LOAN
MODIFICATION AND CONSENT AGREEMENT


 


This
Loan Modification and Consent Agreement is entered into as of June 15, 2012 by and among Vuzix Corporation ("Vuzix")
whose address is 75 Town Centre Drive, Rochester, NY 14623, Kopin Corporation ("Lender") whose address is 125 North Drive
Westboro, Massachusetts 01581 and TDG Acquisition Corp., whose address is PO Box 31 Sewickley,
PA 15637 (“TDG Acquisition”)


 


A.
          Among other indebtedness which may be owing by Vuzix to Lender,
Vuzix is indebted to Lender in the amount of $482,547.00 plus accrued interest pursuant to a promissory note from Lender dated
December 21, 2009, (the “Note”) that was issued pursuant to, among other documents, a [Letter of Agreement , dated
December 21, 2009, (as may be amended from time to time, the "Loan Agreement", a copy of which is attached as Schedule
A) [and, in addition, the amount of $176,819.10 in respect of certain accounts payable from Vuzix to Lender (Schedule B) (the (“Accounts
Receivable”)].


 


B.
          Repayment
of the Indebtedness (as hereinafter defined) is secured by a security interest in the Collateral as described in the Loan Agreement.


 


C.           Vuzix and Lender have entered into a License and Escrow Agreement dated October 20, 2010 (the “Escrow Agreement”),
pursuant to which Vuzix has deposited certain documents in escrow with Chu, Ring & Hazel, LLP (the “Escrow Agent”)
and granted Lender a license to use certain intellectual property for the limited purpose describe in the Escrow Agreement.


 


D.           Vuzix
has requested that Lender (i) consent to the sale of certain of its assets by Vuzix to TDG Acquisition pursuant to an Asset Purchase
Agreement to be entered into between Vuzix and TDG Acquisition (which Asset Purchase Agreement, in the form provided to Lender
as of the date hereof, as it may hereafter be modified, is hereinafter referred to as the "Purchase Agreement"), (ii)
release Lender's security interest in all assets being sold by Vuzix to TDG Acquisition pursuant to the Purchase Agreement, (iii)
make such other changes to the Loan Agreement as are more fully set forth herein and (iv) permit the assignment of the Escrow Agreement
to TDG and amend the Escrow Agreement , as so assigned, as set forth herein.


 


E.
Defined terms used but not otherwise defined herein shall have the same meanings as in the Loan Agreement; provided that (i) all
indebtedness owing by Vuzix to Lender, including, without limitation, amounts due pursuant to the Loan Agreement and the Note and
due in respect of the Accounts Receivable are referred to as the "Indebtedness", (ii) the Loan Agreement between Vuzix
and the Lender and the related financing statement, together with all other documents securing repayment of the Indebtedness, shall
be referred to hereinafter as the "Security Documents" and (iii) the Security Documents, together with all other documents
evidencing or securing the Indebtedness shall be referred to as the "Existing Loan Documents".


 


1.
CONSENT TO SALE OF ASSETS. Subject to the terms and conditions contained herein, Lender hereby consents to the sale of the Acquired
Assets (as defined in the Purchase Agreement) to TDG Acquisition Company, LLC pursuant to the Purchase Agreement.


 


2.
RELEASE OF SECURITY INTEREST IN ASSETS TO BE SOLD. Subject to the terms and conditions contained herein, Lender hereby releases
its security interest in the Acquired Assets. Concurrently with the execution and delivery of this Agreement, Lender is delivering
to Vuzix a Form UCC-3, in the form necessary for filing in all applicable jurisdictions to effect the release of such lien.


 



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3.
DESCRIPTION OF CHANGE IN TERMS. Effective as of the date hereof, the Loan Agreement is hereby amended as follows:


 


		-	No further payments of principal and interest on the Note shall be made until July 15, 2013. Payments
of principal and interest on the Note shall re-commence on July 15, 2013 and shall be paid in accordance with the terms of the
Note.



		-	15% of any Earn Out payments Vuzix receives pursuant to the Purchase Agreement will be paid to
the Lender promptly (but in any event within ten (10) business days) after they are received by Vuzix.



		-	The Note (including principal, interest and any other amounts due thereunder) will be payable in
full on July 15, 2015.



 


4. ASSIGNMENT
AND AMENDMENT OF ESCROW AGREEMENT.


 


		a.	Effective as of the date hereof, the Escrow Agreement
is assigned by Vuzix to TDG Acquisition. Kopin and the Escrow Agent consent to such assignment



 


		b.	Effective as of the date hereof, the Escrow Agreement
is amended in the following respects:



 


		i.	All references to Vuzix, both as a separate word and
as one of a set of words (such as “Vuzix Intellectual Property”) shall be deemed to be references to TDG Acquisition



 


		ii.	The address for TDG Acquisition shall be as set forth
above.



 


		iii.	Article VIII, section 1 of the Escrow Agreement is amended
so as to provide that Escrow Agreement shall terminate two (2) years from the date of this Agreement.



 


5. Security
Agreement. Vuzix hereby grants Kopin a security interest in all of the assets of Vuzix, effective immediately after the closing
under the Purchase Agreement. Such security interest shall be subordinate only to the security interests of LC Capital Master Fund,
Ltd. and any commercial bank that is a lender to Vuzix (including but not limited to Bridge Bank) (together, the “Senior
Lenders”). Promptly after the execution hereof, Vuzix shall deliver to Lender (a) a form UCC-1 in form for filing in all
applicable jurisdictions and (2) subordination agreements from the holders of all security interests in the assets of Vuzix other
than Bridge Bank and LC Capital Master Fund, Ltd. The terms of such security interest shall be the same as the terms relating to
the security interest granted in the Loan Agreement, which are incorporated herein by reference as if fully set forth herein. Lender
agrees to execute any subordination agreement tht may be required by the Senior Lenders.


 


6.
NO DEFENSES OF VUZIX. Vuzix agrees that, as of the date hereof, it has no defenses against the obligations to pay any amounts under
the Indebtedness. Vuzix acknowledges and warrants that Lender has acted in good faith and has conducted in a commercially reasonable
manner its relationships with Vuzix in connection with this Agreement and in connection with the Loan Documents, including the
Loan Agreement and the Indebtedness, the Vuzix hereby waives and releases any claims to the contrary.


 



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7.
CONTINUING VALIDITY. Except as expressly modified pursuant to this Agreement, the terms of the Existing Loan Documents remain unchanged
and in full force and effect. Lender's agreement to modifications to the existing Indebtedness pursuant to this Agreement in no
way shall obligate Lender to make any future modifications to the Indebtedness. Nothing in this Agreement shall constitute a satisfaction
of the Indebtedness.


 


8.
INTEGRATION. This Agreement, together with the Existing Loan Documents, constitutes the entire agreement and understanding among
the parties relating to the subject matter hereof, and supersedes all prior and contemporaneous proposals, negotiations, agreements,
and understandings relating to the subject matter. No modification, rescission, waiver, release, or amendment of any provision
of this Agreement shall be made, except by a written agreement signed by Lender and Vuzix.


 


9.
GOVERNING LAW, HEADINGS. This Agreement shall be governed and construed in accordance with the laws of the State of New York without
giving effect to conflicts of laws principles. The headings and captions in this Agreement are for the convenience of the parties
only and are not a part of this Agreement.


 


10.
CONDITIONS. The effectiveness of this Loan Modification Agreement is conditioned upon the (i) closing of the Purchase Agreement
between Vuzix and TDG Acquisition, and (ii) payment by Vuzix of $ 200,000 upon closing of the Purchase Agreement, in reduction
of the Indebtedness.


 


[Signature Page Follows]


 



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This
Agreement is executed as of the date first written above.


 


	VUZIX CORPORATION:	 	LENDER:	 
	 	 	 	 	 
	By:	/s/ Paul Travers	 	By:	/s/ Richard Sneider	 
	 	 	 	 	 
	Name: Paul Travers	 	Name: Richard Sneider	 
	 	 	 	 	 
	Title:  CEO	 	Title: CFO	 
	 	 	 	 	 
	TDG Acquisition Corp	 	For purposes of agreeing to the assignment	 
	 	 	and amendment of the Escrow Agreement:	 
	By: 	/s/ James P. Balet	 	 	 	 
	 	 	 	 	 	 
	Name:  James P. Balet	 	 	 
	 	 	Chu, Ring & Hazel, LLP	 
	Title:  Secretary	 	 	 
	 	 	 	By:	/s/ John H. Chu	 
	 	 	 	 	 	 
	 	 	Name:  John H. Chu	 
	 	 	 	 
	 	 	Title:  Partner	 


 



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Exhibit
A


 


Letter Agreement between
Vuzix Corporation and Lender, along with any amendments


 


Exhibit
B (if applicable)


 


Schedule of Accounts
Payable between Vuzix Corporation and Lender – if any, plus amount unpaid at close.




 






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