eMagin Enters Into Agreements For Approximately $6.5 Million Private Placement

eMagin Corporation (AMEX: EMA), a leader in virtual
imaging technology, has entered into definitive agreements with
institutional and accredited investors for the sale of approximately
$6.5 million of senior secured convertible debentures and warrants.
The net proceeds from the financing will be used for general working
capital purposes.
   Under the agreements, investors agreed to purchase $5,970,000
principal amount of notes with conversion prices of $0.26 per share
that may convert into 22,192,301 shares of common stock and 5 year
warrants exercisable at $0.36 per share for 15,534,607 shares of
common stock. An additional $500,000 will be invested through exercise
of a warrant to purchase approximately 1.92 million shares of common
stock at $0.26 per share prior to December 14, 2006 or, at the request
of the Company, by the purchase of additional notes and warrants. If
not converted half of the principal amount will be due July 21, 2007
and the remaining balance due January 21, 2008. Interest at 6% per
annum is payable in quarterly installments on outstanding Notes during
their term commencing on September 1, 2006.
   In a showing of commitment to the Company's prospects, Paul
Cronson, Director, John Atherly, Chief Financial Officer, and Olivier
Prache, Senior Vice President of Display Manufacturing and Development
Operations participated in the transaction, and Gary Jones, Chief
Executive Officer and Susan Jones, Chief Marketing and Strategy
Officer, who collectively own 5% of the Company's outstanding shares,
agreed to defer 10% of their compensation until eMagin becomes EBITDA
positive or until the occurrence of certain other events.
   In conjunction with the note purchase transaction the Company will
submit to shareholders at its annual meeting a resolution to enact a
reverse stock split of 1 for 10 which, if approved, normalizes the
company's share price and shares outstanding.
   In order to reestablish performance incentives employees and
Directors have also agreed to forfeit approximately 4.7 million shares
of existing stock options in return for re-pricing 8.8 million
existing options at $0.26 per share. Re-priced options will not be
exercisable until 2007 or in some cases not until 2011, depending on
individual grant-vesting schedules.
   In addition, to further strengthen its management team the Company
intends to add two new Directors recommended by the new investors and
to recruit additional senior management.
   Additional details regarding the private placement are provided on
Form 8-K which is being filed today. Representing the company in this
transaction was Sichenzia Ross Friedman Ference, LLP.
   The note shares and warrants are being issued in a private
placement under regulation D of the Securities Act of 1933, as
amended. The company has agreed to file a registration statement
covering the resale of the common stock and underlying the notes and
warrants purchased by these investors following the closing. This
press release does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities, nor shall there be
any sale of the securities in any jurisdiction in which such offering
would be unlawful.

   About eMagin Corporation

   A leader in OLED microdisplay and virtual imaging technologies,
eMagin integrates high-resolution OLED microdisplays, magnifying
optics, and systems technologies to create a virtual image that
appears comparable to that of a computer monitor or a large-screen
television. eMagin's OLED displays have broad market reach and are
incorporated into a variety of near-to-eye imaging products by
military, industrial, medical and consumer OEMs who choose eMagin's
award-winning technology as a core component for their solutions.
eMagin has recently introduced its first direct-to-consumer system,
the Z800 3DVisor, which provides superb 3D stereovision and
headtracking for PC gaming, training and simulation, and business
applications. eMagin's microdisplay manufacturing and R&D operations
are co-located with IBM on its campus in East Fishkill, New York.
System design facilities and sales and marketing are located in
Bellevue, Washington. A sales office is located in Tokyo, Japan. For
additional information, please visit www.emagin.com and
www.3dvisor.com.

   Forward Looking Statements

   This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, including those regarding
eMagin Corporation and its subsidiaries' expectations, intentions,
strategies and beliefs pertaining to future events or future financial
performance. All statements contained herein are based upon
information available to eMagin's management as of the date hereof,
and actual results may vary based upon future events, both within and
without eMagin management's control. In some cases, you can identify
forward-looking statements by terminology such as "may," "will,"
"should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential" or "continue," the negative of such terms, or
other comparable terminology. These statements are only predictions.
Actual events or results may differ materially from those in the
forward-looking statements as a result of various important factors,
including those described in the Company's most recent filings with
the SEC. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, such statements should not
be regarded as a representation by the Company, or any other person,
that such forward-looking statements will be achieved. The business
and operations of the Company are subject to substantial risks which
increase the uncertainty inherent in forward-looking statements. We
undertake no duty to update any of the forward-looking statements,
whether as a result of new information, future events or otherwise. In
light of the foregoing, readers are cautioned not to place undue
reliance on such forward-looking statements.

   Note: eMagin and 3DVisor are trademarks of eMagin Corporation.