Delaware | 3577 | 04-3392453 | ||
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Robert F. Mechur, Esq.
Boylan, Brown, Code, Vigdor & Wilson, LLP 2400 Chase Square Rochester, New York 14604 (585) 232-5300 |
Kenneth G. Sam, Esq.
Jason Brenkert, Esq. Dorsey & Whitney LLP 370 17th Street, Suite 470 Denver, Colorado 80202 (303) 629-3400 |
Large accelerated filer
o
|
Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if a smaller reporting company) |
Proposed Maximum
|
Amount of
|
|||||||||
Aggregate
|
Registration
|
|||||||||
Title of Securities to be Registered | Offering Price(1) | Fee | ||||||||
Units, each consisting of one share of Common Stock,
$0.001 par value, and one-half of one Common Stock Purchase
Warrant(2)
|
$ | 15,464,625.00 | $ | 862.93 | ||||||
Shares of Common Stock included as part of the Units
|
||||||||||
Common Stock Purchase Warrants included as part of the Units
|
||||||||||
Shares of Common Stock underlying the Common Stock Purchase
Warrant included in the Units
|
$ | 11,598,469.00 | (3)(5) | $ | 647.19 | |||||
Agent Compensation Options(4)
|
||||||||||
Shares of Common Stock included as part of the Agent
Compensation Options
|
$ | 1,933,079.00 | $ | 107.87 | ||||||
Common Stock Purchase Warrants included as part of the
Compensation Options(5)
|
||||||||||
Shares of Common Stock underlying the Common Stock Purchase
Warrants included in the Compensation Options
|
$ | 1,449,808.00 | (3)(5) | $ | 80.90 | |||||
Total
|
$ | 30,445,981.00 | $ | 1698.89 | ||||||
(1) | Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. In accordance with Rule 457(o) under the Securities Act, the number of shares being registered and the maximum offering price per share are not included in this table. | |
(2) | Public offering of units, each unit consisting of one share of common stock, $0.001 par value, and one-half of one common stock purchase warrant. | |
(3) | Estimated pursuant to Rule 457(g). | |
(4) | The Canadian agents will receive options entitling the agents to purchase that number of shares of common stock and warrants equal to 12.5% of the aggregate number of shares of common stock and warrants sold under the offering, respectively (including the shares of common stock and warrants issued upon exercise of the over-allotment option), at the offering price per share and warrant, respectively, for a period of 12 months from the closing date. | |
(5) | Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued as a result of any additional shares of common stock that shall become issuable by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration that results in an increase in the number of the outstanding shares of common stock. |
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
|
Per Unit(2) | Total | |||||||
Public offering price(1)
|
Cdn$ | Cdn$ | ||||||
Underwriting discounts and commissions(3)(4)
|
Cdn$ | Cdn$ | ||||||
Proceeds, before expenses, to Vuzix
|
Cdn$ | Cdn$ |
(1) | The offering is denominated in Canadian dollars. | |
(2) | We intend to allocate Cdn$ to the share of common stock and Cdn$ to the one half of one common stock purchase warrant comprising each unit. | |
(3) | We have retained the Canadian agents to solicit subscriptions for the units on a best efforts basis. As consideration for their services in connection with the initial public offering, the Canadian agents will receive: (i) a commission, payable in cash, equal to 8% of the gross proceeds of the offering; (ii) options entitling the agents to purchase that number of shares of our common stock and warrants equal to 12.5% of the aggregate number of shares of our common stock and warrants sold under the offering (including the shares and warrants issued upon exercise of the over-allotment option), at the offering price per share and warrant, for a period of 12 months from the closing date; and (iii) a non-refundable due diligence fee of Cdn$15,000. The Canadian agents will also be reimbursed for their reasonable fees and expenses including the reasonable legal fees and disbursements of legal counsel to the agents. The Canadian agents may appoint selling agents in the United States, which may be paid cash selling commissions not to exceed 6% of the gross proceeds of the offering in the United States and options entitling US selling agents to purchase that number of shares of our common stock and warrants equal to 8% of the aggregate number of shares of our common stock and warrants sold in the United States under the offering (including the shares and warrants issued upon exercise of the over-allotment option) at the initial public offering price for a period of 12 months from the closing date. The commission paid to US selling agents will be paid by the Canadian agents from their commissions. Canaccord Adams Inc., a US registered broker dealer affiliated with Canaccord Capital Corporation, has been appointed as a selling agent. | |
(4) | In consideration of certain fiscal advisory services rendered by the Canadian agents to us pursuant to a fiscal advisory fee agreement between us and the Canadian agents, we have agreed to issue to the Canadian agents at the closing of this offering, in payment of a fiscal advisory fee, that number of shares of our common stock equal to, depending on the gross proceeds of the offering, between 1.0% and 2.0% of our common stock issued and outstanding immediately upon the closing of the offering. The issuance of these shares to the Canadian agents is not covered by this prospectus. These shares will be issued pursuant to exemptions from the registration requirements of applicable United States and Canadian securities laws and will be subject to resale restrictions under those laws and a lock-up agreement for one year. See Underwriting Fiscal Advisory Fee Agreement. |
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F-1 | ||||||||
EX-3.1 | ||||||||
EX-3.3 | ||||||||
EX-10.1 | ||||||||
EX-10.2 | ||||||||
EX-10.4 | ||||||||
EX-10.6 | ||||||||
EX-10.7 | ||||||||
EX-10.8 | ||||||||
EX-10.9 | ||||||||
EX-10.10 | ||||||||
EX-10.11 | ||||||||
EX-10.13 | ||||||||
EX-10.14 | ||||||||
EX-10.15 | ||||||||
EX-10.16 | ||||||||
EX-10.17 | ||||||||
EX-10.18 | ||||||||
EX-10.20 | ||||||||
EX-23.1 | ||||||||
EX-23.2 |
ii
1
| improve our brand name recognition; | |
| develop products for large markets; | |
| broaden and develop strategic relationships and partnerships; | |
| expand market awareness for virtual display solutions; | |
| maintain and exploit any cost advantage our technology can provide us; | |
| extend our proprietary technology leadership; and | |
| establish multiple revenue sources. |
2
Securities offered by Vuzix | Up to units ( units if the agents over-allotment option is exercised in full); each unit consisting of one share of our common stock, par value $0.001 per share, and one half of one common stock purchase warrant. | |
Up to shares of our common stock ( shares if the agents over-allotment option is exercised in full) (1) | ||
Up to common stock purchase warrants ( common stock purchase warrants if the agents over-allotment option is exercised in full). Each whole warrant will entitle its holder to purchase one share of our common stock at Cdn$ per share at any time for months after the closing of this offering. | ||
Common stock to be outstanding after this offering | shares ( shares if the agents over-allotment option is exercised in full) (2) | |
Over-allotment option | We have granted the agents an over-allotment option, exercisable for a period of 30 days from the date of the closing of this offering, to sell additional shares of common stock and whole warrants up to the lesser of the agents over-allocation position determined as of the time of closing of the offering and shares of common stock and whole warrants (15% of the number of shares and warrants offered by us under this prospectus) or any combination thereof at a price of Cdn$ per share and Cdn$ per warrant to cover over-allotments, if any, and for market stabilization purposes. For greater clarity, these warrants will only be issued for the purpose of distribution of units to purchasers. The aggregate number of shares and warrants issuable to purchasers pursuant to the offering will not exceed and , respectively. If the over-allotment option is exercised in full, the total price to the public will be Cdn$ , the commission payable to the agents will be Cdn$ and the net proceeds to us will be Cdn$ . For additional information see Underwriting. | |
Agent Compensation | As consideration for their services, the Canadian agents will receive: (i) a commission equal to 8% of the gross proceeds of the offering; (ii) options entitling the Canadian agents to purchase that number of shares of our common stock and warrants equal to 12.5% of the aggregate number of shares of our common stock and warrants sold under the offering (including the shares and warrants issued upon exercise of the over-allotment option), at the offering price per share and warrant, for a period of 12 months from the closing date; and (iii) a non-refundable due diligence fee of Cdn$15,000. The Canadian agents will also be reimbursed for their reasonable fees and expenses including the reasonable legal fees and disbursements of legal |
3
counsel to the agents. The Canadian agents may appoint selling agents in the United States, including Canaccord Adams Inc., which may be paid cash selling commissions not to exceed 6% of the gross proceeds of the offering in the United States and options entitling US selling agents to purchase that number of shares of our common stock and warrants sold in the United States under the offering (including the shares and warrants issued upon exercise of the over-allotment option) equal to 8% of the aggregate number of shares of our common stock and warrants at the initial public offering price for a period of 12 months from the closing date. The commission paid to US selling agents will be paid by the Canadian agents from their commissions. | ||
In consideration of certain fiscal advisory services rendered by the Canadian agents to us pursuant to a fiscal advisory fee agreement between us and the Canadian agents, we have agreed to issue to the Canadian agents at the closing of this offering, in payment of a fiscal advisory fee, that number of shares of our common stock equal to, depending on the gross proceeds of the offering, between 1.0% and 2.0% of our common stock issued and outstanding immediately upon the closing of the offering. The issuance of these shares to the Canadian agents is not covered by this prospectus. These shares will be subject to resale restrictions under applicable United States and Canadian securities legislation and a contractual lock-up agreement for one year. See Underwriting Fiscal Advisory Fee Agreement. | ||
Use of proceeds | Based on an assumed initial public offering price of Cdn$ per unit, after payment of commissions and expenses we expect to receive gross proceeds of Cdn$ and net proceeds of Cdn$ (or gross proceeds of Cdn$ and net proceeds of Cdn$ if the over-allotment option is exercised in full). We expect to use $ million of the net proceeds of this offering to repay outstanding indebtedness, including accrued interest. The indebtedness to be repaid includes $95,000 in principal amount plus interest payable to our President and Chief Executive Officer. We intend to use the remainder of the net proceeds from this offering for research and development expenses; capital expenditures; selling, marketing, general and administrative expenses; possible acquisitions of businesses, technologies or other assets; and general corporate purposes. For additional information see Use of Proceeds. | |
Risk Factors | See Risk Factors and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our securities. |
(1) | Consists of (i) up to shares ( shares if the over-allotment option is exercised in full) included in the units; (ii) up to shares ( shares if the over-allotment option is exercised in full) issuable upon exercise of the common stock purchase warrants included in the units; (iii) shares issued to the agents in payment of a fiscal advisory fee; and (iv) up to shares ( shares if the over-allotment option is exercised in full) and up to an additional shares ( shares if the over-allotment option is exercised in full) issuable upon exercise of common stock purchase warrants issuable upon exercise of the options issued to the agents as compensation. | |
(2) | Does not include (i) up to 15,304,554 shares issuable upon exercise of options granted under our 2007 Amended and Restated Stock Option Plan; (ii) 1,200,000 shares issuable upon exercise of options granted under our 2009 Non-Employee Director Stock Option Plan subject to the effectiveness of the registration statement of which this prospectus forms a part; (iii) any of the shares described in footnote (1) above except of those described in clause (iii) in footnote (1); (iv) up to 7,060,914 shares issuable upon conversion of 168,500 outstanding shares of our Series C 6% Convertible Preferred Stock (Series C Preferred Stock), together with all accrued and unpaid dividends thereon as of the date of this prospectus, at the rate of $0.2917 per share; (v) up to 4,599,045 shares issuable upon conversion of $575,000 in aggregate principal amount of convertible promissory notes outstanding, together with all accrued and unpaid interest thereon as of the date of this prospectus; and (vi) up to 7,172,160 shares issuable upon exercise of outstanding warrants. |
4
6
Year Ended December 31,
Three Months Ended March 31,
2008
2007
2006
2009
2008
(Unaudited)
(Unaudited)
$
12,564,487
$
10,146,379
$
9,538,308
$
3,043,994
$
1,720,914
8,863,508
6,783,473
5,767,550
1,856,683
1,487,349
3,700,979
3,362,906
3,770,758
1,187,311
233,565
3,366,518
2,365,412
1,279,239
502,011
736,716
2,128,625
1,920,164
1,191,800
449,266
449,562
2,299,685
1,718,627
1,560,278
478,253
533,799
510,133
374,078
276,989
138,834
123,696
8,304,961
6,378,281
4,308,306
1,568,364
1,843,773
(4,603,982
)
(3,015,375
)
(537,548
)
(381,053
)
(1,610,208
)
188
2,549
313
(24,216
)
(1,272
)
366
(260,977
)
(241,692
)
(179,019
)
(65,376
)
(41,600
)
96,632
(5,212
)
98,372
(3,700
)
(888
)
(753
)
(290,217
)
(44,139
)
(182,406
)
(67,536
)
(41,987
)
$
(4,894,199
)
$
(3,059,514
)
$
(719,954
)
$
(448,589
)
$
(1,652,195
)
$
(0.0229
)
$
(0.0160
)
$
(0.0047
)
$
(0.0022
)
$
(0.0084
)
218,268,927
197,973,139
173,268,048
220,268,927
200,424,027
*
All outstanding warrants, options, and convertible debt are
anti-dilutive, therefore basic and diluted earnings per share
are the same for all periods.
Year Ended December 31,
Three Months Ended March 31,
2008
2007
2006
2009
2008
(Unaudited)
(Unaudited)
$
(1,285,449
)
$
(3,295,900
)
$
120,053
$
(761,919
)
$
(208,047
)
(549,804
)
(316,743
)
(479,236
)
(60,208
)
(164,927
)
2,289,116
3,408,328
874,569
262,559
77,652
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As of December 31,
As of March 31,
2008
2007
2006
2009
2008
(Unaudited)
(Unaudited)
$
818,719
$
364,856
$
569,171
$
259,151
$
69,534
(1,846,289
)
966,658
69,766
(1,892,747
)
(651,720
)
6,221,897
6,967,254
5,013,263
5,277,583
5,316,225
1,754,379
2,014,476
1,980,476
1,762,408
2,015,453
(14,687,276
)
(9,691,977
)
(6,531,363
)
(15,161,140
)
(11,369,383
)
(2,089,942
)
423,236
(603,954
)
(2,223,119
)
(1,190,888
)
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33
78
7
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8
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create awareness of our brand and products, including general
awareness of this new Video Eyewear product category;
identify the most effective and efficient levels of spending for
marketing expenditures in our new target market;
effectively manage marketing costs (including creative and
media) in order to maintain acceptable operating margins and
return on marketing investment;
select the right markets in which to market; and
convert consumer awareness into actual product purchases.
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10
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discontinuing selling the products that incorporate or otherwise
use technology that contains our allegedly infringing
intellectual property;
attempting to obtain a license to the relevant third party
intellectual property, which may not be available on reasonable
terms or at all; or
attempting to redesign our products to remove our allegedly
infringing intellectual property.
14
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compliance with a wide variety of foreign laws and regulations,
particularly labor, environmental and other laws and regulations
that govern our operations in those countries;
legal uncertainties regarding taxes, tariffs, quotas, export
controls, export licenses and other trade barriers;
economic instability in the countries of our suppliers and
customers, particularly in the Asia-Pacific region, causing
delays or reductions in orders for their products and therefore
our sales;
political instability in the countries in which our suppliers
operate, particularly in China and Taiwan;
difficulties in collecting accounts receivable and longer
accounts receivable payment cycles; and
potentially adverse tax consequences.
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New Product Launch:
With the growth of our
product portfolio, we experience increased complexity in
coordinating product development, manufacturing, and shipping.
As this complexity increases, it places a strain on our ability
to accurately coordinate the commercial launch of our products
with adequate supply to meet anticipated customer demand and
effective marketing to stimulate demand and market acceptance.
If we are unable to scale and improve our product launch
coordination, we could frustrate our customers and lose retail
shelf space and product sales;
Forecasting, Planning and Supply Chain
Logistics:
With the growth of our product
portfolio, we also experience increased complexity in
forecasting customer demand, in planning for production, and in
transportation and logistics management. If we are unable to
scale and improve our forecasting, planning and logistics
management, we could frustrate our customers, lose product sales
or accumulate excess inventory; and
Support Processes:
To manage the growth of our
operations, we will need to continue to improve our transaction
processing, operational and financial systems, and procedures
and controls to effectively manage the increased complexity. If
we are unable to scale and improve these areas, the consequences
could include: delays in shipment of product, degradation in
levels of customer support, lost sales, decreased cash flows,
and increased inventory. These difficulties could harm or limit
our ability to expand.
16
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17
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potential disruption of our ongoing business and distraction of
management;
difficulty integrating the operations and products of the
acquired business;
unanticipated expenses related to technology integration;
exposure to unknown liabilities, including litigation against
the companies we may acquire;
additional costs due to differences in culture, geographic
locations and duplication of key talent; and
potential loss of key employees or customers of the acquired
company.
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provide that the authorized number of directors may be changed
only by resolution of the board of directors;
provide that all vacancies, including newly created
directorships, may, except as otherwise required by law, be
filled by the affirmative vote of a majority of directors then
in office, even if such number is less than a quorum;
require that any action to be taken by our stockholders be
effected at a duly called annual or special meeting of
stockholders and not by written consent;
provide that stockholders seeking to present proposals before a
meeting of stockholders or to nominate candidates for election
as directors at a meeting of stockholders must provide notice in
writing in a timely manner, and also specify requirements as to
the form and content of a stockholders notice;
do not provide for cumulative voting rights, therefore allowing
the holders of a majority of the shares of our common stock
entitled to vote in any election of directors to elect all of
the directors standing for election, if they should so
choose; and
provide that special meetings of our stockholders may be called
only by the chairman of the board, our chief executive officer
or by the board of directors pursuant to a resolution adopted by
a majority of the total number of authorized directors.
adversely affect the voting power of the holders of our common
stock;
make it more difficult for a third party to gain control of us;
discourage bids for our common stock;
limit or eliminate any payments that the holders of our common
stock could expect to receive upon our liquidation; or
adversely affect the market price of our common stock.
23
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our possible or assumed future results of operations;
our business strategies;
our ability to attract and retain customers;
our ability to sell additional products and services to
customers;
our cash needs and financing plans;
our competitive position;
our industry environment;
our potential growth opportunities;
expected technological advances by us or by third parties and
our ability to leverage them;
the effects of future regulation; and
the effects of competition.
24
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research and development expenses;
capital expenditures;
selling, marketing, general and administrative expenses;
possible acquisitions of businesses, technologies or other
assets; and
general corporate purposes.
Targeted
Completion Date
Fall 2009
Spring 2010
Summer 2010
Fall 2010
Spring 2011
25
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26
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on an actual basis;
on a pro forma basis based on an assumed initial public offering
price of Cdn$ per unit, to give effect to the
conversion of (i) 168,500 shares of our Series C
Preferred Stock outstanding immediately prior to the closing of
this offering, together with all dividends accrued and unpaid
thereon, at the conversion price of $0.2917 per share into
7,060,914 shares of our common stock; and (ii) $75,000
in aggregate principal amount of convertible promissory notes,
together with all interest accrued and unpaid thereon, at the
conversion price of $0.057089 per share into
2,251,985 shares of our common stock; and
on a
pro forma
as adjusted basis to give effect to the
events described above and the sale of units in
this offering at an assumed initial offering price of
Cdn$ per unit, after deducting estimated
underwriting discounts and commissions and offering expenses of
Cdn$ million, and the issuance
of shares of our common stock to the
Canadian agents in payment of a fiscal advisory fee.
March 31, 2009
Pro Forma
Actual
Pro Forma
As Adjusted
(Unaudited)
$
259,151
1,286,643
349,574
126,191
1,762,408
169
220,269
13,039,100
(321,517
)
(15,161,140
)
(2,223,119
)
$
(201,560
)
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15,304,554 shares of our common stock issuable upon
exercise of then outstanding options under our 2007 option plan,
having a weighted average exercise price of $0.0999 per share;
30,000,000 shares of our common stock reserved for issuance
upon exercise of options under our 2009 option plan, none of
which had then been granted;
7,000,000 shares of our common stock reserved for issuance
upon exercise of options under our 2009 directors option
plan, none of which had then been granted; and
7,172,160 shares of our common stock issuable upon exercise
of outstanding warrants, having a weighted average exercise
price of $0.1815 per share.
28
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$
(0.0210
)
0.0076
Shares Purchased
Total Consideration
Average Price
Number
Percent
Amount
Percent
per Share
220,268,927
%
$
12,897,165
%
$
0.0585
%
100
%
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15,304,554 shares of our common stock issuable upon
exercise of options then outstanding under our 2007 option plan,
having a weighted average exercise price of $0.0883 per share;
30,000,000 shares of our common stock reserved for issuance
upon exercise of options under our 2009 option plan, none of
which had then been granted;
7,000,000 shares of our common stock reserved for issuance
upon exercise of options under our 2009 directors
option plan, none of which had then been granted; and
7,172,160 shares of common stock issuable upon exercise of
then outstanding warrants, having a weighted average exercise
price of $0.1815 per share.
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31
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Year Ended December 31,
Three Months Ended March 31,
2008
2007
2006
2009
2008
(Unaudited)
(Unaudited)
$
12,564,487
$
10,146,379
$
9,538,308
$
3,043,994
$
1,720,914
8,863,508
6,783,473
5,767,550
1,856,683
1,487,349
3,700,979
3,362,906
3,770,758
1,187,311
233,565
3,366,518
2,365,412
1,279,239
502,011
736,716
2,128,625
1,920,164
1,191,800
449,266
449,562
2,299,685
1,718,627
1,560,278
478,253
533,799
510,133
374,078
276,989
138,834
123,696
8,304,961
6,378,281
4,308,306
1,568,364
1,843,773
(4,603,982
)
(3,015,375
)
(537,548
)
(381,053
)
(1,610,208
)
188
2,549
313
(24,216
)
(1,272
)
366
(260,977
)
(241,692
)
(179,019
)
(65,376
)
(41,600
)
96,632
(5,212
)
98,372
(3,700
)
(888
)
(753
)
(290,217
)
(44,139
)
(182,406
)
(67,536
)
(41,987
)
$
(4,894,199
)
$
(3,059,514
)
$
(719,954
)
$
(448,589
)
$
(1,652,195
)
$
(0.0229
)
$
(0.0160
)
$
(0.0047
)
$
(0.0022
)
$
(0.0084
)
218,268,927
197,973,139
173,268,048
220,268,927
200,424,027
*
All outstanding warrants, options, and convertible debt are
anti-dilutive, therefore basic and diluted earnings per share
are the same for all periods.
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Year Ended December 31,
Three Months Ended March 31,
2008
2007
2006
2009
2008
(Unaudited)
(Unaudited)
$
(1,285,449
)
$
(3,295,900
)
$
120,053
$
(761,919
)
$
(208,047
)
(549,804
)
(316,743
)
(479,236
)
(60,208
)
(164,927
)
2,289,116
3,408,328
874,569
262,559
77,652
As of December 31,
As of March 31,
2008
2007
2006
2009
2008
(Unaudited)
(Unaudited)
$
818,719
$
364,856
$
569,171
$
259,151
$
69,534
(1,846,289
)
966,658
69,766
(1,892,747
)
(651,720
)
6,221,897
6,967,254
5,013,263
5,277,583
5,316,225
1,754,379
2,014,476
1,980,476
1,762,408
2,015,453
(14,687,276
)
(9,691,977
)
(6,531,363
)
(15,161,140
)
(11,369,383
)
(2,089,942
)
423,236
(603,954
)
(2,223,119
)
(1,190,888
)
Table of Contents
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
34
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valuation of inventories;
carrying value of long-lived assets;
valuation of intangible assets;
revenue recognition;
product warranty;
stock-based compensation; and
income taxes.
35
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improve brand name recognition;
provide excellent products and service;
develop products for large markets;
broaden and develop strategic relationships and partnerships;
43
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promote and enhance development of third party software that can
take advantage of our products;
expand market awareness for Video Eyewear, including use for
Virtual Reality and Augmented Reality;
obtain and maintain market leadership and expand customer base;
maintain and exploit cost advantage;
extend our proprietary technology leadership;
enhance and protect our intellectual property portfolio;
establish multiple revenue sources;
continue to invest in highly qualified personnel;
build and maintain strong design capabilities; and
leverage our outsourcing model.
Increasing use of the Internet in all aspects of society and
business, which is increasing demand for Internet access
anywhere, anytime.
Low cost wireless networks, with significantly increased
bandwidths and improved compression of digital media, continue
to evolve. They now allow users to view television or access the
Internet on mobile devices. However, the relatively lower
resolution and larger size of the displays currently used in
these mobile devices do not allow the users to take full
advantage of the high-resolution content available to them. We
believe that our Video Eyewear products are well suited for this
purpose.
Increased spending by consumers on mobile entertainment devices
such as iPods and cellular telephones. We expect that
full-featured, cellular handsets with video capabilities will
become more widely available and that a single handset will
replace todays separate telephone, PDA, digital camera,
handheld game player and MP3 music player. Our Video Eyewear
products can provide viewable high-resolution mobile displays
for users of these merged devices, with better viewing
capability and higher detailed resolution than the small screens
on existing mobile devices.
Industrial, defense and security sectors are employing mobile
communications, sensors and surveillance devices that are light,
durable and easy to use but require displaying their
high-resolution content on an external device and often in a
hands-free way. Our wearable Video Eyewear products can be ideal
for this and will allow a user their physical mobility.
Video gaming on PCs and consoles continues to grow in North
America and around the world. We believe that our Virtual
Display technologies will significantly increase user
satisfaction with gaming applications by engaging the user
through the use of stereoscopic imagery and interactive head
tracking. Our Virtual Reality and Augmented Reality Video
Eyewear are designed to provide this capability.
The widening distribution of new three dimensional (3D) movies
and other 3D content in North America is creating a need for a
method to play this content outside movie theaters. We believe
that Video Eyewear, with its inherent dual display design, is
well suited for the playback of 3D content. Stereoscopic 3D
video playback on Video Eyewear also avoids many of the negative
issues commonly encountered by shutter, polarized or color
anaglyph glasses used in competing technologies and allows the
user to view 3D content without purchasing new computer or
television equipment.
People with low-vision problems require devices to magnify and
capture images that they wish to see and to display them in a
manner that they can view with their remaining vision. Our Video
Eyewear, with the
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addition of a camera and digital signal processing in a single
device, can provide this capability to many people suffering
from certain types of vision problems.
Night vision and thermal sighting systems;
Unmanned vehicle and robotic systems; and
Training and simulation systems, including AR Video Eyewear.
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AV230 XL QVGA (320x240 three-color pixels)
resolution and simulating a
44-inch
screen at nine feet.
AV310 widescreen WQVGA (420x240 three-color pixels)
resolution and simulating a
52-inch
screen at nine feet.
AV920 VGA (640x480 three-color pixels) resolution
and simulating a
62-inch
screen at nine feet.
VR920 VGA (640x480 three-color pixels) resolution,
simulating a
62-inch
screen at nine feet, designed to plug into a computers USB
and video ports, and containing our proprietary three degrees of
freedom head tracking technology, which enables the user to look
around the environment being displayed by simply moving his or
her head. A microphone allows the user to communicate with
others. We expect those features to be of particular interest to
users playing games using the VR920, but they also can be used
in commercial 3D applications and for exploring Internet virtual
worlds like Second Life. The VR920 is currently compatible with
over 80 titles that work with it out of the box, including
popular games such as Microsofts Flight Simulator X and
World of Warcraft. We currently have over 1000 software
developers kits being used in applications from college
research programs to commercial developers to develop additional
titles for the VR920. With the addition of a clip-on camera
which we are currently tooling the VR920 can also used in AR
applications.
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44 total patents issued worldwide;
27 US patents issued (12 non-provisional, 15 design);
11 US patents pending (3 design, 7 non-provisional, 1
provisional);
17 international (non-US) patents issued (15 design, 2
non-provisional);
10 international (non-US) patents pending (3 design, 5
non-provisional, 2 applications under the Patent Cooperation
Treaty); and
5 applications in preparation but not yet filed, covering our
virtual display technology.
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MyVu has based its most recent product line on an optic design
that results in relatively small virtual image sizes. While this
allows for a smaller form factor, it does not provide the large
virtual image that we believe consumers desire from Video
Eyewear products. Images on our Video Eyewear products appear as
much as four times larger than those on MyVu products. MyVu
products also do not currently support 3D, VGA video from a PC
or tracking. Finally, MyVu does not have a Video Eyewear product
designed specifically for the gaming market.
Zeiss introduced its first Video Eyewear product in the spring
of 2008. This product is bigger and bulkier than ours and we
believe it will be less acceptable in the mobile markets. And
while Zeiss does provide some level of 3D video support, it does
not currently offer PC products nor does it support the tracking
technology that would allow its products to be interactive.
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product reviews, case studies and promotions in trade
publications;
enhancement and maintenance of our Website;
Internet and web page advertising and targeted emails;
public relations, print advertising, catalogs and point of
purchase displays
trade shows and sponsorships;
co-marketing relationships with relevant companies in selected
markets; and
Internet awareness and outreach activities.
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distinguishing the Video Eyewear product category from current
competitors and legacy head mounted displays;
building consumer acceptance and momentum around the new Video
Eyewear category;
creating awareness of the benefits of Video Eyewear as compared
to existing technologies; and
creating brand awareness of the Vuzix,
iWear
®
and
Wrap
tm
brands.
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47
CEO, President and Director
56
CFO, Executive Vice President and Director
37
Director of Engineering
61
Vice President Quality Assurance
62
Vice President Low-Vision Assist Products
48
Controller
37
Vice President Sales & Marketing
Defense
36
Director Sales Consumer
40
Director of Manufacturing
56
Director
51
Director Elect
42
Director Elect
46
Director Elect
57
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Stock
All Other
Salary
Bonus
Awards
Compensation
Total
Year
($)
($)
($)
($)
($)
2008
$
200,000
$
200,000
2007
$
142,460
$
142,460
2008
$
175,000
$
24,571
(1)
$
199,571
2007
$
127,407
$
23,309
(1)
$
150,716
(1)
Consists of amounts paid to Mr. Russell as a reimbursement
for the rental of an automobile and direct travel to and from
his residence in Vancouver, Canada to Rochester.
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65
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Option Awards
Equity
Incentive Plan
Awards:
Number
Number of
Number of
of
Securities
Securities
Securities
Underlying
Underlying
Underlying
Unexercised
Unexercised
Unexercised
Option
Options
Options
Unearned
Exercise
Option
(#)
(#)
Options
Price
Expiration
Exercisable
Unexercisable
(#)
($)
Date
188,576
$
0.00875
9/03/12
1,485,232
$
0.02599
1/03/13
174,256
$
0.00875
9/03/12
Market Value
Securities
of Common
Number of
Under
Exercise
Shares on Date
Options(1)
Option
Price(3)
of Grant
3,365,224
common
stock
November 1, 2001
to May 1, 2009
November 1, 2011
to May 1, 2019
$0.0608
(4
)
2,222,320
common
stock
September 3, 2002
to May 1, 2009
September 3, 2002
to May 1, 2019
$0.0355
(4
)
8,973,642
common
stock
September 30, 2000
to May 1, 2009
September 30, 2010 to
May 1, 2019
$0.1373
(4
)
6,821,587
common
stock
March 30, 2000
to May 1, 2009
June 30, 2009 to
May 1, 2019
$0.1539
(4
)
(1)
Represents the aggregate number of shares issuable upon exercise
of all outstanding options and warrants held by the group.
Except for warrants exercisable to purchase an aggregate of
3,855,899 shares of our common stock held by our current
and former consultants, all the securities disclosed in this
table are options granted under our 2007 plan.
(2)
All options granted under our 2007 plan expire ten years from
the date of grant. Warrants expire between two and five years
from the date of issuance with a weighted average remaining term
of 0.99 years.
(3)
Represents the weighted average exercise price of all
outstanding options and warrants held by the members of the
group. Individual exercise prices range: (i) for directors,
from $0.0088 to $0.2334; (ii) for executive officers, from
$0.0088 to $0.1500; (iii) for employees, from $0.0061 to
$0.2334; and (iv) for consultants, from $0.0061 to $0.2333.
(4)
All options and warrants are exercisable at the fair market
value of our common stock as of the date of grant as determined
by our board of directors.
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Fees
Nonqualified
Earned or
Non-Equity
Deferred
Paid in
Stock
Option
Incentive Plan
Compensation
All Other
Cash
Awards
Awards
Compensation
Earnings
Compensation
Total
($)
($)
($)(1)
($)
($)
($)
($)
$
1,081
$
1,081
(1)
The amounts shown in this column represent the dollar amounts
recognized for share-based compensation expense for financial
statement reporting purposes for stock options granted in 2008
and unvested stock options granted in prior years in accordance
with Statement of Financial Accounting Standards No. 123
(revised 2004),
Share-Based Payment,
but without giving
effect to estimated forfeitures related to service-based vesting
conditions. The assumptions used to compute the fair value are
disclosed in note 18 (Stock-based Compensation Expense) to
our audited financial statements for the fiscal year ended
December 31, 2008 included in this prospectus.
(2)
Resigned from our board of directors in June 2009.
(3)
Elected to our board of directors in June 2009.
(4)
Elected, and has agreed to serve, as a member of our board of
directors upon the effectiveness of the registration statement
of which this prospectus forms a part.
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selecting and hiring our independent auditors, and approving the
audit and non-audit services to be performed by our independent
auditors;
evaluating the qualifications, performance and independence of
our independent auditors;
monitoring the integrity of our financial statements and our
compliance with legal and regulatory requirements as they relate
to financial statements or accounting matters;
reviewing the adequacy and effectiveness of our internal control
policies and procedures;
discussing the scope and results of the audit with the
independent auditors and reviewing with management and the
independent auditors our interim and year-end operating
results; and
preparing the audit committee report that the SEC requires in
our annual proxy statement.
reviewing and approving compensation of our executive officers
including annual base salary, annual incentive bonuses, specific
goals, equity compensation, employment agreements, severance and
change in control arrangements, and any other benefits,
compensations or arrangements;
reviewing and recommending compensation goals, bonus and stock
compensation criteria for our employees;
reviewing and discussing annually with management our
Compensation Discussion and Analysis disclosure
required by SEC rules;
preparing the compensation committee report required by the SEC
to be included in our annual proxy statement; and
administering, reviewing and making recommendations with respect
to our equity compensation plans.
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assisting our board of directors in identifying, interviewing
and recruiting prospective director nominees;
recommending director nominees;
establishing and reviewing on an annual basis a process for
identifying and evaluating nominees for our board of directors;
annually evaluating and reporting to the our board of directors
on the performance and effectiveness of the board of directors;
recommending members for each board committee of our board of
directors; and
annually presenting a list of individuals recommended for
nomination for election to our board of directors at the annual
meeting of our shareholders.
Tinka Resources Limited
Halo Resources Ltd.
Golden Peaks Resources Ltd.
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each of our named executive officers;
each of our directors and directors elect;
each person, or group of affiliated persons, known by us to
beneficially own more than 5% of our common stock; and
all of our directors, directors elect and executive officers as
a group.
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Number of
Percentage of Shares
Shares
Beneficially Owned
Beneficially
Before
After
Owned(2)
Offering(3)
Offering(4)
72,747,703
(5)
32.24
%
%
12,288,033
(6)
5.45
%
%
300,000
(8)
*
*
175,000
(7)
*
*
175,000
(7)
*
*
175,000
(7)
*
*
20,278,453
(6)
9.06
%
%
85,735,736
(8)
38.44
%
%
*
less than 1.0%
(1)
The address for each person is
c/o Vuzix
Corporation, 75 Town Centre Drive, Rochester, NY 14623.
(2)
We have determined beneficial ownership in accordance with the
rules of the SEC. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared
voting power or investment power with respect to those
securities. In addition, the rules include shares of common
stock issuable pursuant to the exercise of stock options or
warrants, or the conversion of convertible promissory notes,
that are either immediately exercisable or convertible, or that
will become exercisable within 60 days after the date of
this prospectus. These shares are deemed to be outstanding and
beneficially owned by the person holding those options, warrants
or convertible promissory notes for the purpose of computing the
percentage ownership of that person, but they are not treated as
outstanding for the purpose of computing the percentage
ownership of any other person. Unless otherwise indicated, the
persons or entities identified in this table have sole voting
and investment power with respect to all shares shown as
beneficially owned by them, subject to applicable community
property laws.
(3)
The percentage of shares beneficially owned before the offering
is based on 220,268,927 shares of our common stock issued
and outstanding as of the date of this prospectus.
(4)
The percentage of shares beneficially owned after the offering
is based on shares of our common stock
issued and outstanding, including 9,312,899 shares of
common stock to be issued upon the conversion of both all our
outstanding shares of Series C Preferred Stock, together
with all accrued and unpaid dividends, and $75,000 in aggregate
principal amount of convertible promissory notes, together with
all accrued and unpaid interest
and shares to be issued under our fiscal
advisory fee agreement with the Canadian agents, and assumes no
exercise of the agents overallotment option.
(5)
Includes 1,673,808 shares issuable upon exercise of options
granted under our 2007 option plan.
(6)
Includes 374,256 shares issuable upon exercise of options
granted under our 2007 option plan.
(7)
Consists of shares issuable upon exercise of options granted
under our directors plan, subject to the effectiveness of
the registration statement of which this prospectus forms a
part. Does not include an additional 125,000 shares
issuable upon exercise of option that will vest in equal monthly
installments and will be fully vested on the first anniversary
of the effective date of grant.
(8)
Includes (i) 1,879,556 shares issuable upon exercise
of options granted under our 2007 option plan and
(ii) 700,000 shares issuable upon exercise of options
granted under our 2009 directors plan, subject to the
effectiveness of the registration statement of which this
prospectus forms a part.
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prior to the date of the transaction, the board of directors of
the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an
interested stockholder;
the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of
shares outstanding shares owned by persons who are directors and
also officers and shares owned by employee stock plans in which
employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
on or subsequent to the date of the transaction, the business
combination is approved by the board and authorized at an annual
or special meeting of stockholders, and not by written consent,
by the affirmative vote of at least
66
2
/
3
%
of the outstanding voting stock which is not owned by the
interested stockholder.
any merger or consolidation involving the corporation and the
interested stockholder;
any sale, transfer, pledge or other disposition involving the
interested stockholder of 10% or more of the assets of the
corporation;
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subject to exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder; and
the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
provide that the authorized number of directors may be changed
only by resolution of the board of directors;
provide that all vacancies, including newly created
directorships, may, except as otherwise required by law, be
filled by the affirmative vote of a majority of directors then
in office, even if such number is less than a quorum;
require that any action to be taken by our stockholders be
effected at a duly called annual or special meeting of
stockholders and not by written consent;
provide that stockholders seeking to present proposals before a
meeting of stockholders or to nominate candidates for election
as directors at a meeting of stockholders must provide notice in
writing in a timely manner, and also specify requirements as to
the form and content of a stockholders notice;
do not provide for cumulative voting rights, therefore allowing
the holders of a majority of the shares of our common stock
entitled to vote in any election of directors to elect all of
the directors standing for election, if they should so
choose; and
provide that special meetings of our stockholders may be called
only by the chairman of the board, our chief executive officer
or by the board of directors pursuant to a resolution adopted by
a majority of the total number of authorized directors.
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1% of the number of shares of common stock then outstanding,
which will equal approximately 260,846 shares immediately
after this offering; or
The average weekly trading volume of the common stock on the
TSX-V
during
the four calendar weeks preceding the filing of a notice on
Form 144 with respect to such sale.
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Number of
Percentage of Class Outstanding
Securities Held in
Prior to the
Escrow(1)
Offering
After the Offering
106,475,137
(1)
48.3
%
6,513,920
3.0
%
(1)
Pursuant to National Policy
46-201, shares
of our common stock will be held in escrow under the
Principals Escrow. Pursuant to the
TSX-V
Escrow, shares of our common stock will be held
in escrow under the Seed Escrow.
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F-2
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F-3
Table of Contents
F-4
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F/K/A ICUITI CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY
Common Stock
Additional
Retained
Preferred Stock
Subscriptions
Shares
Amount
Paid-In Capital
Deficit
Shares
Amount
Receivable
Total
173,245,191
$
173,245
$
5,593,693
$
(5,718,223
)
123,000
$
123
$
(266,240
)
$
(217,402
)
407,604
45,500
46
407,650
(93,186
)
(93,186
)
18,418
18,418
22,857
23
497
520
95,410
(95,410
)
(719,954
)
(719,954
)
173,268,048
173,268
6,115,622
(6,531,363
)
168,500
169
(361,650
)
(603,954
)
78,275
78,275
402,483
402
5,328
5,730
177,136
177
1,373
1,550
23,125,472
23,125
3,767,686
3,790,811
1,000,000
1,000
199,000
200,000
111,438
111,438
(101,100
)
(101,100
)
(40,133
)
40,133
(3,059,514
)
(3,059,514
)
197,973,139
197,972
10,238,589
(9,691,977
)
168,500
169
(321,517
)
423,236
2,450,888
2,451
14,245
16,696
15,847,517
15,848
2,122,798
2,138,646
1,552,936
1,553
12,033
13,586
444,447
444
66,223
66,667
(101,100
)
(101,100
)
66,227
66,227
180,298
180,298
(4,894,199
)
(4,894,199
)
218,268,927
$
218,268
$
12,700,413
$
(14,687,276
)
168,500
$
169
$
(321,517
)
$
(2,089,943
)
2,000,000
2,000
298,000
300,000
(2
)
(2
)
(25,275
)
(25,275
)
40,689
40,689
(448,589
)
(448,589
)
220,268,927
$
220,268
$
13,039,100
$
(15,161,140
)
168,500
$
169
$
(321,517
)
$
(2,223,120
)
F-5
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For Three Months Ended
For Years Ended
March 31,
December 31,
2009
2008
2008
2007
2006
(Unaudited)
(Unaudited)
(As restated)
$
(448,589
)
$
(1,652,195
)
$
(4,894,199
)
$
(3,059,514
)
$
(719,954
)
138,834
123,696
510,133
374,078
276,989
40,689
46,584
180,298
111,438
18,418
66,667
66,227
78,275
451,092
2,032,098
1,494,613
(931,121
)
(1,226,116
)
(118,977
)
(634,005
)
(322,856
)
(826,732
)
(362,118
)
(130,130
)
(26,060
)
(1,155
)
67,135
(106,025
)
4,919
(414,504
)
(780,111
)
733,691
1,580,255
1,496,609
34,284
(67,929
)
14,088
(175,574
)
289,124
(400,836
)
695,517
683,040
(78,947
)
(117,722
)
(35,524
)
2,814
5,187
31,225
3,192
(266,475
)
266,475
135,000
17,672
26,639
110,527
103,347
55,237
(761,919
)
(208,047
)
(1,285,449
)
(3,295,900
)
120,053
(19,369
)
(122,380
)
(424,166
)
(180,310
)
(370,188
)
(40,839
)
(42,547
)
(125,638
)
(136,433
)
(109,048
)
(60,208
)
(164,927
)
(549,804
)
(316,743
)
(479,236
)
(2,523
)
107,870
123,890
(13,837
)
(115,138
)
300,000
2,138,646
3,792,362
407,650
(34,918
)
(46,915
)
(98,702
)
(168,947
)
(121,135
)
(206,980
)
(22,328
)
16,697
16,696
5,730
520
13,586
95,000
725,000
262,559
77,652
2,289,116
3,408,328
874,569
(559,568
)
(295,322
)
453,863
(204,315
)
515,386
818,719
364,856
364,856
569,171
53,785
$
259,151
$
69,534
$
818,719
$
364,856
$
569,171
45,747
29,490
149,214
138,345
179,019
36,412
425
425
3,725
1,950
9,528
89,833
221,633
317,932
62,010
25,275
25,275
101,100
101,100
93,186
200,000
F-6
Table of Contents
For Three Months
For Years Ended
Ended March 31,
December 31,
2009
2008
2008
2007
2006
(Unaudited)
(Unaudited)
(As restated)
$
2,595,504
$
1,663,875
$
11,015,784
$
4,701,004
$
6,910,866
448,490
57,039
1,548,703
5,445,375
2,627,442
3,043,994
1,720,914
12,564,487
10,146,379
9,538,308
1,617,174
1,440,348
7,844,519
3,407,340
4,269,908
239,509
47,001
1,018,989
3,376,133
1,497,642
1,856,683
1,487,349
8,863,508
6,783,473
5,767,550
1,187,311
233,565
3,700,979
3,362,906
3,770,758
502,011
736,716
3,366,518
2,365,412
1,279,239
449,266
449,562
2,128,625
1,920,164
1,191,800
478,253
533,799
2,299,685
1,718,627
1,560,278
138,834
123,696
510,133
374,078
276,989
1,568,364
1,843,773
8,304,961
6,378,281
4,308,306
(381,053
)
(1,610,208
)
(4,603,982
)
(3,015,375
)
(537,548
)
188
2,549
313
(1,272
)
366
(24,216
)
96,632
(65,376
)
(41,600
)
(260,977
)
(241,692
)
(179,019
)
(66,648
)
(41,234
)
(285,005
)
(142,511
)
(178,706
)
(447,701
)
(1,651,442
)
(4,888,987
)
(3,157,886
)
(716,254
)
888
753
5,212
(98,372
)
3,700
(448,589
)
$
(1,652,195
)
$
(4,894,199
)
$
(3,059,514
)
$
(719,954
)
$
(0.0022
)
$
(0.0084
)
$
(0.0229
)
$
(0.0160
)
$
(0.0047
)
220,268,927
200,424,027
218,268,927
197,973,139
173,268,048
F-7
Table of Contents
F-8
Table of Contents
F-9
Table of Contents
F-10
Table of Contents
3 years
5 years
3 years
5 years
F-11
Table of Contents
F-12
Table of Contents
2008
2007
$
1,417,870
$
2,908,224
(4,259
)
$
1,413,611
$
2,908,224
F-13
Table of Contents
2008
2007
$
2,091,734
$
1,656,093
130,351
197,413
539,883
211,994
(454,647
)
(81,035
)
$
2,307,321
$
1,984,465
2008
2007
$
1,567,537
$
1,247,402
522,274
463,847
360,695
315,091
$
2,450,506
$
2,026,340
(1,624,582
)
(1,169,170
)
$
825,924
$
857,170
2008
2007
$
899,952
$
774,314
(215,150
)
(160,430
)
$
684,802
$
613,884
F-14
Table of Contents
2008
2007
$
25,478
$
65,194
40,000
27,500
106,865
73,064
13,617
6,114
$
185,960
$
171,872
$
15,361
(28,317
)
55,431
$
42,475
(48,710
)
79,299
$
73,064
(71,244
)
105,045
$
106,865
F-15
Table of Contents
2009
2010
2011
2012
2013
Thereafter
Total
$
500,000
$
95,000
$
$
$
$
284,208
$
879,208
F-16
Table of Contents
2008
2007
$
320,128
$
418,830
(139,800
)
(171,778
)
$
180,328
$
247,052
Amount
$
244,610
109,498
30,301
$
384,409
(64,281
)
$
320,128
2008
2007
$
390,940
$
313,657
315,591
303,042
112,648
112,648
$
819,179
729,347
(490,866
)
(286,127
)
$
328,313
$
443,220
2008
2007
2006
$
(4,888,987
)
$
(3,157,886
)
$
(716,254
)
F-17
Table of Contents
2008
2007
2006
$
$
$
5,212
(98,372
)
3,700
$
5,212
$
(98,372
)
$
3,700
$
5,212
$
(98,372
)
$
3,700
2008
2007
2006
34.0
%
34.0
%
34.0
%
%
(0.3
)%
(0.2
)%
(0.3
)%
(0.3
)%
(0.8
)%
(1.3
)%
(1.2
)%
(0.9
)%
(2.1
)%
(2.5
)%
(6.2
)%
%
%
(0.2
)%
30.3
%
29.7
%
25.7
%
(30.3
)%
(29.7
)%
(25.7
)%
%
%
%
F-18
Table of Contents
2008
2007
$
68,000
$
12,000
1,000
1,825,000
1,235,000
946,000
656,000
122,000
102,000
$
2,962,000
$
2,005,000
(2,962,000
)
(2,005,000
)
$
$
$
(19,000
)
$
(19,000
)
19,000
$
$
$
$
2008
2007
$
$
$
$
F-19
Table of Contents
$
1,682,700
245,500
76,800
$
2,005,000
855,000
102,000
$
2,962,000
F-20
Table of Contents
2008
2007
6,171,008
3,509,456
(1,552,936
)
(177,136
)
380,699
2,838,688
4,998,771
6,171,008
F-21
Table of Contents
Weighted
Number of
Average
Exercise Price
Shares
Exercise Price
Range
11,783,648
$
0.02916
$
0.0061 $ 0.2334
1,601,800
$
0.2318
$
0.2275 $ 0.2334
(22,857
)
$
0.02275
$0.02275
$
13,362,591
$
0.05266
$
0.0061 $ 0.2334
1,772,584
$
0.2189
$
0.2000 $ 0.2334
(402,483
)
$
0.01137
$
0.0087 $0.02889
(185,742
)
$
0.02889
$0.02889
14,546,950
$
0.07254
$
0.0061 $ 0.2334
1,917,288
$
0.1846
$
0.15 $ 0.20
(2,450,888
)
$
0.00694
$
0.0.6123 $ 008750
(934,336
)
$
0.1949
$
0.20 $ 0.2334
13,079,014
$
0.0914
$
0.0061 $ 0.2334
F-22
Table of Contents
Total Options Outstanding
Weighted average
remaining life
Weighted average
Shares
(yrs)
exercise price
2,995,192
3.58
$
0.0076
5,105,291
6.07
$
0.0257
2,644,152
9.66
$
0.1889
2,334,379
8.10
$
0.2323
13,079,014
6.59
$
0.0914
Exercisable Options Outstanding
Weighted average
remaining life
Weighted average
Shares
(yrs)
exercise price
2,995,192
3.58
$
0.0076
4,653,140
5.98
$
0.0255
551,296
9.39
$
0.1935
1,382,991
7.90
$
0.2322
9,582,619
5.70
$
0.0594
Unvested Options Outstanding
Weighted average
remaining life
Weighted average
Shares
(yrs)
exercise price
$
452,151
7.00
$
0.1350
2,092,856
9.73
$
0.1876
951,388
8.41
$
0.2324
3,496,395
9.02
$
0.1930
F-23
Table of Contents
2008
2007
2006
$
180,298
$
111,438
$
18,418
$
180,298
$
111,438
$
18,418
$
0.0008
$
0.0006
$
0.0001
2008
2007
2006
6.25 years
6.25 years
6.25 years
60.9%
63.7%
63.7%
4.39%
4.39%
4.49%
F-24
Table of Contents
Total Minimum
2009
2010
Lease Payments
$
66,765
$
23,835
$
90,600
2008
2007
2006
$
4,451,121
$
3,282,755
$
2,022,623
6,471,824
1,418,249
4,888,243
1,548,703
5,445,375
2,627,442
92,839
$
12,564,487
$
10,146,379
$
9,538,308
F-25
Table of Contents
F-26
Table of Contents
Table of Contents
Table of Contents
Initial
Public
Offering
June 30,
2009
Cdn$
l
Cdn$
l
Cdn$
l
Cdn$
l
Cdn$
l
Cdn$
l
(1)
We have retained the Agents to solicit subscriptions for the
Units on a best efforts basis. As consideration for their
services, the Agents will receive: (i) a commission equal
to 8% of the gross proceeds of the Offering; (ii) options
(the Compensation Options) entitling the Agents to
purchase that number of Shares and Warrants equal to 12.5% of
the aggregate number of Shares and Warrants sold under the
Offering (including the Shares and Warrants issued upon exercise
of the Over-Allotment Option), at the Offering Price per Share
and Warrant, for a period of 12 months from the closing
date; and (iii) a due diligence fee of Cdn$15,000. The
Agents will also be reimbursed for their reasonable fees and
expenses including the reasonable legal fees and disbursements
of legal counsel to the Agents. This prospectus also qualifies
the distribution of that number of Compensation Options
entitling the Agents to acquire up to 10% of the Shares and
Warrants sold under the Offering (including pursuant to the
exercise of the Over-Allotment Option referred to below). The
distribution of the balance of the Compensation Options
(entitling the Agents to acquire up to 2.5% of the number of
Shares and Warrants sold under the Offering) is not qualified
under this prospectus and such securities will be issued to the
Agents pursuant to exemptions from the prospectus and
registration requirements of applicable securities legislation
and will be subject to resale restrictions under applicable
securities legislation.
(2)
In consideration of certain fiscal advisory services rendered by
the Agents to us pursuant to a fiscal advisory fee agreement
between us and the Agents dated June 29, 2009 (the
Fiscal Advisory Fee Agreement), we have agreed to
issue to the Agents that number of shares of our common stock
equal to, depending on the gross proceeds of the Offering,
between 1.0% and 2.0% of the number of issued and outstanding
shares of our common stock outstanding on the closing of the
Offering. The distribution of these shares to the Agents
pursuant to the Fiscal Advisory Fee Agreement is not qualified
by this prospectus. Such shares will be issued pursuant to
exemptions from the prospectus and registration requirements of
applicable securities legislation and will be subject to resale
restrictions under applicable securities legislation. See
Material Contracts.
(3)
Before deducting the expenses of the Offering estimated at
Cdn$
l
which, together with the Agents commission and fees, will
be paid by us out of the proceeds of the Offering.
(4)
We have granted the Agents an over-allotment option (the
Over-Allotment Option), exercisable in whole or in
part at any time for a period of 30 days from the date of
the closing of the Offering, to sell up to an aggregate number
of additional Shares and Warrants, up to the lesser of the
Agents over-allocation position determined at the time of
closing of the Offering
and
l
Shares
and
l
Warrants (15% of the number of Shares and whole Warrants offered
by us under this prospectus) or any combination thereof at a
price of
Cdn$
l
per Share and
Cdn$
l
per Warrant. For greater clarity, these Warrants will only be
issued upon exercise of the Over-Allotment Option for the
purpose of distribution of Units to purchasers. The aggregate
number of Shares and Warrants issuable to purchasers pursuant to
the Offering shall not
exceed
l
Shares
and
l
Warrants, respectively. The Over-Allotment Option and the Shares
and Warrants issuable on exercise thereof are qualified for
distribution under this prospectus regardless of whether the
over-allocation position is ultimately filled through the
exercise of the Over-Allotment Option or secondary market
purchases. If the Over-Allotment Option is exercised in full,
the aggregate price to the public, the Agents commission
and the net proceeds to Vuzix will be
Cdn$
l
,
Cdn$
l
and
Cdn$
l
,
respectively. The expenses associated with any exercise of the
Over-Allotment Option, together with the Agents
commission, will be paid by us. See Plan of
Distribution.
Table of Contents
Maximum Number of
Securities Held
Exercise Period
Exercise Price
l
Shares
30 days from the closing
l
per
Share
l
Warrants
of the Offering
l
per
Warrant
12.5% of the number of
12 months from the
$
l
per Unit
Shares and Warrants sold
closing of the Offering
under the Offering
(including upon exercise of
the Over-Allotment Option)
l
(1)
Assuming exercise in full of the Over-Allotment Option.
(2)
This prospectus also qualifies the distribution of that number
of Compensation Options entitling the Agents to acquire up to
10% of the Shares and Warrants sold under the Offering
(including the Shares and Warrants issued upon exercise of the
Over-Allotment Option). The distribution of the balance of the
Compensation Options (entitling the Agents to acquire up to 2.5%
of the number of Shares and Warrants sold under the Offering) is
not qualified under this prospectus and such portion of the
Compensation Options will be issued to the Agents pursuant to
exemptions from the prospectus and registration requirements of
applicable securities legislation and will be subject to resale
restrictions under applicable securities legislation.
CDN-2
CDN-3
CDN-3
CDN-3
CDN-4
CDN-4
CDN-7
CDN-7
CDN-9
CDN-10
CDN-10
CDN-11
CDN-11
CDN-C-1
CDN-C-2
Year Ended December 31
Period Ended March 31
2008
2007
2006
2009
2008
$
1.2969
$
1.1853
$
1.1726
$
1.3000
$
1.0324
0.9719
0.9170
1.0990
1.1823
0.9719
1.0660
1.0748
1.1342
1.2456
1.0042
1.2246
0.9881
1.1653
1.2602
1.0279
CDN-3
Table of Contents
who is or is deemed to be a resident of Canada,
who deals at arms length with us,
who is not affiliated with us,
an interest in which would not be a tax shelter
investment under the
Income Tax Act
(Canada) (the
Tax Act),
who is not a financial institution or other taxpayer
to which the mark to market rules in the Tax Act
apply,
who holds all Shares and Warrants solely as capital property,
who does not determine its Canadian tax results in a
functional currency, each as defined in the Tax Act,
and
for whom we are not at any material time a foreign
affiliate for the purposes of the Tax Act,
CDN-4
Table of Contents
CDN-5
Table of Contents
CDN-6
Table of Contents
CDN-7
Table of Contents
CDN-8
Table of Contents
Number of Shares
Issue Price
Nature of
of Common Stock
Per Share of
Aggregate
Securities Issued
Issued or Issuable
Common Stock
Issue Price
options
(1)
2,335,940
$
0.15
shares of common stock
(2)
2,000,000
$
0.15
$
300,000
warrants
(2)
1,000,000
$
0.20
warrants
(3)
120,000
$
0.01
warrants
(4)
11,583
$
0.15
options
(5)
142,864
$
0.15
options
(6)
446,424
$
0.15
shares of common
stock
(7)
444,447
$
0.15
$
66,667
shares of common
stock
(8)
2,000,000
$
0.15
$
300,000
options
(9)
1,328,000
$
0.20
shares of common
stock
(10)
13,364,899
$
0.15
$
2,004,735
warrants
(11)
66,667
$
0.01
warrants
(12)
157,504
$
0.01
warrants
(13)
24,945
$
0.20
shares of common
stock
(14)
1,552,936
$
0.01
$
15,529
(1)
Options were granted under our stock option plan to 44 employees
and are exercisable for ten years from the date of grant,
subject to vesting over four years from the date of grant.
CDN-9
Table of Contents
(2)
Shares of our common stock, together with a warrant to purchase
an additional 1,000,000 shares of our common stock, were
issued to an individual investor and such warrants are
exercisable for five years from the date of issue.
(3)
Warrants were issued to a consultant in consideration for
services and are exercisable for five years from the date of
issuance.
(4)
Warrants were issued to a consultant in consideration for
services and are exercisable for five years from the date of
issuance.
(5)
Options were granted under our stock option plan to our external
director as his annual retainer for serving and are exercisable
for ten years from the date of grant, subject to vesting over
12 months from the date of grant.
(6)
Options were issued to one consultant and two employees and are
exercisable for ten years from the date of grant, subject to
vesting over four years from the date of grant.
(7)
Shares of our common stock were issued to a consultant for
services.
(8)
Shares of our common stock were issued to an individual investor.
(9)
Options were issued under our 2007 stock option plan to seven
employees and are exercisable for ten years from the date of the
grant subject to vesting over four years from the date of grant.
(10)
Shares of our common stock were issued to 46 individual and
institutional investors.
(11)
Warrants were issued to a consultant in consideration for
services and are exercisable for five years from the date of
issuance.
(12)
Warrants were issued to a consultant in consideration for
services and are exercisable for five years from the date of
issuance.
(13)
Warrants were issued to a consultant in consideration for
services and are exercisable for five years from the date of
issuance.
(14)
Shares issued to 51 investors pursuant to the exercise of then
outstanding warrants.
(a)
Warrant Indenture. See Plan of Distribution.
(b)
Shareholders Agreement dated as of October 11, 2000 by and
among Vuzix and Shareholders (as defined therein). See
Description of Capital Stock Registration
Rights and Exhibit 10.9 in the U.S. Prospectus.
(c)
Technology Purchase and Royalty Agreement dated as of
December 23, 2005 between Vuzix and New Light
Industries, Ltd. See Description of Capital
Stock Registration Rights and
Exhibit 10.12 in the U.S. Prospectus.
(d)
Demand Note in the original principal amount of $247,690.92 by
Vuzix to the order of Paul J. Travers. See Exhibit 10.17 in
the U.S. Prospectus.
(e)
Loan Agreement dated as of October 2008 by and between the Vuzix
and Paul J. Travers. See Exhibit 10.18 in the U.S.
Prospectus.
(f)
Promissory Note dated as of October 2008 by Vuzix to the order
of Paul J. Travers. See Exhibit 10.19 in the U.S.
Prospectus.
(g)
Fiscal Advisory Fee Agreement dated as of June 29, 2009 between
Vuzix and the Agents. See Exhibit 10.21 in the U.S.
Prospectus.
CDN-10
Table of Contents
CDN-11
Table of Contents
By: (Signed)
Grant Russell
Chief Financial Officer, Treasurer and Secretary
CDN-C-1
Table of Contents
BOLDER INVESTMENT PARTNERS, LTD.
By: (Signed)
Paul
Woodward
CDN-C-2
Table of Contents
Item 13.
Other
Expenses of Issuance and Distribution.
Amount to
be Paid
$
1,699
$
3,734
*
*
*
*
*
*
*
*
$
*
*
To be provided by amendment.
Item 14.
Indemnification
of Directors and Officers.
II-1
Table of Contents
transaction from which the director derives an improper personal
benefit;
act or omission not in good faith or that involves intentional
misconduct or a knowing violation of law;
unlawful payment of dividends or redemption of shares; or
breach of a directors duty of loyalty to the corporation
or its stockholders.
II-2
Table of Contents
Item 15.
Recent
Sales of Unregistered Securities.
II-3
Table of Contents
II-4
Table of Contents
II-5
Table of Contents
Item 16.
Exhibits
and Financial Statement Schedules.
(a)
Exhibits.
(b)
Financial
Statement Schedules.
Item 17.
Undertakings.
II-6
Table of Contents
By:
President, Chief Executive Officer
and Director
(Principal Executive Officer)
June 30, 2009
Chief Financial Officer, Secretary
and Treasurer
(Principal Financial and Accounting Officer)
June 30, 2009
Director
June 30, 2009
II-7
Table of Contents
1
.1*
Form of Agency Agreement
3
.1
Certificate of Incorporation currently in effect
3
.2*
Amended and Restated Certificate of Incorporation to be
effective immediately following the closing of the offering
3
.3
Bylaws currently in effect
3
.4*
Amended and Restated Bylaws to be effective immediately
following the closing of the offering
4
.1*
Specimen certificate evidencing shares of common stock
4
.2*
Specimen common stock purchase warrant
4
.3*
Form of Warrant Indenture between the registrant and
Computershare Trust Company of Canada
Certain instruments defining the rights of the holders of
long-term debt of the registrant, none of which authorize a
total amount of indebtedness in excess of 10% of the total
assets of the registrant and its subsidiary on a consolidated
basis, have not been filed as exhibits. The registrant hereby
agrees to furnish a copy of any of these agreements to the
Commission upon request.
5
.1*
Opinion of Boylan, Brown, Code, Vigdor & Wilson, LLP
10
.1+
2007 Amended and Restated Stock Option Plan
10
.2+
2009 Stock Plan
10
.3+*
Form of Award Agreement under 2009 Stock Plan
10
.4+
2009 Non-Employee Directors Stock Option Plan
10
.5+*
Form of Option Grant Agreement under 2009 Non-Employee
Directors Stock Option Plan
10
.6+
Form of Indemnification Agreement by and between the registrant
and each director and executive officer
10
.7+
Employment Agreement dated as of August 1, 2007 by and
between the registrant and Paul J. Travers
10
.8+
Employment Agreement dated as of August 1, 2007 by and
between the registrant and Grant Russell
10
.9
Shareholders Agreement dated as of October 11, 2000 by and
among the registrant and Shareholders (as defined therein)
10
.10
Registration Rights Agreement dated as of October 11, 2000
by and among the registrant and the Investors (as defined
therein)
10
.11
Registration Rights Agreement dated as of June 2005 by and among
the registrant and the Investors (as defined therein)
10
.12*
Technology Purchase and Royalty Agreement dated as of
December 23, 2005 between the registrant and New Light
Industries, Ltd.
10
.13
Warrant to purchase common stock dated as of December 23,
2005 issued by the registrant to New Light Industries, Ltd.
10
.14
Rights Agreement dated as of December 23, 2005 by and
between the registrant and New Light Industries, Ltd.
10
.15
Agency Agreement dated as of June 29, 2007 by and between
the registrant and Canaccord Capital Corporation
10
.16
Form of warrant to purchase common stock issued by the
registrant pursuant to the Agency Agreement dated as of
June 29, 2007 by and between the registrant and Canaccord
Capital Corporation
10
.17
Demand Note in the original principal amount of $247,690.92 by
the registrant to the order of Paul J. Travers
10
.18
Loan Agreement dated as of October 2008 by and between the
registrant and Paul J. Travers
10
.19*
Promissory Note dated as of October 2008 by the registrant to
the order of Paul J. Travers
10
.20
Fiscal Advisory Fee Agreement dated as of June 29, 2009 by
and between the registrant and Canaccord Capital Corporation and
Bolder Investment Partners, Ltd.
23
.1
Consent of Rotenberg & Co. LLP, independent registered
public accounting firm
23
.2
Consent of Davie Kaplan, CPA , P.C., independent registered
public accounting firm
23
.3*
Consent of Boylan, Brown, Code, Vigdor & Wilson, LLP
(included in Exhibit 5.1)
24
.1
Power of Attorney (included on signature page)
*
To be filed by amendment
+
Management contract or compensation plan or arrangement
1. | The name of this corporation is Vuzix Corporation. | ||
2. | Its registered office in the State of Delaware is located at 2711 Centerville Rd, Suite 400, City of Wilmington, Zip Code 19808, County of New Castle the name and address of its registered agent is Corporation Service Company. | ||
3. | The date of filing of the original Certificate of Incorporation in Delaware was 9/16/97. | ||
4. | The date when restoration, renewal, and revival of the charter of this company is to commence is the 28th day of February 2009, same being prior to the date of the expiration of the charter. This renewal and revival of the charter of this corporation is to be perpetual. | ||
5. | This corporation was duly organized and carried on the business authorized by its charter until the 1st day of March, 2009, at which time its charter became inoperative and void for non-payment of taxes and this certificate for renewal and revival is filed by authority of the duly elected directors of the corporation in accordance with the laws of the State of Delaware. |
|
By: |
/s/ Paul J. Travers
|
||||
|
||||||
|
Name: | Paul J. Travers | ||||
|
||||||
|
Title: | President |
Vuzix Corporation
|
||||
By: | /s/ Paul J. Travers | |||
Paul J. Travers, President and CEO | ||||
|
By: |
/s/ Paul J. Travers
|
||||
|
||||||
|
Title: | CEO | ||||
|
||||||
|
Name: | Paul J. Travers |
Icuiti Corporation
|
||||
By: | /s/ Paul J. Travers | |||
Paul J. Travers, President and CEO | ||||
Icuiti Corporation
|
||||
By: | /s/ Paul J. Travers | |||
Paul J. Travers, President | ||||
/s/ Paul J. Travers | ||||
Paul J. Travers, President | ||||
1. | The Certificate of Incorporation is hereby amended to change the name of the corporation in Paragraph FIRST to Vicuity Corporation. Paragraph FIRST shall read in its entirety as follows: | ||
FIRST: The name of the Corporation is Vicuity Corporation. | |||
2. | This amendment was duly adopted by action taken by the Board of Directors of the Corporation at a meeting followed by unanimous written consent of the stockholders in accordance with Sections 242 and 228 of the General Corporation Law of the State of Delaware. |
INTERACTIVE IMAGING SYSTEMS, INC.
|
||||
By: | /s/ Paul J. Travers | |||
Paul J. Travers, President | ||||
INTERACTIVE IMAGING SYSTEMS, INC.
|
||||
By: | /s/ Paul J. Travers | |||
Paul J. Travers, President | ||||
INTERACTIVE IMAGING SYSTEMS, INC.
|
||||
By: | /s/ Paul J. Travers | |||
Paul J. Travers, President | ||||
/s/ Paul J. Travers | ||||
Paul J. Travers, President | ||||
1. | The name of this corporation is Interactive Imaging Systems, Inc. | ||
2. | Its registered office in the State of Delaware is located at 2711 Centerville Rd, Suite 400, City of Wilmington, Zip Code 19808, County of New Castle the name and address of its registered agent is Corporation Service Company 2711 Centerville Rd, Suite 400, Wilmington, DE 19808. | ||
3. | The date of filing of the original Certificate of Incorporation in Delaware was 9/16/97. | ||
4. | The date when restoration, renewal, and revival of the charter of this company is to commence is the 29th day of February 2000, same being prior to the date of the expiration of the charter. This renewal and revival of the charter of this corporation is to be perpetual. | ||
5. | This corporation was duly organized and carried on the business authorized by its charter until the 1st day of March, 2000, at which time its charter became inoperative and void for non-payment of taxes and this certificate for renewal and revival is filed by authority of the duly elected directors of the corporation in accordance with the laws of the State of Delaware. |
|
By: |
/s/ Paul J. Travers
|
||||
|
||||||
|
Name: | Paul J. Travers | ||||
|
||||||
|
Title: | President |
KAOTECH CORPORATION
|
||||
By: | /s/ Paul J. Travers | |||
Paul J. Travers, President | ||||
/s/ Paul Travers
President
/s/ John H. Chu
Article I. - General
|
1 | |||
1.1. Offices
|
1 | |||
1.2. Seal
|
1 | |||
1.3. Fiscal Year
|
1 | |||
Article II. - Stockholders
|
1 | |||
2.1. Place of Meetings
|
1 | |||
2.2. Annual Meeting
|
1 | |||
2.3. Quorum
|
1 | |||
2.4. Right to Vote; Proxies
|
2 | |||
2.5. Voting
|
2 | |||
2.6. Notice of Annual Meetings
|
3 | |||
2.7. Stockholders List
|
3 | |||
2.8. Special Meetings
|
3 | |||
2.9. Notice of Special Meetings
|
3 | |||
2.10. Inspectors
|
3 | |||
2.11. Stockholders Consent in Lieu of Meeting
|
4 | |||
Article III. - Directors
|
4 | |||
3.1. Number of Directors
|
4 | |||
3.2. Change in Number of Directors; Vacancies
|
5 | |||
3.3. Resignation
|
5 | |||
3.4. Removal
|
6 | |||
3.5. Place of Meetings and Books
|
6 | |||
3.6. General Powers
|
6 | |||
3.7. Executive Committee
|
6 | |||
3.8. Other Committees
|
6 | |||
3.9. Powers Denied to Committees
|
6 | |||
3.10. Substitute Committee Member
|
7 | |||
3.11. Compensation of Directors
|
7 | |||
3.12. Annual Meeting
|
7 | |||
3.13. Regular Meetings
|
7 | |||
3.14. Special Meetings
|
8 | |||
3.15. Quorum
|
8 | |||
3.16. Telephonic Participation in Meetings
|
8 | |||
3.17. Action by Consent
|
8 | |||
Article IV. - Officers
|
8 | |||
4.1. Selection; Statutory Officers
|
8 | |||
4.2. Time of Election
|
9 | |||
4.3. Additional Officers
|
9 |
4.4. Terms of Office
|
9 | |||
4.5. Compensation of Officers
|
9 | |||
4.6. Chairman of the Board
|
9 | |||
4.7. President
|
9 | |||
4.8. Vice-Presidents
|
9 | |||
4.9. Treasurer
|
10 | |||
4.10. Secretary
|
10 | |||
4.11. Assistant Secretary
|
10 | |||
4.12. Assistant Treasurer
|
10 | |||
4.13. Subordinate Officers
|
11 | |||
Article V. - Stock
|
11 | |||
5.1. Stock
|
11 | |||
5.2. Fractional Share Interests
|
11 | |||
5.3. Transfers of Stock
|
12 | |||
5.4. Record Date
|
12 | |||
5.5. Transfer Agent and Registrar
|
12 | |||
5.6. Dividends
|
13 | |||
5.7. Lost, Stolen or Destroyed Certificates
|
13 | |||
5.8. Inspection of Books
|
13 | |||
Article VI. - Miscellaneous Management Provisions
|
13 | |||
6.1. Checks, Drafts and Notes
|
13 | |||
6.2. Notices
|
13 | |||
6.3. Conflict of Interest
|
14 | |||
6.4. Voting of Securities owned by this Corporation
|
14 | |||
Article VII. - Indemnification
|
15 | |||
7.1. Right to Indemnification
|
15 | |||
7.2. Right of Indemnitee to Bring Suit
|
16 | |||
7.3. Non-Exclusivity of Rights
|
17 | |||
7.4. Insurance
|
17 | |||
7.5. Indemnification of Employees and Agents of the
Corporation
|
17 | |||
Article VIII. - Amendments
|
17 | |||
8.1. Amendments
|
17 |
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the Company : | Vuzix Corporation | |||
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75 Town Centre Drive | ||||
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Rochester, NY 14623 | ||||
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Attn: Chief Financial Officer | ||||
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Indemnitee: | ||||
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VUZIX CORPORATION | ||||||
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By: | |||||
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Name: |
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Title: |
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INDEMNITEE: | ||||||
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Name: |
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EXECUTIVE: | ||||||
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/s/ Paul Travers | ||||||
Paul Travers | ||||||
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ICUITI CORPORATION | ||||||
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By: |
/s/ Grant Russell
|
||||
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Name: | Grant Russell | ||||
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Title: | Executive Vice President and | ||||
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Chief Financial Officer |
EXECUTIVE: | ||||||
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/s/ Grant Russell | ||||||
Grant Russell | ||||||
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ICUITI CORPORATION | ||||||
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||||||
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By:
Name: |
/s/ Paul Travers
|
||||
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Title: | President and Chief Executive Officer |
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(i) If to Company: | |||
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Interactive Imaging Systems, Inc. | |||
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2166 Brighton-Henrietta Townline Road | |||
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Rochester, New York 14623 | |||
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Facsimile: (716) 240-8003 | |||
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Attention: Paul J. Travers, President | |||
|
||||
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With a copy to : | |||
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Steven R. Gersz, Esq. | |||
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Underberg & Kessler LLP | |||
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1800. Chase Square | |||
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Rochester, New York 14604 |
|
Facsimile:
(716) 258-2821
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(ii) If to Shareholders: |
INTERACTIVE IMAGING SYSTEMS, INC. | ||||
|
||||
By:
|
/s/ Paul J. Travers
|
|||
Name:
|
Paul J. Travers | |||
Title:
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President |
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Signature: | |||||
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||||||
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||||||
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||||||
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Name: | |||||
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||||||
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||||||
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||||||
Address:
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||||||
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Date:
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(i) | If to Company: | ||
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Interactive Imaging Systems, Inc. | |||
|
2166 Brighton-Henrietta Townline Road | |||
|
Rochester, New York 14623 | |||
|
Facsimile: (716) 240-8003 | |||
|
Attention: Paul J. Travers, President | |||
|
||||
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With a copy to: | |||
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Steven R. Gersz, Esq. | |||
|
Underberg & Kessler LLP | |||
|
1800 Chase Square | |||
|
Rochester, New York 14604 | |||
|
Facsimile: (716) 258-2821 | |||
|
||||
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(ii) | If to Investors: |
- 8 -
INTERACTIVE IMAGING SYSTEMS, INC.
|
||||
By:
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/s/ Paul J. Travers | |||
Name:
|
|
|||
Title:
|
President |
- 9 -
INVESTOR:
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||
|
||
Signature:
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Print Name:
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Address:
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Date:
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Company:
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Icuiti Corporation. | |
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22166 Brighton-Henrietta Townline Road | |
|
Suite B | |
|
Rochester, New York 14634
Attention: President |
|
|
Tel: 585-240-8000 | |
|
Facsimile: 585-240-8003 | |
with a copy to:
|
||
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Boylan, Brown, Code, Vigdor & Wilson, LLP | |
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2400 Chase Squire | |
|
Rochester, NY 14604 | |
|
Attention: Robert F. Mechur, Esq. | |
|
Tel: 585-232-5300 | |
|
Facsimile: 585-238-9022 | |
|
||
Investors:
|
At the address and facsimile set forth on the signature page hereof |
9
ICUITI CORPORATION | ||||||
|
||||||
|
By: | /s/ Paul J. Travers | ||||
|
Name: |
|
||||
|
Title: | President |
|
||||||
|
INVESTOR: | |||||
|
|
|||||
|
||||||
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Print Name: | |||||
|
||||||
|
Address: _ | |||||
|
||||||
|
||||||
|
||||||
|
Telephone: | |||||
|
Facsimile: |
|
where: | X = the number of Warrant Shares to be issued to the Holder; | ||
|
Y = the number of Warrant Shares to then be exercised under this Warrant Certificate; | |||
|
A = the Market Value (defined below) of one share of Common Stock; and B = the Exercise Price. |
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. | |||
(b) | Without limiting the Investors right to transfer, assign or otherwise convey the Warrant or Warrant Shares in compliance with all applicable securities laws, the Investor 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 Investors own account and not as a nominee for any other party, and that the Investor 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. |
ICUITI CORPORATION | ||||||
|
||||||
|
By: | /s/ Paul J. Travers | ||||
|
||||||
|
Name: | Paul J. Travers | ||||
|
Title: | President |
|
(Name) | |||||
|
|
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|
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(Address) | ||||||
|
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|
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(Tax ID #) | |||||
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(Name) | |||||||
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(Date) | (Signature) | ||||||
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(Address) | |||||||
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||||||||
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Dated: | |||||||
Signature
|
(i) | make and keep public information available, as those terms are understood and defined in SEC Rule 144; | ||
(ii) | file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and | ||
(iii) | furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (a) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act (at any time after it has become subject to such reporting |
requirements), (b) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (c) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form. |
ICUITI CORPORATION | ||||
|
||||
By:
|
/s/ Paul J. Travers | |||
|
||||
Name:
|
Paul J. Travers | |||
Title:
|
President | |||
|
||||
NEW LIGHT INDUSTRIES, LTD. | ||||
|
||||
By:
|
/s/ Steve McGrew | |||
|
||||
Name:
|
Steve McGrew | |||
Title:
|
President |
(a) | Accredited Investor means an accredited investor as defined in Rule 501(a) of Regulation D; | ||
(b) | Administration Fee means the fee payable to the Agent by the Issuer in connection with the Agents services in connection with the administration and co-ordination of the Private Placement; | ||
(c) | Agents Fee means the fee which is set out in this Agreement and which is payable by the Issuer to the Agent in consideration of the services performed by the Agent under this Agreement; | ||
(d) | Agents Warrants means the non-transferable share purchase warrants of the Issuer which will be issued as part of the Agents Fee and the Administration Fee and which have the terms provided in this Agreement and the certificates representing such share purchase warrants; |
(e) | Agents Warrant Shares means the previously unissued Common Shares which will be issued upon the exercise of the Agents Warrants; | ||
(f) | Applicable Legislation means the securities acts in the Selling Provinces, together with all the regulations and rules made and promulgated thereunder and all administrative policy statements, instruments, blanket orders and rulings, notices and administrative directions issued by the Commissions; | ||
(g) | Closing means completion of the issuance of Shares pursuant to this Agreement and the Subscription Agreements; | ||
(h) | Closing Date means each day on which Shares are issued to the Purchasers; | ||
(i) | Commissions means the securities commission or equivalent regulatory authority in the Selling Provinces; | ||
(j) | Common Shares means the $.001 par value common stock of the Issuer, after giving effect to the consolidation referred to in Section 10.1(e) of this Agreement; | ||
(k) | Corporate Finance Shares means the previously unissued Common Shares which will be issued in consideration of the corporate finance and structuring services provided by the Agent; | ||
(l) | Directed Selling Efforts means directed selling efforts as defined in Rule 902(c) of Regulation S; | ||
(m) | Exemptions means the exemptions from the prospectus requirements of the Applicable Legislation and exemptions from registration under the U.S. Securities Act and as set forth the in the Subscription Agreement; | ||
(n) | Foreign Private Issuer means foreign private issuer as defined in Rule 405 promulgated under the U.S. Securities Act; | ||
(o) | Final Closing means the final Closing of the Private Placement; | ||
(p) | Financial Statements means the unaudited financial statements of the Issuer as at May 31, 2007 and the audited financial statements of the Issuer for the fiscal year ended December 31, 2006; | ||
(q) | First Closing means the first Closing of the Private Placement; | ||
(r) | Material Adverse Effect means any event, change or effect that, individually or when taken together with any related events, is or is reasonably likely to be materially adverse to the business, prospects, operations, condition (financial or otherwise) or liabilities of the Issuer or to the value or price of any Securities of the Issuer; | ||
(s) | Material Change has the meaning defined in the Applicable Legislation; |
- 3 -
(t) | Material Fact has the meaning defined in the Applicable Legislation; | ||
(u) | Private Placement means the offering of the Shares on the terms and conditions of this Agreement; | ||
(v) | Purchasers means the purchasers of the Shares pursuant to the Private Placement; | ||
(w) | Registrable Securities means the Shares and the Agents Warrant Shares until all Shares and Agents Warrant Shares (i) have been disposed of pursuant to the registration statement described in Section 14.1, (ii) have been sold under circumstances under which all of the applicable conditions of Rule 144 (or any similar provision then in force) under the U.S. Securities Act are met, (iii) have been otherwise transferred to persons who may trade such Securities without restriction under the U.S. Securities Act, and the Issuer has delivered a new certificate or other evidence of ownership for such Securities not bearing a restrictive legend or and/or (iv) in the opinion of counsel to the Issuer, may be sold without any time, volume or manner limitations pursuant to Rule 144(k) (or any similar provision then in effect) under the U.S. Securities Act. In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Shares and Agents Warrant Shares, such adjustment shall be deemed to be made in the definition of Registrable Security as is appropriate in order to prevent any dilution or enlargement of the registration rights granted pursuant to this Agreement; | ||
(x) | Regulation D means Regulation D promulgated under the U.S. Securities Act; | ||
(y) | Regulation S means Regulation S promulgated under the U.S. Securities Act; | ||
(z) | Regulatory Authorities means the Commissions; | ||
(aa) | Securities means the Shares, the Agents Warrants, the Agents Warrant Shares, the Corporate Finance Shares; | ||
(bb) | Selling Provinces means the Provinces of Canada; | ||
(cc) | Shares means the previously unissued Common Shares that are contemplated to be issued pursuant to this Agreement, other than the Agents Warrant Shares; | ||
(dd) | Subscription Agreement means the form of subscription agreement prepared in connection with this Private Placement and approved by the Issuer and the Agent; | ||
(ee) | Subsidiaries has the meaning ascribed thereto in Delaware General Corporate Law; | ||
(ff) | U.S. Affiliate has the meaning in paragraph 6.3(a); |
- 4 -
(gg) | U.S. Person means U.S. Person as defined in Rule 902(k) of Regulation S; and | ||
(hh) | U.S. Securities Act means the United States Securities Act of 1933, as amended. |
(a) | a cash payment equal to 7% of the gross proceeds received by the Issuer from the sale of the Shares on such Closing which will be paid in lawful U.S. currency; and |
(b) | that number of Agents Warrants which is equal to 10.0% of the number of Shares sold on such Closing. |
- 5 -
(a) | a resident in one of the Selling Provinces who meets the requirement of one of the Exemptions; | ||
(b) | an Accredited Investor (and the Agent and the U.S. Affiliate, after customary inquiry and investigation, have no reason to believe otherwise) if a U.S. Person or a person in the United States in accordance with Section 6 of this Agreement; or | ||
(c) | a resident of a jurisdiction outside of Canada and the United States for whom an Exemption is available for the sale of Shares to such person and in compliance with the securities laws applicable to such resident or jurisdiction. |
(a) | conduct all activities in connection with the Private Placement and the sale of the Shares, in compliance with this Agreement and all Applicable Legislation, Exchange Policies and applicable U.S. securities laws; and |
(b) | not advertise the proposed offering or sale of the Shares in printed public media, radio, television or telecommunications, including electronic display. |
- 6 -
(a) | it is not, as a result of the sale of the Securities will not be, and agrees to use its best efforts not to become, at any time prior to the expiration of three years after the Closing Day, an investment company as defined in the United States Investment Company Act of 1940 , as amended; | ||
(b) | during the period in which the Shares are offered for sale or during the term of the Agents Warrants, neither it nor any of its affiliates, nor any person acting on their behalf (other than the Agent, its respective affiliates or any person acting on their behalf, in respect of which no representation is made) has made or will make any Directed Selling Efforts in the United States or has taken or will take any action in violation of Regulation M under the United States Securities Exchange Act of 1934 , as amended, the 1934 Act), with respect to distributions under Regulation S, or has taken or will take any action that would cause the exemption from registration under Rule 506 of Regulation D or Regulation S to be unavailable for offers and sales of the Securities, pursuant to this Agreement; | ||
(c) | none of the Issuer, any of its affiliates or any person acting on its or their behalf (other than the Agent, the U.S. Affiliate, their respective affiliates or any person acting on their behalf, in respect of which no representation is made) has offered or will offer to sell, or has solicited or will solicit offers to buy, any of the Securities in the United States by means of any form of general solicitation or general advertising, which includes any advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, or in any manner involving a public offering within the meaning of Section 4(2) of the U.S. Securities Act; | ||
(d) | the Issuer has not, for a period of six months prior to the commencement of the offering of Securities, sold, offered for sale or solicited any offer to buy any of its securities and will not sell, offer for sale or solicit any offer to buy any of its securities, in a manner that would be integrated with the offer and sale of the Securities and would cause the exemption from registration set forth in Rule 506 of Regulation D to become unavailable with respect to the offer and sale of the Shares in the United States or to or for the benefit or account of U.S. Persons; | ||
(e) | neither the Issuer nor any of its predecessors or affiliates has been subject to any order, judgment, or decree of any court of competent jurisdiction temporarily, preliminarily or permanently enjoining such person for failure to comply with Rule 503 of Regulation D; | ||
(f) | the Issuer covenants and agrees with the Agent to execute or procure the execution of all documents and to use its commercially reasonable efforts to take or cause to be taken both before each Closing, all such steps as may be reasonably necessary or desirable to establish, to the reasonable satisfaction of counsel for the Agent and counsel for the Issuer, any and all legal requirements to enable the Agent to offer the Shares for sale in the United States under Rule 506 of |
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Regulation D in accordance with this Agreement and the applicable exemption from registration under applicable state securities laws; and | |||
(g) | except with respect to offers or sales of Shares to Accredited Investors in reliance upon an exemption from registration under Rule 506 of Regulation D, neither the Issuer nor any of its affiliates, nor any person acting on their behalf (other than the Agent, the U.S. Affiliate, their respective affiliates or any person acting on their behalf, in respect of which no representation is made), has made in a transaction that would be integrated with the offer and sale of the Securities or will make: |
(i) | any offer to sell, or any solicitation of an offer to buy, any Shares to or for the benefit or account of a U.S. Person, or a person in the United States; or | ||
(ii) | any sale of Shares unless, at the time the buy order was or will have been originated, the purchaser is: |
(A) | outside the United States; or | ||
(B) | the Issuer, its affiliates, and any person acting on their behalf reasonably believe that the purchaser is outside the United States. |
(a) | any offer to sell, or any solicitation of an offer to buy, Shares to any U.S. Person, to any person purchasing for the benefit or account of a U.S. Person, or any person in the United States; | ||
(b) | any sale of Securities unless, at the time the buy order was or will have been originated the Purchaser is: |
(i) | outside the United States; or | ||
(ii) | the Agent, its affiliates and any person acting on their behalf reasonably believe that the Subscriber is outside the United States; nor |
(c) | any Directed Selling Efforts in the United States with respect to the Securities. |
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(a) | the Agent will offer the Shares in the United States only through a broker dealer registered pursuant to Section 15(b) of the 1934 Act and in good standing with the National Association of Securities Dealers Inc. (U.S. Affiliate), solely to Accredited Investors, and only in states of the United States where such broker-dealer is registered, or otherwise exempt from registration; | ||
(b) | no form of general solicitation or general advertising (as those terms are used in Regulation D) or any manner involving a public offering within the meaning of Section 4(2) of the U.S. Securities Act has been or will be used by the Agent, the U.S. Affiliate, their affiliates or anyone acting on their behalf, including advertisements, articles, notices or other communications published in any newspaper, magazine, or similar media or broadcast over radio or television, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, in connection with the offer or sale of the Shares to U.S. Persons; | ||
(c) | any offer, sale or solicitation of an offer to buy the Shares that has been made or will be made to U.S. Persons was or will be made only to Accredited Investors, and in transactions that are exempt from registration under applicable state securities laws and require no filings or actions pre-offer or pre-sale except as otherwise agreed by the Issuer; | ||
(d) | it has not entered and will not enter into any contractual arrangement with respect to the distribution of the Securities, except with its affiliates, any selling group members or with the prior written consent of the Issuer and it shall use its commercially reasonable efforts to ensure the each selling group member complies with the applicable provisions of this Section 6; | ||
(e) | all offers of Shares in the United States or to or for the benefit or account of a U.S. Person have been and will be made through a U.S. Affiliate and all sales of the Shares in the United States or to or for the benefit or account of a U.S. Person will be made by the Issuer to Accredited Investors designated by the U.S. Affiliate or by the Agent acting through a U.S. Affiliate; | ||
(f) | immediately prior to soliciting any Purchaser that is in the United States or for the benefit or account of a U.S. Person, the Agent, the U.S. Affiliate, their respective affiliates, and any person acting on their behalf, had or will have had, as the case may be, reasonable grounds to believe and did or will, as the case may be, believe that each such Purchaser was or is an Accredited Investor, and at the time of completion of each sale to or for the benefit or account of a U.S. Person or a person in the United States, the Agent, the U.S. Affiliate, their respective affiliates, and any person acting on their behalf will have reasonable grounds to believe and will believe, that each Purchaser designated by such Agent or the U.S. Affiliate to purchase Shares from the Issuer is an Accredited Investor; | ||
(g) | on each Closing, the Agent together with the U.S. Affiliate, will provide a certificate, substantially in the form of Appendix I, relating to the manner of the |
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offer and sale of the Shares in the United States and to or for the benefit or account of U.S. Persons, or a written confirmation that it did not sell any Shares in the United States or to or for the benefit or account of U.S. Persons or arrange for any purchasers that are in the United States or are U.S. Persons; |
(h) | neither the Agent, the U.S. Affiliate, their respective affiliates, or any person acting on their behalf, has taken or will take, directly or indirectly, any action in violation of Regulation M under the 1934 Act in connection with the offer and sale of the Securities; | ||
(i) | prior to completion of any sale of Shares to a person in the United States or to a U.S. Person, the Agent shall cause each such Purchaser of Shares to execute an agreement in the form agreed upon by the Agent and the Issuer; | ||
(j) | the Agent shall give the Issuer reasonable notice of the U.S. jurisdictions in which it proposes to offer and sell the Shares, so as to assist the Issuer in satisfying its obligations under Paragraph 6.1(f) and to permit the Issuer to timely submit any and all filings required of the U.S. Securities Act and applicable state laws; | ||
(k) | the representations and warranties and covenants of the Agent contained in this Section 6 shall be true and correct as of the Closing, with the same force and effect as if then made by the Agent. |
(a) | file with the Commissions any report required to be filed by the Applicable Legislation in connection with the Private Placement, in the required form; and |
(b) | provide the Agents solicitor with copies of the report or reports. |
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(a) | Certificates means the certificates representing the Shares, Agents Warrants and Corporate Finance Shares to be issued on a Closing in the names and denominations reasonably requested by the Agent or the Purchasers, as the case may be; and |
(b) | Proceeds means the gross proceeds of the sale of Shares on a Closing, less: |
(i) | any portion of the Agents Fee which is payable in cash; | ||
(ii) | the reasonable expenses of the Agent in connection with the Private Placement which have not been paid by the Issuer; and | ||
(iii) | on the First Closing, the Administration Fee; | ||
(iv) | any amount paid directly to the Issuer by purchasers in connection with the Private Placement. |
(a) | the Issuer will have delivered to the Agent and its solicitor a favourable opinion of the Issuers US and Canadian solicitors dated as of the date of such Closing, in a form reasonably acceptable to the Agent and its solicitor as to all legal matters reasonably requested by the Agent relating to the Issuer and the creation, issuance and sale of the Securities; |
(b) | the Issuer will have delivered to the Agent and its solicitor such certificates of its officers other documents relating to the Private Placement or the affairs of the Issuer as the Agent or its solicitor may reasonably request; |
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(c) | each representation and warranty of the Issuer which is contained in this Agreement continues to be true, and the Issuer has performed or complied with all of its covenants, agreements and obligations under this Agreement; | ||
(d) | the completion of due diligence satisfactory to the Agent, on the Issuer, the Issuers management, business, assets and technology; and | ||
(e) | the Issuer has completed a consolidation of its common shares on a 7 old for 1 new basis; |
(a) | receipt of all required regulatory approval for or acceptance of the Private Placement; and |
(b) | the removal or partial revocation of any cease trading order or trading suspension made by any competent authority to the extent necessary to complete the Private Placement. |
(a) | an adverse Material Change, or an adverse change in a Material Fact relating to any of the Securities, occurs or is announced by the Issuer; | ||
(b) | there is an event, accident, governmental law or regulation or other occurrence of any nature which, in the opinion of the Agent, acting reasonably, seriously affects or will seriously affect the financial markets, or the business of the Issuer or its subsidiaries or the ability of the Agent to perform its obligations under this Agreement, or a Purchasers decision to purchase the Shares; | ||
(c) | following a consideration of the history, business, products, property or affairs of the Issuer or its principals and promoters, or of the state of the financial markets in general, or the state of the market for the Issuers securities in particular, the Agent determines, in its sole discretion, that it is not in the interest of the Purchasers to complete the purchase and sale of the Shares; | ||
(d) | the Securities cannot, in the opinion of the Agent, acting reasonably, be marketed due to the state of the financial markets, or the market for the Shares in particular; | ||
(e) | an enquiry or investigation (whether formal or informal) in relation to the Issuer, or the Issuers directors, officers or promoters, is commenced or threatened by an officer or official of any competent authority; |
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(f) | any order to cease, halt or suspend trading (including an order prohibiting communications with persons in order to obtain expressions of interest) in the securities of the Issuer prohibiting or restricting the Private Placement is made by a competent regulatory authority and that order is still in effect; | ||
(g) | the Issuer is in breach of any material term of this Agreement; or | ||
(h) | any of the representations or warranties made by the Issuer in this Agreement is false or has become false. |
(a) | the Issuer has no Subsidiaries; | ||
(b) | the Issuer is a valid and subsisting corporation duly incorporated and in good standing under the laws of the jurisdiction in which it is incorporated, continued or amalgamated; | ||
(c) | the Issuer is duly registered and licenced to carry on business in the jurisdictions in which it carries on business or owns property where so required by the laws of that jurisdiction and are not otherwise precluded from carrying on business or owning property in such jurisdictions by any other commitment, agreement or document, except to the extent that the failure to so register or become licensed would not have a Material Adverse Effect; | ||
(d) | the Issuer has full corporate power and authority to carry on its business as now carried on by it and to undertake the Private Placement and this Agreement has been, or will be by the First Closing, duly authorized by all necessary corporate action on the part of the Issuer; | ||
(e) | all of the material transactions of the Issuer have been promptly and properly recorded or filed in its books or records and its minute books or records contain all records of the meetings and proceedings of its directors, shareholders, and other committees, if any, since conception; | ||
(f) | as of the date hereof, the authorized capital of the Issuer consists of (a) 400,000,000 shares of Common Stock, $.001 par value per share, of which 21,658,507 shares are issued and outstanding and (b) 6,745,681 shares of Preferred Stock, $.001 par value per share, of which (i) 725,000 shares are designated as Series A Redeemable Preferred Stock, of which zero (0) shares are issued and outstanding, (ii) 1,020,681 shares are designated as Series B Convertible Preferred Stock, of which zero (0) shares are issued and outstanding, and (iii) 500,000 shares are designated as Series C 6% Convertible Preferred Stock, of which 168,500 shares are issued and outstanding and, except as set out in Schedule A hereto, no person has any right, agreement or option, present or |
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future, contingent or absolute, or any right capable of becoming such a right, agreement or option, for the issue or allotment of any unissued shares in the capital of the Issuer or its subsidiary or any other security convertible into or exchangeable for any such shares, or to require the Issuer or its subsidiary to purchase, redeem or otherwise acquire any of the issued and outstanding shares in its capital; | |||
(g) | the Issuer will reserve or set aside sufficient shares in its treasury to issue the Shares, the Agents Warrant Shares and the Corporate Finance Shares and all such shares will be duly and validly issued as fully paid and non-assessable shares in the capital of the Issuer and upon due exercise of the Agents Warrants, the Agents Warrant Shares will be duly and validly issued as fully paid and non-assessable shares in the capital of the Issuer; | ||
(h) | except for such securities, liens and encumbrances reflected in the Financial Statements and in the due diligence materials provided to the Agent, the Issuer is the legal and beneficial owner of and has good and marketable title to the properties, business and assets or the interests in the properties, business or assets referred to in any materials provided to the Agent, all agreements by which the Issuer holds an interest in a property, business or assets are in good standing according to their terms and the properties are in good standing under the applicable laws of the jurisdictions in which they are situated and all filings and commitments required to maintain the properties or assets in good standing have been properly recorded and filed in a timely manner with the appropriate regulatory body , except to the extent that the failure to do any of the foregoing would not have a Material Adverse Effect; | ||
(i) | all financial, marketing, sales and operational information provided to the Agent in writing do not contain any misrepresentations (as such term is defined in the Applicable Legislation) and are accurate in all material respects; | ||
(j) | the Subscription Agreement and all other written representations made by the Issuer to a Purchaser or potential Purchaser in connection with the Private Placement were accurate in all material respects and did not omit any material fact, the omission of which will make such representations materially misleading or incorrect; | ||
(k) | the Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles, present fairly, in all material respects, the financial position and all material liabilities (accrued, absolute, contingent or otherwise) of the Issuer as of the date thereof, and there have been no adverse material changes in the financial position of the Issuer since the date thereof and the business of the Issuer has been carried on in the usual and ordinary course consistent with past practice since the date thereof; | ||
(l) | the auditors of the Issuer who audited the Financial Statements of the Issuer for the most recent financial year-end and who provided their audit report thereon are |
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independent public accountants and there has never been any material disagreement with the present auditors of the Issuer; |
(m) | the Issuer has complied and will comply fully with the requirements of all applicable corporate and securities laws and administrative policies and directions, including, without limitation, the Applicable Legislation and the U.S. Securities Act in relation to the issue of its securities and in all matters relating to the Private Placement; | ||
(n) | the Issuer is in compliance with all applicable laws, regulations and statutes (including all environmental laws and regulations) in the jurisdictions in which it carries on business and which may materially affect the Issuer, has not received a notice of non-compliance, nor know of, nor have reasonable grounds to know of, any facts that could give rise to a notice of non-compliance with any such laws, regulations and statutes, and is not aware of any pending change or contemplated change to any applicable law or regulation or governmental position that would materially affect the business of the Issuer or the business or legal environment under which the Issuer operates; | ||
(o) | there is not presently any Material Change or change in any Material Fact relating to the Issuer which has not been fully disclosed to the Agent ; | ||
(p) | the issue and sale of the Securities by the Issuer and the Agent does not and will not conflict with, and does not and will not result in a breach of, or constitute a default under (A) any statute, rule or regulation applicable to the Issuer including, without limitation, the Applicable Legislation and the U.S. Securities Act; (B) the constituting documents, by-laws or resolutions of the Issuer which are in effect at the date hereof; (C) any agreement, debt instrument, mortgage, note, indenture, instrument, lease or other document to which the Issuer is a party or by which it is bound; or (D) any judgment, decree or order binding the Issuer or the property or assets of the Issuer; | ||
(q) | the Issuer is not a party to any actions, suits or proceedings which could materially affect its business or financial condition, and to the best of the Issuers knowledge no such actions, suits or proceedings are contemplated or have been threatened; | ||
(r) | there are no judgments against the Issuer which are unsatisfied, nor are there any consent decrees or injunctions to which the Issuer is subject; | ||
(s) | no order prohibiting the sale of the securities of the Issuer has been issued to and is outstanding against the Issuer or its directors, officers or promoters or against any other companies that have common directors, officers or promoters and no investigations or proceedings for such purposes are pending or threatened; | ||
(t) | the Issuer has filed all federal, state, local and foreign tax returns which are required to be filed, or has requested extensions thereof, and has paid all taxes required to be paid by it and any other assessment, fine or penalty levied against |
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it, or any amounts due and payable to any governmental authority, to the extent that any of the foregoing is due and payable; |
(u) | the Issuer has established on its books and records reserves which are adequate for the payment of all taxes not yet due and payable and there are no liens for taxes on the assets of the Issuer except for taxes not yet due, and there are no audits of any of the tax returns of the Issuer which are known by the Issuers management to be pending, and there are no claims which have been or may be asserted relating to any such tax returns which, if determined adversely, would result in the assertion by any governmental agency of any deficiency which would have a material adverse effect on the properties, business or assets of the Issuer; | ||
(v) | the Issuer owns or possesses adequate rights to use all material patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and other intellectual property necessary for the business of the Issuer now conducted and proposed to be conducted, without any conflict with or infringement of the rights of others.; | ||
(w) | the Issuer has received no communication alleging that the Issuer has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity; | ||
(x) | except as set out in Schedule B, the Issuer does not have any loans or other indebtedness outstanding which has been made to any of its shareholders, officers, directors or employees, past or present, or any person not dealing at arms length (as such term is used in the Income Tax Act (Canada); | ||
(y) | in respect of both the hardware equipment and software components of the information management and computers systems (collectively, the Systems) of the Issuer: |
(i) | the Systems have been maintained and supported in accordance with prudent industry practices; | ||
(ii) | there is an appropriate disaster recovery plan in place in respect of such Systems; | ||
(iii) | appropriate controls are in place to control access and security to such Systems and there are appropriate firewalls and virus protection programs in place; | ||
(iv) | all software being used is supported by valid licences and all licences in respect of such software are in good standing in all material respects and not in default in any respect; and | ||
(v) | all related data, content and programs are backed-up regularly with copies stored safely and securely off-site; |
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(z) | other than the Agent, no person, firm or corporation acting or purporting to act at the request of the Issuer is entitled to any brokerage, agency or finders fee in connection with the transactions described herein; and | ||
(aa) | the warranties and representations in this Section are true and correct and will remain so as of the Final Closing. |
(a) | it is a valid and subsisting corporation under the law of the jurisdiction in which it was incorporated; | ||
(b) | it is duly registered under the Applicable Legislation; | ||
(c) | it will not advertise the offering; | ||
(d) | it will market and sell the Shares in compliance with the Applicable Legislation, the U.S. Securities Act and this Agreement. |
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(a) | the Agent and/or its Personnel have been negligent, have exercised bad faith, have contravened any applicable law or have committed wilful misconduct or any fraudulent act in the course of such performance; and |
(b) | the expenses, losses, claims, damages or liabilities, as to which indemnification is claimed, were directly caused by the negligence, bad faith, wilful misconduct or fraud referred to in 15.1(a). |
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ICUITI CORPORATION
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Per: | /s/ Paul J. Travers | |||
Authorized Signatory | ||||
Per: | /s/ Grant Russell | |||
Authorized Signatory | ||||
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} | CANACCORD CAPITAL CORPORATION | |||
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Per: | |||
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Authorized Signatory | |||
c/s
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Per: | |||
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Authorized Signatory | |||
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I/We have the authority to bind the corporation |
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(a) | the Shares have been offered and sold in the United States or to or for the benefit or account of U.S. Persons only through the U.S. Affiliate, which was on the dates of such offers and sales, and is on the date hereof, a duly registered broker or dealer pursuant to Section 15(b) of the 1934 Act and under the securities laws of each state in which such offers and sales were made (unless exempted from the respective states broker-dealer registration requirements) and was and is a member in good standing with the National Association of Securities Dealers, Inc. | ||
(b) | all offers and sales of Shares in the United States or to or for the benefit or account of U.S. Persons have been effected through the U.S. Affiliate in accordance with all applicable federal and states laws and regulations governing the registration and conduct of securities brokers and dealers; | ||
(c) | each offeree that was in the United States or for the benefit or account of a U.S. Person was provided with a copy of the Subscription Agreement relating to the offering of the Shares; | ||
(d) | immediately prior to transmitting the Subscription Agreement to such offerees, we had reasonable grounds to believe and did believe that each such offeree was an Accredited Investor and, on the date hereof, we have reasonable grounds to believe and do believe that each person in the United States and each U.S. Person that we have arranged to purchase Shares from the Issuer is an Accredited Investor; | ||
(e) | no form of general solicitation or general advertising (as those terms are used in Regulation D) was used by us, including any advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, in connection with the offer or sale of the Shares in the United States; | ||
(f) | the offering of the Securities has been conducted in accordance with the terms of the Agency Agreement; and | ||
(g) | prior to any sale of Shares in the United States or to or for the benefit or account of a U.S. Person we caused purchaser to execute a Subscription Agreement, including the Certification of U.S. Purchaser contained therein. |
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CANACCORD CAPITAL CORPORATION
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By: | ||||
Name: | ||||
Title: | ||||
[US AFFILIATE]
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By: | ||||
Name: | ||||
Title: | ||||
1,802,283
432,647
722,143
429,177
3,392,250
CERTIFICATE NO.: W-2007-___ | WARRANTS |
1. | At any time or times prior to the Expiration Time on the Expiration Date, the Holder may exercise all or any number of Warrants represented hereby, by delivering to the Corporation at its principal office at 75 Town Centre Drive, Rochester, New York, 14623, U.S.A. facsimile: (585) 240-8003, a duly completed and executed exercise notice in the form attached as Schedule A hereto (the Exercise Notice ) evidencing the election (which on delivery to the Corporation shall be irrevocable) of the Holder to exercise the number of Warrants set forth in the Exercise Notice and a certified cheque or bank draft in lawful money of the United States of America payable to the Corporation for the aggregate Exercise Price of all Warrants being exercised. If the Holder is not exercising all Warrants represented by this Warrant Certificate, the Holder shall be entitled to receive a Warrant certificate representing the number of Warrants which is the difference between the number of Warrants represented by this Warrant Certificate and the number of Warrants being so exercised. | |
To the extent that the Warrants represented by this Warrant Certificate confer the right to acquire a fraction of a Common Share, such right may be exercised in respect of such fraction only in combination with one or more Warrants which in the aggregate entitle the Holder to acquire a whole number of Common Shares. |
No fractional Common Share will be issued upon the exercise of any Warrant and the Holder will not be entitled to any cash payment as compensation in lieu of a fractional Common Share. | ||
2. | The Holder shall be deemed to have become the holder of record of Common Shares on the date (the Exercise Date ) on which the Corporation has received both a duly completed Exercise Notice and payment in full in respect of the Common Shares; provided, however, that if such date is not a business day then the Common Shares shall be deemed to have been issued and the Holder shall be deemed to have become the holder of record of the Common Shares on the next following business day. Within three business days of the Exercise Date, the Corporation shall issue and deliver (or cause to be delivered) to the Holder, by registered mail to the Holders address specified in the register of the Corporation, a certificate for the appropriate number of Common Shares. | |
3. | The Corporation hereby covenants and agrees with the Holder that: |
(a) | each Common Share issued upon the due exercise of each Warrant will, upon issuance, be fully paid and non-assessable and free and clear of any lien, claim, charge or encumbrance and at all times the Corporation will have authorized and reserved for issuance a sufficient number of Common Shares to provide for the exercise of the Warrants; | ||
(b) | except as expressly provided herein, this Warrant Certificate shall not entitle the Holder to any rights as a shareholder of the Corporation including, without limitation, any voting rights; | ||
(c) | it will use commercially reasonable efforts at all times prior to the Expiration Date to maintain its corporate existence; | ||
(d) | if required, it will give written notice of the issue of Common Shares pursuant to the exercise of the Warrants to the securities regulatory authority in the jurisdiction in which the Holder is resident; and | ||
(e) | it will perform and carry out all acts and things required to be done by it as provided for herein. |
4. | (a) If, prior to the Expiration Time on the Expiration Date, the Corporation, |
(i) | subdivides, redivides, combines or consolidates its then outstanding Common Shares into a greater or lesser number of Common Shares, or | ||
(ii) | distributes Common Shares or securities exchangeable or convertible for Common Shares by way of stock dividend or otherwise (other than as a dividend paid in the ordinary cause, a distribution of Common Shares on exercise of Warrants or pursuant to the exercise of options granted under the Corporations stock option plan) to holders of all or substantially all of its then outstanding Common Shares, |
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(b) | If, prior to the Expiration Time on the Expiration Date, the Corporation fixes a record date for the issue of options, rights or warrants exercisable during a period expiring not more than 45 days after the record date for such issue (the Rights Period ) to all or substantially all the holders of Common Shares entitling them to acquire Common Shares or other securities convertible or exchangeable into Common Shares at less than 95% of their Current Market Price (any of such event herein called a Rights Offering ) then the Exercise Price shall be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately after such record date by a fraction, |
(i) | the numerator of which shall be the aggregate of: |
(1) | the number of Common Shares outstanding as of the record date for the Rights Offering; and | ||
(2) | a number determined by dividing either |
(A) | the product of the number of Common Shares issued or subscribed for during the Rights Period and the price at which such Common Shares are offered, or | ||
(B) | the product of the exchange or conversion price of such securities offered and the number of Common Shares for or into which the securities so offered pursuant to the Rights Offering have been exchanged or converted during the Rights Period, |
(ii) | the denominator of which shall be the number of Common Shares outstanding after giving effect to the Rights Offering, including the number of Common Shares actually issued or subscribed for (or securities for or into which the securities so offered pursuant to the Rights Offering have been exchanged or converted) during the Rights Period. |
(c) | If, prior to the Expiration Time on the Expiration Date, the Corporation distributes evidences of its indebtedness or any property or other assets (other than by way of a Common Share Reorganization or Rights Offering and excluding cash dividends paid in the ordinary course) to holders of all or substantially all of its then outstanding Common Shares, the number of Common Shares to be issued by the Corporation under the Warrants shall, at the time of exercise, be appropriately adjusted and the Holder shall receive, in lieu of the number of Common Shares in respect of which the right is then being exercised, the aggregate number of Common Shares or other securities or property that the Holder would have been entitled to receive as a result of such event, if, on the record date therefor, the Holder had been the registered holder of the number of Common Shares to which the Holder was theretofore entitled upon the exercise of the Warrants. |
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(d) | If, prior to the Expiration Time on the Expiration Date, there is a capital reorganization of the Corporation or a reclassification or other change in the Common Shares (other than a Common Share Reorganization) or a consolidation, merger or amalgamation of the Corporation with or into any other corporation or entity (other than a consolidation, merger or amalgamation which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other securities) or a transfer of all or substantially all of the Corporations undertaking and assets to another corporation or entity in which the holders of Common Shares are entitled to receive shares, other securities or property (any of such events being called a Capital Reorganization ), the Holder, where the Holder has not exercised the Warrants prior to the effective date of such Capital Reorganization, shall be entitled to receive and shall accept, upon the exercise of such right, on such date or any time thereafter, for the same aggregate consideration in lieu of the number of Common Shares to which the Holder was theretofore entitled to subscribe for and purchase, the aggregate number of shares or other securities or property which the Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Common Shares to which the Holder was theretofore entitled to acquire hereunder. | ||
(e) | Any adjustments made pursuant to this section 4 shall be subject to the following rules and procedures: |
(i) | the adjustments provided for in section 4 are cumulative and shall be made successively whenever an event referred to herein shall occur, provided no adjustment shall be made unless the cumulative effect of all such adjustments would change the Exercise Price by at least 1% of the current Exercise Price or if the Holder is allowed to participate in the specified event as though the Holder had exercised the Warrants prior to such occurrence of such event; | ||
(ii) | if the Corporation sets a record date to take any action and thereafter and before taking such action abandons its plan to take such action, then no adjustment to the Exercise Price shall be required by reason of setting such record date; | ||
(iii) | upon the occurrence of each and every event set out in this section 4, the provisions of the Warrants, including the Exercise Price, shall be deemed to be amended accordingly and the Corporation shall take all necessary action to comply with such provisions as so amended; | ||
(iv) | Current Market Price of the Common Shares at any date means the price per Common Share equal to the fair market value thereof as determined by the board of directors of the Corporation, acting reasonably; | ||
(v) | in the event of any question arising with respect to the adjustments provided in Section 4, such question shall be conclusively determined, absent manifest error, by a firm of chartered accountants appointed by the Corporation, acting reasonably (who may be the Corporations auditors), such accountants shall have access to all necessary records of the Corporation and such determination shall be binding upon the Corporation and the Holder; | ||
(vi) | as a condition precedent to the taking of any action which would result in an adjustment to the number of Common Shares purchaseable upon exercise of these Warrants, the Corporation shall take any corporate action which may be necessary in order that the Common Shares to which the Holder is entitled on the full exercise of its exercise right in accordance with the provisions hereof shall be available for such purpose and that such Common Shares may be validly and legally issued as fully paid and non-assessable Common Shares; and |
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(vii) | the Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment in the Exercise Price and/or number of Common Shares purchaseable upon exercise of Warrants as provided for herein, deliver a certificate of an officer of the Corporation to the Holder specifying the nature of the event requiring the adjustment and the amount of the adjustment thereby necessitated and setting forth in reasonable detail the adjusted Exercise Price and/or number of Common Shares purchasable upon exercise of Warrants, the method of calculation and the facts upon which such calculation is based. |
5. | If at any time there occurs any Change in Control Transaction, then the Holder shall be deemed to have exercised the entirety of the Warrants represented by this Warrant Certificate 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 Corporation, 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 Certificate had the entirety of the Warrants represented by this Warrant Certificate 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 Corporation with or into any other corporation or other entity or person (whether or not the Corporation is the surviving corporation) (excluding a consolidation or merger in connection with a corporate reorganization in which the ultimate beneficial owners of the Corporation 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 Corporations voting power is transferred through a merger, consolidation or similar transaction, or (z) the liquidation or distribution to shareholders of the Corporation of all or substantially all of its assets. | |
6. | If, in case at any time: |
then, and in any one or more of such cases, the Corporation will give to the Holder at least 15 business days prior written notice of the date on which the books of the Corporation will close or a record will be taken for such dividend, distribution or offer of subscription rights, or for determining rights to vote with respect to such dissolution, liquidation or winding-up or Share Reorganization and, in the case of such dissolution, liquidation or winding-up or Share Reorganization, at least 15 business days prior written notice of the date when the same will take place. Such notice in accordance with the foregoing clause will also specify, in the case of any such dividend, distribution or offer of subscriptions rights, the date on which the holders of the Common Shares will be entitled thereto, and such notice in accordance with the foregoing will also specify the date on which the holders of the Common Shares will be entitled to exchange the Common Shares for securities or other property deliverable upon such dissolution, liquidation or winding-up or Share Reorganization, as the case may be. | ||
7. | Except as hereinafter provided, all or any of the rights conferred upon the Holder by the terms hereof may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement contained herein shall be had against any shareholder, director or officer of the Corporation either directly or through the Corporation, it being expressly agreed and declared that the |
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obligations under the Warrants are solely corporate obligations and that no personal liability whatever shall attach to or be incurred by the shareholders, directors or officers of the Corporation or any of them in respect thereof, any and all rights and claims against every such shareholder, officer or director being hereby expressed waived as a condition of and as a consideration for the issue of the Warrants. | ||
8. | The Warrants evidenced by this Warrant Certificate are not transferable. | |
9. | If any Warrant certificate becomes stolen, lost, mutilated or destroyed, the Corporation, shall, on such terms as it may in its discretion acting reasonably impose, issue and deliver to the Holder a new Warrant certificate of like denomination, tenor and date as the Warrant certificate so stolen, lost, mutilated or destroyed. | |
10. | The Corporation shall maintain at its principal office a register of the names and addresses of the holders of the Warrants. | |
11. | The Warrants evidenced by this Warrant Certificate and the Common Shares issuable upon exercise thereof are subject to statutory resale restrictions under applicable securities legislation and may not be traded until the expiry of certain hold periods, except as permitted by and in compliance with applicable securities legislation. | |
12. | If any date upon or by which any action is required to be taken by the Corporation or the Holder is not a business day then such action shall be required to be taken on or by the next day which is a business day. In the event the Expiration Date falls on a date which is not a business day, the Expiration Date shall be extended to the next succeeding day that is a business day. | |
13. | Words importing the singular number also include the plural and vice versa and words importing any gender include all genders. | |
14. | The division of this Warrant Certificate into sections or other subdivisions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Warrant Certificate or the Warrants. | |
15. | If any provision of this Warrant Certificate shall be void or unenforceable for any reason, it shall be severed from the remainder of the provisions and such remainder shall remain in full force and effect notwithstanding such severance. Any court with jurisdiction over any dispute relating to the Warrants may amend the provisions of this Warrant Certificate and the terms of the Warrants to the minimum extent required to render the impugned provision valid and enforceable. | |
16. | Time shall be of the essence hereof. | |
17. | Unless otherwise indicated, any reference to dollar amounts or $ is expressed in Canadian dollars. | |
18. | As used in this Warrant Certificate, business day means a day other than a Saturday, Sunday, any statutory or civic holiday or any other day on which banks are generally closed in Rochester, New York. | |
19. | Except as otherwise provided in this Warrant Certificate, any notice or other communication required or permitted to be given in respect of the Warrants shall be in writing and shall be given by facsimile or by hand-delivery as provided below. Any notice or other communication, if sent by facsimile, shall be deemed to have been received on the business day on which it was sent, or if delivered by hand shall be deemed to have been received at the time it is delivered. Notice of change of address shall also be governed by this section. Notices and other communications shall be addressed and delivered as follows: |
(a) | in the case of the Corporation: |
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(b) | in the case of the Holder, by personal or couriered delivery to such holder at the address of the Holder as set forth on the register maintained by the Corporation, as described in section 8. |
20. | The Corporation may deem and treat the Holder as the absolute owner of these Warrants for all purposes and shall not be affected by any notice or knowledge to the contrary. The receipt by the Holder for Common Shares purchasable pursuant to the Warrants evidenced hereby shall be a good discharge to the Corporation for the same and the Corporation shall not be bound to inquire into such Holders title. | |
21. | The terms and conditions of the Warrants shall enure to the benefit of and be binding upon the Holder, and the Holders heirs, personal representatives, successors and assigns (as the case may be) and shall enure to the benefit of and be binding upon the Corporation and its successors and assigns. In the case of the consolidation, amalgamation, arrangement, merger or transfer of the undertaking or assets of the Corporation as an entirety, or substantially as an entirety, to another corporation, the successor corporation resulting from such consolidation, amalgamation, arrangement, merger or transfer (if not the Corporation) will be bound by the provisions hereof and for the due and punctual performance and observance of each and every covenant and obligation contained in this Warrant to be performed by the Corporation. | |
22. | The Warrants shall be governed by the laws of the State of New York and the laws of the United States of America applicable therein. The parties irrevocably attorn and submit to the non-exclusive jurisdiction of the courts of New York with respect to any matter arising hereunder or related hereto. | |
23. | These Warrants and the Common Shares issuable upon the exercise of these warrants have not been and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act) or any state securities laws. These Warrants may not be exercised in the United States (as defined in regulations under the U.S. Securities Act) unless the Warrants and Common Shares issuable upon exercise hereof have been registered under the U.S. Securities Act and any applicable state securities laws or unless as exemption from such registration is available, and the Corporation receives an opinion of counsel in form and substance satisfactory to it to such effect. |
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ICUITI CORPORATION
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By: | ||||
Paul J. Travers, President and CEO | ||||
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TO:
ICUITI CORPORATION (the Corporation)
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Name in Full | Address | Number of Common Shares | ||
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By: | |||||
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$247,690.92 | June 16, 2000 |
INTERACTIVE IMAGING SYSTEMS, INC. | ||||||
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By:
Name: |
/s/ Paul J. Travers
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Title: | President |
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VUZIX CORPORATION | ||||||
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By:
Name: |
/s/ Grant Russell
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Title: | Chief Operating Officer | ||||
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/s/ Paul Travers | ||||||
Paul Travers |
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Vuzix Corporation | ||||||
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By: | |||||
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Name: |
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Title: | Chief Operating Officer |
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Amount of | ||||||||||
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(a) | All of Borrowers Accounts (as defined in Section 9-106 of the Uniform Commercial Code as in effect in the State of New York (the UCC )) whether secured or unsecured, now owned or hereafter acquired, and the proceeds thereof (the Accounts ); | |
(b) | All of Borrowers Instruments (as defined in Section 9-105(1)(i) of the UCC), now owned or hereafter acquired, and the proceeds thereof; | |
(c) | All of Borrowers Chattel Paper (as defined in Section 9-105(1)(b) of the UCC), now owned or hereafter acquired, and the proceeds thereof; | |
(d) | All of Borrowers General Intangibles (as defined in Section 9-106 of the UCC), now owned or hereafter acquired, and the proceeds thereof (the General Intangibles ); | |
(e) | All of Borrowers Inventory (as defined in Section 9-109(4) of the UCC), now owned or hereafter acquired, and the proceeds thereof (the Inventory ); | |
(f) | All of Borrowers Equipment (as defined in Section 9-109(2) of the UCC) and all attachments, accessories, parts or tooling relating thereto and all replacements for the foregoing, in each case now owned or hereafter acquired, and the proceeds thereof (the Equipment ); | |
(g) | All of Borrowers Insurance with respect to the Inventory, General Intangibles, Fixtures, Equipment and Goods against risks of fire, theft or any other physical damage or loss, now owned or hereafter acquired, and the proceeds thereof, and all insurance insuring the payment of Accounts, now owned or hereafter acquired, and the proceeds thereof; | |
(h) | All goodwill, trade names, trademarks, trade secrets, know-how, inventions, patents, patent applications, copyrights and other intellectual property, now owned or hereafter acquired by Borrower, or any rights of Borrower with respect to any of the foregoing, now owned or hereafter acquired, whether or not any of the same are covered in other categories of this Schedule, and the proceeds thereof; | |
(i) | All of Borrowers Documents of Title (as defined in Section 1-201-(15) of the UCC), now owned or hereafter acquired, and the proceeds thereof; |
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(j) | All of Borrowers Goods (as defined in Section 2-105(1) of the UCC), now owned or hereafter acquired, whether or not any of the same are covered in other categories of this Schedule, and the proceeds thereof (the Goods ); | |
(k) | All of Borrowers Fixtures (as described in Section 9-313 of the UCC), now owned or hereafter acquired, and the proceeds thereof (the Fixtures ); | |
(l) | All of Borrowers Investment Property (as defined in Section 9-115 of the UCC), now owned or hereafter acquired, and all proceeds and General Intangibles arising therefrom (the Investment Property ); | |
(m) | All of Borrowers right, title and interest in all of its books, records, ledger sheets, files and other data and documents, now owned or hereafter existing, relating to any of the items listed in Sections (a) through (k) above; | |
(n) | All of Borrowers rights as a seller of goods under Article 2 of the UCC with respect to the Inventory, and as to goods represented by or securing any of the Accounts, all of Debtors rights therein including, without limitation, rights of stoppage in transit, replevin and reclamation; and | |
(o) | All guarantees, mortgages and real or personal property leases or other written or oral agreements or property securing or relating to any of the items referred to above, or acquired for the purpose of securing and enforcing any of such items; and | |
(p) | All sums at any time standing to Borrowers credit on Secured Partys books, and all moneys, securities and other property of Borrower at any time in Secured Partys possession or in which Lender has a lien or security interest, and all proceeds thereof. |
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1. | Concurrent with closing of the IPO and provided that this agreement has not terminated in accordance with its terms, the Company agrees that it will, as a fiscal advisory fee (the Fiscal Advisory Fee ) in respect of the Services, issue to the Advisors, such number of shares (the Payment Shares ) of its common stock as is equal to the lesser of (a) the Fee Rate (as determined pursuant to Section 2 hereof) multiplied by the aggregate number of shares of the Corporations common stock outstanding as of such date, including all such shares issued pursuant to the IPO, and (b) such number as may be acceptable to all applicable regulatory authorities (including approval of any stock exchange on which the Corporations shares of common stock are proposed to be listed). Notwithstanding the foregoing: (i) no Payment Shares shall be issuable to an Advisor unless such Advisor is, at the time of closing of the IPO, a member of the syndicate of investment dealers formed in connection with the IPO; and (ii) to the extent that no Proceeds (as defined below) are raised from the sale of securities pursuant to the IPO, then no Fiscal Advisory Fee shall be payable. | |
2. | For purposes of this Agreement, the Fee Rate shall be determined based on the total gross proceeds raised from the sale of securities of the Corporation pursuant to the IPO (the Proceeds ). In the event that the Proceeds are (a) less than Cdn$8,000,000, then the Fee Rate shall be 1.00%; (b) Cdn$8,000,000 to Cdn$9,999,999, then the Fee Rate shall be 1.25%; (c) Cdn$10,000,000 to Cdn$12,499,999, then the Fee Rate shall be 1.50%; and (d) Cdn$12,500,000 or more, then the Fee Rate shall be 2.00%. |
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3. | In the event that the IPO closes in more than one tranche, the Fee Rate and the number of Payment Shares shall be recalculated at each such closing and the Corporation shall issue to the Advisors in accordance with this Agreement such additional number of shares of its common stock as is equal to the number of Payment Shares so recalculated, less any Payment Shares issued to the Advisors on prior closings. | |
4. | Each of the Advisors will be entitled to receive 25% of the Payment Shares. In addition, the Corporation shall either allocate all of the remaining 50% of the Payment Shares between the Advisors in such proportions as the Corporation may deem to be most equitable, based on the performance of the Advisors in connection with the IPO, or cancel that remaining portion of the Fiscal Advisory Fee. | |
5. | Each Advisor represents and warrants to the Corporation that it is an accredited investor within the meaning of National Instrument 45-106. The Payment Shares to be issued to each of the Advisors shall be registered in the name or names or for the benefit of the respective Advisor may direct and shall be delivered to or to the direction of the respective Advisors concurrent with closing of the IPO. | |
6. | The Corporation is relying on the representations and warranties contained herein, along with filings made by the Advisors with applicable regulatory authorities to determine each Advisors eligibility to be issued the Payment Shares under applicable securities laws. Each Advisor hereby severally agrees to indemnify the Corporation and each of its directors and officers against all losses, claims, costs, expenses, damages or liabilities which any of them may suffer or incur as a result of or arising from reliance thereon. | |
7. | The Corporation hereby represents and warrants to the Advisors that this Agreement has been authorized by all necessary corporate action on the part of the Corporation and is a legal and binding agreement enforceable against it. | |
8. | This Agreement supersedes, terminates and cancels any and all previous agreements, representations or warranties, written or oral, between the parties relating to the Fiscal Advisory Fee and the Payment Shares. | |
9. | Each Advisor hereby irrevocably agrees that the Payment Shares will be subject to resale restrictions in accordance with applicable securities laws and the rules of any stock exchange on which the Corporations shares of common stock are proposed to be listed and will be subject to further resale restrictions for a period of one year following the date of issuance pursuant to the Advisors form of lock-up agreement. | |
10. | This Agreement will terminate and be of no further force or effect without further action by any party, on October 31, 2009, provided that if the first tranche of the IPO has closed prior to such date, this Agreement will continue to apply to subsequent closings of the IPO after such date. |
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11. | This Agreement is governed by the laws of the Province of Ontario and the parties attorn to the exclusive jurisdiction of the courts of Ontario for the resolution of all disputes arising out of or in connection with this Agreement. | |
12. | This Agreement may be executed in several counterparts (including by fax), each of which when so executed shall be deemed to be an original and shall have the same force and effect as an original and such counterparts together shall constitute one and the same instrument. |
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VUZIX CORPORATION
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Per: | /s/ Paul J. Travers | |||
Authorized Signatory | ||||
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CANACCORD CAPITAL CORPORATION
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Per: | /s/ David Rentz | |||
Authorized Signatory | ||||
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BOLDER INVESTMENT PARTNERS, LTD.
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Per: | /s/ Paul Woodward | |||
Authorized Signatory | ||||
(a) | assisting and advising the Corporation with respect to capital markets strategies; | ||
(b) | facilitating introductions of the Corporation to prospective providers of debt and equity capital, including venture capital; | ||
(c) | assisting the Corporation in its development of an investor relations strategy and communications with existing investors; | ||
(d) | assisting and advising the Corporation with respect to negotiating the form, structure, terms and price of a proposed financing; | ||
(e) | identifying, approaching and conducting discussions with prospective investors; | ||
(f) | assisting the Corporation in the preparation of any confidential information memorandum or other documents appropriate for the solicitation of expressions of interest from third parties; | ||
(g) | assisting and advising the Corporation with respect to negotiating the form, structure, terms and price of a proposed financing; | ||
(h) | providing the Corporation with analysis and advice as to the financial implications of a proposed financing; | ||
(i) | together with the Corporations counsel, assisting in negotiating documentation necessary to complete a proposed financing; and | ||
(j) | providing such other financial advisory services as the Corporation and the Advisors agree are appropriate in the circumstances. |