SHARED SERVICES AGREEMENT

 

This SHARED SERVICES AGREEMENT (this “Agreement”) is entered into and made
effective as of June 15, 2012 (the “Effective Date”), by and between TDG
ACQUISITION COMPANY, LLC, a Delaware limited liability company (“Buyer”), and
VUZIX CORPORATION, a Delaware corporation (“Seller”).

 

WITNESSETH :

 

WHEREAS, Buyer and Seller have entered into a certain Asset Purchase Agreement
dated June 15, 2012 (the “Purchase Agreement”) pursuant to which Buyer is
purchasing certain business assets from Seller as more fully set forth in the
Purchase Agreement;

 

WHEREAS, also pursuant to the Purchase Agreement, Buyer and Seller have agreed
to enter into this Agreement pursuant to which Seller will provide certain
transition, administrative and support services to Buyer, and Buyer shall
provide certain transition services to Seller, all on the terms set forth in
this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Buyer and Seller, intending to be
legally bound, do hereby mutually covenant and agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1          Definitions. Capitalized terms used herein (including the Appendix
hereto) and not otherwise defined herein shall have the meanings assigned to
such terms in the Purchase Agreement.

 

1.2          Usage. For purposes of this Agreement, except as otherwise
expressly provided herein or unless the context otherwise requires: (i) words
using the singular or plural number also include the plural or singular number,
respectively, and the use of any gender herein shall be deemed to include the
other genders; (ii) references herein to “Articles,” “Sections,” “subsections”
and other subdivisions, and to the Appendix and other attachments, without
reference to a document are to the specified Articles, Sections, subsections and
other subdivisions of, and the Appendix and other attachments to, this
Agreement; (iii) a reference to a subsection without further reference to a
Section is a reference to such subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to other
subdivisions within a Section or subsection; (iv) the words “herein,” “hereof,”
“hereunder,” “hereby” and other words of similar import refer to this Agreement
as a whole and not to any particular provision and (v) the words “include,”
“includes” and “including” are deemed to be followed by the phrase “without
limitation.”

 

ARTICLE II

SHARED SERVICES

 

2.1          Shared Services. Upon the terms and subject to the conditions set
forth in this Agreement, the Seller will provide Buyer with certain shared
services (the “Seller Shared Services”) and Buyer shall provide Seller with
certain shared services (the “Buyer Shared Services”), all as set forth on the
Appendix attached hereto and incorporated herein by this reference. Such Seller
Shared Services to be provided by Seller as Buyer shall reasonably request from
time to time during the term hereof, and such Buyer Shared Services to be
provided by Buyer as Seller shall reasonably request from time to time during
the term hereof. The Seller Shared Services and Buyer Shared Services
collectively referred to herein as the “Shared Services”.

 

 

 

 

2.2          Personnel. In providing Shared Services, Seller and Buyer, as
applicable, shall each utilize personnel that are acceptable to the other party
in such other party’s reasonable discretion. Further, Seller may employ the
services of third parties to provide Seller Shared Services to the extent such
third party services were routinely utilized to provide similar services to the
Seller prior to the Effective Date or are reasonably necessary for the efficient
performance of the Seller Shared Services, provided such third parties are
acceptable to Buyer in Buyer’s reasonable discretion.

 

2.3          Representatives. Seller and Buyer shall each appoint a
representative to act as its primary contact person for the provision of all of
the Shared Services (collectively, the “Primary Coordinators”). The initial
Primary Coordinators shall be Michael McCrackan for Seller and Rich Ryan for
Buyer. Each party may treat an act of the Primary Coordinator of the other party
as being authorized by such other party without inquiring behind such act or
ascertaining whether such Primary Coordinator had authority to so act. Buyer and
Seller shall advise each other in writing of any change in the Primary
Coordinators, setting forth the name of the Primary Coordinator to be replaced
and the name of the replacement, and certifying that the replacement Primary
Coordinator is authorized to act for such party in all matters relating to this
Agreement. Buyer and Seller agree that all communications relating to the
provision of the Shared Services shall be directed to the Primary Coordinators.

 

2.4          Level of Shared Services.

 

(a)          Seller and Buyer, as applicable, shall each, in all material
respects, use commercially reasonable efforts to provide their respective Shared
Services in a commercially reasonable manner in accordance with general industry
standards and exercising the same degree of care as it exercised or would
exercise in performing the same or similar services for its own account.

 

(b)          In addition to being subject to the terms and conditions of this
Agreement for the provision of the Shared Services, Buyer agrees that the Seller
Shared Services provided by third parties shall be subject to the terms and
conditions of any agreements between Seller and such third parties. Seller shall
consult with Buyer, and obtain Buyer’s approval (which cannot be unreasonably
withheld or delayed) concerning the terms and conditions of any such agreements
to be entered into, or proposed to be entered into, with third parties after the
date hereof for provision of any of the Seller Shared Services.

 

2.5          Limitation of Liability. In the absence of negligent acts or
omissions or willful misconduct on the part of Seller or Buyer, as applicable,
in providing Shared Services, neither Seller nor Buyer shall be liable for any
claims, liabilities, damages, losses, costs, expenses (including settlements,
judgments, court costs and reasonable attorneys’ fees), fines and penalties,
arising out of any actual or alleged injury, loss or damage of any nature
whatsoever in providing Shared Services for which it is responsible hereunder.
Notwithstanding anything to the contrary contained herein, in the event Seller
or Buyer commits an error with respect to or incorrectly performs or fails to
perform any Shared Service, at the other party’s request, such party shall use
reasonable efforts and good faith to correct such error, re-perform or perform
such Shared Service at no additional cost to the other party.

 

2.6          Access. Seller shall with reasonable advance notice and during
normal business hours provide personnel of Buyer, including consultants and
other representatives or advisors, with access to its equipment, offices,
warehouse, plant, telecommunications and computer equipment and systems, and any
other areas and equipment to the extent reasonably required for personnel of
Buyer to monitor the progress and performance of the Seller Shared Services.

 

 

 

 

ARTICLE III

COMPENSATION

 

3.1          Consideration. As consideration for the Shared Services, Buyer
shall pay to Seller and Seller shall pay to Buyer, as applicable, the fees or
other compensation as may be specified for each of the Shared Services as set
forth in the Appendix.

 

3.2          Invoices. Seller will submit one invoice to Buyer each month for
all Seller Shared Services provided to Buyer by Seller during the prior month.
Similarly, Buyer will submit one invoice to Seller each month for all Buyer
Shared Services provided to Seller by Buyer during the prior month. Each invoice
shall include a reasonably detailed summary of the Shared Services provided,
including those for which there are fixed dollar fees and those provided on a
non-fixed fee basis, together with documentation supporting each of the invoiced
amounts that are not covered by a fixed fee. Each party shall have the right to
setoff any amount owed to it by the other party against amounts it owes to such
other party hereunder. All invoices shall be sent to the attention of the
Primary Coordinators at the addresses set forth in Section 6.5 hereof or to such
other addresses as shall have specified by proper notice by either party.

 

3.3          Payment of Invoices. Payment of all invoices in respect of a Shared
Service shall be made by check or electronic funds transmission in U.S. Dollars,
within thirty (30) days of the invoice date unless otherwise specified in the
Appendix relating to such Shared Service.

 

ARTICLE IV

CONFIDENTIALITY

 

4.1          Obligation. Each party shall not use or permit the use of (without
the prior written consent of the other party) and shall keep, and shall cause
its consultants and advisors to keep, confidential all Confidential Information
(hereafter defined) of the other party received pursuant to or in connection
with this Agreement.

 

4.2          Care and Inadvertent Disclosure. With respect to any Confidential
Information, each party agrees as follows:

 

(a)          it shall use the same degree of care in safeguarding the
Confidential Information of the other party as it uses to safeguard its own
information which must be held in confidence; and

 

(b)          upon the discovery of any inadvertent disclosure or unauthorized
use of the other party’s Confidential Information, or upon obtaining notice of
such a disclosure or use from the other party, it shall take all necessary
actions to prevent any further inadvertent disclosure or unauthorized use, and
such other party shall be entitled to pursue any other remedy which may be
available to it.

 

4.3          Injunctive Relief. Seller, on the one hand, and Buyer, on the
other, acknowledge and agree that the other party would be damaged irreparably
if any provisions of ARTICLE IV are not performed in accordance with their
specific terms or are otherwise breached, and that money damages alone would be
an inadequate remedy to compensate the other party for any such breach.
Accordingly, each party agrees that the other party will be entitled to an
injunction or injunctions to prevent breaches of the provisions of ARTICLE IV
and to enforce specifically ARTICLE IV in any action instituted in any court of
the United States or any state thereof having jurisdiction over the parties and
the matter, in addition to any other remedy to which a party may be entitled at
law or in equity, which other remedies, including monetary damages, will in no
way be limited by the foregoing.

 

 

 

 

4.4          Definition. For purposes of this Agreement, the term “Confidential
Information” means any and all non-public or trade secret information related,
in any manner whatsoever, to the business, operations, or condition (financial
or otherwise) of a party hereto, whether now existing or acquired or developed
after the date hereof. Notwithstanding the above, Confidential Information shall
not include any information of a party which is or becomes part of the public
domain, except for information which became part of the public domain as a
result of disclosure by the other party or its employees, representatives or
advisors of Confidential Information of the other party in violation of this
Agreement or the wrongful disclosure of such information by a third party.

 

ARTICLE V

TERM AND TERMINATION

 

5.1          Term. This Agreement shall become effective on the Effective Date
and shall remain in force until either (i) Buyer sends notice to Seller, at
least ten (10) days in advance of the date of such termination, that it no
longer requires any Seller Shared Services, or (ii) until such time as the term
of all Shared Services have expired, as provided on the Appendix as related to
each such Shared Service, whichever first occurs, unless this Agreement is
terminated prior thereto pursuant to Section 5.2. If this Agreement is
terminated by Buyer pursuant to Subsection 5.1(i), Seller shall nevertheless
remain entitled to receive the Buyer Shared Services pursuant to this Agreement,
on the terms contained herein, for the term then in effect and each applicable
renewal term.

 

5.2          Termination. Buyer may terminate any Seller Shared Services to be
provided to it under this Agreement at any time, by providing Seller with at
least ten (10) days’ prior written notice, specifying the date on which such
Shared Services are to be terminated; provided, however, in the event that
Seller retains a third party to perform any Seller Shared Services, such notice
period shall be extended to be the same notice period for cancellation
contractually or legally required to be given to such third party by Seller, but
in no event to longer than thirty (30) days. In the event of any such
termination, the termination will not affect this Agreement with respect to any
Shared Services not so terminated by Buyer under this Section. In addition to
Buyer’s right to terminate Shared Services, if either party (hereafter called
the “Defaulting Party”) shall fail to materially perform or default in the
performance of any of its obligations under this Agreement, the party entitled
to the benefit of such performance (hereinafter referred to as a “Non-Defaulting
Party”) may give written notice to the Defaulting Party specifying the nature of
such failure or default and stating that the Non-Defaulting Party intends to
terminate this Agreement with respect to the Defaulting Party if such failure or
default is not cured (i) in the case of a payment default, within three (3)
business days of such written notice, or (ii) in the case of all other defaults,
within fifteen (15) days of such written notice or, in the case of defaults not
susceptible to being cured with fifteen (15) days, to a reasonable period of
time provided the Defaulting Party commences curing with such fifteen (15) days
and diligently pursues the cure until completed. If any failure or default so
specified is not cured within such applicable period, the Non-Defaulting Party
may elect to immediately terminate this Agreement with respect to the Defaulting
Party. Such termination shall be effective upon giving a written notice of
termination from the Non-Defaulting Party to the Defaulting Party and shall be
without prejudice to any other right or remedy which may be available to the
Non-Defaulting Party against the Defaulting Party under this Agreement or at law
or in equity, including any right of the Non-Defaulting Party to seek specific
performance and/or obtain replacement or substitute services, if available, for
any Shared Services not provided by the Defaulting Party, at the expense of the
Defaulting Party.

 

 

 

 

5.3          Survival of Certain Obligations. Without prejudice to the survival
of the other agreements of the parties, the following obligations shall survive
the termination of this Agreement: (a) the obligations of each party under
Articles IV, V, and VI and (b) a party’s right to receive the compensation for
the Shared Services provided by it hereunder provided in Section 3.1 above
incurred prior to the effective date of termination.

 

ARTICLE VI

MISCELLANEOUS

 

6.1          Complete Agreement; Construction. This Agreement, including the
Appendix hereto, shall constitute the entire agreement between the parties with
respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter. In
the event of any inconsistency between this Agreement and any Appendix hereto,
the Appendix shall prevail.

 

6.2          Other Related Agreements. This Agreement is not intended to
address, and should not be interpreted to address, any other matters
specifically and expressly covered by the Purchase Agreement or any other
document executed in connection with the transaction contemplated under the
Purchase Agreement.

 

6.3          Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.

 

6.4          Survival of Agreements. Except as otherwise contemplated by this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Effective Date.

 

6.5          Notices. All notices and other communications hereunder shall be in
writing and hand delivered or mailed by certified mail (return receipt
requested) or sent by nationally-recognized overnight courier service or sent by
any means of electronic message transmission with delivery confirmed (by voice
or otherwise) to the parties at the following addresses (or at such other
addresses for a party as shall be specified by like notice) and will be deemed
given on the date on which such notice is received:

 

If to the Seller:

 

Vuzix Corporation

Attn: Steve Ward

75 Town Centre Drive

Rochester, NY 14623

with a copy to:

 

Woods Oviatt Gilman LLP

2 State Street

Rochester, NY 14618

Attention: Robert F. Mechur

 

If to the Buyer:

 

TDG Acquisition Company, LLC

Attn: Mr. Rich Ryan

2166 Brighton Henrietta Town Line Road          Rochester NY 14623

 

 

 

 

with a copy to:

 

Metz Lewis Brodman Must O’Keefe, LLC

11 Stanwix Street, 18th Floor

Pittsburgh, Pennsylvania 15222

Attn: Christopher A. Brodman, Esq.

 

6.6         Waivers. The failure of any party to require strict performance by
any other party of any provision in this Agreement will not waive or diminish
that party’s right to demand strict performance thereafter of that or any other
provision hereof.

 

6.7         Amendments. This Agreement may not be modified or amended except by
an agreement in writing signed by each of the parties hereto.

 

6.8         Assignment. This Agreement may not be assigned by either party
without the consent of the other party. Any assignment in contravention of this
Section 6.8 shall be void.

 

6.9          Successors and Assigns. The provisions to this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns.

 

6.10        Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and should not be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.

 

6.11        Title and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

 

6.12        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 IN THE STATE OF NEW YORK.

 

6.13        Consent to Jurisdiction. Each of the parties irrevocably submits to
the exclusive jurisdiction of (a) the courts of the State of Delaware, and (b)
the United States District Court for the Western District of New York , for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties agrees to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Western District of New York or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the applicable New York state court sitting in Monroe County, New York. Each of
the parties further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party’s respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 6.13. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the New York state court sitting in Monroe County, New York, or
(ii) the United States District Court for the Western District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.

 

 

 

 

6.14          Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

 

6.15          Relationship of Parties. It is expressly agreed and understood
that in providing the Shared Services the Seller and Buyer are independent
contractors working for themselves and neither such party is, nor shall it be
deemed to be, and shall not hold itself out as, an agent, legal representative
or employee of the other. Nothing in this Agreement shall be deemed or construed
by the parties or any third party as creating the relationship of principal and
agent, partnership or joint venture between the parties, it being understood and
agreed that no provision contained herein, and no act of the parties, shall be
deemed to create any relationship between the parties other than the
relationship of buyer and seller of services nor be deemed to vest any rights,
interests or claims in any third parties. The parties do not intend to waive any
privileges or rights to which they may be entitled.

 

[Remainder of Page Blank; Signature Page Follows]

 

 

 

Signature Page to Shared Services Agreement

 

IN WITNESS WHEREOF, the parties hereto have caused this Shared Services
Agreement to be executed the day and year first above written.

 

  TDG ACQUISITION COMPANY, LLC           By:   James P. Balet             Name:
James P. Balet             Title: Secretary           VUZIX CORPORATION        
  By:   /s/ Paul Travers             Name: Paul Travers             Title: CEO