Document:

exh1042.htm

    Exhibit 10.42

    
       

      
        	 	
                Annex
      VII

                to

                Note
      Purchase

                Agreement

              

      

       

    

     

    [Letterhead
of Company Counsel]

     

    [Closing
Date]

     

    The
Buyers listed on 

    Exhibit A
Hereto

     

    Re:
eMagin Corporation 

     

    Ladies and
Gentlemen:

     

    We have
acted as counsel to eMagin Corporation, a Delaware corporation (the "Company"),
in connection with the issuance by the Company of $[7,000,000] aggregate
principal amount of 6% Senior Secured Convertible Note due 2007-2008 (the
-"Notes"), and related Common Stock Purchase Warrants (the "Warrants"), pursuant
to the several Note Purchase Agreements, dated as of July , 2006 (the
"Agreements"), by and between the Company and the several Buyers named therein
(the "Buyers"). Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned to such terms in the Agreements.
This opinion is being delivered to you pursuant to Section 7(n) of the
Agreements.

     

    In so acting, we
have examined originals or copies (certified or otherwise identified to our
satisfaction) of the Agreements, the Notes, the Warrants, the Pledge and
Security Agreement, dated as of July , 2006, by and between the Company and the
Collateral Agent named therein (the "Security Agreement"), the Patent and
Trademark Security Agreement, dated as of July , 2006, by and between the
Company and the Collateral Agent named therein (the "Patent and Trademark
Security Agreement"), the Lockbox Agreement, dated as of July 2006, by and
between the Company and the Lockbox Agent named therein (the "Lockbox
Agreement"), and such corporate records, agreements, documents and other
instruments, and such certificates or comparable' documents of public officials
and of officers and representatives of the Company, and have made such inquiries
of such officers and representatives, as we have deemed relevant and necessary
as a basis for the opinions hereinafter set forth. The Agreements, the Notes,
the Warrants, the Security Agreement, the Patent and Trademark Security
Agreement and the Lockbox Agreement are hereinafter referred to collectively as
the "Transaction
Documents."

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    In
rendering the opinions set forth in this opinion letter, we assume the
following:

     

    (a) - the
legal capacity of each natural person;

     

    (b) the legal
existence of all parties to the transactions referred to in the Transaction
Documents excluding the Company;

     

    (c) the power
and authority of each person other than the Company or person(s) acting on
behalf of the Company to execute, deliver and perform each document executed and
delivered and to do each other act done or to be done by such
person;

     

    (d) the
authorization, execution and delivery by each person other than the Company or
person(s) acting on behalf of the Company of each document executed and
delivered or to be executed and delivered by such person;

     

    (e) the
legality, validity, binding effect and enforceability as to each person other
than the Company or person(s) acting on behalf of the Company of each document
executed and delivered or to be executed or delivered and of each other act done
or to be done by such person;

     

    (f) the
transactions referred to in the Transaction Documents have been
consummated;

     

    (g) the
payment of all the required documentary stamps taxes and fees imposed upon the
execution, filing or recording of the Transaction Documents;

     

    (h) that
there have been no undisclosed modifications of any provision of any document
reviewed by us in connection with the rendering of the opinions set forth in
this opinion letter and no undisclosed prior waiver of any right or remedy
contained in the Transaction Documents;

     

    (i) the
genuineness of each signature (other than the signatures of the officers of the
Company), the completeness of each document submitted to us, the authenticity of
each document reviewed by us as an original, the conformity to the original of
each document reviewed by us as a copy and the authenticity of the original of
each document received by us as a copy;

     

    (j) the
truthfulness of each statement as to all factual matters otherwise not known to
us to be untruthful contained in any document encompassed within the due
diligence review undertaken by us;

     

    (k) the
accuracy on the date of this letter as well as on the date stated in all
governmental certifications of each statement as to each factual matter
contained in such governmental certifications;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (l) that
the addressee has acted in good faith, without notice of adverse claims, and has
complied with all laws applicable to it that affect the transactions referred to
in the Transaction Documents;

     

    (m) that the
transactions referred to in the Transaction Documents comply with all tests of
good faith, fairness and conscionability required by law;

     

    (n) that
routine procedural matters such as service of process or qualification to do
business in the relevant jurisdictions will be satisfied by the parties seeking
to enforce the Transaction Documents;

     

    (o) that all
statutes, judicial and administrative decisions, and rules and regulations of
governmental agencies constituting the law for which we are assuming
responsibility are published (e.g., reported court decisions and the specialized
reporting services of BNA, CCH and Prentice-Hall) or otherwise generally
accessible (e.g., LEXIS or WESTLAW) in each case in a manner generally available
(i.e., in terms of access and distribution following publication) to lawyers
practicing in our judicial circuit;

     

    (p) that
other agreements related to the transactions referred to in the Transaction
Documents will be enforced as written;

     

    (q) that no
action, discretionary or otherwise, will be taken by or on behalf of
the Company in the future that might result in a violation of law;

     

    (r) that
there are no other agreements or understandings among the parties that would
modify the terms of the Transaction Documents or the respective rights or
obligations of the parties to the Transaction Documents;

     

    (s) that with
respect to the Transaction Documents and to the transactions referred to
therein, there has been no mutual mistake of fact and there exists no fraud or
duress; and

     

    (t) the
constitutionality and validity of all relevant laws, regulations and agency
actions unless a reported case has otherwise held or widespread concern has been
expressed by commentators as reflected in materials which lawyers routinely
consult.

     

    As to
certain questions of fact material to this opinion, we have relied upon
statements or certificates of public officials and officers of the
Company.

     

    Whenever
a statement herein is qualified by "to our knowledge" or similar phrase, it
means that, during the course of our representation of the Company for the
purposes of this opinion letter, (1) no information that would give those
lawyers who participated in the preparation of the letter (collectively, the
"Opinion Letter
Participants")
current actual knowledge of the inaccuracy of such statement has come to
their
attention; (2) we have not undertaken any independent investigation or inquiry
to determine the accuracy of such statement; (3) any limited investigation or
inquiry otherwise undertaken by the Opinion Letter Participants during the
preparation of this opinion letter should–not be
regarded as such an investigation or inquiry; and (4) no inference as to our
knowledge of any matters bearing on the accuracy of any such statement should be
drawn from the fact of our representation of the Company. We also call to your
attention to the fact that we are not general counsel to the Company and we are
not familiar with all aspects of the Company's business affairs. We have not
conducted an independent audit of the Company or its files.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    The
validity, binding effect and enforceability of Transaction Documents may be
limited or otherwise affected by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar statutes, rules, regulations
or other laws affecting the enforcement of creditors' rights and remedies
generally and (b) the unavailability of, or limitation on the availability of, a
particular right or remedy (whether in a proceeding in equity or at law) because
of an equitable principle or a requirement as to commercial reasonableness,
conscionability or good faith. In addition, certain remedies, waivers and other
provisions contained in the Transaction Documents might not be enforceable;
nevertheless, such unenforceability will not render such agreements invalid as a
whole or preclude the practical realization of the benefits to the Secured Party
thereunder. We express no opinions as to the application of the laws of usury to
the Transaction Documents.

     

    Based on
the foregoing, and subject to the qualifications stated herein, we are of the
opinion that:

     

    1. The
Company and each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.

     

    2. The
Company has all necessary corporate power and authority to execute, deliver and
perform its obligations under each of the the Transaction Documents and to
consummate the transactions contemplated thereby.

     

    3. The
Transaction Documents have been duly and validly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery thereof by the other parties thereto) constitute the legal, valid and
binding obligations of the Company, enforceable against it in accordance with
there respective terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject to general
principles of equity, whether enforcement is sought in a proceeding at law or in
equity.

     

    4. The
Shares have been duly authorized and, when issued upon conversion of the Notes
in accordance with the terms of the Notes or upon exercise of the Warrants
in accordance with the tern-is of the Warrants, as the case may be, will be
validly issued, fully-paid and non-assessable.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    5. Assuming
the representations and warranties of the Buyers in Section 3 of the Agreements
are true and correct, the Notes and the Warrants may be offered and issued to
the Buyers pursuant to the Agreements, the Conversion Shares may be offered and
issued to the Buyers upon conversion of the Notes, and the Warrant Shares may be
offered and issued to the Buyers upon exercise of the Warrants, in each such
case, without registration under the 1933 Act.

     

    6. The
execution and delivery of the Transaction Documents by the Company, and the
consummation by the Company of the issuance of the Securities and the other
transactions contemplated by the Transaction Documents do not and will not, with
or without the giving of notice or the lapse of time, or both, (i) result in any
violation of any term of the Certificate of Incorporation or by-laws of the
Company or any Subsidiary, (ii) violate or contravene any applicable law, rule
or regulation or any applicable decree, judgment or order of any court, United
States federal or state regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any Subsidiary or any
of their respective properties or assets or (iii) have any material adverse
effect on any permit, certification, registration, approval, consent, license or
franchise necessary for the Company or any Subsidiary to own or lease and
operate any of its properties and to conduct any of its businesses or the
ability of the Company or any Subsidiary to make use thereof.

     

    7.
Assuming the representations and warranties of the Buyers in Section 3 of the
Agreements are true and correct, no authorization, approval or consent of, or
filing with, any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders of the Company is
required to be obtained or made by the Company for the offer, issuance and sale
of the Notes and the offer and issuance of the Warrants as contemplated by the
Agreements or the offer and issuance of the Conversion Shares upon conversion of
the Notes in accordance with the terms thereof or the offer and issuance of the
Warrant Shares upon exercise of the Warrants in accordance with the terms
thereof except such as have been obtained or made and other than (a) the filing
pursuant to the Agreements of a Registration Statement with the SEC covering the
resale of the Shares (b) such as may be required under the securities or "blue
sky" laws of certain jurisdictions (as to which we express no opinion) and (c)
the Form D to be filed by the Company with the SEC.

     

    8. The
Security Agreement is effective to create in favor of the Collateral Agent, for
the benefit of the holders from time to time of the Notes, as secured party,
valid security interests in the Collateral (as defined in the Security
Agreement) including, without limitation, the funds and proceeds from time to
time deposited or held in the Collateral Account (as defined in the Lockbox
Agreement), as security for the Obligations (as defined in the Security
Agreement), financing statements in proper form covering such security interests
will be duly filed in the offices listed on Schedule
I hereto, and when filed, such security interests in the Collateral will
be perfected to the extent that security interests in such Collateral may be
perfected by the filing of
financing statements under the Uniform Commercial Code. Our opinions expressed
above are specifically subject to the following limitations, exceptions,
qualifications and assumptions:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    A. The
effect of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting the relief of debtors or the rights and remedies
of creditors generally, including without limitation the effect of statutory or
other law regarding fraudulent conveyances and preferential
transfers.

     

    B. Limitations
imposed by state law, federal law or general equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions of
any applicable agreement and upon the availability of injunctive relief or other
equitable remedies, regardless of whether enforcement of any such agreement is
considered in a proceeding in equity or at law.

     

    We are
counsel admitted to practice in the State of New York and we do not express any
opinion with respect to the effect or applicability of the laws of any
jurisdiction, other than the laws of the State of New York, Delaware General
Corporation Law and the federal laws of the United States of America. In
furnishing the opinion regarding the valid existence and good standing of the
Company, we have relied solely upon a good standing certificate issued by the
Secretary of State of Delaware on June 27, 2006.

     

    This
opinion is rendered as of the date first written above, is solely for your
benefit in connection with the Agreements and may not be relief upon or used by,
circulated, quoted, or referred to nor may any copies hereof by delivered to any
other person without our prior written consent. We disclaim any obligation to
update this opinion letter or to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.

     

    
      
        	 	Very truly
      yours,	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

      

    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

     

     

    Alexandra
Global Master Fund Ltd.

    do
Alexandra Investnient Management, LLC

    767 Third
Avenue

    39th
Floor

    New York,
New York 10017

     

    [NAME] 

    [ADDRESS]

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
       

      Schedule II 

     

    [Secretary
of State of the State of Delaware]

     

    
       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      Schedule II 

    [Secretary
of State of the State of Delaware] 

     

    [Department
of State of the State of New York]

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
       

      
        	 	
                
                  Annex
      VIII

                  to

                  Note
      Purchase

                  Agreement

                

              

      [Closing
Date]

       

      The
Buyers listed on 

      Exhibit A
Hereto

       

      Re:
eMagin Corporation 

       

      Ladies
and Gentlemen:

       

      We have
acted as intellectual property counsel to eMagin Corporation, a Delaware
corporation (the "Company"), in connection with the issuance by the Company of
$[7,000,000] aggregate principal amount of 6% Senior Secured Convertible Note
due 2007-2008 (the "Notes"), and related Common Stock Purchase Warrants (the
"Warrants"), pursuant to the several Note Purchase Agreements, dated as of July
2006 (the
"Agreements"), by and between the Company and the several Buyers named therein
(the "Buyers"). Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned to such terms in the Agreements.
This opinion is being delivered to you pursuant to Section 7(n) of the
Agreements. 

       

      In so
acting, we have examined originals or copies (certified or otherwise identified
to our satisfaction) of the Patent and Trademark Security Agreement, dated as of
July , 2006, by and between the Company and the Collateral Agent named therein
(the "Patent and Trademark Security Agreement") and such corporate records,
agreements, documents and other instruments, and such certificates or comparable
documents of public officials and of officers and representatives of the
Company, and have made such inquiries of such officers and representatives, as
we have deemed relevant and necessary as a basis for the opinions hereinafter
set forth.

       

      Based on
the foregoing, and subject to the qualifications stated herein, we are of the
opinion that:

       

      1. The
Patent and Trademark Security Agreement, taken together with the Security
Agreement, creates valid and enforceable security interests in favor of the
Collateral Agent, for the benefit of the holders from time to time of the Notes,
as secured parties, in all of the Company's right, title and interest in, to and
under the Collateral (as defined in the Patent and Trademark Security Agreement
for purposes of this opinion). The Patent Security Agreement and the Trademark
Security Agreement (attached as Exhibits E and F to the Patent and Trademark
Security Agreement) have or will be filed in the PTO, and together with the
filing of financing statements, have or will result in
the perfection of the Collateral Agent's security interests in the Collateral in
the United States.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      The
opinion herein is subject to (i) the limitations on perfection of security
interests in proceeds resulting from the operation of Section 9-315 of the UCC;
(ii) the limitations with respect to securities imposed by Sections 8-302 and
9-312 of the UCC; (iii) the
provisions of Section 9-203 of the UCC relating to the time of attachment; and
(iv) Section
552 of Title 11 of the United States Code (the "Bankruptcy Code") with respect
to any Collateral acquired by the Company subsequent to the commencement of a
case against or by the Company under the Bankruptcy Code. 

       

      The
opinions expressed herein are limited to the laws of the State of New York, the
laws of the State of Delaware and the federal laws of the United States, and we
express no opinion as to the effect on the matters covered by this letter of the
laws of any other jurisdiction. 

       

      The
opinions expressed herein are rendered solely for your benefit in connection
with the transactions described herein. Those opinions may not be used or relied
upon by any other person, nor may this letter or any copies hereof be furnished
to a third party, filed with a governmental agency, quoted, cited or otherwise
referred to without our prior written consent.

       

       

       

      
        
          	 	 	Very
      truly yours,	 
	 	 	 	 
	
                   

                	
                   

                	/s/ Jason
      M. Drangel	 
	 	 	
                  Epstein
      Drangel Bazerman & James, LLP

                	 
	 	 	 	 
	 	 	 	 

        

      

       

    

     

     

     

    
      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

     

    
      	 	
              
                Annex
      IX

                to

                Note
      Purchase

                Agreement

              

            

    

    
 

    LOCKUP
AGREEMENT

    July 
__, 2006

     

    To: 
eMagin Corporation

    and the
Buyers Parties to the Note Purchase 

    Agreements
Referred to Below

     

    Re: eMagin Corporation Note Purchase
Agreements 

     

    Dear Sir or
Madam:

     

    Reference
is made to the several Note Purchase Agreements, dated as of the date hereof, by
and between eMagin Corporation, a Delaware corporation (the "Company"), and the
respective buyers who are parties thereto and hereto (each, a "Buyer" and
collectively, the "Buyers"), and any successors and assigns thereto (the "Note
Purchase Agreements"). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned to such terms in the
Agreements.

     

    The
undersigned stockholder (the "Stockholder") of the Company understands that it
is a condition precedent to the several obligations of the Buyers to purchase
their respective Notes and Warrants pursuant to the Note Purchase Agreements
that the Stockholder shall have executed and delivered this Agreement to the
Buyers and the Company. Pursuant to a Note Purchase Agreement, the Stockholder
is purchasing a 6% Senior Secured Convertible Note due 2007-2008 of the Company
in the aggregate principal amount of $40,000.00 (the Note") and a Warrant to
purchaseshares of Common Stock (the "Warrant"). The Note, the Warrant
and the
shares of Common Stock issuable upon conversion of the Note and upon exercise of
the Warrant are collectively referred to herein as the
"Securities".

     

    The
Stockholder hereby agrees that, except for transfers occurring upon the death of
Stockholder and except for intra-family transfers or transfers to trusts for
estate planning purposes (provided that in each such case, the transferee first
agrees to become bound by the provisions of this letter agreement), the
Stockholder will not, directly or indirectly, offer, sell, pledge, contract to
sell, grant any option for the sale of, transfer or otherwise dispose of: yle
Securities or any interest therein for a period beginning on the date of this
letter agreement and ending on January , 2008. Notwithstanding the foregoing,
(A) this letter agreement and the obligations hereunder shall terminate and be
of no further force and effect upon the date of consummation of a sale of all or
substantially all of the assets of the Company and (B) the Stockholder may sell
shares of Common Stock issued upon conversion of the Note or upon exercise of
the Warrant in accordance with the following schedule:

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              Period

            	
              Number of Shares

            
	
              Prior
      to December 31, 2006

            	
              NONE

            
	
              After
      December 31, 2006

            	
              Up to 50,000 shares
      of Common Stock in each fiscal quarter of the Company (such number of
      shares subject to equitable adjustments for
      stock splits, stock dividends, combinations, capital
      reorganizations and similar events relating to the Common Stock occurring
      after the date of this Agreement)

            

    

    

    The
Company hereby agrees to notify its transfer agent of the provisions of this
letter agreement. The Stockholder acknowledges and agrees that the Company may
enter a stop transfer order with its transfer agent prohibiting transfer of the
Securities, except in compliance with the requirements of this letter
agreement.

     

    This
letter agreement may be executed in any number of counterparts, all of which
shall together constitute one and the same instrument. This letter agreement
shall be governed by and construed in accordance with the laws of the State of
New York. In the event of the invalidity or unenforceability of any part or
provision of this letter agreement, such invalidity or unenforceability shall
not affect the validity or enforceability of any other part or provision of this
letter agreement.

     

    
      
        

      

    

     

    Please
indicate your agreement with the terms of this letter by signing and returning
to the undersigned a copy hereof.

     

     

    
      
        	 	 	Very
      truly yours,	 
	 	 	 	 
	
                 

              	
                 

              	/s/ 	 
	 	 	
                John
      Atherly

              	 
	 	 	 	 
	 	 	 	 

      

    

     

    Accepted
and Agreed as of the above date.

     

    EMAGIN
CORPORATION

     

    
    

     

    
      	
              By:

            	 	 
	 	
              Name:

            	 
	 	Title:	 

    

     

     

     

    13ex1087.htm

    
      Exhibit
10.87

      
 

      Schedule
1

      Moriah
Collateral

       

      All now
owned and hereafter acquired property (including, without limitation, real
property) and assets of Borrower and the Proceeds and products thereof (which
property, assets together with all other collateral security for the Obligations
now or hereafter granted to or otherwise acquired by Lender, are referred to
herein collectively as the "Collateral"),
including, without limitation, all property of Borrower now or hereafter
held or possessed by Lender and including the following (capitalized terms used
but not defined herein have the meanings given to them in the Moriah Loan
Agreement):

       

      (a) All now
owned and hereafter acquired: Accounts; contract rights; chattel paper
(including, but not limited to, rentals and other amounts payable under leases
of equipment to customers pursuant to which Borrower is the lessor or assignee
of any lessor); general intangibles (including, but not limited to, tax and duty
refunds, patents, patent applications, trademarks, trademark applications,
tradenames and tradestyles, copyrights, copyright applications, trade rights
(whether or not registered), discoveries, improvements, processes, know-how,
formulas, trade secrets, service marks, other rights in intellectual property
(whether patentable or not), goodwill, customer and mailing lists, life
insurance policies, licenses (whether as licensor or licensee), franchises and
permits); documents (including, without limitation, all warehouse receipts);
instruments; all guaranties, letters of credit, steamship guaranties, airway
releases or other similar guaranties, agreements or property securing or
relating to any of the items referred to above (including, but not limited to,
purchase money security interests granted by Account Debtors in connection with
installment sales); all cash monies, investment properties, deposits,
securities, bank accounts, deposit accounts, credits and other property now or
hereafter held in any capacity by Lender;

       

      (b) Inventory;

       

      (c) Equipment
and fixtures;

       

      (d) All now
owned and hereafter acquired right, title and interests of Borrower in, to and
in respect of any real or other personal property in or upon which Lender has or
may hereafter have a security interest, Lien or right of setoff;

       

      (e) All of
Borrower's existing and future leasehold interests in premises or facilities
leased from third parties by Borrower;

       

      (f) All
present and future books and records relating to any of the above including,
without limitation, all present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of Borrower with respect to any of the foregoing
maintained with or by any other Person); and

       

      (g) Any
and all products and Proceeds of the foregoing in any form including, without
limitation, all insurance claims, warranty claims and proceeds and claims
against third parties for loss or destruction of or damage to any or the
foregoing.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
 

      Schedule
2

      Notes
Collateral

       

      The Notes
Collateral includes each of the following, whether now existing or hereafter
arising:

       

      (1) all
Accounts of eMagin Corporation, a Delaware Corporation, (the "Borrower") and, if
the Collateral Agent exercises its rights under Section 3(b) of the Pledge and
Security Agreement, dated as of July 21, 2006, by the Borrower, to Alexandra
Global Master Fund Ltd., as Collateral Agent (the "Note Pledge Agreement"), the
Lockbox and each and every General Intangible relating thereto;

       

      (2) all
Inventory of the Borrower;

       

      (3) all
Equipment of the Borrower;

       

      (4) all
Proprietary Information owned or licensed by the Borrower, whether existing on
the date hereof or developed or acquired hereafter;

       

      (5) all of
the Borrower's right, title and interest in and to all Contracts, Documents,
Chattel Paper, Instruments, Investment Property and General Intangibles, whether
existing on the date hereof or hereafter arising;

       

      (6) all cash,
securities, rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of the Collateral,
including, without limitation in respect of the cash or other property held in
the Lockbox or the Collateral Account;

       

      (7) all
Patents, Patent Licenses, Trademarks and Trademark Licenses;

       

      (8) all
insurance policies to the extent they relate to items (1) through (7)
above;

       

      (9) all
books, ledgers, books of account, records, writings, databases, information and
other property relating to, used or useful in connection with, evidencing,
embodying, incorporating, or referring to any of the foregoing; and

       

      (10) to the
extent not otherwise included, all Proceeds, products, rents, issues, profits
and returns of and from any and all of the foregoing, which Proceeds may be in
the form of Accounts, Chattel Paper, Inventory or otherwise; all as provided in
the Note Pledge Agreement. Capitalized terms used herein but not defined herein
shall have the meanings provided for such terms in the Note Pledge
Agreement.

       

       

      
        
           

        

        
          
            2

          

          
            

          

        

        
           

        

      

     

     

    
 

    
      
        Schedule
7(B)

         

        NONE

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