Document:

December
23, 2010

    

    BY EMAIL

    Paul J
Travers

    71
Boughton Hill Road

    Honeoye
New York 14472

    

    Dear Mr.
Travers,

    

    Reference
is made to a revolving loan agreement between Paul J Travers (“Travers”) and
Vuzix Corporation (“Vuzix) dated October 17, 2008 (the “Loan
Agreement”).  The outstanding principal balance as of the date of this
letter is $215,500. The Loan Agreement is payable on demand and was to be repaid
before December 31, 2010.

    

    Vuzix is
entering into certain financing arrangements (the “New Financing”) with Lampe,
Conway & Co., LLC to provide a $4,000,000 three year term
loan.  It is a condition of the closing of such financing arrangements
that payment on the Loan Agreement be further deferred.

    

    Travers
believes that it is in its best interest that the New Financing be
closed.  Therefore, in order to enable Vuzix to close the New
Financing, the parties agree that the Loan Agreement shall be, and it hereby is,
amended as follows:

    

    
      	
               
      

            	
              1.

            	
              The
      effective date of this amendment (the “Effective Date”) shall be the
      closing date of the New Financing (the “Closing
  Date”).

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      date of December 31, 2010 in Section 2.01 of the Loan Agreement shall be
      substituted with December 31, 2013.

            

    

    

    
      	
               
      

            	
              3.

            	
              The
      outstanding principal and all accrued interest to December 31, 2010,
      totaling $258,658.20, shall be paid in thirty-six (36) equal monthly
      blended payments of  Eight Thousand Five Hundred and Four
      Dollars and Twelve Cents ($8,504.12) beginning on January 31,
      2011.

            

    

    

    
      	
               
      

            	
              4.

            	
              As
      additional compensation, on the Effective Date, Vuzix Corporation will
      issue to Travers (or its named nominee) warrants (the “Warrants”) to
      purchase 1,034,633 common shares of Vuzix at a exercise price equal to
      US$0.0992 per share.  The Warrants shall be exercisable until
      December 31, 2013. The final terms and conditions of the Warrants are
      subject to the approval of the Toronto Venture Stock
    Exchange.

            

    

    

    
      	
               
      

            	
              5.

            	
              Travers
      herein agrees to execute and enter into a Intercreditor Agreement with
      Lampe Conway simultaneous with the closing of the New Financing, the form
      of which is substantially represented in Appendix A
  herein.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              6.

            	
              Except
      as herein provided, the Letter Agreement shall otherwise remain in full
      force and effect.

            

    

    

    Please
acknowledge your agreement to the foregoing by signing a copy of this letter in
the spaces provided below and returning it to the undersigned.

    

    
      
        
          	
                  Yours
      truly,

                
	 
      
	
                  VUZIX
      CORPORATION

                
	 
      
	
                  By:

                	
                  /s/
      Grant Russell

                
	 
      	
                   
      Name: Grant Russell

                
	 
      	
                   
      Title: EVP & CFO

                

        

      

    

    

    Confirmed
and Agreed to as of the date first above written.

    

    
      
        
          	
                  Paul
      Travers

                
	 
      
	
                  By:

                	
                  /s/
      Paul TraversDecember
23, 2010

    

    

    BY EMAIL

    John
Burtis

    178
Seymour Road

    Rochester,
New York 14609

    

    Dear Mr.
Burtis,

    

    Reference
is made to loan agreements between John Burtis (“Burtis”) and Vuzix Corporation
(“Vuzix) dated May 7, 2010 and September 17, 2010 (the “Loan
Agreement”).  The outstanding principal balance as of the date of this
letter is $125,000. The Loan Agreement was payable on November 30,
2010.

    

    Vuzix is
entering into certain financing arrangements (the “New Financing”) with Lampe,
Conway & Co., LLC to provide a $4,000,000 three year term
loan.  It is a condition of the closing of such financing arrangements
that payment on the Loan Agreement be further deferred.

    

    Burtis
believes that it is in its best interest that the New Financing be
closed.  Therefore, in order to enable Vuzix to close the New
Financing, the parties agree that the Loan Agreement shall be, and it hereby is,
amended as follows:

    

    
      	
              1.  

            	
              The
      effective date of this amendment (the “Effective Date”) shall be the
      closing date of the New Financing (the “Closing
  Date”).

            

    

    

    
      	
              2.  

            	
              The
      date of December 31, 2010 in Section 2.01 of the Loan Agreement shall be
      substituted with December 31, 2013.

            

    

    

    
      	
              3.  

            	
              The
      interest rate shall be decreased to twelve (12%) per annum commencing on
      January 1, 2011.

            

    

    

    
      	
              4.  

            	
              The
      outstanding principal and all accrued interest to December 31, 2010,
      totaling $135,763.01, shall be paid in thirty-six (36) equal monthly
      blended payments of  Eight Thousand Five Hundred and Four
      Dollars and Twelve Cents ($4,463.60) beginning on January 31,
      2011.

            

    

    

    
      	
              5.  

            	
              As
      additional compensation, on the Effective Date, Vuzix Corporation will
      issue to Burtis (or its named nominee) warrants (the “Warrants”) to
      purchase 543,052 common shares of Vuzix at a exercise price equal to
      US$0.0992 per share.  The Warrants shall be exercisable until
      December 31, 2013. The final terms and conditions of the Warrants are
      subject to the approval of the Toronto Venture Stock
    Exchange.

            

    

    

    
      	
              6.  

            	
              Burtis
      herein agrees to execute and enter into a Intercreditor Agreement with
      Lampe Conway simultaneous with the closing of the New Financing, the form
      of which is substantially represented in Appendix A
  herein.

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    
      	
              7.  

            	
              Except
      as herein provided, the Letter Agreement shall otherwise remain in full
      force and effect.

            

    

    

    Please
acknowledge your agreement to the foregoing by signing a copy of this letter in
the spaces provided below and returning it to the undersigned.

    

    Yours truly,

    

    VUZIX CORPORATION

    

    By: /s/ Grant
Russell                                                                       

    Name: Grant Russell

    Title: EVP & CFO

    

    

    Confirmed
and Agreed to as of the date first above written.

    

    

    John
Burtis

    

    

    By: /s/ John
Burtis                                                                         

    Name:

    Title:THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF OR OTHERWISE IN ACCORDANCE
WITH APPLICABLE LAW.

    

    WITHOUT
PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL
APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL APRIL 24, 2011.

    

    WARRANT
TO PURCHASE STOCK

     

    
      
        	
                Corporation:

              	
                Vuzix
      Corporation

              
	
                Number
      of Shares:

              	
                Up
      to 1,662,274

              
	
                Class
      of Stock:

              	
                Common

              
	
                Exercise
      Price:

              	
                USD
      $0.09965 per Share

              
	
                Issue
      Date:

              	
                December
      23, 2010

              
	
                Expiration
      Date:

              	
                January
      15, 2014

              

      

    

     

    THIS
WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of
which is hereby acknowledged, Vast Technologies Inc. (“Holder”) is entitled to
purchase the number of fully paid and nonassessable shares (the “Shares”) of
Common Stock of VUZIX CORPORATION (the “Company”), in the number, at the price,
and for the term specified above, subject to the provisions and upon the terms
and conditions set forth in this Warrant.

     

    ARTICLE
1.  EXERCISE

     

    1.1
 Maximum Number
of Shares.  This number of Shares purchasable upon exercise of
this Warrant shall be up to 1,662,274.

     

    1.2 
Method of
Exercise.  Holder may exercise this Warrant by delivering this
Warrant and a duly executed Notice of Exercise in substantially the form
attached as Appendix 1 to the principal office of the
Company.  Holder shall concurrently deliver to the Company a check for
the aggregate price for the Shares being purchased (the “Warrant
Price”).

     

    1.3 
Delivery of
Certificate and New Warrant.  Promptly after Holder exercises
this Warrant, the Company shall deliver to Holder certificates for the Shares
acquired and, if this Warrant has not been fully exercised and has not expired,
a new Warrant representing the right to purchase the Shares not so
acquired.

     

    1.4
 Replacement of
Warrants.  On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, surrender for cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.

     

    ARTICLE
2.  ADJUSTMENTS
TO THE SHARES; REGISTRATION RIGHTS.

     

    2.1
 Stock Dividends,
Splits, Etc.  If the Company declares or pays a dividend on its
common stock payable in common stock, or other securities, or subdivides the
outstanding common stock into a greater amount of common stock, then upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would
have been entitled had Holder owned the Shares of record as of the date the
dividend or subdivision occurred.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    2.2
 Reclassification, Exchange
or Substitution.  Upon any reclassification, exchange,
substitution, or other event that results in a change of the number and/or class
of the securities issuable upon exercise of this Warrant, Holder shall be
entitled to receive, upon exercise of this Warrant, the number and kind of
securities and property that Holder would have received for the Shares if this
Warrant had been exercised immediately before such reclassification, exchange,
substitution, or other event.  Upon the closing of any sale, license,
or other disposition of all or substantially all of the assets (including
intellectual property) of the Company, or any reorganization, consolidation, or
merger of the Company where the holders of the Company’s securities before the
transaction beneficially own less than 50% of the outstanding voting securities
of the surviving entity after the transaction, the successor entity shall assume
the obligations of this Warrant, and this Warrant thereafter shall be
exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of this Warrant as
if such Shares were outstanding on the record date for the Acquisition and
subsequent closing.  The Exercise Price shall be adjusted
accordingly.  The Company or its successor shall promptly issue to
Holder a new Warrant for such new securities or other property.  The
new Warrant shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 2
including, without limitation, adjustments to the Exercise Price and to the
number of securities or property issuable upon exercise of the new
Warrant.  The provisions of this Section 2.2 shall similarly
apply to successive reclassifications, exchanges, substitutions, or other
events.

     

    2.3
 Adjustments for
Combinations, Etc.  If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Exercise Price shall be proportionately increased.

     

    2.4
 No
Impairment.  The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all the provisions of
this Article 2 and in taking all such action as may be necessary or
appropriate to protect Holder’s rights under this Article against
impairment.  If the Company takes any action affecting the Shares or
its common stock other than as described above that adversely affects Holder’s
rights under this Warrant, the Exercise Price shall be adjusted downward and the
number of Shares issuable upon exercise of this Warrant shall be adjusted upward
in such a manner that the aggregate Warrant Price of this Warrant is
unchanged.

     

    2.5 
Certificate as to
Adjustments.  Upon each adjustment of the Exercise Price, the
Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its Chief Financial Officer setting forth such
adjustment and the facts upon which such adjustment is based.  The
Company shall, upon written request, furnish Holder a certificate setting forth
the Exercise Price in effect upon the date thereof and the series of adjustments
leading to such Exercise Price.

     

    2.6
 Registration
Rights.  The Holder shall have the right to cause the Company
to register the Shares issuable upon exercise of this Warrant in one (1) or more
piggy-back registrations.  The Company shall provide notice to the
Holder of any registration of its securities not less than thirty (30) days
prior to any filing of a registration statement.  Upon the Company’s
receipt of any notice from the Holder that the Holder has requested a piggyback
registration or demand registration in accordance with its rights hereunder, the
Company shall use its best efforts to (a) in respect of a piggyback
registration, including the Shares issuable upon exercise of this Warrant in the
contemplated registration by the Company (subject to the rights of holders of
piggyback registration rights granted prior to the date of this warrant and to
underwriters’ cutbacks).  Upon any registration contemplated
hereunder, the Company shall bear the entire expense of such registration, and
shall indemnify the Holder for any inaccuracies or omissions contained in such
registration statement (other than such inaccuracies or omissions which are
directly related to the information provided by the Holder).

     

    ARTICLE
3.  REPRESENTATIONS AND
COVENANTS OF THE COMPANY.

     

    3.1
 Representations
and Warranties.  The Company hereby represents and warrants to
the Holder that:

     

    ll Shares
that may be issued upon the exercise of the purchase right represented by this
Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable, and free of any liens and encumbrances except for
restrictions on transfer provided for herein or under applicable federal and
state securities laws.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    3.2 
Notice of Certain
Events.  If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of
common stock; (d) to merge or consolidate with or into any other
corporation, or sell, lease, license, or convey all or substantially all of its
assets, or to liquidate, dissolve or wind up; or (e ) to offer holders of
registration rights the opportunity to participate in an underwritten public
offering of the company’s securities for cash, then, in connection with each
such event, the Company shall give Holder (1) at least 20 days prior
written notice of the date on which a record will be taken for such dividend,
distribution, or subscription rights (and specifying the date on which the
holders of common stock will be entitled thereto) or for determining rights to
vote, if any, in respect of the matters referred to in (a) and (b) above;
(2) in the case of the matters referred to in (c) and (d) above at least
20 days prior written notice of the date when the same will take place (and
specifying the date on which the holders of common stock will be entitled to
exchange their common stock for securities or other property deliverable upon
the occurrence of such event); and (3) in the case of the matter referred
to in (e) above, the same notice as is given to the holders of such registration
rights.

     

    3.4   No Rights as Shareholder
until Exercise.  Prior to the exercise of this Warrant, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of any of the Shares that may be acquired upon exercise of this Warrant
or any other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder until such Shares are purchased by the
Holder in accordance with the terms of this Warrant; as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise shall not accrue to the Holder until the
Warrant shall have been exercised as provided herein (and then such rights shall
only be applicable to the Shares purchased by the Holder).  However,
at the time of the exercise of this Warrant pursuant to Section 1 hereof, the
Shares so purchased hereunder shall be deemed to be issued to such Holder as the
record owner of such Shares as of the close of business on the date on which
this Warrant shall have been exercised, and the Holder shall have full and
unrestricted rights as a common shareholder of the Company with respect to such
Shares.

     

    ARTICLE
4.  MISCELLANEOUS.

     

    4.1
 Term.  This
Warrant is exercisable, in whole or in part, at any time and from time to time
on or before the Expiration Date set forth above.

     

    4.2
 Legends.  This
Warrant and the Shares (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form (which legend shall be removed following the
registration of the Shares issuable upon exercise of this Warrant):

     

    THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR IN ACCORDANCE WITH APPLICABLE
LAW.

     

    WITHOUT
PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL
APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL APRIL 24, 2011.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    4.3 
Compliance with
Securities Laws on Transfer.  This Warrant and the Shares
issuable upon exercise this Warrant (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) may not be transferred or
assigned in whole or in part without compliance with applicable Canadian,
federal and state securities laws by the transferor and the transferee and with
the rules of any stock exchange on which the share of the Company’s common stock
is traded.

     

    4.4 
Transfer
Procedure.  Subject to the provisions of Section 4.3,
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) by giving the Company notice of the
portion of the Warrant being transferred setting forth the name, address and
taxpayer identification number of the transferee and surrendering this Warrant
to the Company for reissuance to the transferee(s) (and Holder, if
applicable).

     

    4.5 
Notices.  All
notices and other communications from the Company to the Holder, or vice versa,
shall be deemed delivered and effective when given personally or mailed by
first-class registered or certified mail, postage prepaid, return receipt
requested, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such Holder from time
to time.

     

    4.6 
Waiver.  This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.

     

    4.7 
Attorneys’
Fees.  In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys’ fees.

     

    4.8
 Governing
Law.  This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.

     

    
      
        
          	 
      	
                  VUZIX
      CORPORATION

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Paul Travers

                
	 
      	 
      	 
      
	 
      	
                  Name:

                	
                  Paul Travers

                
	 
      	 
      	 
      
	 
      	
                  Title:

                	
                  President

                

        

      

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    APPENDIX
1

     

    NOTICE OF
EXERCISE

     

    1.           The
undersigned hereby elects to purchase ______________ shares of the Common Stock
of VUZIX CORPORATION pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.

     

    2.           Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:

     

    ________________________________

    c/o

    [ADDRESS]

     

    and issue
to the undersigned a new warrant, in like tenor to the attached Warrant, for any
shares as to which the attached Warrant has not been exercised.

     

    3.           The
undersigned represents it is acquiring the shares solely for its own account and
not as a nominee for any other party and not with a view toward the resale or
distribution thereof except in compliance with applicable securities
laws.

     

    
      
        	
                _____________________________,  or
      Registered Assignee

              
	 
      
	
                   

              
	
                (Signature)

              
	 
      
	
                   

              
	
                (Date)

              

      

    

     

    
      
         

      

      
        1

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