Exhibit 10.6


    Exhibit
      10.6


     

    
 

    AMENDMENT
      NO. 1 TO LOCKBOX AGREEMENT

    


    THIS
      AMENDMENT NO. 1 TO LOCKBOX AGREEMENT,
      dated as
      of July 23, 2007 (this “Agreement”), by and between EMAGIN
      CORPORATION,
      a
      Delaware corporation (the “Company”), and ALEXANDRA
      GLOBAL MASTER FUND LTD.,
      a
      British Virgin Islands international business company, as collateral agent
      (in
      such capacity, the “Collateral Agent”) on behalf of the Holders (such
      capitalized term and all other capitalized terms used herein having the
      respective meanings provided herein), amends the LOCKBOX
      AGREEMENT,
      dated
      as of July 21, 2006 (the “Lockbox Agreement”), made by the
      Company to the Collateral Agent.

    


    W I T N E S S E T H:

    


    WHEREAS,
      the
      Company and the Collateral Agent are parties to the Lockbox
      Agreement;

    


    WHEREAS,
      the
      Company and the Collateral Agent wish to amend the Lockbox Agreement as provided
      in this Agreement; and

    


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

    


    1. Definitions. 

    


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

    


    1.2 Capitalized
      terms used in this Agreement and not defined in this Agreement shall have the
      respective meanings provided in the Lockbox Agreement.

    


    1.3 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.

    


    1.4 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):

    


    “Amended
      Lockbox Agreement” means the Lockbox Agreement, as amended by this
      Agreement.

    


    “Amended
      Notes” means the Amended and Restated 8% Senior Secured Convertible Notes due
      2008 issued by the Company upon amendment and restatement of the
      Notes.


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    


    “Amended
      Patent and Trademark Security Agreement” means the Patent and Trademark Security
      Agreement dated as of July 21, 2006, by and between the Company and the
      Collateral Agent, as amended by Amendment No. 1 to Patent and Trademark Security
      Agreement, dated as of July 23, 2007, by and between the Company and the
      Collateral Agent.

    


    “Amended
      Pledge and Security Agreement” means the Pledge and Security Agreement, dated as
      of July 21, 2006, by and between the Company and the Collateral Agent, as
      amended by Amendment No. 1 to the Pledge and Security Agreement, dated as of
      July 23, 2007 by and between the Company and the Collateral Agent.

    


    “Amendment
      Agreements” means the several Amendment Agreements, dated as of July 23, 2007 by
      and between the Company and the Holders. 

    


    “Amendment
      Transaction Documents” means the Amended Notes, the Amended Warrants, the
      Certificate Designations, the Amended Patent and Trademark Security Agreement,
      the Amended Pledge and Security Agreement, the Amended Lockbox
      Agreement and
      the
      other agreements, instruments and documents contemplated hereby and
      thereby.

    


    “Certificate
      of Designations” means the Certificate of Designations of Series A Senior
      Secured Convertible Preferred Stock of the Company as filed with the Secretary
      of State of the State of Delaware.

    


    “Effective
      Date” shall have the meaning provided in Section 4.

    


    “Effective
      Time” shall have the meaning provided in the Amendment Agreements.

    


    “Holders”
      means with respect to any time prior to the Effective Time on the Effective
      Date
      the holders of Notes and with respect to any time after the Effective Time
      on
      the Effective Date, the holders from time to time of any Amended Notes or shares
      of Series A Preferred Stock.

    


    “Series
      A
      Preferred Stock” means the Series A Senior Secured Convertible Preferred Stock,
      par value $0.001 per share, of the Company.

    


    2. Amendments.

     

    2.1 Amendments
      to Lockbox Agreement. Upon
      the
      terms and subject to the conditions of this Agreement, the Lockbox Agreement
      is
      hereby amended as follows:

    


    (a) Amendment
      of Certain Definitions.
      Section
      1(a) of the Lockbox Agreement shall be amended by deleting the terms “Additional
      Note Purchase Agreement”, “Event of Default”, “Holder”, “Note Purchase
      Agreements”, “Majority Holders”, “Notes” and “Transaction Documents” and the
      accompanying definitions thereof and substituting in lieu thereof in their
      respective alphabetical order the following:


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    


    “Additional
      Note Purchase Agreement” means the Note Purchase Agreement, dated as of July 21,
      2006, as amended on March 28, 2007, by and between the Company and Stillwater
      LLC, as amended by the Amendment Agreement, pursuant to which the Company issued
      the Additional Note.

    


    “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;
      or

    


    (2) the
      failure by the Company to pay the Optional Redemption Price or the Mandatory
      Redemption Price; or

    


    (3) the
      breach by the Company of any other material covenant or other term or condition
      of the Certificate of Designations; or

    


    (4) 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

    


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

    


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

    


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

    


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

    


    “Majority
      Holders” means at any time (i) such of the holders of Notes who hold Notes
      which, based on the outstanding principal amounts thereof, represent a majority
      of the aggregate outstanding principal amount of the Notes at such time, and
      (ii) such of the holders of Preferred Shares which shares constitute a majority
      of the outstanding Preferred Shares at such time.

    


    “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, as amended by the Amendment Agreement, pursuant to which the Company
      issued the Notes, including, without limitation, the Additional Note Purchase
      Agreement.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    “Notes”
      means the Amended and Restated 8% Senior Secured Convertible Notes due 2008
      issued by the Company upon amendment and restatement of the Company’s 6% Senior
      Secured Convertible Notes due 2007-2008, as amended, originally issued pursuant
      to the Note Purchase Agreements, including, without limitation, the Additional
      Note.

    


    (b) Additional
      Defined Terms. Section
      1(a) of the Lockbox Agreement shall be amended by adding new defined terms
      and
      definitions thereof, in the places constituting their respective alphabetical
      orders, as follows:

    


    “Amendment
      Agreement” means the several Amendment Agreements, dated as of July 23, 2007, by
      and between the Company and the Holders.

    


    “Certificate
      of Designations” means the Certificate of Designations of Series A Senior
      Secured Convertible Preferred Stock of the Company as filed with the Secretary
      of State of the State of Delaware.

    


    “Mandatory
      Redemption Price” shall have the meaning assigned to such term in the
      Certificate of Designations.

    


    “Optional
      Redemption Price” shall have the meaning assigned to such term in the
      Certificate of Designations.

    


    “Preferred
      Shares” means shares of Series A Senior Secured Convertible Preferred Stock
      issued by the Company.

    


    3. Effect
      of Amendment; Confirmation.

    


    (a) From
      and
      after the Effective Date, the rights and obligations of the Company, the
      Collateral Agent and the Holders under the Lockbox Agreement and the Transaction
      Documents and all other agreements, documents and instruments contemplated
      hereby and thereby shall apply with full force and effect to the Lockbox
      Agreement, as amended by this Agreement, and each reference to the Lockbox
      Agreement in the Transaction Documents shall be deemed to be a reference to
      the
      Lockbox Agreement, as amended by this Agreement and each reference in the
      Lockbox Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words
      of like import shall mean and be a reference to the Lockbox Agreement as amended
      hereby, and this Agreement and the Lockbox Agreement shall be read together
      and
      construed as a single instrument.

    


    (b) Except
      as
      amended by this Agreement, the Lockbox Agreement shall remain in full force
      and
      effect in accordance with its respective terms.

    


    (c) The
      execution, delivery and effectiveness of this Agreement shall not, except as
      expressly provided herein, operate as a waiver of any right, power or remedy
      of
      the Collateral Agent, the Company or the Holders under the Lockbox Agreement
      or
      any of the Transaction Documents, nor constitute a waiver or amendment of any
      other provision of the Lockbox Agreement or any of the Transaction Documents
      or
      for any purpose except as expressly set forth herein.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    (d) Nothing
      in this Agreement or in connection with the transactions contemplated by this
      Agreement or otherwise shall be construed, directly or indirectly, by
      implication or otherwise to impair the validity, enforceability, priority,
      perfection or other attributes of the security interest granted pursuant to
      the
      Lockbox Agreement.

    


    4. Effectiveness.

    


    The
      amendment of the Lockbox Agreement pursuant to this Agreement shall become
      effective on the date (the “Effective Date”) when all of the following
      conditions are satisfied:

    


    (a) The
      Collateral Agent shall have received Acknowledgement and Consents, in the form
      attached hereto as Exhibit
      A,
      from
      the Majority Holders; and

    


    (b) On
      the
      Effective Date the Effective Time under all of the Amendment Agreements shall
      have occurred.

    


    5. Miscellaneous. 

    


    5.1 Waiver
      and Amendments; Successors and Assigns.

    The
      provisions of Section 15 of the Lockbox Agreement shall be applicable to this
      Agreement as if this Agreement were the “Agreement” referred to in Section 15 of
      the Lockbox Agreement.

    


    5.2 Counterparts.

    This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

    


    5.3 Titles
      and Subtitles.

    The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

    


    5.4 Notices.

    Any
      notice required or permitted under this Agreement shall be given as provided
      in
      the Lockbox Agreement.

    


    5.5 Severability.

    If
      one or
      more provisions of this Agreement are held to be unenforceable under applicable
      law, such provision shall be excluded from this Agreement and the balance of
      this Agreement shall be interpreted as if such provision were so excluded and
      shall be enforceable in accordance with its terms.

    


    5.6 Entire
      Agreement.

    This
      Agreement and the other Amendment Transaction Documents and other documents
      contemplated hereby and thereby constitute the entire agreement among the
      parties hereof with respect to the subject matter hereof and thereof and
      supersede all prior agreements and understandings, both oral and written,
      between the parties with respect to the subject matter hereof and
      thereof.


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    


    5.7 Further
      Assurances.

    The
      parties shall execute and deliver all such further instruments and documents
      and
      take all such other actions as may reasonably be required to carry out the
      transactions contemplated hereby and to evidence the fulfillment of the
      agreements herein contained.

    


    5.8 Applicable
      Law.

    This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York without regard to principles of conflicts of laws, except
      to the extent that under the New York Uniform Commercial Code the laws of
      another jurisdiction govern matters of perfection and the effect of perfection
      or non-perfection of any security interest granted under the Lockbox Agreement,
      as amended by this Agreement.

    


    5.9 Counterparts;
      Execution.

    This
      Agreement may be executed in any number of counterparts and by the parties
      hereto on separate counterparts, but 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 electronic
      or
      telephone line facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

    


    5.10 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
      Pages Follow]


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      the
      Company and the Collateral Agent have caused this Agreement to be duly executed
      and delivered by their respective officers or other representatives thereunto
      duly authorized as of the date first above written.

     

     

    
      	 	 	 
	 	
              EMAGIN
                CORPORATION

            
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
                

              

              Name:
                

              Title:
                

            
	 	 



      	 	 	 
	 	
              ALEXANDRA GLOBAL MASTER
                FUND LTD., as Collateral
                Agent

               

              By: ALEXANDRA
                INVESTMENT MANAGEMENT, LLC, 

              as
                Investment Advisor

            
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
                

              

              Name:
                

              Title:
                

            
	 	 


    

     

     

     


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

    


    ACKNOWLEDGEMENT
      AND CONSENT

    


    To:
      ALEXANDRA GLOBAL MASTER FUND LTD.,

    As
      Collateral Agent

    c/o
      Alexandra Investment Management, LLC

    767
      Third
      Avenue, 39th
      Floor

    New
      York,
      New York 10017

    


    Re:
      eMagin Corporation

    


    Reference
      is made to the Lockbox Agreement, dated as of July 21, 2006 (as amended,
      supplemented or otherwise modified from time to time, the “Lockbox Agreement”)
      by and between eMagin Corporation, a Delaware corporation (the “Company”), to
      Alexandra Global Master Fund Ltd., a British Virgin Islands international
      business company, as collateral agent (in such capacity, the “Collateral Agent”)
      on behalf of the Holders. Capitalized terms used herein and not otherwise
      defined herein are used herein as defined in the Lockbox Agreement.

    


    The
      Company has requested that the Holders consent to an Amendment to the Lockbox
      Agreement on the terms described in that certain Amendment No. 1 to the Lockbox
      Agreement (“Amendment No. 1 to Lockbox Agreement”), the form of which is
      attached hereto.

    


    Pursuant
      to Section 15 of the Lockbox Agreement, the undersigned Holder hereby consents
      to the terms of Amendment No. 1 to Lockbox Agreement and authorizes the
      Collateral Agent to execute and deliver Amendment No. 1 to Lockbox Agreement
      on
      its behalf.

     

     

    
      	 	 	 
	 	
              Very
                truly yours,

              


              NAME
                OF HOLDER:

              ______________________________

            
	 
 	 
 	 
 
	
              Dated
                as of July 23, 2007

            	By:  	/s/ 
	 	
              
                

              

              Name:

              Title:

            
	 	 




    


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