Sample Business Contracts

Employment Agreement - Microvision Inc. and Richard F. Rutkowski

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                              EMPLOYMENT AGREEMENT
                              RICHARD F. RUTKOWSKI

     AGREEMENT, effective as of October 1, 1997 by and between MICROVISION,
INC., a Company of the State of Washington, having its principal place of
business at 2203 Airport Way South, Suite 100, Seattle Washington 98134,
hereinafter referred to as the "Company") and Richard F. Rutkowski, (hereinafter
called "Executive").

                              W I T N E S S E T H:

     WHEREAS, the Company wishes to continue to retain the services of the
Executive to work for the Company as its President and Chief Executive Officer
(herein referred to as the "Position") upon the terms and conditions hereinafter
set forth; and

     WHEREAS, in consideration for continued service in the Position, the
Executive has agreed to enter into and be bound by the terms of this Agreement.

     NOW THEREFORE, in consideration of the foregoing and mutual covenants
herein contained, the parties agree as follows:


     1.1  The Company hereby employs Executive to serve in the Position and
          Executive hereby accepts such employment as of the effective date of
          this Agreement.

     1.2  Executive will devote his best efforts and full time and attention to
          performing all duties assigned or delegated to him by the Board of
          Directors of the Company consistent with the Position.

     1.3  The term of employment shall end on December 31, 2001, unless this
          Agreement is extended by the parties.


     2.1  For his services hereunder, Executive shall receive an annual salary
          of $145,000, payable in regular installments under the payroll of the

     2.2  The level of Executive's salary shall be reviewed by the Board of
          Directors on an annual basis and upon such review, may remain the same
          or be increased in such amount as the Board of Directors, in its
          discretion, based upon merit, determines, provided that there shall be
          no decrease in the salary of the Executive without his consent.

     2.3  In addition to the salary to which Executive is entitled under Section
          2.1, Executive shall be entitled to participate in benefit plans, if
          any, that the Company may offer or establish from time to time for
          Executives of equal or lesser rank.

                                  Page 1 of 9
          Participation in benefit plans for the Executive shall terminate if
          the Company terminates similar benefits for Executives of equal or
          lessor rank.

     2.4  If at any time the Company does not maintain medical and dental
          insurance coverage for all Executives, the Company shall reimburse the
          Executive for securing private coverage during the term of this

     2.5  All salary and benefits, if any, shall be subject to the customary
          withholding of taxes as required by law. Except as otherwise provided
          in Section 8 hereof, Executive's salary and benefits end immediately
          upon the termination of employment.


     3.1  If the Company maintains a formal cash incentive plan for senior
          management, the Executive shall be eligible to participate in such
          plan with a target incentive opportunity at least equal to the highest
          percentage opportunity provided to any other Executive covered under
          such plan.

     3.2  If such a formal plan is not maintained by the Company, the Executive
          shall be eligible for consideration to receive an annual cash
          incentive payment from the Company. Executive's eligibility for such a
          discretionary incentive payment ends upon termination of employment.
          This amount shall be determined annually in the sole and complete
          discretion of the Board of Directors, which may take into account in
          its decision, among other items, such items as:

          3.2.1 The financial performance of the Company, including, but not
                limited to revenues, operating income, and net income, if any;

          3.2.2 The individual accomplishments of the Executive;

          3.2.3 Other company achievements, including, but not limited to,
                product research, development and introduction; market offerings
                and the arrangement of strategic alliances; and

          3.2.4 Competitive practice for executives in similar situations.


          The Executive shall receive options to purchase common stock of the
          Company in the amounts set forth below. All such options shall be
          granted in accordance with the stock option plan maintained by the
          Company and shall be subject to the terms and conditions set forth
          therein and in the stock option grant letter issued by the Company to
          Executive thereunder. If there are insufficient shares available under
          the stock option plan in existence at the time of this Agreement, such
          shares shall be granted subject to the approval of shareholders at the
          next annual meeting subsequent to the execution of this Agreement. The
          options shall be exercisable for ten years from the date of grant, and
          shall vest in quarterly installments as noted below.

                                  Page 2 of 9
     4.1  An option to purchase up to 80,000 shares at a price of $14.00. These
          options shall vest in four equal quarterly installments, commencing on
          October 1, 1997.

     4.2  An option to purchase up to 80,000 shares at a price of $17.50. These
          options shall vest in four equal quarterly installments commencing on
          October 1, 1998.

     4.3  An option to purchase up to 80,000 shares at a price of $21.88. These
          options shall vest in four equal quarterly installments commencing on
          October 1, 1999.

     4.4  An option to purchase up to 80,000 shares at a price of $27.34. These
          options shall vest in four equal quarterly installments commencing on
          October 1, 2000.

     4.5  An option to purchase up to 20,000 shares at a price of $34.18. These
          options shall vest in one quarterly installment commencing on October
          1, 2001.


     5.1  The parties acknowledge that Executive may incur, from time to time,
          for the benefit of the Company and in furtherance of the Company's
          business, various expenses such as travel, entertainment and
          promotional expenses. The Company agrees that it shall either pay such
          expenses directly, advance sums to Executive to be used for payment of
          such expenses, or reimburse Executive for such expenses incurred by

     5.2  The Company agrees to pay such expenses, in accordance with its
          written policies covering the payment of business expenses and to the
          extent that these expenses do not exceed limits contained in such
          policies or applicable law. Executive agrees to submit to the Company
          such documentation as may be necessary to substantiate that all
          expenses paid or reimbursed pursuant to this Section 5 were reasonable
          and necessary for the performance of his duties under this Agreement.


     6.1  Executive will observe and comply with such reasonable rules,
          regulations and policies as may from time to time be established by
          the Board of Directors of the Company, either orally or in writing.

     6.2  Executive specifically agrees that he will comply with the
          confidentiality and security rules established by the Board of
          Directors with respect to confidential and financial information of
          the Company.

                                  Page 3 of 9

     7.1  Executive shall, at all times during the term of this Agreement,
          observe and conform to all laws regulating the business of the

     7.2  Executive acknowledges and recognizes that during the term of this
          Agreement, he will necessarily become privy to certain confidential
          and proprietary information of the Company and customers of the
          Company (hereinafter referred to as "Confidential Data"). Confidential
          Data shall shall include but not be limited to all information
          concerning the identity of the Company's customers and suppliers,
          technical, financial and business activities, plans, operations,
          proprietary software, systems, procedures or know-how of the Company
          and any information regarding customers of the Company and their
          business affairs or endeavors. Executive agrees that he will hold all
          Confidential Data in the strictest confidence and that he will not
          disclose to any person or entity for any reason nor use any
          Confidential Data in any way other than on behalf of the Company or as
          the Company may otherwise direct.

     7.3  Executive agrees that all business records and files, including but
          not limited to memoranda, notes, client lists, and proposals
          pertaining to the business, services or processes of the Company,
          shall be the sole property of the Company and he shall not retain,
          remove or copy such materials during the term of this Agreement or
          upon its termination or expiration, without the prior unanimous
          written consent of the Board of Directors of the Company. Upon the
          termination of this Agreement, or at any other time upon the request
          of the Board of Directors of the Company, Executive shall deliver all
          such materials to the Company.

     7.4  The foregoing obligations of Executive shall survive the termination
          or expiration of this Agreement.


     8.1  If the Executive terminates the Agreement for any reason other than
          Constructive Termination (as defined in Section 8.3.5), or if the
          Company terminates the Agreement for Cause, no severance payment of
          any kind shall be made.

     8.2  If the Company terminates this Agreement for reasons other than Cause,
          or if the Executive is Constructively Terminated prior to a Change in
          Control, the Company shall:

          8.2.1 Pay to the Executive a lump sum equal to the Executive's salary
                of record for a period equal to the greater of one (1) year or
                the remaining period of this Agreement.

          8.2.2 Continue to provide medical and dental insurance to the
                Executive for the greater of a period of one (1) year or the
                remainder of the term of this Agreement on the same terms as if
                the Executive were an active Executive of the Company.

                                  Page 4 of 9
     8.3  If the Executive is terminated or Constructively Terminated by the
          Company following a Change of Control, the Company shall:

          8.3.1 Pay to the Executive a lump sum equal to the Executive's salary
                of record for a period of three (3) years;

          8.3.2 Pay to the Executive a lump sum equal to three (3) times the
                average of the Executive's cash bonuses received in the three
                (3) preceding calendar years;

          8.3.3 Continue to provide medical and dental insurance to the
                Executive for a period of one (1) year on the same terms as if
                the Executive were an active Executive of the Company.

          8.3.4 For purposes of this Agreement, a Change of Control shall be
                deemed to occur on any of the following events:

       Any "person", including a "group" as determined in
                        accordance with Section 13(d)(3) of the Securities
                        Exchange Act of 1934, as amended, is, or becomes, the
                        beneficial owner of securities of the Company
                        representing more than thirty percent (30%) of the
                        combined voting power of the Company's then outstanding

       As a result of, or in connection with, any tender offer
                        or exchange offer, merger or other business combination,
                        sale of assets or contested election, or any combination
                        of the foregoing transactions (a "Transaction"), the
                        persons who constituted the Board of Directors the
                        Company prior to the Transaction cease to constitute a
                        majority of the Board of Directors of the Company or any
                        successor to the Company;

       The Company is merged or consolidated with another
                        Company and as a result of the merger or consolidation,
                        less than fifty percent (50%) of the outstanding voting
                        securities of the surviving or resulting Company shall
                        then be owned in the aggregate by the former
                        stockholders of the Company;

       A tender offer or exchange offer is made and consummated
                        for the ownership of securities of the Company
                        representing more than thirty percent (30%) of the
                        combined voting power of the Company's then outstanding
                        voting securities; or

       The Company transfers substantially all of its assets to
                        another Company of which the Company owns less than
                        fifty percent (50%) of the outstanding voting

          8.3.5 For purposes of this Agreement, Constructive Termination means:

                                  Page 5 of 9
       The reduction of the Executive's salary or target

       The demotion or reduction in duties of the Executive;

       The relocation of the Executive's place of employment
                        more than 50 miles from the existing place of
                        employment; or

       Breach by the Company or its successor of any material
                        provision of this Agreement.

     8.4  For purposes of this Agreement, "Cause" shall be defined as any of the

          8.4.1 Repeated failure or refusal of the Executive to carry out the
                reasonable directions of the Board of Directors of the Company
                consistent with the duties and obligations of the Executive;

          8.4.2 Willful violation of state or federal law involving the
                commission of a crime against the Company or a felony adversely
                affecting the Company; or

          8.4.3 Any material breach of this Agreement or of any covenant herein
                or the falsification of any material representation or warranty
                not corrected as provided in Section 8.5 hereof.

     8.5  If 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 (30) day period following the delivery of
          such notice.

     agreement and for a period of twenty-four (24) months after the termination
     of this Agreement for any reason:

     9.1  While this Agreement is in effect, Executive shall not, directly or
          indirectly, as an individual or representative of any other person
          and/or entity, deal with or solicit for business purposes that are in
          competition with any product or service offered by the Company, any
          current customer of the Company or any person and/or entity that is,
          or has commenced negotiations to become, a customer of the Company.

     9.2  Executive shall not, directly or indirectly, solicit, raid, entice, or
          induce any other Executive of the Company to become employed by or
          associated with any other person or entity.

     9.3  Executive shall not, directly or indirectly, as an Executive,
          consultant, agent, partner, principal, stockholder (other than as a
          holder of less than one percent (1%) of the shares of a publicly or
          privately held company), officer, director, or in any other individual
          or representative capacity, engage in any business activity that is
          competitive with any products or services offered by the Company at
          the time of the Executive's termination.

                                  Page 6 of 9
     9.4  The parties hereto acknowledge that the Executive's services,
          knowledge and experience are unique and of special value to the
          Company, and that, in the event of a breach or threatened breach by
          Executive of any of his obligations under this Agreement, including
          but not limited to those set forth in this Section 9, the Company will
          not have an adequate remedy at law. Accordingly, in the event of any
          breach or threatened breach of any provision of this Agreement by
          Executive, the Company shall be entitled to such equitable and
          injunctive relief as may be available to restrain Executive and any
          other individual or entity participating in breach or threatened
          breach, from violating the provisions of this Agreement. Nothing
          herein shall be construed as prohibiting the Company from pursuing any
          other remedies available at law for such breach or threatened breach,
          including the recovery of damages and the immediate termination of
          Executive's employment hereunder.


     10.1 Executive acknowledges that during the course of his employment he
          may, either alone or in conjunction with others, be involved with the
          creation, authorship or development of inventions, materials or
          property, including but not limited to the field of laser or LED-based
          scanning display technologies, computer software, computer software
          and hardware applications (hereinafter referred to as "Materials").
          Executive agrees that he will disclose all such Materials to the Board
          of Directors of the Company. Executive acknowledges that all such
          Materials shall be the property of the Company whether or not patent
          or copyright applications are filed with respect thereto from the date
          of their conception. If an assignment is necessary to transfer
          ownership thereof to the Company, Executive agrees that this
          Agreement, without more, shall constitute such an assignment. At the
          Company's request, Executive shall be required to make or assist in
          the filing of letters of patent, copyright applications or the like
          with respect to such Materials. In connection therewith, Executive
          agrees to execute all documents necessary or beneficial to establish
          or maintain the Company's rights in such property, applications or the
          like. All such filings shall be made, if possible, in the name of the
          Company, at its expense. If made during the term of his employment,
          Executive shall receive no additional compensation therefor. If such
          filings are required after the termination of the Executive's
          employment by the Company, he shall receive reasonable compensation
          for his assistance.

          Pursuant to RCW 49.44.140, the Company has no rights under Section 10
          of this Agreement to any invention for which no equipment, supplies,
          facilities, or trade secret information of the Company was used and
          which was developed entirely on Executive's own time, unless: (a) the
          invention relates (i) directly to the business of the Company or (ii)
          to the Company's actual or demonstratably anticipated research or
          development; or (b) the invention results from any work performed by
          Executive for the Company.

     10.2 The foregoing obligations of Executive shall survive the termination
          or expiration of this Agreement.

                                  Page 7 of 9
11.  ASSIGNMENT. The rights of either party shall not be assigned or transferred
     without the other party's consent, nor shall the duties of either party be
     delegated in whole or in part without the other party's consent. Any
     unauthorized assignment, transfer or other delegation shall be of no force
     or effect.

12.  AMENDMENTS. No amendments or additions to this Agreement shall be binding
     unless in writing and signed by both parties.

13.  GOVERNING LAW. This Agreement shall be governed in all respects by the laws
     of the State of Washington.

14.  BINDING ARBITRATION. Any disagreement, dispute, controversy or claim
     arising out of or in any way related to this Agreement, the subject matter
     hereof or the interpretation hereof or any arrangements relating hereto or
     contemplated herein or the breach, termination or invalidity hereof or the
     provision or failure to provide for any other benefits pursuant to any
     other bonus or compensation plans, stock option plan, life insurance or
     benefit plan or similar plan or agreement with the Company shall be settled
     exclusively and finally by binding arbitration. If this Section 14
     conflicts with any provision in any such plan or agreement, this provision
     requiring arbitration shall control.

     14.1 The arbitration shall be conducted through Judicial Arbitration and
          Mediation Services/Endispute (henceforth referred to as "JAMS") to be
          held before such arbitrator as the parties may agree, or if they are
          unable to agree, to be selected by obtaining five proposed arbitrators
          from JAMS and alternately striking names until one name remains.

     14.2 The arbitration shall be conducted in accordance with the Judicial
          Arbitration and Mediation Services Rules of Practice and Procedure as
          are then in effect, except as modified by the agreement of the

     14.3 Either party may initiate a claim by contacting JAMS.

     14.4 The decision of the arbitrator shall be final and binding on all
          parties and the parties waive their right to trial de novo or appeal,
          except and only for the purpose of enforcing the decision of the
          arbitrator, for which purpose the parties hereby agree that the
          Superior Court of King Country Washington shall have jurisdiction.

     14.5 The prevailing party shall be entitled to recover reasonable
          attorneys' fees and the costs of bringing or defending the arbitration
          and any action for enforcement, the amount of the awards being
          determined by the arbitrator.

15.  PARAGRAPH HEADINGS. The paragraph headings used in this Agreement are
     included solely for convenience and shall not affect or be used in
     connection with the interpretation of this Agreement.

16.  WAIVER, MODIFICATION, CANCELLATION. Any waiver, alteration or modification
     of any of the provisions of this Agreement or cancellation or replacement
     of this Agreement shall not be valid unless in writing and signed by all of
     the parties hereto.

                                  Page 8 of 9
17.  HEIRS AND SUCCESSORS. This Agreement shall be binding upon the Company,
     Executive and their successors, heirs, personal representatives and

18.  WAIVER. The waiver by either party of a breach of any provision contained
     herein must be in writing and shall in no way be construed as a waiver of
     any succeeding breach of such provision or the waiver of the provision

19.  NOTICE. Whenever under the provisions of this Agreement notice is required
     to be given, it shall be in writing and shall be deemed given when hand
     delivered or mailed, postage prepaid by registered or certified mail,
     return receipt requested, addressed to the Executive or the Company at the
     following addresses:

     Executive:                        Richard F. Rutkowski
                                       c/o Microvision, Inc.
                                       2203 Airport Way South, Suite 100
                                       Seattle, WA  98134

     Company:                          Microvision, Inc.
                                       2203 Airport Way South Suite 100
                                       Seattle, WA 98134
                                       Attn: Secretary

          Either party hereto may change his or its address for purposes of this
          Agreement by notification to the other party in accordance with this

20.  SEVERABILITY. If any provision of this Agreement is held invalid, illegal
     or unenforceable, the validity, legality and enforceability of the
     remaining provisions will not in any way be affected or impaired thereby.

21.  ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
     parties regarding the subject matter hereof and supersedes all prior
     agreements, understandings and negotiations regarding the same.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.


by -------------------------/------         -----------------------------------
                               Date                      Witness


----------------------------/------         -----------------------------------
                               Date                      Witness

                                  Page 9 of 9