Document:

ex41.htm

    Exhibit
4.1

     

    THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO EMAGIN CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.

     

    Right to
Purchase up to 750,000 Shares of Common Stock of

     

    eMagin
Corporation

     

    (subject
to adjustment as provided herein)

     

    COMMON
STOCK PURCHASE WARRANT

     

    
      	 
      	
              Issue
      Date:  January 30, 2008

            

    

    

    EMAGIN
CORPORATION, a corporation organized under the laws of the State of Delaware
(“eMagin”), hereby certifies that, for value received, MORIAH CAPITAL, L.P., or
assigns (the "Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company (as defined herein) from and after the Issue Date of
this Warrant and at any time or from time to time before 5:00 p.m., New York
time, on January 29, 2013 (the "Expiration Date"), up to Seven Hundred Fifty
Thousand (750,000) fully paid and nonassessable shares of Common Stock (as
hereinafter defined), $0.001 par value per share, at the applicable Exercise
Price per share (as defined below).  The number and character of such
shares of Common Stock and the applicable Exercise Price per share are subject
to adjustment as provided herein.

     

    As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:

     

    (a)           The
term "Company" shall include eMagin and any corporation which shall succeed, or
assume the obligations of, eMagin hereunder.

     

    (b)           The
term "Common Stock" includes (i) the Company's Common Stock, par value $0.001
per share; and (ii) any other securities into which or for which any of the
securities described in the preceding clause (i) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

     

    (c)           The
term "Other Securities" refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.

     

     

    
      
        
        

      

      
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    (d)           The
"Exercise Price" applicable under this Warrant shall be One Dollar and Fifty
Cents ($1.50) per share.

     

    1. Exercise of
Warrant.

     

    1.1 Number of Shares Issuable
upon Exercise.  From and after the date hereof through and
including the Expiration Date but not thereafter, the Holder shall be entitled
to receive, upon exercise of this Warrant in whole or in part, by delivery of an
original or fax copy of an exercise notice in the form attached hereto as Exhibit A (the
"Exercise Notice"), shares of Common Stock of the Company, subject to adjustment
pursuant to Sections 4 and 5.

     

    1.2 “Current Fair Market Value”
when used with respect to the Common Stock as of a specified date (sometimes
referred to herein as a “Determination Date”) means, with respect to a share of
Common Stock, the average of the closing prices of the Common Stock sold on all
securities exchanges including the NASD OTCBB, NASDAQ Capital Market, the Nasdaq
National Market, the American Stock Exchange or the New York Stock Exchange
(each, a “Trading
Market”) on which the Common Stock may at the time be listed, or, if
there have been no sales on any such exchange on such day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of regular
trading such day, or, if on such day the Common Stock is not so listed, the
average of the representative bid and asked prices quoted in the NASDAQ System
as of 4:00 p.m., New York City time, or, if on such day the Common Stock is not
quoted in the NASDAQ System, the average of the highest bid and lowest asked
price on such day in the domestic over-the-counter market as reported by the
Pink Sheets, LLC, or any similar successor organization, in each such case
averaged over a period of five (5) Trading Days consisting of the day as of
which the Current Fair Market Value of Common Stock is being determined (or if
such day is not a Trading Day, the Trading Day next preceding such day) and
the four (4)
consecutive Trading Days prior to such day.  If on the date for which
Current Fair Market Value is to be determined the Common Stock is not listed on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Current Fair Market Value of Common Stock shall be the price per
share of Common Stock as of the most recent date on which eMagin has sold shares
of Common Stock or Common Stock Equivalents to one or more unaffiliated third
parties in a bona fide financing round during the 365 days prior to the date of
such determination.  If no such sales were made during the 365 days
prior to the date of such determination, the Current Fair Market Value of Common
Stock shall be the price per share which eMagin could then obtain from a willing
buyer on an arms’-length basis (not an affiliate, employee or director of eMagin
at the time of determination) for shares of Common Stock sold by eMagin, from
authorized but unissued shares, as determined in by an independent appraiser
mutually acceptable to, and unaffiliated with, eMagin and Holder, whose
appraisal costs shall be paid by eMagin.

     

    1.3 “Common Stock
Equivalent” means any warrant, option, subscription or purchase right
with respect to shares of Common Stock, any security or property rights
convertible into, exchangeable for, or otherwise entitling the holder thereof to
acquire, shares of Common Stock or any warrant, option, subscription or purchase
right with respect to any such convertible, exchangeable or other
security.

     

     

    
      
        
        

      

      
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    1.4 “Trading Day” means at
any time a day on which the Trading Market on which the Common Stock may be
listed is open for general trading of securities.

     

    1.5 Company
Acknowledgment.  The Company will, at the time of the exercise
of the Warrant, upon the request of the holder hereof acknowledge in writing its
continuing obligation to afford to such holder any rights to which such holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such holder any such rights.

     

    1.6 Trustee for Warrant
Holders.  In the event that a bank or trust company shall have
been appointed as trustee for the holders of the Warrant pursuant to Subsection
3.2, such bank or trust company shall have all the powers and duties of a
warrant agent (as hereinafter described) and shall accept, in its own name for
the account of the Company or such successor person as may be entitled thereto,
all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.

     

    2. Procedure for
Exercise.

     

    2.1 Delivery of Stock
Certificates, Etc., on Exercise.  The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be deemed
to be issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares in accordance herewith.  As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
Current Fair Market Value of one full share, together with any other stock or
other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or
otherwise.

     

    2.2 Exercise.  Payment
may be made either (i) in cash or by certified or official bank check payable to
the order of the Company equal to the applicable aggregate Exercise Price, (ii)
if there is no effective registration statement covering the shares issuable
upon exercise of this Warrant at that time, by delivery of the Warrant, or
shares of Common Stock and/or Common Stock receivable upon exercise of the
Warrant in accordance with the formula set forth below in this Section 2.2, or
(iii) if there is no effective registration statement covering the shares
issuable upon exercise of this Warrant at that time, by a combination of any of
the foregoing methods, for the number of Common Shares specified in such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.  Notwithstanding any provisions herein to the
contrary, if the Current Fair Market Value of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below),
in lieu of exercising this Warrant for cash, the Holder may elect to receive
shares equal to the value (as determined below) of this Warrant (or the portion
thereof being exercised) by surrender of this Warrant at the principal office of
the Company together with the properly endorsed Exercise Notice in which event
the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:

     

     

    
      
        
        

      

      
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              X=Y

            	
              (A-B)

            
	 
      	
              A

            

    

    

    
      	
               Where
      X =

            	
              the
      number of shares of Common Stock to be issued to the
  Holder

            

    

     

    
      	
               
      

            	
              Y
      =

            	
              the
      number of shares of Common Stock purchasable under the Warrant or, if only
      a portion of the Warrant is being exercised, the portion of the Warrant
      being exercised (at the date of such
  calculation)

            

    

     

    
      	
               
      

            	
              A
      =

            	
              the
      Current Fair Market Value of one share of the Company's Common Stock (at
      the date of such calculation)

            

    

     

    
      	
               
      

            	
              B
      =

            	
              Exercise
      Price (as adjusted to the date of such
  calculation)

            

    

     

    

     

    2.3 4.99% and 9.99%
Limitations.

     

    

    (1)           Notwithstanding
anything contained herein to the contrary, Holder shall not be entitled to
purchase pursuant to the terms hereof a number of shares of Common Stock that
would exceed the difference between 4.99% of the issued and outstanding shares
of Common Stock and the number of shares of Common Stock beneficially owned by
Holder (the “4.99%
Limitation”).  For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the 1934 Act and Regulation 13d-3 thereunder. Holder may void the 4.99%
Limitation upon 75 days prior notice to the Company.

     

    (2)           In
the event that Holder voids the 4.99% Limitation, Holder shall not be entitled
to purchase pursuant to the hereof an amount that would be convertible into that
number of shares of Common Stock that would exceed the difference between 9.99%
of the issued and outstanding shares of Common Stock and the number of shares of
Common Stock beneficially owned by Holder (the “9.99%
Limitation”).  For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the 1934 Act and Regulation 13d-3 thereunder. Holder may void the 9.99%
Limitation upon 75 days prior notice to the Company.

     

    

    
      
        
        

      

      
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    3. Effect of Reorganization,
Etc.; Adjustment of Exercise Price.

     

    3.1 Reorganization,
Consolidation, Merger, Etc.  In case at any time or from time
to time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1 at any time after the consummation
of such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.

     

    3.2 Dissolution.  In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder of the
Warrant pursuant to Section 3.1, or, if the Holder shall so instruct the
Company, to a bank or trust company specified by the Holder and having its
principal office in New York, NY as trustee for the Holder of the Warrant (the
“Trustee”).

     

    3.3 Continuation of
Terms.  Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section
4.  In the event this Warrant does not continue in full force and
effect after the consummation of the transactions described in this Section 3,
then the Company's securities and property (including cash, where applicable)
receivable by the Holders of the Warrant will be delivered to Holder or the
Trustee as contemplated by Section 3.2.

     

    4. Extraordinary Events
Regarding Common Stock.  In the event that the Company shall
(a) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding shares
of Common Stock, or (c) combine its outstanding shares of the Common Stock into
a smaller number of shares of the Common Stock, then, in each such event, the
Exercise Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Exercise Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section
4.  The number of shares of Common Stock that the holder of this
Warrant shall thereafter, on the exercise hereof as provided in Section 1, be
entitled to receive shall be increased to a number determined by multiplying the
number of shares of Common Stock that would otherwise (but for the provisions of
this Section 4) be issuable on such exercise by a fraction of which (a) the
numerator is the Exercise Price that would otherwise (but for the provisions of
this Section 4) be in effect, and (b) the denominator is the Exercise Price in
effect on the date of such exercise.

     

     

     

    
      
        
        

      

      
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    5. Adjustments for Certain
Issuances of Common Stock or Securities Convertible into or Exchangeable for
Common Stock.   If the Company shall issue any Common
Stock or securities exercisable for or convertible into Common Stock other than
Excluded Stock (as defined below), for a consideration per share less than the
Current Fair Market Value thereof in effect immediately prior to the issuance of
such Common Stock (excluding stock dividends, subdivisions and other
transactions which are covered by Section 4), the Exercise Price in effect
immediately after each such issuance shall forthwith (except as provided in this
Section 5) be adjusted to a price equal to the quotient obtained by
dividing:

     

    a. an amount
equal to the sum of

     

    (x)           the
total number of shares of Common Stock outstanding on a Fully-Diluted Basis (as
defined below) immediately prior to such issuance multiplied by the Exercise
Price  in effect immediately prior to such issuance, plus

     

    (y)           the
consideration received by the Company upon such issuance, by

     

    b. the total
number of shares of Common Stock outstanding on a Fully-Diluted Basis
immediately prior to such issuance plus the number of shares of Common Stock so
issued (or the number of shares of Common Stock issuable upon exercise or
conversion of the other securities so issued).

     

    For
purposes of this Section 5, the following provisions shall be
applicable:

     

    (1)           In
the case of the issuance of Common Stock for cash, the consideration shall be
deemed to be the amount of cash paid therefor after deducting any discounts or
commissions paid or incurred by the Company in connection with the issuance and
sale thereof.

     

    (2)           In
the case of the issuance of Common Stock for a consideration in whole or in part
other than cash, the consideration other than cash shall be deemed to be the
fair market value thereof as determined in good faith by the board of directors
of the Company, in accordance with generally accepted accounting principles,
which determination and the basis therefore shall be provided to the Holder at
the time of the foregoing issuance or deemed issuance of Common Stock; provided, however, that if the
Holder objects to such valuation within twenty (20) days of receipt of notice
thereof, the Holder may request the Company to obtain the opinion of a mutually
acceptable investment banking firm to determine the fair market value thereof,
the costs of which shall be borne by the Company, in which event the
consideration shall be as determined by such investment banking
firm;

     

     

    
      
        
        

      

      
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    (3)           In
the case of the issuance of (i) options to purchase or rights to subscribe for
Common Stock (other than Excluded Stock), (ii) securities by their terms
convertible into or exchangeable for Common Stock (other than Excluded Stock),
or (iii) options to purchase or rights to subscribe for such convertible or
exchangeable securities (other than Excluded Stock):

     

    (A)           the
aggregate maximum number of shares of Common Stock deliverable upon exercise of
such options to purchase or rights to subscribe for Common Stock shall be deemed
to have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
subdivisions (1) and (2) above), if any, received by the Company upon the
issuance of such options or rights plus the minimum purchase price provided in
such options or rights for the Common Stock covered thereby;

     

    (B)           the
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable securities, or upon
the exercise of options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or exchange thereof, shall
be deemed to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the consideration
received by the Company for any such securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received by
the Company upon the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each case to be
determined in the manner provided in subdivisions (1) and (2)
above);

     

    (C)           on
any change in the number of shares of Common Stock deliverable upon exercise of
any such options or rights or conversion of or exchange for such convertible or
exchangeable securities, or on any change in the minimum purchase price of such
options, rights or securities, the Exercise Price shall forthwith be readjusted
to such Exercise Price as would have obtained had the adjustment made upon (x)
the issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change, as the case may be, been made upon the basis of
such change or (y) the options or rights related to such securities not
converted or exchanged prior to such change, as the case may be, been made upon
the basis of such change; and

     

    (D)           on
the expiration of any such options or rights, the termination of any such rights
to convert or exchange or the expiration of any options or rights related to
such convertible or exchangeable securities, the Exercise Price shall forthwith
be readjusted to such Exercise Price as would have obtained had the adjustment
made upon the issuance of such options, rights, convertible or exchangeable
securities or options or rights related to such convertible or exchangeable
securities, as the case may be, been made upon the basis of the issuance of only
the number of shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such convertible or
exchangeable securities or upon the exercise of the options or rights related to
such convertible or exchangeable securities, as the case may be.

     

     

    
      
        
        

      

      
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    For purposes of this Section 5, the
following definitions shall apply:

     

    “Excluded Stock” means
(i) all shares of Common Stock issued and outstanding on the date of issuance of
this Warrant; or (ii) shares of Common Stock or other securities exercisable
therefor (1) issued or issuable to officers, directors, consultants or employees
of the Company pursuant to any employee stock option plan, stock bonus plan,
stock purchase plan or other similar plan approved by the Board or (2) otherwise
issued or issuable to any officer, director, consultant or employee of the
Company if approved by the Board.

     

    “Fully-Diluted Basis”
means, as of any date, the number of shares of Common Stock actually issued and
outstanding, plus an amount equal to the number of shares of Common Stock that
would be outstanding after giving effect to the exercise or conversion of all
options, warrants or other convertible securities.

    

    6. Certificate as to
Adjustments.  In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of the
Warrant, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Exercise Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant.  The Company will forthwith
mail a copy of each such certificate to the holder of the Warrant and any
Warrant agent of the Company (appointed pursuant to Section 10
hereof).

     

    7. Reservation of Stock, Etc.,
Issuable on Exercise of Warrant.  The Company will at all times
reserve and keep available, solely for issuance and delivery on the exercise of
the Warrant, shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant.

     

    8. Assignment; Exchange of
Warrant.  Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a "Transferor") in whole or in part.  On the
surrender for exchange of this Warrant, with the Transferor's endorsement in the
form of Exhibit B attached hereto (the "Transferor Endorsement Form") and
together with evidence reasonably satisfactory to the Company demonstrating
compliance with applicable securities laws, which shall include, without
limitation, the provision of a legal opinion from the Transferor's counsel (at
the Company’s expense) that such transfer is exempt from the registration
requirements of applicable securities laws, and with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant so surrendered by the Transferor.

     

     

    
      
        
        

      

      
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    9. Replacement of
Warrant.  On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

     

    10. Warrant
Agent.  The Company may, by written notice to the each Holder
of the Warrant, appoint an agent for the purpose of issuing Common Stock (or
Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 8, and replacing this Warrant
pursuant to Section 9, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.

     

    11. Transfer on the Company's
Books.  Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the
contrary.

     

    12. Notices,
Etc.  All notices and other communications from the Company to
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such Holder or, until any such Holder furnishes to the
Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.

     

    13. Miscellaneous.  This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This Warrant shall
be governed by and construed in accordance with the laws of State of New York
without regard to principles of conflicts of laws.  Any action brought
concerning the transactions contemplated by this Warrant shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York; provided, however, that the Holder may choose to waive this provision
and bring an action outside the state of New York.  The individuals
executing this Warrant on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury.  The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs.  In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Warrant.  The headings in this Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof.  The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision hereof.  The Company acknowledges that legal counsel
participated in the preparation of this Warrant and, therefore, stipulates that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Warrant to
favor any party against the other party.

     

     

     

    
      
        
        

      

      
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    14.           Registration Rights
Agreement. The shares of Common Stock underlying this Warrant are
“Registrable Securities” under the terms of the Registration Rights Agreement,
dated as of August 7, 2007, as amended by the Warrant Issuance Agreement, dated
January 30, 2008, between the Company and Moriah Capital, L.P., and the Holder
is entitled to the benefits thereof.

     

    IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

     

    
      	 
      	
              EMAGIN
      CORPORATION

            	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	
              By:

            	/s/ Michael
      D. Fowler 	 
	 
      	
              Name:

            	Michael
      D. Fowler 	 
	 
      	
              Title:

            	Interim
      Chief Financial Officer 	 

    

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

     

    FORM
OF SUBSCRIPTION

     

    (To Be
Signed Only On Exercise Of Warrant)

    
 

    TO:           EMAGIN
CORPORATION

     

    Attention:                                Chief
Financial Officer

    

    The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable
box):

     

    
      	 
      	 
      	
              ________
      shares of the Common Stock covered by such Warrant; or

            
	 
      	 
      	 
      
	 
      	 
      	
              the
      maximum number of shares of Common Stock covered by such Warrant pursuant
      to the cashless exercise procedure set forth in Section
  2.

            
	 
      

    

    

    The
undersigned herewith makes payment of the full Exercise Price for such shares at
the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of (check applicable box or
boxes):

     

    
      	 
      	 
      	
              $__________
      in lawful money of the United States; and/or

            
	 
      	 
      	 
      
	 
      	 
      	
              the
      cancellation of such portion of the attached Warrant as is exercisable for
      a total of _______ shares of Common Stock (using a Current Fair Market
      Value of $_______ per share for purposes of this calculation);
      and/or

            
	 
      
	 
      	 
      	 
      
	 
      	 
      	
              the
      cancellation of such number of shares of Common Stock as is necessary, in
      accordance with the formula set forth in Section 2.2, to exercise this
      Warrant with respect to the maximum number of shares of Common Stock
      purchasable pursuant to the cashless exercise procedure set forth in
      Section 2.

            
	 
      
	 
      

    

    

    The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to ______________________________________________ whose
address is
___________________________________________________________________________.

     

    The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the "Securities Act") or pursuant to an exemption from registration
under the Securities Act.

     

    
      	
              Dated:

            	 
      	 
      	 
      
	 
      	 
      	
              (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

            
	 
      	 
      	 
      
	 
      	 
      	
              Address:

            	 
      
	 
      	 
      	 
      	 
      

    

    

    EXHIBIT
B

     

    FORM
OF TRANSFEROR ENDORSEMENT

     

    (To Be
Signed Only On Transfer Of Warrant)

     

    For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of eMagin Corporation into which the within Warrant relates specified
under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of eMagin
Corporation with full power of substitution in the premises.

     

    
      	
               

              Transferees

            	 
      	
               

              Address

            	 
      	
              Percentage

              Transferred

            	 
      	
              Number
      Transferred

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      

    

    

    

    
      	
              Dated:

            	 
      	 
      	 
      
	 
      	 
      	
              (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

            
	 
      	 
      	 
      
	 
      	 
      	
              Address:

            	 
      
	 
      	 
      	 
      	 
      

    

    

    

    
      	 
      	
              SIGNED
      IN THE PRESENCE OF:

            
	 
      	 
      
	 
      	 
      
	 
      	
              (Name)

            
	
              ACCEPTED
      AND AGREED:

            	 
      
	
              [TRANSFEREE]

            	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
              (Name)

            	 
      

    

    
 

     

    11ex101.htm

    Exhibit
10.1

     

     

    AMENDMENT
NO. 1 –

    LOAN
AND SECURITY AGREEMENT

    

    Amendment
No. 1, dated as of January 30, 2008 (“Amendment”), to
the  Loan and Security Agreement, dated August 7, 2007 (the “Original Agreement” and, as
amended hereby, the “Agreement”) by and between
EMAGIN CORPORATION, a
Delaware corporation with its principal place of business located at 10500 N.E.
8th
Street, Suite 1400, Bellevue, Washington 98004 (the "Borrower"), and MORIAH CAPITAL, L.P., a
Delaware limited partnership with offices at 685 Fifth Avenue, New York, New
York 10022 (as further defined below, the "Lender"). Capitalized terms
used but not defined herein have the meanings given to them in the Original
Agreement.

    

    R E C I T A L
S:

    

    A.           Borrower
has requested that Lender consent to certain changes in the Borrowing
Base.

    

    B.           Lender
has agreed to accommodate Borrower’s request on the terms set forth
herein.

    

    The
parties agree as follows:

    

    SECTION
1. AMENDMENTS

    

    Section
1.1                                Amendment to Section 1.9 of Original
Agreement. Section 1.9 of the Original Agreement (“Borrowing Base”) is hereby
amended and restated in its entirety as follows:

    

    
      	
              “1.9

            	
              “Borrowing Base” shall be
      calculated at any time as the sum of (i) the product obtained by
      multiplying the outstanding amount of Eligible Accounts, net of all taxes,
      discounts, allowances and credits given or claimed, by ninety percent
      (90%), plus (ii) the
      product obtained by multiplying the outstanding amount of Eligible Foreign
      Accounts, net of all taxes, discounts, allowances and credits given or
      claimed, by seventy percent (70%), plus (iii) the lesser of (A) Six
      Hundred Thousand Dollars ($600,000) or (B) the product(s) obtained by
      multiplying fifty percent (50%) by the values of Eligible Inventory as
      determined by Lender in good faith in its reasonably commercial judgment,
      based on the lower of cost or
market.”

            

    

     

    

    Section
1.2                                Amendment
to Section 1.22 of Loan Agreement.  Section 1.22 of
the Loan Agreement (“Eligible
Accounts”) is hereby amended and restated in its entirety as
follows:

    

    “1.22        “Eligible
Accounts” are accounts created by Borrower in the ordinary course of its
business which satisfy the following criteria:

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

     

    (1)           such
accounts arise from bona fide completed transactions and have not remained
unpaid for more than ninety (90) days after the invoice date
thereof;

     

    (2)           
the amounts of the accounts reported to Lender are absolutely owing to Borrower
and do not arise from sales on consignment, guaranteed sales or other terms
under which payment by the account debtors may be conditional or
contingent;

     

    (3)           the
account debtor’s chief executive office or principal place of business is
located in the United States, unless payment of any such account debtor’s
accounts is backed by a letter of credit or credit insurance acceptable to, and
approved by, Lender in its sole discretion); provided, however, that,
notwithstanding the foregoing, as of a particular date (“Determination Date”), Eligible
Accounts shall include accounts created by Borrower in the ordinary course of
its business to an account debtor located outside the United States with whom
Borrower has conducted business on a regular basis prior to January 1, 2007 on
the condition that no account of such account debtor has remained unpaid for a
period exceeding ninety (90) days from the invoice date thereof during the
twenty-four (24) -month period immediately preceding the Determination Date, and
that otherwise satisfy the criteria of this Section 1.22 (such accounts referred
to as “Eligible Foreign
Accounts”);

     

    (4)           such
accounts do not arise from any unearned portions of fees derived from progress
billings, as determined by Lender in its sole and absolute discretion, or from
any retainages or bill and hold sales;

     

    (5)           
there are no contra relationships, setoffs, counterclaims or disputes existing
with respect thereto;

     

    (6)           the
goods giving rise thereto were not at the time of the sale subject to any Liens
except for Permitted Encumbrances, and such accounts are free and clear of all
Liens except for Permitted Encumbrances;

     

    (7)           such
accounts are not accounts with respect to which the account debtor or any
officer or employee thereof is an officer, employee or agent of or is affiliated
with Borrower, directly or indirectly, whether by virtue of family membership,
ownership, control, management or otherwise;

     

    (8)           such
accounts are not accounts with respect to which the account debtor is the United
States or any state or political subdivision thereof or any department, agency
or instrumentality of the United States, any state or political subdivision,
unless there has been compliance with the Assignment of Claims Act or any
similar state or local law, if applicable;

     

    (9)           Borrower
has delivered to Lender or Lender’s representative such documents as Lender may
have requested in connection with such accounts and Lender shall have received a
verification of such account, satisfactory to it, if sent to the account debtor
or any other obligor or any bailee;

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    (10)           there
are no facts existing or threatened which might result in any material adverse
change in the account debtor’s financial condition, except for the state of
facts in existence on March 27, 2007 that caused Borrower’s accountants, Eisner
LLP, to issue a “going concern” qualification in their opinion of that date to
Borrower, as set forth in Borrower’s Annual Report on Form 10-K for the year
ended December 31, 2006;

     

    (11)           such
accounts owed by a single account debtor or its affiliates do not represent more
than thirty percent
(30%) of all otherwise Eligible Accounts (accounts excluded from Eligible
Accounts solely by reason of this subsection (11) shall nevertheless be
considered Eligible Accounts to the extent of the amount of such accounts which
does not exceed such percentage of all otherwise Eligible Accounts);
and

     

    (12)           such
accounts are not owed by an account debtor who is or whose affiliates are past
due upon other accounts owed to Borrower comprising more than fifty percent
(50%) of the accounts of such account debtor or its affiliates owed to
Borrower.”

     

    

    SECTION
2. MISCELLANEOUS

    

    Section 2.1  Prior
Agreements.  This Amendment
shall completely and fully supersede all other and prior agreements and
correspondence (both written and oral) by and between Borrower and Lender
concerning the subject matter of this Amendment.  Except as expressly
amended hereby, the Agreement shall remain in full force and
effect.

    

    Section 2.2  Counterparts.  This Amendment
may be executed in any number of counterparts, with the same effect as if all
the signatures on such counterparts appeared on one document.  Each
such counterpart shall be deemed to be an original, but all such counterparts
together shall constitute one and the same instrument.

    

    Section 2.3  Amendments.  This
Amendment may not be amended, waived, modified, supplemented or terminated in
any manner whatsoever except by a written instrument signed by Borrower and
Lender.

    

    Section 2.4  Binding
on Successors.  This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, except that Borrower may not assign any of its rights or
obligations under this Amendment or the other Loan Documents to any Person
without the prior written consent of Lender.

    

    Section 2.5  Invalidity.  Any
provision of this Amendment that may be determined by a court of competent
jurisdiction to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    Section 2.6  Section
or Paragraph Headings.  Section and paragraph headings used
herein are for convenience only and shall not be construed as part of this
Amendment.

    

    Section 2.7  Governing
Law.  This Amendment shall be construed in accordance with, and
shall be governed by, the laws of the State of New York, including Section
5-1401 of the New York General Obligations Law.

    

    Section 2.8  Construction.  The
language in all parts of this Amendment and the other Loan Documents shall be
construed as a whole according to its fair meaning.

    

    

    

    

    

    

    

    

    [SIGNATURE  PAGE
FOLLOWS]

     

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

     

     

    IN WITNESS WHEREOF, this
Amendment No. 1 has been duly executed as of the day and year first above
written.

     

    
      

      
        
          	 	EMAGIN
    CORPORATION	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Michael
      D. Fowler 	 
	 	 	Name:
      Michael D. Fowler 	 
	 	 	Title:
      Interim Chief Financial Officer 	 
	 	 	 	 

        

        
          	 	MORIAH CAPITAL,
      L.P.	 
	 	 	 	 
	
                   

                	
                  By:
      

                	Moriah Capital Management,
      L.P., General
      Partner	 
	 	By	 Moriah Capital
      Management, GP, LLC,General
      Partner	 
	 	 	 	 

        

      
        
          	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Alexandre
      Speaker	 
	 	 	Name:
       Alexandre Speaker	 
	 	 	Title:
      Managing Member 	 
	 	 	 	 

        

    

    

    

    [SIGNATURE
PAGE – AMENDMENT NO. 1 – LOAN AGREEMENT]

     

     

     

     

     

    5

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