AMENDED AND RESTATED SECURITIES ISSUANCE AGREEMENT

THIS AMENDED AND RESTATED SECURITIES ISSUANCE AGREEMENT (this “ Agreement ”) is made and entered into on August 20, effective as of August 7, 2008, by and between eMagin Corporation, a Delaware corporation (the “ Company ”), and Moriah Capital, L.P., a Delaware limited partnership (the “ Lender ”).

Capitalized terms not otherwise defined herein have the meaning set forth in that certain Loan and Security Agreement by and between Lender, as lender, and the Company, as borrower,  dated as of August 7, 2007, as amended through the date hereof (as so amended, the “ Loan Agreement ”).

WHEREAS, the Company and Lender entered into a Securities Issuance Agreement, dated as of August 7, 2007 (the “ Original Securities Issuance Agreement ”), pursuant to which, among other things, the Company issued to Lender 162,500 shares of the Company’s common stock, $0.001 par value per share (“ Common Stock ”), evidenced by stock certificate number 3124, dated August 15, 2007, which shares had  an aggregate market value on the Closing Date of $195,000, based on the closing price of the Common Stock on the OTC Bulletin Board on the Closing Date (the  “ 2007 Shares ”);

WHEREAS, at the request of the Company, the Lender has agreed to (i) waive the Company’s obligation to honor the put of the 2007 Shares on the terms set forth in the Original Securities Issuance Agreement with respect to 125,000 of the 2007 Shares (the “ Waived 2007 Shares ”), and (ii) defer the Company’s obligation to honor the put of the 2007 Shares on the terms set forth in the Original Securities Issuance Agreement with respect to the remaining 37,500 of the 2007 Shares (the “ Deferred 2007 Shares ”), which deferred put right shall be exercisable by Lender in accordance with Section 6.1 hereof;

WHEREAS, as a condition to the execution and delivery of Amendment No. 3 to the Loan Agreement, and in consideration for the foregoing waiver with respect to the 2007 Shares, the Company is issuing 125,000 additional shares of its Common Stock (the “ Additional Shares ”) to Lender on the terms set forth herein, which Additional Shares shall be subject to Lender’s put right in accordance with Section 6.1 hereof;

WHEREAS, in lieu of the issuance to Lender of the “Contingent Issued Shares”, as described in the Original Securities Issuance Agreement, the Company has authorized the issuance to Lender, on the effective date of this Agreement, 360,000 shares of Common Stock (the “ 2008 Shares ”) (the  2008 Shares, together with the  Additional Shares, are referred to herein as collectively as the “ Shares ”);

WHEREAS, the issuances and other obligations and transactions described and contemplated hereby are in partial consideration for Lender agreeing to enter into, perform or accept, as applicable, the Loan Agreement and the other Loan Documents, and for Lender agreeing to amend the Loan Agreement in accordance with the terms of Amendment No. 3 thereof, being entered into contemporaneously herewith (“ Amendment No. 3 ”); and

WHEREAS, the parties desire to amend and restate the Original Securities Issuance Agreement in its entirety to reflect the foregoing;

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.   Issuance of Shares; Waiver of Put of 2007 Shares .

2.   Closing; Delivery .  (a) Closing Obligations of Company . At the Closing Date, except as set forth below, the Company shall have taken and shall take all actions necessary to issue the  Additional Shares and the 2008 Shares to Lender and to consummate the transactions contemplated hereby, including, without limitation, delivery or causing to be delivered to Lender the following:

(b) Closing Obligations of Lender .  At the Closing Date, Lender shall have taken and shall take all actions necessary for its acquisition of the Additional Shares and the 2008 Shares, and to consummate the transactions contemplated hereby.

3.   Representations and Warranties of the Company .  The Company hereby represents and warrants to Lender as follows:

(a)   The authorized and issued capital stock of the Company as of the date hereof is as disclosed in the Company’s filings that are required by the Securities Act of 1933, as amended (the “ Securities Act ”) and the Securities Exchange Act of 1934, as amended (the “ Securities Exchange Act ”) (the “ SEC Reports ”) to be filed with the Securities and Exchange Commission (“ SEC ”).

(b)   Except as disclosed in the SEC Reports, other than: (i) Common Stock reserved for issuance under the Company’s stock option plans and (ii) the Shares, there are no outstanding options, warrants, rights (including, but not limited to, conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or other arrangements or agreements of any kind for the purchase or acquisition from the Company or its Subsidiaries, of any of their securities.  Neither the offer, issuance or sale of any of, or the issuance of any of, the Additional  Shares and the 2008 Shares, nor the consummation of any transactions contemplated hereby, will result in a change in the price or number of any securities of the Company or its Subsidiaries authorized or issued other than pursuant to Amendment No. 3 to the Loan Agreement and the transactions contemplated therein.

(c)   All issued and outstanding securities: (i) have been duly authorized and validly issued and are fully paid and nonassessable and (ii) were issued in compliance with all applicable state and federal laws.

(d)   The Additional Shares and the 2008 Shares have been duly and validly reserved for issuance.  When issued in compliance with the provisions of this Agreement, the Additional Shares and the 2008 Shares will be validly issued, fully paid and nonassessable, and will be free of any liens, charges, encumbrances, options, rights of first refusal, security interests, claims, mortgages, pledges, charges, easements, covenants, restrictions, (except as contained herein) obligations, or any other encumbrances (including, without limitation, any conditional sale or other title retention agreement or any lease in the nature thereof and any agreement to grant or to permit or suffer to exist any of the foregoing) or third party rights or equitable interests of any nature whatsoever or any Liens all of the above shall be referred to herein as a “Lien”.

3.3   Authorization; Binding Obligations .  All corporate action on the part of the Company necessary for the authorization of the transactions contemplated hereby and by Amendment No. 3, and the performance of the same, has been taken or will be taken prior to the Closing Date.  This Agreement and the transactions contemplated hereby and by Amendment No. 3 are the valid and binding obligations of the Company, enforceable against it in accordance with their terms.

3.4   Title to Properties and Assets; Liens, Etc .  Except for Permitted Encumbrances, each of the Company and each of its Subsidiaries has good and marketable title to its properties and assets, and good title to its leasehold estates, in each case not subject to any Liens.

3.5   No Conflicts .  Neither the Company nor any of its Subsidiaries is in violation or default of (a) any term of its formation documents or by-laws or (b) other than with respect to (i) any Event of Default arising out of the Company’s failure to repay the Obligations under the Loan Agreement on August 7, 2008, which default has been waived by Lender, and (ii) any rights to registration of shares of the Company’s common stock, of any provision of any indebtedness for borrowed money, any mortgage, indenture, lease, license, agreement or contract (collectively, “ Contracts ”) or any judgment, order, writ, injunction, or decree (“ Orders ”).  The execution, delivery and performance of this Agreement and the Loan Documents will not, with or without the passage of time or giving of notice, result in a default under any such term or provision of indebtedness for borrowed money, Contract or Order, or result in the creation of any Lien upon any of the securities, properties or assets of the Company or any of its Subsidiaries, or the suspension, revocation, impairment, forfeiture or nonrenewal of any licenses, permits, franchises, approvals, consents, waiver, notices, authorizations, qualifications, concessions, or the like.

3.6   Registration Rights and Voting Rights .  Except as disclosed in the Registration Rights Agreement or in any SEC Reports, neither the Company nor any of its Subsidiaries is presently under any obligation, and neither the Company nor any of its Subsidiaries has granted any rights, to register any of the Company’s or its Subsidiaries’ securities.  Except as disclosed in any SEC Reports, to the Company’s best knowledge, no stockholder of the Company or any of its Subsidiaries has entered into any agreement with respect to the voting of equity securities of the Company or any of its Subsidiaries.

3.7   Valid Offering .  Assuming the accuracy of the representations and warranties of Lender contained in this Agreement, the offer, sale and issuance of the Additional Shares and the 2008 Shares will be exempt from the registration requirements of the Securities Act, and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.

3.8   SEC Reports .  The Company’s SEC Reports do not  contain any untrue statement of a material fact nor omi