Exhibit 10.6


    Exhibit
      10.6

     

     

    

      LOCKBOX
        AGREEMENT

      


      THIS
        LOCKBOX AGREEMENT,
        dated
        as of July 21, 2006 (this “Agreement”), by and between EMAGIN
        CORPORATION,
        a
        Delaware corporation (the “Company”), the bank or other financial institution
        which may become a party hereto in accordance with Section 25, as lockbox
        agent
        (the “Lockbox Agent”), and ALEXANDRA
        GLOBAL MASTER FUND LTD.,
        a
        British Virgin Islands international business company (the “Collateral
        Agent”).

      


      W I T N E S S E T H:

      


      WHEREAS,
        the
        Company and the several Buyers (such capitalized term and all other capitalized
        terms used in this Agreement having the meanings provided in Section 1) are
        parties to the several Note Purchase Agreements, pursuant to which, among
        other
        things, the Buyers have agreed to purchase the Notes from the Company;


      


      WHEREAS,
        contemporaneously with the execution and delivery of this Agreement, the
        Company
        and the Collateral Agent are executing and delivering the Security Agreement
        with the Collateral Agent pursuant to which, among other things, the Company
        is
        granting a security interest in the Collateral, including, without limitation,
        all of the Company's right, title and interest in and to all Accounts and
        Contracts arising thereunder and the Collateral Account to the Collateral
        Agent
        for the ratable benefit of the Holders;

      


      WHEREAS,
        in order
        to give effect to and perfect the security interest in certain of the collateral
        subject to the Security Agreement, this Agreement provides that all payments
        to
        the Company pursuant to the Security Agreement shall be paid into a lockbox
        or a
        Collateral Account controlled by the Lockbox Agent and disbursed from the
        Collateral Account in accordance with the terms of this Agreement;
        and

       

      WHEREAS,
        it
        is a
        condition precedent to the several obligations of the Buyers to purchase
        their
        respective Notes pursuant to the Note Purchase Agreements that the Company
        and
        the Collateral Agent shall have executed and delivered this Agreement for
        the
        ratable benefit of the Holders;

      


      NOW
        THEREFORE,
        in
        consideration of the premises and the mutual covenants contained herein and
        other good and valuable consideration, the receipt and sufficiency of which
        are
        hereby acknowledged, the parties agree as follows:

      


      1.
         Definitions.

      


      (a) As
        used
        in this Agreement, the terms “Agreement”, “Company”, “Collateral Agent”, and
“Lockbox Agent” shall have the respective meanings assigned to such terms in the
        introductory paragraph of this Agreement.

      


      (b) 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 and of this Agreement.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (c) Capitalized
        terms used herein without definition shall have the respective meanings assigned
        to such terms in the Notes.

      


      (d) The
        following terms shall have the following meanings (such meanings to be equally
        applicable to both the singular and plural forms of the terms
        defined):

      


      “Accounts”
        shall have the meaning given such term in the Security Agreement.

      


      “Additional
        Note” means the Note issued pursuant to the Additional Note Purchase
        Agreement.

      


      “Additional
        Note Purchase Agreement” means the Note Purchase Agreement, dated as of July 21,
        2006, by and between the Company and Stillwater LLC, which by its terms
        contemplates the issuance of up to $500,000 aggregate principal amount of
        Notes
        on or after December 10, 2006.

      


      “Agreement”
        means this Lockbox Agreement, as amended, supplemented or otherwise modified
        from time to time.

      


      “Available
        Specified Funds” means with respect to each Deposit Date the amount of the
        Specified Funds less the Retained Amount.

      


      “Buyer”
        means any of the several buyers party to a Note Purchase Agreement.

      


      “Collateral”
        shall have the meaning given such term in the Security Agreement.

      


      “Collateral
        Account” means the account maintained at the Collateral Agent for the ratable
        benefit of the Holders which is identified in clause (b) of Section 2 and
        entitled “eMagin Noteholder Collateral Account”, and any successor or
        replacement account.

      


      “Deposit
        Date” shall have the meaning given such term in Section 7(a).

      


      “Event
        of
        Default” means:

      


      (1) the
        failure by the Company to perform in any material respect any obligation
        of the
        Company under this Agreement as and when required by this
        Agreement;

      


      (2) any
        representation or warranty made by the Company pursuant to this Agreement
        shall
        have been untrue in any material respect when made or deemed to have been
        made;
        or

      


      (3) any
        Event
        of Default, as that term is defined in the Security Agreement;

      


      
        
          
          

        

        
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      (4) any
        Event
        of Default, as that term is defined in the Patent and Trademark Security
        Agreement; or

      


      (5) any
        Event
        of Default, as that term is defined in any of the Notes.

      


      “Event
        of
        Default Notice” means a notice given by the Company, the Collateral Agent or a
        Holder to the Lockbox Agent of the occurrence of an Event of
        Default.

      


      “Holder”
        means any Buyer or any holder from time to time of any Note.

      


      “Instruction”
        shall have the meaning provided in Section 2(a).

      


      “Lien”
        shall mean any lien, mortgage, security interest, chattel mortgage, pledge
        or
        other encumbrance (statutory or otherwise) of any kind securing satisfaction or
        performance of an obligation, including any agreement to give any of the
        foregoing, any conditional sales or other title retention agreement, any
        lease
        in the nature thereof, and the filing of or the agreement to give any financing
        statement under the Code of any jurisdiction or similar evidence of any
        encumbrance, whether within or outside the United States.

      


      “Lockbox”
        means the lockbox administered by the Lockbox Agent for the ratable benefit
        of
        the Holders which is identified in clause (a) of Section 2, and any successor
        or
        replacement lockbox.

      


      “Lockbox
        Agent's Designees” shall have the meaning given such term in Section
        10(a).

      


      “Majority
        Holders” means at any time such of the holders of Notes, which based on the
        outstanding principal amount of the Notes, represents a majority of
        the
        aggregate outstanding principal amount of the Notes.

      


      “Note
        Purchase Agreements” means the several Note Purchase Agreements, dated as of
        July 21, 2006, by and between the Company and the respective Buyer party
        thereto
        pursuant to which the Company issued the Notes, including, without limitation,
        the Additional Note Purchase Agreement.

      


      “Notes”
        means the Company’s 6% Senior Secured Convertible Notes due 2007-2008 originally
        issued pursuant to the Note Purchase Agreements, including, without limitation,
        the Additional Note.

      


      “Notice
        Date” means the date on which the Company gives the Instruction in accordance
        with Section 2.

      


      “Obligations
        Schedule” means a schedule prepared by the Company which for each Holder and
        each Note held thereby states, as of the date thereof, the
        following:

      


      
        
          
          

        

        
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      (i) such
        Holder's name, address, telephone line facsimile transmission number and
        payment
        instructions, including wire transfer instructions, 

      


      (ii) the
        original principal amount, the outstanding principal amount and the and the
        maturity date of the Note, 

      


      (iii) the
        amount of accrued and unpaid interest on each Note, 

      


      (iv) the
        amount of unpaid interest due on each Note as of the most recent Interest
        Payment Date, 

      


      (v) the
        amount of unpaid Default Interest, if any, due on each Note, 

      


      (vi) the
        occurrence or continuation of any Event of Default with respect to each Note,
        

      


      (vii) the
        occurrence of any event which with notice or the passage of time, or both,
        could
        become an Event of Default, 

      


      (viii) the
        amount, due date of, and reasons for any unpaid obligation due with respect
        to
        each Note by reason of (A) an Event of Default or (B) any other repurchase,
        redemption or acceleration obligation, and 

      


      (ix) the
        aggregate amount then due to the Holder with respect to each Note.

      


      “Patent
        and Trademark Security Agreement” means the Patent and Trademark Security
        Agreement, dated as of July 21, 2006, between the Company and the Collateral
        Agent.

      


      “Person”
        means any natural person, corporation, partnership, limited liability company,
        trust, incorporated organization, unincorporated association or similar entity
        or any government, governmental agency or political subdivision.

      


      “Retained
        Amount” means that portion, which may be all, of the Specified Funds for each
        Deposit Date which equal (to the extent of the Specified Funds available)
        the
        sum of all amounts with respect to the Notes which are scheduled to accrue
        or
        which otherwise are expected to become due to the Holders during the Retention
        Period for principal of and interest and Default Interest on the Notes or
        for
        costs and expenses arising under the Transaction Documents and payable by
        the
        Company. 

      


      “Retention
        Period” means the 45-day period after each Deposit Date.

      


      “Security
        Agreement” means the Pledge and Security Agreement, dated as of July 21, 2006,
        between the Company and the Collateral Agent.

      


      “Specified
        Funds” shall have the meaning given such term in Section 7(a).

      


      
        
          
          

        

        
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      “Subsidiary”
        means any corporation or other entity of which a majority of the capital
        stock
        or other ownership interests having ordinary voting power to elect a majority
        of
        the board of directors or other Persons performing similar functions are
        at the
        time directly or indirectly owned by the Company.

      


      “Termination
        Notice” means a notice given to the Lockbox Agent by and signed by the Company,
        the Majority Holders and the Collateral Agent, which notice states that a
        particular Event of Default has terminated or has been satisfied or waived
        and
        no Holder has any continuing rights with respect thereto.

      


      “Transaction
        Documents” means the Notes, the Note Purchase Agreements, this Agreement, the
        Security Agreement, the Patent and Trademark Security Agreement, the Warrants
        and the other agreements, instruments and documents contemplated hereby and
        thereby.

      


      2. Payments.
        (a) The
        Company agrees, that, upon the direction of the Collateral Agent given at
        any
        time that an Event of Default has occurred and is continuing, in accordance
        with
        Section 3(b) of the Security Agreement the Company shall irrevocably instruct
        in
        writing (the “Instruction”) all the account debtors on the Accounts that
        constitute part of the Collateral and all of the parties (other than the
        Company) who are parties to Contracts that constitute part of the Collateral
        that such Accounts and Contracts have been assigned to the Collateral Agent
        for
        the ratable benefit of the Holders and that payments in respect thereof shall
        be
        shall be made either 

      


      (i) by
        check
        or money order to the address of the Lockbox, which address shall be identified
        to the Company by the Collateral Agent or if the Lockbox Agent is a bank
        shall
        be the address of the office of the Lockbox Agent, or 

      


      (ii)
         by
        wire
        transfer of funds to the Collateral Account, which account shall be identified
        to the Company by the Collateral Agent.

      


      If
        the
        Company fails to give the Instruction in accordance with Section 3(b) of
        the
        Security Agreement, the Collateral Agent may, in its own name or in the name
        of
        the Company, give the Instruction directly to the account debtors on the
        Accounts that constitute part of the Collateral and to all of the parties
        to
        Contracts that constitute part of the Collateral.

      


      (b) If
        the
        Collateral Agent shall so require, at or prior to the time any Person who
        has
        not already received the Instruction is to become an account debtor on Accounts
        that constitute part of the Collateral or a party to Contracts that constitute
        part of the Collateral, the Company shall instruct such Person that such
        Accounts and Contracts have been assigned to the Collateral Agent for the
        ratable benefit of the Holders and that payments in respect thereof shall
        be
        made in the manner set forth in Section 2(a). If the Company fails to give
        the
        instructions in accordance with this Section 2(b), the Collateral Agent may,
        in
        its own name or in the name of the Company, give such instructions directly
        to
        such Person.

      


      3.
         No
        Contrary Instructions. Without
        the prior written consent of the Collateral Agent and the Majority Holders,
        the
        Company shall not revoke, rescind or modify the Instruction or take any other
        action which is contrary to or inconsistent with this Agreement or the Security
        Agreement. If for any reason the Company receives any payment from an account
        debtor or party to a Contract on or after the Notice Date, the Company shall
        immediately deposit such payment, and any interest or proceeds thereon, in
        the
        Collateral Account. Prior to such deposit, the Company shall hold all such
        funds
        in trust for the exclusive benefit of the Collateral Agent and the Holders
        pursuant to this Agreement.

      


      
        
          
          

        

        
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      4. Lockbox.
        The
        Lockbox shall be under the sole and exclusive control of the Lockbox Agent,
        as
        agent for the Collateral Agent only. On each Business Day on or after the
        date
        the Company gives or is required to give the Instruction, the Lockbox Agent
        will
        remove all items from the Lockbox and promptly deposit all checks, money
        orders
        and other payments included in such items in the Collateral Account. The
        Company
        irrevocably authorizes and directs the Lockbox Agent to endorse and deposit
        all
        such checks and money orders in the Collateral Account on the Business Day
        of
        receipt by the Lockbox.

      


      5. Collateral
        Account. 
        The
        Collateral Account shall be under the sole and exclusive control of the Lockbox
        Agent, as agent for the Collateral Agent only. All cash deposited in the
        Collateral Account pursuant to this Agreement, and all interest earned thereon,
        shall be held in the Collateral Account and shall at all times be segregated
        from the funds and property of any other Person. The Collateral Account shall
        be
        an interest-bearing account which pays interest at the rate determined from
        time
        to time by the Lockbox Agent for comparable, fully liquid commercial accounts.
        Without the prior consent of the Company, the Collateral Agent and the Majority
        Holders, the assets in the Collateral Account shall be held in cash only
        and
        shall not be invested in any securities. Funds may be withdrawn from the
        Collateral Account only as expressly provided in this Agreement.

      


      6. Events
        of Default. 
        Upon the
        occurrence of an Event of Default, the Company shall immediately, and the
        Collateral Agent may at any time, notify the Lockbox Agent thereof by giving
        an
        Event of Default Notice. If an Event of Default Notice is so given to the
        Lockbox Agent by the Company or the Collateral Agent, then thereafter the
        Lockbox Agent shall deem an Event of Default to have occurred and be continuing
        for all purposes unless and until the Lockbox Agent receives a Termination
        Notice executed by the Company, the Majority Holders and the Collateral
        Agent.

      


      7. Release
        of Funds. (a)
        Three
        Business Days after the Business Day on which funds received from any person
        are
        deposited into the Collateral Account in a minimum amount of $100,000
        (or
        which
        would increase the balance in the Collateral Account to at least $100,000)
        (the
“Deposit Date”), the Lockbox Agent shall disburse the amount of funds, including
        interest received, held in the Collateral Account on such Deposit Date (the
        “Specified Funds”) as follows:

      


      (i) First,
        to
        pay each Holder on a pro rata basis the amount of all accrued and unpaid
        interest and Default Interest, if any, then due each Holder in accordance
        with
        the terms of their respective Notes through the most recent Interest Payment
        Date;

      


      (ii) Second,
        to pay each Holder on a pro rata basis the unpaid amount, if any, then due
        such
        Holder pursuant to Article II of the Notes for any Determination Period ended
        at
        least 45 days prior to the date of such payment;

      


      
        
          
          

        

        
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      (iii) Third,
        to
        pay each Holder on a pro rata basis the amount, if any, of unpaid principal
        then
        due on the maturity date of any installment of principal of such Holder's
        Notes;


      


      (iv) Fourth,
        to the Holders and the Collateral Agent to pay or reimburse them for their
        respective amounts of costs and expenses payable by the Company pursuant
        to the
        Transaction Documents and not theretofore paid or reimbursed by the Company
        (including under this Section 7(a)); and

      


      (v) Fifth,
        if
        no Event of Default shall have occurred and be deemed continuing pursuant
        to
        Section 6, to pay the Available Specified Funds remaining in the Collateral
        Account to the Company.

      


      (b) During
        each Retention Period, the Lockbox Agent shall hold the Retained Amount in
        the
        Lockbox Account. On the Business Day following the end of such Retention
        Period,
        the Lockbox Agent shall (1) pay each Holder, on a pro rata basis, from the
        Retained Amount any unpaid amounts due to the Holders for interest, Default
        Interest and principal as described in clauses (i)-(iii) of Section 7(a)
        which
        have accrued and become due during the Retention Period and then (2) pay
        costs
        and expenses of the Holders and the Collateral Agent as described in clause
        (iv)
        of Section 7(a) and then (3) provided no Event of Default shall have occurred
        and be continuing, pay the remaining Retained Amount to the
        Company.

      


      (c) If
        an
        Event of Default shall have occurred and be continuing, after disbursing
        the
        Specified Funds in the Collateral Account pursuant to clauses (i) through
        (iv)
        of Section 7(a), the Lockbox Agent shall disburse the remaining Specified
        Funds
        to pay each Holder, on a pro rata basis, the amount of unpaid principal then
        due
        upon acceleration, if any, pursuant to Article IV of such Holder's Note(s);
        provided,
        however, that
        if
        the amount of such Specified Funds is insufficient to pay all amounts due
        to the
        Holders, then the amount paid to the Holders pursuant to this Section 7(c)
        shall
        be prorated among the Holders in proportion to the respective amounts due
        each
        Holder.

      


      (d) For
        each
        Deposit Date, after making the payments to the Holders required by Sections
        7(b)
        and 7(c) and after the Company shall have paid the Holders any other amounts
        then due under the Notes, the Lockbox Agent shall pay to the Company all
        Specified Funds remaining in the Collateral Account. Funds received in the
        Collateral Account and interest received thereon after any Deposit Date shall
        be
        deemed new Specified Funds to be disbursed, three Business Days after the
        next
        Deposit Date to occur, in accordance with all of the provisions and priorities
        of this Section 7 before being paid to the Company.

      


      8. Reporting
        Requirements; Payment Instructions.
        (a) On
        or before the Notice Date, on the first Business Day of each calendar month
        thereafter, and at such other times as requested by the Lockbox Agent in
        order
        to comply with its obligations under this Agreement or by the Collateral
        Agent,
        the Company shall furnish to the Lockbox Agent and the Collateral Agent an
        updated Obligations Schedule. The Company shall promptly correct any errors
        in
        any Obligations Schedule and furnish copies of such corrected Obligations
        Schedule to the Lockbox Agent and the Collateral Agent. If the Collateral
        Agent
        or any Holder shall notify the Lockbox Agent and the Company of any error
        in or
        dispute concerning an Obligations Schedule, the Lockbox Agent shall not release
        any funds from the Collateral Account which are the subject of such error
        or
        dispute until such error is corrected or such dispute is resolved with the
        consent of the affected Holders and the Company. The Lockbox Agent may release
        from the Collateral Account, in accordance with this Agreement, funds which
        are
        not subject to such error or dispute.

      


      
        
          
          

        

        
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      (b) All
        payments by the Lockbox Agent to the Holders under this Agreement shall be
        made
        by wire transfer of immediately available funds to the applicable account,
        or if
        no wire transfer instructions are given to the address, specified for each
        Holder in the Obligations Schedule or in a superseding notice given by a
        Holder
        to the Lockbox Agent. All payments by the Lockbox Agent to the Company under
        this Agreement shall be deposited in the Company's separate account maintained
        at the Lockbox Agent or shall be sent by wire transfer of immediately available
        funds to such other account as the Company shall have specified by notice
        to the
        Lockbox Agent.

      


      9. Representations
        and Warranties.
        The
        Company hereby represents and warrants to and for the benefit of the Lockbox
        Agent, the Collateral Agent and the Holders that: 

      


      (a) Power
        and Authority.
        The
        Company has full power, authority and legal right to enter into this
        Agreement.

      


      (b) Binding
        Obligation. 
        This
        Agreement has been duly authorized by the Company and has been duly executed
        and
        delivered by the Company and constitutes a legal, valid and binding obligation
        of the Company enforceable against the Company in accordance with its
        terms.

      


      (c) Non-Contravention. 
        The
        execution, delivery and performance of this Agreement will not violate any
        provision of any applicable law or regulation or of any order, judgment,
        writ,
        award or decree of any court, arbitrator or governmental authority, domestic
        or
        foreign, or of any securities issued by the Company or any Subsidiary, or
        of any
        mortgage, indenture, lease, contract or other agreement, instrument or
        undertaking to which the Company or any Subsidiary is a party or which purports
        to be binding upon the Company or any Subsidiary or upon any of their respective
        assets and will not result in the creation or imposition of any Lien on any
        of
        the assets of the Company or any Subsidiary except as expressly permitted
        by
        this Agreement and the other Transaction Documents.

      


      (d) Consents. 
        No
        consent (other than consents which have been obtained) of any party, and
        no
        filing, approval, registration, recording or other action is required in
        connection with the execution, delivery or performance of this Agreement
        by the
        Company.

      


      10. Limitation
        of Liability. The
        Lockbox Agent's liability in connection with the performance of the transactions
        covered by this Agreement shall be strictly limited as follows:

      


      (a) The
        Lockbox Agent shall exercise ordinary care in selecting agents and independent
        contractors, adequately bonded, to pick up and deliver the contents of the
        Lockbox (“Lockbox Agent's Designees”) but shall not be liable for loss caused by
        Lockbox Agent's Designees' negligence or misconduct. In the event of such
        loss,
        the Lockbox Agent will exercise its commercially reasonable best efforts,
        at the
        Company's cost and expense, to assist the Company in obtaining redress from
        the
        responsible party.

      


      
        
          
          

        

        
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      (b) The
        Lockbox Agent shall exercise its commercially reasonable best efforts in
        determining the optimum time to pick up mail at the Lockbox and the best
        carrier
        to deliver that mail to the Lockbox Agent’s designated processing facility.
        However, the Lockbox Agent shall not be liable if the chosen pickup time
        and
        carrier prove not to result in the earliest possible availability of
        funds.

      


      (c) In
        performing it duties hereunder, the Lockbox Agent will exercise ordinary
        care
        and will act in good faith. The Lockbox Agent will not be accountable for
        its
        failure to perform any of its obligations hereunder, except for its gross
        negligence or willful misconduct, or that of its employees, officers or agents.
        If, as a result of such gross negligence or willful misconduct, the Lockbox
        Agent is liable for mishandling any item, such liability shall be limited
        to the
        lesser of the face amount of any check involved or the amount of the Company's
        direct loss as a result of such mishandling, and in no event shall the Lockbox
        Agent be responsible for any incidental or consequential damages. IN NO EVENT
        SHALL THE LOCKBOX AGENT BE LIABLE FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES
        OR
        LOSS OF PROFIT, NOTWITHSTANDING NOTICE TO THE LOCKBOX AGENT OF THE POSSIBILITY
        OF SUCH DAMAGES OR LOSSES.

      


      11. Indemnification.
        The
        Company agrees to pay, indemnify, and to save the Lockbox Agent, the Collateral
        Agent and each Holder harmless from, any and all liabilities, costs and expenses
        (including, without limitation, legal fees and expenses) (i) with respect
        to, or
        resulting from, any delay in paying any and all excise, sales or other taxes
        which may be payable or determined to be payable with respect to the Collateral
        Account, (ii) with respect to, or resulting from, any failure or delay by
        the
        Company in complying with any law or regulation applicable to the Collateral
        Account or (iii) in connection with this Agreement, any breach or alleged
        breach
        hereof, or any action taken by the Lockbox Agent, the Collateral Agent or
        any
        Holder in exercising its rights hereunder. 

      


      12. Security
        Agreement.
        The
        Collateral Account and the Lockbox, and all funds due to the Company and
        deposited in the Lockbox and the Collateral Account, are subject to the security
        interest of the Collateral Agent pursuant to the Security Agreement in
        accordance with the terms thereof.

      


      13. Paragraph
        Headings, Captions, Etc.
        The
        paragraph headings, the captions and the footers used in this Agreement are
        for
        convenience of reference only and are not to affect the construction hereof
        or
        be taken into consideration in the interpretation hereof.

      


      14. No
        Waiver; Cumulative Remedies. 
        The
        Lockbox Agent shall not by any act, delay, indulgence, omission or otherwise
        be
        deemed to have waived any right or remedy hereunder or to have acquiesced
        in any
        default or breach of any of the terms and conditions hereof. No failure to
        exercise, nor any delay in exercising, on the part of the Lockbox Agent,
        any
        right, power or privilege hereunder shall operate as a waiver thereof. No
        single
        or partial exercise of any right, power or privilege hereunder shall preclude
        any other or further exercise thereof or the exercise of any other right,
        power
        or privilege. A waiver by the Lockbox Agent, the Collateral Agent or the
        Holders
        of any right or remedy hereunder on any one occasion shall not be construed
        as a
        bar to any right or remedy which the Lockbox Agent, the Collateral Agent
        or the
        Holders would otherwise have on any future occasion. The rights and remedies
        herein and in the Transaction Documents are cumulative, may be exercised
        singly
        or concurrently and are not exclusive of any rights or remedies provided
        by law
        or in equity or by statute.

      


      
        
          
          

        

        
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      15. Waivers
        and Amendments; Successors and Assigns.
        None of
        the terms or provisions of this Agreement may be waived, amended, supplemented
        or otherwise modified except by a written instrument executed by the party
        to be
        charged with enforcement; provided,
        however, that
        any
        provision of this Agreement may be waived, amended, supplemented or otherwise
        modified by the Lockbox Agent only with the prior written approval of the
        Collateral Agent or the Majority Holders. This Agreement shall be binding
        upon
        the successors and permitted assigns of the Company and shall inure to the
        benefit of the Lockbox Agent and its successors and assigns. The Company
        may not
        assign its rights or obligations under this Agreement without the prior written
        consent of the Lockbox Agent, which the Lockbox Agent may withhold in its
        sole
        discretion.

      


      16. Effective
        Date; Termination. 
        This
        Agreement shall become effective at the time of first issuance of any Note
        on
        the earliest Issuance Date when executed and delivered by the Company and
        the
        Collateral Agent. Upon the payment and performance in full by the Company
        of its
        obligations under the Transaction Documents, the Company's obligations to
        the
        Lockbox Agent and the Holders pursuant to Sections 2 through 8 shall terminate,
        any funds remaining in the Collateral Account shall be paid to the Company,
        and
        promptly thereafter the parties shall instruct the account debtors on all
        Accounts that theretofore constituted Collateral and all parties to Contracts
        that theretofore constituted Collateral to make all further payments due
        to the
        Company directly to the Company.

      


      17. Notices.
        Except
        as otherwise specifically provided herein, any notice required or permitted
        to
        be given under the terms of this Agreement shall be given in writing and
        shall
        be deemed effectively given upon personal delivery to the party to be notified
        or five days after deposit with the United States Postal Service, by registered
        or certified mail, postage prepaid to the party to be notified at such party’s
        address indicated in this Section 17 or at such other address as such party
        may
        designate by ten days’ advance written notice to the other parties. Notices in
        writing shall also be deemed effectively given upon delivery by an overnight
        courier, or upon transmission by facsimile, except that the time at which
        the
        notice is given will be the time at which confirmation of receipt is generated
        by the receiving facsimile machine. In the case of any notice to the Company,
        such notice shall be addressed to the Company at, 10500 N.E. 8th
        Street,
        Suite 1400, Bellevue, WA 98004 Attention: Chief Financial Officer (telephone
        line facsimile number (425) 749-3601), with a copy to Sichenzia Ross Friedman
        Ference LLP, 1065 Avenue of the Americas, 21st
        Floor,
        New York, New York 10018, Attention: Richard A. Friedman, Esq. (telephone
        line
        facsimile number (212) 930-9725), and in the case of any notice to the
        Collateral Agent or to the Collateral Agent while it serves as Lockbox Agent,
        such notice shall be addressed to the Collateral Agent (or Lockbox Agent,
        as
        applicable) at Alexandra Global Master Fund Ltd., c/o Alexandra Investment
        Management, LLC, 767 Third Avenue, 39th
        Floor,
        New York, New York 10017 (telephone line facsimile number (212) 301-1810),
        and
        if the Collateral Agent is not the Lockbox Agent, in the case of any notice
        to
        the Lockbox Agent, such notice shall be addressed to the Lockbox Agent at
        its
        address or telephone line facsimile transmission number provided in writing
        to
        the Company and the Collateral Agent at the time it becomes the Lockbox
        Agent.

      


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      18. Fees
        and Expenses. The
        Company agrees to pay the fees of the Lockbox Agent in performing its services
        under this Agreement and all reasonable expenses (including, but not limited
        to,
        attorneys' fees and costs for legal services, costs of insurance and payments
        of
        taxes or other charges) of, incidental to, or in any way relating to the
        performance by the Lockbox Agent of its obligations and the enforcement or
        protection of the rights of the Lockbox Agent hereunder. 

      


      19. Concerning
        Lockbox Agent. 
        The
        Company acknowledges that the rights and responsibilities of the Lockbox
        Agent
        under this Agreement with respect to any action taken by the Lockbox Agent
        or
        the exercise or nonexercise by the Lockbox Agent of any option, right, request,
        judgment or other right or remedy provided for herein or resulting or arising
        out of this Agreement shall, as between the Lockbox Agent and the Holders,
        be
        governed by Exhibit
        A to
        this
        Agreement and by such other agreements with respect thereto as may exist
        from
        time to time among them, but, as between the Lockbox Agent and the Company,
        except as expressly provided in Section 16, the Lockbox Agent shall be
        conclusively presumed to be acting as agent for the Collateral Agent with
        full
        and valid authority so to act or refrain from acting, and the Company shall
        not
        be under any obligation to make any inquiry respecting such authority.


      


      20. Concerning
        the Collateral Agent.
        The
        Collateral Agent hereby appoints the Lockbox Agent as its agent upon the
        terms
        provided in this Agreement, with the Lockbox Agent to act exclusively for
        the
        benefit of the Collateral Agent. The Collateral Agent is executing and
        delivering this Agreement solely for purposes of this Section 20.

      


      21. Integration. This
        Agreement represents the entire agreement of the Company and the Lockbox
        Agent
        with respect to the subject matter hereof, and there are no promises,
        undertakings, representations or warranties by the parties relative to the
        subject matter hereof not expressly set forth or referred to
        herein.

      


      22. Governing
        Law. This
        Agreement and the rights and obligations of the Company under this Agreement
        shall be governed by, and construed and interpreted in accordance with, the
        law
        of the State of New York.

      


      23. Counterparts;
        Execution. This
        Agreement may be executed in any number of counterparts and all the counterparts
        taken together shall be deemed to constitute one and the same instrument.
        This
        Agreement, once executed by a party, may be delivered to the other party
        hereto
        by telephone line facsimile transmission of a copy of this Agreement bearing
        the
        signature of the party so delivering this Agreement.

      


      24. Third
        Party Beneficiaries.
        The
        Collateral Agent and the Holders shall be third party beneficiaries of this
        Agreement.

      


      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      25. Collateral
        Agent as Lockbox Agent.
        Whenever
        there shall not be a bank or other financial institution serving as Lockbox
        Agent, the Collateral Agent shall serve as Lockbox Agent. The Collateral
        Agent
        may select a bank or financial institution to serve as Lockbox Agent. During
        any
        period that the Collateral Agent serves as Lockbox Agent any reference to
        the
        Collateral Agent in this Agreement shall be a nullity. A bank selected by
        the
        Collateral Agent to serve as Lockbox Agent may, by executing and delivering
        to
        the Company and the Collateral Agent a counterpart of this Agreement, become
        a
        party to this Agreement, as Lockbox Agent, whereupon, the Collateral Agent
        shall
        cease to be the Lockbox Agent, and the Company agrees to all amendments to
        the
        form of this Agreement as such bank or financial institution so selected
        by the
        Collateral Agent to serve as Lockbox Agent may require. While the Collateral
        Agent serves as Lockbox Agent, it may maintain the Collateral Account at
        a bank
        selected by the Collateral Agent, notwithstanding any provision of this
        Agreement to the contrary.

      


      26. 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.

      


      [Signature
        page follows]


      
        
           

          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF,
        the
        Company has caused this Agreement to be duly executed and delivered as of
        the
        date first above written.

       

       

      
        	 	 	 
	 	EMAGIN
                CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ Gary
                W.
                Jones
	 	
                
Name:
                Gary W. Jones
	 	
                Title:
                  Chief Executive Officer

              




       

      


      ACKNOWLEDGED
        AND AGREED:

      


      ALEXANDRA
        GLOBAL MASTER FUND LTD.,

      as
        Collateral Agent and Lockbox Agent

      


      BY:
        Alexandra Investment Management, LLC,

      as
        Investment Advisor

      


      


      
        	 	 	 	 
	/s/ Mikhail
                Filimonov	 	 	 
	
                
Name
                Mikhail Filimonov
Title Chairman and Chief Executive
                Officer	 	 	
              
	 	 	 	 




      


      



      
        
          
             

          

          
          

        

        
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      Exhibit
        A

      


      The
        Lockbox Agent

      


      1. Appointment. The
        Holders (all capitalized terms used in this Exhibit A and not otherwise defined
        herein shall have the respective meanings provided in the Lockbox Agreement
        to
        which this Exhibit A is attached (the “Agreement”)), by their acceptance of the
        benefits of the Agreement, hereby irrevocably designate Alexandra Global
        Master
        Fund Ltd. as Lockbox Agent to act as specified herein and in the Agreement.
        Each
        Investor hereby irrevocably authorizes, and each other Holder of any Note
        by the
        acceptance of such Note shall be deemed irrevocably to authorize, the Lockbox
        Agent to take such action on its behalf under the provisions of the Agreement
        and any other instruments and agreements referred to herein or therein and
        to
        exercise such powers and to perform such duties hereunder and thereunder
        as are
        specifically delegated to or required of the Lockbox Agent by the terms hereof
        and thereof and such other powers as are reasonably incidental thereto. The
        Lockbox Agent may perform any of its duties hereunder by or through its agents
        or employees.

      


      2. Nature
        of Duties.
        The
        Lockbox Agent shall have no duties or responsibilities except those expressly
        set forth in the Agreement. Neither the Lockbox Agent nor any of its officers,
        directors, employees or agents shall be liable for any action taken or omitted
        by it as such under the Agreement or hereunder or in connection herewith
        or
        therewith, unless caused by its or their gross negligence or willful misconduct.
        The duties of the Lockbox Agent shall be mechanical and administrative in
        nature; the Lockbox Agent shall not have by reason of the Agreement or any
        other
        Transaction Document a fiduciary relationship in respect of the Collateral
        Agent
        or any Holder; and nothing in the Agreement, expressed or implied, is intended
        to or shall be so construed as to impose upon the Lockbox Agent any obligations
        in respect of the Agreement except as expressly set forth herein.

      


      The
        Lockbox Agent shall not be liable for any act it may do or omit to do while
        acting in good faith and in the exercise of its own best judgment. Any act
        done
        or omitted by the Lockbox Agent on the advice of its own attorneys shall
        be
        deemed conclusively to have been done or omitted in good faith. The Lockbox
        Agent shall have the right at any time to consult with counsel on any question
        arising under the Agreement. The Lockbox Agent shall incur no liability for
        any
        delay reasonably required to obtain the advice of counsel. Nothing herein
        shall
        constitute a release or waiver of such legal counsel from any liability it
        may
        have for the advice given to the Lockbox Agent.

       

      


      3. Lack
        of Reliance on the Lockbox Agent.
        Independently and without reliance upon the Lockbox Agent, the Collateral
        Agent
        and each Holder, to the extent it deems appropriate, has made and shall continue
        to make (i) its own independent investigation of the financial condition
        and
        affairs of the Company and its subsidiaries in connection with the making
        and
        the continuance of the Company's obligations under the Transaction Documents
        and
        the taking or not taking of any action in connection therewith, and (ii)
        its own
        appraisal of the creditworthiness of the Company and its subsidiaries, and
        the
        Lockbox Agent shall have no duty or responsibility, either initially or on
        a
        continuing basis, to provide the Collateral Agent or any Holder with any
        credit
        or other information with respect thereto, whether coming into its possession
        before any such obligation arises or the purchase of any Note, or at any
        time or
        times thereafter. The Lockbox Agent shall not be responsible to the Collateral
        Agent or any Holder for any recitals, statements, information, representations
        or warranties herein or in any document, certificate or other writing delivered
        in connection herewith or for the execution, effectiveness, genuineness,
        validity, enforceability or sufficiency of the Agreement or the financial
        condition of the Company or be required to make any inquiry concerning either
        the performance or observance of any of the terms, provisions or conditions
        of
        the Agreement, or the financial condition of the Company, or the existence
        or
        possible existence of any Event of Default.

      


      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      4. Certain
        Rights of the Lockbox Agent. No
        Holder
        shall have the right to cause the Lockbox Agent to take any action with respect
        to the Lockbox or the Collateral Account, with only the Collateral Agent
        or the
        Majority Holders having the right to direct the Lockbox Agent to take any
        such
        action. If the Lockbox Agent shall request instructions from the Collateral
        Agent or the Majority Holders with respect to any act or action (including
        failure to act) in connection with the Agreement, the Lockbox Agent shall
        be
        entitled to refrain from such act or taking such action unless and until
        it
        shall have received instructions from the Collateral Agent or the Majority
        Holders, and to the extent requested, appropriate indemnification in respect
        of
        actions to be taken by the Lockbox Agent; and the Lockbox Agent shall not
        incur
        liability to any Person by reason of so refraining. Without limiting the
        foregoing, neither the Collateral Agent nor any Holder shall have any right
        of
        action whatsoever against the Lockbox Agent as a result of the Lockbox Agent
        acting or refraining from acting hereunder in accordance with the instructions
        of the Collateral Agent or the Majority Holders or as otherwise specifically
        provided in the Agreement.

      


      5. Reliance.
        The
        Lockbox Agent shall be entitled to rely, and shall be fully protected in
        relying, upon any note, writing, resolution, notice, statement, certificate,
        telephone line facsimile transmission, email, telex, teletype or telecopier
        message, cablegram, radiogram, order or other document or telephone message
        signed, sent or made by the proper Person, and, with respect to all legal
        matters pertaining to the Agreement and its duties thereunder, upon advice
        of
        counsel selected by it.

      


      6. Limitation
        of Collateral Agent and Holder Liability.
        The
        Collateral Agent and the Holders shall not be liable for any liabilities,
        obligations, losses, damages, penalties, actions, judgments, suits, costs,
        expenses or disbursements of any kind or nature whatsoever which may be imposed
        on, incurred by or asserted against the Lockbox Agent in performing its duties
        hereunder or under the Agreement, or in any way relating to or arising out
        of
        the Agreement.

      


      7. The
        Lockbox Agent in its Individual Capacity.
        The
        Lockbox Agent and its affiliates may lend money to, purchase, sell and trade
        in
        securities of and generally engage in any kind of business with the Company
        or
        any affiliate or subsidiary of the Company as if it were not performing the
        duties specified herein, and may accept fees and other consideration from
        the
        Company for services to the Company in connection with the Transaction Documents
        and otherwise without having to account for the same to the Holders;
provided,
        however,
        that the
        Collateral Agent on behalf of itself and such affiliates, hereby waives any
        claim, right or Lien against the Collateral Account in any way arising from
        or
        relating to any such loan, securities transaction or business with the
        Company.

      


      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      8. Holders.
        The
        Lockbox Agent may deem and treat the holder of record of any Note as the
        owner
        thereof for all purposes hereof unless and until a written notice of the
        assignment or transfer thereof, as the case may be, shall have been filed
        with
        the Lockbox Agent. Any request, authority or consent of any Person or entity
        who, at the time of making such request or giving such authority or consent,
        is
        the holder of record of any Note shall be conclusive and binding on any
        subsequent holder, transferee or assignee, as the case may be, of such Note
        or
        of any Note(s) issued in exchange therefor.

      


      9. Resignation
        by the Lockbox Agent.
        (a) The
        Lockbox Agent may resign from the performance of all its functions and duties
        under the Agreement at any time by giving 60 Business Days' prior written
        notice
        (as provided in the Agreement) to the Company, the Collateral Agent and the
        Holders. Such resignation shall take effect upon the appointment of a successor
        Lockbox Agent pursuant to clauses (b) and (c) below.

      


      (b) Upon
        any
        such notice of resignation, the Collateral Agent shall appoint a successor
        Lockbox Agent hereunder.

      


      (c) If
        a
        successor Lockbox Agent shall not have been so appointed within said 60 Business
        Day period, the Lockbox Agent shall then appoint a successor Lockbox Agent
        who
        shall serve as Lockbox Agent hereunder or thereunder until such time, if
        any, as
        the Collateral Agent appoints a successor Lockbox Agent as provided above.
        If a
        successor Lockbox Agent has not been appointed within such 60-day period,
        the
        Lockbox Agent may, at the sole cost and expense of the Company, petition
        any
        court of competent jurisdiction or may interplead the Company, the Collateral
        Agent and the Holders in a proceeding for the appointment of a successor
        Lockbox
        Agent, and all fees, including but not limited to extraordinary fees associated
        with the filing of interpleader, and expenses associated therewith shall
        be
        payable by the Company.

      


      (d) The
        fees
        of any successor Lockbox Agent for its services as such shall be payable
        by the
        Company.

       

       

      A-3