<SEC-DOCUMENT>0001144204-12-024985.txt : 20120430
<SEC-HEADER>0001144204-12-024985.hdr.sgml : 20120430
<ACCEPTANCE-DATETIME>20120430170558
ACCESSION NUMBER:		0001144204-12-024985
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20120629
FILED AS OF DATE:		20120430
DATE AS OF CHANGE:		20120430
EFFECTIVENESS DATE:		20120430

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Vuzix Corp
		CENTRAL INDEX KEY:			0001463972
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER PERIPHERAL EQUIPMENT, NEC [3577]
		IRS NUMBER:				043392453
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-53846
		FILM NUMBER:		12796085

	BUSINESS ADDRESS:	
		STREET 1:		75 TOWN CENTRE DRIVE
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14623
		BUSINESS PHONE:		585-359-5900

	MAIL ADDRESS:	
		STREET 1:		75 TOWN CENTRE DRIVE
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14623
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>v311152_def14a.htm
<DESCRIPTION>FORM DEF 14A
<TEXT>
<HTML>
<HEAD>
     <TITLE></TITLE>
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<P STYLE="margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">SCHEDULE 14A</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Rule 14a-101)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INFORMATION REQUIRED IN PROXY STATEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">SCHEDULE 14A INFORMATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Proxy Statement Pursuant to Section 14(a)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">of the Securities Exchange Act of 1934</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Filed by the Registrant <FONT STYLE="font-family: Wingdings">x</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Filed by a Party other than the Registrant <FONT STYLE="font-family: Wingdings">o</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Check the Appropriate Box:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">o</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Preliminary Proxy Statement</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">o</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">x</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Definitive Proxy Statement</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">o</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Definitive Additional Materials</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">o</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Soliciting Material Under Rule 14a-12</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>VUZIX CORPORATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Name of Registrant as Specified in Its
Charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;(Name of Person(s) Filing Proxy Statement if other than
the Registrant)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Payment of Filing Fee (Check the appropriate box):</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">x</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">No fee required</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">o</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(1)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Title of each class of securities to which transaction
applies:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(2)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Aggregate number of securities to which transaction
applies:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(3)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(4)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Proposed maximum aggregate value of transaction:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(5)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Total fee paid:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0"><FONT STYLE="font-family: Wingdings">o</FONT></TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Fee paid previously with preliminary materials:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings">o</FONT> &nbsp;&nbsp;&nbsp;Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(1)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Amount Previously paid:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(2)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Form, Schedule or Registration Statement No.:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(3)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Filing Party:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; text-align: left; padding: 0; text-indent: 0">(4)</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">Date Filed</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>VUZIX CORPORATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>75 Town Centre Drive</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Rochester, New York 14623</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(585) 359-5900</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>To Be Held On</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>June 22, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dear Stockholder:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You are cordially invited to attend the
annual meeting of stockholders of Vuzix Corporation. <B> </B>The meeting will be held on Friday, June 22, 2012 at 11:00 a.m. (local
time) at the Doubletree Hotel, 1111 Jefferson Road, Rochester, New York, 14623, for the following purposes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0">1.</TD><TD STYLE="padding: 0; text-indent: 0">To elect five (5) directors to serve until the 2012 Annual Meeting of Stockholders and until their successors are duly elected
and qualified.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0">2.</TD><TD STYLE="padding: 0; text-indent: 0">To ratify the selection of EFP Rotenberg, LLP as the independent registered public accounting firm of the Company for the year
ending December 31, 2012.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0">3.</TD><TD STYLE="padding: 0; text-indent: 0">To transact such other business as may properly come before the meeting or any adjournment thereof.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The record date for the annual meeting is
May 25, 2012. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.
Our transfer books will not be closed<FONT STYLE="font-size: 10pt">.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 50%; padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">By Order of the Board of Directors</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Steven D. Ward,</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Secretary</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; text-align: left; padding: 0; text-indent: 0">Dated:</TD><TD STYLE="text-align: justify; padding: 0; text-indent: 0">April 30, 2012</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Rochester, New York</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; padding: 2pt; text-align: justify; border: Black 1pt solid"><B>You are cordially
invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return
the enclosed proxy as promptly as possible in order to ensure your representation at the meeting. Your vote is important, no matter
how many shares you owned on the record date. A return envelope is enclosed for your convenience and needs no postage if mailed
in the United States. If you wish, you may vote via the Internet or telephone, instructions for doing so are attached to this Proxy
Statement. Even if you have voted by proxy or via the Internet, you may still vote in person if you attend the meeting. Please
note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you
must obtain a proxy issued in your name from that record holder.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON JUNE 22, 2012.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our proxy statement and annual report to stockholders, which
are enclosed with this mailing, are also available at www.edocumentview.com/vzx</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Table of Contents</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="width: 97%; padding: 0; text-indent: 0">Notice of Annual Meeting of Stockholders</TD>
    <TD STYLE="width: 3%; padding: 0; text-indent: 0; text-align: right">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0">Proxy Statement for 2012 Annual Meeting of Stockholders</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">3</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-indent: 0">Questions and Answers about this Proxy Material and Voting</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">3</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0">Security Ownership of Certain Beneficial Owners and Management</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">7</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Section 16(a) Beneficial Ownership Reporting Compliance</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">8</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0">Proposal 1 - Election of Directors</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">8</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Nominees for Election as Directors</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">9</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Information Regarding the Board and its Committees</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">10</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Compensation Committee Interlocks and Insider Participation</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">12</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Corporate Governance and Related Matters</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">12</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-indent: 0">Proposal 2 &ndash; Ratification of the Selection of the Company&rsquo;s Independent Registered Public</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Accounting Firm for Fiscal 2012</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">13</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-indent: 0">Audit Committee Report</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">14</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0">Compensation of Named Executive Officers and Directors</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">15</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Named Executive Officers</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">15</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Compensation Committee Report</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">20</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Executive Officer Compensation Tables</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">20</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Employment Agreements and Potential Payments upon Termination or a Change in Control</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">23</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0 0 0 0.25in; text-indent: 0">Director Compensation</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">26</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0">Transactions with Related Persons</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-indent: 0">Other Matters</TD>
    <TD STYLE="padding: 0; text-indent: 0; text-align: right">28</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>VUZIX CORPORATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">75 Town Centre Drive</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Rochester, New York 14623</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(585) 359-5900</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROXY STATEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FOR 2012 ANNUAL MEETING OF STOCKHOLDERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This proxy statement is furnished to shareholders
in connection with the solicitation of proxies by the Board of Directors of Vuzix Corporation. (the &quot;Company&quot;) in connection
with the annual meeting of shareholders of the Company to be held on June 22, 2012 at 11:00 a.m., local time, at the Doubletree
Hotel, 1111 Jefferson Road, Rochester, New York, 14623 (the &quot;Meeting&quot;). <B>A copy of the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission (&quot;SEC&quot;) is available without charge upon written request to the
Company's Secretary at the Company's corporate offices, or from the SEC's website at www.sec.gov.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Additional copies of this proxy statement
and the annual report to shareholders, notice of meeting, form of proxy, and directions to be able to attend the meeting and vote
in person, may be obtained from the Company's Secretary, 75 Town Centre Drive, Rochester, New York 14623. This proxy statement,
together with the accompanying annual report to shareholders and form of proxy will first be sent to Shareholders on or about May
31, 2012 and will also be available on the Company&rsquo;s website and at the Company&rsquo;s transfer agent at www.envisionreports.com/VZX.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Important Notice Regarding the Availability
of Proxy Materials</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>for the Annual Meeting of Shareholders
to be Held on June 22, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>This proxy statement, form of proxy,
and the accompanying annual report to shareholders are available at www.vuzix.com</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: center; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>SOLICITATION
AND REVOCABILITY OF PROXIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: center; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">The enclosed proxy
for the Meeting is being solicited by the directors of the Company. Shareholders of record may vote by mail, telephone, or via
the Internet. The toll-free telephone number and Internet web site are listed on the enclosed proxy. If you vote by telephone or
via the Internet you do not need to return your proxy card. If you choose to vote by mail, please mark, date and sign the proxy
card, and then return it in the enclosed envelope (no postage is necessary if mailed within the United States). Any person giving
a proxy may revoke it at any time prior to the exercise thereof by filing with the Secretary of the Company a written revocation
or duly executed proxy bearing a later date. The proxy may also be revoked by a Shareholder attending the Meeting, withdrawing
the proxy and voting in person.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The expense of preparing, printing and mailing
the form of proxy and the material used in the solicitation thereof will be borne by the Company. In addition to solicitation by
mail, proxies may be solicited by the directors, officers and regular employees of the Company (who will receive no additional
compensation therefor) by means of personal interview, telephone or facsimile. It is anticipated that banks, brokerage houses and
other institutions, custodians, nominees, fiduciaries or other record holders will be requested to forward the soliciting material
to persons for whom they hold shares and to seek authority for the execution of proxies; in such cases, the Company will reimburse
such holders for their charges and expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>VOTING SECURITIES AND PRINCIPAL HOLDERS
THEREOF</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The close of business
on May 25, 2012 has been fixed as the record date for determination of the shareholders entitled to notice of, and to vote at,
the Meeting. On that date there were outstanding and entitled to vote 265,259,348 shares of common stock, par value $.001 per share,
of the Company&rsquo;s common stock (the &quot;Common Stock&quot;) each of which is entitled to one vote on each matter at the
Meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Company's
bylaws, a plurality of the votes cast at the Meeting will be required to elect directors, and a majority of the votes cast at the
Meeting will be required to ratify the appointment of the independent auditors for 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The presence, in person or by properly executed
proxy, of the holders of shares of Common Stock entitled to cast a majority of all the votes entitled to be cast at the Meeting
is necessary to constitute a quorum. Holders of shares of Common Stock represented by a properly signed, dated and returned proxy
will be treated as present at the Meeting for purposes of determining a quorum. Proxies relating to &quot;street name&quot; shares
that are voted by brokers will be counted as shares present for purposes of determining the presence of a quorum, but will not
be treated as votes cast at the Meeting as to any proposal as to which the brokers do not have voting instructions and discretion.
These missing votes are known as &ldquo;broker non-votes.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Why am I receiving these materials?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are sending you this proxy statement
and the enclosed proxy card because the board of directors of Vuzix Corporation (&ldquo;Vuzix&rdquo;, the &ldquo;Company&rdquo;,
&ldquo;we&rdquo;, &ldquo;our&rdquo;, &ldquo;us&rdquo;) is soliciting your proxy to vote at the 2012 Annual Meeting of Stockholders.
We invite you to attend the annual meeting and request that you vote on the proposals described in this proxy statement. The meeting
will be held on Friday, June 22, 2012 at 11:00 a.m. (local time) at the Doubletree Hotel, 1111 Jefferson Road, Rochester, New
York. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, date, sign and return
the enclosed proxy card.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are mailing this proxy statement, the
accompanying proxy card, and our Annual Report to Stockholders for the year ended December 31, 2011 on or about May 31, 2012 to
all stockholders of record entitled to vote at the annual meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Who can vote at the annual meeting?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Only stockholders of record at the close
of business on May 25, 2012, the record date for the meeting, will be entitled to vote at the annual meeting. On April 30, 2012,
there were 265,259,348 of common stock outstanding and entitled to vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Stockholder of Record: Shares Registered
in Your Name</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If on May 25, 2012, your shares of Vuzix
common stock were registered directly in your name with our transfer agent, Computershare Trust Company, then you are a stockholder
of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend
the meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Beneficial Owner: Shares Registered in
the Name of a Broker or Bank</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If on May 25, 2012, your shares of Vuzix
common stock were held in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial
owner of shares held in &ldquo;street name&rdquo; and these proxy materials are being forwarded to you by that organization. The
organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting. As a beneficial
owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited
to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the
meeting unless you request and obtain a signed letter or other valid proxy from your broker or other agent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>What am I voting on?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">There are two matters scheduled for a vote:
the election of five (5) directors to serve until the 2013 Annual Meeting of Stockholders, and the ratification of the selection
of EFP Rotenberg, LLP as our independent registered public accounting firm for the year ending December 31, 2012. Our board of
directors does not intend to bring any other matters before the meeting and is not aware of anyone else who will submit any other
matters to be voted on. However, if any other matters properly come before the meeting, the people named on the proxy card, or
their substitutes, will be authorized to vote on those matters in their own judgment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>How many votes do I have?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On each matter to be voted upon, you have
one vote for each share of common stock you owned as of May 25, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>What is the quorum requirement?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A quorum of stockholders is necessary to
hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares entitled to vote are present at
the meeting. Your shares are counted as present at the meeting if:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">You are present and vote in person at the meeting; or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">You have properly submitted a proxy card.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">You have voted via the Internet or by telephone</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Your shares will be counted towards the
quorum only if you submit a valid proxy, have voted via the Internet, have voted via telephone, or vote in person at the meeting.
Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the votes
present at the meeting may adjourn the meeting to another date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>How do I vote?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The procedures for voting are set forth
below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Stockholder of Record: Shares Registered
in Your Name</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you are a stockholder of record, you
may vote in person at the annual meeting, vote by proxy using the enclosed proxy card, vote via the Internet or by telephone. Whether
or not you plan to attend the meeting, we urge you to vote by proxy, via the Internet or by Telephone to ensure your vote is counted.
You may still attend the meeting and vote in person if you have already voted by proxy, via the Internet or by telephone.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">To vote in person, come to the annual meeting and we will give you a ballot when you arrive.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">To vote using the proxy card, simply complete, date and sign the enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">To vote via the Internet or by telephone, follow the instructions on the enclosed proxy card.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Beneficial Owner: Shares Registered in
the Name of Broker or Bank</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you hold your shares in &ldquo;street
name&rdquo; and thus are a beneficial owner of shares registered in the name of your broker, bank or other agent, you must vote
your shares in the manner prescribed by your broker or other nominee. Your broker or other nominee has enclosed or otherwise provided
a voting instruction card for you to use in directing the broker or nominee how to vote your shares. Check the voting form used
by that organization to see if it offers internet or telephone voting. To vote in person at the annual meeting, you must obtain
a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy
materials, or contact your broker or bank to request a proxy form.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>How are votes counted?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You may either vote &ldquo;FOR&rdquo; or
&ldquo;WITHHOLD&rdquo; authority to vote for each nominee for the board of directors. You may vote &ldquo;FOR&rdquo;, &ldquo;AGAINST&rdquo;
or &ldquo;ABSTAIN&rdquo; on any other proposals.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you submit your proxy, vote via the Internet
or by telephone but abstain from voting or withhold authority to vote on one of more matters, your shares will be counted as present
at the meeting for the purpose of determining a quorum. Your shares also will be counted as present at the meeting for the purpose
of calculating the vote on the particular matter with respect to which you abstained from voting or withheld authority to vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you abstain from voting on a proposal,
your abstention has the same effect as a vote against that proposal, except, however, an abstention has no effect on the election
of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you hold your shares in street name and
do not provide voting instructions to your brokerage firm, it may still be able to vote your shares with respect to certain &ldquo;discretionary&rdquo;
(or routine) items, but it will not be allowed to vote your shares with respect to certain &ldquo;non-discretionary&rdquo; items.
In the case of non-discretionary items, for which no instructions are received, the shares will be treated as &ldquo;broker non-votes&rdquo;.
Shares that constitute broker non-votes will be counted as present at the meeting for the purpose of determining a quorum, but
will not be considered entitled to vote on the proposal in question. Your broker does not have discretionary authority to vote
shares for the election of directors but will have discretionary authority to vote on the proposal relating to the ratification
of the selection of the accounting firm. As a result, if you do not vote your street name shares, your broker has the authority
to vote on your behalf with respect to Proposal 2 (the ratification of the selection of the accounting firm), but not with respect
to Proposal 1 (the election of directors). We encourage you to provide instructions to your broker to vote your shares for the
director nominees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>How many votes are needed to approve each Proposal?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><B>Proposal 1 - </B><I>Election of directors</I></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Directors are elected by a plurality of the votes represented
by the shares of common stock present at the meeting in person or by proxy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">This means that the five (5) director nominees with
the most affirmative votes will be elected. Withheld votes, abstentions and broker non-votes will have no effect.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><B>Proposal 2 &ndash; </B><I>Ratification of the selection of EFP Rotenberg, LLP as the independent registered public accounting
firm of the Company for the year ending December 31, 2012.</I></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Approval is by the affirmative vote of a majority of
the shares present in person or by proxy at the meeting and entitled to vote. Abstentions are counted and have the effect of a
vote against the proposal because abstentions are deemed to be present and entitled to vote but are not counted toward the affirmative
vote required to approve such proposal. Broker non-votes will not be entitled to vote on this proposal. Therefore, under applicable
Delaware law, broker non-votes will have no effect on the number of affirmative votes required to adopt such proposal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>What if I return a proxy card, vote via the Internet or by
telephone but do not make specific choices? What are the recommendations of our board of directors?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you return a signed and dated proxy card
or vote via the Internet without marking any voting selections, the persons named as proxy holders on the proxy card will vote
in accordance with the recommendations of the board of directors. The board&rsquo;s recommendation is set forth together with the
description of each proposal in this proxy statement. In summary, the board recommends a vote:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><I>for</I> election of the nominated slate of directors (see Proposal 1); and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0"><I>for</I> ratification of EFP Rotenberg, LLP as the independent registered public accounting firm for the year ending December
31, 2012 (see Proposal 2).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">With respect to any other matter that properly
comes before the meeting, the proxy holders will vote as recommended by the board of directors or, if no recommendation is given,
in their own discretion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Can I change my vote after submitting my proxy, voting via
the Internet or by telephone?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Yes. You can revoke your proxy at any time
before the final vote at the meeting. If you are a stockholder of record, you may revoke your proxy in any one of three ways:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">You may submit another properly completed proxy card with a later date.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">You may send a written notice that you are revoking your proxy to Corporate Secretary, Vuzix Corporation, 75 Town Centre Drive,
Rochester, New York 14623.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">You may attend the annual meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you hold your shares in street name,
contact your broker or other nominee regarding how to revoke your proxy and change your vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>How can I find out the results of the voting at the annual
meeting?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Preliminary voting results will be
announced at the annual meeting. Final voting results will be published in our report on Form 8-K within five (5) business
days after the annual meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>What does it mean if I receive more than one proxy card?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you receive more than one proxy card,
your shares are registered in more than one name or are registered in different accounts. Please complete, date, sign and return
each proxy card, vote your shares via the Internet or by telephone for each proxy card you received to ensure that all of your
shares are voted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Who is paying for this proxy solicitation?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Vuzix will pay for the entire cost of soliciting
proxies. In addition to these mailed proxy materials, our directors, officers and employees may also solicit proxies in person,
by telephone, or by other means of communication. We will not pay our directors, officers and employees any additional compensation
for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials
to beneficial owners.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>When are stockholder proposals due for next year&rsquo;s
annual meeting?</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At our annual meeting each year, our board
of directors submits to stockholders its nominees for election as directors. In addition, the board of directors may submit other
matters to the stockholders for action at the annual meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our stockholders also may submit proposals
for inclusion in the proxy material. These proposals must meet the stockholder eligibility and other requirements of the Securities
and Exchange Commission (the &ldquo;<B>SEC</B>&rdquo;). To be considered for inclusion in next year&rsquo;s proxy materials, you
must submit your proposal in writing by February 3, 2013 to our Corporate Secretary, Vuzix Corporation, 75 Town Centre Drive, Rochester,
New York 14623.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, our by-laws provide that a
stockholder may present from the floor a proposal that is not included in the proxy statement if the stockholder delivers written
notice to our Corporate Secretary not earlier than 120 days and not later 90 days before the first anniversary of the preceding
year&rsquo;s annual meeting. The notice must set forth your name, address and number of shares of stock you hold, a description
of the business to be brought before the meeting, the reasons for conducting such business at the annual meeting, any material
interest you have in the proposal, and such other information regarding the proposal as would be required to be included in a proxy
statement. We have received no such notice for the 2012 annual meeting. For the 2013 annual meeting of stockholders, written notice
must be delivered to our Corporate Secretary at our principal office, 75 Town Centre Drive, Rochester, New York 14623, between
February 22, 2013 and March 24, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our by-laws also provide that if a stockholder
intends to nominate a candidate for election as a director, the stockholder must deliver written notice of such intent to our Corporate
Secretary. The notice must be delivered not earlier than 120 days and not later 90 days before the first anniversary of the preceding
year&rsquo;s annual meeting. The notice must set forth your name and address and number of shares of stock you own, the name and
address of the person to be nominated, a description of all arrangements or understandings between such stockholder and each nominee
and any other person (naming such person) pursuant to which the nomination is to be made by such stockholder, the nominee&rsquo;s
business address and experience during the past five years, any other directorships held by the nominee, the nominee&rsquo;s involvement
in certain legal proceedings during the past ten years and such other information concerning the nominee as would be required to
be included in a proxy statement soliciting proxies for the election of the nominee. In addition, the notice must include the consent
of the nominee to serve as a director if elected. We have received no such notice for the 2012 annual meeting. For the 2013 annual
meeting of stockholders, written notice must be delivered to our Corporate Secretary at our principal office, 75 Town Centre Drive,
Rochester, New York 14623, between February 22, 2013 and March 24, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table shows the amount of
our common stock beneficially owned as of April 28, 2012 by (i) each person or group as those terms are used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the &quot;Exchange Act&quot;), believed by us to beneficially own more than
5% of our common stock, (ii) each of our directors, (iii) each of our executive officers named in the Summary Compensation Table,
and (iv) all of our directors and executive officers as a group. Except as otherwise noted, each person named in the table has
sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community
property laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">Name and Addresses of <BR>Beneficial
    Owner <FONT STYLE="font-size: 8pt"><SUP>(1)</SUP></FONT></TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Shares
    <BR>Beneficially Owned <FONT STYLE="font-size: 8pt"><SUP>(2)</SUP></FONT></TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Percent
    of Outstanding Shares <BR>Beneficially Owned <FONT STYLE="font-size: 8pt"><SUP>(3)</SUP></FONT></TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 75%; font-size: 10pt; text-align: left">Paul J. Travers</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">77,544,015</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><SUP>(4)</SUP></TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">28.54</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Grant Russell</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">13,729,649</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(5)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">5.14</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">William Lee</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">704,000</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(5)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">*</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Frank Zammataro</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">450,000</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(7)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">*</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">Richard Conway</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">46,517,695</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(8)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">14.92</TD><TD NOWRAP STYLE="font-size: 10pt; text-align: left">%*</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Jos&eacute; Cecin</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,000,000</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(7)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">*</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">Michael McCrackan</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,000,000</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(7)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">*</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Paul Churnetski</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">18,511,984</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">6.98</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">Directors and executive officers as a group (6 people)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">94,427,663</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(9)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">34.17</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">*less than 1.0%</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(1)</TD><TD STYLE="padding: 0; text-indent: 0">The address for each person is c/o&nbsp;Vuzix Corporation, 75 Town Centre Drive, Rochester, NY 14623.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(2)</TD><TD STYLE="padding: 0; text-indent: 0">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&nbsp;days after the date of this proxy statement. 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.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(3)</TD><TD STYLE="padding: 0; text-indent: 0">The percentage of shares beneficially owned is based on 265,259,348&nbsp;shares of our common
stock issued and outstanding as of April 30, 2012.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(4)</TD><TD STYLE="padding: 0; text-indent: 0">Includes shares held by the Travers Family Trust, and (i) 1,705,058&nbsp;shares issuable to Mr.
Travers and his son upon exercise of options granted under our 2007 option plan and (ii) 3,730,429 shares issuable to Mr. Travers
upon the conversion of amounts owed for deferred compensation and accrued interest.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(5)</TD><TD STYLE="padding: 0; text-indent: 0">Includes shares held by Mr. Russell&rsquo;s son and (i) 328,423&nbsp;shares issuable upon exercise
of options granted under our 2007 option plan and (ii) 50,000 shares issuable to Mr. Russell&rsquo;s son upon exercise of warrants
to purchase common stock, and (iii) 1,237,449 shares issuable to Mr. Russell upon the conversion of amounts owed for deferred compensation
and accrued interest.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(5)</TD><TD STYLE="padding: 0; text-indent: 0">Includes shares held by Mr. Lee&rsquo;s wife and daughter and (i) 450,000 shares issuable upon exercise of options granted
under our 2009 option plan and (ii) 75,000 shares issuable to Mr. Lee, his wife and daughter upon exercise of warrants to purchase
common stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(7)</TD><TD STYLE="padding: 0; text-indent: 0">Represents shares issuable upon exercise of options granted under our 2009 option plan.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(8)</TD><TD STYLE="text-align: justify">Represents convertible debt and warrants issued to LC
Capital Master Fund, Ltd. for which Mr. Conway has shared voting power.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(10)</TD><TD STYLE="text-align: justify">Includes (i) 4,933,481&nbsp;shares issuable upon exercise
of options granted under our 2007 and 2009 option plans and (ii) 52,645,206 shares issuable upon exercise of warrants to purchase
common stock and conversion of term debt.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;<B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Section 16(a) Beneficial Ownership Reporting Compliance</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Section 16(a) of the Securities Exchange
Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity
securities, to file with the SEC reports of ownership and changes in ownership of common stock and our other equity securities.
Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section
16(a) forms they file. LC Capital Master Fund, Ltd acquired beneficial ownership of 15.0% of our common stock on December 23,
2010 as was reported by its filing with the SEC on Schedule 13D.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="font-weight: normal">SEC
regulations require us to identify any one who filed a required report late during the most recent fiscal year. Based solely
on review of the copies of such reports furnished to the Company and written representations that no other reports were
required during the year ended December 31, 2011, and we believe that, during 2011, all of our directors and executive
officers complied with the reporting requirements of Section 16(a).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROPOSAL 1</B></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ELECTION OF DIRECTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The number of directors is established by
the board and is currently fixed at five (5). At this annual meeting, five (5) persons, comprising the entire membership of the
Board of Directors, are to be elected. Each elected director will serve until the Company's next annual meeting of shareholders
and until a successor is elected and qualified. Messrs. Travers, Russell, Lee and Cecin were elected by the stockholders at the
last annual meeting. Messrs. Scott has been nominated for election as a director by the stockholders for the first time at this
annual meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">It is intended that the accompanying proxy
will be voted in favor of the five (5) persons listed below to serve as directors unless the stockholder indicates to the contrary
on the proxy. All nominees have consented to serve if elected. We expect that each of the nominees will be available for election,
but if any of them is not a candidate at the time the election occurs, it is intended that such proxy will be voted for the election
of another nominee to be designated by the board to fill any such vacancy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For the election of directors, only proxies
and ballots, Internet votes of telephone votes marked &ldquo;FOR all nominees&rdquo;, &ldquo;WITHHELD for all nominees&rdquo; or
specifying that votes be withheld for one or more designated nominees are counted to determine the total number of votes cast;
votes that are withheld are excluded entirely from the vote and will have no effect . Abstentions will have no effect on the vote
for the election of directors. Directors are elected by a plurality of the votes cast. This means that the five (5) nominees who
receive the most affirmative votes will be elected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The term of office of each person elected
as a director will continue until the next annual meeting or until his or her successor has been elected and qualified, or until
the director&rsquo;s death, resignation or removal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The Board of Directors
unanimously recommends a vote FOR the election as directors the nominees listed below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Nominees for Election as Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The names of the nominees, their ages as
of April 30, 2012, and certain information about their business experience during the past five years and their directorships of
other publicly held corporations are set forth below. <B> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Paul J. Travers</I>,
was the founder of Vuzix and has served as our President and Chief Executive Officer since 1997 and as a member of our board of
directors since November 1997. Prior to the formation of Vuzix, Mr. Travers founded both e-Tek Labs, Inc. and Forte Technologies
Inc. He has been a driving force behind the development of our products. With more than 25 years&rsquo; experience in the consumer
electronics field, and 20 years&rsquo; experience in the virtual reality and virtual display fields, he is a nationally recognized
industry expert. He holds an Associate degree in engineering science from Canton, ATC and a Bachelor of Science degree in electrical
and computer engineering from Clarkson University. Mr. Travers resides in Honeoye Falls, New York, United States.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Grant Russell</I>,
<I>Chief Financial Officer, Executive Vice-President</I>. Mr. Russell has served as our Chief Financial Officer since 2000 and
assumed the role of Executive Vice-President in 2008. Mr. Russell holds professional accounting designations in both Canada and
the USA, and has extensive expertise in finance and pubic start-ups. He has successfully founded, operated and sold two prior companies
focused on the computer hardware and software consumer markets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>William Lee</I>.
Mr. Lee has served as the CFO of several companies and has served on the boards of directors of several publicly-held corporations,
including consumer software products firms [See Reg S-X]. Mr. Lee serves as Chairman of the Audit Committee. Mr. Lee&rsquo;s experience
is helpful to us in evaluating strategic investment opportunities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Jos&eacute; A. Cecin</I>.
Mr. Cecin has served as the COO and has served on the boards of directors of several publicly-held corporations, including several
technology firms [see Reg S-X]. Mr. Cecin is an Electrical Engineer with defense schooling and service record and provides the
Company advice on its dealings with US Defense and Government customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Michael Scott. &nbsp;</I>Mr.
Scott is currently a Professor of Law. Mr. Scott specializes in practicing and teaching Technology and Intellectual Property law
and will be a resource to the Board in connection with the Company&rsquo;s dealings with its intellectual properties and licensing
strategies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The board of directors
considers diversity in the makeup of the Board when evaluating director candidates. Characteristics that it considers include nature
and breadth of business experience, education, professional certification, gender, race, education and nationality.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Background of Nominees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white"><I>Paul J. Travers</I>,
age 50, was the founder of Vuzix and has served as our President and Chief Executive Officer since 1997 and as a member of our
board of directors since November 1997. Prior to the formation of Vuzix, Mr.&nbsp;Travers founded both e-Tek Labs, Inc. and Forte
Technologies Inc. He has been a driving force behind the development of our products. With more than 25&nbsp;years&rsquo; experience
in the consumer electronics field, and 20&nbsp;years&rsquo; experience in the virtual reality and virtual display fields, he is
a nationally recognized industry expert. He holds an Associate degree in engineering science from Canton, ATC and a Bachelor of
Science degree in electrical and computer engineering from Clarkson University. Mr.&nbsp;Travers resides in Honeoye Falls, New
York, United States.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 34.55pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white"><I>Grant Russell</I>,
age 59, has served as our Chief Financial Officer since 2000 and as a member of our board of directors since April 3, 2009. From
1997 to 2004, Mr. Russell developed and subsequently sold a successful software firm and a new concept computer store and cyber
caf&eacute;. In 1984, he co-founded Advanced Gravis Computer (Gravis), which, under his leadership as President, grew to become
the world&rsquo;s largest PC and Macintosh joystick manufacturer with sales of $44,000,000 worldwide and 220 employees. Gravis
was listed on NASDAQ and the Toronto Stock Exchange. In September 1996 it was acquired by a US-based Fortune 100 company in a successful
public tender offer. Mr. Russell holds a Bachelor of Commerce degree in finance from the University of British Columbia and is
both a US Certified Public Accountant and a Canadian Chartered Accountant. Mr. Russell resides in Vancouver, British Columbia,
Canada.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white"><I>William Lee</I>,
age 59, has served as a member of our board of directors since June 26, 2009. Mr. Lee has been self-employed as a financial consultant
since May 2008. From January 2006 to May 2008, he served as Chief Financial Officer of Jinshan Gold Mines Inc., a mining company
listed on the Toronto Stock Exchange. From July 2004 to January 2006, he was engaged as a business analyst for Ivanhoe Energy Inc.,
a Toronto Stock Exchange and NASDAQ listed company, and Ivanhoe Mines Ltd. Vancouver, an independent international heavy oil development
and production company with operations in Canada, the United States, China, and Ecuador and listed on the New York and Toronto
Stock Exchanges. Mr. Lee spent nine years engaged in the practice of public accounting with the firm of Deloitte &amp; Touche.
Mr. Lee is a member of the Institute of Chartered Accountants of British Columbia and holds a Bachelor of Commerce degree from
the University of British Columbia. Mr. Lee also currently serves as a director of Tinka Resources Ltd., Halo Resources Ltd., and
Riverside Resources Inc., all of which are listed on the TSX-V. Mr. Lee resides in Delta, British Columbia, Canada.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 34.55pt"><I>Jos&eacute; A.
Cecin</I>, age 48, was recently the Executive Vice President and Chief Operating Officer of RCN Corporation. Previously, he was
a Managing Director of BB&amp;T Capital Markets where he was the Group Head of the firm's Communications Investment Banking practice.
He has served as a director of several publicly traded companies including RCN, Arbinet Corporation, SkyTerra Communications and
NEON Group, Inc. Mr. Cecin earned a BS degree in Electrical Engineering from the United States Military Academy at West Point and
an MBA from Stanford University. Mr. Cecin is the second of the two director nominees designated by Lampe Conway pursuant to the
loan agreement between the Company and LC Capital Master Fund Ltd. (LC).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 34.55pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 34.55pt"><I>Michael Scott</I>,
age 66, is a Professor of Law at the Southwestern Law School in Los Angeles, CA. Previously, he was Partner at various legal firms
specializing in Technology and IP Practices, including Perkins Coie LLP, and Graham &amp; James. He previously served on the board
of Sanctuary Woods Multimedia, Inc., a publicly traded company. He is the author of 7 books on Technology Law as well as the writer
of numerous legal IP-related articles published in journals, newspapers and magazines. He is the Founder and Editor-in-Chief of
the E-Commerce Law Report and the Cyberspace Lawyer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-underline-style: none"><B>Information
Regarding the Board and its Committees</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Director Meeting and Attendance</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">During 2011, our board held three (3) in-person
regular meetings, five (5) conference-call meetings, and acted three (3) times by unanimous written consent. In addition, the directors
considered Company matters and had frequent communication with each other apart from the formal meetings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Board Independence</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">Our board
has determined that each of our directors other than Mr.&nbsp;Travers and Mr.&nbsp;Russell is an independent director as
defined by Rule&nbsp;10A-3 promulgated by the Securities and Exchange Act pursuant to the Securities Exchange Act of 1934,
as amended. We believe that we are compliant with the independence criteria for boards of directors under applicable laws
and regulations. The board may meet independently of management as required. Although they are permitted to do so,
the independent directors have not held separately scheduled meetings but have had executive sessions at the conclusions of
the regularly scheduled meetings at which non-independent directors and members of management are not in attendance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Board Committees</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">We have an audit
committee, a compensation committee and a nominating committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0; background-color: white"><B><I>Audit Committee</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0; text-indent: -4.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Our audit committee
consists of William Lee and Frank Zammataro, each of whom is a non-employee director. Mr.&nbsp;Lee is the chairperson of our audit
committee. Our board of directors has determined that each member designee of our audit committee is an independent director as
defined by Rule 10A-3 promulgated by the Securities and Exchange Act pursuant to the Securities Exchange Act of 1934, as amended
and meets the requirements of financial literacy under SEC rules and regulations. Mr.&nbsp;Lee serves as our audit committee financial
expert, as defined under SEC rules. Our audit committee met four (4) times during 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -4.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Our audit committee
is responsible for, among other things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">selecting and hiring our independent auditors, and approving the audit and non-audit services to be performed by our independent
auditors;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">evaluating the qualifications, performance and independence of our independent auditors;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate
to financial statements or accounting matters;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">reviewing the adequacy and effectiveness of our internal control policies and procedures;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif"></P>

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<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">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;&nbsp;and</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">preparing the audit committee report that the SEC requires in our annual proxy statement.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Our board of directors
has adopted a written charter for our audit committee, which is available on our website (www.vuzix.com).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0; background-color: white"><B><I>Compensation Committee</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Our compensation
committee consists of Joe Cecin and Frank Zammataro, each of whom is a non-employee director. Mr. Zammataro is the chairperson
of our compensation committee. Our board of directors has determined that each member designee of our compensation committee is
an independent director as defined by Rule 10A-3 promulgated by the Securities and Exchange Act pursuant to the Securities Exchange
Act of 1934, as amended. Our compensation committee met once in 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0; text-indent: 0.5in; background-color: white">Our
compensation committee is responsible for, among other things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">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, compensation or arrangements</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">reviewing and recommending compensation goals, bonus and stock compensation criteria for our
employees;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">preparing any compensation committee report required by the rules of the SEC to be included in
our annual proxy statement;&nbsp;and</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">administering, reviewing and making recommendations with respect to our equity compensation plans.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our compensation committee may not delegate
any of its authority to any other person. No compensation consultant was engaged to determine or recommend the amount or form of
compensation paid to our executive officers in 2011. The compensation paid to our named executive officers for 2010 was determined
by the employment agreements we entered into with those executives in August 2007<I>.</I> See &ldquo;Compensation of Named Executive
Officers and Directors &ndash; Employment Agreements.&rdquo;<B> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors has adopted a written
charter for our compensation committee, which is available on our website (www.vuzix.com).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0; background-color: white"><B><I>Nominating Committee</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 0; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our nominating committee consists of Frank
Zammataro, Joe Cecin, and William Lee each of whom is a non-employee member of our board of directors. Mr.&nbsp;Zammataro is the
chairperson of our nominating committee. Our board of directors has determined that each member designee of our nominating committee
is an independent director as defined by Rule 10A-3 promulgated by the Securities and Exchange Act pursuant to the Securities Exchange
Act of 1934, as amended. Our board of directors has adopted a written charter for our nominating committee, which is available
on our website (www.vuzix.com). <FONT STYLE="font-size: 10pt">&nbsp;</FONT>Our nominating committee met once in 2011 and once in
2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Nominating Process</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The process followed by the nominating and
governance committee to identify and evaluate candidates includes requests to board members, the chief executive officer, and others
for recommendations, meetings from time to time to evaluate any biographical information and background material relating to potential
candidates and their qualifications, and interviews of selected candidates. Nominations of persons for election to our board may
be made at a meeting of stockholders only (i) by or at the direction of the board; or (ii) by any stockholder who has complied
with the notice procedures set forth in our bylaws and in the section entitled &ldquo;Questions and Answers About This Proxy Material
and Voting &ndash; When are stockholder proposals due for next year&rsquo;s annual meeting?&rdquo; In addition, stockholders who
wish to recommend a prospective nominee for the nominating and governance committee&rsquo;s consideration should submit the candidate&rsquo;s
name and qualifications to Secretary, 75 Town Centre Drive, Rochester, New York 14623.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In evaluating the suitability of candidates
to serve on the board of directors, including stockholder nominees, the nominating committee seeks candidates who are independent
as defined by Rule 10A-3 promulgated by the Securities and Exchange Act pursuant to the Securities Exchange Act of 1934, as amended
and meet certain selection criteria established by the committee. The committee also considers an individual&rsquo;s skills, character
and professional ethics, judgment, leadership experience, business experience and acumen, familiarity with relevant industry issues,
and other relevant criteria that may contribute to our success. This evaluation is performed in light of the skill set and other
characteristics that would most complement those of the current directors, including the diversity, maturity, skills and experience
of the board as a whole.<FONT STYLE="color: black"> The board seeks the best director candidates based on the skills and characteristics
required without regard to race, color, national origin, religion, disability, marital status, age, sexual orientation, gender,
gender identity and expression, or any other basis protected by federal, state or local law.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-underline-style: none"><B>Corporate
Governance and Related Matters</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Board Leadership Structure </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board is responsible for the selection
of the chairman of the board and the chief executive officer. Our board does not have a policy on whether or not the roles of chief
executive officer and chairman should be separate and, if they are to be separate, whether the chairman should be selected from
the non-employee directors or be an employee. Currently our chief executive officer acts as chairman. Our board believes that Paul
J. Travers, our founder and chief executive officer, is best situated to act as chairman of the board because he is the director
most familiar with the Company&rsquo;s business and industry and is therefore best able to identify the strategic priorities to
be discussed by the board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board believes that the most effective
board structure is one that emphasizes board independence and ensures that the board&rsquo;s deliberations are not dominated by
management. Three of our five current directors qualify as independent directors within the meaning of Rule 10A-3 promulgated by
the Securities and Exchange Act pursuant to the Securities Exchange Act of 1934, as amended). Each of our standing board committees
is comprised of only independent directors, including our nominating committee, which is charged with annually evaluating and reporting
to the board on the performance and effectiveness of the board. Our board has not appointed a lead independent director.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><I>Our Board&rsquo;s Role in Risk Oversight<FONT STYLE="font-family: Times New Roman, Times, Serif">
</FONT></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Our management
is responsible for risk management on a day-to-day basis. The role of our board and its committees includes overseeing the risk
management activities of management. Our board oversees our risk management processes directly and through its committees. The
audit committee assists the board in fulfilling its oversight responsibilities with respect to risk management in the areas of
financial reporting, internal controls and compliance with legal and regulatory requirements, and discusses policies with respect
to risk assessment and risk management, including guidelines and policies to govern the process by which our exposure to risk is
handled. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management
of risks arising from our compensation policies and programs. The nominating committee assists the board in fulfilling its oversight
responsibilities with respect to the management of risks associated with board organization, membership and structure and succession
planning for our directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Code of Ethics</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors has adopted a written
code of ethics, the Code of Business Conduct and Ethics, which applies to all of our directors, officers (including our chief executive
officer and chief financial officer) and employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We make available to the public various
corporate governance information on our website (www.vuzix.com) under &ldquo;Investors &ndash; Corporate Governance.&rdquo; Information
on our website includes our Code of Business Conduct and Ethics, the Audit Committee Charter, the Compensation Committee Charter,
the Nominating Committee Charter, and our Insider Trading Policy. Information regarding any amendments to, or waiver from, the
Code of Business Conduct and Ethics will also be posted on our website.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Communications with the Board of Directors</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Stockholders and other parties may communicate
directly with the board of directors or the relevant board member by addressing communications to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 148.5pt">[Name of director(s) or Board of Directors]</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 148.5pt">Vuzix Corporation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 148.5pt">c/o Corporate Secretary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 148.5pt">75 Town Centre Drive</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 148.5pt">Rochester, New York 14623</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 148.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All stockholder correspondence will be compiled
by our corporate secretary and forwarded as appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Director Attendance at Annual Meetings</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have scheduled a board of directors meeting
in conjunction with our annual meeting of stockholders and, while we do not have a formal policy regarding attendance at annual
meetings, we as a general matter expect that the directors will attend the annual meeting. Three of the five director nominees
for 2011 attended our 2011 annual meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROPOSAL 2</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RATIFICATION OF THE SELECTION OF THE
COMPANY&rsquo;S</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The audit committee has selected the accounting
firm of EFP Rotenberg, LLP to serve as the Company&rsquo;s independent registered public accounting firm for the year ending December
31, 2012. EFP Rotenberg, LLP (and its predecessor, Rotenberg &amp; Co., LLP) has served as the Company&rsquo;s independent registered
public accounting firm since August 2009 and is considered by the audit committee, the board and management of the Company to be
well qualified. The stockholders are being asked to ratify the audit committee&rsquo;s appointment of EFP Rotenberg, LLP. If the
stockholders fail to ratify this appointment, the audit committee may, but is not required to, reconsider whether to retain that
firm. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different accounting
firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
A representative of EFP Rotenberg, LLP will be present at the annual meeting and will be given the opportunity to make a statement
if he or she so desires and will be available to respond to appropriate questions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Fees Paid to EFP Rotenberg, LLP</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
shows the fees that were billed by EFP Rotenberg, LLP for professional services rendered in 2011 and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">2011</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">2010</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 72%; font-size: 10pt; text-align: left">Audit Fees <SUP>(1)</SUP></TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">102,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">100,500</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt">Audit-Related Fees <SUP>(2)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">0</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">0</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">All Other Fees <SUP>(3)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">3,617</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">0</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Total EFP Rotenberg, LLP Fees</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">105,617</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">100,500</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">(1) Audit fees primarily represent amounts
billed for the audit of our annual consolidated financial statements for such fiscal year and quarterly reviews of our consolidated
financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">(2) Audit-related fees represent fees for
services rendered in connection with the comfort letter delivered to our underwriters in connection with our initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">(3) All other fees in 2011 consisted of
interest charged.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Pre-Approval of Fees by Audit Committee</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In accordance with applicable laws, rules
and regulations, our audit committee charter and pre-approval policies established by the audit committee require that the audit
committee review in advance and pre-approve all audit and permitted non-audit fees for services provided to us by our independent
registered public accounting firm. The services performed by, and the fees to be paid to, EFP Rotenberg, LLP in 2011 were approved
by the audit committee, then consisting of Messrs. Lee and Zammataro.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Independence Analysis by Audit Committee</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The audit committee has considered whether
the provision of the services described above was compatible with maintaining the independence of EFP Rotenberg, LLP and determined
that the provision of such services was compatible with such firm&rsquo;s independence. For each of 2011 and 2010, EFP Rotenberg,
LLP provided no services other than those services described above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Required Vote</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The affirmative vote of the holders of a
majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on
the matter is needed to ratify the appointment of EFP Rotenberg, LLP as our independent registered public accounting firm for the
year ending December 31, 2012. Under Delaware law, an abstention will have the same legal effect as a vote against the ratification
of EFP Rotenberg, LLP, and broker non-votes will have no effect on the outcome of the ratification of the independent registered
public accounting firm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Audit Committee and our Board of
Directors unanimously recommend that the</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>stockholders vote FOR ratification of
the appointment of EFP Rotenberg, LLP as our independent</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>registered public accounting firm for
the year ending December 31, 2012.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AUDIT COMMITTEE REPORT<A HREF="#note_ftn1" NAME="note_ftnref1" STYLE="font-size: 65%; vertical-align: 35%">1</A></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Membership and Role of Audit Committee</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The audit committee of our board is responsible
for providing independent, objective oversight and review of our accounting functions, internal controls and financial reporting
process. Currently, the audit committee is comprised of Messrs. Lee and Zammataro. The audit committee operates pursuant to a written
charter adopted by the board of directors in December 2009 and may be found on our website www.vuzix.com under the &ldquo;Investors-Corporate
Governance&rdquo; section. We believe that each of the members of the audit committee is independent as defined by applicable laws
and regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Management has the primary responsibility
for the financial statements and the reporting process, including our system of internal controls, and for the preparation of the
consolidated financial statements in accordance with generally accepted accounting principles. Our independent accountants are
responsible for performing an independent audit of those financial statements in accordance with generally accepted auditing standards
and to issue a report thereon. The audit committee&rsquo;s responsibility is to monitor and oversee these processes on behalf of
the board. The members of the audit committee are not professional accountants or auditors and their functions are not intended
to duplicate or certify the activities of management and the independent auditors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Review of our Audited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In fulfilling its oversight responsibilities,
the audit committee reviewed the audited financial statements in our Annual Report on Form 10-K with management and discussed the
quality and acceptability of our accounting principles, the reasonableness of significant judgments, and the clarity of disclosures
in our financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The audit committee reviewed with the independent
auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally
accepted accounting principles, their judgments as to the quality and acceptability of our accounting principles and such other
matters as are required to be discussed with the committee under generally accepted auditing standards, including the Statement
on Auditing Standards No. 61 (Communications with Audit Committees). In addition, the audit committee has discussed with the independent
auditors the auditors&rsquo; independence from management and us, including the matters in the written disclosures required by
Independence Standards Board Standard No. 1 (Independent Discussions with Audit Committees), which were submitted to us, and considered
the compatibility of non-audit services with the auditors&rsquo; independence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><A HREF="#note_ftnref1" NAME="note_ftn1" STYLE="font-size: 65%; vertical-align: 35%">1</A>
<I>The material in this report is not deemed to be &ldquo;soliciting material,&rdquo; or to be &ldquo;filed&rdquo; with the Securities
and Exchange Commission and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general
incorporation language in any such filings.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The audit committee discussed with our independent
auditors the overall scope and plans for their audit. The audit committee met with the independent auditors, with and without management
present, to discuss the results of their examination, their evaluation of our internal controls, and the overall quality of our
financial reporting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In reliance on these reviews and discussions,
the audit committee recommended to our board of directors (and our board has approved) that our audited financial statements for
the year ended December 31, 2011 be included in the Annual Report on Form 10-K for the year ended December 31, 2011 for filing
with the Securities and Exchange Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The audit committee selects the Company&rsquo;s
independent registered public accounting firm annually and has submitted such selection for the year ending December 31, 2012 for
ratification by stockholders at the Company&rsquo;s annual meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 50%; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 50%; font: 10pt Times New Roman, Times, Serif; padding: 0; text-align: left; text-indent: 0">Audit Committee:</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0; text-align: left; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0; text-align: left; text-indent: 0">William Lee, Chairman</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding: 0; text-align: left; text-indent: 0">Frank Zammataro</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>COMPENSATION OF NAMED EXECUTIVE OFFICERS
AND DIRECTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Named Executive Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This proxy statement contains information
about the compensation paid to our named executive officers during 2011. For 2011, we determined that the following officers were
our named executive officers for purposes of this proxy statement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">Paul J. Travers - chief executive officer and president</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">Grant Russell &ndash; chief financial officer and executive vice president</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding: 0; text-indent: 0">Michael McCrackan &ndash; vice president of operations</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Executive Officer Compensation Tables</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SUMMARY COMPENSATION TABLE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
concerning total compensation earned or paid to our named executive officers for 2011. More detailed information is presented in
the other tables and in the footnotes to the tables.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Option</TD><TD STYLE="font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">All Other</TD><TD STYLE="font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Salary</TD><TD STYLE="font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Bonus or Commission</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Awards</TD><TD STYLE="font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Compensation</TD><TD STYLE="font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Total</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">Name and Principal Position</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP STYLE="width: 16%; font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Paul J. Travers, President and</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">2011</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">300,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><SUP>(1)</SUP></TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">300,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Chief Executive Officer</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2010</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">300,000</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(1)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">300,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Grant Russell, Chief Financial</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2011</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">305,000</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(1)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">4,601</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(2)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">22,436</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(3)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">299,602</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Officer&nbsp;&amp; Executive Vice President</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2010</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">305,000</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(1)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">3,067</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(2)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">20,001</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(3)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">202,980</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Michael McCrackan</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2011</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">117,231</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">11,480</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>(2)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">128,711</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Vice President of Operations</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2010</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">59,400</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left"><SUP>&nbsp;</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">59,400</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: top; padding: 0; text-align: justify; text-indent: 0">(1)</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">Includes $100,000 unpaid but accrued wages per each named executive officer&rsquo;s employment contract. For further details see Transactions with Related Persons &ndash; Deferred Compensation.</TD></TR>
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: top; padding: 0; text-align: justify; text-indent: 0">(2)</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">Represents the dollar amounts recognized for share-based compensation expense for financial statement reporting purposes for stock options granted in 2009 and unvested stock options granted in prior years in accordance with FASB ASC Topic 718 - Stock Compensation<I>,</I> 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 16 (Stock-based Compensation Expense) to our consolidated audited financial statements for the fiscal year ended December&nbsp;31, 2011 and 2010 included in our annual report accompanying this proxy statement.</TD></TR>
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: top; padding: 0; text-align: justify; text-indent: 0">(3)</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">Consists of amounts paid to Mr.&nbsp;Russell in reimbursement for the rental of an automobile and direct travel to and from his primary residence in Vancouver, Canada to Rochester, New York.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>OUTSTANDING EQUITY AWARDS AT FISCAL YEAR
END</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
concerning exercisable and unexercisable stock options held by the named executive officers at December 31, 2011. We granted stock
awards to only one named executive officers in 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="18" STYLE="border-bottom: black 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">Option Awards</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Equity</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Incentive Plan</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Awards:</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Number of</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Number of</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Number of</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Securities</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Securities</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Securities</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Underlying</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Underlying</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Underlying</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Unexercised</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Unexercised</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Unexercised</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Option</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Options</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Options</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Unearned</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Exercise</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Option</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">(#)</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">(#)</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Options</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Price</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-align: center; text-indent: 0">Expiration</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; border-bottom: black 0.75pt solid"><B>Name</B></P></TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">Exercisable</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">Unexercisable</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">(#)</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">($)</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">Date</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-indent: 0">Paul Travers</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">188,576</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">$</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">0.00875</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">9/03/12</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">1,485,232</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">$</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">0.02599</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">1/03/13</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-indent: 0">Grant Russell</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">174,256</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">$</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">0.00875</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: right; text-indent: 0">9/03/12</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-align: right; text-indent: 0">154,167</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-align: right; text-indent: 0">45,833</TD>
    <TD STYLE="vertical-align: super; padding: 0; text-indent: 0"><SUP>(1)</SUP></TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">$</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-align: right; text-indent: 0">0.15000</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-align: right; text-indent: 0">5/02/19</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">Michael McCrackan</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-align: right; text-indent: 0">333,333</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-align: right; text-indent: 0">666,667</TD>
    <TD STYLE="vertical-align: super; padding: 0; text-indent: 0"><SUP>(2) (3)</SUP></TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-align: right; text-indent: 0">&mdash;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">$</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-align: right; text-indent: 0">0.15000</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-align: right; text-indent: 0">2/18/21</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt; background-color: white">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(1)</TD><TD STYLE="padding: 0; text-indent: 0">This option was granted under our 2007 option plan and vests in equal monthly installments over four years from the date of
grant.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(2)</TD><TD STYLE="padding: 0; text-indent: 0">This option was granted under our 2009 option plan and vests in equal monthly installments over four years from the date of
grant.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.25in; padding: 0; text-indent: 0">(3)</TD><TD STYLE="padding: 0; text-indent: 0">A total of 1,000,000 options were granted to Michael McCrackan in 2011.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>2011 OPTION EXERCISES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">There were no exercises of stock options
by our name executive officers during 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Employment Agreements </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Paul J. Travers</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">On August&nbsp;1,
2007, we entered into an employment agreement with Paul J. Travers providing for his continued service as our Chief Executive Officer
and President. Under the agreement, Mr.&nbsp;Travers is entitled to an initial annual base salary of $300,000 or such greater amount
as shall be determined by the board of directors. Mr. Travers has agreed to defer the payment of $100,000 of his salary for 2010.
He is also eligible to receive such periodic, annual or other bonuses as the board of directors in its sole discretion shall determine
and to participate in all bonus plans established for our senior executives. The agreement also provides that Mr.&nbsp;Travers
may be awarded, in the sole discretion of the board of directors, stock options and other awards under any plan or arrangement
for which our senior executives are eligible. The level of his participation in any such plan or arrangement shall be determined
by the board of directors in its sole discretion. To the greatest extent permissible under the Internal Revenue Code (the Code)
and the regulations thereunder, options granted to Mr.&nbsp;Travers shall be incentive stock options within the meaning Section&nbsp;422
of the Code. He is also eligible to participate in all employee benefit plans which are generally available to our senior executives
and entitled to receive fringe benefits and perquisites comparable to those of our other senior executives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT>Under
his agreement, we are obligated to reimburse Mr.&nbsp;Travers for the costs of an automobile at the rate of $750 per month and
for all actual, reasonable and customary expenses incurred in the course of his employment in accordance with our policies as then
in effect. Mr.&nbsp;Travers is subject to certain restrictive covenants under the agreement, including a covenant not to compete
for 24&nbsp;months after his termination for any reason other than by him for good reason or by us without cause and for 48&nbsp;months
after his termination if such termination results in our obligation to pay him the change of control payment described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><I>Grant Russell</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">On August&nbsp;1,
2007, we entered into an employment agreement with Grant Russell providing for his continued service as our Chief Financial Officer
and Executive Vice President. Under the agreement, Mr.&nbsp;Russell is entitled to an initial annual base salary of $305,000 or
such greater amount as shall be determined by the board of directors. Mr. Russell has agreed to defer $100,000 of his salary for
2010. He is also eligible to receive such periodic, annual or other bonuses as the board of directors in its sole discretion shall
determine and to participate in all bonus plans established for our senior executives. The agreement also provides that Mr.&nbsp;Russell
may be awarded, in the sole discretion of the board of directors, stock options and other awards under any plan or arrangement
for which our senior executives are eligible. The level of his participation in any such plan or arrangement shall be determined
by the board of directors in its sole discretion. To the greatest extent permissible under the Code and the regulations thereunder,
options granted to Mr.&nbsp;Russell shall be incentive stock options within the meaning of Section&nbsp;422 of the Code. He is
also eligible to participate in all employee benefit plans which are generally available to our senior executives and entitled
to receive fringe benefits and perquisites comparable to those of our other senior executives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Under his agreement,
we are obligated to either reimburse Mr.&nbsp;Russell for the costs of an automobile at the rate of $750 per month or to bear all
expenses associated with his lease of an automobile for his use while in Rochester, New York, to reimburse him for the costs of
travel between Rochester, New York and his primary residence in Vancouver, British Columbia, Canada and to reimburse him for all
actual, reasonable and customary expenses incurred in the course of his employment in accordance with our policies as then in effect.
We provide Mr. Russell the option to receive a portion of his salary in the form of a housing allowance, at the rate prescribed
by the Internal Revenue Service, for the maintenance of a second residence in Rochester, New York. Payment of such allowance is
deductible by us for federal income tax purposes in the same manner as cash compensation. Mr.&nbsp;Russell is subject to certain
restrictive covenants under the agreement, including a covenant not to compete for 24 months after his termination for any reason
other than by him for good reason or by us without cause and for 48&nbsp;months after his termination if such termination results
in our obligation to pay him the change of control payment described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Potential Payments upon Termination
or Change in Control</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This section sets forth information regarding
compensation and benefits that each of the named executive officers would receive in the event of a change in control (as defined
in the applicable employment agreement) or in the event of termination of employment under several different circumstances, including:
(1) termination by Vuzix for cause (as defined in the applicable employment agreement); (2) a voluntary termination by the named
executive officer; (3) termination by the named executive officer for good reason (as defined in the applicable employment agreement);
(4) involuntary termination by Vuzix without cause; (5) death; or (5) disability (as defined in the applicable employment agreement).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the agreements of both Mr. Travers
and Russell: (a) we shall have &ldquo;cause&rdquo; to terminate them as a result of their: (i) willfully engaging in conduct which
is materially injurious to us; (ii) willful fraud or material dishonesty in connection with their performance as an employee; (iii)
deliberate or intentional failure to substantially perform their duties as employees that results in material harm to us; or (iv)
conviction for, or plea of nolo contendere to a charge of, commission of a felony; (b) they shall have &ldquo;good reason&rdquo;
to terminate their employment upon: (i) a material diminution during the term of the agreements in their duties, responsibilities,
position, office or title; (ii) a breach by us of the compensation and benefits provisions of their agreements; (iii) a material
breach by us of any other terms of their agreements; or (iv) the relocation of their principal place of business at our request
beyond 30 miles from its current location; and (c) they shall be deemed to be &ldquo;disabled&rdquo; if they shall be rendered
incapable of performing their duties to us by reason of any medically determined physical or mental impairment that can be expected
to result in death or that can reasonably be expected to last for a period of either (i) five or more consecutive months from the
first date of their absence due to the disability or (ii) nine months during any 12-month period. Any termination by us for cause
or by them for good reason is subject to a 30-day notice period and opportunity to cure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under their employment agreements, &ldquo;change
of control&rdquo; means: (i) the approval by our stockholders, and the completion of the transaction resulting from such approval,
of (A) the sale or other disposition of all or substantially all our assets or (B) our complete liquidation or dissolution; (ii)
the sale, in a single transaction or in a series of related transactions, of all or substantially all of the outstanding shares
of our capital stock; (iii) the approval by our stockholders, and the completion of the transaction resulting from such approval,
of a merger, consolidation, reorganization or similar corporate transaction, whether or not we are the surviving corporation in
such transaction, in which the outstanding shares of common stock are converted into (A) shares of stock of another company, other
than a conversion into shares of voting common stock of the successor corporation (or a holding company thereof) representing fifty
percent (50%) or more of the voting power of all capital stock thereof outstanding immediately after the merger or consolidation
or (B) other securities (either ours or those of another company) or cash or other property; (iv) pursuant to an affirmative vote
of a holder or holders of seventy five percent (75%) of our capital stock of the entitled to vote on such a matter, the removal
of a majority of the individuals who are at that time members of the board of directors; or (v) the acquisition by any entity or
individual of one hundred percent of our capital stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The actual amounts that would be payable
in such circumstances can only be determined at the date of termination or upon the change in control. The amounts included below
are based on the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We have assumed that the termination event occurred effective as of December 31, 2011, the last day of 2011;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We have assumed that the value of our common stock was $0.055 per share, the US dollar equivalent of the Canadian dollar closing
market price (Cdn $0.055 per share) of our common stock on December 30, 2011, the last trading day of our common stock, and that
all unvested options were exercised on December 31, 2011; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Health benefits are included at the estimated value of continuation of this benefit.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><U>Paul J. Travers</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If Mr. Travers&rsquo;s employment is terminated
(i) by the Company without cause or (ii) by Mr. Travers for good reason or (iii) as a result of disability, Mr. Travers would be
entitled to receive:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">two&nbsp; times his annual base salary, payable in 24 equal monthly
    installments</FONT></TD>
    <TD STYLE="width: 87px; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 600,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">his annual incentive bonus, payable within 60 days of termination</FONT></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;-</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-top: 6pt; padding-bottom: 6pt; padding-left: 0.25in">Total cash compensation upon termination</TD>
    <TD STYLE="padding-top: 6pt; padding-bottom: 6pt; text-align: right">$ &nbsp;&nbsp;&nbsp;600,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If Mr. Travers&rsquo;s employment is terminated
        within one year of a change of control for any reason other than by us for cause, or if he elects to terminate his employment (whether
        or not for good reason) during the period beginning 121 days after a change of control and ending on the second anniversary thereof,
        Mr. Travers would be entitled to receive:</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">four&nbsp; times his annual base salary, payable in 48 equal monthly
    installments</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,200,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">his annual incentive bonus, then in effect, payable within 60 days
    of termination</FONT></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in">Total cash compensation upon change of control</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$1,200,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Additionally, in either case Mr. Travers would also be entitled to:</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">continuation of medical benefits throughout the 24 or 48-month period
    during which severance payments are made &nbsp;or until he becomes eligible to receive medical benefits from subsequent employer</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">$&nbsp; 15,290</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">value of all unvested options, which would vest immediately</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$&nbsp; 0</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">any accrued amounts owing to him</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If Mr. Travers&rsquo;s employment is terminated
for cause or by Mr. Travers voluntarily, he will be entitled to receive only any accrued amounts owing him and will forfeit all
unvested equity and unearned incentive payments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><U>Grant Russell</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If Mr. Russell&rsquo;s employment is terminated
(i) by the Company without cause or (ii) by Mr. Russell for good reason or (iii) as a result of disability, Mr. Russell would be
entitled to receive:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">two times his annual base salary, payable in 24 equal monthly installments</FONT></TD>
    <TD STYLE="width: 87px; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 550,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">his annual incentive bonus, payable within 60 days of termination</FONT></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;-</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-top: 6pt; padding-left: 0.25in">Total cash compensation upon termination</TD>
    <TD STYLE="padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 550,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If Mr. Russell&rsquo;s employment is terminated
        within one year of a change of control for any reason other than by us for cause, or if he elects to terminate his employment (whether
        or not for good reason) during the period beginning 121 days after a change of control and ending on the second anniversary thereof,
        Mr. Russell would be entitled to receive:</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">four times his annual base salary, payable in 48 equal monthly installments</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,100,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">his annual incentive bonus, then in effect, payable within 60 days
    of termination</FONT></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.25in">Total cash compensation upon change of control</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$1,100,000</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Additionally, in either case Mr. Russell would also be entitled to:</TD>
    <TD STYLE="width: 87px; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">continuation of medical benefits throughout the 24 or 48-month period
    during which severance payments are made or until he becomes eligible to receive medical benefits from subsequent employer</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">$ 15,290</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">value of all unvested options, which would vest immediately</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$&nbsp; 0</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 0.5in; font-family: Symbol; text-indent: -0.25in">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT STYLE="font-family: Times New Roman, Times, Serif">any accrued amounts owing to him</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If Mr. Russell&rsquo;s employment is terminated
for cause or by Mr. Russell voluntarily, he will be entitled to receive only any accrued amounts owing him and will forfeit all
unvested equity and unearned incentive payments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>Director
Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>How Directors are Compensated</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Employee directors do not receive additional
compensation for serving on the board beyond the compensation they received for serving as our officers, as described under &ldquo;Executive
Compensation.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We use a combination of cash and stock-based
incentive compensation to attract and retain qualified candidates to serve on the board. In setting non-employee director compensation
the board considers the amount of time that directors expend in fulfilling their duties as members of our board and the skill-level
we require of members of our board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt; text-align: center; background-color: white"><B>DIRECTOR
COMPENSATION&nbsp;&mdash; YEAR ENDED DECEMBER 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Fees</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Nonqualified</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Earned or</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Non-Equity</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Deferred</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Paid in</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Stock</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Option</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Incentive Plan</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Compensation</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">All Other</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Cash</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Awards</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Awards</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Compensation</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Earnings</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Compensation</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center">Total</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">Name</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)(1)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">($)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 37%; font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">William Lee</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right">8,265</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right">8,265</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Frank Zammataro</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">8,265</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">8,265</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Joe Cecin</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">132,692</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">48,720</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">181,412</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Kathryn Sayko <SUP>(2)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">8,265</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">8,265</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -10pt; padding-left: 10pt">Bernard Perrine <SUP>(2)</SUP></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">8,265</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">8,265</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt; background-color: white">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: top; padding-right: 0.8pt; text-align: justify">(1)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 0.8pt">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 2009 and unvested stock options granted in prior years in accordance with FASB ASC Topic 718 - Stock Compensation<I>,</I> 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&nbsp;15 (Stock-based Compensation Expense) to our audited financial statements for the fiscal year ended December&nbsp;31, 2011.</TD></TR>
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: top; padding-right: 0.8pt; text-align: justify">(2)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 0.8pt">Directors of the Company up until June 29, 2011.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 40.1pt 0pt 34.55pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">During 2011, other
than cash fees paid to Joe Cecin, no cash director fees were earned by or paid to any non-management member of the board of directors
but each of our nonemployee directors was reimbursed for ordinary expenses incurred in connection with attendance at meetings of
the board of directors. In the future, to recruit and maintain qualified directors we believe that we will likely have to begin
paying annual retainers, board committee membership and board meeting fees. It is not expected that such fees will be paid to any
directors who are also our employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">In connection with their annual service extending into 2011,
we granted to each of William Lee, Frank Zammataro, Kathryn Sayko and Bernard Perrine, who were are then non-employee directors,
an option to purchase 150,000 shares of our common stock at an exercise price of $0.15 per share. In connection with the services
of Joe Cecin and him acting as the Company&rsquo;s non-executive Chairman for 2011, we granted him an option to purchase 1,000,000
shares of our common stock at an exercise price of $0.10 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TRANSACTIONS WITH RELATED PERSONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.55pt; background-color: white">Since January&nbsp;1,
2009, we have entered into the following transactions in which our directors, executive officers or holders of more than 5% of
our capital stock had or will have a direct or indirect material interest. The following transactions do not include compensation,
termination and change-in-control arrangements, which are described under &ldquo;Management.&rdquo; We believe the terms obtained
or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to
terms available or the amounts that would be paid or received, as applicable, in arm&rsquo;s-length transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT><B>Officer
Loan</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">In October 2002,
we entered into a stock purchase agreement with four of our employees, including Grant Russell, our Chief Financial Officer and
Executive Vice President, pursuant to which they purchased an aggregate of 32,537,135&nbsp;shares of common stock at an aggregate
purchase price of $199,260 or $0.00613 per share. Of these shares, Mr.&nbsp;Russell purchased 9,531,022&nbsp;shares at an aggregate
purchase price of $58,378. In order to finance the purchase of these shares, we loaned each employee an amount equal to the purchase
price for the shares he purchased. Each loan was evidenced by a non-recourse promissory note and was secured by a pledge of the
shares purchased. Each loan bore interest at the rate of 6% per annum, and all principal and interest was originally due and payable
in September 2007. In September 2007, we extended the maturity date of each note until September 2012. In April 2009, we forgave
the entire amount of Mr.&nbsp;Russell&rsquo;s indebtedness under this loan in payment of a one-time bonus in consideration of Mr.&nbsp;Russell&rsquo;s
efforts in connection with this offering. At that time, the outstanding principal amount of the note payable by Mr.&nbsp;Russell
together with all interest accrued thereon was $81,046.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;</FONT><B>Revolving
Loans</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">In October 2008,
we entered into a revolving loan agreement with Paul J. Travers, our President and Chief Executive Officer, pursuant to which Mr.&nbsp;Travers
agreed to loan us such amounts as we may request and he may agree from time to time until December&nbsp;31, 2010. Interest accrues
on the principal amount outstanding under the agreement at the annual rate of 12.0% and is payable on demand. As security for our
obligations under the loan agreement, we granted Mr.&nbsp;Travers a security interest in all of our assets. The principal amount
outstanding under this loan agreement as of December 31, 2010 and 2009 was $215,500. We had intended to the repay the entire principal
amount outstanding under this agreement, together with all interest accrued thereon, from the proceeds of our initial public offering.
We concluded that we did not receive sufficient proceeds from our initial public offering to repay this indebtedness and Mr. Travers
has agreed to make no demand for repayment until after January 2, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">In December
2010 we entered into a Convertible Senior Secured Term Loan Agreement, pursuant to which we borrowed $4,000,000. The loan
bears interest at a 12% per annum interest rate. No payments of principal are required in first 12 months of the loan.
Beginning on January 13, 2012, the Company is required to make 24 equal monthly payments of $141,666 each. A final principal
payment of $600,000 is due on December 23, 2014. The Company is currently in default under this loan agreement and has not
received a waiver or entered into a forbearance agreement with the Senior Lender. As such the lender is currently able to
exercise its remedies under the loan agreement, including acceleration of the amounts due them and foreclosure and the sale
of the collateral held by them. Since the date of default, October 1, 2011, the loan now bears interest at a 17% annual
interest rate. The Company has not made any of its required principal repayments, but the lender has so far agreed to
reschedule such repayments until December 23, 2014. In connection with the above financing, four existing secured lenders who
are currently owed $2,320,980 in principal and accrued interest agreed to subordinate their security interests in favor of
the Lender and to extend the period of debt repayments for 24 to 36 months following closing of the Loan transaction. One of
the lenders who deferred payment of his debt was Paul Travers, our President and Chief Executive Officer, who deferred
payment of the loan referred to above. As of December 23, 2010 the amount of principal and accrued interest due Mr. Travers
was $258,658.20, which was payable on or before December 31, 2010. On December 23, 2010, Vuzix and Mr. Travers agreed that
such amount will be payable, together with interest thereon, in thirty-five (36) equal monthly installments of $8,504.12
each, commencing on January 31, 2012. Due to the Company&rsquo;s default on its Senior Term Debt as discussed above, the Company has ceased the scheduled repayments to Mr. Travers. The entire unpaid amount, and interest accrued thereon, will be due and
payable on December 31, 2013. In connection with such deferral, Vuzix issued to Mr. Travers a Warrant to purchase up
to 1,034,633 shares of our Common Stock at an exercise price of $0.09965 per share. That Warrant expires on December
31, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT><B>Payment of Deferred
Compensation and Shareholder Loans</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">In June 2009, we
agreed with Mr.&nbsp;Travers and Mr. Russell, our President and Chief Executive Officer, and Executive Vice President and Chief
Financial Officer, respectively, that we would pay them outstanding deferred compensation in the aggregate amounts of $410,096
plus interest at the annual rate of 8.0%, as repayment of $199,941 loaned to us prior to our public offering in 12 equal monthly
installments beginning on the first anniversary of the closing of our initial public offering until paid in full. Our initial public
offering closed on December 24, 2009. Pursuant to that deferral arrangement, the board of directors amended the terms of these
loans to make the principal amounts thereof, and all accrued interest thereon, payable at the options of Mr. Travers and Mr. Russell
in shares of our common stock at the rate of $0.19 per share, the US dollar equivalent of the price in Canadian dollars (Cdn$0.20)
at which we sold units in our initial public offering. Based on the total amounts owed as of December 31, 2010, a total of 4,967,876
shares of common stock would be issued in payment in full of the amounts owed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT><B>Indemnification
Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">We have entered
into indemnification agreements with each of our directors and executive officers. Under these agreements we are obligated to indemnify
the indemnitee to the fullest extent permitted by applicable law for all reasonable expenses (including attorneys&rsquo; fees and
disbursements), judgments, fines (including excise taxes and penalties) and amounts paid in settlement actually and reasonably
incurred by the indemnitee arising out of or connected with the indemnitee&rsquo;s service as a director or officer and indemnitee&rsquo;s
service in another capacity at our request or direction. We are also obligated to advance all reasonable and actual expenses incurred
by the indemnitee in connection with any action, suit, proceeding or appeal with respect to which he is entitled to be indemnified
upon our receipt of an invoice for such expenses. Our obligation to advance expenses is subject to the indemnitee&rsquo;s execution,
upon our request, of an agreement to repay all such amounts it if is ultimately determined that he is not entitled to be indemnified
by us under applicable law. If a claim for indemnification under this agreement may not be paid to the indemnitee under applicable
law, then in any action in which we are jointly liable with the indemnitee, we are obligated to contribute to the amount of reasonable
expenses (including attorneys&rsquo; fees and disbursements) actually and reasonably incurred by the indemnitee in proportion to
the relative benefits received by us and the indemnitee from the transaction from which such action arose, and our relative fault
and that of the indemnitee in connection with the events which resulted in such expenses. The rights of an indemnitee under the
form of indemnification agreement are in addition to any other rights that the indemnitee may have under our certificate of incorporation
or bylaws, any agreement, or any vote of our stockholders or directors. We are not obligated to make any payment under the form
of indemnification agreement to the extent payment is actually made to the indemnitee under an insurance policy or any other method
outside of the agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>OTHER MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The board of directors knows of no other
matters that will be presented for consideration at the annual meeting, but if other matters properly come before the meeting,
the persons named as proxies in the enclosed proxy will vote according to their best judgment. Stockholders are requested to date
and sign the enclosed proxy and to mail it promptly in the enclosed postage-paid envelope. If you attend the annual meeting, you
may revoke your proxy at that time and vote in person, if you wish. Otherwise your proxy will be voted for you.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 50%; padding: 0; text-indent: 0">By Order of the Board of Directors</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Steven D. Ward,</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Secretary</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">Dated:</TD><TD STYLE="text-align: justify">April 30, 2012</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Rochester, New York</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; padding: 2pt; text-align: justify; border: Black 1pt solid"><B>We will make
available at no cost, upon your written request, a copy of our annual report on Form 10-K for the year ended December 31, 2011
(without exhibits) as filed with the Securities and Exchange Commission. Copies of exhibits to our Form 10-K will be made available,
upon your written request and payment to us of the reasonable costs of reproduction and mailing. Written requests should be made
to: Corporate Secretary, Vuzix Corporation, 75 Town Centre Drive, Rochester, New York 14623.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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