Attached files
| file | filename |
|---|---|
| EX-10.2 - Vuzix Corp | v206807_ex10-2.htm |
| EX-10.1 - Vuzix Corp | v206807_ex10-1.htm |
| EX-10.4 - Vuzix Corp | v206807_ex10-4.htm |
| EX-99.1 - Vuzix Corp | v206807_ex99-1.htm |
| 8-K - Vuzix Corp | v206807_8k.htm |
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF OR OTHERWISE IN ACCORDANCE
WITH APPLICABLE LAW.
WITHOUT
PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL
APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL APRIL 24, 2011.
WARRANT
TO PURCHASE STOCK
|
Corporation:
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Vuzix
Corporation
|
|
Number
of Shares:
|
Up
to 40,000,000, subject to reduction as provided in Section
1.1
|
|
Class
of Stock:
|
Common
|
|
Exercise
Price:
|
USD
$0.09965 per Share
|
|
Issue
Date:
|
December
23, 2010
|
|
Expiration
Date:
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December
23, 2014.
|
THIS
WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of
which is hereby acknowledged, LC Capital Master Fund Ltd (“Holder”) is entitled
to purchase the number of fully paid and nonassessable shares (the “Shares”) of
Common Stock of VUZIX CORPORATION (the “Company”), in the number, at the price,
and for the term specified above, subject to the provisions and upon the terms
and conditions set forth in this Warrant.
ARTICLE
1. EXERCISE
1.1
Maximum Number of
Shares. This number of Shares purchasable upon exercise of
this Warrant shall be up to 40,000,000; provided, however, that the maximum
number of Shares into which the Notes and the Loan may be converted and for
which the purchase rights contained in the Warrant may be exercised, in the
aggregate, shall not exceed, from time to time 46,517,695 (the “Maximum
Amount”). Any attempted exercise of this Warrant for a number of
Shares which would result in the Holder receiving Shares incident to this
Warrant and its conversion rights under the Notes and Loan which are in excess
of the Maximum Amount shall be void, but only to the extent that it exceeds the
Maximum Amount and any such exercise shall be deemed to be an exercise for the
Maximum Amount. All Share numbers used in the calculations provided for in
this Section 1.1 shall be adjusted as provided in Article 2.
1.2 Method of
Exercise. Holder may exercise this Warrant by delivering this
Warrant and a duly executed Notice of Exercise in substantially the form
attached as Appendix 1 to the principal office of the
Company. Holder shall concurrently deliver to the Company a check for
the aggregate price for the Shares being purchased (the “Warrant
Price”).
1.3 Exercise
Limitation. Notwithstanding any other provision of this
Warrant, Holder may not exercise this Warrant for a number of Shares which would
result in LC Capital Offshore Fund Ltd. (the “Offshore Entity”), directly or
indirectly, holding, beneficially owning or controlling or directing, together
with any Shares otherwise beneficially owned, controlled or otherwise directed
by LC Capital Offshore Fund Ltd. more than 9.99% of the issued and outstanding
Shares of the Company immediately following such exercise. In the
event that Holder is so restricted from exercising some portion of this Warrant
at a particular time, Holder shall retain the right to exercise the Warrant for
the remaining number of Shares purchasable upon exercise of this Warrant at a
later date(s), until the Expiration Date, if and to the extent that such
exercise does not result in the Offshore Entity, directly or indirectly,
holding, beneficially owning or controlling or directing more than 9.99% of the
issued and outstanding Shares of the Company.
1
1.2
Delivery of
Certificate and New Warrant. Promptly after Holder exercises
this Warrant, the Company shall deliver to Holder certificates for the Shares
acquired and, if this Warrant has not been fully exercised and has not expired,
a new Warrant representing the right to purchase the Shares not so
acquired.
1.3
Replacement of
Warrants. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, surrender for cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.
1.4
Conversion
Right. In lieu of exercising this Warrant as specified in
Section 1.2, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined by dividing (a) the aggregate
Fair Market Value of the Shares or other securities otherwise issuable upon
exercise of this Warrant minus the aggregate Warrant Price of such Shares by
(b) the Fair Market Value of one Share; provided, however, that the Holder may not exercise
the conversion right contained in this section 1.4 to the extent such exercise
is prohibited by the Rules of the TSX-V Exchange or any other stock exchange
upon which the Shares are listed at the time of such attempted
exercise. The Fair Market Value of the Shares shall be determined
pursuant to Section 1.5.
1.5
Fair Market
Value. If the Shares are traded regularly in a public market,
the Fair Market Value of the Shares shall be (i) the lower of the closing price
of the Shares for the business day immediately before Holder delivers its Notice
of Exercise to the Company, or (ii) the average closing price of the Shares for
the 30 trading days prior to the business day upon which Holder delivers its
Notice of Exercise to the Company. If the Shares are not regularly
traded in a public market, the Board of Directors of the Company shall determine
Fair Market Value in its reasonable good faith judgment. The
foregoing notwithstanding, if Holder advises the Board of Directors in writing
that Holder disagrees with such determination, then the Company and Holder shall
promptly agree upon a reputable investment banking firm to undertake such
valuation. If the valuation of such investment banking firm is
greater than that determined by the Board of Directors, then all fees and
expenses of such investment banking firm shall be paid by the
Company. In all other circumstances, such fees and expenses shall be
paid by Holder.
ARTICLE
2. ADJUSTMENTS TO THE
SHARES; REGISTRATION RIGHTS.
2.1
Stock Dividends,
Splits, Etc. If the Company declares or pays a dividend on its
common stock payable in common stock, or other securities, or subdivides the
outstanding common stock into a greater amount of common stock, then upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would
have been entitled had Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
2.2
Reclassification,
Exchange or Substitution. Upon any reclassification, exchange,
substitution, or other event that results in a change of the number and/or class
of the securities issuable upon exercise of this Warrant, Holder shall be
entitled to receive, upon exercise of this Warrant, the number and kind of
securities and property that Holder would have received for the Shares if this
Warrant had been exercised immediately before such reclassification, exchange,
substitution, or other event. Upon the closing of any sale, license,
or other disposition of all or substantially all of the assets (including
intellectual property) of the Company, or any reorganization, consolidation, or
merger of the Company where the holders of the Company’s securities before the
transaction beneficially own less than 50% of the outstanding voting securities
of the surviving entity after the transaction, the successor entity shall assume
the obligations of this Warrant, and this Warrant thereafter shall be
exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of this Warrant as
if such Shares were outstanding on the record date for the Acquisition and
subsequent closing. The Exercise Price shall be adjusted
accordingly. The Company or its successor shall promptly issue to
Holder a new Warrant for such new securities or other property. The
new Warrant shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 2
including, without limitation, adjustments to the Exercise Price and to the
number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 2.2 shall similarly
apply to successive reclassifications, exchanges, substitutions, or other
events.
2
2.3
Adjustments for
Combinations, Etc. If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Exercise Price shall be proportionately increased.
2.4
No
Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all the provisions of
this Article 2 and in taking all such action as may be necessary or
appropriate to protect Holder’s rights under this Article against
impairment. If the Company takes any action affecting the Shares or
its common stock other than as described above that adversely affects Holder’s
rights under this Warrant, the Exercise Price shall be adjusted downward and the
number of Shares issuable upon exercise of this Warrant shall be adjusted upward
in such a manner that the aggregate Warrant Price of this Warrant is
unchanged.
2.5
Certificate as to
Adjustments. Upon each adjustment of the Exercise Price, the
Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its Chief Financial Officer setting forth such
adjustment and the facts upon which such adjustment is based. The
Company shall, upon written request, furnish Holder a certificate setting forth
the Exercise Price in effect upon the date thereof and the series of adjustments
leading to such Exercise Price.
2.6
Registration
Rights. The Holder shall have the right to cause the Company
to register the Shares issuable upon exercise of this Warrant in one (1) or more
piggy-back registrations and/or in one (1) demand registration. The
Company shall provide notice to the Holder of any registration of its securities
not less than thirty (30) days prior to any filing of a registration
statement. Upon the Company’s receipt of any notice from the Holder
that the Holder has requested a piggyback registration or demand registration in
accordance with its rights hereunder, the Company shall use its best efforts to
(a) in respect of a piggyback registration, including the Shares issuable upon
exercise of this Warrant in the contemplated registration by the Company
(subject to the rights of holders of piggyback registration rights granted prior
to the date of this warrant and to underwriters’ cutbacks), or (b) in respect of
a demand registration, (1) file a registration statement to register the Shares
issuable upon exercise of this Warrant not less than forty-five (45) days
following the date on which the Company receives such request for a demand
registration, and (2) use its reasonable efforts to cause such registration
statement to go effective not less than one hundred twenty (120) days following
the date on which the Company receives such request for demand
registration. Upon any registration contemplated hereunder, the
Company shall bear the entire expense of such registration, and shall indemnify
the Holder for any inaccuracies or omissions contained in such registration
statement (other than such inaccuracies or omissions which are directly related
to the information provided by the Holder).
ARTICLE
3. REPRESENTATIONS AND
COVENANTS OF THE COMPANY.
3.1
Representations and
Warranties. The Company hereby represents and warrants to the
Holder as follows:
(a)
All Shares that may be issued upon the exercise of the purchase right
represented by this Warrant, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
(b)
The capitalization table attached hereto as Appendix 2 correctly sets forth the
authorized, issued and outstanding shares of capital stock of the Company and
all options to acquire any such shares as of the date of this
Warrant.
3
3.2
Notice of Certain
Events. If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of
common stock; (d) to merge or consolidate with or into any other
corporation, or sell, lease, license, or convey all or substantially all of its
assets, or to liquidate, dissolve or wind up; or (e ) to offer holders of
registration rights the opportunity to participate in an underwritten public
offering of the company’s securities for cash, then, in connection with each
such event, the Company shall give Holder (1) at least 20 days prior
written notice of the date on which a record will be taken for such dividend,
distribution, or subscription rights (and specifying the date on which the
holders of common stock will be entitled thereto) or for determining rights to
vote, if any, in respect of the matters referred to in (a) and (b) above;
(2) in the case of the matters referred to in (c) and (d) above at least
20 days prior written notice of the date when the same will take place (and
specifying the date on which the holders of common stock will be entitled to
exchange their common stock for securities or other property deliverable upon
the occurrence of such event); and (3) in the case of the matter referred
to in (e) above, the same notice as is given to the holders of such registration
rights.
3.3
Information
Rights. So long as the Holder holds this Warrant and/or any of
the Shares, the Company shall deliver to the Holder (a) within one hundred
twenty (120) days after the end of each fiscal year of the Company,
Company-prepared annual financial statements of the Company, or if available,
the annual audited financial statements of the Company certified by independent
public accountants of recognized standing and (b) within forty-five (45)
days after the end of each of the first three quarters of each fiscal year, the
Company’s quarterly, unaudited financial statements, provided Company need not
provide such information for any period in which Company has filed Form 10-Q or
Form 10-K with the Securities and Exchange Commission.
3.4 No Rights as Shareholder
until Exercise. Prior to the exercise of this Warrant, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of any of the Shares that may be acquired upon exercise of this Warrant
or any other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder until such Shares are purchased by the
Holder in accordance with the terms of this Warrant; as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise shall not accrue to the Holder until the
Warrant shall have been exercised as provided herein (and then such rights shall
only be applicable to the Shares purchased by the Holder). However,
at the time of the exercise of this Warrant pursuant to Section 1 hereof, the
Shares so purchased hereunder shall be deemed to be issued to such Holder as the
record owner of such Shares as of the close of business on the date on which
this Warrant shall have been exercised, and the Holder shall have full and
unrestricted rights as a common shareholder of the Company with respect to such
Shares.
ARTICLE
4. MISCELLANEOUS.
4.1
Term. This
Warrant is exercisable, in whole or in part, at any time and from time to time
on or before the Expiration Date set forth above.
4.2
Legends. This
Warrant and the Shares (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form (which legend shall be removed following the
registration of the Shares issuable upon exercise of this Warrant):
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR IN ACCORDANCE WITH APPLICABLE
LAW.
WITHOUT
PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL
APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL APRIL 24, 2011.
4
4.3
Compliance with
Securities Laws on Transfer. This Warrant and the Shares
issuable upon exercise this Warrant (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) may not be transferred or
assigned in whole or in part without compliance with applicable Canadian,
federal and state securities laws by the transferor and the transferee and with
the rules of any stock exchange on which the share of the Company’s common stock
is traded.
4.4
Transfer
Procedure. Subject to the provisions of Section 4.3,
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) by giving the Company notice of the
portion of the Warrant being transferred setting forth the name, address and
taxpayer identification number of the transferee and surrendering this Warrant
to the Company for reissuance to the transferee(s) (and Holder, if
applicable).
4.5
Notices. All
notices and other communications from the Company to the Holder, or vice versa,
shall be deemed delivered and effective when given personally or mailed by
first-class registered or certified mail, postage prepaid, return receipt
requested, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such Holder from time
to time.
4.6
Waiver. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.
4.7
Attorneys’
Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys’ fees.
4.8
Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
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VUZIX
CORPORATION
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|
|
By:
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/s/ Paul
Travers
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Name:
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Paul
Travers
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Title:
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President
|
5
APPENDIX
1
NOTICE OF
EXERCISE
1. The
undersigned hereby elects to purchase ______________ shares of the Common Stock
of VUZIX CORPORATION pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:
LC
Capital Master Fund Ltd . or Registered Assignee
c/o
[ADDRESS]
and issue
to the undersigned a new warrant, in like tenor to the attached Warrant, for any
shares as to which the attached Warrant has not been exercised.
3. The
undersigned represents it is acquiring the shares solely for its own account and
not as a nominee for any other party and not with a view toward the resale or
distribution thereof except in compliance with applicable securities
laws.
|
[LC
Capital Master Fund Ltd], or Registered
Assignee
|
|
|
|
(Signature)
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|
|
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(Date)
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1
APPENDIX
2
CAPITALIZATION
TABLE
VUZIX
CORPORATION
OUTSTANDING
EQUITY
|
Common
Shares
|
263,600,274 | |||
|
Stock
Options
|
15,458,538 | |||
|
Warrants
|
19,368,149 |
1