SECURITY AGREEMENT

This Security Agreement is entered into this 21th  day of May , 2010, by and
between Vuzix Corporation, a Delaware corporation, with an address at 75 Town
Centre Drive, Rochester, NY 14623 (the "Debtor") and Kopin Corporation, a
Delaware Corporation having an address at 200 John Hancock Road, Taunton,
Massachusetts  02780( the "Secured Party").

ARTICLE I
DEFINITIONS

All words and terms used in this Agreement shall have the meanings as set forth
in the following Sections; and where not otherwise defined herein, they shall be
deemed to have the meanings accorded to them in the New York Uniform Commercial
Code, as amended from time to time (the "UCC").

Section 1.1           "Agreement" shall mean this Security Agreement and all
documents and instruments executed and delivered in conjunction herewith.

Section 1.2           "Collateral" shall mean the property subject to the
security interest created by this Agreement, being all of the Debtor's personal
property of every kind and nature and wherever located, now owned or hereafter
acquired, and the proceeds thereof, as follows:

(a)           All of Debtor's Accounts (as defined in Section 9-106 of the UCC)
whether secured or unsecured, now existing or hereafter acquired, and the
proceeds thereof (the "Accounts");

(b)           All of Debtor's Instruments (as defined in Section 9-105(1)(i) of
the UCC), now owned or hereafter acquired and the proceeds thereof;

(c)           All of Debtor's Chattel Paper (as defined in Section 9-105(1)(b)
of the UCC), now owned or hereafter acquired and the proceeds thereof;

(d)           All of Debtor's General Intangibles (as defined in Section 9-106
of the UCC), now owned or hereafter acquired, and the proceeds thereof (the
"General Intangibles");

(e)           All of Debtor's Inventory (as defined in Section 9-109(4) of the
UCC), now existing or hereafter acquired and the proceeds thereof (the
"Inventory");

(f)           All of Debtor's Equipment (as defined in Section 9-109(2) of the
UCC), all attachments, accessories, parts or tooling related thereto and all
replacements for the foregoing, in each case now existing or hereafter acquired,
and the proceeds thereof (the "Equipment");

(g)           All of Debtor's Insurance with respect to the Inventory, General
Intangibles, Fixtures, Equipment, Goods and other Collateral against risks of
fire, theft or any other physical damage or loss, now owned or hereafter
acquired and the proceeds thereof, and all insurance insuring the payment of
Accounts, now owned or hereafter acquired, and the proceeds thereof
(collectively, the "Insurance");

 
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(h)           All goodwill, trade names, trademarks, trade secrets, know-how,
inventions, patents, patent applications, copyrights and other intellectual
property now owned or hereafter acquired by Debtor, or any rights of Debtor with
respect to any of the foregoing, whether or not any of the same are covered in
other categories of this Section 1.2, and the proceeds thereof;

(i)            All of Debtor's Documents of Title (as defined in Section
1-201-(15) of the UCC), now existing or hereafter acquired, and the proceeds
thereof;

(j)            All of Debtor's Goods (as defined in Section 2-105(1) of the
UCC), now owned or hereafter acquired, whether or not any of the same are
covered in other categories of this Section 1.2, and the proceeds thereof (the
"Goods");

(k)           All of Debtor's Fixtures (as described in Section 9-313 of the
UCC), now existing or hereafter acquired and the proceeds thereof (the
"Fixtures");

(l)            All of Debtor’s Investment Property (as defined in Section 9-115
of the UCC), now owned or hereafter acquired, and all proceeds and General
Intangibles arising therefrom (the "Investment Property");

(m)           All of Debtor's right, title and interest in all of its books,
records, ledger sheets, files and other data and documents, now owned or
hereafter existing, relating to any of the items listed in Sections (a) through
(l) above;

(n)           All of Debtor's rights as a seller of goods under Article 2 of the
UCC with respect to the Inventory, and as to goods represented by or securing
any of the Accounts, all Debtor's rights therein including, without limitation,
rights of stoppage in transit, replevin and reclamation;

(o)           All guarantees, mortgages or real or personal property leases or
other agreements or property securing or relating to any of the items referred
to above, or acquired for the purpose of securing and enforcing any of such
items; and

(p)           All sums at any time standing to Debtor's credit on Secured
Party's books, and all moneys, securities and other property of Debtor at any
time in Secured Party's possession or in which Secured Party has a lien or
security interest, and all proceeds thereof.

Section 1.3          "Obligation" shall mean any and all liabilities and
obligations of the Debtor to the Secured Party pursuant to or represented by a
Secured Promissory Note (the "Note") of even date herewith, issued to Secured
Party pursuant to a Revolving Line of Credit Trade Agreement between Debtor and
Secured Party, also of even date herewith.

 
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ARTICLE II
SECURITY INTEREST

As security for the payment of the Obligation, the Debtor hereby grants to
Secured Party a security interest in the Collateral.

ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEBTOR

The Debtor represents, warrants and covenants, and shall be deemed to do so
continually as long as this Agreement shall remain in force, that:

Section 3.1          Ownership of Collateral.  It is the owner of the
Collateral, with good, marketable and indefeasible title thereto, free of all
liens, security interests, claims, liabilities, mortgages, leases, pledges,
encumbrances, restrictions, charges or imperfections of title whatsoever, except
for the security interest of the Secured Party and as otherwise indicated on
Schedule A.

Section 3.2           Authority.  The Debtor is authorized to enter into and
implement this Agreement and has taken all necessary actions, corporate or
otherwise, in relation to such authorization.

Section 3.3           Maintenance of Collateral.  The Debtor shall continually
take such steps as may be necessary and prudent to protect the interest of
Secured Party in the Collateral including, but not limited to the following:

(a)           Maintain and records relating to the Collateral and allow Secured
Party or its representatives access to such records and the Collateral at all
reasonable times for the purpose of examination, verification, copying,
extracting and other reasonable purposes as Secured Party may require;

(b)           Execute and deliver to Secured Party such financing statements
and/or other and further documentation as Secured Party may deem reasonably
necessary or advisable in order to evidence, effectuate or perfect its security
interest in the Collateral;

(c)           Defend the Collateral against all claims and demands of third
parties at any time claiming the same or any interest therein, except buyers of
Inventory in the ordinary course of the Debtor's business; provided, however,
that the Debtor may grant security interests in some or all of the Collateral in
order to secure the payment of Senior Debt, as such term is defined in Section
6.1;

(d)           Not without prior written consent of Secured Party sell, transfer
or otherwise dispose of the Collateral or any interest therein, in bulk or
otherwise, except for (i) the sale of Inventory in the ordinary course of
business, (ii) the granting of security interests to secure the repayment of
Senior Debt, as such term is defined in Section 6.1 and (iii) the factoring of
accounts receivable for the purpose of obtaining funds for use in the ordinary
course of Debtor’s business;

 
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(e)           Notify Secured Party in the event of material loss or damage to
the Collateral or of any material adverse change in the Debtor's business or the
Collateral, or of any other occurrences which could materially and adversely
affect the security of Secured Party;

(f)            Pay all expenses incurred in the manufacture, delivery, storage
or other handling of the Collateral and all taxes which are or may become a lien
on the Collateral, promptly when due, and in any event reimburse Secured Party,
on demand, for any expenses which she might incur in satisfying such expenses or
taxes; and

(g)           Maintain insurance on the Collateral of such types, coverage, form
and amount as is usually carried on similar property by similar enterprises and
shall supply Secured Party with certificates as to the continuance of such
insurance, at its request.  All such insurance shall be payable to Secured Party
and the Debtor as their interests shall appear.  Insurance proceeds received by
Secured Party shall be applied by its against the Obligations, whether or not
then due.  Debtor shall timely make, file, settle and adjust all claims under
all such insurance, provided, that Secured Party shall have the right at its
election, to do so directly or to direct the Debtor in taking such action.

Section 3.6           Reimbursement to Secured Party.  All expenses of Debtor
paid by Secured Party pursuant to paragraphs (f) or (g) of Section 3.5 shall be
reimbursed by Debtor on demand, shall be Obligations secured hereby, and shall
bear interest, payable on demand, from the date of Secured Party's payment of
such expenses until payment in full is made by Debtor, at the highest rate
charged from time to time on the Obligation.

ARTICLE IV
EVENTS OF DEFAULT

Any of the following events or occurrences shall constitute an "event of
default" under this Agreement:

(a)           The failure to pay when due any amount due under the Obligation,
whether upon demand, at maturity, by acceleration or otherwise; or the
occurrence of an Event of Default as specified in the Note.

 
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(b)           The attachment or restraint of any of the Collateral or the same
being subject at any time to any mandatory court order or other legal process;

(c)           The failure of the Debtor to perform its duties as specified in,
or the breach of any representation, warranty or covenant contained in or made
pursuant to, this Agreement;

(d)           The failure in business, dissolution or termination of the
existence of the Debtor;

(e)           Any petition in bankruptcy being filed by or against the Debtor,
or any proceedings in bankruptcy or under any law relating to the relief of
debtors, being commenced for the relief or readjustment of any indebtedness of
the Debtor, either through reorganization, composition, extension or otherwise;
provided that, in the case of a petition or proceeding being commenced against
the Debtor, it shall not have been dismissed within sixty (60) days of being
filed or commenced.;

(f)           The making by the Debtor of an assignment for the benefit of
creditors, or the taking advantage by Debtor of any insolvency law;

(g)           The appointment of any receiver of any property of the Debtor; or

(h)           The failure of the Debtor to perform its duties as specified in,
or the breach of any representation, warranty or covenant contained in or made
pursuant to, or any default, Event of Default or event which, with notice or
lapse of time or both would constitute a default or Event of Default under, (i)
any agreement, document or instrument evidencing or representing the Obligation,
or (ii) any agreement, document, instrument, mortgage or guaranty executed in
connection with or in any way securing or related to the Obligation.

ARTICLE V
RIGHTS OF SECURED PARTY

Section 5.1           General Rights.  The rights of Secured Party shall at all
times be those of a secured party under the New York UCC in addition to and not
in limitation of the rights provided under this Security Agreement.

 
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ARTICLE VI
SUBORDINATION

Section 6.1           (a)           The security interest granted by this
Agreement shall be and hereby is subordinated to any security interest granted
in respect of Senior Debt and in respect of those obligations listed on Schedule
A, until the full and final payment in cash of all such Senior Debt, whether now
or hereafter incurred or owed by Debtor and all of those obligations listed on
Schedule A.  Secured Party will not take or omit to take any action or assert
any claim with respect to the Collateral which is inconsistent with the
provisions of this Section 6.1.  Without limiting the foregoing, Secured Party
will not take any action to foreclose or realize upon the Collateral or any part
thereof except in connection with any action to foreclose or realize upon the
Collateral by the holder of any Senior Debt but subject, in such event, to the
payment of or satisfaction of the Senior Debt, or as may be permitted with the
consent of the holders of all Senior Debt.  "Senior Debt" means all principal,
interest, fees, costs, enforcement expenses (including legal fees and
disbursements), collateral protection expenses and other reimbursement or
indemnity obligations created in favor of any lender to the Debtor in respect of
money borrowed by the Debtor from such lender for use in the ordinary course of
its business.

(b)           The security interest granted by this Agreement shall be and
hereby is declared to be pari passu with any security interest granted by the
Debtor in all or any part of the Collateral to any trade creditor of Debtor to
secure the payment of the purchase price of goods or services provided by such
trade creditor to the Debtor in the ordinary course of the Debtor’s business,
and the Secured Party agrees to share its security interest in and the proceeds
of any Collateral with any such trade creditor in proportion to the amount of
the obligation of Debtor to Secured Party and all such trade creditors.
ARTICLE VI
MISCELLANEOUS

Section 7.1          Waivers.  The Debtor expressly waives notice of nonpayment,
demand, presentment, protest or notice of protest in relation to the Obligations
or the Collateral.  No delay or omission of Secured Party in exercising or
enforcing any of its rights, powers, privileges, options or remedies under this
Agreement shall constitute a waiver thereof, and no waiver by Secured Party of
any default by the Debtor shall operate as a waiver of any other default.  This
Agreement constitutes the entire agreement between the Debtor and Secured Party
with respect to the security interest created and supersedes all prior written
or oral communications or understandings with respect to the subject matter
hereof.  No term or provision of this Agreement shall be waived, altered or
modified except by written amendment signed by the parties.  All rights and
remedies of Secured Party under this Agreement shall be cumulative and not
alternative or exclusive, may be exercised by Secured Party at such time or
times and in such order as Secured Party, in its sole discretion, may determine,
and are for the sole benefit of Secured Party.  The exercise or failure to
exercise such rights and remedies shall not result in liability to the Debtor or
others except in the event of willful misconduct or bad faith by Secured Party,
and in no event shall Secured Party be liable for more than it actually receives
as a result of the exercise or failure to exercise such rights and remedies.

Section 7.2          Successors and Survival.  This Agreement shall be binding
upon and shall inure to the benefit of the respective parties, their successors
and assigns, and shall remain in force and effect until terminated by written
agreement of the parties.  All representations, warranties and covenants shall
survive the execution hereof.

Section 7.3          Notices.  Any notices under or pursuant to this Agreement
shall be in writing and shall be delivered personally, or sent by registered or
certified mail to the address of the parties as set forth above or to such other
address as each Party may designate to the other from time to time.  Notices to
the Debtor shall be effective when received or receipted for or three (3) days
following mailing, whichever is sooner.

 
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Section 7.4         Headings.  The headings of Articles and Sections in this
Agreement are for convenience only.  They form no part of this Agreement and
shall not affect its interpretation.

Section 7.5          Severability.  If any provision of this Agreement shall be
or become illegal or unenforceable in whole or in part for any reason
whatsoever, the remaining provisions shall nevertheless be deemed valid, binding
and subsisting.

Section 7.6          Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within New York State, without giving
effect to conflict of laws principles.

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.

Vuzix Corporation
   
By:
/s/ Paul Travers
Name: Paul Travers
Title:   President
   
Kopin Corporation
   
By:
/s/ John C. C. Fan
Name: John C. C. Fan
Title:   Chief Executive Officer

STATE OF NEW YORK
COUNTY OF MONROE       SS.:

On the _____ day of May, 2010, before me, personally appeared Paul Travers
personally known to me or proved to me on the basis of satisfactory evidence to
be the individuals whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

   
 
Notary Public
 

 
 
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SCHEDULE A

PRIOR SECURITY INTERESTS

·
Loan Payable to Bank of America - $100,000

·
Loan Payable to JP Morgan Chase - $112,500

·
Note Payable to Paul Travers - $209,208

·
Note Payable to Paul Travers – $215,500

·
Note Payable to Grant Russell - $100,000

·
Note Payable to John Burtis - $75,000

·
Note Payable to Vicente Gavieres - $50,000

·
Note Payable to Sally Burdick - $123,718

·
Note Payable to Vast Corporation - $1,000,000

·
Note Payable to Kopin Corporation - $746,500

·
End

 
 
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SCHEDULE A TO UCC-1 FINANCING STATEMENT

All of the Debtor's personal property of every kind and nature and wherever
located, now owned or hereafter acquired, and the proceeds thereof, as follows:

(a)
All of Debtor's Accounts (as defined in Section 9-106 of the UCC) whether
secured or unsecured, now owned or hereafter acquired, and the proceeds thereof
(the "Accounts");

(b)
All of Debtor's Instruments (as defined in Section 9-105(1)(i) of the UCC), now
owned or hereafter acquired, and the proceeds thereof;

(c)
All of Debtor's Chattel Paper (as defined in Section 9-105(1)(b) of the UCC),
now owned or hereafter acquired, and the proceeds thereof;

(d)
All of Debtor's General Intangibles (as defined in Section 9-106 of the UCC),
now owned or hereafter acquired, and the proceeds thereof (the "General
Intangibles");

(e)
All of Debtor's Inventory (as defined in Section 9-109(4) of the UCC), now owned
or hereafter acquired, and the proceeds thereof (the "Inventory");

(f)
All of Debtor's Equipment (as defined in Section 9-109(2) of the UCC) and all
attachments, accessories, parts or tooling relating thereto and all replacements
for the foregoing, in each case now owned or hereafter acquired, and the
proceeds thereof (the "Equipment");

(g)
All of Debtor's Insurance with respect to the Inventory, General Intangibles,
Fixtures, Equipment and Goods against risks of fire, theft or any other physical
damage or loss, now owned or hereafter acquired, and the proceeds thereof, and
all insurance insuring the payment of Accounts, now owned or hereafter acquired,
and the proceeds thereof;

(h)
All goodwill, trade names, trademarks, trade secrets, know-how, inventions,
patents, patent applications, copyrights and other intellectual property, now
owned or hereafter acquired by Debtor, or any rights of Debtor with respect to
any of the foregoing, now owned or hereafter acquired, whether or not any of the
same are covered in other categories of this Schedule, and the proceeds thereof;

(i)
All of Debtor's Documents of Title (as defined in Section 1-201-(15) of the
UCC), now owned or hereafter acquired, and the proceeds thereof;

(j)
All of Debtor's Goods (as defined in Section 2-105(1) of the UCC), now owned or
hereafter acquired, whether or not any of the same are covered in other
categories of this Schedule, and the proceeds thereof (the "Goods");

(k)
All of Debtor's Fixtures (as described in Section 9-313 of the UCC), now owned
or hereafter acquired, and the proceeds thereof (the "Fixtures");

 
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(l)
All of Debtor’s Investment Property (as defined in Section 9-115 of the UCC),
now owned or hereafter acquired, and all proceeds and General Intangibles
arising therefrom (the "Investment Property");

(m)
All of Debtor's right, title and interest in all of its books, records, ledger
sheets, files and other data and documents, now owned or hereafter existing,
relating to any of the items listed in Sections (a) through (k) above;

(n)
All of Debtor's rights as a seller of goods under Article 2 of the UCC with
respect to the Inventory, and as to goods represented by or securing any of the
Accounts, all of Debtor's rights therein including, without limitation, rights
of stoppage in transit, replevin and reclamation; and

(o)
All guarantees, mortgages and real or personal property leases or other written
or oral agreements or property securing or relating to any of the items referred
to above, or acquired for the purpose of securing and enforcing any of such
items; and

(p)
All sums at any time standing to Debtor's credit on Secured Party's books, and
all moneys, securities and other property of Debtor at any time in Secured
Party's possession or in which Secured Party has a lien or security interest,
and all proceeds thereof.

 
 
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