Attached files
file | filename |
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EX-10.2 - Vuzix Corp | v206807_ex10-2.htm |
EX-10.1 - Vuzix Corp | v206807_ex10-1.htm |
EX-10.3 - Vuzix Corp | v206807_ex10-3.htm |
EX-10.4 - Vuzix Corp | v206807_ex10-4.htm |
8-K - Vuzix Corp | v206807_8k.htm |
Press
Release
|
Vuzix
Secures $4.0 Million Term Debt and Restructures $2.3 Million in Short-Term
Debt
ROCHESTER,
NEW YORK— (December 23, 2010) - Vuzix Corporation (TSX-V: VZX, OTC:BB: VUZI)
(“Vuzix” or, the “Company”) reported today that it closed a private placement
financing in the principal amount of $4.0 million with LC Capital Master Fund
Ltd. (the “Lender”). The Lender has the right to convert its debt
into shares of Vuzix Common Stock (“Common Shares”). The Lender
received Warrants to purchase additional Common Shares. In connection
with the financing, holders of approximately $2.3 million of indebtedness from
the Company deferred payments of the amounts owed them. Those creditors received
warrants to purchase Common Shares. Details of each of these
transactions are set forth below.
(Please
note that all amounts are stated in U.S. dollars unless otherwise
noted.)
$4 Million Term Debt
Facility:
The
convertible, senior secured term loan (the “Loan”) is in the principal amount of
$4,000,000. Accrued interest is to be paid semi-annually at a rate of
12% per annum commencing 6 months after closing. No payments of principal are
required in the first 12 months of the loan. Beginning in the 13th month
following closing, the Company is required to make 24 equal monthly payments of
$141,666. A final principal payment of $600,000 is due at the end of the
48-month period.
The
Company will use approximately $425,000 to repay two bank loans and three notes
payable. An additional $1,500,000 will be used to pay down supplier
accounts. The balance of approximately $2,000,000 will be used to
improve the Company’s working capital position and liquidity. The unpaid
principal and accrued interest on the Loan is convertible into Common Shares at
a price of $0.09965 per share, at any time.
The
Company issued to the Lender warrants to purchase up to 40,000,000 Common Shares
(the “Warrants”), at an exercise price of $0.09965 per share, at any time prior
to December 23, 2014.
The
maximum number of Common Shares that may be issued pursuant to: (i) the exercise
of Warrants; and (ii) the conversion of principal and interest owing under the
Loan, shall not exceed 46,517,695 Common Shares, which corresponds to 15% of the
Company’s currently issued and outstanding Common Shares after giving the effect
to the exercise of the conversion rights and the Warrants.
The Loan
agreement contains certain covenants, including the maintenance of minimum cash
levels of $500,000 or unused operating lines of an equivalent amount and
positive EBITDA operating results. Beginning with the quarter ending March 31,
2011, Vuzix is required to achieve positive EBITDA operating results each
quarter, starting at nil and increasing to $1,000,000 per quarter over the term
of the Loan. The Lender is also entitled to appoint two new board members to the
Company’s board of directors, subject to the mutual agreement upon suitable
candidates and regulatory approval.
December
23, 2010
|
Press
Release
|
Additionally
if the Company does not enter into a working line of credit secured by Accounts
Receivable and Inventory of not less than $1,000,000 nor more than $2,000,000,
within 90 days following the closing date, the Company must pay the Lender a fee
of $200,000, payable on the fourth anniversary of the closing date and
convertible into Common Shares at a conversion price equal to the greater of (i)
the U.S. Dollar equivalent of CDN$0.10 per share and (ii) the market price of
the Common Shares on the date of issuance of such promissory note. If such a
line of credit is not obtained within 180 days from the Closing Date, Vuzix
shall pay the Lender an additional fee of $400,000, payable on the fourth
anniversary of the Closing Date and convertible into Common Shares of the
Company at a conversion price equal to the greater of (i) the U.S. Dollar
equivalent of CDN$0.10 per share and (ii) the market price of the Commons
Shares, on the date of issuance of such promissory note.
The
maximum number of Common Shares that the Lender may acquire pursuant to the
exercise of Warrants, the conversion of the Loan and the conversion of the line
of credit penalty fees is of 52,507,695, or 19.9% of the Company’s issued
outstanding Common Shares on the date hereof.
The
foregoing is only a summary of the transaction between Vuzix and the
Lender. Reference is made to the report on Form 8-K that Vuzix will
file with the United States Securities and Exchange Commission and to the copies
of the transaction documents that will be attached to that report for a complete
presentation of the terms of the transaction between Vuzix and the
Lender.
Kaufman
Bros. acted as the Company’s financial advisor with respect to the Loan
transaction and was: (i) paid an advisory fee of $50,000; and (ii) issued
warrants to purchase 1,000,000 Common Shares. The warrants issued to
Kaufman Bros. have the same terms as the Warrants.
Debt
Restructuring
In
connection with the financing, four existing secured lenders who are currently
owed $2,320,980 in principal and accrued interest have 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. As
partial compensation for subordination and postponement, these existing
creditors were issued warrants to purchase an aggregate of 4,612,666 Common
Shares, with an exercise price of US$0.09965 per share. The Warrants are
exercisable until the earlier of the maturity date of the indebtedness owing to
the applicable creditor or 5 years from the closing date.
One of
the subordinating lenders is Paul Travers, the Company’s President and CEO, who
is owed an aggregate of $258,658 by the Company in respect of advances made by
Mr. Travers to the Company in 2008. Mr. Travers will be issued warrants to
purchase 1,034,633 Common Shares in consideration for the subordination and
postponement of amounts owing to him.
Mr.
Travers is a related party within the meaning of Multilateral Instrument 61-101
- Protection of Minority
Security Holders in Special Transactions (“MI
61-101”). Consequently, the issuance of warrants to Mr. Travers
constitutes a related party transaction within the meaning of MI 61-101
requiring the Corporation, in the absence of exemptions, to obtain a formal
valuation for, and minority shareholder approval of, the related party
transaction. The Company has determined that an exemption from the
formal valuation requirements under MI 61-101, specifically under section 5.5(a)
thereof. The Company has determined that an exemption is also
available from the minority shareholder approval requirements under the
exemption in Section 5.7(a) of MI 61-101. The disclosure of the
related party transaction in this news release is less than 21 days prior to the
closing of such related party transaction. The disclosure of the
proposed related party transaction in this news release is reasonable given that
the related party transaction was negotiated in the context of the negotiation
and completion of the Loan transaction.
All of
the securities issued pursuant to the transactions referred to herein are
subject to resale restrictions under applicable TSX Venture Exchange policies
for a period of four months from the date hereof
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December
23, 2010
|
Press
Release
|
About
Vuzix Corporation
Vuzix is
a leading supplier of Video Eyewear products in the defense, consumer and media
& entertainment markets. The Company’s products, personal display devices
that offer users a portable high quality viewing experience, provide solutions
for mobility, thermal sighting systems, tactical wearable displays, virtual and
augmented reality. With its origins in defense research and development for next
generation display solutions, Vuzix holds over 51 patents in the Video Eyewear
field. The company and has won 9 Consumer Electronics Show Innovations Awards,
the RetailVision Best New Product, several wireless technology innovation
awards, among others. Founded in 1997, Vuzix is a public company (TSX-V:VZX -
News, OTC:BB: VUZI) with offices in Rochester, NY, Oxford, UK and Tokyo, Japan.
For more information visit www.vuzix.com.
Forward-Looking
Statements Disclaimer
Certain
statements contained in this release are "forward looking statements" within the
meaning of the Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws. Forward looking statements contained in this release may relate
to, among other things, the Company’s proposed repayment of principal and
interest, the future issuance by the Company of Common Shares upon exercise of
warrants, the conversion of the Loan and the conversion of deferred structuring
penalty fees, the Company’s use of the Loan proceeds and the negotiation and
entering into of an operating credit facility. They are generally identified by
words such as "plans," "seeks," "believes," "may," "expects," "anticipates,"
"should'" and similar expressions. Readers should not place undue reliance on
such forward-looking statements, which are based upon the Company's beliefs and
assumptions as of the date of this release. The Company's actual results could
differ materially from those projected in the Company's forward-looking
statements due to, among other things, our ability to raise necessary capital;
government regulation of our technologies; our ability to enforce our
intellectual property rights and protect our proprietary technologies; the
timing of new product launches; delays in product development; and dependence on
third parties for certain key components. These risk factors and others are
described in the Company's reports filed with the United States Securities and
Exchange Commission and applicable Canadian securities regulators. Subsequent
events and developments may cause these forward-looking statements to change.
The Company specifically disclaims any obligation or intention to update or
revise these forward-looking statements as a result of changed events or
circumstances that occur after the date of this release, except as required by
applicable law.
Neither
TSX Venture Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
For
further press information, please contact:
Charlotte
Walker, VP Corporation Communications
IR@vuzix.com
75 Town
Centre Drive
Rochester,
NY USA
Tel:
(585) 359-5910
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