<FONT SIZE=1><P
ALIGN="CENTER"> </FONT><B><FONT
SIZE=3>EMPLOYMENT AGREEMENT
</P>
</B><P> </P>
<B><P>AGREEMENT</B>
made and entered into in Seattle, Washington, by and
between
MICROVISION, Inc. (the
"Company"), a Delaware corporation with
its
principal place of business in Seattle,
Washington, and Alexander Y. Tokman
("Executive"),
effective as of the 7th day of April, 2009. </P>
<P> </P>
<B><P>WHEREAS</B>,
subject to the terms and conditions hereinafter set
forth,
the
Company wishes to employ Executive as its President and Chief
Executive
Officer and Executive wishes to accept
such employment; </P>
<P> </P>
<B><P>NOW,
THEREFORE</B>, in consideration of the foregoing premises and
the
mutual promises, terms, provisions and
conditions set forth in this Agreement,
the
parties hereby agree: </P>
<P> </P>
<P>1.
<U>Employment</U>. Subject to the terms and conditions
set forth in this
Agreement, the Company hereby offers,
and Executive hereby accepts, employment.
</P>
<P> </P>
<P>2. <U>Term</U>.
Subject to earlier termination as hereafter provided,
Executive's employment hereunder shall
be for a term of three (3) years,
commencing as of the effective date of
this Agreement, and ending on April 7,
2012, ("Employment
Term"), subject to earlier termination as set
forth
in
Section 5 below. Following the expiration of the Employment Term,
this
Agreement shall be automatically
renewed for successive one (1) year periods
("Renewal Term")
unless, at least ninety (90) days prior to the
expiration of the Employment Term or
the then current Renewal Term, either party
provides the other with written notice
of intention not to renew, in which case
this Agreement shall terminate as of
the end of the Employment Term or the
Renewal Term, as applicable. If this
Agreement is renewed, the terms of this
Agreement during any Renewal Term shall
be the same as the terms in effect
immediately prior to such renewal
(including but not limited to, the provisions
set
forth in Sections 4 and 5 below), subject to any changes or
modifications as
mutually may be agreed between the
Parties as evidenced in a written instrument
signed by both the Company and
Executive. "Term" as used in this Agreement
without further modification shall mean
the Employment Term together with any
Renewal Term.</P>
<P> </P>
<P>3. <U>Capacity and
Performance</U>. </P>
<P> </P>
<P>a. During the Term, Executive
shall serve the Company as its President and
Chief Executive Officer, reporting to
the Company's Board of Directors (the
"Board"). In addition, and without
further compensation, Executive may also
serve as a member of the Board.
In addition, Executive may also serve as a
director and/or officer of one or more
of the Company's Affiliates, if so
elected or appointed from time to time.
</P>
<P> </P>
<P>b. During the Term, Executive
shall be employed by the Company on a full-time
basis and shall perform such duties as
are intrinsic to his position and such
other duties and responsibilities on
behalf of the Company and its Affiliates as
may
reasonably be designated from time to time by the Board or by its
designees.
</P>
<P> </P>
<P>c. During the Term, Executive
shall devote his full business time and his
best efforts, business judgment, skill
and knowledge exclusively to the
advancement of the business and
interests of the Company and its Affiliates and
to
the discharge of his duties and responsibilities hereunder.
Executive shall
not
actively engage in any other business activity during the Term, but
may
participate in industry, trade,
professional, charitable and community
activities and manage personal
investments so long as such activities, either
individually or in the aggregate, do
not <A NAME="OLE_LINK1"><A
NAME="OLE_LINK2">conflict with the
interests of the Company and its Affiliates
or
interfere with the discharge of Executive's responsibilities to the
Company
and
its Affiliates</A></A>. Executive may serve on
the boards of directors of
other companies only with the prior
express permission of the Board. The Board
has
given its permission for Executive to serve on the Board of Endra,
Inc.</P>
<P> </P>
<P>4. <U>Compensation and
Benefits</U>. As compensation for all services
performed by Executive under and during
the Term and subject to performance of
Executive's duties and of the
obligations of Executive to the Company and its
Affiliates, pursuant to this Agreement
or otherwise: </P>
<P> </P>
<P>a. <U>Base
Salary</U>. Beginning with the effective date of this
Agreement,
the
Company shall pay Executive a base salary at the rate of Three
Hundred Forty
Seven Thousand Two Hundred Eighty Eight
Dollars ($347,288) per year ("Base
Salary"), payable in
accordance with the payroll practices of the Company
for
its executives and subject to annual review by the Board or a
committee
thereof and to such increases as the
Board or a committee thereof, in its sole
discretion, may from time to time
determine. No decreases may be made in
Executive's Base Salary without prior
written consent by Executive. </P>
<P> </P>
<P>b. <U>Bonus
Compensation</U>. During the Term, Executive will be eligible
for
an
annual bonus opportunity (the "Bonus") at a level
commensurate with
his
position and responsibilities as Chief Executive Officer of the
Company, as
reasonably determined by the Board or a
committee thereof. The Parties agree
that the target equivalent of such
Bonus will be no less than 50% of the Base
Salary. The actual amount of the
payment under any Bonus shall be determined by
the
Board or a committee thereof, based on its assessment, in its
sole
discretion, of Executive's performance
and that of the Company against
appropriate and reasonably attainable
goals established by the Board or a
committee thereof after consultation
with Executive, in the calendar year
following the performance year.
To the extent consistent with bonus
opportunities (and payments thereunder)
awarded to other executive officers of
the
Company whose compensation is subject to Section 162(m) of the
Code, the
Board or a committee thereof may
structure any Bonus for Executive with the
intent that it comply with the
performance-based compensation exception
requirements under Section 162(m),
provided that the target equivalent of the
Bonus shall not go below 50% of the
Base Salary. If so determined by the Board
or
a committee thereof, after soliciting Executive's input, Bonus
compensation
may
be paid (i) in cash and/or in equity or (ii) in such form (cash or
equity or
a
combination thereof) as Executive may elect, subject to such
limitations on
any
such election as the Board or a committee thereof may impose.
Any Bonus
compensation earned by Executive shall
be paid to Executive in the calendar year
following the performance year, no
later than bonus payments to other Executives
and
in all events by December 31 of such following year.
</P>
<P> </P>
<P>c. <U>Long Term
Incentives</U>. During the Term, Executive will be
eligible
for
stock or stock-based awards ("Stock Awards") at a level
commensurate with
his
position and responsibilities as Chief Executive Officer of the
Company, as
reasonably determined by the Board or a
committee thereof, each such award to be
made under the Company's 2006 Equity
Incentive Plan or any successor thereto.
Subject to the terms of such Plan, the
Board or a committee thereof shall have
the
discretion to determine (i) the type of each Stock Award
(<I>e.g.</I>, stock
option, restricted stock or restricted
stock unit); (ii) the number and shares
subject to each Stock Award; (iii) the
performance conditions, if any, and other
vesting terms applicable to each Stock
Award; and (iv) all other terms of each
Stock Award;
<I>provided</I>, that except as the Board or a
committee thereof
and
Executive may otherwise agree, Stock Awards during the Term shall
be granted
on
a basis, as determined by the Board or a committee thereof, that
is
reasonably calculated to meet the
objectives described in Exhibit A hereto. </P>
<P>d.
<U>Vacations</U>. During the Term, Executive shall be
entitled to four (4)
weeks of paid vacation per year to be
taken at such times and intervals as shall
be
determined by Executive, subject to the reasonable business needs
of the
Company. Vacation shall otherwise be
governed by the policies of the Company, as
in
effect from time to time; provided, however, that nothing in
Company policy
or
practice shall prevent Executive from receiving pay for accrued but
unused
vacation at the time of Executive's
termination from employment pursuant to the
terms of this Agreement.
</P>
<P> </P>
<P>e. <U>Other
Benefits</U>. During the Term and subject to any
contribution
therefore generally required of
employees of the Company, Executive shall be
entitled to participate in any and all
employee benefit plans from time to time
in
effect for employees of the Company generally, except to the extent
such
plans provide a category of benefit
(for example, but without limitation,
severance) otherwise provided to
Executive pursuant to this Agreement. Such
participation shall be subject to the
terms of the applicable plan documents and
generally applicable Company policies.
The Company may alter or terminate its
employee benefit plans at any time, as
it, in its sole judgment, determines to
be
appropriate. </P>
<P> </P>
<P>f. <U>Business
Expenses</U>. The Company shall pay or reimburse Executive
for
all
reasonable business expenses incurred or paid by Executive in
the
performance of his duties and
responsibilities hereunder, subject to such
policies as may be established by the
Company from time to time, any maximum
annual limit or other restrictions on
such expenses and to provision of such
reasonable substantiation and
documentation as may be specified by the Company
from time to time. Any such
payment or reimbursement that could constitute
"nonqualified deferred compensation"
subject to Section 409A of the Code shall
be
subject to the requirements that: (i) the amount of expenses
eligible for
payment or reimbursement during any
calendar year may not affect the expenses
eligible for payment or
reimbursement in any other taxable year, (ii) the
payment or reimbursement must be made,
if at all, not later than December 31 of
the
calendar year following the calendar year in which the expense was
incurred,
and
(iii) any right that Executive may have to reimbursement shall in
no event
be
subject to liquidation or exchange for any other
benefit.</P>
<P> </P>
<P>5. <U>Termination of
Employment and Severance Benefits</U>.
Notwithstanding
the
provisions of Section 2 hereof, Executive's employment hereunder
shall
terminate prior to the expiration of
the Term under the following circumstances:
</P>
<P> </P>
<P>a. <U>Death</U>.
In the event of Executive's death during the Term,
Executive's employment hereunder shall
immediately and automatically terminate.
In
such event, the Company shall pay to Executive's designated
beneficiary or,
if
no beneficiary has been designated by Executive, to his estate: (i)
any
earned and unpaid Base Salary, payable
on the Company's next regular pay day
following termination, (ii) any
vacation time earned but not used through the
date of termination, payable on the
Company's next regular pay day following the
termination, (iii) any bonus
compensation earned for the Bonus Year
preceding that in which the termination
occurs and unpaid on the date of
termination ("Awarded
Bonus"), payable in accordance with Section 4.b
hereof, (iv) subject to Section 4(f)
above, any reimbursable business expenses
incurred by Executive but not yet
reimbursed on the date of termination,
provided that such expenses and
required substantiation and documentation are
submitted within sixty (60) days of
termination, with reimbursement being made
promptly after receipt of documentation
(amounts provided in (i) through (iv),
"Final Payment"); and
(v) payment for a pro-rata portion of
Executive's Bonus for the Bonus Year in
which the termination occurs in the
event that bonuses are paid to other
officers of the Company for the same Bonus
Year and provided that the timing of
such pro-rata bonus payment will be made in
the
same form of consideration and at the same time as the bonus
payments made
to
other officers. The Company shall also make provision, in a
manner
consistent with Section 409A of the
Code, such that for a period of up to
eighteen (18) months following
Executive's death Executive's surviving spouse,
if
any, and his surviving dependents, if any, if they are eligible for
and elect
continuation of health coverage
pursuant to the so-called "COBRA" coverage-
continuation provisions applicable to
the Company's group health plan, shall be
required to contribute to such coverage
only so much as they would have
contributed for comparable family
coverage had Executive continued to be
employed. The Company shall have
no further obligations to Executive. </P>
<P> </P>
<P>b.
<U>Disability</U>. </P>
<P> </P>
<P>i. To the extent permitted by
applicable law, the Company may terminate
Executive's employment hereunder, upon
notice to Executive, in the event that
Executive becomes disabled during his
employment hereunder through any illness,
injury, accident or condition of either
a physical or psychological nature and,
as
a result, is unable to perform substantially all of his duties
and
responsibilities hereunder, with or
without reasonable accommodation as required
by
law, for a period of more than one hundred twenty (120) days during
any
period of three hundred and sixty-five
(365) consecutive calendar days. In the
event of such termination, the Company
shall pay Executive the Final Payment and
payment for a pro-rata portion of
Executive's Bonus for the Bonus Year in which
the
termination occurs in the event that bonuses are paid to other
officers of
the
Company for the same Bonus Year and provided that the timing of
such pro-
rata bonus payment will be made in the
same form of consideration and at the
same time as the bonus payments made to
other officers. The Company shall also
make provision, in a manner consistent
with Section 409A of the Code, such that
for
a period of up to eighteen (18) months following such termination
Executive
and
his family members, to the extent they are eligible for and
elect
continuation of health coverage
(including pursuant to the so-called "COBRA"
coverage-continuation provisions
applicable to the Company's group health plan),
shall be required to contribute to such
coverage only so much as they would have
contributed for comparable family
coverage had Executive continued to be
employed. The Company shall have
no further obligations to Executive.</P>
<P>ii. Prior to termination as
provided at clause i. above, the Board may
designate another employee to act in
Executive's place during any period of
Executive's disability. Notwithstanding
any such designation, Executive shall
continue to receive the compensation
and benefits in accordance with Sections
4.a
through 4.d and benefits in accordance with Section 4.e, to the
extent
permitted by the then-current terms of
the applicable benefit plans, until
Executive becomes eligible for
disability income benefits under the Company's
disability income plan or until the
termination of his employment, whichever
shall first occur.</P>
<P> </P>
<P>iii. While receiving
disability income payments under the Company's
disability income plan, Executive shall
not be entitled to receive any Base
Salary under Section 4.a hereof, but
shall continue to participate in Company
benefit plans in accordance with
Section 4.e and the terms of such plans, until
the
termination of his employment. </P>
<P> </P>
<P>iv. If any question shall
arise as to whether during any period Executive is
disabled through any illness, injury,
accident or condition of either a physical
or
psychological nature so as to be unable to perform substantially
all of his
duties and responsibilities hereunder,
a determination of whether Executive has
a
disability shall be made by Executive's health care provider. In
the event the
Company questions the medical opinion
of Executive's health care provider, the
Company may require Executive to obtain
a second opinion from a different health
care provider chosen by the Company at
its own expense. If there is a conflict
between the opinion of Executive's
health care provider and the opinion of the
Company's selected health care
provider, the Company may require Executive to
obtain a third opinion from a health
care provider jointly approved by the
Company and Executive at the Company's
expense, and this third opinion shall be
binding on Executive and the Company.
Any such determination of disability under
this Section 5.b.iv is not intended to
alter any benefits any party may be
entitled to receive under any long-term
disability insurance policy carried by
either the Company or Executive with
respect to Executive, which benefits shall
be
governed solely by the terms of any such insurance policy. If the
Executive
fails to submit to a medical
examination at the request of the Company as
provided above, the Company's
determination of the issue shall be binding on
Executive. </P>
<P> </P>
<P>c. <U>By the Company for
Cause</U>. The Company may terminate Executive's
employment hereunder for Cause at any
time upon notice to Executive setting
forth in reasonable detail the nature
of such Cause. The following, as
determined by the Board in its
reasonable judgment, shall constitute Cause for
termination: (i) Executive's repeated
willful failure to perform, or gross
negligence in the performance of, his
duties and responsibilities to the Company
or
any of its Affiliates; (ii) fraud, embezzlement or other dishonesty
with
respect to the Company or any of its
Affiliates; (iii) breach of any of his
obligations under Section 7, 8 or 9
hereof or (iv) commission of a felony or
other crime involving moral turpitude.
Upon termination of Executive's
employment hereunder for Cause, the
Company shall have no further obligations to
Executive other than to pay Executive
the Final Payment. </P>
<P> </P>
<P>d. <U>By the Company
Other than for Cause</U>. The Company may
terminate
Executive's employment hereunder other
than for Cause at any time upon notice to
Executive. In the event of such
termination during the Employment Term or a
Renewal Term, then, the Company (i)
shall pay Executive (A) the Final Payment
and
(B) severance pay in an amount equal to eighteen (18) months of
Base Salary,
at
the rate in effect at the date of termination, plus an amount equal
to (I)
Executive's target Bonus amount
for the year of termination, or (II) if no such
target has been fixed for the year of
termination, the actual bonus paid or
payable to Executive for the most
recently completed fiscal year of the Company
for
which an annual bonus was paid or is payable to Executive;
<I>provided</I>,
that in the case of any termination
under this subsection (d) occurring after
December 31, 2009, in lieu of the
amount described in (I) above there shall be
paid to Executive the actual bonus paid
or payable to him for the most recently
completed fiscal year of the Company
for which an annual bonus was paid or is
payable to him; and (ii) shall
continue, while Executive is receiving severance
pay
hereunder, to contribute to the premium cost of participation by
Executive
and
his eligible dependents in the Company's group medical and dental
plans,
provided that Executive is entitled to
continue such participation under
applicable law and plan terms and pays
the remainder of the premium cost from
month to month in accordance with the
schedule established by the Company. Any
obligation of the Company to Executive
under clause (i) or (ii) hereof, however,
shall be reduced by any other payments
from the Company to which Executive is
entitled as a result of termination
(exclusive of any Final Payment due) and is
conditioned on Executive signing and
delivering to the Company, not later than
the
earlier of (i) sixty (60) days after termination of employment or
(ii) the
deadline for consideration and
execution thereof specified in the form of
release of claims attached hereto as
Exhibit B, together with the end of
any
applicable revocation period (the "Release
Deadline"), a release
in
such form (the "Employee Release").
Severance pay and Target Bonus
to
which Executive is entitled hereunder shall be payable pro-rata at
the
Company's regular payroll periods
during the eighteen (18) month period
immediately following termination of
Executive's employment, with the first
payment being made on the Company's
next regular payday following the Release
Deadline, but retroactive to the next
business day following the date of
termination of employment;
<I>provided</I>, that no payment will be made
prior
to
the effective date of the Employee Release in the form attached
hereto as
Exhibit B and that if at the relevant
time Executive is a Specified Employee, so
much of the amounts payable hereunder
as constitutes nonqualified deferred
compensation subject to Section 409A of
the Code and that would be payable
during the six-month period following
Executive's termination shall instead be
accumulated and paid in a single sum
upon the day after the conclusion of such
six-month period.
</P>
<P> </P>
<P>e. <U>By Executive for
Good Reason</U>. Executive may terminate his
employment hereunder for Good Reason
provided that (A) he give notice to the
Company within ninety (90) days of the
initial occurrence of the event or
condition constituting Good Reason,
setting forth in reasonable detail the
nature of such Good Reason;
(B) the Company fails to cure within thirty
(30) days following such notice; and
(C) Executive terminates his employment
within thirty (30) days following the
end of the thirty (30)-day cure period (if
the
Company fails to cure). The following shall constitute Good
Reason for
termination by Executive: (i) failure
of the Company to continue Executive in
the
position of Chief Executive Officer; (ii) substantial diminution in
the
nature and scope of Executive's
responsibilities, duties, authority, and
reporting up requirements of Executive,
provided, however, that the Company's
failure to continue Executive's
appointment or election as a director or officer
of
one of the Company's Affiliates and any diminution of the business
at the
Company or any of its Affiliates shall
not constitute "Good Reason";
(iii) material failure of the Company
to provide Executive with the Base Salary
and
benefits in accordance with the terms of Section 4 hereof; or
(iv)
relocation of Executive's office more
than thirty-five (35) miles from the then-
current location of the Company's
principal offices without his consent. In the
event of termination in accordance with
this Section 5.e during the Employment
Term or Renewal Term, then Executive
will be entitled to the same pay and
benefits he would have been entitled to
receive had Executive been terminated by
the
Company other than for Cause in accordance with Section 5.d above;
provided
that Executive satisfies all conditions
to such entitlement, including without
limitation the timely signing of an
effective Employee Release in the form
attached hereto as Exhibit B, in
accordance with the requirements set forth in
Section 5.d.
</P>
<P> </P>
<P>f. <U>By Executive Other
than for Good Reason</U>. Executive may terminate
his
employment hereunder at any time upon sixty (60) days' notice to
the
Company. In the event of termination by
Executive pursuant to this Section 5.f,
the
Board may elect to waive the period of notice, or any portion
thereof, and,
if
the Board so elects, the Company will pay Executive the Base Salary
for the
notice period (or for any remaining
portion of the period) and the Final
Payment. The Company shall have no
further obligation to Executive. </P>
<P> </P>
<P>g. <U>Upon a Change of
Control</U>. </P>
<P> </P>
<P>i. If a Change of Control
occurs and the Company terminates Executive's
employment hereunder other than for
Cause during the Employment Term or Renewal
Term and within two (2) years following
such Change of Control or Executive
terminates his employment hereunder for
any reason during the Employment Term or
Renewal Term and within two (2) years
following such Change of Control, then, in
lieu of any payments to or on behalf of
Executive under Section 5.d or 5.e
hereof, the Company, in addition to
providing Executive the Final Payment, (A)
shall pay Executive an amount equal to
two times the sum of one year of Base
Salary at the rate in effect at the
date of termination or, if higher, on the
date of the Change of Control plus a
payment equal to the Target Bonus for which
Executive is eligible, which amount
shall be payable in a single lump sum within
ten
(10) business days following the later of the effective date of the
Employee
Release in the form attached hereto as
Exhibit B or the date it is received by
the
Company and (B) shall pay the full cost of Executive's
continued
participation in the Company's group
health and dental plans for two years or,
if
less, for so long as Executive remains entitled to continue
such
participation under applicable law. In
addition, 100% of those Options which are
not
exercisable, and which have not been exercised and have not expired
or been
surrendered or cancelled, shall become
exercisable upon such termination and
shall otherwise be and remain
exercisable in accordance with the terms of the
Options subject to the Option
Agreement. The obligations of the Company
hereunder, however, other than for the
Final Payment, if any, are subject to
Executive signing a timely and
effective Employee Release in the form attached
hereto as Exhibit B in accordance with
the rules specified in subsection (d)
above. Notwithstanding the
generality of the foregoing, (i) if the Change of
Control is not a "change in control
event" (as that term is defined at Section
1.409A-3(i)(5) of the Treasury
Regulations), so much of the amounts described in
this paragraph as does not exceed the
amounts that would have been payable to
Executive under Section 5.d. or Section
5.e., as the case may be, had
termination occurred prior to the
Change of Control, and that constitutes
nonqualified deferred co
