Exhibit 10.3

 

WAIVER AND CONSENT

 

This Waiver and Consent (“Consent”) is made and entered into as of December ___,
2014, by and among Vuzix Corporation, a Delaware corporation (the “Company”),
and the parties identified on the signature page hereto (each a “Purchaser” and
collectively, “Purchasers”). Capitalized terms used but not defined herein will
have the meanings assigned to them in the Securities Purchase Agreements (as
defined below).

 

WHEREAS, the Company and Purchasers identified on Exhibit A entered into
Securities Purchase Agreements (“Securities Purchase Agreements”) and other
related Transaction Documents (“Transaction Documents”) dated as of June 3,
2014; and

 

WHEREAS, the Company issued to Purchasers Convertible Notes (the “Notes”)
pursuant to the terms of the Securities Purchase Agreements; and

 

WHEREAS, the Company intends to enter into a financing transaction which (i) is
with a strategic investor that will generate gross proceeds of at least Ten
Million Dollars ($10,000,000), (ii) is in consideration for securities of the
Company which are sold at a minimum effective price of Five Dollars ($5.00) per
share of Common Stock, (iii) by its terms would not otherwise trigger the
anti-dilution rights of the Purchasers under Section 5(b) of the Note, and (iv)
will not include any price protection anti-dilution rights provisions (other
than rights of participation, “make-whole” options exercisable by the investor
for cash (which may, in certain instances, be at a per share price of less than
$5.00) or upon violation this Consent) (the “Proposed Offering”); and

 

WHEREAS, in connection with the Proposed Offering, Purchasers would be entitled
to certain rights of participation and anti-dilution protections in connection
with the Transaction Documents; and

 

WHEREAS, in connection with the Proposed Offering, the Company and Purchasers
agree to the following waivers and consents.

 

NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and Purchasers hereby agree as follows:

 

1.              Provided the Proposed Offering closes on or before February 27,
2015, Purchasers permanently and irrevocably: (i) waive the anti-dilution
protections and other rights set forth in Section 5(b) of the Notes, (ii) waive
any restrictions contained in Section 4.13 of the Securities Purchase Agreement
and consent to the consummation of the Proposed Offering, (iii) waive all rights
to participate in the Proposed Offering as such rights are set forth in Section
4.18 of the Securities Purchase Agreement and (iv) agrees that all future rights
of participation set forth in Section 4.18 of the Securities Purchase Agreement
shall be expressly subject to any rights of participation granted to the
investor in the Proposed Offering.

 

2.              The waivers and consents set forth in this Consent will be
effective only if holders of not less than 85% of the outstanding principal
amounts of Notes as of December 31, 2014 execute and deliver this Consent to the
Company (which, for the avoidance of doubt, shall satisfy the requirement by the
Company to receive the consent of a Majority in Interest (as defined in the
Securities Purchase Agreement) for the waiver of any provision under the
Transaction Documents as set forth in Section 5.5 of the Securities Purchase
Agreement); and holders of not less than 70% of the Company’s outstanding common
stock purchase warrants described on Exhibit B hereto execute and deliver to the
Company on or before January 2, 2015, the form of Warrant Waiver annexed hereto
as Exhibit C.

 

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3.              The undersigned represents to the Company that it is the holder
of the Note in the amounts set forth on Exhibit A hereto, has not transferred or
assigned any rights under the Note to any third party and has the authority to
enter into and deliver this Consent. The undersigned further represents to the
Company that it will not transfer or assign the Note or any rights thereunder to
a third party unless such third party agrees to execute a waiver and consent
agreeing to the terms set forth herein.

 

4.              This Consent may be executed in counterparts, each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument. This Consent may be signed and delivered by facsimile or
electronically and such facsimile or electronically signed and delivered Consent
shall be enforceable.

 

5.              This Consent will be subject to amendment and/or waiver as
described in the Transaction documents.

 

6.              The invalidity or unenforceability of any provision hereof will
in no way affect the validity or enforceability of any other provision.

 

7.              This Consent shall be included in the definition of Transaction
Documents.

 

8.              All notices, demands, requests, consents, approvals, and other
communications required or permitted in connection with this Consent shall be
made and given in the same manner set forth in Section 5.4 of the Securities
Purchase Agreement.

 

9.              This Consent shall be governed by, interpreted and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws and as further described in Section 5.9 of the Securities
Purchase Agreement.

 

10.            The parties acknowledge that this Consent is also being entered
into for the benefit of the investor to the Proposed Offering who is hereby made
a third party beneficiary of this Consent with rights of enforcement. Until the
sooner of the abandonment of the Proposed Offering or February 27, 2015, this
Consent may not be amended without the consent of such investor.

 

11.            Except as expressly set forth herein, this Consent shall not be
deemed to be a waiver, amendment or modification of any provisions of
the Transaction Documents or of any right, power or remedy of Purchaser, or
constitute a waiver of any provision of the Transaction Documents (except to the
extent herein set forth), or any other document, instrument and/or agreement
executed or delivered in connection therewith and any other agreement to which
Purchaser may be a party, in each case whether arising before or after the date
hereof or as a result of performance hereunder or thereunder. Except as set
forth herein, Purchaser reserves all rights, remedies, powers, or privileges
available under the Transaction Documents and any other agreement to which
Purchaser may be a party, at law or otherwise. This Consent shall not constitute
a novation or satisfaction and accord of the Transaction Documents or any other
document, instrument and/or agreement executed or delivered in connection
therewith and any other agreement to which Purchaser may be a party.

 

12.            The Company and the Purchaser acknowledge that certain
information provided to the Purchaser in connection with obtaining this Consent
may constitute material, non-public information related to the Company (the
“Proposed Offering MNPI”). The Company agrees that it shall, on or before
January 16, 2015, file a Current Report on Form 8-K with the Securities and
Exchange Commission disclosing such Proposed Offering MNPI.

 

(Signatures to follow)

 

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IN WITNESS WHEREOF, the Company and the undersigned Purchasers have caused this
Waiver to be executed as of the date first written above.

 

  VUZIX CORPORATION   the “Company”       By:  

 

“PURCHASER”

 

Name of Purchaser:
____________________________________________________________________

 

Signature of Authorized Signatory of Purchaser:
_____________________________________________

 

Name of Authorized Signatory:
___________________________________________________________

 

Title of Authorized Signatory:
____________________________________________________________ 

 

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