Document:

Exhibit 10.5

    Exhibit
      10.5

     

    
 

    AMENDMENT
      NO. 1 TO PLEDGE AND SECURITY AGREEMENT

    

    THIS
      AMENDMENT NO. 1 TO PLEDGE AND SECURITY AGREEMENT,
      dated as
      of July 23, 2007 (this “Agreement”), by and between EMAGIN
      CORPORATION,
      a
      Delaware corporation (the “Grantor”), 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 (such
      capitalized term and all other capitalized terms used herein having the
      respective meanings provided herein), amends the PLEDGE
      AND SECURITY AGREEMENT,
      dated
      as of July 21, 2006 (the “Pledge and Security Agreement”), made by the
      Grantor to the Collateral Agent.

    

    W I T N E S S E T H:

    

    WHEREAS,
      the
      Grantor and the Collateral Agent are parties to the Pledge and Security
      Agreement;

    

    WHEREAS,
      the
      Grantor and the Collateral Agent wish to amend the Pledge and Security 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”, “Grantor”, “Collateral Agent” and
“Pledge and Security 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 Pledge and Security 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, dated as of July 21, 2006, by
      and between the Grantor, the Lockbox Agent and the Collateral Agent, as amended
      by Amendment No. 1 to Lockbox Agreement, dated as of July 23, 2007, by and
      between the Grantor and the Collateral Agent.

    

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

    

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

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

    

    “Amended
      Pledge and Security Agreement” means the Pledge and Security Agreement as
      amended by this Agreement.

    

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

    

    2. Amendments.

     

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

    

    (a) Amendment
      of Certain Definitions.
      Section
      1(d) of the Pledge and Security Agreement shall be amended by deleting the
      terms
“Additional Note Purchase Agreement”, “Event of Default”, “Holder”, “Note
      Purchase Agreements”, “Majority Holders”, “Notes”, “Obligations” 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 Grantor to perform in any material respect any obligation of
      the
      Grantor under this Agreement as and when required by this Agreement;
      or

    

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

    

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

    

    (4) any
      representation or warranty made by the Grantor 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 Grantor to perform in any material respect any obligation of
      the
      Grantor under the Patent and Trademark Security Agreement as and when required
      by the Patent and Trademark Security Agreement;

    

    (6) any
      representation or warranty made by the Grantor pursuant to the Patent and
      Trademark Security Agreement shall have been untrue in any material respect
      when
      made or deemed to have been made;

    

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

    

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

    

    (9) 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.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

    

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

    

    “Obligations”
      means:

    

    (1) the
      full
      and prompt payment when due of all obligations and liabilities to the Holders,
      whether now existing or hereafter arising, under the Transaction Documents
      and
      the due performance and compliance with the terms of the Transaction
      Documents;

    

    (2) the
      full
      and prompt payment when due of all obligations and liabilities of the Grantor
      to
      pay the Optional Redemption Price and Mandatory Redemption Price pursuant to
      the
      Preferred Shares and the due performance and compliance with the terms of the
      Certificate of Designations;

    

    (3) any
      and
      all sums advanced by the Collateral Agent or any Holder in order to preserve
      the
      Collateral or to preserve the Security Interest;

    

    (4) in
      the
      event of any proceeding for the collection or enforcement of any obligations
      or
      liabilities of the Grantor referred to in the immediately preceding clauses
      (1)
      and (2) in accordance with the terms of the Transaction Documents, the
      reasonable expenses of re-taking, holding, preparing for sale, selling or
      otherwise disposing of or realizing on the Collateral, or of any other exercise
      by the Collateral Agent of its rights hereunder, together with reasonable
      attorneys' fees and court costs; and

    

    (5) any
      amounts for which the Collateral Agent or any Holder is entitled to
      indemnification under Section 5(j).

    

    

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

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

    

    “Certificate
      of Designations” means the Certificate of Designations of Series A Senior
      Secured Convertible Preferred Stock of the Grantor 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 Grantor.

    

    (c) 
      Amendment of Section 15(b).
      Section
      15(b) of the Pledge and Security Agreement shall be amended by deleting Section
      15(b) of the Pledge and Security in its entirety and substituting in lieu
      thereof the following:

    

    (b) If
      an
      Event of Default shall have occurred and be continuing, the Collateral Agent
      shall disburse the funds held by it pursuant to this Agreement as
      follows:

    

    (i) First,
      to
      pay any amounts payable to the Collateral Agent pursuant to Section 17 that
      have
      not been paid by the Grantor; and then

    

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

    

    (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
      and the unpaid Mandatory Redemption Price for the Preferred Shares required
      to
      be redeemed on the Mandatory Redemption Date; and then

    

    (iv) Fourth,
      to pay each Holder, on a pro rata basis, the amount then due upon acceleration,
      if any, pursuant to Section 5 of such Holder’s Note(s); and then

    

    (v) Fifth,
      to
      pay each Holder who has exercised its repurchase rights under Section 5 of
      the
      Notes or its optional redemption rights under Section 11 of the Certificate
      of
      Designations, on a pro rata basis, all of the applicable unpaid Repurchase
      Price
      for each of the Notes or portions thereof required to be repurchased and all
      of
      the applicable and unpaid Optional Redemption Price for the Preferred Shares
      required to be redeemed; and then

    

    (vi) Sixth,
      to
      pay each Holder any other amount due and payable to such Holder under the
      Transaction Documents; and then

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (vii) Seventh,
      the remaining amount, if any, to the Grantor.

    

    provided,
      however,
      that if
      the amount of funds held by the Collateral Agent is insufficient to pay all
      amounts due to the Holders pursuant to clauses (ii) and (iv) above, then the
      amount paid to the Holders pursuant to this Section 15(b) shall be prorated
      among the Holders in proportion to the respective amounts due each Holder
      pursuant to the particular such clause or clauses for which such funds are
      insufficient.

    

    3. Effect
      of Amendment; Confirmation.

    

    (a) From
      and
      after the Effective Date, the rights and obligations of the Grantor, the
      Collateral Agent and the Holders under the Pledge and Security 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
      Pledge and Security Agreement, as amended by this Agreement, and each reference
      to the Pledge and Security Agreement in the Transaction Documents shall be
      deemed to be a reference to the Pledge and Security Agreement, as amended by
      this Agreement and each reference in the Pledge and Security Agreement to “this
      Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean
      and be a reference to the Pledge and Security Agreement as amended hereby,
      and
      this Agreement and the Pledge and Security Agreement shall be read together
      and
      construed as a single instrument.

    

    (b) Except
      as
      amended by this Agreement, the Pledge and Security 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 Grantor or the Holders under the Pledge and Security
      Agreement or any of the Transaction Documents, nor constitute a waiver or
      amendment of any other provision of the Pledge and Security Agreement or any
      of
      the Transaction Documents or for any purpose except as expressly set forth
      herein.

    

    (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
      Pledge and Security Agreement.

    

    4. Effectiveness.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    The
      amendment of the Pledge and Security 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 14 of the Pledge and Security Agreement shall be
      applicable to this Agreement as if this Agreement were the “Agreement” referred
      to in Section 14 of the Pledge and Security 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 Pledge and Security 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.

    

    5.7 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 Pledge and Security
      Agreement, as amended by this Agreement.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    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]

     

     

     

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Grantor and 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

            
	 
 	 
 	
               

               

              ALEXANDRA
                INVESTMENT MANAGEMENT, LLC, 
as Investment
                Advisor

               

               

            
	
            	By:  	/s/ 
	 	
              

            
	 	 

    

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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 Pledge and Security Agreement, dated as of July 21, 2006 (as
      amended, supplemented or otherwise modified from time to time, the “Pledge and
      Security Agreement”) by and between eMagin Corporation, a Delaware corporation
      (the “Grantor”), 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 Pledge and
      Security Agreement.

    

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

    

    Pursuant
      to Section 14 of the Pledge and Security Agreement, the undersigned Holder
      hereby consents to the terms of Amendment No. 1 to Pledge and Security Agreement
      and authorizes the Collateral Agent to execute and deliver Amendment No. 1
      to
      Pledge and Security Agreement on its behalf.

     

    
      	 	 	Very truly yours,
	 	 	 
	 	 	 
	 	 	 
	 Dated
              as of July 23, 2007	NAME
              OF
              HOLDER:
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              

              Name:

            
	 	Title: 

    

    

     

    

    10Exhibit 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:

            
	 	 

    

    8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]