Document:

Exhibit 10.4

    Exhibit
      10.4

     

    
 

    PLEDGE
      AND SECURITY AGREEMENT

    

    THIS PLEDGE
      AND SECURITY AGREEMENT,
      dated
      as of July 21, 2006 (this “Agreement”), made by
      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 in this Agreement having
      the respective meanings provided in this Agreement).

    

    W I T N E S S E T H:

    

    WHEREAS,
      the
      Grantor and the several Buyers are parties to the several Note Purchase
      Agreements, pursuant to which, among other things, the Buyers have agreed to
      purchase up to $7,000,000 aggregate principal amount of Notes of the
      Grantor;

    

    WHEREAS,
      in
      connection with the transactions contemplated by the Note Purchase Agreements,
      the Grantor has agreed to grant to the Collateral Agent a security interest
      in
      certain of its property, assets and rights; 

    

    WHEREAS,
      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
      Grantor shall have executed and delivered this Agreement to the Collateral
      Agent
      for the ratable benefit of the Holders; 

    

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement the Company
      and the Collateral Agent are executing and delivering the Patent and Trademark
      Security Agreement and the Lockbox Agreement; and

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and to induce the Buyers to purchase their
      respective Notes and Warrants, the Grantor hereby agrees with the Collateral
      Agent, for the ratable benefit of the Holders, as follows:

    

    1.
       Definitions.

    

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

    

    (b) All
      the
      agreements or instruments herein defined shall mean such agreements or
      instruments as the same may from time to time be supplemented or amended or
      the
      terms thereof waived or modified to the extent permitted by, and in accordance
      with, the terms thereof and of this Agreement.

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

    “Accounts”
      means all rights to payment for goods sold or leased or for services rendered,
      whether or not such rights have been earned by performance.

    

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

    

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

    

    “Affiliate”
      means, with respect to any Person, any other Person that directly, or indirectly
      through one or more intermediaries, controls, is controlled by or is under
      common control with the subject Person. For purposes of this definition,
“control” (including, with correlative meaning, the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
      possession, directly or indirectly, of the power to direct or cause the
      direction of the management and policies of such Person, whether through the
      ownership of voting securities or by contract or otherwise.

    

    “Business
      Day” means any day other than a Saturday, Sunday or a day on which commercial
      banks in The City of New York are authorized or required by law or executive
      order to remain closed.

    

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

    

    “Chattel
      Paper” shall have the meaning assigned to such term under the Code.

    

    “Code”
      means the Uniform Commercial Code as from time to time in effect in the State
      of
      Delaware.

    

    “Collateral”
      means each of the following, whether now existing or hereafter
      arising:

    

    (1) all
      Accounts of the Grantor and, if the Collateral Agent exercises its rights under
      Section 3(b), the Lockbox and each and every General Intangible relating
      thereto;

    

    (2) all
      Inventory of the Grantor;

    

    (3) all
      Equipment of the Grantor;

    

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

    

    
      
        
        

      

      
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    (5) all
      of
      the Grantor’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.

    

    “Collateral
      Account” shall have the meaning provided in the Lockbox Agreement.

    

    “Contracts”
      shall have the meaning assigned to that term under the Code.

    

    “Documents”
      shall have the meaning assigned to such term under the Code.

    

    “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) 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

    

    (3) 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;

    

    (4) 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;

    

    
      
        
        

      

      
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    (5) 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;

    

    (6) 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

    

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

    

    “General
      Intangibles” shall have the meaning assigned to such term under the
      Code.

    

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

    

    “Indemnified
      Person” shall have the meaning provided in Section 5(j).

    

    “Inventory”
      shall have the meaning assigned to such term under the Code, and in any event,
      including, without limitation, all raw material, work-in process and finished
      goods, inventory, merchandise, goods and other personal property that are held
      by or on behalf of a Person for sale or lease or to be furnished under a
      contract of service or which give rise to any Account, including, without
      limitation, returned goods.

    

    “Issuance
      Date” means the date on which the Notes are initially issued.

    

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

    

    “Lockbox”
      shall have the meaning assigned to such term in the Lockbox Agreement.

    

    “Lockbox
      Agent” means the Person from time to time serving as Lockbox Agent under the
      Lockbox Agreement.

    

    “Lockbox
      Agreement” means that certain Lockbox Agreement dated as of the date hereof, by
      and between the Grantor and the Lockbox Agent.

    

    “Majority
      Holders” means at any time such of the holders of the 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.

    

    
      
        
        

      

      
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    “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
      pursuant to which the Grantor issued the Notes, including, without limitation,
      the Additional Note Purchase Agreement.

    

    “Notes”
      means the Grantor’s 6% Senior Secured Convertible Notes due 2007-2008 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) any
      and
      all sums advanced by the Collateral Agent or any Holder in order to preserve
      the
      Collateral or to preserve the Security Interest;

    

    (3) 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

    

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

    

    “Patent(s)”
      means all present and future patents, patent applications and patent disclosures
      which are presently, or in the future may be, owned, issued, acquired or used
      (whether pursuant to a license or otherwise) anywhere in the world by the
      Grantor, in whole or in part, and all of the Grantor's right, title and interest
      in and to all patentable inventions and to file applications for patents under
      patent laws of the United States or of any other jurisdiction, including,
      without limitation, any and all extensions, reissues, substitutes,
      continuations, continuations-in-part, divisional, patents of addition,
      re-examinations and renewals thereof, and patents issuing therefrom, and any
      other proprietary rights related to any of the foregoing (including, without
      limitation, remedies against infringements thereof and rights of protection
      of
      an interest therein under the laws of all jurisdictions) and any and all foreign
      counterparts of any of the foregoing.

    

    “Patent
      Licenses” means each license agreement relating to Patents granted to, used or
      acquired by the Grantor, in each case together with the right to use and rely
      upon the inventions and other intellectual property conveyed
      thereunder.

    

    
      
        
        

      

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

    

    “Permitted
      Liens” shall have the meaning assigned to such term in the Notes.

    

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

    

    “Proceeds”
      shall have the meaning assigned to such term under the Code.

    

    “Proprietary
      Information” means information in whatever form generally unavailable to the
      public that has been created, discovered, developed or otherwise become known
      to
      the Grantor or in which property rights have been assigned or otherwise conveyed
      to the Grantor, which information has economic value or potential economic
      value
      to the creation, operation, use, modification, extension, upgrade, application,
      marketing, sale and distribution of the Grantor’s products and services.
      Proprietary Information shall include, but not be limited to, trade secrets,
      processes, formulas, writings, data, know-how, negative know-how, improvements,
      discoveries, developments, designs, inventions, techniques, technical data,
      customer and supplier lists, financial information, business plans or
      projections and modifications or enhancements to any of the above. Proprietary
      Information shall include all information existing on the date hereof and all
      information developed or acquired hereafter.

    

    “Security
      Interest” means the security interest granted in the Collateral pursuant to this
      Agreement.

    

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

    

    “Trademark
      License” means each license agreement relating to Trademarks used, adopted or
      acquired by the Grantor. 

    

    “Trademarks”
      means (a) all trademarks, trade names, corporate names, company names, business
      names, fictitious business names, trade styles, service marks, logos and other
      source or business identifiers of the Grantor adopted for use in conjunction
      with the Grantor’s business products and services, now existing anywhere in the
      world or hereinafter adopted or acquired, whether currently in use or not,
      and
      the goodwill associated therewith, all registrations and recordings thereof,
      and
      all applications in connection therewith, and (b) all renewals thereof by the
      Grantor.

    

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

    

    
      
        
        

      

      
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    2. Grant
      of Security Interest.
      As
      collateral security for the prompt and complete payment and performance of
      the
      Obligations and for the other purposes provided in this Agreement, the Grantor
      hereby grants to the Collateral Agent for the ratable benefit of the Holders
      a
      first priority security interest in all of the Collateral. Such grant includes,
      without limitation, a grant of the security interest to secure the payment
      and
      performance of Obligations relating to the Additional Note upon the date of
      issuance of such Additional Note.

    

    3. Rights
      of Collateral Agent; Limitations on Collateral Agent's
      Obligations.

    

    (a) Grantor
      Remains Liable under Accounts and Contracts.
      Anything herein to the contrary notwithstanding, the Grantor shall remain liable
      under each of the Accounts and Contracts that constitute part of the Collateral
      to observe and perform all the conditions and obligations to be observed and
      performed by it thereunder, all in accordance with the terms of any agreement
      giving rise to each such Account and in accordance with and pursuant to the
      terms and provisions of each such Contract. The Collateral Agent shall not
      have
      any obligation or liability under any Account that constitutes part of the
      Collateral (or any agreement giving rise thereto) or under any Contract that
      constitutes part of the Collateral by reason of or arising out of this Agreement
      or the receipt by the Collateral Agent of any payment relating to such Account
      or Contract pursuant hereto, nor shall the Collateral Agent be obligated in
      any
      manner to perform any of the obligations of the Grantor under or pursuant to
      any
      such Account (or any agreement giving rise thereto) or under or pursuant to
      any
      such Contract, to make any payment, to make any inquiry as to the nature or
      the
      sufficiency of any payment received by it or as to the sufficiency of any
      performance by any party under any such Account (or any agreement giving rise
      thereto) or under any such Contract, to present or file any claim, to take
      any
      action to enforce any performance or to collect the payment of any amounts
      which
      may have been assigned to it or to which it may be entitled at any time or
      times. 

    

    (b) Notice
      to Account Debtors and Contracting Parties.
      Upon
      the direction of the Collateral Agent at any time that an Event of Default
      has
      occurred and is continuing, the
      Grantor shall promptly, but in no event later than five Business Days, after
      such direction is given, notify all the account debtors on the Accounts that
      constitute part of the Collateral and parties to the Contracts that constitute
      part of the Collateral that such Accounts and such Contracts have been assigned
      to the Collateral Agent for the ratable benefit of the Holders and that payments
      in respect thereof shall be made directly to the Collateral Agent or as the
      Collateral Agent shall direct in accordance with the Lockbox Agreement.

    

    (c) Verification
      and Analysis of Accounts.
      If an
      Event of Default has occurred and the Collateral Agent shall have directed
      the
      Grantor to notify the account debtors on the Accounts and parties to the
      Contracts in accordance with Section 3(b), in addition to its rights pursuant
      to
      clause (1) of this Section 3(c) the Collateral Agent shall have the right in
      its
      own name or in the name of others to communicate with account debtors on the
      Accounts that constitute part of the Collateral and parties to the Contracts
      that constitute part of the Collateral to verify with them to its satisfaction
      the existence, amount and terms of any such Accounts or Contracts and to make
      test verifications of such Accounts in any manner and through any medium that
      it
      reasonably considers advisable, and the Grantor shall furnish all such
      assistance and information as the Collateral Agent may require in connection
      therewith. At any time and from time to time, upon the Collateral Agent's
      reasonable request and at the expense of the Grantor, the Grantor shall cause
      independent public accountants or others satisfactory to the Collateral Agent
      to
      furnish to the Collateral Agent reports showing reconciliations, aging and
      test
      verifications of, and trial balances for, such Accounts.

    

    
      
        
        

      

      
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    4. Representations
      and Warranties.
      The
      Grantor hereby represents and warrants that: 

    

    (a) Title;
      No Other Liens.
      Except
      for the Lien granted to the Collateral Agent for the ratable benefit of the
      Holders pursuant to this Agreement, the Patent and Trademark Security Agreement,
      the Lockbox Agreement and the Lien granted to the Collateral Agent for the
      ratable benefit of the Holders pursuant to the Patent and Trademark Security
      Agreement, the Grantor owns and has good and marketable title to each item
      of
      the Collateral free and clear of any and all Liens or claims of others except
      Permitted Liens. No security agreement, financing statement or other public
      notice with respect to all or any part of the Collateral is on file or of record
      in any public office, except such as may have been filed in favor of the
      Collateral Agent, for the ratable benefit of the Holders, pursuant to this
      Agreement or pursuant to the Patent and Trademark Security
      Agreement.

    

    (b) Perfected
      First Priority Liens.
      The
      Liens granted pursuant to this Agreement will constitute upon the completion
      of
      all the filings or notices listed in Schedule
      I
      hereto,
      perfected Liens on all Collateral in favor of the Collateral Agent for the
      benefit of the Holders, which are prior to all other Liens (except Permitted
      Liens, if any) on such Collateral and which are enforceable as such against
      all
      Persons.

    

    (c) Accounts.
      No
      amount payable to the Grantor under or in connection with any Account that
      constitutes part of the Collateral is evidenced by any Instrument (other than
      checks in the ordinary course of business) or Chattel Paper which has not been
      delivered to the Collateral Agent. The place where the Grantor keeps its records
      concerning the Accounts that constitute part of the Collateral is set forth
      on
Schedule
      II
      hereto.

    

    (d) Consents
      under Contracts.
      No
      consent (other than consents that have been obtained) of any party (other than
      the Grantor), to any Contract that constitutes part of the Collateral is
      required, or purports to be required, in connection with the execution, delivery
      and performance of this Agreement or the exercise of the Collateral Agent's
      rights and remedies provided herein or at law.

    

    (e) Inventory.
      The
      items of Inventory that constitute part of the Collateral are, as of the
      Issuance Date, kept at the locations listed on Schedule
      III
      hereto
      and have not been kept at any other location within the six-month period ending
      on the Issuance Date.

    

    (f) Chief
      Executive Office.
      The
      Grantor's chief executive office and chief place of business is located at
      10500
      N.E. 8th
      Street,
      Suite 1400, Bellevue,
      WA 98004.

    

    
      
        
        

      

      
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    (g) Power
      and Authority.
      The
      Grantor has full power, authority and legal right to grant the Collateral Agent
      the Lien on the Collateral pursuant to this Agreement.

    

    (h) Approvals,
      Filings, Etc.
      No
      authorization, approval or consent of, or filing, registration, recording or
      other action with, any United States or foreign court, governmental body,
      regulatory agency, self-regulatory organization, or stock exchange or market,
      the stockholders of the Grantor or any other Person, is required to be obtained
      or made by the Grantor or any Subsidiary (x) for the grant by the Grantor of
      the
      Security Interest in the Collateral pursuant to this Agreement, (y) to perfect
      the Security Interest purported to be created by this Agreement, or (z) for
      the
      exercise of the Collateral Agent's rights and remedies provided herein or at
      law, in each case except as has been obtained or made.

    

    5. Covenants.
      The
      Grantor covenants and agrees with the Collateral Agent that from and after
      the
      date of this Agreement until the payment or performance in full by the Grantor
      of all of the Obligations:

    

    (a) Further
      Documentation; Pledge of Instruments and Chattel Paper.
      At any
      time and from time to time, upon the written request of the Collateral Agent,
      and at the sole expense of the Grantor, the Grantor will promptly and duly
      execute and deliver such further instruments and documents and take such further
      action as the Collateral Agent may reasonably request for the purpose of
      obtaining or preserving the full benefits of this Agreement and of the rights
      and powers herein granted, including, without limitation, the filing of any
      financing or continuation statements under the Code or similar laws in effect
      in
      any such jurisdiction with respect to the Liens created hereby. The Grantor
      also
      hereby authorizes the Collateral Agent to file any such financing or
      continuation statement without the signature of the Grantor to the extent
      permitted by applicable law. A carbon, photographic or other reproduction of
      this Agreement shall be sufficient as a financing statement for filing in any
      jurisdiction. If any amount payable under or in connection with any of the
      Collateral shall be or become evidenced by any Instrument or Chattel Paper,
      such
      Instrument or Chattel Paper shall be immediately delivered to the Collateral
      Agent, duly endorsed in a manner satisfactory to the Collateral Agent, to be
      held as Collateral pursuant to this Agreement.

    

    (b) Maintenance
      of Records.
       The
      Grantor will keep and maintain at its own cost and expense satisfactory and
      complete records of the Collateral, including, without limitation, a record
      of
      all payments received and all credits granted with respect to any Accounts
      that
      may constitute part of the Collateral. For the further security of the
      Collateral Agent, the Grantor hereby grants to the Collateral Agent a security
      interest in all of the Grantor's books and records pertaining to the Collateral,
      and the Grantor shall turn over any such books and records for inspection at
      the
      office of the Grantor to the Collateral Agent or to its representatives during
      normal business hours at the request of the Collateral Agent.

    

    (c) Limitation
      on Liens on Collateral.
      The
      Grantor (x) will not create, incur or permit to exist, will defend the
      Collateral against, and will take such other action as is necessary to remove,
      any Lien or claim on or to the Collateral, other than the Security Interest
      created hereby and Liens created by the Patent and Trademark Security Agreement,
      and (y) will defend the right, title and interest of the Collateral Agent in
      and
      to any of the Collateral against the claims and demands of all
      Persons.

    

    
      
        
        

      

      
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    (d) Limitations
      on Dispositions of Collateral.
      The
      Grantor will not sell, transfer, lease, assign, grant any participation or
      interest in, or otherwise dispose of, any of the Collateral to any Person,
      including, without limitation, any Subsidiary or Affiliate of the Grantor,
      or
      attempt, offer or contract to do so. 

    

    (e) Performance
      of Contracts and Agreements Giving Rise to Accounts.
      The
      Grantor shall (i) exercise promptly and diligently each and every material
      right
      and perform each material obligation which it may have under each Contract
      that
      constitutes part of the Collateral and each agreement giving rise to an Account
      that constitutes part of the Collateral (other than any right of termination)
      and (ii) deliver to the Collateral Agent, upon request, a copy of each material
      demand, notice or document received by it relating in any way to any Contract
      that constitutes part of the Collateral or any agreement giving rise to an
      Account that constitutes part of the Collateral. The Grantor shall not amend
      or
      modify the terms of, or waive any rights under, any Contracts, in a manner
      which
      would materially adversely affect the Security Interest or the value of such
      Contracts.

    

    (f) Further
      Identification of Collateral.
      The
      Grantor shall furnish to the Collateral Agent from time to time, upon the
      request of the Collateral Agent, statements and schedules further identifying
      and describing the Collateral and such other reports in connection with the
      Collateral as the Collateral Agent may reasonably request, all in reasonable
      detail.

    

    (g) Notices.
      The
      Grantor will advise the Collateral Agent within two Business Days of the
      occurrence thereof, in reasonable detail, at its address in accordance with
      Section 16, (i) of any Lien (other than Liens permitted hereunder) on, or claim
      asserted against, any of the Collateral, (ii) of any Event of Default or any
      event which, with notice or the lapse of time, or both, would become an Event
      of
      Default and (iii) of the occurrence of any other event which could reasonably
      be
      expected to have a material adverse effect on the Collateral, the Security
      Interest or the rights of the Collateral Agent hereunder.

    

    (h) Changes
      in Locations, Name, Etc. The
      Grantor will not 

    

    (1) change
      the location of its chief executive office/chief place of business from that
      specified in Section 4(f) or remove its books and records from the location
      specified in Section 4(c), or

    

    (2) change
      its name, identity or corporate structure to such an extent that any financing
      statement filed in connection with this Agreement and naming the Collateral
      Agent as secured party would become misleading or invalid, or

    

    (3) change
      the location at which any item of Inventory that constitutes Collateral is
      kept
      from the locations specified in Section 4(e),

    

    unless
      in
      any such case it shall have given the Collateral Agent at least 30 days prior
      written notice thereof and, prior to such action or event, shall have taken
      appropriate action satisfactory to the Collateral Agent to preserve and protect
      the Collateral Agent's security interest under this Agreement.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (i) Subsidiaries.
      This
      Agreement is entered into on behalf of and for the benefit of the Grantor.
      The
      Subsidiaries and the Affiliates of the Grantor have no ownership or other rights
      in the Collateral. The Grantor will not permit any Subsidiary or any Affiliate
      of the Grantor to have any ownership or other rights in or to exercise any
      control over the Collateral.

    

    (j) Indemnification.
      The
      Grantor agrees to indemnify and hold harmless the Collateral Agent and each
      Holder and their respective officers, directors, Affiliates, agents, members,
      shareholders and investment advisors (each, an “Indemnified Person”) from and
      against any and all claims, demands, losses, judgments and liabilities
      (including liabilities for penalties) of whatsoever kind or nature, and to
      reimburse the Collateral Agent and each Holder for all costs and expenses,
      including reasonable attorneys’ fees and expenses, arising out of or resulting
      from this Agreement, including any breach hereof or Event of Default hereunder,
      or the exercise by the Collateral Agent or any Holder, as the case may be,
      of
      any right or remedy granted to it hereunder or under the other Transaction
      Documents under applicable law; provided,
      however,
      that the
      Grantor shall not be required to indemnify a particular Indemnified Person
      to
      the extent any claim, demand, loss, judgment, liability, cost or expense is
      determined by final judgment (not subject to further appeal) of a court of
      competent jurisdiction to have arisen primarily from the gross negligence or
      willful misconduct of such Indemnified Person. In no event shall any Indemnified
      Person other than the Collateral Agent have any liability or obligation to
      the
      Grantor under this Agreement or applicable law (liability under which the
      Grantor hereby waives) for any matter or thing in connection with this
      Agreement, and in no event shall the Collateral Agent be liable, in the absence
      of a determination of gross negligence or willful misconduct on its part by
      final judgment (not subject to further appeal) of a court of competent
      jurisdiction, for any matter or thing in connection with this Agreement other
      than to account for moneys actually received by it in accordance with the terms
      hereof. If and to the extent that the obligations of the Grantor under this
      Section 4(j) are unenforceable for any reason, the Grantor hereby agrees to
      make
      the maximum contribution to the payment and satisfaction of such obligations
      which is permissible under applicable law. 

    

    6. Collateral
      Agent's Powers.

    

    (a) Powers.
      The
      Grantor hereby irrevocably constitutes and appoints the Collateral Agent and
      any
      officer or agent thereof or investment advisor thereto, with full power of
      substitution, as its true and lawful attorney-in-fact with full irrevocable
      power and authority in the place and stead of the Grantor and in the name of
      the
      Grantor or in its own name, from time to time in the Collateral Agent's
      discretion, during any period in which an Event of Default is continuing, for
      the purpose of carrying out the terms of this Agreement, to take any and all
      appropriate action and to execute any and all documents and instruments which
      may be necessary or desirable to accomplish the purposes of this Agreement,
      and,
      without limiting the generality of the foregoing, the Grantor hereby gives
      the
      Collateral Agent and each such officer, agent and investment advisor the power
      and right, on behalf of the Grantor, without notice to or assent by the Grantor,
      except any notice required by law, to do the following:

    

    (i) to
      take
      possession of and endorse and collect any checks, drafts, notes, acceptances
      or
      other instruments for the payment of moneys due under or with respect to any
      Collateral and to file any claim or to take any other action or proceeding
      in
      any court of law or equity or otherwise deemed appropriate by the Collateral
      Agent for the purpose of collecting any and all such moneys due under or with
      respect to any such Collateral whenever payable, in each case in the name of
      the
      Grantor or its own name, or otherwise;

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (ii) to
      pay or
      discharge taxes and liens levied or placed on or threatened against the
      Collateral and to pay all or any part of the premiums therefor and the costs
      thereof; and

    

    (iii) (A)
      to
      direct any party liable for any payment under any of the Collateral to make
      payment of any and all moneys due or to become due thereunder directly to the
      Collateral Agent or as the Collateral Agent shall direct; (B) to ask or demand
      for, collect, receive payment of and receipt for, any and all moneys, claims
      and
      other amounts due or to become due at any time in respect of or arising out
      of
      any Collateral; (C) to sign and endorse any invoices, freight or express bills,
      bills of lading, storage or warehouse receipts, drafts against debtors,
      assignments, verifications, notices and other documents in connection with
      any
      of the Collateral; (D) to commence and prosecute any suits, actions or
      proceedings at law or in equity in any court of competent jurisdiction to
      collect the Collateral or any thereof and to enforce any other right in respect
      of any Collateral; (E) to defend any suit, action or proceeding brought against
      the Grantor with respect to any Collateral; (F) to settle, compromise or adjust
      any suit, action or proceeding described in clause (E) above and, in connection
      therewith, to give such discharges or releases as the Collateral Agent may
      deem
      appropriate; and (G) generally, to sell, transfer, pledge and make any agreement
      with respect to or otherwise deal with any of the Collateral as fully and
      completely as though the Collateral Agent were the absolute owner thereof for
      all purposes, and to do, at the Collateral Agent's option and the Grantor's
      expense, at any time, or from time to time, all acts and things which the
      Collateral Agent deems necessary to protect, preserve or realize upon the
      Collateral and the Collateral Agent's Liens thereon and to effect the intent
      of
      this Agreement, all as fully and effectively as the Grantor might
      do.

    

    The
      Grantor hereby ratifies all that said attorneys shall lawfully do or cause
      to be
      done by virtue hereof. This power of attorney is a power coupled with an
      interest and shall be irrevocable until the Grantor shall have paid and
      performed in full all of the Obligations.

    

    (b) Other
      Powers.
      The
      Grantor also authorizes the Collateral Agent, from time to time during any
      period in which an Event of Default is continuing, to
      execute, in connection with the sale provided for herein, any endorsements,
      assignments or other instruments of conveyance or transfer with respect to
      the
      Collateral.

    

    (c) No
      Duty on Collateral Agent's Part.
      The
      powers conferred on the Collateral Agent hereunder are solely to protect the
      Collateral Agent's interests in the Collateral for the pro
      rata
      benefit
      of the Holders and shall not impose any duty upon the Collateral Agent to
      exercise any such powers. The Collateral Agent shall be accountable only for
      amounts that it actually receives as a result of the exercise of such powers,
      and neither it nor any of its officers, directors, employees or agents shall
      be
      responsible to the Grantor for any act or failure to act hereunder, except
      for
      their own gross negligence or willful misconduct.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    7. Performance
      by Collateral Agent of Grantor's Obligations. If
      the
      Grantor fails to perform or comply with any of its agreements contained herein
      and the Collateral Agent, as provided for by the terms of this Agreement and
      following reasonable notice to the Grantor, may itself perform or comply, or
      otherwise cause performance or compliance, with such agreement, and the expenses
      of the Collateral Agent incurred in connection with such performance or
      compliance shall be payable by the Grantor to the Collateral Agent on demand
      and
      shall constitute Obligations secured hereby.

    

    8. Remedies
      in General.
      If an
      Event of Default has occurred and is continuing, the Collateral Agent may
      exercise, in addition to all other rights and remedies granted to it in this
      Agreement and in any other instrument or agreement securing, evidencing or
      relating to the Obligations, all rights and remedies of a secured party under
      the Code. Without limiting the generality of the foregoing, if an Event of
      Default has occurred and is continuing, the Collateral Agent, without demand
      of
      performance or other demand, presentment, protest, advertisement or notice
      of
      any kind (except any notice required by law referred to below or expressly
      provided for) to or upon the Grantor or any other Person (all and each of which
      demands, defenses, advertisements and notices are, to the extent permitted
      by
      applicable law, hereby waived), may in such circumstances forthwith collect,
      receive, appropriate and realize upon the Collateral, or any part thereof,
      and/or may forthwith sell, license, assign, give option or options to purchase,
      or otherwise dispose of and deliver the Collateral or any part thereof (or
      contract to do any of the foregoing), at public or private sale or sales, at
      any
      exchange, broker's board or office of the Collateral Agent or elsewhere upon
      such terms and conditions as it may deem advisable and at such prices as it
      may
      deem best, for cash or on credit or for future delivery without assumption
      of
      any credit risk. The Collateral Agent shall have the right upon any such public
      sale or sales, and, to the extent permitted by law, upon any such private sale
      or sales, to purchase the whole or any part of the Collateral so sold, free
      of
      any right or equity of redemption in the Grantor, which right or equity is
      hereby waived, to the extent permitted by applicable law, or released.

    

    The
      Grantor further agrees that, if an Event of Default has occurred and is
      continuing, at
      the
      Collateral Agent's request, to assemble the Collateral and make it available
      to
      the Collateral Agent at places which the Collateral Agent shall reasonably
      select, whether at the Grantor's premises or elsewhere. The Collateral Agent
      shall apply the net proceeds of any such collection, recovery, receipt,
      appropriation, realization or sale, after deducting all reasonable costs and
      expenses of every kind incurred therein or incidental to the care or safekeeping
      of any of the Collateral or in any way relating to the Collateral or the rights
      of the Collateral Agent hereunder, including, without limitation, reasonable
      attorneys' fees and disbursements, to the payment in whole or in part of the
      Obligations, in such order as the Collateral Agent may elect, and only after
      such application and after the payment by the Collateral Agent of any other
      amount required by any provision of law, need the Collateral Agent account
      for
      the surplus, if any, to the Grantor. To the extent permitted by applicable
      law,
      the Grantor waives all claims, damages and demands it may acquire against the
      Collateral Agent arising out of the exercise by it of any rights hereunder,
      provided,
      that
      nothing contained in this Section 8 shall relieve the Collateral Agent from
      liability arising solely from its gross negligence or willful misconduct. If
      any
      notice of a proposed sale or other disposition of Collateral shall be required
      by law, such notice shall be deemed reasonable and proper if given at least
      ten
      days before such sale or other disposition. The Grantor shall remain liable
      for
      any deficiency if the proceeds of any sale or other disposition of the
      Collateral are insufficient to pay the Obligations and the fees and
      disbursements of any attorneys employed by the Collateral Agent to collect
      such
      deficiency.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    9. Limitation
      on Duties Regarding Preservation of Collateral.
      The
      Collateral Agent's sole duty with respect to the custody, safekeeping and
      physical preservation of the Collateral in its possession, under the Code or
      otherwise, shall be to deal with it in the same manner as the Collateral Agent
      deals with similar property for its own account. Neither the Collateral Agent
      nor any of its directors, officers, employees or agents shall be liable for
      failure to demand, collect or realize upon all or any part of the Collateral
      or
      for any delay in doing so or shall be under any obligation to sell or otherwise
      dispose of any Collateral upon the request of the Grantor or
      otherwise.

    

    10. Powers
      Coupled with an Interest.
      All
      authorizations and agencies herein contained with respect to the Collateral
      are
      irrevocable and powers coupled with an interest until the Grantor has paid
      and
      performed in full all of its obligations under the Transaction
      Documents.

    

    11. Severability.
      Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

    

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

    

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

    

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

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    15. Termination
      of Security Interest; Release of Collateral.  

    

    (a) Upon
      the
      payment in full of all principal of and premium, if any, and interest on the
      Notes and the payment in full of all other amounts for Obligations that are
      due
      and payable at such time, and if no claims for payment by the Company of any
      Obligations are at the time pending, the Security Interest shall terminate
      and
      all rights to the Collateral shall revert to the Grantor. 

    

    (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;

    

    (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;

    

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

    

    (iv) Fourth,
      to pay each Holder, on a pro rata basis, the amount then due upon acceleration,
      if any, pursuant to Section 4 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, 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
      then

    

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

    

    (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.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (c) At
      any
      time and from time to time prior to termination of the Security Interest
      pursuant to Section 15(a), the Collateral Agent shall release any of the
      Collateral only with the prior written consent of the Majority Holders.

    

    (d) Upon
      any
      such termination of the Security Interest or release of all the Collateral,
      the
      Collateral Agent will, at the expense of the Grantor, execute and deliver to
      the
      Grantor such documents and take such other actions as the Grantor shall
      reasonably request to evidence the termination of the Security Interest and
      deliver to the Grantor all Collateral so released then in its
      possession.

    

    16. Notices.
      Any
      notices required or permitted to be given under the terms of this Agreement
      shall be in writing and shall be sent by mail, personal delivery, telephone
      line
      facsimile transmission or courier and shall be effective five days after being
      placed in the mail, if mailed, or upon receipt, if delivered personally, by
      telephone line facsimile transmission or by courier, in each case addressed
      to a
      party at such party's address (or telephone line facsimile transmission number)
      shown below or such other address (or telephone line facsimile transmission
      number) as a party shall have provided by notice to the other party in
      accordance with this provision. In the case of any notice to the Grantor, such
      notice shall be addressed to the Grantor at 10500 N.E. 8th
      Street,
      Suite 1400,Bellevue, WA 98004, Attention: Chief Financial Officer (telephone
      line facsimile number (425) 749-3601), with a copy to Sichenzia Ross Friedman
      Ference LLP, 1065 Avenue of the Americas, 21st
      Floor,
      New York, New York 10018, Attention: Richard A. Friedman, Esq. (telephone line
      facsimile number (212) 930-9725) and in the case of any notice to the Collateral
      Agent, such notice shall be addressed to the Collateral Agent at c/o Alexandra
      Investment Management, LLC, 767 Third Avenue, 39th
      Floor,
      New York, New York 10017 (telephone line facsimile number (212) 301-1810),
      with
      a copy to Law Offices of Brian W Pusch, Penthouse Suite, 29 West 57th
      Street,
      New York, New York (telephone line facsimile number (212)
      980-7055).

    

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

    

    18. Concerning
      Collateral Agent.
      The
      Grantor acknowledges that the rights and responsibilities of the Collateral
      Agent under this Agreement with respect to any action taken by the Collateral
      Agent or the exercise or nonexercise by the Collateral Agent of any option,
      right, request, judgment or other right or remedy provided for herein or
      resulting or arising out of this Agreement shall, as between the Collateral
      Agent and the Holders, be governed by Schedule
      IV hereto
      and by such other agreements with respect thereto as may exist from time to
      time
      among them, but, as between the Collateral Agent and the Grantor, except as
      expressly provided in Sections 14 and 15, the Collateral Agent shall be
      conclusively presumed to be acting as agent for the Holders with full and valid
      authority so to act or refrain from acting, and the Grantor shall not be under
      any obligation to make any inquiry respecting such authority. The Collateral
      Agent hereby waives for the benefit of the Holders any claim, right or lien
      of
      the Collateral Agent against the Collateral arising under applicable law or
      arising from any business or transaction between the Collateral Agent and the
      Grantor other than pursuant to this Agreement or any of the other Transaction
      Documents.

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    19. Survival.
      All
      representations, warranties, covenants and agreements of the Grantor and of
      the
      Collateral Agent contained herein will survive the execution and delivery hereof
      and the release of any Collateral pursuant hereto and shall remain operative
      and
      in full force and effect regardless of any investigation made by or on behalf
      of
      the Collateral Agent or the Grantor or any person who controls the Collateral
      Agent or the Grantor.

    

    20. Grantor’s
      Obligations Absolute, Etc. The
      obligations of the Grantor under this Agreement shall be absolute and
      unconditional and shall remain in full force and effect without regard to,
      and
      shall not be released, suspended, discharged, terminated or otherwise affected
      by, any circumstance or occurrence whatsoever, including, without limitation:
      (a) any renewal, extension, amendment or modification of or addition or
      supplement to or deletion from any of the Transaction Documents or any other
      agreement or instrument referred to therein, or any assignment or transfer
      of
      any thereof; (b) any waiver, consent, extension, indulgence or other action
      or
      inaction under or in respect of any such Transaction Document or other agreement
      or instrument; (c) any furnishing of any additional security to the Collateral
      Agent or its assignees or any acceptance thereof or any release of any security
      by the Collateral Agent or its assignees; (d) any limitation on any party’s
      liability or obligations under any such Transaction Document or other agreement
      or instrument or any invalidity or unenforceability, in whole or in part, of
      any
      such Transaction Document or other agreement or instrument or any term thereof;
      or (e) any bankruptcy, insolvency, reorganization, composition, adjustment,
      dissolution, liquidation or other like proceeding relating to the Grantor,
      or
      any action taken with respect to this Agreement by any trustee or receiver,
      or
      by any court, in any such proceeding, whether or not the Grantor shall have
      notice or knowledge of any of the foregoing.

    

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

    

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

    

    23. 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 telephone
      line facsimile transmission of a copy of this Agreement bearing the signature
      of
      the party so delivering this Agreement.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

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

    

    

    [Signature
      page follows]

    
      
         

        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Grantor 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/ Gary
              W.
              Jones
	 	
              
Name:
              Gary W. Jones
	 	Title: Chief
              Executive Officer

      	 	 	 
	 	
              ALEXANDRA
                GLOBAL MASTER FUND
                LTD., as Collateral Agent

            
	 
 	 
 	
               

               

              ALEXANDRA
                INVESTMENT MANAGEMENT, LLC, as Investment
                Advisor
 

               

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

    

    
      
        
           

        

        
        

      

      
        19

        
          

        

      

      
        
        

        
          

        

      

    

    SCHEDULE
      I

    

    Filings
      Required to Perfect Security Interest

    

    1. Secretary
      of State of the State of Delaware

    

    2. Department
      of State of the State of New York

    

    
      
        
           

        

        
        

      

      
        I-1

        
          

        

      

      
        
        

        
          

        

      

    

    SCHEDULE
      II

    

    Location
      of Records Concerning Accounts

    

    

    eMagin
      Corporation

    10500
      NE
      8th
      Street,
      Suite 1400

    Bellevue,
      WA. 98004

    
      
        
           

        

        
        

      

      
        II-2

        
          

        

      

      
        
        

        
          

        

      

    

    SCHEDULE
      III

    

    Inventory
      Locations

    

    eMagin
      Corporation

    2070
      Route 52

    Hopewell
      Junction, NY 12533

    

    eMagin
      Corporation 

    10500
      NE
      8th
      Street,
      Suite 1400

    Bellevue,
      WA. 98004

    Asteria
      Manufacturing and Brimal Holding (same address):

    

    Wisma
      AIC

    Lot
      3

    Persiaran
      Kemajuan

    Seksyen
      16

    40200
      Shah Alam

    Selangor
      Darul Ehsan

    Malaysia

    

    
      
        
           

        

        
        

      

      
        III-1

        
          

        

      

      
        
        

        
          

        

      

    

    SCHEDULE
      IV

    

    The
      Collateral Agent

    

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

    

    2. Nature
      of Duties.
      The
      Collateral Agent shall have no duties or responsibilities except those expressly
      set forth in the Agreement. Neither the Collateral Agent nor any of its
      officers, directors, employees or agents shall be liable for any action taken
      or
      omitted by it as such under the Agreement or hereunder or in connection herewith
      or therewith, unless caused by its or their gross negligence or willful
      misconduct. The duties of the Collateral Agent shall be mechanical and
      administrative in nature; the Collateral Agent shall not have by reason of
      the
      Agreement or any other Transaction Document a fiduciary relationship in respect
      of any Holder; and nothing in the Agreement, expressed or implied, is intended
      to or shall be so construed as to impose upon the Collateral Agent any
      obligations in respect of the Agreement except as expressly set forth herein.
      The Collateral Agent shall not take any material action or exercise any material
      right or power pursuant to Section 5, 6 or 7 of this Agreement without the
      authorization or direction of the Majority Holders; provided,
      however,
      that if
      the Collateral Agent determines that it is unable to contact the Majority
      Holders for purposes of seeking such authorization or direction or time will
      not
      permit the Collateral Agent to so contact the Majority Holders prior to such
      time as detriment may occur to the rights of the Collateral Agent or the Holders
      from any failure of the Collateral Agent to act or exercise such right, then
      in
      any such case the Collateral Agent may take such action or exercise such right
      without specific authorization or direction from the Majority
      Holders.

    

    The
      Collateral Agent shall not be liable for any act it may do or omit to do while
      acting in good faith and in the exercise of its own best judgment. Any act
      done
      or omitted by the Collateral Agent on the advice of its own attorneys shall
      be
      deemed conclusively to have been done or omitted in good faith. The Collateral
      Agent shall have the right at any time to consult with counsel on any question
      arising under the Agreement. The Collateral Agent shall incur no liability
      for
      any delay reasonably required to obtain the advice of counsel.

    

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

    

    
      
        
        

      

      
        IV-1

        
          

        

      

      
        
        

      

    

    4. Certain
      Rights of the Collateral Agent. 
      No
      Holder shall have the right to cause the Collateral Agent to take any action
      with respect to the Collateral, with only the Majority Holders having the right
      to direct the Collateral Agent to take any such action. If the Collateral Agent
      shall request instructions from the Majority Holders with respect to any act
      or
      action (including failure to act) in connection with the Agreement, the
      Collateral Agent shall be entitled to refrain from such act or taking such
      action unless and until it shall have received instructions from the Majority
      Holders, and to the extent requested, appropriate indemnification in respect
      of
      actions to be taken by the Collateral Agent; and the Collateral Agent shall
      not
      incur liability to any person by reason of so refraining. Without limiting
      the
      foregoing, no Holder shall have any right of action whatsoever against the
      Collateral Agent as a result of the Collateral Agent acting or refraining from
      acting hereunder in accordance with the instructions of the Majority Holders
      or
      as otherwise specifically provided in the Agreement.

    

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

    

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

    

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

    

    
      
        
        

      

      
        IV-2

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

     

     

    IV-3Exhibit 10.5

    Exhibit
      10.5

     

    
 

    PATENT
      AND TRADEMARK SECURITY AGREEMENT

    

    This
      PATENT
      AND TRADEMARK SECURITY AGREEMENT,
      dated
      as of July 21, 2006 (this “Agreement”), made by 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 in this Agreement having the
      respective meanings provided in this Agreement).

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      the
      Grantor and the several Buyers are parties to the several Note Purchase
      Agreements pursuant to which, among other things, the Buyers have agreed to
      purchase up to $7,000,000 aggregate principal amount of Notes of the
      Grantor;

    

    WHEREAS,
      the
      Grantor has certain right, title and interest in and to certain patents, patent
      applications and trademarks and related property;

    

    WHEREAS,
      the
      Grantor has agreed to grant to the Collateral Agent a security interest in
      its
      right, title and interest in and to certain patents, patent applications,
      trademarks and related rights to secure the payment and performance of certain
      obligations of the Grantor, including, without limitation, obligations of the
      Grantor under the Notes, the Note Purchase Agreements, the Security Agreement
      and this Agreement;

    

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

    

    WHEREAS,
      the
      Grantor is contemporaneously herewith entering into the Security Agreement
      and
      the Lockbox Agreement with the Collateral Agent for the ratable benefit of
      the
      Holders;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and to induce the Buyers to purchase their
      respective Notes pursuant to the Note Purchase Agreements, the Grantor hereby
      agrees with the Collateral Agent, for the ratable benefit of the Holders, as
      follows: 

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.
       Definitions.

    

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

    

    (b) All
      the
      agreements or instruments herein defined shall mean such agreements or
      instruments as the same may from time to time be supplemented or amended or
      the
      terms thereof waived or modified to the extent permitted by, and in accordance
      with, the terms thereof and of this Agreement.

    

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

    

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

    

    “Accounts”
      means all rights to payment for goods sold or leased or for services rendered,
      whether or not such rights have been earned by performance.

    

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

    

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

    

    “Affiliate”
      means, with respect to any Person, any other Person that directly, or indirectly
      through one or more intermediaries, controls, is controlled by or is under
      common control with the subject Person. For purposes of this definition,
“control” (including, with correlative meaning, the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
      possession, directly or indirectly, of the power to direct or cause the
      direction of the management and policies of such Person, whether through the
      ownership of voting securities or by contract or otherwise.

    

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

    

    “Code”
      means the Uniform Commercial Code as from time to time in effect in the State
      of
      Delaware.

    
      
         

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Collateral”
      means all of the Grantor’s right, title and interest in and to each of the
      following, whether now owned or at any time hereafter acquired by the Grantor
      or
      in which the Grantor now has or at any time in the future may acquire any right,
      title or interest:

    

    (1) all
      Patents;

    

    (2) all
      Patent Licenses;

    

    (3) all
      Trademarks;

    

    (4) all
      Trademark Licenses;

    

    (5) all
      Contracts, Documents and General Intangibles developed or acquired by the
      Grantor relating to any and all of the foregoing;

    

    (6) all
      insurance policies to the extent they relate to the preceding items (1) through
      (5); and

    

    (7) to
      the
      extent not otherwise included in the preceding items (1) through (6), all
      Proceeds, products, rents, issues, profits and returns of and arising from
      any
      and all of the foregoing.

    

    “Contracts”
      shall have the meaning assigned to such term under the Code.

    

    “Documents”
      shall have the meaning assigned to such term under the Code.

    

    “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;

    

    (2)
       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 be
      made;

    

    (3)
       the
      failure by the Grantor to perform in any material respect any obligation of
      the
      Grantor under the Security Agreement as and when required by the Security
      Agreement;

    
      
         

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

    

    (5) 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;

    

    (6) 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 be made;
      or

    

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

    

    “General
      Intangibles” shall have the meaning ascribed to such term in the Code.

    

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

    

    “Issuance
      Date” means the date on which the Notes are initially issued.

    

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

    

    “Lockbox
      Agent” means the Person from time to time serving as Lockbox Agent under the
      Lockbox Agreement.

    

    “Lockbox
      Agreement” means that certain Lockbox Agreement, dated as of July 21, 2006, by
      and between the Grantor and the Lockbox Agent.

    

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

    

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

    
      
         

        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

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

    

    “Obligations”
      shall mean:

    

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

    

    (2) any
      and
      all sums advanced by the Collateral Agent or any Holder in order to preserve
      the
      Collateral or to preserve the Collateral Agent’s security interest in the
      Collateral; 

    

    (3) 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 Notes and this Agreement, 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

    

    (4) any
      amounts for which any Holder is entitled to indemnification under Section
      4(n).

    

    “Patent(s)”
      means all patents, patent applications and patent disclosures which are
      presently, or in the future may be, owned, issued, acquired or used (whether
      pursuant to a license or otherwise) anywhere in the world by the Grantor, in
      whole or in part, and all of the Grantor’s right, title and interest in and to
      all patentable inventions and to file applications for patents under patent
      laws
      of the United States or of any other jurisdiction, including any and all
      extensions, reissues, substitutes, continuations, continuations-in-part,
      divisional, patents of addition, re-examinations and renewals thereof, and
      patents issuing therefrom, and any other proprietary rights related to any
      of
      the foregoing (including, without limitation, remedies against infringements
      thereof and rights of protection of an interest therein under the laws of all
      jurisdictions) and any and all foreign counterparts of any of the foregoing,
      including without limitation, those listed on Exhibit
      A to
      this
      Agreement.

    

    “Patent
      Licenses” means each license agreement identified in Exhibit
      A
      to this
      Agreement as it may be amended, supplemented or otherwise modified from time
      to
      time, and each license agreement relating to Patents hereafter granted to,
      used
      or acquired by the Grantor, in each case together with the right to use and
      rely
      upon the inventions and other intellectual property conveyed
      thereunder.

    
      
         

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

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

    

    “Proceeds”
      shall have the meaning assigned to such term under the Code. 

    

    “PTO”
      means the United States Patent and Trademark Office.

    

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

    

    “Security
      Interest” means the security interest and collateral assignment granted in the
      Collateral pursuant to this Agreement.

    

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

    

    “Trademark
      License” means each license agreement identified in Exhibit
      B
      hereto
      as it may be amended, supplemented or otherwise modified from time to time,
      and
      each license agreement relating to Trademarks hereafter used, adopted or
      acquired by the Grantor. 

     

    “Trademarks”
      means (a) all trademarks, trade names, corporate names, company names, business
      names, fictitious business names, trade styles, service marks, logos and other
      source or business identifiers of the Grantor adopted for use in conjunction
      with the sale of Medical Devices or Competitive Products, now existing anywhere
      in the world or hereinafter adopted or acquired, whether currently in use or
      not, and the goodwill associated therewith, all registrations and recordings
      thereof, and all applications in connection therewith, including, without
      limitation, those identified in Exhibit
      B
      to this
      Agreement, and (b) all renewals thereof by the Grantor.

    

    “Transaction
      Documents” means the Notes, the Note Purchase Agreements, this Agreement, the
      Security Agreement, the Lockbox Agreement, the Warrants and the other
      agreements, instruments and documents contemplated hereby and thereby, and
      any
      amendments, extensions or renewals thereof or replacements
      therefor.

    
      
         

        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    2. Grant
      of Security Interest.
      As
      collateral security for the prompt and complete payment and performance when
      due
      of the Obligations and for the other purposes provided in this Agreement, the
      Grantor hereby grants, assigns and conveys to the Collateral Agent, for the
      ratable benefit of the Holders, all of the Grantor’s right, title and interest
      in and to the Collateral as collateral security and hereby grants the Collateral
      Agent a continuing first priority security interest therein. Such grant
      includes, without limitation, a grant of the security interest to secure the
      payment and performance of Obligations relating to the Additional Note upon
      the
      date of issuance of such Additional Note. Notwithstanding the foregoing
      assignment, unless and until there shall have occurred and be continuing an
      Event of Default, the Grantor shall retain and the Collateral Agent hereby
      grants to the Grantor the exclusive, non-transferable, revocable right and
      license to use the Collateral on and in connection with making, having made,
      using and selling products sold by the Grantor, for the Grantor’s own benefit
      and account and for none other (except as provided in the Patent Licenses
      identified on Exhibit
      A
      and the
      Trademark Licenses identified on Exhibit
      B).
      The
      Grantor agrees not to sell or assign its interest in, or grant any sublicense
      under, the foregoing license granted to the Grantor without the prior written
      consent of the Collateral Agent, which may be withheld in the Collateral Agent’s
      sole and absolute discretion.

    

    3. Representations
      and Warranties.
      The
      Grantor hereby represents and warrants that:

    

    (a) Description
      of Collateral. True
      and
      complete schedules setting forth all Patents, Patent Licenses, Trademarks and
      Trademark Licenses owned, held, controlled or used by the Grantor or to which
      the Grantor is a party on the date of this Agreement, together with a summary
      description and full information in respect of the filing, registration,
      issuance and expiration dates thereof, as applicable, are set forth on
Exhibit
      A
      with
      respect to Patents and Patent Licenses and on Exhibit
      B
      with
      respect to Trademarks and Trademark Licenses, respectively, to this
      Agreement.

    

    (b) Title;
      No Other Liens.
      Except
      for the Lien granted to the Collateral Agent for the ratable benefit of the
      Holders pursuant to this Agreement and the Lien granted to the Collateral Agent
      for the ratable benefit of the Holders pursuant to the Security Agreement,
      the
      Grantor is the sole and exclusive owner of and has good and marketable title
      to
      each item of the Collateral free and clear of any and all Liens or claims of
      others, except as permitted by Section 3.9 of the Notes. None of the Grantor’s
      Subsidiaries or other entities controlled by the Grantor has any right, title
      or
      interest in or to any of the Collateral. No security agreement, financing
      statement or other public notice with respect to all or any part of the
      Collateral is on file or of record in any public office, except such as may
      have
      been filed in favor of the Collateral Agent, for the ratable benefit of the
      Holders, pursuant to this Agreement or the Security Agreement.

    
      
         

        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (c) Perfected
      First Priority Liens.
      The
      Liens granted pursuant to this Agreement will constitute, upon the completion
      of
      all the filings or notices listed in Exhibit
      C
      to this
      Agreement, which Exhibit includes all UCC-1 financing statements to be filed
      pursuant to the terms of the Security Agreement, all requisite filings to be
      made with the PTO in the forms substantially similar to that of Exhibit
      E and
      Exhibit
      F to
      this
      Agreement, valid and perfected Liens on all Collateral in favor of the
      Collateral Agent for the ratable benefit of the Holders, which are prior to
      all
      other Liens on such Collateral and which are enforceable as such against all
      Persons. 

    

    (d) Consents
      under Contracts.
      No
      consent (other than consents that have been obtained) of any party (other than
      the Grantor) to any Contract that constitutes part of the Collateral is
      required, or purports to be required, in connection with the execution, delivery
      and performance of this Agreement or the exercise of the Collateral Agent’s
      rights and remedies provided herein or at law. 

    

    (e) Chief
      Executive Office.
      The
      Grantor’s chief executive office and chief place of business is located at 10500
      N.E. 8th
      Street,
      Suite 1400, Bellevue,
      WA 98004.

    

    (f) Authority.
      The
      Grantor has full power, authority and legal right to grant the Collateral Agent
      the Lien on the Collateral pursuant to this Agreement.

    

    (g) Approvals,
      Filings, Etc.
      No
      authorization, approval or consent of, or filing, registration, recording or
      other action with, any United States or foreign court, governmental body,
      regulatory agency, self-regulatory organization, or stock exchange or market,
      the stockholders of the Company or any other Person, including, without
      limitation, the PTO, is required to be obtained or made by the Company or any
      Subsidiary (x) for the grant by the Grantor of the Lien on the Collateral
      pursuant to this Agreement, (y) the collateral assignment of the Collateral
      to
      the Collateral Agent pursuant to this Agreement or (z) to perfect the Lien
      purported to be created by this Agreement, in each case except as has been
      obtained or made or (z) for the exercise of the Collateral Agent’s rights and
      remedies provided herein or at law.

    

    (h) No
      Claims.
      Each of
      the Patents and Trademarks existing on the date hereof is valid and enforceable,
      and the Grantor is not presently aware of any past, present or prospective
      claim
      by any third party that any of such Patents or Trademarks are invalid or
      unenforceable, or that the use of any Patents does or may violate the rights
      of
      any third person, or of any basis for any such claims.

    

    (i) Statutory
      Notice. The
      Grantor has used and will continue to use proper statutory notice in connection
      with its use of the Patents.

    
      
         

        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    (j) Certain
      Patent Matters.
      To its
      knowledge, the Grantor does not lack any material rights or licenses to use
      the
      Patents or to make, have made, use, sell, or offer for sale the claimed subject
      matter of the Patents. To the knowledge of the Grantor, there are no facts
      which
      would form a basis for a finding that any of the claims of the Patents is
      unpatentable, unenforceable or invalid. To the knowledge of the Grantor, there
      are no pending U.S. or foreign patent applications which, if issued, would
      limit
      or prohibit the ability of the Grantor or the Collateral Agent to make, have
      made, use, sell, or offer for sale the claimed subject matter of the
      Patents.

    

    (k) Custom
      License Matters. Each
      Patent License or Trademark License is the legal, valid and binding obligation
      of the Grantor and the respective licensor thereunder; the Grantor is not,
      and,
      to the best knowledge of the Grantor, each licensor is not, in default of any
      of
      its obligations under any Patent License or Trademark License; no event has
      occurred and no circumstance exists that with the giving of notice or the
      passage of time, or both, would constitute such a default by the Grantor; and,
      to the best knowledge of the Grantor, no such event has occurred or circumstance
      exists that would constitute a default by the licensor under any Patent License
      or Trademark License.

    

    4. Covenants.
      The
      Grantor covenants and agrees with the Collateral Agent that from and after
      the
      date of this Agreement until the payment and performance in full by the Grantor
      of all of the Obligations:

    

    (a) Further
      Documentation.
      At any
      time and from time to time, upon the written request of the Collateral Agent,
      and at the sole expense of the Grantor, the Grantor will promptly and duly
      execute and deliver such further instruments and documents and take such further
      action as the Collateral Agent may request for the purpose of obtaining or
      preserving the full benefits of this Agreement and of the rights and powers
      herein granted, including, without limitation, any applicable filing with the
      PTO and the filing of any financing or continuation statements under the Code
      or
      similar laws in effect in any such jurisdiction with respect to the Liens
      created hereby. The Grantor also hereby authorizes the Collateral Agent to
      file
      any such financing or continuation statement without the signature of the
      Grantor to the extent permitted by applicable law. A carbon, photographic or
      other reproduction of this Agreement shall be sufficient as a financing
      statement for filing in any jurisdiction.

    

    (b) Maintenance
      of Records.
      The
      Grantor will keep and maintain at its own cost and expense satisfactory and
      complete records of the Collateral. For the further security of the Collateral
      Agent for the ratable benefit of the Holders, the Grantor hereby grants to
      the
      Collateral Agent, for the ratable benefit of the Holders, a security interest
      in
      all of the Grantor’s books and records pertaining to the Collateral, and the
      Grantor shall turn over any such books and records for inspection
      at the office of the Grantor to the Collateral Agent or to its representatives
      during normal business hours at the request of the Collateral
      Agent.

    
      
         

        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c) Limitation
      on Liens on Collateral.
      The
      Grantor (x) will not create, incur or permit to exist, will defend the
      Collateral against, and will take such other action as is necessary to remove,
      any Lien or claim on or to the Collateral, other than the Liens created hereby
      and by the Security Agreement and Liens permitted by Section 3.9 of the Notes,
      and (y) will defend the right, title and interest of the Collateral Agent in
      and
      to any of the Collateral against the claims and demands of all
      Persons.

    

    (d) Limitations
      on Dispositions of Collateral.
      The
      Grantor will not sell, transfer, assign, grant any participation in, sublicense
      or otherwise dispose of any of the Collateral to any Persons, including, without
      limitation, any Subsidiary or Affiliate, or attempt, offer or contract to do
      so.

    

    (e) Limitations
      on Modifications, Waivers, Extensions of Patent Licenses and Trademark
      Licenses.
      The
      Grantor will not (i) amend, modify, terminate or waive any provision of any
      Patent License with respect to any Patent or Trademark License with respect
      to
      any Trademark in any manner which could reasonably be expected to materially
      adversely affect the value of such Patent License or Trademark License as
      Collateral, (ii) fail to exercise promptly and diligently each and every
      material right and perform each material obligation which it may have under
      each
      Patent License and Trademark License with respect to any Trademarks. Within
      two
      Business Days of receipt thereof, the Grantor will deliver to the Collateral
      Agent a copy of each material demand, notice or document received by it relating
      in any way to each Patent License and Trademark License.

    

    (f) Further
      Identification of Collateral.
      The
      Grantor shall furnish to the Collateral Agent from time to time, upon the
      request of the Collateral Agent, statements and schedules further identifying
      and describing the Collateral and such other reports in connection with the
      Collateral as the Collateral Agent may reasonably request, all in reasonable
      detail.

    

    (g) Notices.
      The
      Grantor shall advise the Collateral Agent promptly, but in no event later than
      two Business Days after the occurrence thereof, in reasonable detail, at its
      address specified in accordance with Section 15 (i) of any Lien on, or claim
      asserted against, any of the Collateral, other than as created hereby or as
      permitted hereby, (ii) of any Event of Default or any event which, with the
      giving of notice or the passage of time, or both, would become an Event of
      Default and (iii) of the occurrence of any other event which could reasonably
      be
      expected to have a material adverse effect on the Liens created hereunder or
      the
      rights of the Collateral Agent hereunder.

    
      
         

        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (h) Patents. 

    

    (1) The
      Grantor will notify the Collateral Agent immediately if it knows, or has reason
      to know, that any application relating to any Patent may become abandoned or
      of
      any adverse determination or development (including, without limitation, the
      institution of, or any such determination or development in, any proceeding
      in
      the PTO or any court or tribunal in any country) regarding the Grantor’s
      ownership of or license rights or other rights with respect to any
      Patent.

    

    (2) The
      Grantor will, with respect to any Patent that the Grantor obtains after the
      Issuance Date or any Patent License that the Grantor acquires after the Issuance
      Date, promptly, but in no event later than five Business Days thereafter, (i)
      take all actions necessary so that the Collateral Agent shall obtain a perfected
      security interest in such Patent or Patent License and (ii) provide to the
      Collateral Agent a revised Exhibit
      A,
      listing
      all Patents and all Patent Licenses in which the Grantor has an
      interest.

    

    (3) Upon
      request of the Collateral Agent, the Grantor shall execute and deliver any
      and
      all agreements, instruments, documents, and papers as the Collateral Agent
      may
      request to evidence the Collateral Agent’s security interest in such Patents or
      Patent Licenses, and the Grantor hereby constitutes the Collateral Agent its
      attorney-in-fact to execute and file all such writings for the foregoing
      purposes, all acts of such attorney being hereby ratified and confirmed; such
      power being coupled with an interest is irrevocable until the Grantor shall
      have
      paid and performed in full all of its obligations under this Agreement and
      the
      other Transaction Documents.

    

    (4) The
      Grantor will take all reasonable and necessary steps, including, without
      limitation, in any proceeding before the PTO to maintain and pursue each Patent
      including, without limitation, payment of maintenance fees.

    

    (5) In
      the
      event that any Patent included in the Collateral is infringed by a third party,
      the Grantor shall promptly notify the Collateral Agent after it learns thereof
      and shall, if appropriate, sue for infringement, seeking injunctive relief
      where
      appropriate and to recover any and all damages for such infringement, or take
      such other actions as the Grantor shall reasonably deem appropriate under the
      circumstances to protect such Patent.

    

    (6) The
      Grantor hereby grants to the Collateral Agent and its employees and agents
      the
      right, upon prior written notice, to visit the Grantor’s plants and facilities,
      and the Grantor shall use its best efforts to arrange for the Collateral Agent
      and its employees and agents to have access to such plants and facilities of
      third parties which manufacture or supply goods or services, for or under
      contract with the Grantor.

    
      
         

        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (i) Trademarks.

    

    (1) The
      Grantor (either itself or through licensees) will, with respect to each
      Trademark identified in Exhibit
      B,
      as
Exhibit
      B
      may be
      amended, supplemented or otherwise modified from time to time, (i) continue
      to
      use or have used such Trademark to the extent necessary to maintain such
      Trademark in full force free from any claim of abandonment for non-use, (ii)
      maintain as in the past the quality of products and services offered under
      such
      Trademark, (iii) employ such Trademark with the appropriate notice of
      registration, (iv) not adopt or use any mark which is confusingly similar or
      a
      colorable imitation of such Trademark unless the Collateral Agent, for the
      ratable benefit of the Holders, shall obtain a first priority perfected security
      interest in the Company’s interest in such mark pursuant to this Agreement, and
      (v) not (and not permit any licensee or sublicensee thereof to) do any act
      or
      knowingly omit to do any act whereby any such Trademark may become
      invalidated.

    

    (2) The
      Grantor will promptly notify the Collateral Agent if any application or
      registration relating to any Trademark may become abandoned, canceled or denied,
      or of any adverse determination or development (including, without limitation,
      the institution of, or any such determination or development in, any proceeding
      in the PTO or any court or tribunal in any country) regarding the Grantor’s
      ownership interest in such Trademark or its right to register the same or to
      keep and maintain the same.

    

    (3) The
      Grantor will, with respect to any Trademark that the Grantor registers after
      the
      Issuance Date or any Trademark License that the Grantor acquires after the
      Issuance Date, promptly (i) take all actions necessary so that the Collateral
      Agent, for the ratable benefit of the Holders, shall obtain a perfected security
      interest in such Trademark or Trademark License and (ii) provide to the
      Collateral Agent a revised Exhibit
      B
      listing
      all registered Trademarks and all Trademark Licenses in which the Grantor has
      an
      interest.

    

    (4) Upon
      request of the Collateral Agent, the Grantor shall execute and deliver any
      and
      all agreements, instruments, documents, and papers as the Collateral Agent
      may
      request to evidence the Collateral Agent’s security interest in any Trademark
      and the goodwill and general intangibles of the Grantor relating thereto or
      represented thereby, and the Grantor hereby constitutes the Collateral Agent
      its
      attorney-in-fact to execute and file all
      such
      writings for the foregoing purposes, all acts of such attorney being hereby
      ratified and confirmed; such power being coupled with an interest is irrevocable
      until the Grantor shall have paid and performed in full all of its obligations
      under the Transaction Documents. 
      

    

    
      
         

        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (5) The
      Grantor will take all reasonable and necessary steps, including, without
      limitation, in any proceeding before the PTO, to maintain and pursue each
      application (and to obtain the relevant registration) and to maintain the
      registration of the Trademarks, including, without limitation, filing of
      applications for renewal, affidavits of use and affidavits of
      incontestability.

    

    (6) In
      the
      event that any Trademark included in the Collateral is infringed,
      misappropriated or diluted by a third party, the Grantor shall notify the
      Collateral Agent and shall, if appropriate, sue for infringement,
      misappropriation or dilution, seeking injunctive relief where appropriate and
      to
      recover any and all damages for such infringement, misappropriation or dilution,
      or take such other action as the Grantor reasonably deems appropriate under
      the
      circumstances to protect such Trademark.

    

    (j) Further
      Actions.
      Without
      limiting the foregoing provisions of this Section 4, the Grantor further agrees
      for itself and its successors and assigns to execute upon request any other
      lawful documents and likewise to perform any other lawful acts which may be
      necessary or desirable to secure fully for the Collateral Agent, for the ratable
      benefit of the Holders, all right, title and interest in and to the Collateral,
      including, but not limited to, the execution of substitution, reissue,
      divisional or continuation patent applications; and preliminary or other
      statement of the giving of testimony in any interference or other proceeding
      in
      which the Collateral or any application, Patent or Trademark directed thereto
      or
      derived therefrom may be involved.

    

    (k) License
      Agreements.
      The
      Grantor shall comply with its obligations under each of its Patent Licenses
      and
      Trademark Licenses.

    

    (l) Changes
      in Locations, Name, Etc.
      The
      Grantor will not (i) change the location of its chief executive office/chief
      place of business from that specified in Section 3(e) or (ii) change its name,
      identity or corporate structure to such an extent that any statement filed
      by
      the Collateral Agent with the PTO in connection with this Agreement would become
      misleading, unless it shall have given the Collateral Agent at least 30 days
      prior written notice thereof and, prior to such action or event, shall have
      taken appropriate action satisfactory to the Collateral Agent to preserve and
      protect the Collateral Agent’s collateral assignment and the Security Interest
      under this Agreement.

    
      
         

        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (m) Subsidiaries.
      This
      Agreement is entered into on behalf of and for the benefit of the Grantor.
      The
      Grantor will not permit any of its Subsidiaries or Affiliates or any other
      entities controlled by the Grantor to have any ownership or other rights in
      or
      to exercise any control over the Collateral.

    

    (n) Indemnification.
      The
      Grantor agrees to indemnify and hold harmless the Collateral Agent and each
      Holder and their respective officers, directors, Affiliates, agents and
      investment advisors (each, an “Indemnified Person”) from and against any and all
      claims, demands, losses, judgments and liabilities (including liabilities for
      penalties) of whatsoever kind or nature, and to reimburse the Collateral Agent
      and each Holder for all costs and expenses, including reasonable attorneys’ fees
      and expenses, arising out of or resulting from this Agreement, including any
      breach hereof or Event of Default hereunder, or the exercise by the Collateral
      Agent or any Holder, as the case may be, of any right or remedy granted to
      it
      hereunder or under the other Transaction Documents or under applicable law;
      provided,
      however,
      that the
      Grantor shall not be required to indemnify a particular Indemnified Person
      to
      the extent any claim, demand, loss, judgment, liability, cost or expense is
      determined by final judgment (not subject to further appeal) of a court of
      competent jurisdiction to have arisen primarily from the gross negligence or
      willful misconduct of such Indemnified Person. In no event shall any Indemnified
      Person other than the Collateral Agent have any liability or obligation to
      the
      Grantor under this Agreement or applicable law (liability under which the
      Grantor hereby waives) for any matter or thing in connection with this
      Agreement, and in no event shall the Collateral Agent or any Holder be liable,
      in the absence of a determination of gross negligence or willful misconduct
      on
      its part by final judgment (not subject to further appeal) of a court of
      competent jurisdiction, for any matter or thing in connection with this
      Agreement other than to account for moneys actually received by it in accordance
      with the terms hereof. If and to the extent that the obligations of the Grantor
      under this Section 4(n) are unenforceable for any reason, the Grantor hereby
      agrees to make the maximum contribution to the payment and satisfaction of
      such
      obligations which is permissible under applicable law. In any suit, proceeding
      or action brought by the Collateral Agent or any Holder under any Account or
      Contract that constitutes part of the Collateral for any sum owing thereunder,
      or to enforce any provisions of any such Account or Contract, the Grantor will
      save, indemnify and keep the Collateral Agent and each Holder harmless from
      and
      against all expense, loss or damage suffered by reason of any defense, setoff,
      counterclaim, recoupment or reduction or liability whatsoever of the account
      debtor or obligor thereunder, arising out of a breach by the Grantor of any
      obligation thereunder or arising out of any other agreement, indebtedness or
      liability at any time owing to or in favor of such account debtor or obligor
      or
      its successors from the Grantor.

    
      
         

        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    5. Collateral
      Agent’s Powers.

    

    (a) Powers.
      The
      Grantor hereby irrevocably constitutes and appoints the Collateral Agent and
      any
      officer or agent thereof or investment advisor thereto, with full power of
      substitution, as its true and lawful attorney-in-fact with full irrevocable
      power and authority in the place and stead of the Grantor and in the name of
      the
      Grantor or in its own name, from time to time in the Collateral Agent’s
      discretion, during any period in which an Event of Default is continuing, for
      the purpose of carrying out the terms of this Agreement, to take any and all
      appropriate action and to execute any and all documents and instruments which
      may be necessary or desirable to accomplish the purposes of this Agreement,
      and,
      without limiting the generality of the foregoing, the Grantor hereby gives
      the
      Collateral Agent and each such officer, agent and investment advisor the power
      and right, on behalf of the Grantor, without notice to or assent by the Grantor,
      except any notice required by law, to do the following:

    

    (1) to
      take
      possession of and endorse and collect any checks, drafts, notes, acceptances
      or
      other instruments for the payment of moneys due under or with respect to any
      Collateral and to file any claim or to take any other action or proceeding
      in
      any court of law or equity or otherwise deemed appropriate by the Collateral
      Agent for the purpose of collecting any and all such moneys due under or with
      respect to any such Collateral whenever payable, in each case in the name of
      the
      Grantor or its own name, or otherwise;

    

    (2) to
      pay or
      discharge taxes and Liens levied or placed on or threatened against the
      Collateral and to pay all or any part of the premiums therefor and the costs
      thereof; and

    

    (3) (A)
      to
      direct any party liable for any payment under any of the Collateral to make
      payment of any and all moneys due or to become due thereunder directly to the
      Collateral Agent or as the Collateral Agent shall direct; (B) to ask or demand
      for, collect, receive payment of and receipt for, any and all moneys, claims
      and
      other amounts due or to become due at any time in respect of or arising out
      of
      any Collateral; (C) to sign and endorse any invoices, freight or express bills,
      bills of lading, storage or warehouse receipts, drafts against debtors,
      assignments, verifications, notices and other documents in connection with
      any
      of the Collateral; (D) to commence and prosecute any suits, actions or
      proceedings at law or in equity in any court of competent jurisdiction to
      collect the Collateral or any thereof and to enforce any other right in respect
      of any Collateral; (E) to defend any suit, action or proceeding brought against
      the Grantor with respect to any Collateral; (F) to settle, compromise or adjust
      any suit, action or proceeding described in clause (E) above and, in connection
      therewith, to give such discharges or releases as the Collateral Agent may
      deem
      appropriate; (G) to assign (along with  the goodwill of  the business
      pertaining thereto)  any Patent or Trademark for such term or terms,
      on such conditions, and in such manner, as the Collateral Agent shall
      in

     

    
      
         

        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
      its
        sole
        discretion determine; and (H) generally, to sell, transfer, pledge and make
        any
        agreement with respect to or otherwise deal with any of the Collateral as
        fully
        and completely as though the Collateral Agent were the absolute owner thereof
        for all purposes, and to do, at the Collateral Agent’s option and the Grantor’s
        expense, at any time, or from time to time, all acts and things which the
        Collateral Agent deems necessary to protect, preserve or realize upon the
        Collateral and the Collateral Agent’s Liens thereon and to effect the intent of
        this Agreement, all as fully and effectively as the Grantor might
        do.

    

    

    The
      Grantor hereby ratifies all that said attorneys shall lawfully do or cause
      to be
      done by virtue hereof. This power of attorney is a power coupled with an
      interest and shall be irrevocable until the Grantor shall have paid and
      performed in full all of the Obligations.

    

    (b) Filing
      and Recordation.
      In
      addition to the filings the Grantor is required to make as specified in
Exhibit
      C,
      this
      Agreement or an instrument referring hereto may be filed and recorded in such
      public offices and with such governmental authorities, including the PTO, as
      the
      Collateral Agent may determine from time to time. The Collateral Agent may
      so
      file and record this Agreement as a “security interest”, “collateral
      assignment”, “assignment” or similar designation as the Collateral Agent may
      determine (so long as such designation is consistent with the terms of this
      Agreement) and the Collateral Agent may from time to time rerecord and refile
      or
      take other action to change the designation under which this Agreement is filed
      or recorded (so long as such designation is consistent with the terms of this
      Agreement).

    

    (c) Other
      Powers.
      The
      Grantor also authorizes the Collateral Agent, at any time and from time to
      time,
      to execute, in connection with the sale provided for herein, any endorsements,
      assignments or other instruments of conveyance or transfer with respect to
      the
      Collateral.

    

    (d) No
      Duty on Collateral Agent’s Part.
      The
      powers conferred on the Collateral Agent hereunder are solely to protect the
      Collateral Agent’s interests in the Collateral for the ratable benefit of the
      Holders and shall not impose any duty upon the Collateral Agent to exercise
      any
      such powers. The Collateral Agent shall be accountable only for amounts that
      it
      actually receives as a result of the exercise of such powers, and neither it
      nor
      any of its officers, directors, employees or agents shall be responsible to
      the
      Grantor for any act or failure to act hereunder, except for their own gross
      negligence or willful misconduct.

    

     

    
      
         

        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (e) Grantor
      Remains Liable under Contracts.
      Anything herein to the contrary notwithstanding, the Grantor shall remain liable
      under each of the ontracts
      that constitute part of the Collateral to observe and perform all the conditions
      and obligations to be observed and performed by it thereunder, all in accordance
      with and pursuant to the terms and provisions of each such Contract. The
      Collateral Agent shall not have any obligation or liability under any Contract
      that constitutes part of the Collateral by reason of or arising out of this
      Agreement or the receipt by the Collateral Agent of any payment relating to
      such
      Contract pursuant hereto, nor shall the Collateral Agent be obligated in any
      manner to perform any of the obligations of the Grantor under or pursuant to
      any
      such Contract, to make any payment, to make any inquiry as to the nature or
      the
      sufficiency of any payment received by it or as to the sufficiency of any
      performance by any party under any such Contract, to present or file any claim,
      to take any action to enforce any performance or to collect the payment of
      any
      amounts which may have been assigned to it or to which it may be entitled at
      any
      time or times. 

    

    6. Performance
      by Collateral Agent of Grantor’s Obligations.
      If the
      Grantor fails to perform or comply with any of its agreements contained herein
      and the Collateral Agent, as provided for by the terms of this Agreement and
      following reasonable notice to the Grantor, may itself perform or comply, or
      otherwise cause performance or compliance, with such agreement, and the expenses
      of the Collateral Agent incurred in connection with such performance or
      compliance shall be payable by the Grantor to the Collateral Agent on demand
      and
      shall constitute Obligations secured hereby.

    

    7. Remedies.
      If an
      Event of Default has occurred and is continuing, but in the case of Events
      of
      Default that are solely ones covered by the final clause (2) of Section 4.01
      of
      any Note, only after the expiration of the 120-day period specified in such
      clause (2) the Collateral Agent may exercise, in addition to all other rights
      and remedies granted to it in this Agreement and in any other instrument or
      agreement securing, evidencing or relating to the Obligations, all rights and
      remedies of a secured party under the Code. Without limiting the generality
      of
      the foregoing, if an Event of Default has occurred and is continuing, but in
      the
      case of Events of Default that are solely ones covered by the final clause
      (2)
      of Section 4.01 of any Note, only after the expiration of the 120-day period
      specified in such clause (2) the Collateral Agent, without demand of performance
      or other demand, presentment, protest, advertisement or notice of any kind
      (except any notice required by law referred to below or expressly provided
      for)
      to or upon the Grantor or any other Person (all and each of which demands,
      defenses, advertisements and notices are, to the extent permitted by applicable
      law, hereby waived), may in such circumstances forthwith collect, receive,
      appropriate and realize upon the Collateral, or any part thereof, and/or may
      forthwith sell, license, assign, give option or options to purchase, or
      otherwise dispose of and deliver the Collateral or any part thereof (or contract
      to do any of the foregoing), at public or private sale or sales, at any
      exchange, broker’s board or office of the Collateral Agent or elsewhere upon
      such terms and conditions as it may deem advisable and at such prices as it
      may
      deem best, for cash or on credit or for future delivery without
      assumption of any credit risk. The Collateral Agent shall have the right upon
      any such public sale or sales, and, to the extent permitted by law, upon any
      such private sale or sales, to purchase the whole or any part of the Collateral
      so sold, free of any right or equity of redemption in the Grantor, which right
      or equity is hereby waived, to the extent permitted by applicable law, or
      released. 

    
      
         

        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    The
      Grantor further agrees, if an Event of Default has occurred and is continuing,
      at the Collateral Agent’s request, to assemble the Collateral and make it
      available to the Collateral Agent at places which the Collateral Agent shall
      reasonably select, whether at the Grantor’s premises or elsewhere. The
      Collateral Agent shall apply the net proceeds of any such collection, recovery,
      receipt, appropriation, realization or sale, after deducting all reasonable
      costs and expenses of every kind incurred therein or incidental to the care
      or
      safekeeping of any of the Collateral or in any way relating to the Collateral
      or
      the rights of the Collateral Agent hereunder, including, without limitation,
      reasonable attorneys’ fees and disbursements, to the payment in whole or in part
      of the Obligations, in such order as the Collateral Agent may elect, and only
      after such application and after the payment by the Collateral Agent of any
      other amount required by any provision of law, need the Collateral Agent account
      for the surplus, if any, to the Grantor. To the extent permitted by applicable
      law, the Grantor waives all claims, damages and demands it may acquire against
      the Collateral Agent arising out of the exercise by it of any rights hereunder,
      provided,
      that
      nothing contained in this Section shall relieve the Collateral Agent from
      liability arising solely from its gross negligence or willful misconduct. If
      any
      notice of a proposed sale or other disposition of Collateral shall be required
      by law, such notice shall be deemed reasonable and proper if given at least
      ten
      days before such sale or other disposition. The Grantor shall remain liable
      for
      any deficiency if the proceeds of any sale or other disposition of the
      Collateral are insufficient to pay the Obligations and the fees and
      disbursements of any attorneys employed by the Collateral Agent to collect
      such
      deficiency.

    

    8. Limitation
      on Duties Regarding Preservation of Collateral.
      The
      Collateral Agent’s sole duty with respect to the custody, safekeeping and
      physical preservation of the Collateral in its possession, under the Code or
      otherwise, shall be to deal with it in the same manner as the Collateral Agent
      deals with similar property for its own account. Neither the Collateral Agent
      nor any of its directors, officers, employees or agents shall be liable for
      failure to demand, collect or realize upon all or any part of the Collateral
      or
      for any delay in doing so or shall be under any obligation to sell or otherwise
      dispose of any Collateral upon the request of the Grantor or
      otherwise.

    

    9. Powers
      Coupled with an Interest.
      All
      authorizations and agencies herein contained with respect to the Collateral
      are
      irrevocable and powers coupled with an interest until the Grantor has paid
      and
      performed in full all of the Obligations.

    
      
         

        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    10. Severability.
      Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

    

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

    

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

    

    13. Waivers
      and Amendments; Successors and Assigns.
      None of
      the terms or provisions of this Agreement may be waived, amended, supplemented
      or otherwise modified except by a written instrument executed by the party
      to be
      charged with enforcement; provided,
      however, that
      any
      provision of this Agreement may be waived, amended, supplemented or otherwise
      modified by the Collateral Agent only with the prior written approval of the
      Majority Holders. This Agreement shall be binding upon the successors and
      assigns of the Grantor and shall inure to the benefit of the Collateral Agent
      and its successors and assigns. The Grantor may not assign its rights or
      obligations under this Agreement without the prior written consent of the
      Collateral Agent, which the Collateral Agent may withhold in the discretion
      of
      the Majority Holders. The requirements for resignation, and appointment of
      a
      successor to, the Collateral Agent are established by Exhibit
      D
      hereto
      and not by this Agreement.

    

    14. Termination
      of Security Interest; Release of Collateral.
      (a) Upon
      the payment and performance in full by the Grantor of the Obligations, all
      right, title and interest of the Collateral Agent in and to the Collateral,
      including the Security Interest, pursuant to this Agreement shall terminate
      and
      all rights to the Collateral shall revert to the Grantor. 

    
      
         

        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (b) At
      any
      time and from time to time prior to termination of the right, title and interest
      of the Collateral Agent in and to the Collateral pursuant to Section 14(a),
      the
      Collateral Agent shall release any of the Collateral only with the prior written
      consent of the Majority Holders. 

    

    (c) Upon
      any
      such termination of the Security Interest, the Collateral Agent will, at the
      expense of the Grantor, execute and deliver to the Grantor such documents and
      take such other actions as the Grantor shall reasonably request to evidence
      the
      reassignment of the Collateral to the Grantor and the termination of the
      Security Interest. The Collateral Agent shall deliver to the Grantor all
      Collateral so released then in its possession.

    

    15. Notices.
      Any
      notices required or permitted to be given under the terms of this Agreement
      shall be in writing and shall be sent by mail, personal delivery, telephone
      line
      facsimile transmission or courier and shall be effective five days after being
      placed in the mail, if mailed, or upon receipt, if delivered personally, by
      telephone line facsimile transmission or by courier, in each case addressed
      to a
      party at such party’s address (or telephone line facsimile transmission number)
      shown below or such other address (or telephone line facsimile transmission
      number) as a party shall have provided by notice to the other party in
      accordance with this provision. In the case of any notice to the Grantor, such
      notice shall be addressed to the Grantor at 10500 N.E. 8th
      Street,
      Suite 1400,Bellevue, WA 98004, Attention: Chief Financial Officer (telephone
      line facsimile number (425) 749-3601), with a copy to Sichenzia Ross Friedman
      Ference LLP, 1065 Avenue of the Americas, 21st
      Floor,
      New York, New York 10018, Attention: Richard A. Friedman, Esq. (telephone line
      facsimile number (212) 930-9725), and in the case of any notice to the
      Collateral Agent, such notice shall be addressed to the Collateral Agent at
      c/o
      Alexandra Investment Management, LLC, 767 Third Avenue, 39th
      Floor,
      New York, New York 10017, Attention: Chief Compliance Officer (telephone line
      facsimile transmission number (212) 301-1800).

    

    16. Fees
      and Expenses.
      The
      Grantor agrees to pay the fees of the Collateral Agent in performing its
      services under this Agreement and all reasonable expenses (including but not
      limited to attorneys’ fees and costs for legal services, costs of insurance and
      payments of taxes or other charges) of, or incidental to, the custody, care,
      sale or realization on any of the Collateral or in any way relating to the
      performance of the obligations or the enforcement or protection of the rights
      of
      the Collateral Agent hereunder. 

    

    17. Concerning
      Collateral Agent.
      The
      Grantor acknowledges that the rights and responsibilities of the Collateral
      Agent under this Agreement with respect to any action taken by the Collateral
      Agent or the exercise or

    
      
         

        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    nonexercise
      by the Collateral Agent of any option, right, request, judgment or other right
      or remedy provided for herein or resulting or arising out of this Agreement
      shall, as between the Collateral Agent and the Holders, be governed by
Exhibit
      D
      to this
      Agreement and by such other agreements with respect thereto as may exist from
      time to time among them, but, as between the Collateral Agent and the Grantor,
      except as expressly provided in Sections 13 and 14, the Collateral Agent shall
      be conclusively presumed to be acting as agent for the Holders with full and
      valid authority so to act or refrain from acting, and the Grantor shall not
      be
      under any obligation to make any inquiry respecting such authority. The
      Collateral Agent hereby waives for the benefit of the Holders any claim, right
      or Lien of the Collateral Agent against the Collateral arising under applicable
      law or arising from any business or transaction between the Collateral Agent
      and
      the Grantor other than pursuant to this Agreement or any of the other
      Transaction Documents.

    

    18. Survival.
      All
      representations, warranties, covenants and agreements of the Grantor and of
      the
      Collateral Agent contained herein will survive the execution and delivery hereof
      and the release of any Collateral pursuant hereto and shall remain operative
      and
      in full force and effect regardless of any investigation made by or on behalf
      of
      the Collateral Agent or the Grantor or any person who controls the Collateral
      Agent or the Grantor.

    

    19. Grantor’s
      Obligations Absolute, Etc. The
      obligations of the Grantor under this Agreement shall be absolute and
      unconditional and shall remain in full force and effect without regard to,
      and
      shall not be released, suspended, discharged, terminated or otherwise affected
      by, any circumstance or occurrence whatsoever, including, without limitation:
      (a) any renewal, extension, amendment or modification of or addition or
      supplement to or deletion from any of the Transaction Documents or any other
      agreement or instrument referred to therein, or any assignment or transfer
      of
      any thereof; (b) any waiver, consent, extension, indulgence or other action
      or
      inaction under or in respect of any such Transaction Document or other agreement
      or instrument; (c) any furnishing of any additional security to the Collateral
      Agent or its assignees or any acceptance thereof or any release of any security
      by the Collateral Agent or its assignees; (d) any limitation on any party’s
      liability or obligations under any such Transaction Document or other agreement
      or instrument or any invalidity or unenforceability, in whole or in part, of
      any
      such Transaction Document or other agreement or instrument or any term thereof;
      or (e) any bankruptcy, insolvency, reorganization, composition, adjustment,
      dissolution, liquidation or other like proceeding relating to the Grantor,
      or
      any action taken with respect to this Agreement by any trustee or receiver,
      or
      by any court, in any such proceeding, whether or not the Grantor shall have
      notice or knowledge of any of the foregoing.

    

    20. Integration.
      This
      Agreement and the Security Agreement represent the entire agreement of the
      Grantor and the Collateral Agent with respect to the subject matter hereof,
      and
      there are no promises, undertakings,

    
      
         

        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    representations
      or warranties by the Collateral Agent relative to subject matter hereof not
      expressly set forth or referred to herein or therein.

    

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

    

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

    

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

    

    

    [signature
      page follows]

    
      
         

        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      Grantor 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/ Gary
              W.
              Jones
	 	
              
Name:
              Gary W. Jones
	 	Title:
              Chief Executive Officer

      	 	 	 
	 	
              ALEXANDRA
                GLOBAL MASTER FUND
                LTD., as Collateral Agent

            
	 
 	 
 	
               

              
ALEXANDRA
                INVESTMENT MANAGEMENT, LLC, as Investment Advisor

               

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

    

     

     

    
      
         

        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    STATE
      OF_________________________)

                            
 )
       SS:

    COUNTY
      OF_______________________)

    

    [CHECK
      FOR APPLICABLE FORM OF ACKNOWLEDGEMENT WHERE SIGNED] On
      this
    
      day of
      July __, 2006, before me personally appeared                                
      proved
      to me on the basis of satisfactory evidence to be the person who executed the
      above Patent and Trademark Security Agreement as                                
      on
      behalf of eMagin Corporation, a Delaware corporation, and acknowledged to me
      that the corporation executed it.

    

    WITNESS
      my hand and official seal.

    

    

    

    ________________________________________

    NOTARY
      PUBLIC

    

    

    

    

    

    

    

    STATE
      OF__________________    )

                 
)
      SS:

    COUNTY
      OF________________     )

    

    On
      this
     
      day of
      July __, 2006, before me personally appeared                                
      proved
      to me on the basis of satisfactory evidence to be the person who executed the
      above Patent and Trademark Security Agreement as                                
      on
      behalf of Alexandra Investment Management, LLC, as Investment Adviser to
      Alexandra Global Master Fund Ltd., and acknowledged to me that the limited
      liability company executed it.

    

    WITNESS
      my hand and official seal.

     

    ________________________________________

    NOTARY
      PUBLIC

    

    

    

    
      
        
           

        

        
        

      

      
        24

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

    

    Patents,
      Patent Licenses and Patent Applications

    

    

    ISSUED
      PATENTS

    

    
      	
              Patent

              Number

            	
              Title

            	
              Issue
                Date

            
	
              7,068,258

            	
              Portable
                communication device with virtual image display module

            	
              June
                27, 2006

            
	
              2,173,248

              (Canada)

            	
              Head
                Mounted Display System with Aspheric Optics (corr. to
                5,543,816)

            	
              May
                27, 2005

            
	
              6,885,147

            	
              Organic
                Light Emitting Diode Devices with Improved Anode Stability

            	
              April
                26, 2005

            
	
              2,173,624

              (Canada)

            	
              Binocular
                Head Mounted Display System

            	
              March
                29, 2005

            
	
              6,858,989

            	
              Method
                and System for Stabilizing Thin Film Transistors in AMOLED
                displays

            	
              February
                22, 2005

            
	
              6,809,710

            	
              Grey
                Scale Pixel Driver for Electronic Display and Method of Operation
                Therefor

            	
              October
                26, 2004

            
	
              6,809,710

            	
              Grey
                Scale Pixel Driver for Electronic Display and Method of Operation
                Therefor

            	
              October
                26, 2004

            
	
              6,760,034

            	
              Three
                Dimensional Display Emulation Method and System

            	
              July
                6, 2004

            
	
              98808734,0

            	
              Laser
                Ablation Method to Fabricate Color Organic Light Emitting Diode
                Displays

            	
              May
                26, 2004

            
	
              6,657,224

            	
              Organic
                Light Emitting Diode Devices Using Thermostable Hole-Injection and
                Hole-Transport Compounds

            	
              December
                2, 2003

            
	
              6,608,283

            	
              Apparatus
                and Method for Solder-Sealing an active Matrix Organic Light Emitting
                Diode

            	
              August
                19, 2003

            
	
              6,608,439

            	
              Inorganic-Based
                Color Conversion Matrix Element for Organic Color Display Devices
                and
                Method of Fabrication

            	
              August
                19, 2003

            

    

     

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

     

    
      	
              6,337,492

            	
              Serially-Connected
                Organic Light Emitting Diode Stack Having Conductors Sandwiching
                Each
                Light Emitting Layer

            	
              January
                8, 2002

            
	
              6,288,232

            	
              Synthesis
                of Pyrazolinynaphthalic Acid Derivatives

            	
              September
                11, 2001

            
	
              6,278,237

            	
              Laterally
                Structured High Resolution Multicolor Organic Electroluminescence
                Display
                Device

            	
              August
                21, 2001

            
	
              6,265,820

            	
              Heat
                Removal System for use in Organic Light Emitting Diode Displays Having
                High Brightness

            	
              July
                24, 2001

            
	
              6,255,771

            	
              Flashover
                Control Structure for Field Emitter Displays and Method of making
                the
                same

            	
              July
                3, 2001

            
	
              6,232,934

            	
              Binocular
                Head Mounted Display System

            	
              May
                15, 2001

            
	
              6,218,777

            	
              Field
                Emission Display Spacer with Guard Electrode

            	
              April
                14, 2001

            
	
              6,215,840

            	
              Method
                and Apparatus for Sequential Memory Addressing

            	
              April
                10, 2001

            
	
              6,204,975

            	
              Reflective
                Micro-Display System

            	
              March
                20, 2001

            
	
              6,198,214

            	
              Large
                Area Spacer-Less Field Emissive Display Package

            	
              March
                6, 2001

            
	
              6,198,220

            	
              Sealing
                Structure for Organic Light Emitting Devices

            	
              March
                6, 2001

            
	
              6,181,304

            	
              Convertible
                Right Eye/Left Eye Monocular Head Mounted Display System

            	
              January
                30, 2001

            
	
              6,169,358

            	
              Method
                and Apparatus for Flashover Control Including a High Voltage Spacer
                for
                Parallel Plate Electron Beam Array Devices and Method of Making
                Thereof

            	
              January
                2, 2001

            
	
              6,166,820

            	
              Laser
                Interferometric Lithographic System Providing Automatic Change of
                Fringe
                Spacing

            	
              December
                26, 2000

            
	
              6,157,291

            	
              Head
                Mounted Display System

            	
              December
                5, 2000

            
	
              6,144,145

            	
              High
                Performance Field Emitter and Method of Producing the Same

            	
              November
                7, 2000

            

    

     

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

     

    
      	
              6,136,621

            	
              High
                Aspect Ratio Gated Emitter Structure and Method of Making

            	
              October
                24, 2000

            
	
              6,101,028

            	
              Miniature
                Microscope

            	
              August
                8, 2000

            
	
              6,069,443

            	
              Passive
                Matrix OLED Display

            	
              May
                30, 2000

            
	
              6,060,728

            	
              Organic
                Light Emitting Device Structure and Process

            	
              May
                9, 2000

            
	
              6,027,388

            	
              Lithographic
                Structure and Method for Making Field Emitters

            	
              February
                22, 2000

            
	
              6,023,259

            	
              OLED
                Active Matrix Using a Single Transistor Current Mode Pixel
                Design

            	
              February
                8, 2000

            
	
              6,016,033

            	
              Electrode
                Structure for High Resolution Organic Light-Emitting Diode Displays
                and
                Method for Making the Same

            	
              January
                18, 2000

            
	
              6,005,720

            	
              Reflective
                Micro-Display System

            	
              December
                21, 1999

            
	
              5,965,898

            	
              High
                Aspect Ratio Gated Emitter Structure and Method of Making

            	
              October
                12, 1999

            
	
              5,959,725

            	
              Large
                Area Energy Beam Intensity Profiler

            	
              September
                28, 1999

            
	
              5,920,080

            	
              Emissive
                Display Using Organic Light Emitting Diodes

            	
              July
                6, 1999

            
	
              5,903,098

            	
              Field
                Emission Display Device Having Multiplicity of Through Conductive
                Vias and
                a Backside Connector

            	
              May
                11, 1999

            
	
              5,903,243

            	
              Compact
                body-Mountable Field Emission Display Device and Display Panel Having
                Utility for use Therewith

            	
              May
                11, 1999

            
	
              5,771,098

            	
              Laser
                Interferometric Lithographic System Providing Automatic Change of
                Fringe
                Spacing

            	
              June
                23, 1998

            
	
              5,708,449

            	
              Binocular
                Head Mounted Display System

            	
              January
                13, 1998

            
	
              5,688,158

            	
              Planarizing
                Process for Field Emitter Displays and Other Electron Source
                Applications

            	
              November
                18, 1997

            
	
              5,672,938

            	
              Light
                Emission Device Comprising Light Emitting Organic Material and Electron
                Injection Enhancement Structure

            	
              September
                30, 1997

            

    

     

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

     

    
      	
              5,663,608

            	
              Field
                Emission Display Devices, and Field Emission Electron Beam Source
                and
                Isolation Structure Components Therefor

            	
              September
                2, 1997

            
	
              5,647,785

            	
              Methods
                of Making Vertical Microelectronic Field Emission Devices

            	
              July
                15, 1997

            
	
              Des
                380,482

            	
              Head
                Mounted Display System

            	
              July
                1, 1997

            
	
              5,629,583

            	
              Flat
                Panel Display Assembly Comprising Photoformed Spacer Structure and
                Method
                of Making the Same

            	
              May
                13, 1997

            
	
              5,619,889

            	
              Method
                of Making Microstructural Surgical Instruments

            	
              April
                15, 1997

            
	
              5,619,097

            	
              Panel
                Display with Dielectric Spacer Structure

            	
              April
                8, 1997

            
	
              5,587,623

            	
              Field
                Emitter Structure and Method of Making the Same

            	
              December
                24, 1996

            
	
              5,583,393

            	
              Selectively
                Shaped Field Emission Electron Beam Source and Phosphor Array for
                use
                Therewith

            	
              December
                10, 1996

            
	
              5,561,339

            	
              Field
                Emission Array Magnetic Sensor Devices

            	
              October
                1, 1996

            
	
              5,548,181

            	
              Field
                Emission Device Comprising Dielectric Overlayer

            	
              August
                20, 1996

            
	
              5,546,099

            	
              Head
                Mounted Display System Light Blocking Structure

            	
              August
                13, 1996

            
	
              5,543,816

            	
              Head
                Mounted Display System with Aspheric Optics

            	
              August
                6, 1996

            
	
              5,539,422

            	
              Head
                Mounted Display System

            	
              July
                23, 1996

            
	
              5,534,743

            	
              Field
                Emission Display Devices, and Field Emission Electron Beam Source
                and
                Isolation Structure Components Therefor

            	
              July
                9, 1996

            
	
              5,529,524

            	
              Method
                of Forming a Spacer Structure Between Opposedly Facing Plate
                Members

            	
              June
                25, 1996

            
	
              Des
                359,729

            	
              Portable
                Interface Unit for a Head-Up Display System

            	
              June
                27, 1995

            

    

     

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

     

    
      	
              5,144,191

            	
              Horizontal
                Microelectronic Field Emission Devices

            	
              September
                1, 1992

            
	
              5,126,287

            	
              Self-Aligned
                Electron Emitter Fabrication Method and Device Formed
                Thereby

            	
              June
                30, 1992

            
	
              4,902,898

            	
              Wand
                Optices Column and Associated Array Wand and Charged Particle
                Source

            	
              February
                20, 1990

            
	
              98808734.0

              (China)

            	
              Laser
                Ablation Method To Fabricate Color OLED Displays

            	
              May
                26, 2004

            

    

    
      
         

        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

    PATENT
      APPLICATIONS IN PROGRESS

    

    

    
      	
              Patent

              Application
                No.

            	
              Title

            	
              Issue
                Date

            
	
              11/169,154

            	
              Method
                of Clearing Electrical Contact Pads in Thin Film Sealed OLED
                Devices

            	
              N/A

            
	
              09/785,270

            	
              Display
                Method and System

            	
              N/A

            
	
              09/849,745

            	
              Portable
                Communication Device With Virtual Image Display Module

            	
              N/A

            
	
              60/684,633

            	
              Tapered
                Fiber Optic Bundle Megadisplay

            	
              N/A

            
	
              60/583,158

            	
              Photoresist
                Laser Ablation

            	
              N/A

            
	
              09/814,853

            	
              Light
                Extraction from Color Changing Medium Layers in Organic Light Emitting
                Diode Devices

            	
              N/A

            
	
              504797/99

              (Japan)

            	
              Emissive
                Display Using Organic Light Emitting Diodes

            	
              N/A

            
	
              2000-550128

              (Japan)

            	
              An
                Improved Electrode Structure for Organic Light Emitting Diode
                Devices

            	
              N/A

            
	
              6-523218

              (Japan)

            	
              Head
                Mounted Display System

            	
              N/A

            
	
              9-531760

              (Japan)

            	
              Support
                for a Head Mounted Display System

            	
              N/A

            
	
              2004-261527
                (Japan; divisional)

            	
              Binocular
                Head Mounted Display System

            	
              N/A

            
	
              2000-565526

              (Japan)

            	
              Convertible
                Right Eye/Left Eye Monocular Head Mounted Display System

            	
              N/A

            
	
              2000-589993

              (Japan)

            	
              Reflective
                Micro-Display System; Miniature Microscope and Reflective Micro-display
                system respectively

            	
              N/A

            
	
              01950594,0

              (Europe)

            	
              OLED
                Devices Using Thermostable Hole-Injection and Hole-Transport
                Compounds

            	
              N/A

            
	
              11/439,014

            	
              Tapered
                Fiber Optic Bundle Metadisplay

            	
              N/A

            

    

     

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

     

    
      	
              11/402,092

            	
              Auto-calibrating
                Gamma Correction Circuit

            	
              N/A

            
	
              11/399,170

            	
              OLED
                Active Matrix Cell Designed For Optimal Uniformity

            	
              N/A

            
	
              133,678

              (Israel)

            	
              Emissive
                Display Using Organic Light Emitting Diodes

            	
              N/A

            
	
              60/755,907

            	
              Automatic
                Timeout Image Orientation System For FOLED Micro-display

            	
              N/A

            
	
              60/725,406

            	
              Novel
                OLED Lighting Device

            	
              N/A

            
	
              2,490,344

              (Canada;
                divisional)

            	
              Binocular
                Head-Mounted Display System

            	
              N/A

            

    

    

    
      
         

        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

    

    KODAK
      PATENTS (partial list)

    

    
      	
              Topic

            	
              U.S.
                Pat. No.

            	
              Issued

            
	 	 	 
	
              Multilayer
                structure

            	
              4,356,429

            	
              1982

            
	
              Multilayer
                structure - Alq 

            	
              4,539,507

            	
              1985

            
	
              Porphyrin
                injecting layer

            	
              4,720,432

            	
              1988

            
	
              Luminescent
                zone - dye dopant

            	
              4,769,292

            	
              1988

            
	
              Improved
                cathode

            	
              4,885,211

            	
              1989

            
	
              Silazane
                HTL

            	
              4,950,950

            	
              1990

            
	
              Improved
                intensity circuit

            	
              4,996,523

            	
              1991

            
	
              Cathode
                overlayer for stability

            	
              5,047,687

            	
              1991

            
	
              Cathode
                metal cap

            	
              5,059,861

            	
              1991

            
	
              Mg,
                Al cathode

            	
              5,059,862

            	
              1991

            
	
              Organic
                amines HTL

            	
              5,061,569

            	
              1991

            
	
              Fused
                metal cathode

            	
              5,073,446

            	
              1991

            
	
              Blue
                emitters

            	
              5,141,671

            	
              1992

            
	
              Blue
                emitters

            	
              5,150,006

            	
              1992

            
	
              Blue
                emitters

            	
              5,151,629

            	
              1992

            
	
              Integral
                shadow mask

            	
              5,276,380

            	
              1994

            
	
              Integral
                shadow mask color

            	
              5,294,869

            	
              1994

            
	
              Color
                change medium

            	
              5,294,870

            	
              1994

            
	
              White
                emitter (2-layer) BAlq

            	
              5,405,709

            	
              1995

            
	
              Phalocyanine
                dopant

            	
              5,409,783

            	
              1995

            
	
              OLED
                ultra thin device

            	
              5,482,896

            	
              1996

            
	
              ALQ
                blue

            	
              5,484,922

            	
              1996

            
	
              OLED
                ultra thin substrate

            	
              5,530,269

            	
              1996

            
	
              OLED
                TFT process

            	
              5,550,066

            	
              1996

            
	
              AC
                drive scheme

            	
              5,552,678

            	
              1997

            
	
              Polyaromatic
                amine HTL

            	
              5,554,450

            	
              1996

            
	
              Quinacridone
                green

            	
              5,593,788

            	
              1997

            
	
              Electron
                injector (silicides etc.)

            	
              5,608,287

            	
              1997

            
	
              Camera
                data printer

            	
              5,634,156

            	
              1997

            
	
              Blue
                emitter oxadizoles

            	
              5,645,948

            	
              1997

            
	
              Camera
                Information Display

            	
              5,652,930

            	
              1997

            
	
              White
                emitter structure

            	
              5,683,823

            	
              1997

            
	
              OLED
                TFT device

            	
              5,684,365

            	
              1997

            
	
              Blue
                emitter metal complex

            	
              5,755,999

            	
              1998

            
	
              LiF
                cathode

            	
              5,776,622

            	
              1998

            

    

    

    
      
         

        
        

      

      
        A-8

        
          

        

      

      
        
        

      

    

    
 

    EXHIBIT
      B

    

    Trademarks
      and Trademark Licenses

    

    
      	
              Serial
                App. No. 

            	
              Item

            	
              Status

            	
              Filing
                Date

            	
              Published,
                Allowed, or Registered

            
	
              78-463416

            	
               VIRTUAL
                VISION VERACITY (Block letters)

            	
              Allowed
                - 1st extension of time granted

            	
              Aug
                6, 2004

            	
              P
                May 2, 2006

            
	
              78-463402

            	
               VERACITY
                (Block letters)

            	 	
              Aug
                6, 2004

            	
              A
                Sep 27, 2005

            
	
              78-235749

            	
              EGLASS

            	
              Registered,
                Int'l

            	
              Apr
                9, 2003

            	
              R
                Aug 17, 2004

            
	
              78-853656

            	
              PRIVATE
                EYES (Block letters)

            	
              Pending
                - Initialized, Int'l

            	
              Apr
                4, 2006

            	 
	
              78-853655

            	
              PRIVATE
                EYE

            	
              Pending
                - Initialized, Int'l 

            	
              Apr
                4, 2006

            	 
	
              78-852411

            	
              EYEVIEWER

            	
              Pending
                - Initialized, Int'l

            	
              Apr
                3, 2006

            	 
	
              78-852409

            	
              EYEWITNESS
                (

            	
              Pending
                - Initialized, Int'l

            	
              Apr
                3, 2006

            	 
	
              78-541421

            	
              Z800
                3D VISOR

            	
              Pending
                - Non-final action, Int'l

            	
              Jan
                3, 2005

            	 
	
              78-667562

            	
              PERSONAL
                VIEWER

            	
              Pending
                - Non-final action, Int'l

            	
              Jul
                11, 2005

            	 
	
              78-667564

            	
              3DVISOR

            	
              Pending
                - Suspension letter, Int'l

            	
              Jul
                11, 2005

            	 
	
              78-667565

            	
              GET
                INSIDE THE GAME

            	
              Pending
                - Non-final action, Int'l

            	
              Jul
                11, 2005

            	 
	
              78-720607

            	
              EYEBUD

            	
              Pending
                - Non-final action, Int'l

            	
              Sep
                26, 2005

            	 
	
              75-856770

            	
              EMAGIN

            	
              Registered,
                Int'l

            	
              Nov
                23, 1999

            	
              R
                Mar 23, 2004

            
	
              74-285,321 

            	
              VIRTUAL
                VISION

            	
              Registered

            	
              June
                16, 1992

            	Dec.
              6, 1994

    

    

    

    

    

    
      
        
           

        

        
        

      

      
        B-1

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      C

    Filings
      Required for Collateral Assignment

    and
      to Perfect Security Interest

    

    1. Filing
      with the PTO

    

    

    2. Filing
      of
      UCC-1 Financing Statement with the State of Delaware

    

    

    3. Filing
      of
      UCC-1 Financing Statement with the
      State
      of Washington

    

    

    4. Filing
      of
      UCC-1 Financing Statement with the State of New York

    

    

    

    
      
        
           

        

        
        

      

      
        C-2

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      D

    

    The
      Collateral Agent

    

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

    

    2. Nature
      of Duties. 
      The
      Collateral Agent shall have no duties or responsibilities except those expressly
      set forth in the Patent and Trademark Security Agreement. Neither the Collateral
      Agent nor any of its officers, directors, employees or agents shall be liable
      for any action taken or omitted by it as such under the Patent and Trademark
      Security Agreement or hereunder or in connection herewith or therewith, unless
      caused by its or their gross negligence or willful misconduct. The duties of
      the
      Collateral Agent shall be mechanical and administrative in nature; the
      Collateral Agent shall not have by reason of the Patent and Trademark Security
      Agreement or any other Transaction Document a fiduciary relationship in respect
      of any Holder; and nothing in the Patent and Trademark Security Agreement,
      expressed or implied, is intended to or shall be so construed as to impose
      upon
      the Collateral Agent any obligations in respect of the Patent and Trademark
      Security Agreement except as expressly set forth herein. The Collateral Agent
      shall not take any material action or exercise any material right or power
      pursuant to Section 5, 6 or 7 of this Agreement without the authorization or
      direction of the Majority Holders; provided,
      however,
      that if
      the Collateral Agent determines that it is unable to contact the Majority
      Holders for purposes of seeking such authorization or direction or time will
      not
      permit the Collateral Agent to so contact the Majority Holders prior to such
      time as detriment may occur to the rights of the Collateral Agent or the Holders
      from any failure of the Collateral Agent to act or exercise such right, then
      in
      any such case the Collateral Agent may take such action or exercise such right
      without specific authorization or direction from the Majority
      Holders.

    
      
         

        
        

      

      
        D-1

        
          

        

      

      
        
        

      

    

    The
      Collateral Agent shall not be liable for any act it may do or omit to do while
      acting in good faith and in the exercise of its own best judgment. Any act
      done
      or omitted by the Collateral Agent on the advice of its own attorneys shall
      be
      deemed conclusively to have been done or omitted in good faith. The Collateral
      Agent shall have the right at any time to consult with counsel on any question
      arising under this Patent and Trademark Security Agreement. The Collateral
      Agent
      shall incur no liability for any delay reasonably required to obtain the advice
      of counsel.

    

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

    

    4. Certain
      Rights of the Collateral Agent. 
      No
      Holder shall have the right to cause the Collateral Agent to take any action
      with respect to the Collateral, with only the Majority Holders having the right
      to direct the Collateral Agent to take any such action. If the Collateral Agent
      shall request instructions from the Majority Holders with respect to any act
      or
      action (including failure to act) in connection with the Patent and Trademark
      Security Agreement, the Collateral Agent shall be entitled to refrain from
      such
      act or taking such action unless and until it shall have received instructions
      from the Majority Holders, and to the extent requested, appropriate
      indemnification in respect of actions to be taken by the Collateral Agent;
      and
      the Collateral Agent shall not incur liability to any person by reason of so
      refraining. Without limiting the foregoing, no Holder shall have any right
      of
      action whatsoever against the Collateral Agent as a result of the Collateral
      Agent acting or refraining from acting hereunder in accordance with the
      instructions of the Majority Holders or as otherwise specifically provided
      in
      the Patent and Trademark Security Agreement.

    
      
         

        
        

      

      
        D-2

        
          

        

      

      
        
        

      

    

    
 

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

    

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

    

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

    

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

    

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

    
      
         

        
        

      

      
        D-3

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

    

    
      
        
           

        

        
        

      

      
        D-4

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      E

    

    FORM
      OF PATENT COLLATERAL ASSIGNMENT 

    AND
      SECURITY AGREEMENT

    

    This
      PATENT
      SECURITY AGREEMENT,
      dated as
      of July 21, 2006, made by 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.

    

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      the
      Grantor has acquired certain right, title and interest in certain United States
      patents and patent applications identified in Exhibit
      1 hereto
      (the “Patents”); 

    

    WHEREAS,
      the
      Grantor and the Buyers are parties to certain Note Purchase Agreements, dated
      as
      of July 21, 2006 (as from time to time amended or supplemented, the “Note
      Purchase Agreements”), pursuant to which, among other things, the Buyers have
      agreed to purchase up to $7,000,000 aggregate principal amount of 6% Senior
      Secured Convertible Notes due 2007-2008 (the “Notes”) of the
      Grantor;

    

    WHEREAS,
      it is a
      condition precedent to the several obligations of the Buyers to purchase their
      respective Notes that the Grantor shall have executed and delivered a Patent
      and
      Trademark Security Agreement to the Collateral Agent for the ratable benefit
      of
      the Holders;

    

    WHEREAS,
      the
      Grantor wishes to grant to the Collateral Agent a security interest in certain
      of its property and assets to secure the performance of its obligations under
      the Notes; 

    

    WHEREAS,
      the
      Grantor is contemporaneously entering into a Security Agreement and a Patent
      and
      Trademark Security Agreement with the Collateral Agent for the ratable benefit
      of the Holders; and

    

    WHEREAS,
      the
      Grantor and Collateral Agent by this instrument seek to confirm and make a
      record of the collateral assignment of and grant of a security interest in
      the
      Patents.

    
      
         

        
        

      

      
        E-1

        
          

        

      

      
        
        

      

    

    

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and adequacy of
      which are hereby acknowledged, the Grantor does hereby acknowledge and confirm
      that it has made a collateral assignment to the Collateral Agent of, and has
      granted to the Collateral Agent a security interest in, all of the Grantor’s
      right, title and interest in, to, and under the Patents. The Grantor also
      acknowledges and confirms that the rights and remedies of the Collateral Agent
      with respect to the collateral assignment of and security interests in the
      Patents acknowledged and confirmed hereby are more fully set forth in the Patent
      and Trademark Security Agreement and the Security Agreement, the terms and
      provisions of which are incorporated herein by reference.

     

     

    
      	 	 	 
	 	EMAGIN
              CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name
	 	Title 

    

     

     

    
      	 	 	 
	 	ALEXANDRA
              GLOBAL MASTER FUND
              LTD., as Collateral Agent
	 
 	 
 	
              
ALEXANDRA
                INVESTMENT MANAGEMENT, LLC, as Investment Advisor

               

            
	 	By:  	 
	 	
              
Name:
              Mikhail Filimonov
	 	Title: Chairman
              and Chief Executive Officer

    

    

    
 

    

    

    

    
      
         

        
        

      

      
        E-2

        
          

        

      

      
        
        

      

    

    For
      eMagin Corporation:

    

    STATE
      OF____________________ )

                                                                  
           )
      SS:

    COUNTY
      OF__________________  )

    

    Subscribed
      and sworn to this       
      day of
                 ,
      2006.

     

    
 

    _________________________________________________

    Notary
      Public

     

     

    My
      Commission Expires:             
                       

    

    

    

    For
      Alexandra Global Master Fund Ltd., 

    as
      Collateral Agent:

    

    STATE
      OF_______________________ )

                                                                              
      )
      SS:

    COUNTY
      OF_____________________  )

    

    Subscribed
      and sworn to this       
      day of
                 ,
      2006.

    
 

    _______________________________________________

    Notary
      Public

    

    My
      Commission Expires:             
                       

    
      
        
           

        

        
        

      

      
        E-3

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      1

    

    Patents
      and Patent Applications

    

    
      
        
           

        

        
        

      

      
        E-1-4

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      F

    

    FORM
      OF TRADEMARK COLLATERAL ASSIGNMENT 

    AND
      SECURITY AGREEMENT

    

    This
      TRADEMARK
      SECURITY AGREEMENT,
      dated as
      of July 21, 2006, made by 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.

    

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      the
      Grantor has acquired an interest in certain trademarks identified in
Exhibit
      B
      hereto
      (the “Trademarks”); 

    

    WHEREAS,
      the
      Grantor and the Buyers are parties to certain Note Purchase Agreements, dated
      as
      of July 21, 2006 (as from time to time amended or supplemented, the “Note
      Purchase Agreements”), pursuant to which, among other things, the Buyers have
      agreed to purchase up to $7,000,000 aggregate principal amount of 6% Senior
      Secured Convertible Notes due 2007-2008 (the “Notes”) of the
      Grantor;

    

    WHEREAS,
      it is a
      condition precedent to the several obligations of the Buyers to purchase their
      respective Notes that the Grantor shall have executed and delivered a Patent
      and
      Trademark Security Agreement to the Collateral Agent for the ratable benefit
      of
      the Holders;

    

    WHEREAS,
      the
      Grantor wishes to grant to Collateral Agent a security interest in certain
      of
      its property and assets to secure the performance of its obligations under
      the
      Notes; 

    

    WHEREAS,
      the
      Grantor is contemporaneously entering into a Security Agreement and a Patent
      and
      Trademark Security Agreement with the Collateral Agent for the ratable benefit
      of the Holders;

    

    WHEREAS,
      the
      Grantor and the Collateral Agent by this instrument seek to confirm and make
      a
      record of the collateral assignment of and grant of a security interest in
      the
      Trademarks.

    
      
         

        
        

      

      
        F-1

        
          

        

      

      
        
        

      

    

    NOW,
      THEREFORE,
      for good
      and valuable consideration, the receipt and adequacy of which are hereby
      acknowledged, the Grantor does hereby acknowledge and confirm that it has made
      a
      collateral assignment to the Collateral Agent of, and has granted to the
      Collateral Agent a security interest in, all of the Grantor’s interests the
      Trademarks. The Grantor also acknowledges and confirms that the rights and
      remedies of Collateral Agent with respect to the collateral assignment of and
      security interests in the Trademarks acknowledged and confirmed hereby are
      more
      fully set forth in the Patent and Trademark Security Agreement and the Security
      Agreement, the terms and provisions of which are incorporated herein by
      reference.

     

    
      	 	 	 
	 	EMAGIN
              CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
Name:
	 	Title: 

    

     

    
      	 	 	 
	 	ALEXANDRA
              GLOBAL MASTER FUND
              LTD., as Collateral Agent
	 
 	 
 
              By:	
              
 ALEXADRA
                INVESTMENT MANAGEMENT, LLC,  as Investment
                Advisor

               

               

            
	 	By:  	 
	 	
              
Name:
              Mikhail Filimonov
	 	Title: Chairman
              and Chief Executive Officer

    
 

    

    

    
      
         

        
        

      

      
        F-2

        
          

        

      

      
        
        

      

    

    

    For
      eMagin Corporation:

    

    STATE
      OF_____________________)

                                                                        
      )
      SS:

    COUNTY
      OF___________________ )

    

    Subscribed
      and sworn to this       
      day of
                 ,
      2006.

     

    
 

    ___________________________________________

    Notary
      Public

     

     

    My
      Commission Expires:             
                       

    

    

    

    For
      Alexandra Global Master Fund Ltd., as 

    Collateral
      Agent:

    

    STATE
      OF_____________________)

                                                                         )
      SS:

    COUNTY
      OF                                             )

    

    Subscribed
      and sworn to this       
      day of
                 ,
      2006.

     

     

    _____________________________________________

    Notary
      Public

     

     

    My
      Commission Expires:             
                       

     

     

    F-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]