Charter or Bylaws,  (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation of, any agreement,  mortgage, deed of trust, indenture, note, bond,
license,  lease  agreement,  instrument  or obligation to which the Company is a
party,  (iii) create or impose a lien,  charge or encumbrance on any property of
the Company  under any  agreement  or any  commitment  to which the Company is a
party or by which  the  Company  is  bound  or by  which  any of its  respective
properties  or assets are bound,  or (iv) result in a violation  of any federal,
state, or local statute, rule, regulation,  order, judgment or decree (including
any federal or state securities laws and regulations)  applicable to the Company
or any of its  subsidiaries  or by which any property or asset of the Company or
any of its subsidiaries are bound or affected.  To the knowledge of the Company,
the  business of the  Company and its  subsidiaries  is not being  conducted  in
violation of any laws,  ordinances or  regulations of any  governmental  entity,
except for possible  violations  which singularly or in the aggregate do not and
will not have a Material  Adverse Effect.  The Company is not required under any
federal,  state  or  local  law,  rule or  regulation  to  obtain  any  consent,
authorization or order of, or make any filing or registration with, any court or
governmental  agency in order for it to  execute,  deliver or perform any of its
obligations under this Agreement, or issue and sell the Securities in accordance
with the terms hereof  (other than any filings  which may be required to be made
by the Company with the SEC or state securities administrators subsequent to the
Closing and any  registration  statement  which may be filed  pursuant  hereto);
provided that,  for purpose of the  representation  made in this

                                      -5-

<PAGE>

sentence,  the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of each Investor herein.

          (f)  SEC  Documents,   Financial  Statements.   The  Common  Stock  is
registered  pursuant to Section 12 of the  Securities  Exchange Act of 1934,  as
amended  (the  "Exchange  Act"),  and the Company has timely  filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the  U.S.  Securities  and  Exchange  Commission  (the  "SEC")  pursuant  to the
reporting requirements of the Exchange Act, including material filed pursuant to
Section  13(a) or  15(d) of the  Exchange  Act (all of the  foregoing  including
filings  incorporated by reference  therein being referred to herein as the "SEC
Documents").  The  Company has  directed  the  Investor to accurate  and readily
accessible sources of true and correct copies of the SEC Documents.  As of their
respective  filing dates,  the SEC Documents  complied in all material  respects
with the  requirements of the Exchange Act or the Securities Act, as applicable,
and the rules and  regulations of the SEC promulgated  thereunder  applicable to
such  documents,  and,  as of their  respective  filing  dates,  none of the SEC
Documents  contained any untrue statement of a material fact or omitted to state
a material fact required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading.  The financial  statements  of the Company  included in the SEC
Documents comply as to form in all material respects with applicable  accounting
requirements under the United States Generally Accepted  Accounting  Principles,
as those  conventions,  rules and  procedures  are  determined  by the Financial
Accounting Standards Board ("GAAP"),  and the published rules and regulations of
the SEC or other applicable  rules and regulations  with respect  thereto.  Such
financial  statements  have been prepared in  accordance  with GAAP applied on a
consistent  basis  during the periods  involved  (except (i) as may be otherwise
indicated in such financial  statements or the footnotes  thereto or (ii) in the
case of  unaudited  interim  statements,  to the extent they may be condensed or
summary  statements),  and fairly present in all material respects the financial
position  of the Company and its  subsidiaries  as of the dates  thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

          (g)  Disclosure.  The Company has provided  each Investor with all the
information  reasonably available to it without undue expense that such Investor
has  requested  for  deciding  whether  to  purchase  the  Purchased  Shares and
Warrants.  None of this  Agreement,  other  agreements,  written  statements  or
certificates  made or delivered in  connection  herewith and the SEC  Documents,
when taken in the aggregate,  as of the date of the Closing  contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.

          (h)  Exemption  from  Registration;  Valid  Issuances.  Subject to the
accuracy of the Investors'  representations  contained in Section 2, the sale of
the  Purchased  Shares,  the  Warrants  and the Warrant  Shares will not require
registration  under the Securities Act and/or any  applicable  state  securities
law.  Neither the sales of the  Purchased  Shares,  the  Warrants or the Warrant
Shares pursuant to, nor the Company's performance of its obligations under, this
Agreement, the Registration Rights Agreement, or the Warrants will (i) result in
the creation or imposition by the Company of any liens, charges, claims or other
encumbrances upon the Purchased  Shares,  the Warrants or the Warrant Shares or,
except as contemplated herein, any of

                                      -6-

<PAGE>

the assets of the Company,  or (ii) entitle the holders of any shares of capital
stock of the Company to  preemptive  or other rights to subscribe for or acquire
any  securities  of the  Company.  The  Purchased  Shares,  the Warrants and the
Warrant  Shares  shall not subject the  Investors  to personal  liability to the
Company or its creditors by reason of the possession thereof.

          (i)  Litigation  and  Other  Proceedings.  There  are no  lawsuits  or
proceedings pending or, to the knowledge of the Company, threatened, against the
Company or any  subsidiary,  nor has the  Company  received  any written or oral
notice of any such  action,  suit,  proceeding  or  investigation,  which  could
reasonably be expected to have a Material  Adverse Effect.  No judgment,  order,
writ,  injunction  or decree or award has been issued by or, to the knowledge of
the Company,  requested of any court,  arbitrator or  governmental  agency which
could result in a Material Adverse Effect.

          (j) No  Misleading  or Untrue  Communication.  The Company and, to the
knowledge  of the Company,  any person  representing  the Company,  or any other
person  selling or  offering  to sell the  Purchased  Shares or the  Warrants in
connection with the transactions  contemplated by this Agreement, have not made,
at any time, any oral  communication in connection with the offer or sale of the
same which contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

          (k) Material Non-Public Information.  The Company has not disclosed to
the Investors any material non-public  information that (i) if disclosed,  would
reasonably  be  expected  to have a  material  effect on the price of the Common
Stock or (ii) according to applicable law, rule or regulation,  should have been
disclosed  publicly  by the  Company  prior to the date hereof but which has not
been so disclosed.

          (l)  No  General   Solicitation  or  Advertising  in  Regard  to  this
Transaction. Neither the Company nor any of its affiliates nor, to the knowledge
of the Company,  any person  acting on its or their behalf (i) has  conducted or
will  conduct any general  solicitation  (as that term is used in Rule 502(c) of
Regulation D) or general  advertising  with respect to the sale of the Purchased
Shares or the  Warrants,  or (ii) made any  offers or sales of any  security  or
solicited  any offers to buy any  security  under any  circumstances  that would
require registration of the Purchased Shares, the Warrants or the Warrant Shares
under the Securities Act.

          (m) Common Stock. The Company has registered its Common Stock pursuant
to Section 12(b) or (g) of the Exchange Act and is in full  compliance  with all
reporting  requirements  of the Exchange  Act, and the Company is in  compliance
with all requirements for the continued listing or quotation of its Common Stock
and such  Common  Stock is  currently  listed or quoted  on the  American  Stock
Exchange (the "Amex"). The Company has not received any notice regarding, and to
its knowledge there is no threat,  of the termination or  discontinuance  of the
eligibility of the Common Stock for such listing.

          4.  Covenants  of each  Investor.  Each  Investor,  severally  and not
jointly,  covenants with the Company that it will,  whenever required by federal
securities laws, deliver the prospectus  included in the Registration  Statement
to any  purchaser of Purchased  Shares from the  Investor.

                                      -7-

<PAGE>

          5. Covenants of the Company.

          (a)  Reservation of Common Stock.  As of the date hereof,  the Company
has reserved and the Company shall continue to reserve and keep available at all
times,  free of  preemptive  rights,  shares of Common  Stock for the purpose of
enabling the Company to issue the Warrant Shares pursuant to this Agreement.

          (b) Listing of Common Stock.  Until the Investors have disposed of all
of  their  Registrable  Securities,   the  Company  hereby  agrees  to  use  its
commercially  reasonable  efforts to maintain the listing of the Common Stock on
the Amex or on such other  principal  market as the Company  becomes  listed and
trades after the date hereof  including the Nasdaq National  Market,  the Nasdaq
Small-Cap  Market,  the New York Stock  Exchange or the OTC Bulletin  Board (the
"Principal  Market"),  to comply in all  material  respects  with the  Company's
reporting,  filing  and  other  obligations  under  the  bylaws  or rules of the
Principal Market and as soon as reasonably  practicable following the Closing to
use its  commercially  reasonable  efforts to list the Purchased  Shares and the
Warrant Shares on the Principal  Market.  The Company further agrees that if the
Company  applies to have the Common Stock traded on any  Principal  Market other
than the Amex, it will include in such  application the Purchased Shares and the
Warrant Shares,  and will take such other  reasonable  action as is necessary or
desirable in the opinion of the Investors to cause the Purchased  Shares and the
Warrant  Shares to be listed  on such  other  Principal  Market as  promptly  as
possible.

          (c) Exchange Act  Registration.  The Company will use its commercially
reasonable  efforts to cause its Common Stock to continue to be registered under
Section  12(b) or (g) of the Exchange  Act, to comply in all  respects  with its
reporting and filing  obligations  under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the Exchange Act or the
rules  thereunder) to terminate or suspend such  registration or to terminate or
suspend its reporting and filing  obligations  under said Exchange Act until the
Investors have disposed of all of their Registrable Securities.

          (d) Legends.  The certificates  evidencing the Registrable  Securities
shall be free of restrictive  legends,  except as set forth in Section 2. If the
transfer  agent of the Common  Stock  (the  "Transfer  Agent") or an  Investor's
broker-dealer requires a legal opinion from the Company's legal counsel pursuant
to the Transfer Agent Instructions to issue new certificates free of a legend to
an Investor and Company's  counsel fails to deliver such opinion  (provided that
any inability to deliver such opinion due to a legal impediment  communicated by
the  Company's  counsel  to the  relevant  Investor  shall not be deemed to be a
failure to deliver such opinion hereunder) to the Transfer Agent within five (5)
trading  days of receipt by such  Company's  counsel of such  request in writing
from the Transfer Agent or the Investor's  broker-dealer,  then the Investor may
independently   retain  legal   counsel  to  provide  such  opinion  in  a  form
satisfactory  to the Company and the Company shall pay the reasonable  costs and
expenses required for such legal opinion.

          6. Miscellaneous.

                                      -8-

<PAGE>

          (a) Survival.  The  representations,  warranties and covenants made by
each of the Company and each Investor in this Agreement, the annexes,  schedules
and exhibits hereto and in each  instrument,  agreement and certificate  entered
into and delivered by them pursuant to this Agreement, shall survive the Closing
and the consummation of the transactions contemplated hereby.

          (b) Indemnity.  (i) Each of the Investors,  severally and not jointly,
shall  indemnify,  defend  and hold  harmless  the  Company,  and any  officers,
employees,  shareholders,  partners, agents, directors or controlling persons of
the Company  (collectively the "Company  Indemnified Parties" and individually a
"Company Indemnified Party") who was or is a party or is threatened to be made a
party to any  threatened,  pending  or  completed  action,  suit or  proceeding,
whether  civil,  criminal,  administrative  or  investigative,  against  losses,
liabilities and expenses of each Company Indemnified Party (including attorneys'
fees,  judgments,  fines and amounts  paid in  settlement,  payable as incurred)
incurred by such person or entity in connection  with such action,  arbitration,
suit or proceeding,  by reason of or arising from (x) any  misrepresentation  or
misstatement  of facts or  omission  to  represent  or state  facts made by such
Investor to the Company,  including,  without limitation, the representation and
warranties  provided by such Investor to the Company in this  Agreement,  or (y)
litigation  or  other   proceeding   brought  in  respect  of  the  transactions
contemplated  hereby by such  Investor  against one or more Company  Indemnified
Parties wherein the Company Indemnified Parties are the prevailing party.

          (ii) The  Company  shall  indemnify,  defend  and hold  harmless  each
Investor, and any officers, employees, shareholders, partners, agents, directors
or controlling persons of such Investor (collectively, the "Investor Indemnified
Parties" and individually an "Investor Indemnified Party") who was or is a party
or is  threatened  to be made a party to any  threatened,  pending or  completed
action,  suit  or  proceeding,   whether  civil,  criminal,   administrative  or
investigative,   against  losses,   liabilities  and  expenses  of  an  Investor
Indemnified Party (including attorneys' fees, judgments,  fines and amounts paid
in  settlement,  payable  as  incurred)  incurred  by such  person  or entity in
connection with such action,  arbitration,  suit or proceeding,  by reason of or
arising from (i) any  misrepresentation  or misstatement of facts or omission to
represent  or state  facts  made by the  Company  to such  Investor,  including,
without  limitation,  the representations and warranties provided by the Company
to such  Investor in this  Agreement,  or (ii)  litigation  or other  proceeding
brought  in  respect  of the  transactions  contemplated  hereby by the  Company
against  one  or  more  Investor   Indemnified   Parties  wherein  the  Investor
Indemnified Parties are the prevailing party.

          (c) Fees and  Expenses.  Each party  shall pay all of its own fees and
expenses related to the transactions contemplated by this Agreement.

          (d)  Entire  Agreement;   Amendment.  This  Agreement  and  the  other
schedules  and  exhibits  attached  hereto,  all of  which  form a part  of this
Agreement,  contain the entire  understanding of the parties with respect to the
matters covered hereby and, except as specifically set forth herein, neither the
Company nor any Investor make any other representations,  warranty,  covenant or
undertaking with respect to such matters.  No provision of this Agreement may be

                                      -9-

<PAGE>

waived or amended other than by a written instrument signed by the party against
whom enforcement of any such amendment or waiver is sought.

          (e)   Notices.   Any  notice,   demand,   request,   waiver  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (i) upon hand delivery, overnight mail or courier service
at the address or number  designated on the signature pages hereof (if delivered
on a business  day  during  normal  business  hours  where such  notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal  business  hours where such notice is to be
received) or (ii) on the second  business day  following  the date of mailing by
express  courier  service,  fully  prepaid,  addressed to such address,  or upon
actual receipt of such mailing,  whichever shall first occur.  The addresses for
such  communications  shall be as set forth on the signature  pages hereof.  Any
party  hereto may from time to time  change its  address  for  notices by giving
written notice of such changed address to the other parties hereto in accordance
herewith.

          (f) Waivers. No waiver by any party of any default with respect to any
provision,  condition or requirement  of this Agreement  shall be deemed to be a
continuing waiver in the future or a waiver of any other  provisions,  condition
or requirement  hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.

          (g) Headings.  The article,  section and  subsection  headings in this
Agreement  are for  convenience  only and  shall not  constitute  a part of this
Agreement  for any other  purpose and shall not be deemed to limit or affect any
of the provisions hereof.

          (h) No Third Party Beneficiaries;  Assignment.  Except for the Company
Indemnified Parties and Investor Indemnified Parties, this Agreement is intended
for the  benefit of the  parties  hereto  and their  respective  successors  and
permitted assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.  Each Investor and the Company may not assign any
of its respective rights or obligations under this Agreement without the written
consent of each other party hereto.

          (i) Governing Law. This  Agreement  shall be governed by and construed
in accordance  with the internal laws of the State of New York,  without  giving
effect to the choice of law provisions. The Company and each Investor waives any
right to a jury trial with respect to any dispute arising out of this Agreement.

          (j)  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties  hereto,  it being  understood that all
parties need not sign the same counterpart.  Execution of counterparts may be by
facsimile.

          (k)  Publicity.  The Company and the  Investors may agree upon a press
release to be issued by the Company upon execution of this Agreement  describing
this Agreement and the transactions contemplated hereby.  Thereafter,  any party
may make a public  statement or

                                      -10-

announcement  with respect to this  Agreement or the  transactions  contemplated
hereby or the  existence of this  Agreement;  provided,  however,  that prior to
issuing  any  such  press   release,   making  any  such  public   statement  or
announcement,  such party must  obtain  the prior  consent of each other  party,
which consent shall not be unreasonably withheld or delayed.

          (l) Severability.  The provisions of this Agreement are severable and,
in the  event  that  any  court  shall  determine  that  any  one or more of the
provisions or part of the provisions  contained in this Agreement shall, for any
reason,  be held to be invalid,  illegal or unenforceable  in any respect,  such
invalidity,  illegality or unenforceability shall not affect any other provision
or part of a provision of this  Agreement and this  Agreement  shall be reformed
and construed as if such invalid or illegal or unenforceable  provision, or part
of such  provision,  had never been contained  herein,  so that such  provisions
would be valid, legal and enforceable to the maximum extent possible, so long as
such  construction  does not materially  adversely effect the economic rights of
either party hereto.

          (m)  Further  Assurances.  From and after the date of this  Agreement,
upon the request of the Investors, on the one hand, or the Company, on the other
hand,  each of the  Company and the  Investors  shall  execute and deliver  such
instruments,  documents  and other  writings as may be  reasonably  necessary or
desirable  to  confirm  and carry out and to  effectuate  fully the  intent  and
purposes of this Agreement.

                                   * * * * * *

                            [Signature Pages Follow]

                                      -11-

<PAGE>

          This  Securities  Purchase  Agreement has been duly executed as of the
date and year first written above.

                                   EMAGIN CORPORATION

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

                                     -12-

<PAGE>

                                   INVESTORS:

                                   Vertical Ventures Investments, LLC

                                   ----------------------------------
                                   Name:
                                   Address:

                                   Newington Invest Limited

                                   ----------------------------------
                                   Name:
                                   Address:

                                  ----------------------------------
                                  Name:  Eric Friedland
                                  Address:

                                  Rainbow Gate Corporation

                                  ----------------------------------
                                  Name:
                                  Address:

                                      -13-

<PAGE>

                                   ----------------------------------
                                   Name:  David K. Zierk
                                   Address:

                                   ----------------------------------
                                   Name:  Andrea Della Valle
                                   Address:

                                  Triton West Group, Inc.

                                  ----------------------------------
                                  Name:
                                  Address:

                                  ----------------------------------
                                  Name:  Ben Johnson
                                  Address:

                                      -14-
<PAGE>

<TABLE>
<CAPTION>

                             Schedule A - INVESTORS

        Name and Address of Investor              Purchase Price      Amount of Purchased Shares     Warrant Amount
        ----------------------------              --------------      --------------------------     --------------
<S>                                                <C>                       <C>                      <C>

Name: Vertical Ventures Investments, LLC           $ 499,999.56            723,275                   289,310

Notice Address:

Name:  Newington Invest Limited                    $ 500,000.00            723,275                   289,310

Notice Address:

Name:  Eric Friedland                              $ 125,000.00            180,819                    72,328

Notice Address:

Name:  Rainbow Gate Corporation                   $  500,000.00            723,275                   289,310

Notice Address:

Name:  David K. Zierk                             $  100,000.00            144,655                    57,862

Notice Address:

Name:  Andrea Della Valle                          $  69,130.00            100,000                    40,000

Notice Address:

<PAGE>

Name:  Triton West Group, Inc.                    $  499,000.00            721,829                   288,732

Notice Address:

Name:  Ben Johnson                                $  207,390.00            300,000                   120,000

Notice Address:
                                                  -------------        -------------             -------------

TOTAL                                             $2,500,519.56          3,617,128                 1,446,852

</TABLE>

<PAGE>

                           Exhibit A - Form of Warrant

                                 [See attached]

<PAGE>

                Exhibit B - Form of Registration Rights Agreement

                                 [See attached]

<PAGE>

                Exhibit C - Form of Instruction to Transfer Agent

                                 [See attached]

<PAGE>REGISTRATION RIGHTS AGREEMENT

          This  REGISTRATION  RIGHTS  AGREEMENT,  dated as of February  27, 2002
(this  "Agreement"),  by and among eMagin Corporation,  a Delaware  corporation,
with principal executive offices located at 2070 Route 52, Hopewell Junction, NY
12533 (the "Company"), and each of the undersigned investors, from time to time,
a signatory  hereto  pursuant to the terms of this  Agreement  (each an "Initial
Investor" or collectively, the "Initial Investors").

          WHEREAS,  upon  the  terms  and  subject  to  the  conditions  of  the
Securities  Purchase Agreement dated as of February 27, 2002, by and between the
Initial  Investors and the Company (the "Securities  Purchase  Agreement"),  the
Company has agreed to issue and sell to each Initial Investor (i) certain shares
(the  "Shares") of the Company's  common  stock,  par value $.001 per share (the
"Common  Stock"),  and (ii) three year  Warrants  (the  "Warrants")  to purchase
shares of Common Stock, in the amounts set forth on Schedule A of the Securities
Purchase Agreement; and

          WHEREAS,  to induce  each of the  Initial  Investors  to  execute  and
deliver the  Securities  Purchase  Agreement,  the Company has agreed to provide
with respect to the Shares and to the Common  Stock  issuable on the exercise of
the Warrants, certain registration rights under the Securities Act;

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

          1. Definitions

          (a) As used in this  Agreement,  the  following  terms  shall have the
meanings:

          (i)  "Affiliate,"  of any specified  Person means any other Person who
     directly,  or indirectly through one or more intermediaries,  is in control
     of, is  controlled  by, or is under common  control  with,  such  specified
     Person.  For  purposes of this  definition,  control of a Person  means the
     power,  directly or  indirectly,  to direct or cause the  direction  of the
     management  and policies of such Person  whether by  contract,  securities,
     ownership or otherwise;  and the terms  "controlling" and "controlled" have
     the respective meanings correlative to the foregoing.

          (ii)  "Closing  Date" means the date and time of the issuance and sale
     of the Shares and the Warrants.

          (iii) "Commission" means the Securities and Exchange Commission.

          (iv)  "Current  Market Price" on any date of  determination  means the
     closing  price of a share of the Common Stock in the regular day session on
     such day as reported on the American Stock Exchange ("Amex");  provided, if
     such security is not listed or admitted to trading on the Amex, as reported
     on the principal  national  security  exchange or quotation system on which
     such security is quoted or listed or admitted to trading, or, if not quoted
     or listed or admitted  to

<PAGE>

     trading on any  national  securities  exchange  or  quotation  system,  the
     closing  price  of such  security  on the  over-the-counter  market  in the
     regular day session on the day in question as reported by Bloomberg  LP, or
     a similar generally accepted reporting service, as the case may be. If such
     security has no quotes or listing as defined in this  section 1 (iv),  then
     the Current Market Price shall be the price per Common Share on any date of
     determination  as determined  by an  independent  third party  appointed by
     mutual agreement of the Company and the Holder.

          (v)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
     amended, and the rules and regulations of the Commission thereunder, or any
     similar successor statute.

          (vi) "Investor" means each of the Initial Investors and any transferee
     or assignee of Registrable  Securities  which agrees to become bound by all
     of the terms and provisions of this Agreement in accordance  with Section 8
     hereof.

          (vii) "Person" means any individual, partnership, corporation, limited
     liability company, joint stock company, association,  trust, unincorporated
     organization, or a government or agency or political subdivision thereof.

          (viii)   "Prospectus"   means  the  prospectus   (including,   without
     limitation,  any  preliminary  prospectus  and any final  prospectus  filed
     pursuant to Rule 424(b) under the Securities Act,  including any prospectus
     that discloses  information  previously  omitted from a prospectus filed as
     part of an effective  registration statement in reliance on Rule 430A under
     the Securities Act) included in the Registration  Statement,  as amended or
     supplemented by any prospectus  supplement with respect to the terms of the
     offering  of any  portion  of the  Registrable  Securities  covered  by the
     Registration  Statement and by all other amendments and supplements to such
     prospectus,  including  all  material  incorporated  by  reference  in such
     prospectus and all documents filed after the date of such prospectus by the
     Company under the Exchange Act and incorporated by reference therein.

          (ix) "Public  Offering" means an offer  registered with the Commission
     and the  appropriate  state  securities  commissions  by the Company of its
     Common Stock and made pursuant to the Securities Act.

          (x)  "Registrable  Securities"  means (i) the Shares,  (ii) the Common
     Stock  issued or  issuable  upon  exercise of the  Warrants,  and (iii) the
     Common Stock issued and issuable in lieu of  Liquidated  Damages  until (x)
     the  Registration  Statement has been declared  effective by the Commission
     and all such securities have been disposed of pursuant to the  Registration
     Statement, (y) all such securities have been sold under circumstances under
     which  all of the  applicable  conditions  of  Rule  144  (or  any  similar
     provision  then in force) under the Securities Act ("Rule 144") are met, or
     (z) such time as, in the  opinion  of  counsel  to the  Company  reasonably
     satisfactory  to the  Investors  and upon delivery to the Investors of such
     executed opinion,  all such securities may be sold without any time, volume
     or manner  limitations  pursuant to Rule  144(k) (or any similar

                                      2

<PAGE>

     provision  then in effect)  under the  Securities  Act. In the event of any
     merger, reorganization,  consolidation, recapitalization or other change in
     corporate  structure  affecting the Common Stock,  such adjustment shall be
     deemed  to be  made  in the  definition  of  "Registrable  Security"  as is
     appropriate  in order to prevent any dilution or  enlargement of the rights
     granted pursuant to this Agreement.

          (xi)  "Registration  Statement" means a registration  statement of the
     Company filed on Form S-2 and/or Form S-3, or if then unavailable,  another
     appropriate  form under the Securities  Act providing for the  registration
     of, and the resale on a continuous  or delayed basis by the holders of, all
     of the  Registrable  Securities  pursuant to Rule 415 under the  Securities
     Act, including the Prospectus contained therein and forming a part thereof,
     any  amendments  to such  registration  statement and  supplements  to such
     Prospectus,  and  all  exhibits  to  and  other  material  incorporated  by
     reference in such registration statement and Prospectus.

          (xii)  "Securities  Act" means the Securities Act of 1933, as amended,
     and the rules and regulations of the Commission thereunder,  or any similar
     successor statute.

          (b) All  capitalized  terms  used  and not  defined  herein  have  the
respective meaning assigned to them in the Securities Purchase Agreement.

          2.   Registration

          (a) Filing and Effectiveness of Registration Statement.

          (i) The Company shall use its  reasonable  best efforts to prepare and
     file with the  Commission not later than 45 calendar days after the Closing
     Date,  a  Registration  Statement  relating  to the  offer  and sale of the
     Registrable  Securities and shall use its reasonable  best efforts to cause
     the Commission to declare such Registration  Statement  effective under the
     Securities  Act as  promptly as  practicable  but in no event later than 90
     calendar  days (150  calendar  days in the event of a "full  review" by the
     Commission)  after the Closing Date. The number of Shares designated in the
     Registration  Statement to be registered  shall include all the Registrable
     Securities and shall include  appropriate  language regarding reliance upon
     Rule  416  under  the  Securities  Act  to  the  extent  permitted  by  the
     Commission.  The Company shall promptly (and, in any event, no more than 48
     hours after it receives  comments from the Commission),  notify each of the
     Investors  when and if it receives any comments from the  Commission on the
     Registration  Statement and promptly  forward a copy of such  comments,  if
     they are in writing, to the Investors. At such time after the filing of the
     Registration  Statement  pursuant to this  Section  2(a) as the  Commission
     indicates,  either  orally or in writing,  that it has no further  comments
     with  respect  to such  Registration  Statement  or that it is  willing  to
     entertain  appropriate  requests for  acceleration of effectiveness of such
     Registration  Statement,  the Company shall promptly, and in no event later
     than five (5) days after receipt of such  indication  from the  Commission,
     request  that  the   effectiveness  of  such   Registration   Statement  be
     accelerated  within 48 hours of the  Commission's  receipt of

                                       3

<PAGE>

     such request. The Company shall notify the Investors by written notice that
     such Registration  Statement has been declared  effective by the Commission
     within 24 hours of such declaration by the Commission.

          (ii) In the event that (A) the Registration  Statement is not filed by
     the  Company in a timely  manner as set forth in Section  2(a)(i),  (B) the
     Registration  Statement is not declared  effective by the Commission within
     the period of time set forth in Section 2(a)(i), or within five (5) days of
     clearance  by  the  Commission  to  request   effectiveness,   or  (C)  the
     Registration  Statement is not  maintained  as effective by the Company for
     the  period  set  forth in  Section  3(a)(i)  below  (each a  "Registration
     Default"),  then the Company will pay each Investor  (pro-rata on a monthly
     basis), for each Registration Default then in effect, as liquidated damages
     and not as a penalty,  during any period in which a Registration Default is
     occurring,  one percent  (1%) per month of (A) the  purchase  price paid by
     such  Investor  for the  Registrable  Securities,  and (B) the value of any
     outstanding  Warrants (valued at the difference between the average Current
     Market Price  during the  applicable  month and the  exercise  price of the
     Warrants  multiplied  by the number of shares of Common  Stock the Warrants
     are  exercisable  into),  held by such  Investor  until such  corresponding
     Registration Default no longer exists ("Liquidated Damages").  Such payment
     of the  Liquidated  Damages shall be made to the Investors in cash,  or, at
     the option of the Company,  in registered  shares of Common Stock (based on
     the Purchase  Price (as defined in the Securities  Purchase  Agreement)) on
     the trading day prior to the date of payment) on the last day of each month
     during which a Registration  Default  occurred or was  continuing,  without
     demand therefor by the Investor; provided, however, that the payment of the
     Liquidated  Damages shall not relieve the Company from its  obligations  to
     register the Securities pursuant to this Section.

          If the  Company  does not remit the  payment to the  Investors  as set
     forth  above,  the  Company  will  pay the  Investors  reasonable  costs of
     collection,  including  attorneys'  fees,  in  addition  to the  Liquidated
     Damages  plus  interest on any  liquidated  damage  payments  not made in a
     timely  manner as set forth above equal to the  effective  "Prime  Rate" as
     announced by Citibank at the time such payment is due hereunder plus 2% per
     annum.  The  registration  of the Registrable  Securities  pursuant to this
     provision shall not affect or limit the Investors' other rights or remedies
     as set forth in this Agreement.

          (b) Piggyback Rights.

          (i) Subject to Section  2(b)(ii),  if the Company at any time proposes
     to file any other  registration  statement  under the  Securities  Act with
     respect to an offering of securities for its own account or for the account
     of another person (other than a  registration  statement on Form S-4 or S-8
     (or any  substitute  form that may be  adopted  by the  Commission)  or any
     registration  statement associated with any equity line of credit and other
     than a registration pursuant to Section 2(a) hereunder),  the Company shall
     give written notice of such proposed filing to each of the Investors at the
     address  set forth in the  register  of the  Company as soon as  reasonably
     practicable  (but in no event  less  than  fourteen  (14) days  before  the
     anticipated  date on which such  registration  will be first filed

                                       4

<PAGE>

     with the Commission),  undertaking to provide each Investor the opportunity
     to  register  on the same  terms and  conditions  such  number  and type of
     Registrable   Securities   as  such  Investor  may  request  (a  "Piggyback
     Registration"). Such written notice shall be clearly marked and the Company
     shall take  reasonable  steps to  confirm  receipt  thereof  from each such
     Investor.  Each  Investor will have five (5) business days after receipt of
     any  such  notice  to  notify  the  Company  as to  whether  it  wishes  to
     participate in a Piggyback  Registration;  provided that should an Investor
     fail to provide  timely  notice to the Company,  such Investor will forfeit
     any rights to  participate  in the Piggyback  Registration  with respect to
     such proposed  offering.  In the event that the  registration  statement is
     filed on behalf of a person  other  than the  Company,  the  Company  will,
     subject to  Section  2(b)(ii),  use its best  efforts to have the shares of
     Registrable  Securities  that the  Investors  wish to sell  included in the
     Registration  Statement.  If  the  Company  shall  determine  in  its  sole
     discretion not to register or to delay the proposed  offering,  the Company
     shall provide written notice of such determination to the Investors and (i)
     in the case of a determination not to effect the proposed  offering,  shall
     thereupon  be  relieved of the  obligation  to  register  such  Registrable
     Securities in connection therewith, and (ii) in the case of a determination
     to  delay a  proposed  offering,  shall  thereupon  be  permitted  to delay
     registering such Registrable Securities for the same period as the delay in
     respect of the proposed offering.

          (ii) If a  registration  pursuant  to this  Section  2(b)  involves an
     underwritten  offering,  and the  managing  underwriter  shall  advise  the
     Company  in  writing,  that,  in its  opinion,  the  number  of  securities
     requested  and  otherwise  proposed  to be  included  in such  registration
     exceeds the number which can be sold in such offering  within a price range
     acceptable  to the  Company,  or that the kind of  securities  requested or
     otherwise  proposed  to be included in such  registration  statement  would
     materially and adversely  effect the success of such offering,  the Company
     will  include in such  registration,  to the extent of the number which the
     Company is so advised can be sold in such offering, (A) if the registration
     is a  primary  registration  on  behalf  of the  Company,  (x)  first,  the
     securities  proposed to be  registered  by the  Company,  (y)  second,  the
     securities  and  Registrable  Securities  which have been  requested  to be
     included in such registration by the Investors and any other persons having
     the right to include securities in such registration  statement pro rata in
     accordance with the aggregate number of securities requested to be included
     by the Investors and such other persons; and (z) third, securities of other
     persons,  if any, requested to be included in such registration pro rata in
     accordance with the number of other securities proposed to be registered by
     such other persons, and (B) if the registration is a secondary registration
     on behalf of other  persons,  (x)  first,  the  securities  proposed  to be
     registered  by  such  other  persons,   (y)  second,   the  securities  and
     Registrable  Securities  which have been  requested  to be included in such
     registration  by the Investors  and any other  persons  having the right to
     include  securities in such  registration  statement pro rata in accordance
     with the  aggregate  number of  securities  requested to be included by the
     Investors and such other persons; and (z) third, securities which have been
     requested to be included in such  registration  by the Company and by other
     persons,  if any, pro rata in accordance with the aggregate number of other
     securities proposed to be registered by the Company and such other persons.
     In the event a

                                       5

<PAGE>

     contemplated distribution does not involve an underwritten public offering,
     the  determinations  contemplated by this Section 2(b)(ii) shall be made by
     the Company's Board of Directors.

          3. Obligations of the Company

          In connection with the registration of the Registrable Securities, the
Company  shall,  subject  to  the  Investors  assistance  and  cooperation,   as
reasonably requested:

          (a) (i) Use its  reasonable  best efforts to prepare and file with the
Commission  such  amendments  (including   post-effective   amendments)  to  the
Registration  Statement and supplements to the Prospectus as may be necessary to
keep the Registration  Statement  continuously  effective and in compliance with
the  provisions of the  Securities  Act  applicable  thereto so as to permit the
Prospectus  forming  part  thereof to be current  and useable by  Investors  for
resales of the  Registrable  Securities for a period of three (3) years from the
date on which the  Registration  Statement  is first  declared  effective by the
Commission  (the  "Effective  Time") or such shorter  period that will terminate
upon the earlier of there ceasing to be any Registrable  Securities  outstanding
or when all the Registrable  Securities  covered by the  Registration  Statement
have been sold  pursuant  thereto in  accordance  with the plan of  distribution
provided  in  the  Prospectus,  transferred  pursuant  to  Rule  144  under  the
Securities Act or otherwise transferred in a manner that results in the delivery
of new securities not subject to transfer  restrictions under the Securities Act
(the  "Registration  Period") and (ii) take all lawful  action such that each of
(A) the  Registration  Statement  and any  amendment  thereto does not,  when it
becomes  effective,  contain an untrue  statement of a material  fact or omit to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  not misleading and (B) the Prospectus  forming part of the
Registration Statement, and any amendment or supplement thereto, does not at any
time during the  Registration  Period include an untrue  statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.

          (b) During the Registration Period, use its reasonable best efforts to
comply with the provisions of the Securities Act with respect to the Registrable
Securities of the Company covered by the Registration  Statement until such time
as all of such  Registrable  Securities have been disposed of in accordance with
the  intended  methods  of  disposition  by the  Investors  as set  forth in the
Prospectus forming part of the Registration Statement;

          (c) (i) Prior to the filing with the  Commission  of any  Registration
Statement (including any amendments thereto) and the distribution or delivery of
any Prospectus  (including any  supplements  thereto),  provide (A) draft copies
thereof to the Investors and give reasonable  consideration to all such comments
as the  Investors  (and their  counsel)  reasonably  may  propose and (B) to the
Investors a copy of the accountant's consent letter to be included in the filing
and (ii) furnish to each Investor whose  Registrable  Securities are included in
the Registration  Statement and its legal counsel identified to the Company, (A)
promptly  after the same is prepared  and publicly  distributed,  filed with the
Commission,  or received by the Company, one copy of the Registration Statement,
each Prospectus,  and each amendment or supplement thereto,  and (B) such number
of copies of the Prospectus and all amendments and supplements  thereto

                                       6

<PAGE>

and such other  documents,  as such Investor may reasonably  request in order to
facilitate the disposition of the Registrable Securities owned by such Investor;

          (d) (i) Use its  reasonable  best  efforts to  register or qualify the
Registrable   Securities  covered  by  the  Registration  Statement  under  such
securities or "blue sky" laws of such jurisdictions as the Investors  reasonably
request,  (ii) prepare and file in such jurisdictions such amendments (including
post-effective   amendments)   and   supplements  to  such   registrations   and
qualifications as may be necessary to maintain the effectiveness  thereof at all
times during the Registration  Period,  (iii) take all such other lawful actions
as may be necessary to maintain such  registrations and qualifications in effect
at all times during the Registration Period, and (iv) take all such other lawful
actions reasonably necessary or advisable to qualify the Registrable  Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection  therewith or as a condition thereto to (A) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d),  (B) subject  itself to general  taxation in any such
jurisdiction  or (C) file a general  consent  to  service of process in any such
jurisdiction;

          (e) As promptly as  practicable  after  becoming  aware of such event,
notify each Investor of the  occurrence  of any event,  as a result of which the
Prospectus included in the Registration  Statement,  as then in effect, includes
an  untrue  statement  of a  material  fact or omits to  state a  material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  under  which they were made,  not  misleading,  and
promptly  prepare an amendment to the  Registration  Statement and supplement to
the  Prospectus  to correct such untrue  statement  or  omission,  and deliver a
number of copies of such  supplement  and  amendment  to each  Investor  as such
Investor may reasonably request;

          (f) As promptly as  practicable  after  becoming  aware of such event,
notify each  Investor who holds  Registrable  Securities  being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the Commission of any stop order or other suspension of the effectiveness of the
Registration  Statement at the earliest possible time and take all lawful action
to effect  the  withdrawal,  recession  or  removal  of such stop order or other
suspension;

          (g) Use its  reasonable  best  efforts  to cause  all the  Registrable
Securities  covered by the Registration  Statement to be listed on the principal
national securities exchange,  and included in an inter-dealer  quotation system
of a registered  national securities  association,  on or in which securities of
the same class or series issued by the Company are then listed or included;

          (h) Use its  reasonable  best efforts to maintain a transfer agent and
registrar,  which may be a single  entity,  for the  Registrable  Securities not
later than the effective date of the Registration Statement;

          (i) Use its  reasonable  best  efforts to take all such  other  lawful
actions  reasonably  necessary to expedite and facilitate the disposition by the
Investors  of their  Registrable  Securities  in  accordance  with the  intended
methods  therefor  provided  in the  Prospectus  which are  customary  under the
circumstances;

                                       7

<PAGE>

          (j)  Make  generally  available  to its  security  holders  as soon as
practicable,  but in any event not later  than  three (3)  months  after (i) the
effective  date (as  defined in Rule  158(c)  under the  Securities  Act) of the
Registration  Statement,  and (ii)  the  effective  date of each  post-effective
amendment  to the  Registration  Statement,  as the  case  may be,  an  earnings
statement of the Company and its  subsidiaries  complying  with Section 11(a) of
the  Securities Act and the rules and  regulations of the Commission  thereunder
(including, at the option of the Company, Rule 158); and

          (k) (i)  Subject  to the  restrictions  set  forth  in the  Securities
Purchase Agreement,  make reasonably available for inspection by Investors,  and
any attorney,  accountant or other agent retained by such Investors all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries,  and (ii) use reasonable best efforts to cause the
Company's officers, directors and employees to supply all information reasonably
requested  by such  Investors  or any  such  attorney,  accountant  or  agent in
connection with the  Registration  Statement,  in each case, as is customary for
similar  due  diligence  examinations;  provided,  however,  that  all  records,
information and documents that are designated in writing by the Company, in good
faith,  as  confidential,  proprietary  or  containing  any  material  nonpublic
information  shall be kept confidential by such Investors and any such attorney,
accountant or agent (pursuant to an appropriate confidentiality agreement in the
case of any such holder or agent),  unless such  disclosure  is made pursuant to
judicial  process in a court  proceeding  (after  first  giving  the  Company an
opportunity  promptly to seek a protective order or otherwise limit the scope of
the information  sought to be disclosed) or is required by law, or such records,
information or documents  become  available to the public generally or through a
third party not in violation of an accompanying  obligation of  confidentiality;
and  provided,  further,  that,  if the  foregoing  inspection  and  information
gathering would otherwise  disrupt the Company's  conduct of its business,  such
inspection and information  gathering shall, to the maximum extent possible,  be
coordinated on behalf of the Investors and the other parties entitled thereto by
one firm of counsel  designed  by and on behalf of the  majority  in interest of
Investors and other parties.

          4. Obligations of the Investors

          In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:

          (a) It  shall  be a  condition  precedent  to the  obligations  of the
Company to complete the registration  pursuant to this Agreement with respect to
the  Registrable  Securities of a particular  Investor that such Investor  shall
furnish to the  Company  such  information  regarding  itself,  the  Registrable
Securities  held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such  Registrable  Securities  and shall execute such documents in connection
with such registration as the Company may reasonably  request.  Unless otherwise
required by the  Commission or any  applicable  law,  nothing in this  Agreement
shall  obligate  any  Investor to consent to be named as an  underwriter  in any
Registration  Statement  pertaining  to the  Registrable  Securities.  At  least
twenty-one  (21)  days  prior  to  the  first  anticipated  filing  date  of the
Registration   Statement,   the  Company  shall  notify  each  Investor  of  the
information  the  Company  reasonably  requires  from  each such  Investor  (the
"Requested  Information") if such Investor elects to have any of its

                                       8

<PAGE>

Registrable Securities included in the Registration Statement. Such notice shall
be clearly marked and the Company shall take reasonable steps to confirm receipt
thereof  from such  Investor.  If at least five (5)  business  days prior to the
anticipated  filing date the Company has not received the Requested  Information
from an Investor (a  "Non-Responsive  Investor"),  then the Company may file the
Registration   Statement  without  including  Registrable   Securities  of  such
Non-Responsive  Investor and have no further  obligations to the  Non-Responsive
Investor.

          (b) Each  Investor by its  acceptance  of the  Registrable  Securities
agrees to cooperate  with the Company in  connection  with the  preparation  and
filing  of the  Registration  Statement  hereunder,  unless  such  Investor  has
notified  the  Company  in  writing  of  its  election  to  exclude  all  of its
Registrable Securities from the Registration Statement.

          (c) Each  Investor  agrees  that,  upon receipt of any notice from the
Company of the  occurrence of any event of the kind described in Section 3(e) or
3(f), it shall immediately discontinue its disposition of Registrable Securities
pursuant to the  Registration  Statement  covering such  Registrable  Securities
until  such  Investor's  receipt of the  copies of the  supplemented  or amended
Prospectus contemplated by Section 3(e) and, if so directed by the Company, such
Investor shall deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a  certificate  of  destruction)  all copies in such
Investor's  possession,  of the Prospectus covering such Registrable  Securities
current at the time of receipt of such notice; provided,  however, that, subject
to  Section  5, the  Company  may not so  suspend  the right to such  holders of
Registrable  Securities for more than thirty (30) calendar days in the aggregate
during any twelve month period, during the period the Registration  Statement is
required to be in effect, and if such period is exceeded,  such event shall be a
Registration  Default and subject to liquidated  damages as set forth in Section
2(a)(ii) hereof.

          5. Right to Suspend Registration Statement

          The  Company  shall have the right at any time for up to 120  calendar
days to  suspend  any  Registration  Statement  in the  event  that the  Company
determines,  in good faith,  that it is in the best interests of the Company for
the Company to proceed  with its own  offering of equity  securities;  provided,
that, the Company shall use its commercially  reasonable  efforts to continue to
proceed forward in good faith with such Registration Statement during the period
of such suspension.  The Company may so proceed by delivering  written notice of
such intention to the Investors. The Company may exercise the right to suspend a
Registration  Statement no more than twice in any 360-day period,  provided that
the  aggregate  period of such  suspensions  shall not exceed  120 days,  in the
aggregate, in any 360-day period.

          6. Expenses of Registration

          All expenses,  other than  underwriting  discounts and  commissions or
similar fees relating to the Registrable Securities, incurred in connection with
registrations,  filings or qualifications  pursuant to Section 3, but including,
without limitation, all registration, listing, and qualifications fees, printing
and engraving fees,  accounting fees, and the fees and  disbursements of counsel
for the Company (but not of the Investors) shall be borne by the Company.

                                       9

<PAGE>

          7. Indemnification and Contribution

          (a) The Company  shall  indemnify  and hold harmless each Investor and
each of their  respective  officers and  directors  and each person who controls
such Investor  within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (each such person being sometimes hereinafter referred to
as an  "Indemnified  Person")  from and against any losses,  claims,  damages or
liabilities,  joint or  several,  to which  such  Indemnified  Person may become
subject under the Securities Act or otherwise,  insofar as such losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an  untrue  statement  or  alleged  untrue  statement  of a  material  fact
contained in any  Registration  Statement or an omission or alleged  omission to
state therein a material fact required to be stated therein or necessary to make
the statements  therein,  not  misleading,  or arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus  or an omission or alleged  omission to state therein a material fact
required to be stated  therein or necessary to make the statements  therein,  in
the light of the circumstances  under which they were made, not misleading;  and
the  Company  hereby  agrees  to  reimburse  such  Indemnified  Person  for  all
reasonable  legal  and  other  expenses  incurred  by  them in  connection  with
investigating  or defending  any such action or claim as and when such  expenses
are  incurred;  provided,  however,  that the Company shall not be liable to any
such  Indemnified  Person in any such  case to the  extent  that any such  loss,
claim,  damage  or  liability  arises  out of or is  based  upon  (i) an  untrue
statement  or  alleged  untrue  statement  made in, or an  omission  or  alleged
omission from, such Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by such Indemnified
Person  expressly  for use therein or (ii) in the case of the  occurrence  of an
event of the type specified in Section 3(e), the use by the  Indemnified  Person
of an outdated or  defective  Prospectus  after the Company has provided to such
Indemnified  Person an updated  Prospectus  correcting  the untrue  statement or
alleged  untrue  statement or omission or alleged  omission  giving rise to such
loss, claim, damage or liability.

          (b) Indemnification by the Investors.  Each Investor agrees, severally
and not jointly,  as a consequence  of the  inclusion of any of its  Registrable
Securities in a Registration  Statement,  to (i) indemnify and hold harmless the
Company,  its directors  (including any person who, with his or her consent,  is
named in the Registration  Statement as a director nominee of the Company),  its
officers  who sign any  Registration  Statement  and each  person,  if any,  who
controls the Company  within the meaning of either  Section 15 of the Securities
Act or Section 20 of the Exchange Act,  against any losses,  claims,  damages or
liabilities to which the Company or such other persons may become subject, under
the  Securities  Act or otherwise,  insofar as such losses,  claims,  damages or
liabilities  (or actions in respect  thereof)  arise out of or are based upon an
untrue  statement or alleged  untrue  statement of a material fact  contained in
such Registration  Statement or Prospectus or arise out of or are based upon the
omission or alleged  omission to state  therein a material  fact  required to be
stated  therein or  necessary  to make the  statements  therein (in light of the
circumstances  under which they were made, in the case of the  Prospectus),  not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue  statement or omission or alleged  omission was made
in reliance upon and in  conformity  with written  information  furnished to the
Company by or on behalf of such Investor  expressly  for use therein;  provided,
however,  no Investor  shall be liable under this Section 7(b) for any amount in
excess of the net  proceeds  paid to such  Investor in respect of shares sold by
it.

                                       10

<PAGE>

          (c) Notice of Claims,  etc.  Promptly after receipt by a party seeking
indemnification  pursuant to this Section 7 (an "Indemnified  Party") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "Claim"),  the Indemnified Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Section  7 is  being  sought  (the  "Indemnifying  Party")  of the  commencement
thereof;  but the omission to so notify the Indemnifying Party shall not relieve
it from any  liability  that it  otherwise  may have to the  Indemnified  Party,
except to the extent  that the  Indemnifying  Party is  actually  prejudiced  by
reason  of such  failure.  In  connection  with any  Claim as to which  both the
Indemnifying Party and the Indemnified Party are parties, the Indemnifying Party
shall be entitled to assume the defense thereof.  Notwithstanding the assumption
of the defense of any Claim by the  Indemnifying  Party,  the Indemnified  Party
shall have the right to employ  separate legal counsel and to participate in the
defense of such Claim,  and the  Indemnifying  Party  shall bear the  reasonable
fees,  out-of-pocket  costs and expenses of one such separate  legal counsel for
all  Indemnified  Parties  in  connection  with  any one  action  or  series  of
substantially related actions if (and only if): (x) the Indemnifying Party shall
have  agreed in  writing  to pay such fees,  costs and  expenses,  (y) the named
parties to any such action  (including any impleaded  parties)  include both the
Indemnified  Party and the  Indemnifying  Party and the Indemnified  Party shall
have been advised by such counsel in writing that there may be one or more legal
defenses  available to the Indemnifying party different from or in conflict with
any legal  defenses  which may be available to the  Indemnified  Party (in which
case the  Indemnifying  party  shall not have the right to assume the defense of
such action on behalf of the Indemnified  party, or (z) the  Indemnifying  Party
shall  have  failed to  employ  legal  counsel  reasonably  satisfactory  to the
Indemnified  Party  within a  reasonable  period  of time  after  notice  of the
commencement  of such Claim.  If the  Indemnified  Party employs  separate legal
counsel in  circumstances  other than as  described  in clauses  (x), (y) or (z)
above,  the fees,  costs  and  expenses  of such  legal  counsel  shall be borne
exclusively by the Indemnified Party. Except as provided above, the Indemnifying
Party  shall not,  in  connection  with any Claim in the same  jurisdiction,  be
liable  for the fees and  expenses  of more  than  one firm of  counsel  for the
Indemnified  Party (together with  appropriate  local counsel).  The Indemnified
Party shall not,  without the prior written  consent of the  Indemnifying  Party
(which  consent shall not  unreasonably  be withheld),  settle or compromise any
Claim or  consent  to the  entry  of any  judgment  that  does  not  include  an
unconditional  release  of the  Indemnifying  Party  from all  liabilities  with
respect to such Claim or judgment.

          (d) Contribution.  If the indemnification provided for in this Section
7 is unavailable to or insufficient to hold harmless an Indemnified Person under
subsection  (a) or (b)  above in  respect  of any  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof)  referred  to  therein,  then each
Indemnifying  Party  shall  contribute  to the  amount  paid or  payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect  thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses,  claims, damages
or liabilities  (or actions in respect  thereof),  as well as any other relevant
equitable  considerations.  The relative  fault of such  Indemnifying  Party and
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged  omission to state a

                                       11

<PAGE>

material fact relates to information  supplied by such Indemnifying  Party or by
such Indemnified Party, and the parties' relative intent,  knowledge,  access to
information  and  opportunity  to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were  determined by pro rata  allocation  (even if
the  Investors  were  treated as one entity  for such  purpose)  or by any other
method of allocation which does not take account of the equitable considerations
referred to in this Section 7(d).  The amount paid or payable by an  Indemnified
Party as a result of the losses,  claims,  damages or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
fees or expenses  reasonably  incurred by such  Indemnified  Party in connection
with  investigating  or defending any such action or claim.  No person guilty of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities  Act) shall be entitled to  contribution  from any person who was not
guilty of such fraudulent misrepresentation.

          (e) Notwithstanding any other provision of this Section 7, in no event
shall any Investor be required to  undertake  liability to any person under this
Section 7 for any amounts in excess of the dollar  amount of the  proceeds to be
received  by  such  Investor  from  the  sale  of  such  Investor's  Registrable
Securities  pursuant to any Registration  Statement under which such Registrable
Securities are to be registered under the Securities Act.

          (f) The  obligations  of the Company  under this Section 7 shall be in
addition  to  any  liability  which  the  Company  may  otherwise  have  to  any
Indemnified  Person and the  obligations  of any  Indemnified  Person under this
Section 7 shall be in addition to any liability  which such  Indemnified  Person
may otherwise have to the Company.  The remedies  provided in this Section 7 are
not exclusive and shall not limit any rights or remedies  which may otherwise be
available to an indemnified party at law or in equity.

          8. Rule 144

          With a view to making  available to the Investors the benefits of Rule
144 under the  Securities  Act or any other  similar rule or  regulation  of the
Commission  that may at any time permit the Investors to sell  securities of the
Company to the public without  registration  ("Rule 144"), the Company agrees to
use its reasonable best efforts to:

          (a) comply with the provisions of paragraph (c) (1) of Rule 144;

          (b) file with the  Commission in a timely manner all reports and other
documents  required to be filed by the  Company  pursuant to Section 13 or 15(d)
under the  Exchange  Act;  and,  if at any time it is not  required to file such
reports but in the past had been required to or did file such reports,  it will,
upon the request of any Investor,  make available other  information as required
by, and so long as  necessary  to permit  sales of, its  Registrable  Securities
pursuant to Rule 144; and

          (c) upon request by the Company's transfer agent for its Common Stock,
the Company  shall  provide  the  transfer  agent an opinion of  counsel,  which
opinion shall be reasonably  acceptable to the transfer agent, that the Investor
has  complied  with  the  applicable  conditions  of Rule  144  (or any  similar
provision then in force) under the Securities Act.

                                       12

<PAGE>

          9. Assignment

          The  rights  to  have  the  Company  register  Registrable  Securities
pursuant to this Agreement shall be  automatically  assigned by the Investors to
any permitted  transferee of all or a portion (which portion shall exceed 10% of
the  Registrable  Securities  on an  as-converted  basis)  of  such  Registrable
Securities  (or  all  or a  portion  (which  portion  shall  exceed  10%  of the
Registrable Securities on an as-converted basis) of any Shares or Warrant of the
Company which is  convertible  into such  securities)  only if: (a) the Investor
agrees in writing with the  transferee or assignee to assign such rights,  and a
copy of such  agreement  is furnished  to the Company  within a reasonable  time
after such assignment, (b) the Company is, within ten (10) business days of such
transfer  or  assignment,  furnished  with  written  notice  of (i) the name and
address of such  transferee or assignee and (ii) the securities  with respect to
which  such  registration   rights  are  being  transferred  or  assigned,   (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities,  and
(d) at or before the time the Company  receives the written notice  contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein.

          10. Amendment and Waiver

          Any  provision  of this  Agreement  may be amended and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and  Investors  who hold at least a  majority  in  interest  of the  Registrable
Securities.  Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.

          11. Changes in Common Stock

          If, and as often as,  there are any changes in the Common Stock by way
of stock split, stock dividend,  reverse split, combination or reclassification,
or through merger, consolidation,  reorganization or recapitalization, or by any
other means,  appropriate  adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall continue
with respect to the Common Stock as so changed.

          12. Miscellaneous

          (a) A person or entity  shall be deemed to be a holder of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

          (b) If,  after the date hereof and prior to the  Commission  declaring
the Registration Statement to be filed pursuant to Section 2 effective under the
Securities  Act, the Company grants to any Person any  registration  rights with
respect to any Company  securities which are more favorable to such other Person
than those provided in this  Agreement,  then the Company

                                       13

<PAGE>

forthwith  shall grant (by means of an amendment to this Agreement or otherwise)
identical registration rights to all Investors hereunder.

          (c) Except as may be otherwise  provided  herein,  any notice or other
communication  or delivery  required or permitted  hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally  recognized overnight courier service, and shall be deemed given
when so delivered  personally or by overnight  courier  service,  or, if mailed,
three days after the date of deposit in the United States mails, as follows:

          (i) if to the Company, to:

          eMagin  Corporation
          2070 Route 52
          Hopewell Junction, NY 12533
          Attention: Gary W. Jones
          (845) 892-1900
          (845) 892-1901 (Fax)

          (ii) if to an  Initial  Investor,  to the  address  set  out for  such
     Initial Investor on Schedule A attached hereto; and

          (iii) if to any other Investor, at such address as such Investor shall
     have provided in writing to the Company.

The Company, the Initial Investors or any Investor may change the foregoing
address by notice given pursuant to this Section 12(c).

          (d)  Failure of any party to exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

          (e) This Agreement  shall be governed by and interpreted in accordance
with the laws of the  State of New York.  Each of the  parties  consents  to the
jurisdiction  of the federal  courts whose  districts  encompass any part of the
City of New York or the state  courts of the  State of New York  sitting  in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives,  to the maximum extent permitted by law, any objection  including
any  objection  based on  forum  non  conveniens,  to the  bringing  of any such
proceeding in such jurisdictions.

          (f) The remedies  provided in this  Agreement are  cumulative  and not
exclusive of any remedies provided by law. If any term,  provision,  covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto

                                       14

<PAGE>

shall use their best efforts to find and employ an alternative  means to achieve
the same or  substantially  the same result as that  contemplated  by such term,
provision,  covenant or restriction.  It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining  terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

          (g) The Company shall not enter into any agreement with respect to its
securities  that is  inconsistent  with the  rights  granted  to the  holders of
Registrable  Securities  in this  Agreement  or  otherwise  conflicts  with  the
provisions hereof.

          (h) This Agreement, the Securities Purchase Agreement and the Warrants
constitute  the entire  agreement  among the parties  hereto with respect to the
subject  matter  hereof.  There are no  restrictions,  promises,  warranties  or
undertakings,  other than those set forth or referred to herein. This Agreement,
the  Securities   Purchase  Agreement  and  the  Warrants  supersede  all  prior
agreements and undertakings among the parties hereto with respect to the subject
matter hereof.

          (i) Subject to the  requirements  of Section 9 hereof,  this Agreement
shall inure to the benefit of and be binding upon the  successors and assigns of
each of the parties hereto.

          (j) All pronouns and any  variations  thereof refer to the  masculine,
feminine or neuter, singular or plural, as the context may require.

          (k) The headings in this  Agreement are for  convenience  of reference
only and shall not limit or otherwise affect the meaning thereof.

          (l) This Agreement may be executed in two or more  counterparts,  each
of which shall be deemed an original but all of which shall  constitute  one and
the same agreement.  A facsimile  transmission of this signed Agreement shall be
legal and binding on all parties hereto.

                            [SIGNATURE PAGE FOLLOWS.]

<PAGE>

          In witness whereof,  the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.

                                           EMAGIN CORPORATION

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

                                       16

<PAGE>
INITIAL INVESTORS:               Vertical Ventures Investments, LLC

                                 ----------------------------------
                                 Name:
                                 Address:

                                 Newington Invest Limited

                                 ----------------------------------
                                 Name:
                                 Address:

                                 ----------------------------------
                                 Name:  Eric Friedland
                                 Address:

                                 Rainbow Gate Corporation

                                 ----------------------------------
                                 Name:
                                 Address:

                                  ----------------------------------
                                  Name:  David K. Zierk
                                  Address:

                                  ----------------------------------
                                  Name:  Andrea Della Valle
                                  Address:

                                  Triton West Group, Inc.

                                  ----------------------------------
                                  Name:
                                  Address:

                                  ----------------------------------
                                  Name:  Ben Johnson
                                  Address:

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