Employment Agreement - Microvision Inc. and Stephen R. Willey
EMPLOYMENT AGREEMENT
FOR
STEPHEN R. WILLEY
AGREEMENT, effective as of October 1, 1998 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 Stephen R. Willey, (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 Executive Vice President (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. EMPLOYMENT
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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, 2002, unless this
Agreement is extended by the parties.
2. COMPENSATION - SALARY AND BENEFITS
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2.1 For his services hereunder, Executive shall receive an annual salary
of $150,000, payable in regular installments under the payroll of the
Company.
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.
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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
Agreement.
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. INCENTIVE COMPENSATION
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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.
4. STOCK OPTIONS
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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.
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4.1 An option to purchase up to 56,000 shares at a price of $14.00. These
options shall vest in four equal quarterly installments, commencing on
October 1, 1998.
4.2 An option to purchase up to 56,000 shares at a price of $17.50. These
options shall vest in four equal quarterly installments commencing on
October 1, 1999.
4.3 An option to purchase up to 56,000 shares at a price of $21.88. These
options shall vest in four equal quarterly installments commencing on
October 1, 2000.
4.4 An option to purchase up to 56,000 shares at a price of $27.34. These
options shall vest in four equal quarterly installments commencing on
October 1, 2001.
4.5 An option to purchase up to 14,000 shares at a price of $34.18. These
options shall vest in one quarterly installment commencing on October
1, 2002.
5. BUSINESS EXPENSES
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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
him.
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. PERFORMANCE OF EMPLOYMENT
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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.
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7. EMPLOYMENT CONDUCT AND CONFIDENTIAL INFORMATION
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7.1 Executive shall, at all times during the term of this Agreement,
observe and conform to all laws regulating the business of the
Company.
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 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. SEVERANCE PAYMENTS
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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.
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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:
8.3.4.1 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
securities;
8.3.4.2 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 of 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;
8.3.4.3 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;
8.3.4.4 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
8.3.4.5 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
securities.
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8.3.5 For purposes of this Agreement, Constructive Termination means:
8.3.5.1 The reduction of the Executive's salary or target
incentive;
8.3.5.2 The demotion or reduction in duties of the Executive;
8.3.5.3 The relocation of the Executive's place of employment
more than 50 miles from the existing place of
employment; or
8.3.5.4 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
following:
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.
9. RESTRICTIVE COVENANT AND INJUNCTIVE RELIEF. During the term of this
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.
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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.
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. INVENTIONS, CREATIONS AND DISCOVERIES
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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.
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10.2 The foregoing obligations of Executive shall survive the termination
or expiration of this Agreement.
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
parties.
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.
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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.
17. HEIRS AND SUCCESSORS. This Agreement shall be binding upon the Company,
Executive and their successors, heirs, personal representatives and
transferees.
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
itself.
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: Stephen R. Willey
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
Section.
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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MICROVISION, INC.
by /s/ RICHARD F. RUTKOWSKI /s/ RICHARD A. RAISIG
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Witness
EXECUTIVE
/s/ STEPHEN R. WILLEY /s/ RICHARD A. RAISIG
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Witness