Employment Agreement
Xxxxxxx X. Xxxxxx
This employment agreement ("Agreement") is made effective on the 26th day
of August, 1996, between Microvision, Inc., a Washington corporation (the
"Company"), and Xxxxxxx X. Xxxxxx ("Employee").
1. Employment. Beginning on the Effective Date (as defined in Section 7),
the Company will employ Employee, and Employee will accept employment by the
Company, as its Chief Financial Officer and Vice President of Operations.
2. Duties. Employee's primary duties will consist of those as may be
reasonably determined by the Board of Directors or the Chief Executive Officer,
and as are generally consistent with the duties of a Chief Financial Officer and
Vice President of Operations and include, but are not limited to: Accounting and
financial issues related to the Company and operational issues related to the
development of the Company. The Board of Directors will assist and work with
Employee in the performance of his duties.
3. Full Time Employee. Employee will be a full-time employee of the
Company. Employee will devote his best efforts to the Company's business and
will not engage in any activities in conflict with the Company's interest.
3.1 Term of Employment. Employee will be employed by the Company,
unless otherwise terminated as provided for in Section 7, until August 26, 1999.
4. Compensation. For all services rendered by Employee under this
Agreement, the Company will pay Employee as follows from the Effective Date.
4.1 Base Salary. A base salary of $115,000 per year subject to
increases as determined by the Board of Directors. Said salary shall be payable
in semi-monthly installments on the fifteenth day and on the last day of each
month. In addition, Employee shall receive a signing bonus of $15,000 upon the
execution of this Agreement.
4.2 Stock Option Bonus. In addition to cash compensation set forth
above, the Company will pay Employee a bonus payable in common stock options as
follows:
4.2.1 In consideration of the employment relationship and
services rendered by Employee, the Company has authorized and hereby grants
options to purchase common stock of the Company to Employee upon execution of
this Agreement. Employee shall vest in such options on the following schedule:
1
Shares
Term of Employment (Pre Reverse Split) Exercise Price Exercise Term
------------------ ------------------- -------------- -------------
August 26, 1996 through August 25, 1997 100,000 $1.64 per share December 31, 2002
August 26, 1997 through August 25, 1998 105,000 $2.25 per share December 31, 2003
August 26, 1998 through August 25, 1999 115,000 $2.75 per share December 31, 2004
Options due Employee each year shall vest pro rata on the last day of each
quarter. The shares noted above are before giving effect to the Company's
proposed 1 for 3.2 reverse stock split.
4.2.2 Employee's entitlement to each successive stock allocation
shall vest on the dates indicated above only if Employee continues the term of
employment pursuant to Section 3.1. Employee shall immediately vest in all
unvested options while employee is employed by the Company, one day before
either of the following triggering events:
1. Upon any sale or public offering of the Company (stock or
assets to a third party, other than Employee, whereby fifty
(50%) or more of the issued and outstanding stock, as of
August 26, 1996 or fifty percent (50%) or more of the
Company's assets held by the Company, as of August 26, 1996,
(in both cases after adjustment for the proposed initial
public offering) are owned by the third party, or
2. Any merger, consolidation, liquidation or dissolution of the
Company.
4.3 Relocation. Employee shall receive a stipend of $20,000 against
documented expenses associated with Employee's relocation from New York, New
York to Seattle.
4.4 Benefits. Employee shall be entitled to all fringe benefits
offered generally to the Company's officers and any other benefit plans
established by the Company, subject to the rules and regulations in effect
regarding participation in such benefit plans. If these benefits do not include
full medical and dental benefits, then the Company shall reimburse Employee on a
monthly basis for coverage obtained by Employee.
4.5. Performance Bonus. Employee may also receive a performance bonus
in an amount to be determined by the Board of Directors and subject to
milestones to be agreed upon by the Employee and the Company. A guaranteed
minimum performance bonus of $15,000 shall be granted Employee at the conclusion
of the first year of this Employment Agreement and additional bonuses shall be
subject to the discretion of the management of the Company and the Compensation
Committee.
2
5. Noncompetition and Confidentiality.
5.1 Except in provided in Section 7.4 below, during the Employee's
employment with the Company and for a period of two (2) years thereafter,
Employee will not, directly or indirectly, be employed by, own, manage, operate,
join, control or participate in the ownership, management, operation or control
of or be connected in any manner with the field of laser-or LED-based retinal
scanning technologies. Employee shall be deemed to be connected with a business
if such business is carried on by a partnership in which he is a general or
limited partner, consultant or employee, or a corporation or association of
which he is a shareholder, officer, director, employee, member, consultant or
agent; provided, that nothing herein shall prevent the purchase or ownership by
Employee of shares of less than 1% of the outstanding shares in a publicly or
privately held company.
5.2 Commencing as of the date of this Agreement and continuing until
two years after the termination of Employee's employment with the Company,
Employee shall not solicit the employment of personnel employed by the Company
or by any direct or indirect parent or subsidiary of the Company.
5.3 Employee agrees that, commencing as of the date of this Agreement
and thereafter, he will not, except to the Company, its subsidiaries, and
affiliates, communicate or divulge to any person, firm or corporation either
directly or indirectly, any confidential or proprietary information relating to
the business, customers and suppliers or other affairs of the Company, its
parents, subsidiaries and their affiliates other than in the normal cause of
performing his duties. Without limited the foregoing, all information concerning
procedures and strategy of the Company, its subsidiaries and parents shall be
deemed confidential and proprietary information.
5.4 Change of Control.
5.4.1 Employee acknowledges that this accord not to compete is
essential to the Company and that the Company would not enter into
this Agreement if it did not include such accord. Employee shall have
no obligation under Sections 5.1 or 5.2 if (i) he leaves the
employment of the Company following a Change in Control Event, as
defined below, (ii) if the Company terminates this Agreement without
cause, or (iii) Employee terminates this Agreement with Cause.
5.4.2 For purposes of this Agreement, a Change in Control Event shall
mean (i) the sale of all or substantially all of the Company's assets
or (ii) any transaction or series of related transactions (including
without limitation, any reorganization, merger or consolidation) that
will result in the shareholders of the Company (or, if the Company is
at least 80% owned by another entity, the shareholders of the
Company's ultimate parent entity, as defined below) immediately prior
to such transaction holding, following such transaction, less than
fifty percent (50%) of the voting power of the surviving or continuing
entity. "Ultimate parent entity" means the entity that directly, or
through one or more other entities, owns eighty percent (80%) or more
of the Company's voting power.
3
6. Equitable Relief. Employee acknowledges that any violation by him of
this Agreement may cause the Company injury. The Company (acting through its
Board of Directors) acknowledges that any violation by the Company of this
Agreement may cause Employee injury. Therefore, each party separately agrees
that the injured party shall be entitled in addition to any remedies it may have
under this Agreement or at law, to injunctive and other equitable relief to
prevent or curtail any breach of this Agreement by the other party, including,
without limitation, Section 5.
7. Term and Termination.
7.1 This Agreement is effective (the "Effective Date") as of the date
first noted above and unless otherwise terminated as provided in this Section 7,
shall remain in effect for a period of three years.
7.2 This Agreement shall be terminated, to the extent such termination
does not conflict with any applicable rights that Employee may have under law
(e.g. FMLA,ADA etc.) or any other rights that Employee may have from sources
outside this relationship with the Company, upon the following:
(a) Death of Employee; or
(b) Inability of Employee to perform his duties for a period of
60 consecutive days due to sickness, disability or any other cause unless
Employee is granted a leave of absence by the Board of Directors; or
(c) For cause as provided in sections 8.1 or 8.2 or 8.3.
7.3 Termination with Cause by the Company. Employee shall be entitled
to compensation earned through the date of termination if termination is with
cause by the Company, without cause by Employee or because of Employee's death
or disability as provided in Sections 7.2(a) or (b).
7.4 Termination without Cause by the Company. In the event the Company
elects to terminate Employee without cause during the term of this Employment
Agreement, Employee shall be entitled to all stock options granted under Section
4 for the quarter during which notice of termination is made to Employee and one
(1) succeeding quarter. In addition, Employee shall be entitled to base salary
compensation equal to one year of compensation, as severance, from the date of
termination without cause. Further, the period of noncompetition under Section 5
shall be reduced to one (1) year which is the period of severance compensation
in the event of Termination without Cause. However, termination under this
sub-section in the final year of this Agreement, shall entitle Employee to base
salary compensation equal to the remaining portion of that year's compensation,
as severance from the date of termination without cause. Termination without
cause by the Company must be preceded by a minimum of a sixty (60) day written
notice of such termination to the Employee.
7.5 Resignation by Employee. In the event Employee elects to terminate
his relationship with the Company without cause by resigning, or otherwise,
Employee shall be entitled to no further cash or stock option compensation from
the date of such termination. Furthermore, termination
4
without cause by Employee must be preceded by a minimum of a sixty (60) day
written notice of such termination to the Company.
7.6 Provisions After Termination. Despite termination of this
Agreement, and irrespective of whether such termination has been effected with
or without cause by either Company or Employee, such termination shall not
affect the continuing enforceability of those provisions hereof that are by
their terms expressly intended to apply after the termination hereof, including
without limitation, those contained in Section 6.
8. Cause and Breach.
8.1 Where reference is made in this Agreement to termination by
the Company with or without cause, "cause" shall mean cause given by Employee to
the Company and is limited to the following:
(a) Repeated failure or refusal to carry out the reasonable
directions of the Board of Directors, provided such
directions are consistent with the duties and obligations
herein set forth to be performed by Employee; or
(b) Willful violation of a state or federal law involving the
commission of a crime against the Company or a felony
materially adversely affecting the Company; or
(c) Employee's medically confirmed dependence on or abuse of
alcohol or any controlled substance; or
(d) Any material breach of this Agreement or of any covenant
herein or the falsity of any material representation or
warranty not corrected as provided in Section 8.3 hereof.
8.2 Where reference is made in this Agreement to termination being by
Employee with or without cause, "cause" shall mean any breach of this Agreement
by the Company not corrected as provided in Section 8.3 hereof.
8.3 Whenever a breach of this Agreement by either party is relied upon
as a justification for any action taken by a party pursuant to any provision of
this Agreement, before such action is taken, the party asserting the breach
shall give the other party written notice of the existence and nature of the
breach and the opportunity to correct such breach during the thirty-day period
following such notice.
5
9. Notice. All notices and requests in connection with this Agreement shall
be in writing and may be given by personal delivery, registered or certified
mail, return receipt requested, telegram or any other customary means of
communication addressed as follows:
Employee: Xxxxxxx X. Xxxxxx
c/o Microvision, Inc.
0000 Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Company: Xxxxxxx X. Xxxxxxxxx
Microvision, Inc.
0000 Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
or to such other address as the party to receive the notice or request
shall designate by written notice to the other. The effective date of any notice
or request shall be five days from the date it is sent by registered mail, or
when delivered to a telegraph company, properly addressed as above with charges
prepaid, or when personally delivered.
10. Assignment.
10.1 Except as provided in Section 10.2 hereof, the rights of either
party shall not be assigned or transferred either voluntarily or by operation of
law without the other party's written consent, nor shall the duties of either
party be delegated in whole or in part either voluntarily or by operation of law
without the other party's written consent. Any unauthorized assignment, transfer
or delegation shall be of no force or effect.
10.2 Notwithstanding Section 10.1 hereof, the Company may assign or
delegate all or any part of its rights or obligations under this Agreement to a
direct or indirect subsidiary or direct or indirect parent or to any entity
owned by such a subsidiary or parent or by merger, consolidation, sale or
transfer of all or substantially all of the Company's assets, provided any
resulting assignee or transferee succeeds to the obligations of the Company
hereunder. All references to the Company shall include any permitted assignee or
successor of the Company.
11. Prior Obligations. Employee represents and warrants to the Company that
he may enter into this Agreement and perform his obligations hereunder without
violating any contractual commitment to any other person, covenants that in the
performance of this duties under this Agreement he will not use or divulge any
information of any person he is lawfully required to maintain in confidence.
12. Preparation of Agreement. Employee acknowledges that this Agreement was
prepared by attorneys representing the Company. This Agreement will have tax
consequences to Employee. Employee has been advised to consult with an attorney
and tax advisor of this choice before entering into this Agreement and he has
done so. Employee acknowledges that he has not relied upon any legal or tax
advice of the Company's attorney in connection with this Agreement.
6
13. Miscellaneous.
13.1 Waiver. No waiver of any of the provisions of this Agreement
shall be valid unless in writing, signed by the party against whom such waiver
is sought to be enforced, nor shall failure to enforce any right hereunder
constitute a continuing waiver of the same or a waiver of any other right
hereunder.
13.2 Amendments. All amendments to this Agreement shall be made in
writing, signed by the parties, and no oral amendment shall be binding on the
parties.
13.3 Integration. This agreement constitutes the entire agreement
between the parties relating to the subject matter hereof and supersedes and
cancels all other prior agreements and understandings of the parties in
connection with such subject matter.
13.4 Severability. The unenforceability or invalidity of any provision
or provisions of this Agreement shall not render any other provisions or
provisions hereof unenforceable or invalid. If any one or more of the provisions
of this Agreement shall for any reason by excessively broad as to duration,
scope, activity or subject, it shall be construed by reducing such provision, so
as to be enforceable to the extent compatible with applicable law.
13.5 Headings. The headings or titles of this Agreement are for the
purpose of reference only and shall not in any way affect the interpretation or
construction of this Agreement.
13.6 Governing Law. This Agreement will be governed by the laws of the
State of Washington.
14. Arbitration of Claims. A claim by either party for breach or
enforcement of a provision of this Agreement is subject to binding arbitration
through Judicial Arbitration and Mediation Services/Endispute ("JAMS"), to be
held before such arbitrator as the parties may agree or, if they are unable to
do so, to be elected by obtaining five proposed arbitrators from JAMS and
alternatively striking names until one name remains. The arbitration shall be
conducted according to the Judicial Arbitration and Mediation Services Rules of
Practice and Procedure then in effect. A claim shall be initiated by calling
JAMS at 622-JAMS. The decision of the arbitrator shall be final and conclusive
and the parties waive the right to trial de novo or appeal, excepting only for
the purpose of enforcing the arbitrator's decision, for which purpose the
parties agree that the Superior Court of King County, Washington shall have
jurisdiction. The substantially prevailing party will be entitled to recover
reasonable attorney's fees and costs of bringing or defending the arbitration
and any action for enforcement, the amount of the awards to be determined by the
arbitrator and the compensation, for benefits under a benefits plan that
contains an arbitration provision or for enforcement of Sections 4 or 5 above.
7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above written.
EMPLOYEE: COMPANY:
MICROVISION, INC.
/s/ /s/
------------------------------- ------------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
