Exhibit 10.7
 
INTERCREDITOR AGREEMENT

INTERCREDITOR AGREEMENT, dated  August 7, 2007, by and among MORIAH CAPITAL,
L.P., a Delaware limited partnership with offices at 685 Fifth Avenue, New York,
New York 10022 (“Moriah”), ALEXANDRA GLOBAL MASTER FUND LTD., a British Virgin
Islands international business company with the offices of its investment
advisor at 767 Third Avenue, 39th Floor, New York, New York 10017 (“Alexandra”),
in its capacity as collateral agent pursuant to the Noteholder Agreements (such
capitalized term and all other capitalized terms used herein having the
respective meanings provided in this Agreement) acting for and on behalf of the
holders of Notes (in such capacity, the “Notes Collateral Agent” as hereinafter
further defined) and 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”).

R E C I T A L S:

A.              The Notes Collateral Agent is the collateral agent under the
Pledge and Security Agreement, dated as of July 21, 2006, made by the Borrower
to the Notes Collateral Agent, as amended by Amendment No. 1 to Pledge and
Security Agreement, dated as of July 23, 2007 by and between the Borrower and
the Notes Collateral Agent (the “Note Pledge Agreement”) for the benefit of the
holders (the “Noteholders”) from time to time of the Amended and Restated 8%
Senior Secured Convertible Notes Due 2008 issued by the Borrower (the “Notes”)
pursuant to the several Note Purchase Agreements, dated as of July 21, 2006, by
and between the Borrower and the several investors named therein, as amended by
the several Amendment Agreements, dated as of July 23, 2007, by and between the
Borrower and the several investors named therein (the “Note Purchase
Agreements”) and, to secure the Borrower’s obligations to the Noteholders, the
Notes Collateral Agent and the holders of Series A Senior Secured Convertible
Preferred Stock, par value $0.001 per share, of the Borrower issued or issuable
upon conversion of the Notes, the Borrower granted to the Notes Collateral Agent
a security interest in and to the property of the Borrower described on Schedule
2 annexed hereto (collectively, the “Notes Collateral”).

B.              Pursuant to a Loan and Security Agreement, of even date
herewith, between Moriah and Borrower (as the same may hereafter be amended, the
“Moriah Loan Agreement;” the term “Moriah Loan Agreements” shall include all of
the Loan Documents, as that term is defined in the Moriah Loan Agreement),
Moriah is providing an accounts receivable and inventory based credit facility
to Borrower that is secured by all now owned and hereafter acquired property
(including, without limitation, real property) and assets of Borrower and the
proceeds and products thereof, as more particularly described in Schedule 1
annexed hereto (collectively, the “Moriah Collateral”).

C.              It is a condition to the consummation of the transactions
contemplated by the Moriah Loan Agreements that the Notes Collateral Agent
subordinate its liens in the Accounts and Inventory as the same may be included
in the Notes Collateral on terms satisfactory to Moriah.

D.              The Notes Collateral Agent and Moriah have each filed or may
hereafter file financing statements under the Uniform Commercial Code, as may be
amended from time to time (“UCC”) with respect to the Notes Collateral and the
Moriah Collateral, respectively, in connection with the foregoing.

 

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E.              The Notes Collateral Agent and Moriah desire to agree on the
relative priority of their respective security interests in, and liens on, their
respective collateral.

In consideration of the foregoing, the mutual covenants and agreements herein
contained and other good and valuable consideration, the Notes Collateral Agent
and Moriah mutually covenant, warrant and agree as follows:

1.           Definitions.  All the agreements or instruments herein defined
shall mean such agreements or instruments as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with the terms thereof.  The following terms
(including both the singular and plurals thereof) shall have the following
meanings unless the context indicates otherwise:

1.1 “Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §§101
etseq.).

1.2 “Claim” or “Claims” means, as applicable, the Moriah Claim and/or the
Noteholder Claim.

1.3 “Collateral” means all property and interests in property now owned or
hereafter acquired by any Loan Party in or upon which a security interest or
mortgage lien is granted to Moriah or the Notes Collateral Agent under the
Security Documents.

1.4 “Creditors” shall mean Moriah, the Noteholders and the Notes Collateral
Agent and their respective successors and assigns.

1.5 “Enforcement Action” means with respect to a Claim, the demand for payment
or acceleration of such Claim, the repossession of any Collateral, the
commencement or prosecution of enforcement of any of the rights and remedies
under, as applicable, the Noteholder Agreements, the Moriah Loan Agreements, or
applicable law with respect to such Claim, including, but not limited to,
judicial or UCC foreclosure, provided that Enforcement Action shall not include
the filing of a claim in an Insolvency Proceeding.

1.6 “Enforcement Notice” means a written notice delivered by the Enforcing Party
to the other Party stating that an "Event of Default" (as defined in the
Noteholder Agreements or the Moriah Loan Agreements, respectively) has occurred
and is continuing and that an Enforcement Period has commenced.

1.7 “Enforcement  Period” means the period of time following the receipt by
either the Notes Collateral Agent or Moriah of an Enforcement Notice until (a)
the Noteholder Claim is Paid in Full (if the Notes Collateral Agent is the
Enforcing Party) or the Moriah Claim is Paid in Full (if Moriah is the Enforcing
Party), or (b) the Creditors agree in writing to terminate such Enforcement
Period.

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1.8 “Enforcing Party” means Moriah in the case of an Enforcement Action with
respect to the Moriah Claim, and the Notes Collateral Agent in the case of an
Enforcement Action with respect to the Noteholder Claim.

1.9 “Insolvency Proceeding” means any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of any Loan
Party.

1.10 “Loan Party” means Borrower and each subsidiary of Borrower which is now or
may hereafter become a party to the Noteholder Agreements or the Moriah Loan
Agreements.

1.10A “Lockbox Agreement” means the Lockbox Agreement, dated as of July 21,
2006, by and between the Borrower and the Notes Collateral Agent, as amended by
Amendment No. 1 to Lockbox Agreement, dated as of July 23, 2007, by and between
the Borrower and the Notes Collateral Agent.

1.11 “Maximum Moriah Debt” means the sum of (a) $2,500,000, plus (b) such other
indebtedness that may be permitted to be incurred from time to time on or after
the date hereof under the terms of the Notes as Permitted Indebtedness as such
term is defined in the Notes.

1.12 “Moriah Claim” means all of the obligations of the Loan Parties to Moriah
as set forth in the Moriah Loan Agreements.

1.13 “Moriah Senior Collateral” means the Collateral described in Section 2.1(a)
in which Moriah has a senior lien or security interest.

1.14 “Noteholder Agreements” means the Note Purchase Agreements, the Notes, the
Note Pledge Agreement, the Patent and Trademark Security Agreement, dated as of
July 21, 2006, by and between the Borrower and the Notes Collateral Agent, as
amended by Amendment No. 1 to Patent and Trademark Security Agreement dated as
of July 23, 2007, by and between the Borrower and the Notes Collateral Agent,
the Lockbox Agreement, the Certificate of Designations of Series A Senior
Secured Convertible Preferred Stock of the Borrower, the Amended and Restated
Common Stock Purchase Warrants issued by the Borrower to the holders of Notes
pursuant to the Note Purchase Agreements and the other agreements, instruments
and documents contemplated thereby.

1.15 “Noteholder Claim” means all obligations of the Loan Parties to the Notes
Collateral Agent and the Noteholders as set forth in the Noteholder Agreements.

1.16 “Noteholder Senior Collateral” means the Collateral described in Section
2.1(b) in which the Notes Collateral Agent has a senior lien or security
interest.

1.17 “Notes Collateral Agent” means Alexandra in its capacity as collateral
agent pursuant to the Note Pledge Agreement and the other applicable Noteholder
Agreements, and its successors and assigns including any replacement or
successor trustee or agent or any additional trustee or agent.

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1.18 “Paid in Full” means, in the case of the Moriah Claim, the aggregate
outstanding, unpaid amount of the Moriah Claim has been paid in full in cash and
all commitments to make loans or extend other financial accommodations have
terminated and, in the case of the Noteholder Claim, the aggregate outstanding
unpaid amount of the Noteholder Claim has been paid in full in cash and all
commitments to make loans or extend other financial accommodations have
terminated.  If after receipt of any payment of, or proceeds of collateral
applied to the payment of, either any Moriah Claim or Noteholder Claim, as the
case may be, any of the Creditors is required to surrender or return such
payment or proceeds to any person for any reason, then the Moriah Claim or
Noteholder Claim as applicable, intended to be satisfied by such payment or
proceeds shall be reinstated and continue as if such payment or proceeds had not
been received by such Creditor, as the case may be.  Notwithstanding anything to
the contrary contained herein, for purposes of this definition, the Moriah Claim
shall not include any amount of the Moriah Claim in excess of the Maximum Moriah
Debt.

1.19 “Party” means Moriah or the Notes Collateral Agent.

1.20 “Person” or “person” means, as applicable, any individual, sole
proprietorship, partnership, corporation, limited liability company, limited
liability partnership, partnership, business trust, unincorporated association,
joint stock corporation, trust, joint venture or other entity or any government
or any agency or instrumentality or political subdivision thereof.
 
1.21 “Post-Petition Interest” means interest at the contract rate under the
Moriah Loan Agreements or the Noteholder Agreements, as applicable, accruing
subsequent to the filing of any Insolvency Proceeding as to any Loan Party
whether or not such interest is an allowable claim in any such Insolvency
Proceeding.

1.22 “Security Documents” means, collectively, the Noteholder Agreements and the
Moriah Loan Agreements.

2.           Intercreditor Agreement.

2.1.           Lien Priorities.  Notwithstanding (a) the date, manner or order
of filing, recordation, or perfection of the security interests or liens granted
in favor of Moriah and the Notes Collateral Agent, (b) any provisions of the
UCC, or any applicable law or decision, (c) the provisions of the Moriah Loan
Agreements, Noteholder Agreements or any contract between any of the Creditors
on one hand, and the Borrower or any affiliate thereof, on the other hand, or
(d) whether either Moriah or the Notes Collateral Agent holds possession of all
or any part of the Collateral, the following, as between Moriah and the Notes
Collateral Agent, shall be the relative priority of the security interests and
liens of Moriah and the Notes Collateral Agent in the Collateral:

(a)           Moriah shall have a first and prior security interest to the
extent set forth herein in all Accounts and Inventory as defined in the Section
9-102 of the UCC.  The Notes Collateral Agent shall have a second and
subordinate security interest in the foregoing property and interests in such
property; provided, that, any amount of the Moriah Claim in excess of the
Maximum Moriah Debt at any time outstanding (together with the interest on such
excess) shall not be entitled to the benefit of the priority of the security
interest of Moriah provided for in this Section 2.1(a).

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(b)           The Notes Collateral Agent shall have a first and prior security
interest in the remainder of the Collateral that is the subject of the
Noteholder Agreements and Moriah shall have a second and subordinate security
interest in such Notes Collateral whether now owned or hereafter created by any
Loan Party.

Neither Moriah nor the Notes Collateral Agent shall contest the validity,
perfection, priority or enforceability of any lien or security interest
heretofore granted to the other Party or granted in connection herewith or
contemplated hereby.  Notwithstanding any failure of a Party to perfect its
security interests in any Collateral or any other defect in any security
interests or obligations owing to such Party, the priority and rights as between
the parties hereto shall be as set forth herein.

2.2.           Distribution of Proceeds of Collateral.

(a)           No Enforcement Period:  Except as provided in Section 2.2(b) below
(with respect to distribution of proceeds of Collateral during an Enforcement
Period):

(i)           All realizations upon and proceeds of Moriah Senior Collateral
shall be paid to Moriah for application to the Moriah Claim, with any residual
proceeds after satisfaction of the Moriah Claim being paid to the Notes
Collateral Agent for the benefit of the Noteholders.

(ii)           All realizations upon and proceeds of Noteholder Senior
Collateral shall be paid to the Notes Collateral Agent for application to the
Noteholder Claim, with any residual proceeds after satisfaction of the
Noteholder Claim being paid to Moriah.

(b)           During Enforcement Period:  During any Enforcement Period, all
proceeds of Collateral shall be distributed in accordance with the following
procedure:

(i)           All realizations upon and proceeds of Moriah Senior Collateral
shall be applied to the Moriah Claim.  After the Moriah Claim is Paid in Full
and the Moriah Loan Agreements are terminated and fully paid or otherwise
satisfied, any remaining proceeds of the Moriah Senior Collateral shall be
applied to the Noteholder Claim.

(ii)           All realizations upon and proceeds of Noteholder Senior
Collateral shall be applied to the Noteholder Claim.  After the Noteholder Claim
is Paid in Full and the Noteholder Agreements are terminated and fully paid or
otherwise satisfied, any remaining proceeds of the Noteholder Senior Collateral
shall be applied to the Moriah Claim.

(iii)           After the Moriah Claim and the Noteholder Claim have been paid
in full in cash and all commitments to make loans or extend other financial
accommodations have terminated, the balance of the realizations upon and
proceeds of the Collateral, if any, shall be paid to the respective Loan Party
or as otherwise required by applicable law.

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(c)           Payments Held in Trust.  Should any payment or distribution be
received by a Party that is not permitted to receive and retain such payment or
distribution pursuant to the terms hereof, such Party shall receive and hold the
same in trust, as trustee, for the Party entitled to receive and retain such
payment, and shall forthwith deliver the same to such Party in precisely the
form received (except for endorsement or assignment where necessary), for
application to the Claim of such Party and, until so delivered, the recipient
shall hold the same in trust as the property of such Party entitled to the
same.  If a Party obligated to make an endorsement or assignment pursuant to the
provisions of this Section fails to make any such endorsement or assignment, the
permitted recipient of such payment or distribution, or any of its officers or
employees, is hereby irrevocably authorized to make the same.

2.3.           Enforcement Actions.  Each of Moriah and the Notes Collateral
Agent agrees not to commence or take any Enforcement Action until an Enforcement
Notice has been given by such Enforcing Party to the other Party.  Subject to
the foregoing, Moriah and the Notes Collateral Agent agree that during an
Enforcement Period:

(a)
Moriah may, at its option, take and continue any Enforcement Action with respect
to Moriah Senior Collateral and realize thereon, without the prior written
consent of the Notes Collateral Agent, provided that during any Enforcement
Period with respect to the Noteholder Senior Collateral, Moriah shall not
commence or take any Enforcement Action or realize upon the Noteholder Senior
Collateral without the Notes Collateral Agent's prior written consent.

(b)
Subject to the standstill period described in Section 2.3(e) below, the Notes
Collateral Agent may, at its option, take and continue any Enforcement Action
with respect to the Noteholder Senior Collateral and realize thereon without the
prior written consent of Moriah, provided that during any Enforcement Period
with respect to the Moriah Senior Collateral, the Notes Collateral Agent shall
not commence or take any Enforcement Action or realize upon any of the Moriah
Senior Collateral without Moriah's prior written consent. In furtherance and not
in limitation of the foregoing, during an Enforcement Period, the Notes
Collateral Agent shall not take any action to enforce its rights under the
Lockbox Agreement, whether pursuant to Section 2 thereof or otherwise.

(c)
If both Moriah and the Notes Collateral Agent elect to proceed with Enforcement
Actions, then each shall proceed with the Enforcement Action of any security
interests in or liens on any Collateral in which it has a senior lien or
security interest, as described in and provided by Section 2.1, without
prejudice to the other Party to join in any proceedings.

(d)
Each Enforcing Party shall so notify the other Party at such time as the
Enforcing Party's Claim is Paid in Full.

(e)
Notwithstanding anything herein to the contrary, but subject to the proviso at
the end of this paragraph, the Notes Collateral Agent agrees that, during the
first five (5) days of an Enforcement Period (the “Standstill Period”), it shall
not take any action to realize on the Noteholder Senior Collateral, so as not to
impair the collection by Moriah of Borrower’s outstanding accounts receivable
during that period; provided, however, that the Notes Collateral Agent shall be
entitled to take such action as it deems necessary in its sole discretion to (i)
protect its secured position during the Standstill Period, (ii) protect its
interest from claims or liens of third parties or governmental authorities, or
(iii) preserve the Noteholder Senior Collateral from deterioration or
diminishment.

 
 
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2.4.           Accountings.  Each of Moriah and the Notes Collateral Agent agree
upon the occurrence of any Enforcement Action, to render accountings to the
other, upon reasonable request of the other, giving effect to the application of
realizations upon and proceeds of Collateral as hereinbefore provided.

2.5.           Notices of Defaults.  Moriah and the Notes Collateral Agent agree
to give to the other copies of any notice of the occurrence of an Event of
Default, respectively, simultaneously with the sending of such notice to the
applicable Loan Party, but the failure to give or forward any such notice shall
not affect the validity of such notice, create a cause of action against the
Party failing to give such notice, or create any claim or right on behalf of the
other Party or any third party.  The sending or receipt of such notice shall not
obligate the recipient to cure such Event of Default.

2.6.           Agency for Perfection.  Moriah and the Notes Collateral Agent
each hereby appoint each other as agent for purposes of perfecting their
respective security interests and liens in the Collateral.  To the extent that
either Party obtains possession of Collateral in which the other Party has a
senior priority under the terms hereof, the Party having possession shall notify
the other Party of such fact and shall deliver such Collateral to the Party
having the senior priority upon request of such Party.  Each Party shall be a
bailee for the other Party with respect to Collateral in such Party's
possession.  If directed by a Loan Party, the bailee Party shall, after the
Claim of such bailee Party has been Paid in Full, deliver the Collateral in its
possession to the other Party.

2.7.           UCC Notices.  In the event that Moriah or the Notes Collateral
Agent shall be required by the UCC or any other applicable law to give notice to
the other of intended disposition of Collateral, such notice shall be given in
accordance with Section 3.8 hereof, and five (5) days' notice shall be deemed to
be commercially reasonable.

2.8.           Information Sharing. Upon the occurrence and continuance of an
Enforcement Period, in the event that either Moriah or the Notes Collateral
Agent shall, in connection with any Enforcement Action, receive possession or
control of any books and records which contain information identifying or
pertaining to any of the property of any Loan Party in which the other Party has
been granted a lien, it shall notify the other Party that it has received such
books and records and shall, as promptly as practicable thereafter, make
available to the other Party duplicate copies of such books and records in the
same form as the original.  All reasonable expenses incurred by either Moriah or
the Notes Collateral Agent in performing its obligations under this paragraph
shall be borne by the Loan Parties and shall constitute indebtedness under the
respective Party's agreements with the Loan Parties.  The failure of either
Party to share information shall not create a cause of action against the Party
failing to share information or create any claim on behalf of any Loan Party or
any third party.

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2.9.           Obligations of the Loan Parties Unconditional.  Nothing contained
herein is intended to or shall increase or impair the obligations, liabilities
and indebtedness of the Loan Parties to pay the Claims as and when the same
shall become due and payable in accordance with the terms of the Moriah Loan
Agreements and the Noteholder Agreements, as applicable, or to affect the
relative rights of the Loan Parties and creditors of the Loan Parties other than
the Creditors.

2.10.                      Continuing Obligations.  This Agreement shall be
irrevocable and shall continue in effect until each Claim has been Paid In
Full.  This is a continuing agreement and each Party may continue, at any time
and without notice to the other Party, to extend credit to or for the benefit of
the Loan Parties on the faith hereof.

2.11.                      Certain Waivers.

(a)           The Notes Collateral Agent acknowledges that Moriah has not made
any warranties or representations with respect to the due execution, legality,
validity, completeness or enforceability of the Moriah Loan Agreements or the
collectibility of the Moriah Claim.

(b)           Each of the Notes Collateral Agent and Moriah shall be entitled to
manage and supervise its financial arrangements with each Loan Party in
accordance with its usual practices, modified from time to time as it deems
appropriate under the circumstances, without affecting the validity or
enforceability of this Agreement.

(c)           Moriah shall have no liability to the Notes Collateral Agent for,
and the Notes Collateral Agent hereby waives any claim which the Notes
Collateral Agent may now or hereafter have against Moriah arising out of any and
all actions which Moriah, in good faith, takes or omits to take (including,
without limitation, actions with respect to the creation, perfection or
continuation of liens or security interests in any existing or future
Collateral, actions with respect to the occurrence of a default or event of
default, actions with respect to the foreclosure upon, sale, release, or
depreciation of, or failure to realize upon, any of the Collateral and actions
with respect to the collection of any claim for all or any part of the
Noteholder Claim from any account debtor, guarantor or any other person) with
respect to and in accordance with any Moriah Loan Agreements or any other
agreement related thereto or to the collection of the Moriah Claim or the
valuation, use, protection or release of the Collateral, so long as any such
actions are taken in a manner consistent with the terms of this Agreement or any
election of the application of Section 1111(b)(2) of the Bankruptcy Code.

(d)           Moriah acknowledges that the Notes Collateral Agent has made no
warranties or representations with respect to the due execution, legality,
validity, completeness or enforceability of the Noteholder Agreements or the
collectibility of the Noteholder Claim.

(e)           The Notes Collateral Agent shall have no liability to Moriah for,
and Moriah hereby waives any claim which Moriah may now or hereafter have
against the Notes Collateral Agent arising out of any and all actions which the
Notes Collateral Agent, in good faith, takes or omits to take (including,
without limitation, actions with respect to the creation, perfection or
continuation of liens or security interests in any existing or future
Collateral, actions with respect to the occurrence of a default or event of
default, actions with respect to the foreclosure upon, sale, release, or
depreciation of, or failure to realize upon, any of the Collateral and actions
with respect to the collection of any claim for all or any part of the Moriah
Claim from any account debtor, guarantor or any other person) with respect to
and in accordance with the Noteholder Agreements or  any other agreement related
thereto or to the collection of the Noteholder Claim or the valuation, use,
protection or release of the Collateral, so long as any such actions are taken
in a manner consistent with the terms of this Agreement or any election of the
application of Section 1111(b)(2) of the Bankruptcy Code.

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2.12.                      Modifications and Waivers.  Any modification or
waiver of any provision of this Agreement, or any consent to any departure by
either Party from the terms hereof, shall not be effective in any event unless
the same is in writing and signed by Moriah and the Notes Collateral Agent, and
then such modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose given.  Any notice to or demand
on any Party in any event not specifically required hereunder shall not entitle
the Party receiving such notice or demand to any other or further notice or
demand in the same, similar or other circumstances unless specifically required
hereunder.  Each Loan Party hereby acknowledges and agrees that this Agreement
may be amended or otherwise modified without notice to or consent by any Loan
Party.

2.13.                      Insurance.  The Party having a senior security
interest or lien in the Collateral shall have, subject to such Party’s rights
under its agreements with the Loan Parties, the sole and exclusive right, as
against the other Party, to adjust settlement of such insurance policy in the
event of any loss.

2.14           Effect of Bankruptcy.  This Agreement shall be and remain
enforceable notwithstanding any Insolvency Proceeding by or against the
Borrower.

3.           Miscellaneous.

3.1.           Representations, Warranties and Covenants.  Each Party
represents, warrants and covenants to the other that:

(a)           except as set forth herein, it has not subordinated, and agrees
that it will not subordinate at any time while this Agreement remain in effect,
any right, claim or interest of any kind in or to the Collateral as to which
such Party has a senior lien or security interest, and any subordination in
violation of this sub-paragraph shall be null and void;

(b)           it has not assigned or transferred any right, claim or interest of
any kind in or to its Claim; and

(c)           the execution, delivery and performance by or on behalf of such
Party has been duly authorized by all necessary action, corporate or otherwise,
does not violate any provision of law, governmental regulation, or any agreement
or instrument by which such Party is bound, and requires no governmental or
other consent that has not been obtained.

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3.2.           No Benefit to Third Parties.  The terms and provisions of this
Agreement shall be for the sole benefit of the Creditors and their respective
successors and assigns, and no other Person shall have any right, benefit,
priority or interest under or because of this Agreement.

3.3.           Independent Credit Investigations.  Neither Party nor any of
their respective directors, officers, agents or employees shall be responsible
to any other person for the solvency, financial condition or ability of any Loan
Party to repay the Moriah Claim or the Noteholder Claim, or for statements of
any Loan Party, oral or written, or for the validity, sufficiency or
enforceability of the Moriah Claim or the Noteholder Claim, the Moriah Loan
Agreements, the Noteholder Agreements, or any liens or security interests
granted by any Loan Party in connection therewith.  Each of the Creditors has
entered into its respective financing agreements with Loan Parties based upon
its own independent investigation and makes no warranty or representation to the
other Party with respect to matters identified or referred to in this
paragraph.  If either Party, in its sole discretion, undertakes, at any time or
from time to time, to provide any such information to the other Party, such
information shall be given with no representation or warranty of any kind from
such Person and such Person shall be under no obligation (a) to provide any such
information to any other Person at that time or to any Person on any subsequent
occasion or (b) to undertake any investigation not a part of its regular
business routine.

3.4           Amendments to Financing Arrangements or to this Agreement.  Moriah
and the Notes Collateral Agent shall each endeavor to notify the other Party of
any material amendment or modification of the Moriah Loan Agreement or the
Noteholder Agreements, respectively, but the failure to do so shall not create a
cause of action against the Party failing to give such notice or create any
claim or right on behalf of the other Party.  Moriah and the Notes Collateral
Agent shall, upon request of the other Party, provide copies of all such
modifications or amendments and copies of all other documentation relevant to
the Collateral.

3.5.           Marshaling of Assets.  The Notes Collateral Agent hereby waives
any and all rights to have the Moriah Senior Collateral, or any part thereof,
marshaled upon any foreclosure of any of Moriah's liens thereon or with respect
to any other Enforcement Action by Moriah.  Moriah hereby waives any and all
rights to have the Noteholder Senior Collateral, or any part thereof, marshaled
upon any foreclosure of the Notes Collateral Agent's liens thereon or with
respect to any other Enforcement Action by the Notes Collateral Agent.  If any
Claim is now or hereafter secured by collateral other than the Collateral
described hereunder, the Party holding such collateral shall have no obligation
to marshal such collateral before enforcing its rights in the Collateral
hereunder, and the other Party shall have no rights hereunder to share or
participate in any proceeds of such other collateral.  Each Party shall have the
right, subject to Section 2.3, to take Enforcement Action against Collateral in
such order, or in whole or in part, and subject to such conditions as such
Enforcing Party determines in its sole discretion.

3.6.           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of each of the
Parties, but does not otherwise create, and shall not be construed as creating,
any rights enforceable by any Loan Party or any other person not a party to this
Agreement.

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3.7.           Agreement Absolute.  This Agreement shall be and remain absolute
and unconditional under any and all circumstances, and no act or omission on the
part of any Party to this Agreement shall affect or impair the agreement of the
other Party hereunder.  Each of the Parties hereby authorizes the other Party to
(a) change any terms relating to such obligations of and Loan Party to such
Party or the loan agreements relating thereto as such other Party in its
discretion may deem advisable and with Borrower’s agreement; (b) grant renewals,
increases or extensions of the time for payment of the Claim of such Party; (c)
receive notes or other evidences of the obligations of the Loan Parties to such
other Party or renewals, increases or extensions thereof; and (d) take or omit
to take any action for the enforcement of, or waive any rights with respect to,
any obligation of the Loan Parties to such other Party without invalidating or
impairing any provision hereof.  The Parties hereby acknowledge and agree that
this Agreement does not increase or expand the obligations of Borrower under the
respective Security Documents to which the Parties are party.  Further, the
Parties acknowledge that if Borrower, in good faith, shall make a payment of
Claims in a manner that is inconsistent with the terms hereof, it shall have no
liability to either Party therefor as long as Borrower cooperates with the
Parties to rectify such mistake.

3.8.              Notice.  All notices, requests and demands to or upon the
respective parties shall be given in writing and shall be deemed to have been
duly given or made upon receipt by the receiving party.  All notices, requests
and demands are to be given or made to the respective parties at the following
addresses (or to such other addresses as either party may designate by notice in
accordance with the provisions of this paragraph):

If to Moriah:                         Moriah Capital, L.P.
685 Fifth Avenue
New York, New York 10022
Attention: Greg Zilberstein

With a copy to:                   Cohen Tauber Spievack & Wagner LLP
420 Lexington Avenue
Suite 2400
New York, New York 10170
Attention: Adam Stein, Esq.

If to the Notes
Collateral Agent:                  Alexandra Global Master Fund Ltd.
c/o Alexandra Investment Management, LLC
767 Third Avenue
39th Floor
New York, New York 10017
Attention: Chief Legal Officer

3.9.              Relationship of Parties.  This Agreement is entered into
solely for the purposes set forth herein, and except as expressly provided
herein, neither Party assumes any other duties or responsibilities to the other
regarding the financial condition of the Borrower or any other Party, or
regarding any collateral, or regarding any other circumstance bearing upon the
risk of nonpayment of the obligations of the Borrower under any of the
agreements hereinabove referred to.  Each Party shall be responsible for
managing its banking investments and/or business relationships with the
Borrower, and neither Party shall be deemed to be the agent of the other for any
purpose (except for the limited purpose set forth in Section 2.6) nor shall any
party hereto be deemed to be acting in concert with, or at the direction of, any
other party.

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3.10.            Governing Law.  This Agreement shall be construed in accordance
with, and shall be governed by, the laws of the State of New York (without
giving effect to choice of law or conflict of law rules).

3.11.            Consent to Jurisdiction.  Each Party hereby (a) irrevocably
submits and consents to the exclusive jurisdiction of the Supreme Court for New
York County, State of New York, and the United State District Court for the
Southern District of New York with respect to any action or proceeding arising
out of this Agreement or any matter arising therefrom or relating thereto and
(b) waives any objection based on venue or forumnonconveniens with respect
thereto.

3.12.            Counterparts.  This Agreement may be executed in counterparts
and by facsimile or other electronic transmission, each of which when so
executed, shall be deemed an original, but all of which together shall
constitute but one and the same instrument.

3.13            Headings.  The headings, captions and footers of this Agreement
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

3.14            Severability.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.

3.15            Entire Agreement; Benefit.  This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof.  There are no restrictions, promises, warranties, or undertakings, other
than those set forth or referred to herein.  This Agreement supersedes all prior
agreements and understandings, whether written or oral, between the parties
hereto with respect to the subject matter hereof.  This Agreement and the terms
and provisions hereof are for the sole benefit of only the Notes Collateral
Agent, for the benefit of the Noteholders, and Moriah and their respective
successors and permitted assigns.

3.16            Waiver.  Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, or any course of dealing between the parties, shall not operate as a
waiver thereof or an amendment hereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.

3.17            Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

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IN WITNESS WHEREOF, this Intercreditor Agreement has been duly executed as of
the day and year first above written.
 
 

 
ALEXANDRA GLOBAL MASTER FUND LTD.,
As Notes Collateral Agent
                 By: ALEXANDRA INVESTMENT MANAGEMENT, LLC,As Investment Advisor
               
 
By:
/s/ Mikhall Filimonov       Name:  Mikhall Filimonov       Title: Chairman and
Chief Executive Office           

 
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: General Partner
         

 

Acknowledged and agreed to by:
 

  EMAGIN CORPORATION          
 
By:
/s/ K.C. Park       
Name: K.C. Park
     
Title: Interim CEO
         

 
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ACKNOWLEDGMENT

The undersigned hereby acknowledges and agrees to the foregoing terms and
provisions.  By executing this Agreement, the undersigned agrees that it will,
together with its successors and assigns, be bound by the provisions hereof as
they relate to the relative rights of the Notes Collateral Agent and Moriah as
between them. The undersigned further agrees that: (i) the terms of this
Agreement shall not give the undersigned any substantive rights vis-a-vis either
the Notes Collateral Agent, the Noteholders or Moriah, (ii) it does not and will
not receive any right, benefit, priority or interest under or because of the
existence of this Agreement, (iii) it will execute and deliver such additional
documents and take such additional action as may be necessary or desirable in
the opinion of any Creditor to effectuate the provisions and purposes of this
Agreement and (iv) this Agreement may be amended or supplemented from time to
time without notice to, or the consent of, the undersigned.

If either Moriah or the Notes Collateral Agent shall enforce its rights or
remedies in violation of the terms of this Agreement, the undersigned agrees
that it shall not use such violation as a defense to any Enforcement Action by
either Moriah or the Notes Collateral Agent nor assert such violation as a
counterclaim or basis for set-off or recoupment against either Moriah, the
Noteholders or the Notes Collateral Agent.

 
 

   EMAGIN CORPORATION        
Dated: August 7, 2007
By:
/s/ K.C. Park       
Name: K.C. Park
     
Title: Interim CEO
       

 
 
 
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