Amended and Restated Stock Option Plan
This Plan is intended to encourage ownership of Stock by officers, employees, directors,
consultants and other key persons of the Company and its Affiliates and to provide additional
incentives for them to promote the success of the Companys business. The Plan is intended to be an
incentive stock option plan within the meaning of Section 422 of the Code but not all Options
granted hereunder are required to be Incentive Options.
As used in this Plan the following terms shall have the following meanings:
2.1. Act means the Securities Act of 1933, as amended.
2.2. Affiliate means a parent or subsidiary corporation of the Company, as defined in
Sections 424(e) and (f), respectively, of the Code.
2.3. Board means the Companys Board of Directors.
2.4. Code means the Internal Revenue Code of 1986, as amended from time to time, or any
statute successor thereto, and any regulations issued from time to time thereunder.
2.5. Committee means a committee appointed by the Board, responsible for the administration
of the Plan, as provided in Section 5 of the Plan. For any period during which no such committee is
in existence all authority and responsibility assigned the Committee under the Plan shall be
exercised, if at all, by the Board.
2.6. Company means Vuzix Corporation (f/k/a Kaotech Corporation, Interactive Imaging
Systems, Inc. and Icuiti Corporation), a corporation organized under the laws of the State of
2.7. Employment Agreement means an agreement, if any, between the Company and an Optionee,
setting forth, inter alia, conditions and restrictions upon the transfer of shares of
2.8. Fair Market Value means the value of a share of Stock on any date as determined by the
2.9. Grant Date means the date as of which an Option is granted, as determined under
2.10. Incentive Option means an Option which by its terms is intended to be treated as an
incentive stock option within the meaning of Section 422 of the Code.
2.11. Nonstatutory Option means any Option that is not an Incentive Option.
2.12. Option means an Option to purchase shares of Stock granted under the Plan including
an Incentive Option and a Nonstatutory Option.
2.13. Option Agreement means a written agreement between the Company and an Optionee,
setting forth the terms and conditions of an Option.
2.14. Option Price means the price paid by an Optionee for a share of Stock upon exercise
of an Option.
2.15. Optionee means a person eligible to receive an Option, as provided in Section 6, to
whom an Option shall have been granted under the Plan.
2.16. Plan means this Icuiti Corporation Amended and Restated Stock Option Plan, as amended
from time to time, which amends and restates the 1997 Stock Option Plan of the Company, as amended,
in its entirety.
2.17. Stock means common stock, par value $.001 per share, of the Company.
2.18. Stock Restriction Agreement means an agreement between the Company and the Optionee
in such form as the Committee may prescribe in connection with the grant of any Option, setting
forth certain restrictions upon the transfer of shares of Stock.
2.19. Ten Percent Owner means a person who owns, or is deemed within the meaning of Section
422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (or any Affiliate). Whether a person is a Ten Percent Owner
shall be determined with respect to each Option based on the facts existing immediately prior to
the Grant Date of such Option.
3. Term of the Plan
Commencing upon the approval of the Plan by the Board, Options may be granted hereunder at any time
until the Plan is terminated by the Board. Options granted prior to shareholder approval of the
Plan are hereby expressly conditioned upon such approval, and shall be void ab initio in
the event the shareholders of the Company shall fail to approve the Plan within twelve (12) months
of the Boards approval of the Plan. No Incentive Options may be granted under the Plan after ten
(10) years from the date the Plan is adopted by the Board or approved by the Companys
shareholders, whichever is earlier.
4. Stock Subject to the Plan
At no time shall the number of shares of Stock then outstanding which are attributable to the
exercise of Options granted under the Plan, plus the number of shares then issuable upon exercise
of outstanding Options granted under the Plan, exceed 40,000,000 shares, subject, however,
to the provisions of Section 17 of the Plan. Shares to be issued upon the exercise of Options
granted under the Plan may be either authorized but unissued shares or shares held by the Company
in its treasury. If any Option expires, terminates, or is canceled for any reason without having
been exercised in full, the shares not purchased thereunder shall again be available for Options
thereafter to be granted.
The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the
Committee shall have complete authority, in its discretion, to make or to select the manner of
making the following determinations with respect to each Option to be granted by the Company in
addition to any other determinations allowed the Committee under the Plan: (a) the employee or
consultant to receive the Option; (b) whether the Option (if granted to an employee) will be an
Incentive Option or Nonstatutory Option; (c) the time of granting the Option; (d) the number of
shares subject to the Option; (e) the Option Price; (f) the Option period; (g) the Option exercise
date or dates; and (h) the effect of termination of employment or other association with the
Company and its Affiliates on the subsequent exercisability of the Option (subject to the Incentive
Option requirements of Section 422 of the Code). In making such determinations, the Committee may
take into account the nature of the services rendered by the respective employees and consultants,
their present and potential contributions to the success of the Company and its subsidiaries, and
such other factors as the Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine the terms and
provisions of the respective Option Agreements (which need not be identical), and to make all other
determinations necessary or advisable for the administration of the Plan. The Committees
determinations made in good faith on matters referred to in this Plan shall be conclusive.
Options shall be granted only to full or part-time officers, employees, directors, consultants and
other key persons (including prospective employees) of the Company and its Affiliates who are
responsible for, or contribute to, the management, growth or profitability of the Company and its
Affiliates as are selected from time to time by the Committee in its sole discretion.
7. Time of Granting Options
The granting of an Option shall take place only when an Option Agreement is duly executed and
delivered by the Company to the Optionee. The granting of an Option shall take place at the time
specified in the Option Agreement. Only if expressly so provided in the Option Agreement shall the
Grant Date be the date on which an Option Agreement shall have been duly executed and delivered by
the Company to the Optionee.
8. Option Price
The Option Price under each Incentive Option shall be not less than 100% of the Fair Market Value
of Stock on the Grant Date, or not less than 110% of the Fair Market Value of Stock on the Grant
Date if the Optionee is a Ten Percent Owner. The Option Price under each Nonstatutory Option shall
not be so limited solely by reason of this Section 8. However, in the event that the Committee
determines to grant a Nonstatutory Option with an Option Price per share of Stock that is less than
the Fair Market Value per share of Stock at such time the Nonstatutory Option is granted, the
Committee shall incorporate into the related Option Agreement such terms and conditions as it
determines necessary to ensure that the Nonstatutory Option satisfies the conditions of paragraphs
(2), (3), and (4) of Section 409A(a) of the Code.
9. Option Period
No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or
after the fifth anniversary of the Grant Date, if the Optionee is a Ten Percent Owner. The Option
period under each Nonstatutory Option shall not be so limited solely by reason of this Section 9.
An Option may be immediately exercisable or become exercisable in such installments, cumulative or
noncumulative, as the Committee may determine. In the case of an Option not otherwise immediately
exercisable in full the Committee may accelerate the exercisability of such Option in whole or in
part at any time, provided the acceleration of the exercisability of any Incentive Option would not
cause the Option to fail to comply with the provisions of Section 422 of the Code.
10. Limit on Incentive Option Characterization
An Incentive Option shall be considered to be an Incentive Option only to the extent that the
number of shares of Stock for which the Option first becomes exercisable in a calendar year do not
have an aggregate Fair Market Value (as of the date of the grant of the Option) in excess of the
current limit. The current limit for any Optionee for any calendar year shall be $100,000 minus
the aggregate Fair Market Value at the date of grant of the number of shares of Stock available for
purchase for the first time in the same year under each other Incentive Option previously granted
to the Optionee under the Plan, and under each other incentive stock option previously granted to
the Optionee under any other incentive stock option plan of the Company and its Affiliates, after
December 31, 1986. Any shares of Stock which would cause the foregoing limit to be
be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms
to those of the Incentive Option.
11. Exercise of Option
An Option may be exercised by the Optionee giving written notice, in the manner provided in Section
23, specifying the number of shares with respect to which the Option is then being exercised. The
notice shall be accompanied by payment in the form of cash, or certified or bank check payable to
the order of the Company in an amount equal to the Option Price of the shares to be purchased or,
if the Committee had so authorized on the grant of any particular Option hereunder (and subject
such conditions, if any, as the Committee may deem necessary to avoid adverse accounting effects to
the Company) by delivery of that number of shares of Stock having a fair market value equal to the
Option Price of the shares to be purchased. Receipt by the Company of such notice and payment shall
constitute the exercise of the Option. Within 30 days thereafter, but subject to the remaining
provisions of the Plan, the Company shall deliver or cause to be delivered to the Optionee or his
agent a certificate or certificates for the number of shares then being purchased. Such shares
shall be fully paid and nonassessable. Nothing herein shall be construed to preclude the Company
from participating in a so-called cashless exercise, provided the Optionee or other person
exercising the Option and each other party involved in any such exercise shall comply with such
procedures, and enter into such agreements, of indemnity or otherwise, as the Company shall
12. Restrictions on Issue of Shares
12.1. Violation of Law. Notwithstanding any other provision of the Plan, if, at any time,
in the reasonable opinion of the Company the issuance of shares of Stock covered by the exercise of
any Option may constitute a violation of law, then the Company may delay such issuance and the
delivery of a certificate for such shares until (i) approval shall have been obtained from such
governmental agencies, other than the Securities and Exchange Commission, as may be required under
any applicable law, rule, or regulation; and (ii) in the case where such issuance would constitute
a violation of a law administered by or a regulation of the Securities and Exchange Commission, one
of the following conditions shall have been satisfied:
(a) the shares with respect to which such Option has been exercised are at the time of the issue of
such shares effectively registered under the Act; or
(b) the Company shall have received an opinion, in form and substance satisfactory to the Company,
from the Companys legal counsel to the effect that the sale, transfer, assignment, pledge,
encumbrance or other disposition of such Shares or such beneficial interest, as the case may be
does not require registration under the Act or any applicable State securities laws.
The Company shall make all reasonable efforts to bring about the occurrence of said events.
12.2. Execution of Stock Restriction Agreement: Interpretation. Whenever shares are to be
issued pursuant to an Option, the Company shall be under no obligation to issue such shares until
such time, if ever, as the person who exercises such Option, in whole or in part, shall have
executed and delivered to the Company the Stock Restriction Agreement specified by the Committee in
connection with the grant of such Option, if any. In the event of any conflict between the
provisions of this Plan and provisions of a Stock Restriction Agreement or Employment Agreement,
the provisions of the Stock Restriction Agreement or Employment Agreement shall control, but
insofar as possible the provisions of the Plan and any such Agreement shall be construed so as to
give full force and effect to all such provisions.
12.3. Placement of Legends. Each certificate representing shares issued upon the exercise
of an Option will bear restrictive legends which may refer to applicable restrictions under the
Stock Restriction Agreement and Employment Agreement, if any.
13. Purchase for Investment; Subsequent Registration
13.1. Investment Representations. Unless the shares to be issued upon exercise of an Option
granted under the Plan have been effectively registered under the Act, the Company shall be under
no obligation to issue any shares covered by any Option unless the person who exercises such
Option, in whole or in part, shall give a written representation to the Company which is
satisfactory in form and substance to its counsel and upon which the Company may reasonably rely,
that he or she is acquiring the shares issued pursuant to such exercise of the Option of his or her
own account for the purpose of investment and not with a view to, or for sale in connection with
the distribution of any such shares.
13.2. Registration. If the Company shall deem it necessary or desirable to register under
the Act or other applicable statutes any shares with respect to which an Option shall have been
granted, or to qualify any such shares for exemption from the Act or other applicable statutes,
then the Company shall take such action at its own expense. The Company may require from each
Option holder or each holder of shares of Stock acquired pursuant to the Plan, such information in
writing for use in any registration statement, prospectus, preliminary prospectus or offering
circular as is reasonably necessary for such purpose and may require reasonable indemnity to the
Company and its officers and directors from such holder against all losses, claims, damage and
liabilities arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made. In addition, the Company may require of any such person
that he or she agree that, without the prior written consent of the Company or such managing
underwriter, he or she will not sell, make any short sale of, loan, grant any option for the
purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares of Stock during the
180 day period commencing on the effective
date of the registration statement relating to such
underwritten public offering of securities.
13.3. Placement of Legends: Stop Orders: etc. Each share of Stock issued pursuant to any
Option granted under this Plan may bear a reference to the investment representation made in
accordance with Section 13.1 in addition to any other applicable restriction under the Plan and the
terms of the Option and to the fact that no registration statement has been filed with the
Securities and Exchange Commission in respect to said Stock. All certificates for shares of Stock
or other securities delivered under the Plan shall be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under the rules, regulations, and other
requirements of any stock exchange upon which the Stock is then listed, and any applicable Federal
or state securities law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
14. Withholding; Notice of Disposition of Stock Prior to Expiration of Specified Holding Period
14.1. Tax Withholding. Whenever shares are to be issued in satisfaction of an Option
granted hereunder, the Company shall have the right to require the Optionee to remit to the Company
an amount sufficient to satisfy federal, state, local or other withholding tax requirements if and
to the extent required by law (whether so required to secure for the Company an otherwise available
tax deduction or otherwise) prior to the delivery of any certificate or certificates for such
14.2. Notification of Disposition. Each person exercising any Incentive Option granted
under the Plan shall be deemed to have covenanted with the Company to report to the Company any
disposition of such shares prior to the expiration of the holding periods specified by Section
422(a)(1) of the Code and if and to the extent that the realization of income in such a disposition
imposes upon the Company federal, state, local or other withholding tax requirements or any such
withholding is required to secure for the Company an otherwise available tax deduction, to remit to
the Company an amount in cash sufficient to satisfy those requirements.
15. Termination of Association with the Company
Unless the Committee shall provide otherwise in the grant of a particular Option under the Plan, if
the Optionees employment or other association with the Company is terminated, whether voluntarily
or otherwise, the Option shall cease to be exercisable in any respect on the 30th day following
such termination. Military or sick leave shall not be deemed a termination of employment or other
association, provided that it does not exceed the longer of ninety (90) days or the period
during which the absent Optionees reemployment rights, if any, are guaranteed by statute or by
16. Transferability of Options
Options shall not be transferable, other than by will or the laws of descent and distribution, and
may be exercised during the life of the Optionee only by the Optionee.
17. Adjustments for Corporate Transactions
17.1. Stock Dividends, Etc. In the event of any stock dividend payable in Stock or any
split-up or contra on in the number of shares of Stock after the date of the Option Agreement and
prior to the exercise in full of the Option, the number of shares subject to such Option Agreement
and the price to be paid for each share subject to the Option shall be proportionately adjusted.
17.2. Stock Reclassification. In the event of any reclassification or change of outstanding
shares of Stock, shares of stock or other securities equivalent in kind and value to those shares
an Optionee would have received if he or she had held the full number of shares of Stock subject to
the Option immediately prior to such reclassification or change and had continued to hold those
shares (together with all other shares, stock and securities thereafter issued in respect thereof)
to the time of the exercise of the Option shall thereupon be subject to the Option.
17.3. Consolidation or Merger. Subject to the remainder of this Section 17.3, in the event
of any consolidation or merger of the Company with or into another company or in case of any sale
or conveyance to another company or entity of the property of the Company as a whole or
substantially as a whole, shares of stock or other securities equivalent in kind and value to those
shares and other securities an Optionee would have received if he or she had held the full number
of shares of Stock remaining subject to the Option immediately prior to such consolidation, merger,
sale or conveyance and had continued to hold those shares (together with all other shares, stock
and securities thereafter issued in respect thereof) to the time of the exercise of the Option
shall thereupon be subject to the Option. However, unless any Option Agreement shall provide
different or additional terms, in any such transaction the Committee, in its discretion, may
provide instead that any outstanding Option shall terminate, to the extent not exercised by the
Optionee prior to termination, either (a) at the close of a period of not less than ten (10) days
specified by the Committee and commencing on the Committees delivery of written notice to the
Optionee of its decision to terminate such Option without payment of consideration as provided in
the following clause or (b) as of the date of the transaction, in consideration of the Companys
payment to the Optionee of an amount of cash equal to the difference between the aggregate Fair
Market Value of the shares of Stock for which the Option is then exercisable and the aggregate
exercise price for such shares under the Option.
17.4. Dissolution or Liquidation. Upon dissolution or liquidation of the Company, the
Option shall terminate, but the Optionee (if at the time in the employ of or otherwise associated
with the Company or any of its Affiliates) shall have the right, immediately
prior to such dissolution or liquidation, to exercise the Option to the extent exercisable on the
date of such dissolution or liquidation.
17.5. Related Matters. Any adjustment required by this Section 17 shall be determined and
made by the Committee. No fraction of a share shall be purchasable or deliverable upon exercise,
but in the event any adjustment hereunder of the number of shares covered by the Option shall cause
such number to include a fraction of a share, such number of shares shall be adjusted to the
nearest smaller whole number of shares. In the event of changes in the outstanding Stock by reason
of any stock dividend, split-up, contraction, reclassification, or change of outstanding shares of
Stock of the nature contemplated by this Section 17, the number of shares of Stock available for
the purposes of the Plan as stated in Section 4 shall be correspondingly adjusted.
18. Reservation of Stock
The Company shall at all times during the term of the Plan and any outstanding Options granted
hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient
to satisfy the requirements of the Plan (if then in effect) and such Options and shall pay all fees
and expenses necessarily incurred by the Company in connection therewith.
19. Limitation of Rights in Stock; No Special Employment or Other Rights
The Optionee shall not be deemed for any purpose to be a stockholder of the Company with respect to
any of the shares of Stock covered by an Option, except to the extent that the Option shall have
been exercised with respect thereto and, in addition, a certificate shall have been issued therefor
and delivered to the Optionee or his agent. Any Stock issued pursuant to the Option shall be
subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the
Certificate of Incorporation, the By-laws of the Company, the Stock Restriction Agreement and the
Employment Agreement. Nothing contained in the Plan or in any Option shall confer upon any Optionee
any right with respect to the continuation of his or her employment or other association with the
Company (or any Affiliate), or interfere in any way with the right of the Company (or any
Affiliate), subject to the terms of any separate employment or consulting agreement or provision of
law or corporate articles or by-laws to the contrary, at any time to terminate such employment or
consulting agreement or to increase or decrease the compensation of the Optionee from the rate in
existence at the time of the grant of an Option.
20. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of
the Company shall be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangement as it may deem desirable, including without limitation, the granting of
stock options other than under the Plan, and such arrangements may be either applicable generally
or only in specific cases.
21. Terminations and Amendment of the Plan
The Board may at any time terminate the Plan or make such modifications of the Plan as it shall
deem advisable. No termination or amendment of the Plan may, without the consent of the Optionee to
whom any Option shall therefore have been granted, adversely affect the rights of such Optionee
under such Option.
22. Notices and Other Communications
Any notice, demand, request or other communication hereunder to any party shall be deemed to be
sufficient if contained in a written instrument delivered in person or sent by first class
registered, certified or overnight mail, postage prepaid, or faxed with a confirmation copy by
regular certified or overnight mail, addressed or faxed, as the case may be, (i) if to the
Optionee, at his or her residence address last filed with the Company and (ii) if to the Company,
at 75 Town Centre Drive, Rochester, NY 14623, Attn: Paul J. Travers, President and CEO, Fax
Number: (585) 359-4172, or to such other address or fax number, as the case may be, as the
addressee may have designated by notice to the addresser. All such notices, requests, demands and
other communications shall be deemed to have been received: (i) in the case of personal delivery,
on the date of such delivery; (ii) in the case of mailing, when received by the addressee; and
(iii) in the case of facsimile transmission, when communicated by facsimile machine report.
23. Governing Law
The Plan and all Options and actions taken thereunder shall be governed, interpreted and enforced
in accordance with the laws of the State of Delaware, without regard to the conflict of laws
principles thereof. The following does not form part of this Plan but is included solely for
* * * * * * *
Date of Board Approval: June 15, 2007
Date of Shareholder Approval: June 15, 2007