Document:

Exhibit
10.36

         

      

    

    
      	 
      

    

    

    CONTRIBUTION
AGREEMENT

     

    between

     

    Affiliates
of

     

    GEROVA
FINANCIAL GROUP, LTD.

     

     and

     

    PLANET
5 DEVELOPMENT GROUP, LLC

     

    Dated:  May
26, 2010

     

    
      	 
      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    CONTRIBUTION
AGREEMENT

    

    THIS CONTRIBUTION AGREEMENT is
made and entered into this 26th day of
May, 2010 by and among: (1) GEROVA FINANCIAL GROUP, LTD., a Cayman Island
corporation (“Gerova”); (2) PLANET
5 DEVELOPMENT GROUP, LLC (collectively, “Planet 5”); and (3)
NET FIVE HOLDINGS, LLC, a Florida limited liability company (the “Company”).

    

    RECITALS

    

    WHEREAS, though its direct and
indirect subsidiaries and affiliates, Gerova is the owner of the Gerova
Properties (as defined below);

    

    WHEREAS, through its direct
and indirect subsidiaries and affiliates, Planet 5 is the owner of the Planet 5
Properties (as defined below);

    

    WHEREAS, Gerova has agreed to
convey the Gerova Properties to the Company in exchange for Class A Interests
(as defined below) in the Company; and

    

    WHEREAS, Planet 5 has agreed
to convey the Planet 5 Properties to the Company in exchange for Class A
Interests (as defined below) in the Company.

    

    NOW, THEREFORE, in
consideration of the mutual promises hereinafter set forth and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

    

    ARTICLE
I

    INTERPRETATIONS;
DEFINITIONS

     

    Section
1.1.      General
Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires: (a) the terms defined in this Section
have the meanings assigned to them in this Section and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other genders; (b) accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles; (c) references herein to “Articles”, “Sections”,
“subsections”, “paragraphs” and other subdivisions without reference to a
document are to designated Articles, Sections, subsections, paragraphs and other
subdivisions of this Agreement; (d) a reference to a subsection without further
reference to a Section is a reference to such subsection as contained in the
same Section in which the reference appears, and this rule shall also apply to
paragraphs and other subdivisions; (e) a reference to an Exhibit or a Schedule
without a further reference to the document to which the Exhibit or Schedule is
attached is a reference to an Exhibit or Schedule to this Agreement; (f) the
words “herein”, “hereof”, “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular provision; and (g) the word
“including” means “including, without limitation,”.

    

    Section
1.2.      Defined
Terms.  For all purposes of this Agreement, certain terms are
defined in sections of this Agreement (and not included in this Section 1.2) and
the following terms shall have the respective meanings set forth
below:

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    “Action” shall mean any
investigation, action, claim, action, proceeding, arbitration or suit (whether
civil, criminal, administrative or judicial), or any appeal therefrom against
any Person.

    

    “Affiliate” shall mean any Person,
any director or officer of such Person, and any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, the term “control” or
any form thereof means, with respect to any Person, the possession directly or
indirectly, of the power to direct or cause the direction of the management
policies of such Person through the ownership of voting securities, by contract
or otherwise.

    

     “Agreement” shall mean
this Agreement in its present form or as it may be amended, modified or
supplemented from time to time in accordance with Section 7.1 of this
Agreement.

    

    “Business Days” shall
mean any day of the week other than Saturday, Sunday or a day on which banking
institutions in Ney York, New York are obligated or authorized by Law to
close.

    

    “Certificate of
Formation” shall mean the Certificate of Formation of the Company
substantially in the form attached as Exhibit
A.

    

    “Class A Interest” shall have
the meaning set forth in the LLC Agreement.

    

    “Code” shall mean the
Internal Revenue Code of 1986, as amended.

    

    “Damages” shall mean
any loss, fine, penalty, judgment, award, claim, obligation, demands, damages
(specifically excluding incidental, consequential, indirect, special and
punitive damages), interest, Tax, cost, liability or expense incurred (including
reasonable attorneys’ fees or any other reasonable out-of-pocket expenses
directly incurred in connection with any Action); provided, however, that
“Damages” shall include payment obligations to a third party actually incurred
by the indemnified party as a result of the indemnified party being required to
pay such third party as part of a Third Party Action.

    

    “Effective Date” shall
mean the date this Agreement is fully executed and delivered by the parties
hereto.

    

    “Fair Market Value”
shall mean the fair market value of an Investment Property as determined in
accordance with Section 2.4.

    

    “Gerova Properties”
shall mean the collective reference to: (a) the various parcels of improved and
unimproved real estate owned by direct and indirect Subsidiaries of Gerova; and
(b) a portfolio of first and second mortgage loans held by direct and indirect
Subsidiaries of Gerona that are listed on Exhibit B attached
hereto.

    
      
         

      

      
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     “Governmental
Authorities” shall mean any federal, state, municipal,
county government, or any subdivision thereof, or any court,
administrative, arbitrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign.

    

    “Investment
Properties” shall mean, collectively, the Gerova Properties and the
Planet 5 Properties.

    

    “Law” shall mean any
applicable national, supra-national, regional, federal, state or local law
(whether common or civil law), statute, rule, regulation, code, ordinance,
administrative ruling, regulation, order, directive or other requirement of any
Governmental Authority.

    

    “LLC Agreement” shall
mean the Operating Agreement for the Company substantially in the form attached
as Exhibit
C.

    

    “Permits” means all
notifications, licenses, permits (including environmental, construction and
operation permits), governmental franchises, registrations, certificates,
approvals, exemptions, classifications, registrations and other similar
documents, rights and authorizations issued by any Governmental
Authority.

    

    “Permitted Exceptions”
shall mean: (a) the lien of current Taxes not yet due and payable; (ii) the
state of facts which would be disclosed by an accurate ALTA land-title survey of
the Investment Property; and (iii) such other customary exceptions that do not
render title to any Investment Property non-financeable or
unmarketable.

    

    “Person” shall mean an
individual, estate, trust, partnership, corporation, limited liability company,
Governmental Authority or other legal entity.

    

    
      “Planet 5 Properties”
means the collective reference to the seven developed properties and four
undeveloped properties that are listed on Exhibit D attached
hereto.

    

    

    “Subsidiaries”  shall
mean any corporation, limited liability company, partnership or other entity, a
majority of the capital stock or equity of which is owned, directly or
indirectly, by any Person.

    

    “Tax” or,
collectively, “Taxes” shall mean:
(a) any and all United States federal, state, local and foreign taxes,
assessments and other like governmental charges, duties, impositions and
liabilities, including, without limitation, taxes based upon or measured by
income, profits, sales, use and occupation, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts;
(b) any liability for the payment of any amounts of the type described in clause
(a) as a result of being a member of an affiliated, consolidated, combined or
unitary group for any period; and (c) any liability for the payment of any
amounts of the type described in clause (a) or (b) as a result of any
obligations under any agreements or arrangements with any other Person with
respect to such amounts and including any liability for taxes of a predecessor
entity.

    
      
         

      

      
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    “Tax Returns” shall mean any return,
report or other document or information required to be supplied to a taxing
authority in connection with Taxes (including any attachments).

    

    ARTICLE
II

    FORMATION AND CONTRIBUTION
OF THE PROPERTY

    

    Section
2.1.      Formation.

    

    (a)      A
Certificate of Formation of the Company was filed with the Secretary of State of
the State of Florida on March 25, 2010.

    

    (b)      Subject
to the terms and conditions of this Agreement, Gerova and Planet 5 shall execute
and deliver the LLC Agreement, which shall be dated as of the Effective
Date.

    

    Section
2.2.     Property
to be Contributed by Gerova.  Prior to
September 30, 2010 and subject to the terms and conditions set forth in this
Agreement, Gerova agrees to convey, transfer and assign to the Company as
Gerova’s capital contribution to the Company, all of its right, title and
interest in the Gerova Properties. The Gerova Properties will be unencumbered at
the time of contribution other than by the Permitted Exceptions.

    

    Section
2.3.     Property
to be Contributed by Planet 5.  Prior to
September 30, 2010, or as soon thereafter as is practicable, and subject to the
terms and conditions set forth in this Agreement, Planet 5 agrees to convey,
transfer and assign to the Company as Planet 5’s capital contribution to the
Company, all of its right, title and interest in the Planet 5 Properties. The
Planet 5 Properties will be unencumbered at the time of contribution other than
by the Permitted Exceptions.

    

    Section
2.4.     Valuation
of the Investment Properties.  Gerova and Planet 5 shall work
together in good faith to determine the current Fair Market Value of each
Investment Property prior to such Investment Property being contributed to the
Company.   If Gerova and Planet 5 are unable to reach agreement
on the Fair Market Value of an Investment Property, each of Gerova and Planet 5
shall engage a recognized independent real estate appraisal company in the
geographic area in which such Investment Property is located and shall give
written notice to the other party specifying the identity of their selected
appraiser.  The two appraisers so appointed shall together mutually
select a third appraiser within ten (10) Business Days after the appointment of
the second appraiser.  The three appraisers shall reach independent
determinations of the Fair Market Value of the Investment
Property.  The average of the two closest appraisals rendered by the
three appraisers shall be deemed to be the Fair Market Value.  If any
appraiser is only able to provide a range of Fair Market Values, the average of
the highest and lowest value in such range shall be deemed to be such
appraiser’s determination of the Fair Market Value.  The determination
of the Fair Market Value in accordance with the foregoing procedure shall be
final and binding on Gerova and Planet 5.  The fees and costs of the
separate independently selected appraisers shall be borne by the party who
selected such appraiser, and the fees and costs of the third appraiser shall be
borne equally by Gerova and Planet 5.  The parties shall use their
best efforts to cause the appraisers to complete their determinations of Fair
Market Value promptly, and in any event, no later than September 30,
2010.  Each of Gerova and Planet 5 shall be required to respond
promptly to any reasonable requests for information that may be advanced by any
appraiser performing the determination of Fair Market Value.

    
      
         

      

      
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    ARTICLE
III

    REPRESENTATIONS AND
WARRANTIES OF GEROVA

    

    Gerova
hereby represents and warrants to the Company and Planet 5 each of the matters
set forth in this Article III and
acknowledges that Planet 5’s entry into this Agreement and the consummation of
the transactions contemplated herein, including the formation and operation of
the Company, are made in reliance upon the completeness and accuracy of the
matters set forth herein:

    

    Section
3.1.     Organization.  Gerova
is a corporation duly formed and validly existing [in good standing] under the
laws of the Cayman Islands, and has all legal power, right and authority to
enter into this Agreement and the instruments referenced herein, and to
consummate the transaction contemplated hereby.  Gerova is duly
qualified or licensed to do business and is [in good standing] in each
jurisdiction in which it is required to be so qualified or licensed, except
where the failure to be so qualified or licensed would not constitute a material
adverse effect.

    

    Section
3.2.     Authority;
Binding Effect.  Gerova has the requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Gerova, and no further action is required on the
part of Gerova to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Gerova and,
assuming the due authorization, execution and delivery by the other parties
hereto, constitutes a valid and binding obligation of Gerova, enforceable
against Gerova in accordance with its terms, except that such enforcement may be
subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to enforcement of creditors’ rights
generally, and (b) general equitable principles.

    

    Section
3.3.     Noncontravention.  The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by Gerova: (a) will not violate or conflict
with its constituent documents; (b) will not result in any violation, breach or
default of any provision of any instrument, judgment, order, writ, decree,
contract or agreement to which Gerova is a party or by which Gerova is bound;
and (c) will not require any consent under in any provision in any
agreement to which Gerova is a party, or be in conflict with or constitute, with
or without the passage of time and giving of notice, either a violation or
default under any such provision.

    

    Section
3.4.     No
Litigation.  There are no Actions, either at Law or in equity,
or before any Governmental Authorities, of any kind now pending or, to the
knowledge of Gerova, threatened or proposed in any manner, or any circumstances
which could reasonably form the basis of any such Action, involving any of the
Gerova Properties.

    
      
         

      

      
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    Section
3.5.     Compliance
with Laws.   Gerova is in compliance in all material
respects with all Laws applicable to the Gerova Properties.  Gerova
has not received any written notification from any Governmental Authority: (a)
asserting a violation by Gerova of any Law applicable to the Gerova Properties;
(b) threatening to revoke any permit applicable to the Gerova Properties; or
(iii)  restricting or in any way limiting the use of the Gerova
Properties.

    

    Section
3.6.     Consents.  No
consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any court or Governmental Authority is required by
Gerova in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.

    

    Section
3.7.     Absence
of Undisclosed Liabilities. Gerova does not have any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature
with respect to the Gerova Properties, except liabilities, obligations or
contingencies which have been disclosed to the Company and Planet
5.

    

    Section
3.8.     Options.   Gerova
has not granted any rights of first offer or refusals or options to purchase the
Gerova Properties or any portion thereof.

    

    Section
3.9.     Taxes. Gerova has: (a) duly and
timely filed with the appropriate Governmental Authorities all Tax Returns
required to be filed by it in connection with or with respect to the Gerova
Properties for all periods ending on or prior to the date hereof, and such Tax
Returns are true, correct and complete in all material respects; and (b) duly
paid in full all Taxes due in connection with or with respect to the filing of
such Tax Returns (whether or not shown on such Tax Returns) and has paid all
other Taxes in connection with or with respect to the Gerova Properties as are
due, except such as are being contested in good faith by appropriate proceedings
and with respect to which Gerova is maintaining reserves adequate for their
payment.  Neither the Internal Revenue Service nor any other
Governmental Authority is now asserting, either through audits, administrative
proceedings, court proceedings or otherwise, or, to the knowledge of Gerova,
threatening to assert against Gerova any deficiency or claim for additional
Taxes in connection with or with respect to the Gerova Properties.

    

    Section
3.10.   Environmental.  To
the knowledge of Gerova: (a) no Hazardous Substances (as hereinafter defined) or
toxic substances have been treated, stored, handled or disposed of on, under or
at the Gerova Properties in violation of applicable Laws; (b) the Gerova
Properties have not been used for industrial purposes; and (c) the Gerova
Properties have never been listed by a Governmental Authority as containing any
Hazardous Substances.  “Hazardous
Substances”, as used herein, means any toxic or hazardous waste,
pollutants or substances, including, without limitation, petroleum products or
by-products, asbestos (irrespective of whether or not encapsulated) and
substances defined or listed as hazardous substances or toxic substances or
similarly identified in or pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 41 U.S.C. Section 9601, et
seq., hazardous materials identified in or pursuant to the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802, et seq., hazardous waste identified
in or pursuant to the Resource Conservation and Recovery Act of 1976, as
amended, 15 U.S.C. Section 2601, et seq. or any hazardous or toxic substance or
pollutant regulated under any other applicable Law.

    
      
         

      

      
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    Section
3.11.   Permits.  Gerova
has obtained and maintained all Permits necessary for Gerova to own, operate,
use, occupy and develop the Gerova Properties.

    

    Section 3.12.  Brokers.  No
agent, broker, or other Person acting pursuant to express or implied authority
of Gerova is entitled to a commission or finder’s fee in connection with the
transactions contemplated by this Agreement

    

    Section
3.13.   Investment
Representation. Gerova represents and warrants that the Class A Interest
in the Company to be received by it will be acquired by it solely for its own
account and with no intention of distributing or reselling the Class A Interest
in any transaction which would be in violation of, or would cause the
transactions contemplated herein to violate, the securities laws of the United
States of America, any state thereof or the District of Columbia, without
prejudice, however, to Gerova’s right at all times to sell or otherwise dispose
of all or any part of the Class A Interest in the Company under an exemption
from registration available under the Securities Act of 1933, as amended (the
“Securities
Act”), and any applicable state or District of Columbia securities
law.

    

    Section
3.14.   Prohibited
Persons and Transactions.  To the knowledge of Gerova, Gerova
is in compliance with, the regulations of the Office of Foreign Asset Control
(“OFAC”) of the
Department of the Treasury (including those named on OFAC’s Specially Designated
and Blocked Persons List) and any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action relating thereto.

    

    ARTICLE
IV

    REPRESENTATIONS AND
WARRANTIES OF PLANET 5 GROUP

    

    Planet 5
hereby represents and warrants to Gerova each of the matters set forth in this
Article III and
acknowledges that Planet 5’s entry into this Agreement and the consummation of
the transactions contemplated herein, including the formation and operation of
the Company, are made in reliance upon the completeness and accuracy of the
matters set forth herein:

    

    Section
4.1.     Organization.  Each
Person constituting Planet 5 is a limited liability company duly formed and
validly existing in good standing under the laws of the jurisdiction of its
formation, and has all legal power, right and authority to enter into this
Agreement and the instruments referenced herein, and to consummate the
transaction contemplated hereby.  Each Person constituting Planet 5 is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which it is required to be so qualified or licensed, except
where the failure to be so qualified or licensed would not constitute a material
adverse effect.

    
      
         

      

      
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    Section
4.2.     Authority;
Binding Effect.  Each Person constituting Planet 5 has the
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary limited liability company action on the part of such
Person, and no further action is required on the part of such Person to
authorize this Agreement or the transactions contemplated hereby. This Agreement
has been duly executed and delivered by each Person constituting Planet 5 and,
assuming the due authorization, execution and delivery by the other parties
hereto, constitutes a valid and binding obligation of such Person, enforceable
against such Person in accordance with its terms, except that such enforcement
may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting or relating to enforcement of creditors’ rights
generally, and (b) general equitable principles.

    

    Section
4.3.     Noncontravention.  The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by Planet 5: (a) will not violate or
conflict with the constituent documents of each Person constituting Planet 5;
(b) will not result in any violation, breach or default of any provision of any
instrument, judgment, order, writ, decree, contract or agreement to which such
Person is a party or by which it is bound; and (c) will not require any
consent under in any provision in any agreement to which such Person is a party,
or be in conflict with or constitute, with or without the passage of time and
giving of notice, either a violation or default under any such
provision.

    

    Section
4.4.     No
Litigation.  There are no Actions, either at Law or in equity,
or before any Governmental Authorities, of any kind now pending or, to the
knowledge of Planet 5, threatened or proposed in any manner, or any
circumstances which could reasonably form the basis of any such Action,
involving any of the Planet 5 Properties.

    

    Section
4.5.     Compliance
with Laws.   Planet 5 is in compliance in all material
respects with all Laws applicable to the Planet 5 Properties.  Planet
5 has not received any written notification from any Governmental Authority: (a)
asserting a violation by Planet 5 of any Law applicable to the Planet 5
Properties; (b) threatening to revoke any permit applicable to the Planet 5
Properties; or (c)  restricting or in any way limiting the use of the
Planet 5 Properties.

    

    Section
4.6.     Consents.  No
consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any court or Governmental Authority is required by
Planet 5 in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.

    

    Section
4.7.     Absence
of Undisclosed Liabilities.  Planet 5 does not have any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature with respect to the Planet 5 Properties, except liabilities,
obligations or contingencies which have been disclosed to the Company and
Gerova.

    

    Section
4.8.      Options.   Planet
5 has not granted any rights of first offer or refusals or options to purchase
the Planet 5 Properties or any portion thereof.

    
      
         

      

      
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    Section
4.9.      FIRPTA.   Planet
5 is not a foreign person within the meaning of Section 1445(f)(3) of the
Code.

    

    Section
4.10.   Taxes. Planet 5 has: (a) duly
and timely filed with the appropriate Governmental Authorities all Tax Returns
required to be filed by it in connection with or with respect to the Planet 5
Properties for all periods ending on or prior to the date hereof, and such Tax
Returns are true, correct and complete in all material respects; and (b) duly
paid in full all Taxes due in connection with or with respect to the filing of
such Tax Returns (whether or not shown on such Tax Returns) and has paid all
other Taxes in connection with or with respect to the Planet 5 Properties as are
due, except such as are being contested in good faith by appropriate proceedings
and with respect to which Planet 5 is maintaining reserves adequate for their
payment.  Neither the Internal Revenue Service nor any other
Governmental Authority is now asserting, either through audits, administrative
proceedings, court proceedings or otherwise, or, to the knowledge of Planet 5,
threatening to assert against Planet 5 any deficiency or claim for additional
Taxes in connection with or with respect to the Planet 5
Properties.

    

    Section
4.11.   Environmental.  To
the knowledge of Planet 5: (a) no Hazardous Substances or toxic substances have
been treated, stored, handled or disposed of on, under or at the Planet 5
Properties in violation of applicable Laws; (b) the Planet 5 Properties have not
been used for industrial purposes; and (c) the Planet 5 Properties have never
been listed by a Governmental Authority as containing any Hazardous
Substances.

    

    Section
4.12.   Permits.  Planet
5 has obtained and maintained all Permits necessary for Planet 5 to own,
operate, use, occupy and develop the Planet 5 Properties.

    

    Section 4.13.  Brokers.  No
agent, broker, or other Person acting pursuant to express or implied authority
of Planet 5 is entitled to a commission or finder’s fee in connection with the
transactions contemplated by this Agreement

    

    Section
4.14.   Investment
Representation. Planet 5 represents and warrants that the Class A
Interest in the Company to be received by it will be acquired by it solely for
its own account and with no intention of distributing or reselling the Class A
Interest in any transaction which would be in violation of, or would cause the
transactions contemplated herein to violate, the securities laws of the United
States of America, any state thereof or the District of Columbia, without
prejudice, however, to Planet 5’s right at all times to sell or otherwise
dispose of all or any part of the Class A Interest in the Company under an
exemption from registration available under the Securities Act of 1933, as
amended (the “Securities Act”), and
any applicable state or District of Columbia securities law.

    

    Section
4.15.   Prohibited
Persons and Transactions.  To the knowledge of Planet 5, Planet
5 is in compliance with, the regulations of the Office of Foreign Asset Control
(“OFAC”) of the
Department of the Treasury (including those named on OFAC’s Specially Designated
and Blocked Persons List) and any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action relating thereto.

    
      
         

      

      
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    ARTICLE
V

    COVENANTS OF THE
PARTIES

     

    Section
5.1.     Further
Assurances.  Each of Gerova and Planet 5 agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary to consummate and make
effective the transactions contemplated by this Agreement, including seeking to
obtain approvals from third Persons which are required in connection with the
consummation of the transactions hereunder or pursuant to the terms of any
agreement with such third Person.  Each of Gerova and Planet 5 will
cooperate, provide information, execute and deliver such instruments and
documents and take such other action reasonably requested by the other in order
to effect the transactions contemplated by this Agreement.

    

    Section
5.2.     Public
Statements. Each of Gerova and Planet 5: (a) shall consult with each
other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby; and (b) shall
not issue any such press release or written public statement prior to such
consultation, except as may be required by Law.

    

    Section
5.3.     Expenses.  Each
of Gerova and Planet 5 shall be responsible for all costs and expenses incurred
by it, including, without limitation, fees and expenses of counsel, in
connection with the negotiation, preparation and delivery of this Agreement and
the LLC Agreement and the transactions contemplated hereby and thereby and in
the performance of its obligations under this Agreement.

    

    Section
5.4.     Prorations.  All
prepaid expenses, advances, credits, deposits and Taxes (“Prorated Items”) paid
in connection with or levied upon the Investment Properties shall be prorated on
a per diem basis between the Company and Gerova or Planet 5, as
applicable.  Penalties and interest for late filings, failure to file,
or incorrect filings on any filings made (or failed to be made) with respect to
the Prorated Items by Gerova or Planet 5, as applicable, shall not be
prorated.  If one party remits to the appropriate Governmental
Authority payment for Prorated Items that are subject to proration hereunder and
such payment includes the other party’s share of such Prorated Items, such party
shall promptly reimburse the remitting party for its share of such Prorated
Items.

    

    ARTICLE
VI

    SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND INDEMNIFICATION

     

    Section
6.1.     Survival
of Representations and Warranties.  All of the representations and
warranties of Gerova and Planet 5 contained herein shall survive the Effective
Date and continue in full force and effect.

    

    Section
6.2.     Indemnity
by Gerova.  Gerova hereby agrees to indemnify, defend and hold
harmless the Company and Planet 5 against and in respect of all Damages suffered
or incurred by the Company and its assigns, successors and Affiliates or by
Planet 5 and its assigns, successors and Affiliates resulting from or arising
out of: (a) the breach or inaccuracy of any representation or warranty made
by Gerova contained herein; or (b) the nonfulfillment of any covenant or
agreement on the part of Gerova forth in this Agreement.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    Section
6.3.     Indemnity
by Planet 5.  Planet 5 hereby agrees to indemnify, defend and
hold harmless the Company and Gerova against and in respect of all Damages
suffered or incurred by the Company and its assigns, successors and Affiliates
or by Gerova and its assigns, successors and Affiliates resulting from or
arising out of: (a) the breach or inaccuracy of any representation or
warranty made by Planet 5 contained herein; or (b) the nonfulfillment of any
covenant or agreement on the part of Planet 5 forth in this
Agreement.

    

    Section
6.4.     Notice of
Claims for Indemnification.  Any party seeking indemnification
pursuant to this Article VI shall
provide notice of such claim (stating in reasonable detail the basis for such
claim) in accordance with Section 7.5 to the indemnifying party.

    

    Section
6.5.     Exclusive
Remedy.  The indemnification obligations in this Article VI shall be
the exclusive remedy for the indemnified parties.  In calculating the
amount of any Damage incurred by any indemnified party hereunder, the amount of
any such Damage shall be reduced by: (a) any and all reductions in Tax liability
or other Tax benefits or Tax refunds realized or to be realized by such
indemnified party by reason of such Damage; and (b) any and all insurance
benefits actually received by such indemnified party by reason of such Damage or
the facts giving rise to the claim for indemnification.

     

    Section
6.6.     Third-Party
Action.  In the event an indemnified party becomes aware of a
third party claim which such indemnified party reasonably believes may result in
a claim against an indemnifying party for indemnification under this Agreement
(a “Third Party
Action”), the indemnified party shall notify the indemnifying party of
such Third Party Action.  The indemnifying party shall have the right
in its sole discretion, at its expense, to conduct the defense of and settle any
such Third Party Action.  The indemnified party shall be entitled, at
its expense, to participate in, but not to determine or conduct the defense of
such Third Party Action, unless the indemnifying party chooses not to conduct
the defense of such Third Party Action.  Except with the consent of
the indemnified party, no settlement of any such Third Party Action shall be
determinative of the existence of or amount of Damages relating to such
matter.  In the event that the indemnifying party has consented to any
such settlement, the indemnifying party shall have no power or authority to
object under any provision of this Agreement to the existence and amount of any
claim by the indemnified party against the indemnifying party for
indemnification under this Agreement with respect to such
settlement.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    ARTICLE
VII

    MISCELLANEOUS
PROVISIONS

    

    Section
7.1.     Entire
Agreement.  This Agreement and the LLC Agreement constitute the
complete and exclusive statement of the agreement among the parties with respect
to the subject matter contained herein and therein.  This Agreement
and the LLC Agreement replace and supersede all prior agreements by and among
the parties with respect to the subject matter contained herein and
therein.  No change, amendment or modification of this Agreement shall
be valid unless the same is in writing and signed by the parties
hereto.  No waiver of any of the provisions of this Agreement, or any
other agreement referred to herein, shall be valid unless in writing and signed
by the party against whom it is sought to be enforced.  The Recitals
shall be considered as being part of this Agreement.

    

    Section
7.2.     Counterparts.  This
Agreement may be executed in any number of counterparts and it shall not be
necessary that each party to this Agreement execute each
counterpart.  Each counterpart so executed (or, if all parties do not
sign on the same counterpart, each group of counterparts signed by all parties)
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same instrument.  In making proof of this
Agreement, it shall not be necessary to account for more than one counterpart or
group of counterparts signed by all parties.

    

    Section
7.3.     Assignment.  This
Agreement shall be binding upon and shall inure to the benefit of the parties
permitted successors and assigns. Neither party may assign its rights under this
Agreement without the prior written consent of the other, which consent may be
granted or denied in the exercise of the non-assigning party’s sole and absolute
discretion.

    

    Section
7.4.      Applicable
Law; Venue.

    

    (a)      This
Agreement shall be governed exclusively by their respective terms and the laws
of the State of Florida, without regard to the conflicts of laws principles
thereof.

    

    (b)      Any
legal action or proceeding with respect to this Agreement and any action for
enforcement of any judgment in respect thereof may be brought in the state or
federal courts of the State of Florida, and, by execution and delivery of this
Agreement, each party hereby accepts for itself and in respect of its property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and the appellate courts thereof.  Each party irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at the address for notices set
forth herein.  Each party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum.

    

    Section
7.5.      Notices.

    

    (a)      Each
notice, request, demand, consent, approval or other communication (hereafter in
this Section referred to collectively as “notices” and referred to singly as a
“notice”) which either party is required or permitted to give to the other party
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly and sufficiently given if:

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    (1)        personally
delivered with proof of delivery thereof (any notice so delivered shall be
deemed to have been received at the time so delivered),

    

    (2)        sent
by Federal Express (or other similar overnight courier) designating early
morning delivery (any notice so delivered shall be deemed to have been received
on the next Business Day following receipt by the courier), or

    

    (3)        sent
by United States registered or certified mail, return receipt requested, postage
prepaid, at a post office regularly maintained by the United States Postal
Service (any notice so sent shall be deemed to have been received two days after
mailing in the United States).

    

    (b)       All
notices shall be addressed to the parties at the addresses for each set forth on
the signature pages hereto. Either party may, by notice given pursuant to this
Section, change the person or persons and/or address or addresses, or designate
an additional person or persons or an additional address or addresses, for its
notices, but notice of a change of address shall only be effective upon
receipt.

    

    Section
7.6.      Partial
Invalidity.  If any term or provision of this Agreement or the
application thereof to any persons or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by Law.

    

    Section
7.7.      Attorneys’
Fees.  In the event the
parties shall become engaged in any litigation or with each other in connection
with or arising out of this Agreement, the prevailing party shall be reimbursed
and indemnified by the party not prevailing in such litigation for all costs and
expenses reasonably incurred by the prevailing party in enforcing or
establishing its rights hereunder, including court costs and reasonable
attorneys’ fees and disbursements.  The prevailing party shall be
determined by the court based upon an assessment of which party’s major
arguments or positions taken in the proceedings could fairly be said to have
prevailed over the other party’s major arguments or positions on major disputed
issues.

    

    Section
7.8.      WAIVER OF
JURY TRIAL.  EACH PARTY TO THIS AGREEMENT WAIVES TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY SUCH PARTY AGAINST ANY
OTHER PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT.

    

    The
remainder of this page is left blank intentionally.

    Signatures
follow on next page.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties have
duly executed this Agreement as of the day and year first above
stated.

    

    
      
        
          
            
              	 
      	
                      GEROVA
      FINANCIAL GROUP, LTD

                    
	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	 
      	
                      Name:
      Michael Hlavsa

                    
	 
      	 
      	
                      Title:  Chief
      Financial Officer

                    
	 
      	 
      	 
      
	 
      	
                      Address for notices:

                    
	 
      	 
      
	 
      	
                      PLANET
      5 DEVELOPMENT GROUP, LLC

                    
	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	
                      Name:

                    	
                      Paul
      Rohan

                    
	 
      	
                      Title:

                    	
                      Manager
      and CEO

                    
	 
      	 
      	 
      
	 
      	
                      Address for notices:

                    
	 
      	 
      
	 
      	
                      NET
      FIVE HOLDINGS, LLC

                    
	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	
                      Name:

                    	
                      Paul
      Rohan

                    
	 
      	
                      Title:

                    	
                      Manager
      and CEO

                    

            

          

        

      

    

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    SCHEDULE
OF EXHIBITS

     

    
      EXHIBIT
A         -       Company
Certificate of Formation

      

      EXHIBIT
B          -       LLC
Agreement

      

      EXHIBIT
C          -       Gerova
Properties

      

      EXHIBIT
D          -       Planet
5 Properties

       

      
        
          
             

          

          
            1

            
              

            

          

          
             

          

        

      

      

    

    EXHIBIT
A

    Company
Certificate of Formation

    

    [See
attached]

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    EXHIBIT
B

    LLC
Agreement

    

    [See
attached]

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    EXHIBIT
C

    Gerova
Properties

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    EXHIBIT
D

    Permitted
Exceptions

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    EXHIBIT
E

    Planet
5 PropertiesTHESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”).  THIS WARRANT SHALL NOT
CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.  THE SECURITIES ARE “RESTRICTED” AND MAY NOT BE RESOLD OR
TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.

    

    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 SEPTEMBER 21, 2010.

    

    Issue
Date:  May 21, 2010

    

    COMMON
STOCK PURCHASE WARRANT

    

    To
Purchase Shares of $0.001 Par Value Common Stock
(“Common Stock”)
of

    

    VUZIX
CORPORATION

    

    THIS
CERTIFIES that, for value received, Kopin Corporation, of Taunton,
MA, USA, upon the terms and subject to the conditions hereinafter set forth, at
any time on or after the Issue Date and on or prior to 8:00 p.m. New York City
Time until the earlier of (i) the later of (a) the Maturity Date and (b) such
time as all payments of outstanding principal and interest have been made to
Lender (as such term is defined in the Promissory Note pursuant to a Revolving
Line of Trade Credit Agreement, dated May 21, 2010); (ii) May 21, 2015 (the
“Termination Date”); or
(iii) five (5) business days after the date when no Advances are outstanding and
either the Lender has declined any further Advances pursuant to Section 2(d) of
the Revolving Line of Credit Agreement or the obligation of Lender to make any
further Advances has terminated or expired. but not thereafter, to subscribe for
and purchase from VUZIX CORPORATION, a Delaware corporation (the “Company”), up to 555,555
shares of Common Stock (the “Warrant Shares”) of the Company at an Exercise Price per
share equal to Cdn$0.12 ( Canadian dollars) per share (as adjusted from time to
time pursuant to the terms hereof any time, the “Exercise Price”).  This
Warrant is being issued in connection with a Revolving Line of Trade Credit
Agreement dated May 21, 2010 entered into between the Company and the Kopin
Corporation.

     

    
      	
              1.

            	
              Title of
      Warrant.  This Warrant and the rights hereunder may not
      be transferred by the Holder, without the prior written consent of the
      Company.  In the event the Company shall consent to such a
      transfer, then the Holder shall surrender this Warrant in person or by
      duly authorized attorney at the office of the Company, together with (a)
      the Assignment Form annexed hereto properly endorsed, and (b) any other
      documentation reasonably necessary to satisfy the Company that such
      transfer is in compliance with all applicable securities
      laws.  The Company may withhold its consent for any reason or
      for no reason.  The term “Holder” shall refer to
      Kopin Corporation or any subsequent transferee of this
      Warrant.

            

    

     

    
      
         

      

      
        Page 1 of
11

        
          

        

      

      
         

      

    

     

    
      VUZIX
Corporation

    

     

    
      	
              2.

            	
              Authorization of
      Shares.  The Company covenants that all shares of Common
      Stock which may be issued upon the exercise of rights represented by this
      Warrant will, upon exercise of the rights represented by this Warrant and
      payment of the Exercise Price as set forth herein will be duly authorized,
      validly issued, fully paid and nonassessable and free from all taxes,
      liens and charges in respect of the issue thereof (other than taxes in
      respect of any transfer occurring contemporaneously with such issue or
      otherwise specified herein).

            

    

     

    
      	
              3.

            	
              Exercise of
      Warrant.

            

    

     

    
      	
              (a)

            	
              The
      Holder may exercise this Warrant, in whole or in part, at any time and
      from time to time on or prior to the Termination Date, by delivering to
      the offices of the Company or any transfer agent for the Common Stock this
      Warrant, together with a Notice of Exercise in the form annexed hereto
      specifying the number of Warrant Shares with respect to which this Warrant
      is being exercised, together with payment to the Company of the Exercise
      Price therefor.

            

    

     

    In the
event that the Warrant is not exercised in full, the number of Warrant Shares
shall be reduced by the number of such Warrant Shares for which this Warrant is
exercised and/or surrendered, and the Company, at its expense, shall within ten
(10) calendar days issue and deliver to the Holder a new Warrant of like tenor
in the name of the Holder or as the Holder (upon payment by Holder of any
applicable transfer taxes) may request, reflecting such adjusted Warrant
Shares.

     

    The
Company shall use its best efforts to deliver the certificates for shares of
Common Stock purchased hereunder to the Holder hereof within ten (10) calendar
days after the date on which this Warrant shall have been exercised as
aforesaid.  The Holder may withdraw its Notice of Exercise at any time
if the Company fails to deliver within ten (10) calendar days the relevant
certificates to the Holder as provided in this Agreement.

     

    
      	
               (b)

            	
              Change in
      Control Transaction.  If at any time there occurs any
      Change in Control Transaction, then the Holder shall be deemed to have
      exercised the entirety of this Warrant immediately prior to the
      effectiveness of such Change in Control Transaction becoming effective or
      immediately prior to the applicable record date thereof, if earlier
      (notwithstanding any restrictions imposed upon the ability of the Holder
      to do so), and the Holder shall be entitled to receive upon or after such
      change in control becoming effective, and upon payment of the Exercise
      Price then in effect, the number of shares or other securities of the
      Company, the number of shares or other securities of any other entity
      and/or any other property which would have been received by the Holder for
      the shares of stock subject to this Warrant had this Warrant been
      exercised immediately prior to such Change in Control Transaction becoming
      effective or immediately prior to the applicable record date thereof, if
      earlier.  “Change in Control
      Transaction” shall mean the occurrence of (x) any consolidation or
      merger of the Company with or into any other corporation or other entity
      or person (whether or not the Company is the surviving corporation)
      (excluding a consolidation or merger in connection with a corporate
      reorganization in which the ultimate beneficial owners of the Company
      before and after such transaction are the same), or (y) any other
      corporate reorganization or transaction or series of related transactions
      in which in excess of 50% of the Company's voting power is transferred
      through a merger, consolidation or similar transaction, or (z) the
      liquidation or distribution to shareholders of the Company of all or
      substantially all of its assets.

            

    

     

    
      
         

      

      
        Page 2 of
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      VUZIX
Corporation

       

    

    
      	
              4.

            	
              No Fractional Shares
      or Scrip.  No fractional shares or scrip representing
      fractional shares shall be issued upon the exercise of this
      Warrant.  In lieu of issuance of a fractional share upon any
      exercise hereunder, the Company will either round up to nearest whole
      number of shares or pay the cash value of that fractional share calculated
      on the basis of the Fair Market Value.  “Fair Market Value” shall
      equal the average closing price of the Common Stock on the principal
      market or exchange on which it is quoted or admitted or listed for trading
      for the 5 trading days preceding the date of determination or, if the
      Common Stock is not quoted, listed or admitted for trading on any market
      or exchange, and the average price cannot be determined as contemplated
      above, the Fair Market Value of the Common Stock shall be as reasonably
      determined in good faith by the Company’s Board of Directors
    .

            

    

     

    
      	
              5.

            	
              Charges, Taxes and
      Expenses.  Issuance of certificates for shares of Common
      Stock upon the exercise of this Warrant shall be made without charge to
      the Holder hereof for any issue or transfer tax or other incidental
      expense in respect of the issuance of such certificate, all of which taxes
      and expenses shall be paid by the Company, and such certificates shall be
      issued in the name of the Holder of this Warrant or in such name or names
      as may be directed by the Holder of this Warrant; provided, however, that
      in the event certificates for shares of Common Stock are to be issued in a
      name other than the name of the Holder of this Warrant, this Warrant when
      surrendered for exercise shall be accompanied by the Assignment Form
      attached hereto duly executed by the Holder hereof; and provided further, that
      the Company shall not be required to pay any tax or taxes which may be
      payable in respect of any transfer involved in the issuance of any Warrant
      certificates or any certificates for the Warrant Shares other than the
      issuance of a Warrant Certificate to the Holder in connection with the
      Holder’s surrender of a Warrant Certificate upon the exercise of all or
      less than all of the Warrants evidenced
thereby.

            

    

     

    
      	
              6.

            	
              Closing of
      Books.  The Company will at no time close its shareholder
      books or records in any manner which interferes with the timely exercise
      of this Warrant.

            

    

     

    
      	
              7.

            	
              No Rights as
      Shareholder until Exercise.  Subject to Section 12 of
      this Warrant and the provisions of any other written agreement between the
      Company and the Holder, the Holder shall not be entitled to vote or
      receive dividends or be deemed the holder of Warrant Shares 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, 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 until the Warrant shall have
      been exercised as provided herein.  However, at the time of the
      exercise of this Warrant pursuant to Section 3 hereof, the Warrant 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.

            

    

     

    
      
         

      

      
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      VUZIX
Corporation

       

    

    
      	
              8.

            	
              Assignment and
      Transfer of Warrant.  If permitted by the Company, in its
      sole discretion, this Warrant may be assigned by the surrender of this
      Warrant and the Assignment Form annexed hereto duly executed at the office
      of the Company (or such other office or agency of the Company or its
      transfer agent as the Company may designate by notice in writing to the
      registered Holder hereof at the address of such Holder appearing on the
      books of the Company); provided, however, that
      this Warrant may not in any event be resold or otherwise
      transferred.

            

    

     

    
      	
              9.

            	
              Loss, Theft,
      Destruction or Mutilation of Warrant; Exchange.  The
      Company represents warrants and covenants that (a) upon receipt by the
      Company of evidence reasonably satisfactory to it of the loss, theft,
      destruction or mutilation of any Warrant or stock certificate representing
      the Warrant Shares, and in case of loss, theft or destruction, of
      indemnity reasonably satisfactory to it, and (b) upon surrender and
      cancellation of such Warrant or stock certificate, if mutilated, the
      Company will make and deliver a new Warrant or stock certificate of like
      tenor and dated as of such cancellation, in lieu of this Warrant or stock
      certificate; provided, that the Company may make a reasonable charge
      therefor.  This Warrant is exchangeable at any time for an equal
      aggregate number of Warrants of different denominations, as requested by
      the holder surrendering the same, or in such denominations as may be
      requested by the Holder following determination of the Exercise
      Price.  The Company may impose a reasonable service charge for
      such registration or transfer, exchange or
  reissuance.

            

    

     

    
      	
              10

            	
              Saturdays, Sundays,
      Holidays, etc.  If the last or appointed day for the
      taking of any action or the expiration of any right required or granted
      herein shall be a Saturday, Sunday or a legal holiday, then such action
      may be taken or such right may be exercised on the next succeeding day not
      a legal holiday.

            

    

     

    
      	
              11

            	
              Specific
      Enforcement.  The Company and the Holder acknowledge and
      agree that irreparable damage would occur in the event that any of the
      provisions of this Warrant were not performed in accordance with their
      specific terms or were otherwise breached.  It is accordingly
      agreed that the parties shall be entitled to an injunction or injunctions
      to prevent or cure breaches of the provisions of this Warrant and to
      enforce specifically the terms and provisions hereof, this being in
      addition to any other remedy to which either of them may be entitled by
      law or equity.

            

    

     

    
      	
              12

            	
              Adjustments of
      Exercise Price and Number of Warrant Shares.  The number
      of and kind of securities purchasable upon exercise of this Warrant and
      the Exercise Price shall be subject to adjustment from time to time as set
      forth in this Section 12. The number of securities stated on Page 1 of
      this Warrant represents all prior adjustments up and to December 31,
      2008.

            

    

     

    
      
         

      

      
        Page 4 of
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      VUZIX
Corporation

       

    

    
      	
              (a)

            	
              Subdivisions,
      Combinations, Stock Dividends and other
      Issuances.   If the Company shall, at any time while
      this Warrant is outstanding, (A) pay a stock dividend or otherwise make a
      distribution or distributions on any equity securities (including
      instruments or securities convertible into or exchangeable for such equity
      securities) in shares of Common Stock, (B) subdivide outstanding shares of
      Common Stock into a larger number of shares, or (C) combine outstanding
      Common Stock into a smaller number of shares, then the Exercise Price
      shall be multiplied by a fraction, the numerator of which shall be the
      number of shares of Common Stock outstanding before such event and the
      denominator of which shall be the number of shares of Common Stock
      outstanding after such event.  Any adjustment made pursuant to
      this Section 12(a) shall become effective immediately after the record
      date for the determination of stockholders entitled to receive such
      dividend or distribution and shall become effective immediately after the
      effective date in the case of a subdivision or combination. The number of
      shares which may be purchased hereunder shall be increased proportionately
      to any reduction in Exercise Price pursuant to this paragraph 12(a), so
      that after such adjustments the aggregate Exercise Price payable hereunder
      for the increased number of shares shall be the same as the aggregate
      Exercise Price in effect just prior to such
  adjustments.

            

    

     

    
      	
              (b)

            	
              Reclassification,
      etc.  If at any time after the date hereof there shall be
      a reorganization or reclassification of the securities as to which
      purchase rights under this Warrant exist into the same or a different
      number of securities of any other class or classes, then the Holder shall
      thereafter be entitled to receive upon exercise of this Warrant, during
      the period specified herein and upon payment of the Exercise Price then in
      effect, the number of shares or other securities or property resulting
      from such reorganization or reclassification, which would have been
      received by the Holder for the shares of stock subject to this Warrant had
      this Warrant at such time been
exercised.

            

    

     

    
      	
              (c)

            	
              Exercise Price
      Adjustment.  In the event of any adjustment in the number
      of Warrant Shares issuable hereunder upon exercise, the Exercise Price
      shall be inversely proportionately increased or decreased as the case may
      be, such that aggregate purchase price for Warrant Shares upon full
      exercise of this Warrant shall remain the same.  Similarly, in
      the event of any adjustment in the Exercise Price, the number of Warrant
      Shares issuable hereunder upon exercise shall be inversely proportionately
      increased or decreased as the case may be, such that aggregate purchase
      price for Warrant Shares upon full exercise of this Warrant shall remain
      the same.

            

    

     

    
      
         

      

      
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      VUZIX
Corporation

       

    

    
      	
              13.

            	
              Notice of Adjustment;
      Notice of Events.  (i) Whenever the number of Warrant
      Shares or number or kind of securities or other property purchasable upon
      the exercise of this Warrant or the Exercise Price is adjusted, the
      Company shall promptly mail to the Holder of this Warrant a notice setting
      forth the number of Warrant Shares (and other securities or property)
      purchasable upon the exercise of this Warrant and the Exercise Price of
      such Warrant Shares after such adjustment and setting forth the
      computation of such adjustment and a brief statement of the facts
      requiring such adjustment.  (ii) If: (A) the Company shall
      declare a dividend (or any other distribution) on its Common Stock; or (B)
      the Company shall declare a special nonrecurring cash dividend on or a
      redemption of its Common Stock; or (C) the Company shall authorize the
      granting to all holders of the Common Stock rights or warrants to
      subscribe for or purchase any shares of capital stock of any class or of
      any rights; or (D) the approval of any stockholders of the Company shall
      be required in connection with any reclassification of the Common Stock of
      the Company, any consolidation or merger to which the Company is a party,
      any sale or transfer of all or substantially all of the assets of the
      Company, or any compulsory share exchange whereby the Common Stock is
      converted into other securities, cash or property; or (E) the Company
      shall authorize the voluntary dissolution, liquidation or winding up of
      the affairs of the Company, then the Company shall cause to be mailed to
      each Warrant holder at their last addresses as they shall appear upon the
      Warrant register of the Company, at least 20 (same time as in the
      preferred stock document) calendar days prior to the applicable record or
      effective date hereinafter specified, a notice stating (x) the date on
      which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to be
      taken, the date as of which the holders of Common Stock of record to be
      entitled to such dividend, distributions, redemption, rights or warrants
      are to be determined or (y) the date on which such reclassification,
      consolidation, merger, sale, transfer or share exchange is expected to
      become effective or close, and the date as of which it is expected that
      holders of Common Stock of record shall be entitled to exchange their
      shares of Common Stock for securities, cash or other property deliverable
      upon such reclassification, consolidation, merger, sale, transfer, share
      exchange, dissolution, liquidation or winding
  up.

            

    

     

    
      	
              14.

            	
              Authorized
      Shares.  The Company covenants that during the period the
      Warrant is outstanding and exercisable, it will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to
      provide for the issuance of the Warrant Shares upon the exercise of any
      and all purchase rights under this Warrant.  The Company further
      covenants that its issuance of this Warrant shall constitute full
      authority to its officers who are charged with the duty of executing stock
      certificates to execute and issue the necessary certificates for the
      Warrant Shares upon the exercise of the purchase rights under this
      Warrant.  The Company will take all such reasonable action as
      may be necessary to assure that such Warrant Shares may be issued as
      provided herein without violation of any applicable law, regulation, or
      rule of any applicable market or
exchange.

            

    

     

    
      	
              15.

            	
              Compliance with
      Securities Laws.  (a) The Holder hereof acknowledges that
      the Warrant Shares acquired upon the exercise of this Warrant, if not
      registered (or if no exemption from registration exists), will have
      restrictions upon resale imposed by state and federal securities laws and
      other regulators.  Each certificate representing the Warrant
      Shares issued to the Holder upon exercise (if not registered, for resale
      or otherwise, or if no exemption from registration exists) will bear
      substantially the following
legends:

            

    

     

    (i) THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED,
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

    
      
         

      

      
        Page 6 of
11

        
          

        

      

      
         

      

    

     

    
      VUZIX
Corporation

       

    

    (ii)
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 SEPTEMBER 21, 2010.

    

    (iii)
Along with any other legends regarding resale restrictions required by
regulatory authorities that the Company and its Warrant Shares are subject
to.

    

    
      	
              (b)

            	
              Without
      limiting the Consultant’s right to transfer, assign or otherwise convey
      the Warrant or Warrant Shares in compliance with all applicable securities
      laws, the Consultant of this Warrant, by acceptance hereof, acknowledges
      that this Warrant and the Warrant Shares to be issued upon exercise hereof
      are being acquired solely for the Consultant’s own account and not as a
      nominee for any other party, and that the Consultant will not offer, sell
      or otherwise dispose of this Warrant or any Warrant Shares to be issued
      upon exercise hereof except under circumstances that will not result in a
      violation of applicable federal and state securities
  laws.

            

    

     

    
      	
              16.

            	
              Miscellaneous.

            

    

     

    
      	
              (a)

            	
              Issue Date; Choice of
      Law; Venue; Jurisdiction.  The provisions of this Warrant
      shall be construed and shall be given effect in all respects as if it had
      been issued and delivered by the Company on the date
      hereof.  This Warrant shall be binding upon any successors or
      assigns of the Company.  This Warrant will be construed and
      enforced in accordance with and governed by the laws of the State of New
      York, except for matters arising under the Act, without reference to
      principles of conflicts of law.  Each of the parties consents to
      the exclusive jurisdiction of the Federal and State Courts sitting in the
      County of Monroe in the State of New York in connection with any dispute
      arising under this Warrant and hereby waives, to the maximum extent
      permitted by law, any objection, including any objection based on forum non conveniens or
      venue, to the bringing of any such proceeding in such
      jurisdiction.  Each party hereby agrees that if the other party
      to this Warrant obtains a judgment against it in such a proceeding, the
      party which obtained such judgment may enforce same by summary judgment in
      the courts of any country having jurisdiction over the party against whom
      such judgment was obtained, and each party hereby waives any defenses
      available to it under local law and agrees to the enforcement of such a
      judgment.  Each party to this Warrant irrevocably consents to
      the service of process in any such proceeding by the mailing of copies
      thereof by registered or certified mail, postage prepaid, to such party at
      its address in accordance with Section 16(c).  Nothing herein
      shall affect the right of any party to serve process in any other manner
      permitted by law.

            

    

     

    
      
         

      

      
        Page 7 of
11

        
          

        

      

      
         

      

    

     

    
      VUZIX
Corporation

       

    

    
      	
              (b)

            	
              Modification and
      Waiver.  This Warrant and any provisions hereof may be
      changed, waived, discharged or terminated only by an instrument in writing
      signed by the party against which enforcement of the same is
      sought.  Any amendment effected in accordance with this
      paragraph shall be binding upon the Consultant, each future Holder of this
      Warrant and the Company.  No waivers of, or exceptions to, any
      term, condition or provision of this Warrant, in any one or more
      instances, shall be deemed to be, or construed as, a further or continuing
      waiver of any such term, condition or
provision.

            

    

     

    
      	
              (c)

            	
              Notices.  Any
      notice, request or other document required or permitted to be given or
      delivered to the Consultant or future Holders hereof or the Company shall
      be personally delivered or shall be sent by certified or registered mail,
      postage prepaid, to the Consultant or each such Holder at its address as
      shown on the books of the Company or to the Company at the address set
      forth in the Purchase Agreement.  All notices under this Warrant
      shall be deemed to have been given when
  received.

            

    

     

    A party
may from time to time change the address to which notices to it are to be
delivered or mailed hereunder by notice given in accordance with the provisions
of this Section 17(c).

     

    
      	
              (d)

            	
              Severability.  Whenever
      possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any
      provision of this Warrant is held to be invalid, illegal or unenforceable
      in any respect under any applicable law or rule in any jurisdiction, such
      invalidity, illegality or unenforceability shall not affect the validity,
      legality or enforceability of any other provision of this Warrant in such
      jurisdiction or affect the validity, legality or enforceability of any
      provision in any other jurisdiction, but this Warrant shall be reformed,
      construed and enforced in such jurisdiction as if such invalid, illegal or
      unenforceable provision had never been contained
  herein.

            

    

     

    
      	
              (e)

            	
              No
      Impairment.  The Company will not, by amendment of its
      Certificate of Incorporation or through any 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 of this Warrant, but will at all times in
      good faith assist in the carrying out of all such terms and in the taking
      of all such action as may be necessary or appropriate in order to protect
      the rights of the Holder against impairment.  Without limiting
      the generality of the foregoing, the Company (a) will not increase the par
      value of any Warrant Shares above the amount payable therefor on such
      exercise, and (b) will take all such action as may be reasonably necessary
      or appropriate in order that the Company may validly and legally issue
      fully paid and nonassessable Warrant Shares on the exercise of this
      Warrant.

            

    

     

    
      
         

      

      
        Page 8 of
11

        
          

        

      

      
         

      

    

     

    
      VUZIX
Corporation

       

    

    IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officers thereunto duly
authorized.

     

    
      
        
          
            
              
                	
                        VUZIX
      CORPORATION

                      
	 
      
	
                        By:

                      	
                        /s/ Paul Travers

                      
	 
      	
                        Name:  Paul
      Travers

                      
	 
      	
                        Title:   
      President

                      

              

            

          

        

      

    

     

    
      
         

      

      
        Page 9 of
11

        
          

        

      

      
         

      

    

     

    NOTICE OF
EXERCISE

     

    To:          VUZIX
CORPORATION

     

    (1)           The
undersigned hereby elects to exercise the attached Warrant for and to purchase
thereunder, ______ shares of Common Stock, [and herewith makes payment therefor
of $_______], resulting in ______ shares of Common Stock issuable
hereunder].

     

    (2)           Please
issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified below (please
provide a Taxpayer ID if being registered in another name):

     

    
      
        
          
            
              	
                         

                    
	
                      (Name)

                    
	 
	
                         

                    
	
                      (Address)

                    
	
                         

                    
	
                         

                    
	 
	
                      (US
      Tax ID #)

                    

            

          

        

      

    

    

    (3)           Please
issue a new Warrant for the unexercised portion of the attached Warrant
(________ remaining Warrants after this exercise) in the name of the undersigned
or in such other name as is specified below):

    

    
      
        
          
            
              
                
                  	 
      	 	
                             

                        
	 
      	 	
                          (Name)

                        
	 
      	 	 
      
	
                             

                        	 	
                             

                        
	
                          (Date)

                        	 	
                          (Signature)

                        
	 
      	 	
                             

                        
	 
      	 	
                          (Address)

                        
	 
      	 	 
      
	
                          Dated:

                        	 	 
      
	
                             

                        	 	 
      
	
                          Signature

                        	 	 
      

                

              

            

          

        

      

    

     

    
      
         

      

      
        Page 10
of 11

        
          

        

      

      
         

      

    

    

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    

                          FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to 

     

    _______________________________________________
whose address is 

     

    ________________________________________________________________

     

    ________________________________________       ____________________

    (Tax
Payer ID)

    

    Dated:  ______________,
________

    

    

    Holder’s
Signature:             _____________________________

    

    Holder’s
Address:               _____________________________

    

    _____________________________

     

    Signature
Guaranteed:  ___________________________________________

     

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in an fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

     

    
      
         

      

      
        Page 11
of 11

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