Document:

<PAGE>
                                                                   EXHIBIT 10.23

                                                THE BANK OF NOVA SCOTIA
                                                Atlanta Agency
                                                Suite 2700
                                                600 Peachtree Street N.E.
                                                Atlanta, Georgia
                                                USA 30308

                                                Tel: (404) 877-1500
                                                Fax: (404) 888-8998

                                                Scotiabank

                                  CONFIDENTIAL

                                                                  March 25, 2002

Caraco Pharmaceutical Laboratories Ltd.
1150 Elijah McCoy
Detroit, Michigan 48202

Attn:  Narendra Borkar, Chief Executive Officer

                     Caraco Pharmaceutical Laboratories Ltd.
                                   Term Sheet

Dear Mr. Borkar:

         Based on discussions with our Mumbai Branch and Sun Pharmaceutical, we
have arranged for a USD 2,500,000 increase to the existing USD 10,000,000 Term
Loan for Caraco Pharmaceuticals Laboratories Ltd. ("Caraco"). We understand that
proceeds from the Credit Facility will be available for the repayment of current
outstanding debt and for general corporate purposes.

         Although we are very interested in providing this financing, our
proposal is subject to satisfactory receipt of (i) a guarantee by Sun
Pharmaceuticals provided to The Bank of Nova Scotia Mumbai Branch ("BNS
Mumbai"), (ii) a guarantee by BNS Mumbai provided to The Bank of Nova Scotia
Atlanta Office, and (iii) a completed Draw Request & executed Promissory Note in
form satisfactory to us.

         The requirements of the attached Term Sheet dated March 25, 2002
replace the terms and conditions of the prior Term Sheet that was completed on
March 14, 2001. Further, the Term Sheet dated March 25, 2002 incorporates
information which is either confidential or proprietary in nature, and is being
furnished on the expressed basis that none of this information be used in a
manner inconsistent with its confidential nature or be disclosed to anyone other
than as may be required by law or to those employees of Caraco who are directly
involved in the proposed transactions and who have been informed of the
confidential nature of this Term Sheet.

         If you are agreeable to the terms and conditions as outlined in the
attached Term Sheet please sign and return to the attention of Thomas Myhre, The
Bank of Nova Scotia, 181 W. Madison Street, Suite 3700, Chicago, Illinois 60602
no later than April 5, 2002. If you have any questions or comments please do not
hesitate to call Thomas at 312/201-4186.

                                              Very truly yours,

                                              THE BANK OF NOVA SCOTIA

                                              By: /s/ N. Bell
                                                  ------------------------------
                                                  N. Bell
                                                  Sr. Manager -- Loan Operations

                                       1

<PAGE>
                                 March 25, 2002
                                   TERM SHEET

<TABLE>
<S>      <C>                                      <C>
I.       PARTIES

         Borrower:                                Caraco Pharmaceuticals Laboratories Ltd., organized under the laws of the
                                                  state of Michigan (the "Borrower").

         Lender                                   The Bank of Nova Scotia

II.      THE CREDIT FACILITY

         Facility Amount:                         USD 12,500,000

         Purpose:                                 The proceeds available under the Credit Facility may be used for general
                                                  corporate purposes, including debt repayment.

         Termination Date:                        August 24, 2005.

         Minimum Draw Down Amount:                USD 250,000

         Final draw down:                         Any amounts not borrowed within 365 days of March 25, 2002 will no longer
                                                  be available for draws. On March 25, 2003 the facility will term out.

         Repayment:                               Four semi-annual installments, of USD 3,125,000 each, due on:
                                                  February 24, 2004, August 24, 2004, February 24, 2005 and August 24, 2005
                                                  (Termination Date).

         Prepayment:                              Not permitted till the completion of 3 years from the Original Closing
                                                  Date of August 24, 2000.

         COMMON TERMS APPLICABLE
         TO THE FACILITY

III.
         Interest Rate:                           LIBOR + 30 bps

         Default Interest Rate:                   LIBOR + 200 bps (Occurs if the Borrower incurs an Event of Default)

         Interest Payment Dates:                  Interest periods for LIBOR loans shall be, at the Borrower's option, one,
                                                  two, three or six months.  Interest on LIBOR loans shall be payable on
                                                  the last business day of the applicable interest period for such loans
                                                  unless such interest exceeds three months then on the 90th day following
                                                  the commencement of such interest period.  Interest on alternate base
                                                  rate loans shall be payable monthly in arrears.

         Annual Work Fee:                         Annual administrative fee in the amount of USD 15,000 due and payable no
                                                  later than December 31 of each year.

         Security:                                Unsecured.

         Guarantees:                              A Guarantee in the amount of USD 12,500,000 is to be delivered on behalf of the
                                                  Borrower by Sun Pharmaceuticals Industries Limited to BNS Mumbai. Additionally,
                                                  BNS Mumbai shall provide a guarantee to The Bank of Nova Scotia Atlanta
                                                  Office in the amount of USD 12,500,000 prior to any funding that exceeds USD
                                                  10,000,000.

         Representations and Warranties:          Customary for the type of transaction proposed and others to be
                                                  reasonably
</TABLE>

                                       2

<PAGE>

<TABLE>
<S>      <C>                                      <C>
                                                  specified by The Bank of Nova Scotia.

         Reporting Requirements:                  1.  The Borrower is to provide quarterly financial statements including
                                                  an income statement, balance sheet, and cash flow statement to be
                                                  received no later than 45 days after each quarter end.

                                                  2. The Borrower is to provide audited financial year-end statements including
                                                  an income statement, balance sheet, cash flow statement, and statement
                                                  of retained earnings to be received no later than 120 days after the financial
                                                  year end.

                                                  3. The Borrower is to provide a detailed annual forecast of its projected
                                                  performance including an income statement, balance sheet, cash flow
                                                  statement, and summary of management assumptions to be received no later
                                                  than 60 days after the financial year end.

                                                  4. The Borrower is to provide a quarterly management discussion and analysis of
                                                  operating performance (including discussion of revenue, gross margins, and
                                                  SG&A expenses) and financial position (including discussion of financial
                                                  position and liquidity) to be received no later than 45 days after each
                                                  quarter end and no later than 120 days after the financial year end.

         Events of Default:                       1.  Failure to pay principal or interest or the annual work fee when due
                                                  and payable.

                                                  2.  Failure to comply with the reporting requirements.

         Miscellaneous:                           1. Indemnification of The Bank of Nova Scotia from and against any losses, claims,
                                                  damages, liabilities or other expenses which arise out of or in connection with
                                                  the Credit Facility, this Term Sheet or the Credit Documentation, including
                                                  those which may arise from or in connection with any action, suite or
                                                  proceeding (whether or not any Indemnified Party is a party or is subject
                                                  thereto).

                                                  2. The Borrower will pay all of The Bank of Nova Scotia's fees and other
                                                  out-of-pocket expenses (including the fees and out-of-pocket expenses of
                                                  The Bank of Nova Scotia's legal counsel) arising out of or in connection with the
                                                  Credit Facility, this Term Sheet or the Credit Documentation, including any
                                                  such fees and expenses which may arise from or in connection with any action,
                                                  suit or proceeding (whether or not an Indemnified Party is a party or is
                                                  subject thereto).

                                                  3.  Waiver of jury trial.

                                                  4. New York governing law; consent to exclusive New York jurisdiction; appointment
                                                  of New York process agent.
</TABLE>

By signing below we agree to the terms and conditions as outlined in the Term
Sheet above.

Caraco Pharmaceuticals Laboratories Incorporated

By: /s/ Narendra N. Borkar
   -----------------------------------------

Print Name: Narendra N. Borkar
           ---------------------------------

Title: CEO
      --------------------------------------

Date:  03/27/02
     ---------------------------------------

                                       3EMAGIN CORPORATION

                         SECURED NOTE PURCHASE AGREEMENT

          THIS SECURED NOTE PURCHASE  AGREEMENT  (this  "Agreement")  is entered
into  as of  June  20,  2002,  by  and  among  eMagin  Corporation,  a  Delaware
corporation (the "Company"),  Virtual Vision, Inc., a Delaware corporation,  and
wholly-owned  subsidiary  of the Company  (the  "Subsidiary")  and the  investor
listed on Schedule A attached hereto (the "Investor").

                              W I T N E S S E T H :
                              - - - - - - - - - -

          WHEREAS, the Company and the Subsidiary have requested funding for the
satisfaction of their salary obligations through at least the end of June 2002;

          WHEREAS, in order to induce the Investor to enter into this Agreement,
the Subsidiary has agreed to grant a continuing first priority security interest
in and to the  Subsidiary  Collateral  (as such term is defined in the  Security
Agreement attached to this Agreement as Exhibit C)

          WHEREAS,  in order to further  induce the  Investor to enter into this
Agreement,  the Company has agreed to grant a subordinated  security interest in
and to the  Company  Collateral  (as such term is  defined  in the  Subordinated
Security Agreement attached to this Agreement as Exhibit D)

          WHEREAS,  the  Investor  has agreed to lend  bridge  financing  to the
Company  (subject to the terms and  conditions  set forth in this  Agreement) in
order for the Company and the  Subsidiary  to satisfy  their salary  obligations
until at least the end of June 2002;

          NOW,  THEREFORE,  in  consideration  of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby  acknowledged,  the  parties  hereto,  intending  to be legally
bound, hereby agree as follows:

          1.   Purchase  and  Sale  of  Secured   Note;   Issuance  of  Warrant.

          (a) (i) The Company has duly  authorized for sale,  issue and delivery
the secured note (the "Note") for a total aggregate principal amount of $200,000
(the "Maximum Note  Amount"),  due and payable on August 30, 2002 (the "Maturity
Date") (unless prepaid prior to such date pursuant to the terms of the Note) and
shall  otherwise  be  substantially  in the form  attached to this  Agreement as
Exhibit A. The Note shall be issued to the Investor  pursuant to this  Agreement
in the principal amount of $200,000.

               (ii) The Company has duly authorized for sale, issue and delivery
of the three year warrant  (the  "Warrant"  and  together  with the Note and the
Common  Stock  (defined  below),  the  "Securities")  to  purchase up to 300,000
shares,  subject to adjustment (the "Maximum  Warrant  Amount") of the Company's
common stock, par value $.001 per share

<PAGE>
(the "Common  Stock"),  such Warrant to be substantially in the form attached to
this Agreement as Exhibit B.

          (b) Subject to the terms of this  Agreement,  the  Investor  agrees to
purchase, and the Company agrees to issue the Investor, the Note and the Warrant
for a purchase price and amount as set out on Schedule A attached hereto.

          (c) The purchase and sale of the Note and the Warrant shall take place
concurrently  with the  execution  of this  Agreement  (the  "Closing").  At the
Closing,  the Company shall deliver to the Investor (i) an executed  counterpart
to this Agreement and (ii) the Note in the principal amount of $200,000, against
delivery to the Company by the Investor of (x) an executed  counterpart  to this
Agreement  and (y) the purchase  price of the Note and the Warrant in the amount
described  in the  preceding  clause (ii) by bank wire  transfer of  immediately
available funds to an account designated in writing by the Company.

          (d) At the Closing,  the Company will promptly issue to the Investor a
Warrant to purchase the Maximum Warrant Amount, such Warrant to have an exercise
price per share equal to 105% of the volume  weighted  average  closing price of
the Common Stock on the American Stock Exchange (or the over-the-counter market)
for the five (5) trading days immediately preceding June 20, 2002 as reported by
the Wall Street Journal,  New York City edition (the "Warrant  Exercise Price").
The Warrant shall be  substantially  in the form  attached to this  Agreement as
Exhibit B.

          (e)  Notwithstanding  anything  to  the  contrary  contained  in  this
Agreement or the Note issued hereunder, if the Investor shall not have delivered
to the Company wire  directions or other evidence  satisfactory  to the Company,
acting  reasonably,  of irrevocable  instruction  to its  respective  banking or
financial institutions to transfer and deliver to the Company's account, by wire
transfer or otherwise, the amounts due from the Investor at the Closing pursuant
to  Section  1(a)  above  (and  amounting  to, in the  aggregate,  $200,000,  in
immediately  available  funds),  by the close of business on June 21, 2002, then
this  Agreement and any Note issued hereby  (including any schedules or exhibits
attached hereto) shall be null and void, and of no further force and effect, and
any amounts,  if any, received by the Company from the Investor pursuant to this
Agreement  or such Note  shall be  promptly  (and in any case no later  than the
close of business on the  immediately  following  business  day) returned by the
Company to the Investor in such amount as may have transferred to the Company by
the Investor;  provided,  that,  any Note or Warrant  issuable  hereunder to the
Investor  shall not be  required  to be released or issued by the Company to the
Investor unless and until the respective amounts due in respect of such Note and
Warrant shall have been actually received by the Company.

          2.  Representations and Warranties of the Investor.  As of the date of
Closing, the Investor hereby represents and warrants to the Company as follows:

          (a) The  Investor is  acquiring  its Note and will acquire its Warrant
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").  By executing  this  Agreement,  the

                                       2
<PAGE>
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) The 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,  the
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  SATISFACTORY  TO THE BORROWER  THAT SUCH
     REGISTRATION IS NOT REQUIRED.

          (c) The Investor has been  furnished  with such materials and has been
given  access to such  information  relating to the Company as the  Investor has
requested.  The 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.  The Investor has been solely responsible
for his own due diligence investigation of the Company and its business, for his
own  analysis of the merits and risks of its  investment  made  pursuant to this
Agreement and for his own analysis of the terms of its investment.

          (d) The  Investor is an  "accredited  investor"  within the meaning of
Rule 501 under the  Securities  Act. The 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.  The Investor
recognizes that the Securities  involve a high degree of risk. The Investor is a
sophisticated  investor,  is  able  to  fend  for  himself  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) This  Agreement  when duly executed and delivered by the Investor,
will  constitute 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

                                       3
<PAGE>
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  the  Investor  holds the Note,  neither  the
Investor nor any person  acting on his behalf (i) has the intention of entering,
or will enter into, any put option,  short position or other similar  instrument
or position  with respect to the Common Stock that may be acquired upon exercise
of the Warrant or (ii) will use shares of Common Stock that may be acquired upon
exercise  of the  Warrant  to settle any put  option,  short  position  or other
similar  instrument  or position  that may have been  entered  into prior to the
execution of this Agreement.

          3.  Representations  and Warranties of the Company and the Subsidiary.
The Company and the Subsidiary represent and warrant to the Investor as follows:

          (a)  Organization,  Good  Standing  and  Power.  The  Company  and the
Subsidiary are  corporations  duly  incorporated,  validly  existing and in good
standing  under  the laws of the  State  of  Delaware  and  have  all  requisite
corporate  authority to own, lease and operate their  respective  properties and
assets and to carry on their respective businesses as now being conducted.  Each
of the Company and the  Subsidiary  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 the Subsidiary,  taken as a whole,  and/or any condition,  circumstance,  or
situation that would prohibit or otherwise materially interfere with the ability
of the Company or the  Subsidiary to perform any of their  material  obligations
under this Agreement or the Securities.

          (b)  Authorization,  Enforcement.  (i) The Company and the  Subsidiary
each 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,  the
Subsidiary or their respective Board of Directors or the Company's  stockholders
is required,  and (iii) each of this  Agreement,  the Note, and the Warrant 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)  Company  Capitalization.  The  authorized  capital  stock  of the
Company  consists of  100,000,000  shares of Common Stock,  of which  30,354,980
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

                                       4
<PAGE>
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 and as set forth in the SEC Documents and the attached  Schedule 3(c),
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 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 and as set forth in the SEC
Documents and the attached  Schedule 3(c), 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.  Except  as set forth in the SEC  Documents,  the offer and sale of all
capital  stock,  convertible  securities,  rights,  warrants,  or options of the
Company  issued prior to the Closing  complied 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 Note and the Warrant (and the shares
of Common Stock  underlying such Warrant) 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 of the Warrant,  the Common Stock issued on
exercise of the Warrant 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 Subsidiary and the  consummation by the Company
of the  transactions  contemplated  herein do not and will not (i)  violate  any
provision of the Company's or the Subsidiary'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 or the  Subsidiary  is a party,  (iii)  create or impose a
lien,  charge or  encumbrance  on any property of the Company or the  Subsidiary
under any agreement or any  commitment to which the Company or the Subsidiary is
a party or by which the  Company or the  Subsidiary  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,   the  Subsidiary  or  any  of  their   respective
subsidiaries or by which any property or asset of the Company, the Subsidiary or
any of their respective  subsidiaries are bound or affected. To the knowledge of
the Company and the Subsidiary,  the business of the Company, the Subsidiary and
their respective  subsidiaries are not being conducted in violation of any laws,
ordinances  or  regulations  of any  governmental  entity,

                                       5
<PAGE>
except for possible  violations  which singularly or in the aggregate do not and
will not have a Material Adverse Effect.  The Company and the Subsidiary are 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 them to execute,  deliver or perform
any of their obligations  under this Agreement,  or for the Company to 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 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 Exchange Act, and, except as disclosed
in the SEC  Documents  or in Schedule  3(f),  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 notes thereto or (ii) in
the case of  unaudited  interim  statements,  to the extent they may not include
footnotes or may be condensed or summary statements),  and fairly present in all
material respects the financial position of the Company and the Subsidiary 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 and the Subsidiary have each provided the
Investor with all the  information  that the Investor has requested for deciding
whether to purchase  the Note and the Warrant.  To the best of the  Company's or
the Subsidiary's knowledge,  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.

                                       6
<PAGE>
          (h) No Liens in Subsidiary.  Other than in respect of leased  tangible
equipment  used by the  Subsidiary  in the  ordinary  course  of  business,  the
Subsidiary  is, as of the Closing,  the owner of all  Subsidiary  Collateral (as
such term is defined in the  Security  Agreement  referred to in Section 4(a) of
this  Agreement)  free from any  security  interest,  deed of  trust,  mortgage,
pledge, lien, claim, charge,  encumbrance,  title retention agreement,  lessor's
interest  in a  financing  lease or  analogous  instrument,  in,  of,  or on the
Subsidiary's  property  (other than Permitted  Liens, as such term is defined in
the Security  Agreement) and the Subsidiary has not issued or committed to issue
any  indebtedness  ranking  equal  to or  higher  in  priority  to the  security
interests to be granted in the Collateral under the Security Agreement to secure
the obligations under the Note.

          (i) No Liens in  Company.  Other than in  respect  of leased  tangible
equipment  used by the Company in the ordinary  course of business and the first
priority  security  interest granted pursuant to the Security  Agreement,  dated
November 20, 2001 (the "Company Senior Security Agreement"),  among the Company,
the Secured Creditors and the Collateral Agent (as such terms are defined in the
Company Senior Security Agreement), the Company is, as of the Closing, the owner
of all Company Collateral (as such term is defined in the Subordinated  Security
Agreement  referred to in Section 4(a) of this Agreement) free from any security
interest,  deed of trust,  mortgage,  pledge, lien, claim, charge,  encumbrance,
title retention  agreement,  lessor's interest in a financing lease or analogous
instrument, in, of, or on the Company's property (other than Permitted Liens, as
such term is defined in the Company Security  Agreement) and the Company has not
issued or  committed  to issue any  indebtedness  ranking  equal to or higher in
priority to the security interests to be granted in the Company Collateral under
the Subordinated Security Agreement to secure the obligations under the Note.

          (j) Creditor Actions.  The Company or the Subsidiary have not received
any written  notice of  foreclosure,  involuntary  bankruptcy or other  material
adverse  creditor  actions  against  the Company or the  Subsidiary  and have no
actual  knowledge  of potential  foreclosure,  involuntary  bankruptcy  or other
material adverse creditor actions affecting the Company or the Subsidiary.

          (k) Company Patents. To the best of the Company's  knowledge,  (i) the
Company has not  received  any written  notice of any claim from any third party
(including,  without  limitation,  any governmental or regulatory entity) and no
such third party claims are pending  challenging the right of the Company to use
the patents (collectively, the "Subordinated Security Agreement Patents") listed
on Annex G to the Subordinated  Security  Agreement (as defined in Section 4(a))
or alleging any violation or infringement by the Company thereof,  and (ii) each
Subordinated  Security  Agreement Patent shown as registered,  filed,  issued or
applied for, has been duly and validly registered in, filed in or issued by, the
official  governmental  registrars  and/or issuers of patents and trademarks and
remain  in full  force  and  effect as of the date of the  Closing  without  any
material defect.

          (l) Subsidiary Patents. To the best of the Subsidiary's knowledge, (i)
the  Subsidiary  has not received any written notice of any claim from any third
party (including, without limitation, any governmental or regulatory entity) and
no such third party claims are pending  challenging  the right of the Subsidiary
to use the patents  (collectively,  the "Security

                                       7
<PAGE>
Agreement  Patents") listed on Annex G to the Security  Agreement (as defined in
Section  4(a)) or alleging  any  violation  or  infringement  by the  Subsidiary
thereof,  and (ii) each Security  Agreement  Patent shown as registered,  filed,
issued or applied  for,  has been duly and validly  registered  in,  filed in or
issued by, the official  governmental  registrars  and/or issuers of patents and
trademarks  and remain in full  force and  effect as of the date of the  Closing
without any material defect.

          (m) Litigation.  Except as set forth in the disclosure letter provided
by the Company to the Investor on June 20, 2002,  the Company and the Subsidiary
are not party to or aware of any actual or asserted  litigation  claims filed in
any court that could result in damages suffered by the Company or the Subsidiary
in excess of $25,000 in the aggregate.

          4. Miscellaneous.

          (a)  Security.  (i) The Note  shall be  secured  by both (A) a general
security interest under a security agreement (the "Security  Agreement"),  dated
as of June 17,  2002,  between  the  Subsidiary,  as  assignor  of the  security
interest and Alligator Holdings, Inc., as collateral agent for the Investor, and
(B) a general  security  interest under a subordinated  security  agreement (the
"Subordinated  Security  Agreement"),  dated as of June 17,  2002,  between  the
Company, as assignor of the security interest and Alligator  Holdings,  Inc., as
collateral agent for the Investor, with such security granted for the benefit of
the  Investor  as  holder  of the Note.  Reference  is  hereby  made to both the
Security  Agreement and the Subordinated  Security  Agreement for a statement of
the rights and  obligations  of the  Investor,  and the nature and extent of the
security for, the Note.

               (ii) Any lien, security interest, encumbrance, charge or claim of
     the  Investor  on any  Company  Collateral  or  any  proceeds  or  revenues
     therefrom  which the  Investor  may have at any time as security for any of
     the Note shall be,  and hereby  are,  subordinated  to all liens,  security
     interests,  or  encumbrances  now  or  hereafter  granted  to  the  Secured
     Creditors under the Company Senior Security Agreement by the Company or any
     other person or by law,  notwithstanding the date or order of attachment or
     perfection of any such lien,  security  interest,  encumbrance  or claim or
     charge  or  the  provision  of  any  applicable  law.  Notwithstanding  the
     foregoing,  if the  Secured  Creditors  under the Company  Senior  Security
     Agreement  shall at any time determine to release their lien on any Company
     Collateral  for the purpose of enabling  the Company or any other person to
     dispose  of such  assets,  the  Investor  under the  Subordinated  Security
     Agreement  hereby  agrees,  subject to the terms and  conditions  set forth
     below, to  simultaneously  release any lien granted therein as security for
     the Note.  Upon the request of and at the expense of the Secured  Creditors
     under the Company Senior  Security  Agreement (or any agent or other person
     acting on their  behalf),  the  Investor  under the  Subordinated  Security
     Agreement  shall  execute and deliver any releases and other  documents and
     agreements  that the Secured  Creditors  under the Company Senior  Security
     Agreement  (or such agent or other person) in their  reasonable  discretion
     deem necessary to dispose of the Company  Collateral for the benefit of the
     Secured Creditors under the Company Senior Security Agreement in accordance
     with the terms and  provisions  thereof free of the interest in same of the
     Investor under the Subordinated Security Agreement.  The Investor under the

                                       8
<PAGE>
     Subordinated  Security  Agreement  retains  all of his  rights  as a junior
     secured  creditor  with  respect to the  surplus  proceeds  of the  Company
     Collateral or undisposed-of  Company Collateral,  if any, arising from sale
     or other  disposition  of the  Company  Collateral  for the  benefit of the
     Secured Creditors under the Company Senior Security Agreement.

               (iii)  Notwithstanding  anything  herein to the  contrary,  in no
     event shall the  Collateral  Agent nor the  Investor  initiate any judicial
     proceeding  or other action  which  results or is intended to result in the
     foreclosure,  realization  upon,  levy upon, or a liquidation of any of the
     Company  Collateral,  including  without  limitation,  the  exercise of any
     rights or remedies of a "secured  party"  under the  Subordinated  Security
     Agreement or under Article 9 of the UCC,  unless and until such time as all
     of the Secured Creditors under the Company Senior Security  Agreement shall
     have been paid in full in cash, and in the event that the Collateral  Agent
     or the Investor shall have received any Company  Collateral or the proceeds
     thereof in respect of the obligations under the Subordinated Agreement as a
     result of any violation of this Section 4(a)(iii), then in such event, such
     Company  Collateral  or  proceeds  thereof  shall be held in trust  for the
     Secured Creditors under the Company Senior Security Agreement and paid over
     and delivered  forthwith to the agent for the Secured  Creditors  under the
     Company  Senior  Security  Agreement  in the form held  (together  with any
     necessary  endorsements) for application to the Company's obligations under
     the Company Senior Security Agreement.

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

          (c)  Survival.   The   representations,   warranties,   covenants  and
agreements made herein shall survive the date of the Closing.

          (d) Entire  Agreement;  Amendment.  This Agreement,  including but not
limited to the form of Note (attached  hereto as Exhibit A), the form of Warrant
(attached hereto as Exhibit B), the form of Security Agreement  (attached hereto
as Exhibit C), the form of Subordinated  Security Agreement  (attached hereto as
Exhibit D) and the Registration  Rights Agreement (attached hereto as Exhibit E)
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 the  Investor  make  any  representations,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be waived or amended other than by a written  instrument signed by
all of the parties to this Agreement.

          (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.

                                       9
<PAGE>
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.  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.  The  Investor  may assign any of his
rights under this  Agreement to any permitted  assignee of the  Securities.  The
Company  may not assign any of its rights or  obligations  under this  Agreement
without the written consent of the Investor.

          (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 the 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.  Upon the execution of this  Agreement (i) the Company
may  file  SEC  Documents   describing  this  Agreement  and  the   transactions
contemplated  hereby,  and  (ii)  any  party  may  make a  public  statement  or
announcement  with  respect to this  Agreement,  the  transactions  contemplated
hereby or the  existence of this  Agreement;  provided,  however,  that prior to
issuing any public  statement  or  announcement  described in clause (ii) above,
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,

                                       10
<PAGE>
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  Investor or the  Company,  each of the Company and the
Investor  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.

          5. Conditions to Closing.  It shall be a condition to the consummation
of the  transactions  contemplated  by this  Agreement  at the Closing  that the
Company shall have,  concurrently  with the  execution of this  Agreement by the
Investor, executed and delivered:

          (a)  a  copy  of an  agreement  of  The  Travelers  Insurance  Company
("Travelers")  with the Company  extending the maturity date of the  Convertible
Promissory  Note,  entered  into  as of  August  21,  2001  by the  Company  and
Travelers, to August 30, 2002;

          (b) to the  Collateral  Agent (as such term is  defined  therein)  the
Security Agreement and Subordinated Security (as defined in Section 4(a)) in the
forms  attached  to this  Agreement  as  Exhibits  C and D,  and  two  completed
originals of a UCC Form 1 for each  security  agreement  suitable for filing and
the applicable  federal  assignment forms executed by the Company sufficient for
the Collateral Agent to perfect the security interests created therein;

          (c) a letter  dated June 20,  2002 from the  Company  to the  Investor
setting  forth the  Investor's  registration  rights with respect to the Warrant
(the  "Registration  Rights  Letter") in the form attached to this  Agreement as
Exhibit E which allows the Investors to have piggy-back registration rights;

          (d) the  Warrant  to be in the  amount  required  to be  issued to the
Investor  on the date of the Closing  pursuant  to Section  1(d) and in the form
attached to this Agreement as Exhibit B; and

          (e) a legal  opinion  of  Company's  counsel  to the  effect  that the
entering into of this  Agreement by the Company and the Subsidiary has been duly
authorized by all necessary  corporate  action of the Company and the Subsidiary
and that the  execution,  delivery  and  performance  of this  Agreement  by the
Company and the  Subsidiary  will not  violate or conflict  with the Amended and
Restated Articles of Incorporation or Bylaws of the Company or the Subsidiary.

                                       11
<PAGE>
          6. Additional  Covenants of Subsidiary.  The Subsidiary  covenants and
agrees with the Investor  that the  Subsidiary  shall not issue any secured debt
(excluding  tangible  equipment  leased in the  ordinary  course of business and
Permitted  Liens,  as defined in the Security  Agreement) or any other  security
(excluding  Permitted Liens, as defined in the Security Agreement) which in form
or  substance  represent  or are  equal to or senior  to the  secured  interests
granted under the Security Agreement without the approval of the Investor.

          7. Additional  Covenants of Company.  The Company covenants and agrees
with the Investor that the Company  shall not issue any secured debt  (excluding
tangible  equipment  leased in the  ordinary  course of business  and  Permitted
Liens, as defined in the Subordinated  Security Agreement) or any other security
(excluding  Permitted Liens, as defined in the Subordinated  Security Agreement)
which in form or  substance  represent  or are equal to or senior to the secured
interests granted under the Subordinated Security Agreement without the approval
of the Investor.

          8. Use of Proceeds.  The Company  shall use the net proceeds  from the
Note for the funding of the Company's and the  Subsidiary's  salary  obligations
only.  On or  before  the date  which is  thirty  (30) days from the date of the
Closing,  the Company shall furnish to the Investor a written  certification  of
the Company,  signed by the Chief  Executive  Officer,  certifying  that the net
proceeds from the Note were used for the purposes permitted by the terms of this
section and no other  purpose or purposes.  The Company  hereby  authorizes  the
Investor and his designated representatives to conduct a review of the Company's
books and  records  sufficient  to satisfy  the  Investor,  in the  exercise  of
reasonable discretion,  that the proceeds of the Note were used for the purposes
permitted by the terms of this section and no other purpose or purposes.

                            [Signature Pages Follow]

                                       12
<PAGE>
          This  Agreement  has been duly  executed as of the date and year first
written above.

                                        EMAGIN CORPORATION

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

                                        VIRTUAL VISION, INC.

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

                                        INVESTOR:

                                        ---------------------------------------
                                        Mortimer D. A. Sackler

                                        Address:  15 East 62nd Street
                                                  New York, NY  10021

                                       13

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