Document:

ex4_2.htm

Exhibit 4.2

BIOTIME, INC.

2002 STOCK OPTION PLAN

 

ARTICLE I

GENERAL

1.           PURPOSE

This BioTime, Inc. Stock Option Plan (the “Plan”) is intended to increase incentive and to encourage stock ownership on the part of selected key officers, directors, employees, consultants, professionals, and other individuals whose efforts may aid BioTime, Inc., a California corporation (the “Company”) or any other
corporations that are or which may become subsidiaries or a parent of the Company.  Except where the context obviously requires otherwise, as used in this Plan, the term “Company” includes BioTime, Inc., a California corporation, and any corporation that is or becomes a parent or subsidiary, as defined in Section 425 of the Internal Revenue Code of 1986, as amended (the “Code”), of BioTime, Inc.  It is intended that certain options granted pursuant to the Plan shall
constitute incentive stock options within the meaning of Section 422(b) of the Code and that certain other options granted pursuant to the Plan shall not constitute incentive stock options (“nonqualified stock options”).

2.           ADMINISTRATION

The Plan shall be administered by the Company’s Board of Directors (the “Board”) or, in the discretion of the Board, by a committee (the “Committee”) of not less than two members of the Board.  The Committee’s interpretation and construction of any term or provision of the Plan or of any option
granted under the Plan shall be final, unless otherwise determined by the Board, in which event such determination by the Board shall be final.  The Committee may from time to time adopt rules and regulations for carrying out this Plan and, subject to the provisions of this Plan, may prescribe the form or forms of the instruments evidencing any option granted under this Plan.  No member of the Committee shall be liable for any action or determination made in good faith with respect to the
Plan or any option granted, or with respect to any shares sold under any restricted stock purchase agreement, under the Plan.

Subject to the provisions of this Plan, the Board or the Committee shall have full and final authority in its discretion to select the eligible persons to whom options are granted or shares are sold under restricted stock purchase agreements, to grant such options and to sell shares as provided in this Plan, to determine the number of
shares to be subject to options or sold pursuant to restricted stock purchase agreements, to determine the exercise prices of options or purchase prices of shares under restricted stock purchase agreements, the terms of exercise of options, expiration dates of options, and other pertinent terms and provisions of options and restricted stock purchase agreements.  The Board may delegate to the Committee the power to make all determinations with respect to the Plan, or may delegate to the Committee only
certain aspects of Plan administration,

  

  

  

such as selecting the eligible persons to whom options will be granted, or decisions concerning the timing, pricing, and amount of a grant or award of options or sale of shares under restricted stock purchase agreements.

3.           ELIGIBILITY

Subject to Section 2 of this Article I, the persons who shall be eligible to receive options  or to purchase shares under restricted stock purchase agreements under the Plan shall be such officers, employees, directors, consultants, professionals, and independent contractors of the Company as the Board of Directors or the Committee
may select.  Eligible persons who are not also salaried employees of the Company shall be eligible to receive nonqualified stock options (but such persons shall not be eligible to receive incentive stock options).

4.           SHARES OF STOCK SUBJECT TO THE PLAN

The shares that may be issued under the Plan shall be authorized and unissued or reacquired common shares, no par value, of the Company (the “Shares”).  The aggregate number of Shares which may be issued under the Plan shall not exceed 1,000,000, unless an adjustment is required in accordance with Article III.

5.           AMENDMENT OF THE PLAN

The Board may, insofar as permitted by law, from time to time, suspend or discontinue the Plan or revise or amend it in any respect whatsoever, except that no such amendment shall alter or impair or diminish any rights or obligations under any option theretofore granted or under any restricted stock purchase agreement executed under the
Plan, without the consent of the person to whom such option was granted or Shares were sold, except as permitted under Section 8 of this Article I.   Without further shareholder approval, no such amendment shall increase the number of shares subject to the Plan (except as authorized by Article III), change the designation in Section 3 of Article I of the class of persons eligible to receive options or purchase Shares under the Plan, extend the term during which options may be exercised, or extend
the final date upon which options under the Plan may be granted or Shares may be sold under restricted stock purchase agreements.

6.           APPROVAL OF SHAREHOLDERS

All options granted under the Plan before the Plan is approved by affirmative vote of the holders of a majority of the voting shares of the Company present and eligible to vote at the next meeting of shareholders of the Company, or any adjournment thereof, shall be subject to such approval.  No option granted hereunder may become
exercisable unless and until such approval is obtained.

  

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        7.           TERM OF PLAN

Options may be granted and Shares may be sold under restricted stock purchase agreements under the Plan until September 10, 2012, the date of termination of the Plan.  Notwithstanding the foregoing, each option granted under the Plan shall remain in effect until such option has been exercised or terminated in accordance with
its terms and the terms of the Plan.

8.           LISTING, REGISTRATION, QUALIFICATION, AND CONSENTS

All options granted under the Plan shall be subject to the requirement that, if at any time the Board or the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to options granted under the Plan, upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such option or the issuance, if any, or purchase of shares in connection therewith, such option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board or the Committee.  Furthermore, if the Board or the Committee determines that
any amendment to any option (including, but not limited to, an increase in the exercise price) is necessary or desirable in connection with the registration or qualification of any of its shares under any state securities or “blue sky” law, then the Board or the Committee shall have the unilateral right to make such changes without the consent of the optionee.

9.           NONASSIGNABILITY

Nonqualified options shall be transferable (i) by will, by the laws of descent and distribution, by instrument to an inter vivos or testamentary trust in which the nonqualified options are to be passed to beneficiaries upon the death of the optionee or (ii) to the extent and in the manner authorized by the Board or Committee by gift to
members of the optionee’s immediate family.  Immediate family means a transferee as permitted by Rule 260.140.41 of Title 10 of the California Code of Regulations which includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law and shall also include adoptive relationships.  Incentive stock options may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the optionee, only by the optionee.   Notwithstanding the preceding two sentences, in conjunction with the exercise of an option, and for the purpose of obtaining financing for such exercise, the option holder may arrange for a securities broker/dealer to exercise an option on the option holder’s behalf, to the extent necessary to obtain funds required to
pay the exercise price of the option.

  

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        10.         WITHHOLDING TAXES

Whenever Shares are to be issued upon the exercise of any option under the Plan or under any restricted stock purchase agreement, the Company shall have the right to require the optionee or purchaser to remit to the Company an amount sufficient to satisfy federal, state, and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares.

11.         DEFINITION OF “FAIR MARKET VALUE”

For the purposes of this Plan, the term “fair market value,” when used in reference to the date of grant of an option or the date of surrender of Shares in payment for the purchase of Shares pursuant to the exercise of any option, as the case may be, shall mean the amount determined by the Board or the Committee as follows:

(a)           If the Shares are listed or have unlisted trading privileges on a national securities exchange (which for the purposes of this Plan shall also include the Nasdaq Stock Market National Market), the Shares shall be valued at their last sale price on the principal national
securities exchange (measured by volume of transactions in such Shares) on which such securities shall have traded, or, if available, such sales price as reported on the composite tape, on the last trading day immediately preceding the date of grant or surrender.

(b)           If the Shares are described in either subparagraph (a) or (b) above but were not traded on the last trading day immediately preceding the date of grant or surrender, or if prices of the Shares are quoted in the National Association of Securities Dealers, Inc., Automated
Quotation system (but which not the  National Market System), or if prices of the Shares are published by the National Quotation Bureau, Inc., then the Shares shall be valued at the average between the last bid and the last asked prices reported in the Wall Street Journal or published by the National Quotation Bureau within the 30 days prior to the date of grant or surrender.

(c)           If the Shares are not described in and valued under subparagraphs (a) and (b) above, then the Shares shall be valued by the Board or the Committee, in its sole judgement, in good faith.

  

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ARTICLE II

STOCK OPTIONS

1.           AWARD OF STOCK OPTIONS

Awards of stock options may be made under the Plan under all the terms and conditions contained herein.  However, in the case of incentive stock options, the aggregate fair market value (determined as of the date of grant of the option) of the Shares with respect to which incentive stock options are exercisable for the first
time by such officer or key employee during any calendar year (under all incentive stock option plans of the Company) shall not exceed $100,000.  The date on which any option is granted shall be the date of the Board’s or the Committee’s authorization of such grant or such later date as may be determined by the Board or the Committee at the time such grant is authorized.

2.           TERM OF OPTIONS AND EFFECT OF TERMINATION

Notwithstanding any other provision of the Plan, an option shall not be exercisable after the expiration of ten (10) years from the date of its grant.  In addition, notwithstanding any other provision of the Plan, no incentive stock option granted under the Plan to a person who, at the time such option is granted, owns shares
possessing more than 10% of the total combined voting power of all classes of shares of the Company or of any parent or subsidiary corporation, shall be exercisable after the expiration of five (5) years from the date of its grant.

In the event that any outstanding option under the Plan expires by reason of lapse of time or otherwise is terminated or canceled for any reason, then the Shares subject to any such option which have not been issued pursuant to the exercise of the option shall again become available in the pool of Shares for which options may be granted
under the Plan.

3.           CANCELLATION OF AND SUBSTITUTION FOR OPTIONS

The Company shall have the right to cancel any option at any time before it otherwise would have expired by its terms and to grant to the same optionee in substitution therefor a new stock option stating an option price which is lower (but not higher) than the option price stated in the canceled option.  Any such substituted
option shall contain all the terms and conditions of the canceled option provided, however, that notwithstanding Section 2 of Article II, such substituted option shall not be exercisable after the expiration of ten (10) years from the date of grant of the canceled option.

  

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4.           TERMS AND CONDITIONS OF OPTIONS

Options granted pursuant to the Plan shall be evidenced by agreements in such form as the Board or the Committee shall from time to time determine, which agreements shall comply with the following terms and conditions.

(a)           Number of Shares and Type of Option

Each option agreement shall state the number of Shares for which the option is exercisable and whether the option is intended to be an incentive stock option or a nonqualified stock option.

(b)           Option Price

Each option agreement shall state the exercise price per share or the method by which such price shall be computed.  The exercise price per share shall be determined by the Board or the Committee at the date such option is granted.  In the case of a nonqualified option, the exercise price may be not less than 85% of
the fair market value of the Shares on the date such option is granted.  In the case of an incentive stock option, the exercise price shall be not less than 100% of the fair market value of the Shares on the date such option is granted.  Notwithstanding the foregoing, the exercise price per share of a option granted to a person who, on the date of such grant and in accordance with Section 425(d) of the Code, owns shares possessing more than 10% of the total combined voting power of all classes
of shares of the Company or of any parent or subsidiary corporation, shall be not less than 110% of the fair market value of the Shares on the date that the option is granted.

(c)           Medium and Time of Payment

The exercise price shall be payable upon the exercise of an option in the lawful currency of the United States of America or, in the discretion of the Board or the Committee, in Shares or in a combination of such currency and such Shares.  Upon receipt of payment, the Company shall deliver to the optionee (or person entitled
to exercise the option) a certificate or certificates for the Shares purchased through such exercise.

(d)           Exercise of Options

Options granted under the Plan shall vest, and thereby become exercisable, at the time or times, or upon the happening of the events or circumstances, determined by the Board or the Committee.  All options granted to employees who are not officers, directors, or consultants shall vest at a rate not less than 20% per year over
5 years from the date of sale.  Options granted to officers, directors, and consultants may vest at any time or from time to time upon the satisfaction of reasonable conditions to vesting determined by the Board or Committee.  Without limiting the other events and circumstances upon which vesting may be determined, the Board or Committee may make vesting conditioned upon continued employment by the Company.  The terms under which

  

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options shall vest shall be stated in each option agreement.  The Board or the Committee may, in its discretion, accelerate (but not delay or postpone) the time or times at which an option vests.

To the extent that an option has become vested (except as provided in Article III), and subject to the foregoing restrictions, it may be exercised in whole or in such lesser amount as may be authorized by the option agreement.  If exercised in part, the unexercised portion of an option shall continue to be held by the optionee
and may thereafter be exercised as herein provided.

 

(e)           Termination of Employment Except By Disability or Death

In the event that an optionee who is an employee of the Company shall cease to be employed by the Company for any reason other than his or her death or disability, his or her option shall terminate on the date (3) months after the date that he ceases to be an employee of the Company.  The Committee or the Board may waive the
provisions of this Subsection 4(e) at the date of grant of an option or at a later date.

(f)           Disability of Optionee

If an optionee who is an employee of the Company shall cease to be employed by the Company by reason of his or her becoming disabled, such option shall terminate on the date one (1) year after cessation of employment due to such disability.  “Disability” means that an employee is unable to carry out the responsibilities
and functions of the position held by the employee by reason of any medically determinable physical or mental impairment.  The Committee or the Board may waive the provisions of this Subsection 4(f) at the time of grant of an option or at a later date if the option is not an incentive stock option.

(g)           Death of Optionee and Transfer of Option

If an optionee should die while in the employ of the Company, or within the three-month period after termination of his or her employment with the Company during which he or she is permitted to exercise an option in accordance with Subsection 4(f) of this Article II, such option shall terminate on the date one (1) year after the optionee’s
death.  During such one-year period, such option may be exercised by the executors or administrators of the optionee’s estate or by any person or persons who shall have acquired the option directly from the optionee by his or her will or the applicable law of descent and distribution.  During such one year period, such option may be exercised with respect to the number of Shares for which the deceased optionee would have been entitled to exercise it at the time of his or her death.  The
Committee or the Board may waive the provisions of this Subsection 4(g) at the date of grant of an option or at a later date if the option is not an incentive stock option.

  

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ARTICLE III

RECAPITALIZATIONS AND REORGANIZATIONS

The number of Shares covered by the Plan, and the number of Shares and price per share of each outstanding option, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding Shares resulting from a subdivision or consolidation of Shares or the payment of a stock dividend, or any other increase
or decrease in the number of issued and outstanding Shares effected without receipt of consideration by the Company.

Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company as a result of which the outstanding securities of the class then subject to options hereunder are changed into or exchanged for cash or property or securities not of the Company’s issue, or upon a sale of substantially
all the property of the Company to, or the acquisition of shares representing more than eighty percent (80%) of the voting power of the shares of the Company then outstanding by, another corporation or person, the Plan shall terminate, and all options theretofore granted hereunder shall terminate, unless provision can be made in writing in connection with such transaction for the continuance of the Plan and/or for the assumption of options theretofore granted, or the substitution for such options of options covering
the shares of a successor corporation, or a parent or a subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices, in which event the Plan and options theretofore granted shall continue in the manner and under the terms so provided.

To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive.

The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes or its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets.

  

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ARTICLE IV

SALE OF RESTRICTED STOCK IN LIEU OF GRANT OF OPTIONS

1.           RESTRICTED STOCK

 

(a)           Number of Shares

Each restricted stock purchase agreement shall state the number of Shares sold under such agreement.

(b)           Purchase Price

Each restricted stock purchase agreement shall state the purchase price per Share or the method by which such price shall be computed.  The Purchase price per Share shall be determined by the Board or the Committee at the date the sale of the Shares is approved (the “Approval Date”); provided that the purchase price
per Share may be not less than 85% of the fair market value per Share on the Approval Date and that if the restricted shares are sold to an individual who owns shares representing more than ten percent of the voting power of all classes of shares of the Company (or any parent or subsidiary of the Company), the purchase price per Share may not be less than 100% of the fair market value per Share on the Approval Date.

(c)           Medium and Time of Payment

The purchase price shall be payable at the time the restricted stock purchase agreement is executed by the eligible person.  Payment shall be made in the lawful currency of the United States of America or, in the discretion of the Board or the Committee, by delivery of a promissory note payable to the Company in such lawful currency.  Upon
receipt of payment, the Company shall deliver to the eligible person a certificate or certificates for the Shares purchased.

(d)           Repurchase Option

Each restricted stock purchase agreement shall provide that the Company shall have the option to repurchase the Shares sold under such agreement in the event the purchaser ceases to be a full time employee of the Company prior to the vesting of such Shares, or if any other condition to the vesting of the Shares stated in the restricted
stock purchase agreement is not met (the “Repurchase Option”).  The Repurchase Option may be exercised by the Company during such period as specified in the applicable restricted stock purchase agreement.  The price at which the Company may repurchase the Shares upon the exercise of the Repurchase Option shall be the price at which the Shares were sold to the eligible person, or such greater price as provided in the applicable restricted stock purchase agreement approved by the
Board or the Committee.  If the purchaser of Shares under a restricted stock purchase agreement has delivered a promissory note as payment of all or part of the purchase price of his or her Shares, the Company may cancel or reduce the principal

 

  

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balance and interest accrued on that promissory note as payment of all or part of the repurchase price upon exercise of the Repurchase Option.

(e)           Vesting of Shares.   Shares sold pursuant to a restricted stock purchase agreement shall vest, and thereby cease to be subject to the Repurchase Option, at the time or times, or upon the happening
of the events or circumstances, determined by the Board or the Committee.  All Shares sold to employees who are not officers, directors, or consultants shall vest at a rate not less than 20% per year over 5 years from the date of sale.  Shares sold to officers, directors, and consultants may vest at any time or from time to time upon the satisfaction of reasonable conditions to vesting determined by the Board or Committee.  Without limiting the other events and circumstances upon
which vesting may be determined, the Board or Committee may make vesting conditioned upon continued employment by the Company.  The terms under which Shares shall vest shall be stated in the restricted stock purchase agreement.  The Board or the Committee may, in its discretion, accelerate (but not delay or postpone) the time or times at which Shares vest under a restricted stock purchase agreement.

2.           ESCROW OF UNVESTED SHARES.

The Company may require that all Shares sold under a restricted stock purchase agreement be held in escrow, on terms satisfactory to the Company, until such Shares have vested and have been paid for in full (including the payment of any amount due on any promissory note delivered by the purchaser and secured by such Shares).

3.           LEGEND ON STOCK CERTIFICATES.

Shares issued under a restricted stock purchase agreement shall include, in addition to any other legends as may be required by law or by the Board or Committee, a legend to the following effect:

THESE SHARES MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

  

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ARTICLE  V

MISCELLANEOUS PROVISIONS

1.           RIGHTS AS A STOCKHOLDER

An optionee or a transferee of an option shall have no rights as a shareholder with respect to any Shares covered by an option until the date of the receipt of payment (including any amounts required by the Company pursuant to Section 10 of Article I) by the Company.  No adjustment shall be made as to any option for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to such date, except as provided in Article III.

2.           MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS AND RESTRICTED STOCK PURCHASE AGREEMENTS

Subject to the terms and conditions and within the limitations of the Plan, the Board or the Committee may modify, extend, renew, or cancel outstanding options granted under the Plan and restricted stock purchase agreements.  Notwithstanding the foregoing, however, no modification of an option or restricted stock purchase agreement
shall, without the consent of the optionee or purchaser, impair or diminish any rights or obligations under any option theretofore granted o restricted stock purchase agreement executed under the Plan, except as provided in Section 8 of Article I.  For purposes of the preceding sentence, the right of the Company pursuant to Section 3 of Article II to cancel any outstanding option and to issue in place of such canceled option a substituted option stating a lower option price shall not be construed as
impairing or diminishing an optionee’s rights or obligations.

3.           OTHER PROVISIONS

The option agreements and restricted stock purchase agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the option or purchase of Shares, or restrictions required by any applicable securities laws, as the Board or the Committee shall deem advisable.

4.           APPLICATION OF FUNDS

The proceeds received by the Company from the sale of Shares pursuant to the exercise of options or under restricted stock purchase agreements will be used for general corporate purposes.

  

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5.           NO OBLIGATION TO EXERCISE OPTION

The granting of an option shall impose no obligation upon the optionee or a transferee of the option to exercise such option.

6.           FINANCIAL ASSISTANCE

Except as may be prohibited by law, the Company is vested with authority under this Plan to assist any employee to whom an option is granted or to whom Shares are sold pursuant to a restricted stock purchase agreement hereunder (including any director or officer of the Company or any of its subsidiaries who is also an employee) in the
payment of the purchase price payable on exercise of that option or under that restricted stock purchase agreement, by lending the amount of such purchase price (including accepting a promissory note executed by the employee as consideration for the sale of the Shares at the time the Shares are issued) to such employee on such terms and at such rates of interest and upon such security (or unsecured) as shall have been authorized by or under authority of the Board or the Committee.

7.           FINANCIAL REPORTS.

The Company shall deliver to each grantee of an option a balance sheet of the Company as at the end of its most recently completed fiscal year, and an income statement of the Company as of the end of such fiscal year.  Such financial statements shall be delivered no less frequently than annually; provided, that such financial
statements need not be delivered to any employee whose duties as an employee assure them access to such financial information.

  

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AMENDMENT TO

BIOTIME, INC.

2002 STOCK OPTION PLAN

Effective December 10, 2004, Article I, Section 4 is amended to read as follows:

4.           SHARES OF STOCK SUBJECT TO THE PLAN

The shares that may be issued under the Plan shall be authorized and unissued or reacquired common shares, no par value, of the Company (the “Shares”).  The aggregate number of Shares which may be issued under the Plan shall not exceed 2,000,000, unless an adjustment is required in accordance with Article III.

  

 

  

2007 AMENDMENT TO

BIOTIME, INC.

2002 STOCK OPTION PLAN

Effective October 15, 2009, Article I, Section 4 is amended to read as follows:

4.           SHARES OF STOCK SUBJECT TO THE PLAN

The shares that may be issued under the Plan shall be authorized and unissued or reacquired common shares, no par value, of the Company (the “Shares”).  The aggregate number of Shares which may be issued under the Plan shall not exceed 4,000,000, unless an adjustment is required in accordance with Article III.

  

 

  

2009 AMENDMENT TO

BIOTIME, INC.

2002 STOCK OPTION PLAN

Effective October 15, 2009, Article I, Section 4 is amended to read as follows:

4.           SHARES OF STOCK SUBJECT TO THE PLAN

The shares that may be issued under the Plan shall be authorized and unissued or reacquired common shares, no par value, of the Company (the “Shares”).  The aggregate number of Shares which may be issued under the Plan shall not exceed 6,000,000, unless an adjustment is required in accordance with Article III.exv10w21

Exhibit 10.21

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (as the same may be amended or modified from time to time pursuant
hereto, this “Escrow Agreement”) is made and entered into as of November ___, 2009, by and among
Vuzix Corporation, a Delaware corporation (“Issuer”), Canaccord Capital Corporation (“Canaccord”),
Canaccord Adams Inc., Bolder Investment Partners, Ltd. (“Bolder”) and Lighthouse Financial Group
LLC (collectively, the “Offering Agents”)(the Issuer and the Offering Agents are sometimes referred
to individually as a “Party” or collectively as the “Parties”), and JPMorgan Chase Bank, National
Association (the “Escrow Agent”).

     WHEREAS, the Issuer has filed with the U.S. Securities and Exchange Commission (the “SEC”) a
Registration Statement on Form S-1 (File No. 333-160417) (as amended from time to time, the
“Registration Statement”) registering under the Securities Act of 1933, as amended, the Issuer’s
sale to the public of up to 50,000,000 units (“Units”), each Unit consisting of one share of the
Issuer’s common stock, par value $0.001 per share, and one-half of one common stock purchase
warrant (the “Offering”);

     WHEREAS, the Issuer has also filed a preliminary prospectus relating to the Offering with the
Ontario Securities Commission (the “OSC”);

     WHEREAS, the Offering shall be made on a best-efforts basis through a syndicate co-led by
Canaccord and Bolder and through certain subagents;

     WHEREAS, the closing of the Offering (the “Closing”) is subject to the Issuer’s receipt of
minimum gross proceeds from the Offering of at least Cdn$6,000,000 (the “Minimum Dollar Amount”)
and subject to a maximum of 50,000,000 Units sold (the “Maximum Unit Amount”);

     WHEREAS, in order to purchase Units, a purchaser must deliver the full amount of its purchase
price, in US or Canadian dollars, to the Offering Agents (collectively, the “Payment”);

     WHEREAS, the Parties have agreed that the Payments made by prospective purchasers of Units
will be refunded to such prospective purchasers if the Closing has not occurred within 90 days of
the date on which the Registration Statement is declared effective by the SEC; and

     WHEREAS, in compliance with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), the Parties desires to establish an escrow in which funds received from
purchasers of Units will be deposited until the Closing, and the Escrow Agent is willing to serve
as Escrow Agent upon the terms and conditions herein set forth.

     NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

1. Appointment.

     1.1. The Parties hereby appoint the Escrow Agent as their escrow agent for the purposes set
forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions
set forth herein.  The Escrow Agent is authorized and regulated by the

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Financial Services Authority in the United Kingdom.

     1.2. Each of the Offering Agents hereby authorizes Canaccord to act on its behalf in
connection with the matters set out herein.

2. Establishment of the Escrow Accounts.

     2.1. The parties hereto shall establish an escrow account at the London branch of the Escrow
Agent, and bearing the designation “Escrow Account for Vuzix Corporation IPO -Canadian” (the
“Canadian Escrow Account”).

     2.2. The parties hereto shall establish an escrow account at the New York City branch of the
Escrow Agent, and bearing the designation “Escrow Account for Vuzix Corporation IPO — US” (the “US
Escrow Account”) (the Canadian Escrow Account and the US Escrow Account are each an “Escrow
Account” and collectively the “Escrow Accounts”).

     2.3. On or before the date of the initial deposit in either Escrow Account pursuant to this
Agreement, Canaccord shall notify the Escrow Agent in writing of the commencement date of the
Offering (the “Commencement Date”). The Commencement Date shall be no earlier than the first date
on which the Registration Statement has been declared effective by the SEC and the OSC has issued a
receipt in accordance with Multilateral Instrument 11-102 – Passport System of the Canadian
Securities Administrators and National Policy 11-202 – Process for Prospectus Reviews in Multiple
Jurisdictions of the Canadian Securities Administrators evidencing that receipts for the final
Canadian prospectus relating to the Offering have been issued for each province of Canada except
Quebec. The Escrow Agent shall not accept any amounts for deposit in either Escrow Account prior to
its receipt of such notification.

     2.4. The Offering shall continue for a period (the “Offering Period”) from the Commencement
Date through the 90th day after date on which the Registration Statement has been declared
effective by the SEC. The last day of the Offering Period is referred to herein as the “Termination
Date.” Except as provided in Section 4.3 hereof, after the Termination Date, neither the Offering
Agents nor the Issuer shall deposit, and the Escrow Agent shall not accept, any additional amounts
representing payments by prospective purchasers. Canaccord shall provide written notice to the
Escrow Agent as to the Termination Date.

3. Deposits in the Escrow Account.

     3.1. All Canadian dollars received by the Offering Agents from prospective purchasers of the
Units shall be deposited in the Canadian Escrow Account, which amounts shall be in the form of wire
transfers representing the payment of money. Wire transfers to the Canadian Escrow Account shall
be sent in Canadian dollars pursuant to the following instructions:

Bank: Royal Bank of Canada, Toronto (ROYCCAT2)

Under direct SWIFT advice to JPMorgan Chase Bank, NA

CHASGB2L

For the account of: JPMorgan Chase Bank, NA (CHASGB2L)

Account Number: 095912194132

For Further Credit To: JPM as EA for Vuzix Corp

2

 

Account Number: 40625901

In compliance with Rule 10b-9 and Rule 15c2-4 of the Exchange Act, all funds received in payment
for the Units shall be forwarded to the Escrow Agent, by each Offering Agent no later than noon
(Eastern time) the next business day after receipt, to be deposited into the Escrow Account.

     3.2. All US dollars received by the Offering Agents from prospective purchasers of the Units
shall be deposited in the US Escrow Account, which amounts shall be in the form of wire transfers
representing the payment of money. Wire transfers to the US Escrow Account shall be sent in US
dollars pursuant to the following instructions:

Bank: JPMorgan Chase Bank, NA

ABA# 021 000 021

Account Number: 806032256

Account Name: JPM as EA for Vuzix Corp IPO – US

In compliance with Rule 10b-9 and Rule 15c2-4 of the Exchange Act, all funds received in payment
for the Units shall be forwarded to the Escrow Agent, by each Offering Agent no later than noon
(Eastern time) the next business day after receipt, to be deposited into the Escrow Account.

     3.3. Simultaneously with each deposit into an Escrow Account, the Offering Agent making such
deposit (or the Issuer, if such deposit is made by the Issuer) shall inform the Escrow Agent in
writing of the name and address of the prospective purchaser(s), the number of Units subscribed for
by such purchaser(s), and the aggregate dollar amount of such subscription (collectively, the
“Subscription Information”).

     3.4. The Escrow Agent shall not be required to accept any amounts representing payments by
prospective purchasers except during the Escrow Agent’s regular banking hours, which are 9:00 a.m.
to 5:00 p.m. Eastern Time.

     3.5. Amounts deposited in an Escrow Account that have cleared the banking system and have been
collected by the Escrow Agent are herein referred to as the “Fund.” Amounts deposited in an Escrow
Account that have not cleared the banking system are herein referred to as “uncollected amounts”.

     3.6. The Escrow Agent shall refund any portion of the Fund prior to disbursement of the Fund
in accordance with Section 4 hereof upon the instructions in writing signed by both the Issuer and
Canaccord.

     3.7. All Canadian dollar deposits will be held in a non interest bearing account with the
Escrow Agent’s London Branch and all US dollar deposits will be held in a non interest bearing
account with the Escrow Agent’s New York City Branch.

4. Disbursement from the Escrow Account.

     4.1. Subject to Section 4.3 below, in the event that at 5:00 p.m. Eastern Time on the

3

 

Termination Date the amount constituting the Fund shall be less than the Minimum Dollar
Amount, then the Escrow Agent shall promptly but in no event later than five (5) business days
after the Termination Date refund to each prospective purchaser the amount of payment received from
such purchaser which is then held in the Fund or which thereafter clears the banking system, and
the Escrow Agent shall notify the Issuer and each Offering Agent of its distribution of the Fund.
The Offering Agent and Issuer shall provide wire instructions via facsimile for each prospective
purchaser. For purposes of determining whether the amount constituting the Fund is less than the
Minimum Dollar Amount at 5:00 p.m. Eastern Time on the Termination Date, the Canadian dollar
equivalent of the amount then held in the US Escrow Account shall be determined by the closing
buying rate of the Bank of Canada on the Termination Date.

     4.2. Subject to Section 4.3 below, in the event that at any time up to 5:00 p.m. Eastern Time
on the Termination Date, the amount constituting the Fund shall be at least equal to the Minimum
Dollar Amount the Escrow Agent shall forthwith notify the Issuer and each Offering Agent of such
fact in writing. The Escrow Agent shall hold the Fund until the Escrow Agent receives, at least one
business day prior to the date on which the Fund is to be disbursed, instructions in writing signed
by both the Issuer and Canaccord as to the disbursement of the Fund. For purposes of determining
whether the amount constituting the Fund is at least equal to the Minimum Dollar Amount at any time
up 5:00 p.m. Eastern Time on the Termination Date, the Canadian dollar equivalent of the amount
then held in the US Escrow Account shall be determined by the closing buying rate of the Bank of
Canada on the date immediately prior to the date of determination.

     4.3. Subject to Section 4.4 below, in the event that at 5:00 p.m. Eastern Time on the
Termination Date, the amount constituting the Fund (counting all amounts deposited in the Escrow
Account from the Commencement Date) shall be greater than the Minimum Dollar Amount, the Escrow
Agent shall, on the Termination Date, notify the Issuer and the Offering Agents of such fact in
writing. The Escrow Agent shall hold any portion of the Fund that has not previously been disbursed
(in accordance with Section 4.2) until the Escrow Agent receives, at least one business day prior
to the date on which such portion of the Fund is to be disbursed, instructions in writing signed by
both the Issuer and Canaccord as to the disbursement thereof. For purposes of determining whether
the amount constituting the Fund is greater than the Minimum Dollar Amount at 5:00 p.m. Eastern
Time on the Termination Date, the Canadian dollar equivalent of the amount then held in the US
Escrow Account shall be determined by the closing buying rate of the Bank of Canada on the
Termination Date.

     4.4. In the event that at any time up to 5:00 p.m. Eastern Time on the Termination Date, the
number of units subscribed for shall be at least equal to the Maximum Unit Amount, , the Escrow
Agent shall forthwith notify the Issuer and the Offering Agents of such fact in writing. The Escrow
Agent shall hold the portion of the Fund that has not yet been disbursed (in accordance with
Section 4.2) until the Escrow Agent receives, at least one business day prior to the date on which
such portion of the Fund is to be disbursed, instructions in writing signed by both the Issuer and
Canaccord as to the disbursement thereof.

     4.5. In the event that at 5:00 p.m. Eastern Time on the Termination Date, the number of units
subscribed for shall be greater than the Maximum Unit Amount, , the Escrow Agent shall notify in
writing the Issuer and the Offering Agents of such fact forthwith following the

4

 

Termination Date. The Escrow Agent shall hold the portion of the Fund that has not previously
been disbursed (in accordance with Sections 4.2 and 4.5) until the Escrow Agent receives, at least
one business day prior to the date on which such portion of the Fund is to be disbursed,
instructions in writing signed by both the Issuer and Canaccord as to the disbursement thereof.

     4.6. Upon disbursement of the Fund pursuant to the terms of this Section 4, the Escrow Agent
shall be relieved of all further obligations and released from all liability under this Agreement.
It is expressly agreed and understood that in no event shall the aggregate amount of payments made
by the Escrow Agent exceed the amount of the Fund.

5. Escrow Agent.  

     5.1. The Escrow Agent shall have only those duties as are specifically and expressly provided
herein, which shall be deemed purely ministerial in nature, and no other duties shall be
implied.  The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of, nor
have any requirements to comply with, the terms and conditions of any other agreement, instrument
or document between the Parties, in connection herewith, if any, including without limitation the
agency agreement contemplated by that engagement letter dated as of June 24, 2009 by and among the
Issuer, Canaccord and Bolder (the “Underlying Agreement”), nor shall the Escrow Agent be required
to determine if any person or entity has complied with any such  agreements, nor shall any
additional obligations of the Escrow Agent be inferred from the terms of such agreements, even
though reference thereto may be made in this Escrow Agreement.  In the event of any conflict
between the terms and provisions of this Escrow Agreement and those of the Underlying Agreement or
any other agreement among the Parties, the terms and conditions of this Escrow Agreement shall
control. The Escrow Agent may rely upon and shall not be liable for acting or refraining from
acting upon any written notice, document, instruction or request furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the proper Party or Parties
without inquiry and without requiring substantiating evidence of any kind.  The Escrow Agent shall
be under no duty to inquire into or investigate the validity, accuracy or content of any such
document, notice, instruction or request.  The Escrow Agent shall have no duty to solicit any
payments which may be due it or the Fund nor shall the Escrow Agent have any duty or obligation to
confirm or verify the accuracy or correctness of any amounts deposited with it hereunder.

     5.2. The Escrow Agent shall not be liable for any action taken, suffered or omitted to be
taken by it in good faith except to the extent that a final adjudication of a court of competent
jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the
primary cause of any loss to any Party.  The Escrow Agent may execute any of its powers and perform
any of its duties hereunder directly or through attorneys and shall be liable only for its gross
negligence or willful misconduct (as finally adjudicated in a court of competent jurisdiction) in
the selection of any such attorney.  The Escrow Agent may consult with counsel, accountants and
other skilled persons to be selected and retained by it.  The Escrow Agent shall not be liable for
any action taken, suffered or omitted to be taken by it in accordance with, or in reliance upon,
the advice or opinion of any such counsel, accountants or other skilled persons.  In the event that
the Escrow Agent shall be uncertain or believe there is some ambiguity as to its duties or rights
hereunder or shall receive instructions, claims or demands from any party hereto which, in its
opinion, conflict with any of the provisions of this Escrow Agreement, it shall be

5

 

entitled to refrain from taking any action and its sole obligation shall be to keep safely all
property held in escrow until it shall be given a direction in writing by the Issuer and
Canaccord which eliminates such ambiguity or uncertainty to the satisfaction of Escrow Agent or by
a final and non-appealable order or judgment of a court of competent jurisdiction.  The Parties
agree to pursue any redress or recourse in connection with any dispute without making the Escrow
Agent a party to the same.  Anything in this Escrow Agreement to the contrary notwithstanding, in
no event shall the Escrow Agent be liable for special, incidental, punitive, indirect or
consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action. Any liability of the Escrow Agent under this Escrow Agreement will be
limited to the amount of fees paid to the Escrow Agent.

     5.3. All amounts held by the Escrow Agent in the Canadian Escrow Account are held by the
Escrow Agent in an account with itself as banker rather than as trustee, and therefore will not be
held in accordance with the client money rules of the FSA (the Financial Services Authority, and
any successor or replacement organisation, following amalgamation, merger or otherwise, recognised
under the Financial Services and Markets Act 2000 (including any statutory modification or
re-enactment thereof or any regulations or orders made thereunder) by which the Escrow Agent is for
the time being regulated or authorised).

     5.4. Any reference in this Agreement to the “FSA Rules” means the rules of the FSA as set out
in the FSA’s Handbook of Rules and Guidance as amended, varied or substituted from time to time.
Where the Escrow Agent is for the time being subject to any FSA Rules in the provision of services
pursuant to this Agreement (including without limitation, in relation to the appointment of agents)
the rights and obligations of the Escrow Agent under the provisions of this Agreement shall be read
and construed as subject to and permitted by such Rules, and the provisions of this Agreement shall
be limited accordingly.

     5.5. The person to whom the Escrow Agent owes the Fund pursuant to clause 2 is the customer of
the Escrow Agent for the purposes of the FSA Rules (the “Customer”). For the purposes of the FSA
Rules, the Escrow Agent shall treat the Customer as a professional client and, notwithstanding that
the Customer may be acting as agent on behalf of another person, the Customer alone shall be
treated as the Escrow Agent’s customer. The Customer is required to notify the Escrow Agent
immediately if at any time it considers that it would no longer fall within the definition of
professional client for the purposes of the FSA Rules.

     5.6. Nothing in the Agreement is intended to exclude or restrict any duty or liability of the
Escrow Agent to the other parties hereto which the Escrow Agent is not permitted to exclude or
restrict by the Financial Services and Markets Act 2000 or the FSA Rules.

6. Succession.

     6.1. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by
giving 30 days advance notice in writing of such resignation to the Parties specifying a date when
such resignation shall take effect.  If the Issuer and Canaccord have failed to appoint a successor
escrow agent prior to the expiration of 30 days following receipt of the notice of resignation, the
Escrow Agent may petition any court of competent jurisdiction for the

6

 

appointment of a successor escrow agent or for other appropriate relief, and any such
resulting appointment shall be binding upon all of the parties hereto.  Escrow Agent’s sole
responsibility after such 30 day notice period expires shall be to hold the Fund (without any
obligation to reinvest the same) and to deliver the same to a designated substitute escrow agent,
if any, or in accordance with the directions of a final order or judgment of a court of competent
jurisdiction, at which time of delivery Escrow Agent’s obligations hereunder shall cease and
terminate, subject to the provisions of Sections 7 and 8 hereunder.  

     6.2. Any entity into which the Escrow Agent may be merged or converted or with which it may be
consolidated, or any entity to which all or substantially all the escrow business may be
transferred, shall be the Escrow Agent under this Escrow Agreement without further act.

7. Compensation and Reimbursement. Issuer agrees to (a) pay the Escrow Agent for the
services to be rendered hereunder, which unless otherwise agreed in writing shall be as described
in Schedule 2 attached hereto, and (b) pay or reimburse the Escrow Agent upon request for all
expenses, disbursements and advances, including, without limitation reasonable attorney’s fees and
expenses, incurred or made by it in connection with the performance of this Escrow Agreement.

8. Indemnity. The Parties shall jointly and severally indemnify, defend and save harmless
the Escrow Agent and its affiliates and their respective successors, assigns, directors, agents and
employees (the “indemnitees”) from and against any and all losses, damages, claims, liabilities,
penalties, judgments, settlements, litigation, investigations, costs or expenses (including,
without limitation, the fees and expenses of outside counsel)(collectively “Losses”) arising out of
or in connection with (a) the Escrow Agent’s execution and performance of this Escrow Agreement,
tax reporting or withholding, the enforcement of any rights or remedies under or in connection with
this Escrow Agreement, or as may arise by reason of any act, omission or error of the indemnitee,
except in the case of any indemnitee to the extent that such Losses are finally adjudicated by a
court of competent jurisdiction to have been primarily caused by the gross negligence or willful
misconduct of such indemnitee, or (b) its following any instructions or other directions, whether
joint or singular, from the Parties as contemplated in this Agreement, except to the extent that
its following any such instruction or direction is expressly forbidden by the terms hereof. The
Parties hereto acknowledge that the foregoing indemnities shall survive the resignation,
replacement or removal of the Escrow Agent or the termination of this Escrow Agreement.

9. Patriot Act Disclosure/Taxpayer Identification Numbers/Tax.

     9.1. Patriot Act Disclosure.  Section 326 of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT
Act”) requires the Escrow Agent to implement reasonable procedures to verify the identity of any
person that opens a new account with it.  Accordingly, the Parties acknowledge that Section 326 of
the USA PATRIOT Act and the Escrow Agent’s identity verification procedures require the Escrow
Agent to obtain information which may be used to confirm the Parties identity including without
limitation name, address and organizational documents (“identifying information”). The Parties
agree to provide the Escrow Agent with and consent to the Escrow Agent obtaining from third parties
any such identifying information required as a

7

 

condition of opening an account with or using any service provided by the Escrow Agent.

     9.2. Taxpayer Identification Numbers (“TINs”). The Parties have provided the Escrow Agent
with their respective fully executed Internal Revenue Service (“IRS”) Form W-8, or W-9 and/or other
required documentation.  The Parties each represent that its correct TIN assigned by the IRS, or
any other taxing authority, is set forth in the delivered forms

10. Notices. All communications hereunder shall be in writing and shall be deemed to be
duly given and received: (a) upon delivery, if delivered personally, or upon confirmed transmittal,
if by facsimile; (b) on the next Business Day (as hereinafter defined) if sent by overnight
courier; or (c) four Business Days after mailing if mailed by prepaid registered mail, return
receipt requested, to the appropriate notice address set forth below or at such other address as
any party hereto may have furnished to the other parties in writing by registered mail, return
receipt requested.

	 	 	 
	If to the Issuer:

	 	Vuzix Corporation
	 

	 	75 Town Centre Drive
	 

	 	Rochester, NY 14623
	 

	 	Attn: Paul J. Travers, President and Chief Executive Officer
	 

	 	Fax: (585) 359-4172
	 
	 	 
	with copies to:

	 	Wildeboer Dellelce LLP
	 

	 	Suite 800, Wildeboer Dellelce Place
	 

	 	365 Bay Street
	 

	 	Toronto, Ontario M5H 2V1
	 

	 	Attn: Robert Fonn
	 

	 	Fax: (416) 361-1790
	 
	 	 
	 

	 	Boylan, Brown, Code, Vigdor & Wilson, LLP
	 

	 	2400 Chase Square
	 

	 	Rochester, New York 14604
	 

	 	Attn: Robert F. Mechur
	 

	 	Fax: (585) 232-3528
	 
	 	 
	If to the Offering Agents:

	 	Canaccord Capital Corporation
	 

	 	Suite 2200 – 609 Granville Street
	 

	 	P.O. BOX 10337, Pacific Centre
	 

	 	Vancouver, British Columbia V7Y 1H2
	 

	 	Attn: David Rentz
	 

	 	Fax: (604) 643-7733
	 
	 	 
	 

	 	Bolder Investment Partners, Ltd.
	 

	 	Suite 800 – 1450 Creekside Drive
	 

	 	Vancouver, British Columbia V6J 5B3
	 

	 	Attn: Paul Woodward
	 

	 	Fax: (604) 714-2326

8

 

	 	 	 
	 

	 	Lighthouse Financial Group LLC
	 

	 	Suite 1430 – 420 Lexington Avenue
	 

	 	New York, New York 10170 4001
	 

	 	Attn: Jeff Morfit
	 

	 	Fax:  ̈
	 
	 	 
	with copies to:

	 	McCullough O’Connor Irwin LLP
	 

	 	1100 – 888 Dunsmuir Street
	 

	 	Vancouver, British Columbia V6C 3K4
	 

	 	Attn: James Beeby
	 

	 	Fax: (604) 687-7099
	 
	 	 
	 

	 	Dorsey & Whitney LLP
	 

	 	370 – 17th St., Suite 4700
	 

	 	Denver, Colorado 80202
	 

	 	Attn: Kenneth G. Sam
	 

	 	Fax: (303) 629-3450
	 
	 	 
	If to the Escrow Agent:

	 	JPMorgan Chase Bank, National Association
	 

	 	4 New York Plaza, 21st Floor
	 

	 	NY, NY 10004
	 

	 	Attn: Greg Kupchynsky/Rola Tseng
	 

	 	Fax: (212) 623-6168

Notwithstanding the above, in the case of communications delivered to the Escrow Agent pursuant to
(i), (ii) and (iii) of this Section 10, such communications shall be deemed to have been given on
the date received by an officer of the Escrow Agent or any employee of the Escrow Agent who reports
directly to any such officer at the above-referenced office.  In the event that the Escrow Agent,
in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such
other means of communication as the Escrow Agent deems appropriate.  Any communications received
after 5:00 pm Eastern Time shall be deemed to have been received on the next Business Day.
“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the
Escrow Agent located at the notice address set forth above is authorized or required by law or
executive order to remain closed.

11. Security Procedures.

     11.1. In the event funds transfer instructions are given (other than in writing at the time of
execution of this Escrow Agreement), whether in writing, by facsimile or otherwise, the Escrow
Agent is authorized to seek confirmation of such instructions by telephone call-back to the person
or persons designated on schedule 1 hereto (“Schedule 1”), and the Escrow Agent may rely upon the
confirmation of anyone purporting to be the person or persons so designated.  Each funds transfer
instruction shall be executed by an authorized signatory, a list of such authorized signatories is
set forth on Schedule 1.  The persons and telephone numbers for call-backs may be changed only in a
writing actually received and acknowledged by the Escrow

9

 

Agent. If the Escrow Agent is unable to contact any of the authorized representatives
identified in Schedule 1, the Escrow Agent is hereby authorized to seek confirmation of such
instructions by telephone call-back to any one or more of Issuer or the applicable Offering Agent’s
executive officers, (“Executive Officers”), as the case may be, which shall include the titles of
Chief Executive Officer, President and Executive Vice President, as the Escrow Agent may select.
Such “Executive Officer” shall deliver to the Escrow Agent a fully executed incumbency certificate,
and the Escrow Agent may rely upon the confirmation of anyone purporting to be any such officer.
The Escrow Agent and the beneficiary’s bank in any funds transfer may rely solely upon any account
numbers or similar identifying numbers provided by Issuer or Offering Agent to identify (a) the
beneficiary, (b) the beneficiary’s bank, or (c) an intermediary bank.  The Escrow Agent may apply
any of the escrowed funds for any payment order it executes using any such identifying number, even
when its use may result in a person other than the beneficiary being paid, or the transfer of funds
to a bank other than the beneficiary’s bank or an intermediary bank designated. The Parties
acknowledge that these security procedures are commercially reasonable.

     11.2. Issuer acknowledges that repetitive funds transfer instructions may be given to the
Escrow Agent for one or more beneficiaries where only the date of the requested transfer, the
amount of funds to be transferred, and/or the description of the payment shall change within the
repetitive instructions (“Standing Settlement Instructions”).  Accordingly, Issuer shall deliver to
Escrow Agent such specific Standing Settlement Instructions only for each respective beneficiary as
set forth in Exhibit A to this Escrow Agreement, by facsimile or other written instruction.  Escrow
Agent may rely solely upon such Standing Settlement Instructions and all identifying information
set forth therein for each beneficiary.  Escrow Agent and the Offering Agents agree that such
Standing Settlement Instructions shall be effective as the funds transfer instructions of Issuer,
without requiring a verifying callback, whether or not authorized, if such Standing Settlement
Instructions are consistent with previously authenticated Standing Settlement Instructions for that
beneficiary.  The Parties and Escrow Agent acknowledge that such Standing Settlement Instructions
are a security procedure and are commercially reasonable.

12. Compliance with Court Orders.  In the event that any escrow property shall be attached,
garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by
an order of a court, or any order, judgment or decree shall be made or entered by any court order
affecting the property deposited under this Escrow Agreement, the Escrow Agent is hereby expressly
authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered
or issued, which it is advised by legal counsel of its own choosing is binding upon it, whether
with or without jurisdiction, and in the event that the Escrow Agent obeys or complies with any
such writ, order or decree it shall not be liable to any of the parties hereto or to any other
person, entity, firm or corporation, by reason of such compliance notwithstanding such writ, order
or decree be subsequently reversed, modified, annulled, set aside or vacated.

13. Miscellaneous. The provisions of this Escrow Agreement may be waived, altered, amended
or supplemented, in whole or in part, only by a writing signed by the Escrow Agent and the
Parties.  Neither this Escrow Agreement nor any right or interest hereunder may be assigned in
whole or in part by the Escrow Agent or any Party, except as provided in Section 6, without the
prior consent of the Escrow Agent and the other parties.  This Escrow Agreement shall be governed
by and construed under the laws of the State of New York. Each Party irrevocably

10

 

waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and
irrevocably consents to service of process by mail or in any other manner permitted by applicable
law and consents to the jurisdiction of the courts located in the State of New York. The Parties
further hereby waive any right to a trial by jury with respect to any lawsuit or judicial
proceeding arising or relating to this Escrow Agreement.  No party to this Escrow Agreement is
liable to any other party for losses due to, or if it is unable to perform its obligations under
the terms of this Escrow Agreement because of, acts of God, fire, war, terrorism, floods, strikes,
electrical outages, equipment or transmission failure, or other causes reasonably beyond its
control.  This Escrow Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument. All
signatures of the parties to this Escrow Agreement may be transmitted by facsimile, and such
facsimile will, for all purposes, be deemed to be the original signature of such party whose
signature it reproduces, and will be binding upon such party.  If any provision of this Escrow
Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a
jurisdiction, then such provision shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions thereof, and any
such prohibition or unenforceability in such jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. A person who is not a party to this
Agreement shall have no right to enforce any term of this Agreement. The Parties represent, warrant
and covenant that each document, notice, instruction or request provided by such Party to Escrow
Agent shall comply with applicable laws and regulations.  Where, however, the conflicting
provisions of any such applicable law may be waived, they are hereby irrevocably waived by the
parties hereto to the fullest extent permitted by law, to the end that this Escrow Agreement shall
be enforced as written.  Except as expressly provided in Section 8 above, nothing in this Escrow
Agreement, whether express or implied, shall be construed to give to any person or entity other
than the Escrow Agent and the Parties any legal or equitable right, remedy, interest or claim under
or in respect of this Escrow Agreement or any funds escrowed hereunder.

[remainder of this page intentionally left blank]

11

 

     IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date set
forth above.

	 	 	 	 	 	 	 
	VUZIX CORPORATION	 	BOLDER INVESTMENT PARTNERS, LTD.
	 
	 	 	 	 	 	 
	By:

	 	 
	 	By:	 	 
	 

Name:

	 	 	 	 

Name:
	 	 
	Title:

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	CANACCORD CAPITAL CORPORATION	 	LIGHTHOUSE FINANCIAL GROUP LLC
	 
	 	 	 	 	 	 
	By:

	 	 
	 	By:	 	 
	 

Name:

	 	 	 	 

Name:
	 	 
	Title:

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	CANACCORD ADAMS INC.	 	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
	 	 	 	 	as Escrow Agent
	 
	 	 	 	 	 	 
	By:

	 	 
	 	By:	 	 
	 

Name:

	 	 	 	 

Name:
	 	 
	Title:

	 	 	 	Title:	 	 

12

 

SCHEDULE 1

Telephone Number(s) and authorized signature(s) for

Person(s) Designated to give Funds Transfer Instructions

Offering Agents:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Name 	 	Telephone Number	 	Signature
	 
	 	1.	 	 	Glenda Chin (Canaccord)

	 	604-643-7408
	 	                                                            
	 	 	 	 	 
	 	 	 	 
	 	2.	 	 	Paul Woodward (Bolder)

	 	604-714-2325
	 	                                                            
	 	 	 	 	 
	 	 	 	 
	 	3.	 	 	 

	 	 	 	                                                            
	 	 	 	 	 

	 	 	 	 

Issuer:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Name	 	Telephone Number	 	Signature
	 
	 	1.	 	 	 

	 	 	 	                                                            
	 	 	 	 	 

	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	2.	 	 	 

	 	 	 	                                                            
	 	 	 	 	 

	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	3.	 	 	 

	 	 	 	                                                            
	 	 	 	 	 

	 	 	 	 

Telephone Number(s) for Call-Backs and

Person(s) Designated to Confirm Funds Transfer Instructions

Offering Agents:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Name 	 	Telephone Number	 	 
	 
	 	1.	 	 	Glenda Chin (Canaccord)

	 	604-643-7408	 	 
	 	 	 	 	 
	 	 	 	 
	 	2.	 	 	Paul Woodward (Bolder)

	 	604-714-2325	 	 
	 	 	 	 	 
	 	 	 	 
	 	3.	 	 	 

	 	 

	 	 

Issuer:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Name 	 	Telephone Number	 	 
	 
	 	1.	 	 	 
	 	 	 	 
	 	 	 	 	 

	 	 

	 	 
	 	2.	 	 	 

	 	 

	 	 
	 	 	 	 	 
	 	 	 	 
	 	3.	 	 	 

	 	 

	 	 

13

 

Telephone call backs shall be made to both Parties if joint instructions are required pursuant to
the agreement. All funds transfer instructions must include the signature of the person(s)
authorizing said funds transfer and must not be the same person confirming said transfer.

Inasmuch as you are the only individual who can confirm wire transfers, JPM will call you to
confirm any federal wire transfer payment order purportedly issued by you. Your continued issuance
of payment orders to us and confirmation in accordance with this procedure will constitute your
agreement (1) to the callback security procedure outlined herein and (2) that the security
procedure outlined herein constitutes a commercially reasonable method of verifying the
authenticity of payment orders. Moreover, you agree to accept any risk associated with a deviation
from this bank policy.

14

 

SCHEDULE 2

Escrow Agent’s Compensation:

$2,500 per account, per annum without pro-ration for partial years

The fees quoted are based on a review of the transaction documents provided and an internal due
diligence review. JPMorgan reserves the right to revise, modify, change and supplement the fees
quoted herein if the assumptions underlying the activity in the account, level of balances, market
volatility or conditions or other factors change from those used to set our fees.

Extraordinary Services and Out-of Pocket Expenses

Any additional services beyond our standard services as specified above, and all reasonable
out-of-pocket expenses including attorney’s or accountant’s fees and expenses will be considered
extraordinary services for which related costs, transaction charges, and additional fees will be
billed at the Bank’s then standard rate. Disbursements, receipts, investments or tax reporting
exceeding 25 items per year may be treated as extraordinary services thereby incurring additional
charges.

15

 

EXHIBIT A

Standing Settlement Instructions

16

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