NEWS RELEASE AND REPORT

TORONTO, Jan. 5 /CNW/ -

1. Name and address of the offeror:
  Lampe, Conway & Co. LLC ("LC&C")
680 Fifth Avenue - 12th Floor
  New York, New York 10019-5429
   
  This news release and report are being filed by LC&C, the investment manager of LC Capital Master Fund Ltd. (the "Master Fund").
   
2. Designation and number or principal amount of securities and the offerors's securityholding percentage in the class of securities of which the offeror acquired ownership or control in the transaction or occurrence giving rise to the obligation to file the news release, and whether it was ownership or control that was acquired in the those circumstances:
   
  The Master Fund entered into a Convertible Loan and Security Agreement on December 23, 2010, which permits the Master Fund to convert the loan into up to 40,140,492 shares of the $.001 par value common stock of Vuzix Corporation ("Vuzix") at a conversion price of $0.09965 per share. The Master Fund also received a warrant on December 23, 2010, which permits the Master Fund to purchase up to 40,000,000 shares of the $.001 par value common stock of Vuzix at a conversion price of $0.09965 per share. The maximum number of shares of common stock that the Master Fund may acquire, however, pursuant to the convertible loan and the warrant is limited to 46,517,695.
   
  The offeror's securityholding percentage in the common stock of Vuzix is 14.99% (being 46,517,695, divided by the sum of 263,600,274 shares of common stock of Vuzix outstanding and the 46,517,695 shares deemed to be beneficially owned by the offeror). The offeror is deemed to have acquired control of common stock in these circumstances.  
   
3. Designation and number or principal amount of securities and the offerors's securityholding percentage in the class of securities immediately after the transaction or occurrence giving rise to the obligation to file the news release:
   
  After giving effect to the transaction referred to in Item 2 above, the offeror is deemed to control a total of 46,517,695 shares of common stock of Vuzix, representing a securityholding percentage of 14.99%.
   
4. Designation and number or principal amount of securities and the percentage of outstanding securities of the class of securities referred to in paragraph 3 over which
   
  (a)     the offeror, either alone or together with any joint actors, has ownership and control:
   
  See Item 3 above and Item 9 below.
   
  (b)     the offeror, either alone or together with any joint actors, has ownership but control is held by other persons or companies other than the offeror or any joint actor:
   
  Not applicable.
   
  (c)     the offeror, either alone or together with any joint actors, has exclusive or shared control but does not have ownership:
   
  Not applicable.
   
5. Name of the market in which the transaction or occurrence that gave rise to the news release took place:
   
  Not applicable.
   
6. The value, in Canadian dollars, of any consideration offered per security if the offeror acquired ownership of a security in the transaction or occurrence giving rise to the obligation to file a news release:
   
  The principal amount of the loan extended by the Master Fund to Vuzix was US$4,000,000 (approximately C$4,000,000 based on current exchange rates).
   
7. Purpose of the offeror and any joint actors in effecting the transaction or occurrence that gave rise to the news release, including any future intention to acquire ownership of, or control over, additional securities of the reporting issuer:
   
  The Master Fund has acquired its common stock of Vuzix for investment.
   
  LC&C, the Master Fund and their respective representatives have been and may continue to be in contact with members of Vuzix's management, Vuzix's Board of Directors, other significant shareholders and others regarding alternatives that Vuzix could employ to maximize shareholder value.
   
  LC&C, the Master Fund and their respective representatives further reserve the right to act in concert with any other shareholders of Vuzix, or other persons, for a common purpose should they determine to do so, and/or to recommend courses of action to management and the shareholders of Vuzix.
   
  The Convertible Loan and Security Agreement referred to in Item 2 provides the Master Fund with the right to nominate two members to Vuzix's Board of Directors, subject to the consent of the Vuzix's Board of Directors and the TSX Venture Exchange.
   
8. The general nature and the material terms of any agreement, other than lending arrangements, with respect to securities of the reporting issuer entered into by the offeror, or any joint actor, and the issuer of the securities or any other entity in connection with the transaction or occurrence giving rise to the news release, including agreements with respect to the acquisition, holding, disposition or voting of any of the securities:
   
  Not applicable.
   
9. Names of any joint actors in connection with this disclosure:
   
  LC&C acts as investment manager to the Master Fund pursuant to certain investment management agreements. Because LC&C shares voting and dispositive power over the shares of common stock of Vuzix by virtue of the aforementioned investment agreements, LC&C may be deemed to have a beneficial interest in the shares of common stock. LC&C disclaims beneficial ownership of the shares of common stock except to the extent of its pecuniary interest, if any, therein.
   
  Steven G. Lampe ("Lampe") and Richard F. Conway ("Conway") act as the sole managing members of LC&C and, as a result, each of Lampe and Conway may be deemed to control such entity. Accordingly, each of Lampe and Conway may be deemed to have a beneficial interest in the shares of common stock of Vuzix by virtue of LC&C's indirect control of the Master Fund and LC&C's power to vote and/or dispose of the shares of common stock. Each of Lampe and Conway disclaims beneficial ownership of the shares of common stock except to the extent of his respective pecuniary interest, if any, therein.
   
10. In the case of a transaction or occurrence that did not take place on a stock exchange or other market that represents a published market for the securities, including an issuance from treasury, the nature and value of the consideration paid by the offeror
   
  The principal amount of the loan extended by the Master Fund to Vuzix was US$4,000,000.
   
11. Description of any change in any material fact set out in a previous report by the entity under the early warning requirements in respect of the reporting issuer's securities:
   
  Not applicable.
   
12. If applicable, a description of the exemption from securities legislation being relied on by the offeror and the facts supporting that reliance:
   
  Not applicable. The Master Fund is not located in Canada.

SOURCE Lampe, Conway

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