diff --git a/scripts/system/controllers/controllerDispatcher.js b/scripts/system/controllers/controllerDispatcher.js
index d79c2bd236..06853fa4ba 100644
--- a/scripts/system/controllers/controllerDispatcher.js
+++ b/scripts/system/controllers/controllerDispatcher.js
@@ -7,7 +7,7 @@
 
 /*jslint bitwise: true */
 
-/* global Script, Entities, Overlays, Controller, Vec3, getControllerWorldLocation, RayPick,
+/* global Script, Entities, Overlays, Controller, Vec3, Quat, getControllerWorldLocation, RayPick,
    controllerDispatcherPlugins, controllerDispatcherPluginsNeedSort, entityIsGrabbable,
    LEFT_HAND, RIGHT_HAND, NEAR_GRAB_PICK_RADIUS */
 
@@ -212,6 +212,14 @@ Script.include("/~/system/controllers/controllerDispatcherUtils.js");
         ];
         // if the pickray hit something very nearby, put it into the nearby entities list
         for (h = LEFT_HAND; h <= RIGHT_HAND; h++) {
+
+            // XXX find a way to extract searchRay from samuel's stuff
+            rayPicks[h].searchRay = {
+                origin: controllerLocations[h].position,
+                direction: Quat.getUp(controllerLocations[h].orientation),
+                length: 1000
+            };
+
             var nearEntityID = rayPicks[h].entityID;
             if (nearEntityID) {
                 // XXX check to make sure this one isn't already in nearbyEntityProperties?
diff --git a/scripts/system/controllers/controllerDispatcherUtils.js b/scripts/system/controllers/controllerDispatcherUtils.js
index e52c158219..cdf8729d9c 100644
--- a/scripts/system/controllers/controllerDispatcherUtils.js
+++ b/scripts/system/controllers/controllerDispatcherUtils.js
@@ -26,7 +26,10 @@
    entityIsGrabbable,
    getControllerJointIndex,
    propsArePhysical,
-   controllerDispatcherPluginsNeedSort
+   controllerDispatcherPluginsNeedSort,
+   projectOntoXYPlane,
+   projectOntoEntityXYPlane,
+   projectOntoOverlayXYPlane
 */
 
 MSECS_PER_SEC = 1000.0;
@@ -162,3 +165,41 @@ propsArePhysical = function (props) {
     var isPhysical = (props.shapeType && props.shapeType != 'none');
     return isPhysical;
 };
+
+projectOntoXYPlane = function (worldPos, position, rotation, dimensions, registrationPoint) {
+    var invRot = Quat.inverse(rotation);
+    var localPos = Vec3.multiplyQbyV(invRot, Vec3.subtract(worldPos, position));
+    var invDimensions = { x: 1 / dimensions.x,
+                          y: 1 / dimensions.y,
+                          z: 1 / dimensions.z };
+    var normalizedPos = Vec3.sum(Vec3.multiplyVbyV(localPos, invDimensions), registrationPoint);
+    return { x: normalizedPos.x * dimensions.x,
+             y: (1 - normalizedPos.y) * dimensions.y }; // flip y-axis
+}
+
+projectOntoEntityXYPlane = function (entityID, worldPos, props) {
+    return projectOntoXYPlane(worldPos, props.position, props.rotation, props.dimensions, props.registrationPoint);
+}
+
+projectOntoOverlayXYPlane = function projectOntoOverlayXYPlane(overlayID, worldPos) {
+    var position = Overlays.getProperty(overlayID, "position");
+    var rotation = Overlays.getProperty(overlayID, "rotation");
+    var dimensions;
+
+    var dpi = Overlays.getProperty(overlayID, "dpi");
+    if (dpi) {
+        // Calculate physical dimensions for web3d overlay from resolution and dpi; "dimensions" property is used as a scale.
+        var resolution = Overlays.getProperty(overlayID, "resolution");
+        resolution.z = 1;  // Circumvent divide-by-zero.
+        var scale = Overlays.getProperty(overlayID, "dimensions");
+        scale.z = 0.01;    // overlay dimensions are 2D, not 3D.
+        dimensions = Vec3.multiplyVbyV(Vec3.multiply(resolution, INCHES_TO_METERS / dpi), scale);
+    } else {
+        dimensions = Overlays.getProperty(overlayID, "dimensions");
+        if (dimensions.z) {
+            dimensions.z = 0.01;    // overlay dimensions are 2D, not 3D.
+        }
+    }
+
+    return projectOntoXYPlane(worldPos, position, rotation, dimensions, DEFAULT_REGISTRATION_POINT);
+}
diff --git a/scripts/system/controllers/controllerModules/nearActionGrabEntity.js b/scripts/system/controllers/controllerModules/nearActionGrabEntity.js
index 8017f457fe..42859f3e19 100644
--- a/scripts/system/controllers/controllerModules/nearActionGrabEntity.js
+++ b/scripts/system/controllers/controllerModules/nearActionGrabEntity.js
@@ -167,6 +167,8 @@ Script.include("/~/system/libraries/controllers.js");
                     return makeRunningValues(false, [], []); // let nearParentGrabEntity handle it
                 } else {
                     this.targetEntityID = targetProps.id;
+                    ContextOverlay.entityWithContextOverlay = this.targetEntityID;
+                    ContextOverlay.enabled = true;
                     // XXX highlight this.targetEntityID here
                     return makeRunningValues(true, [this.targetEntityID], []);
                 }
@@ -188,16 +190,35 @@ Script.include("/~/system/libraries/controllers.js");
                 var args = [this.hand === RIGHT_HAND ? "right" : "left", MyAvatar.sessionUUID];
                 Entities.callEntityMethod(this.targetEntityID, "continueNearGrab", args);
             } else {
-                                // still searching / highlighting
+
+                // still searching / highlighting
                 var readiness = this.isReady (controllerData);
                 if (!readiness.active) {
                     return readiness;
                 }
-                if (controllerData.triggerClicks[this.hand] == 1) {
-                    // stop highlighting, switch to grabbing
-                    // XXX stop highlight here
-                    var targetProps = this.getTargetProps(controllerData);
-                    if (targetProps) {
+
+                var targetProps = this.getTargetProps(controllerData);
+                if (targetProps) {
+
+                    // XXX
+                    var rayPickInfo = controllerData.rayPicks[this.hand];
+                    var pointerEvent = {
+                        type: "Move",
+                        id: this.hand + 1, // 0 is reserved for hardware mouse
+                        pos2D: projectOntoEntityXYPlane(rayPickInfo.entityID, rayPickInfo.intersection, targetProps),
+                        pos3D: rayPickInfo.intersection,
+                        normal: rayPickInfo.normal,
+                        direction: rayPickInfo.searchRay.direction,
+                        button: "Secondary"
+                    };
+                    if (ContextOverlay.createOrDestroyContextOverlay(rayPickInfo.entityID, pointerEvent)) {
+                    }
+                    // XXX
+
+
+                    if (controllerData.triggerClicks[this.hand] == 1) {
+                        // stop highlighting, switch to grabbing
+                        // XXX stop highlight here
                         this.startNearGrabAction(controllerData, targetProps);
                     }
                 }