Exhibit 10.1

 

MASTER AMENDMENT AGREEMENT

 

This Master Amendment Agreement (the “Agreement”), dated as of July 25, 2005
(the “Amendment Date”), is by and among Microvision, Inc., a Delaware
corporation (the “Company”), and the investors listed on Schedule of Buyers
attached hereto (individually, a “Buyer” and collectively, the “Buyers”).

 

RECITALS

 

A. The Company and the Buyers entered into that certain Securities Purchase
Agreement dated as of March 11, 2005 (the “Securities Purchase Agreement”)
pursuant to which, among other things, the Company issued to the Buyers certain
senior secured exchangeable convertible notes (the “Old Notes”).

 

B. The Company agreed to provide certain registration rights with respect to the
shares of common stock of Lumera Corporation issuable under the Old Notes (the
“Exchange Shares”) pursuant to a Registration Rights Agreement dated as of March
11, 2005 by and between the Company and the Buyers (the “Lumera Registration
Rights Agreement”).

 

C. The Company and the Buyers desire to amend and restate the Old Notes, and the
Company has agreed to issue warrants (the “Amendment Warrants”) on the terms and
conditions hereof.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the premises and mutual promises herein made,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Buyers hereby agree as follows:

 

1. Amendment of Notes.

 

1.1 Each of the Buyers and the Company hereby agrees that the Old Note issued to
such Buyer is hereby amended and restated to read in its entirety in the form
attached hereto as Exhibit A (as so amended and restated, the “Amended and
Restated Note”).

 

1.2 The Company shall promptly issue to each Buyer an Amended and Restated Note
in the principal amount as is set forth opposite such Buyer’s name on the
Schedule of Buyers, along with warrants to acquire that number of shares as is
set forth opposite such Buyer’s name on the Schedule of Buyers, upon the
surrender by such Buyer of the Old Note issued to it in like principal amount
(provided that the failure on the part of the Buyer to surrender the Old Note
issued to it shall not effect the validity of the amendment and restatement of
such Old Note).

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2. Registration Rights. The following amendments shall be made to Section 1 of
the Registration Rights Agreement dated as of March 11, 2005 by and among the
Company and the Buyers with respect to shares of the Company’s common stock:

 

2.1 New Definitions. The following terms shall be added in appropriate
alphabetical order:

 

“Amendment Date” shall have the meaning set forth in the Master Amendment
Agreement.

 

“Amendment Warrant Shares” means the shares issuable under the Amendment
Warrants.

 

“Amendment Warrants” means those warrants issued by the Company pursuant to the
Master Amendment Agreement.

 

“Master Amendment Agreement” means the Master Amendment Agreement dated as of
July 25, 2005 by and among the Company and the Buyers.

 

2.2 The defined term “Filing Deadline” shall be amended and restated as follows:

 

“Filing Deadline” means 30 days after the Amendment Date.

 

2.3 The defined term “Effectiveness Deadline” shall be amended and restated as
follows:

 

“Effectiveness Deadline” means the date which is 90 days after the Amendment
Date, or if there is a review of the Registration Statement by the SEC, 120 days
after the Amendment Date.

 

2.4 The defined term “Registrable Securities” shall be amended and restated as
follows:

 

“Registrable Securities” means (i) the Conversion Shares issued or issuable upon
conversion of the Notes, (ii) the Warrant Shares issued or issuable upon
exercise of the Warrants, (iii) the Amendment Warrant Shares issued or issuable
upon exercise of the Amendment Warrants, (iii) the Interest Shares issued or
issuable under the Notes and (iv) any share capital of the Company issued or
issuable with respect to the Conversion Shares, the Notes, the Warrant Shares,
the Amendment Warrant Shares, the Warrants or the Amendment Warrants as a result
of any share split, share dividend, recapitalization, exchange or similar event
or otherwise, without regard to any limitation on conversions of the Notes or
exercises of the Warrants or Amendment Warrants.

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2.5 The defined “Required Registration Amount” shall be amended and restated as
follows:

 

“Required Registration Amount” means 130% of the sum of (i) the maximum number
of Interest Shares issued and issuable pursuant to the terms of the Notes
calculated as if all such Interest Shares were to be issued as of the trading
date immediately preceding the applicable date of determination, (ii) the number
of Conversion Shares issued and issuable pursuant to the Notes as of the trading
day immediately preceding the applicable date of determination, (iii) the number
of Warrant Shares issued and issuable pursuant to the Warrants as of the trading
day immediately preceding the applicable date of determination, and (iv) the
number of Amendment Warrant Shares issued and issuable pursuant to the Amendment
Warrants as of the trading day immediately preceding the applicable date of
determination, all subject to adjustment as provided in Section 2(e); provided,
however, that if the Securities and Exchange Commission will not permit the
Company to register such amount, then the “Required Registration Amount” shall
be such amount as the Securities and Exchange Commission would permit, which in
no event shall be lower than 100% of the sum of clauses (i), (ii), (iii) and
(iv).

 

3. Old Warrants. The following amendments shall be made to Warrant No. 77,
Warrant No. 78, Warrant No. 79 and Warrant No. 80 of the Company, issued to the
Buyers on March 11, 2005 pursuant to the Securities Purchase Agreement:

 

3.1 The following term shall be added to Section 15 in appropriate alphabetical
order:

 

“Amendment Warrants” means those warrants issued pursuant to the Master
Amendment Agreement dated as of July 25, 2005 by and between the Company and the
Purchasers.

 

3.2 Section (1)(f) is amended and restated as follows:

 

(f) Limitations on Exercises.

 

(i) Beneficial Ownership. The Company shall not effect the exercise of this
Warrant, and the Holder shall not have the right to exercise this Warrant, to
the extent that after giving effect to such exercise, such Person (together with
such Person’s affiliates) would beneficially own in excess of 9.99% (the
“Maximum Percentage”) of the number of shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
such Person and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by such Person
and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by
such Person and its affiliates (including, without limitation, any convertible
notes or convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein. Except as
set forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this Warrant, in determining
the number of outstanding shares of Common Stock, the Holder may rely on

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the number of outstanding shares of Common Stock as reflected in (1) the
Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other
public filing with the Securities and Exchange Commission, as the case may be,
(2) a more recent public announcement by the Company or (3) any other notice by
the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or oral request
of the Holder, the Company shall within one Business Day confirm orally and in
writing to the Holder the number of shares of Common Stock then outstanding. In
any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company,
including the SPA Securities, the SPA Warrants and the Amendment Warrants, by
the Holder and its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.

 

(ii) Principal Market Regulation. The Company shall not be obligated to issue
any shares of Common Stock upon exercise of this Warrant if the issuance of such
shares of Common Stock would exceed that number of shares of Common Stock which
the Company may issue upon exercise of this Warrant (including, as applicable,
any shares of Common Stock issued upon conversion or exercise of the SPA
Securities, SPA Warrants or Amendment Warrants or issued as Interest Shares (as
defined in the Securities Purchase Agreement)) without breaching the Company’s
obligations under the rules or regulations of the Principal Market (the
“Exchange Cap”), except that such limitation shall not apply in the event that
the Company (A) obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of shares of Common Stock
in excess of such amount regardless of whether the shares of Common Stock are
listed on the Principal Market or (B) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall
be reasonably satisfactory to the Required Holders. Until such approval or
written opinion is obtained, no Buyer shall be issued, upon exercise or
conversion, as applicable, of any SPA Warrants, SPA Securities or Amendment
Warrants, shares of Common Stock in an amount greater than the product of the
Exchange Cap multiplied by a fraction, the numerator of which is the principal
amount of Notes issued to such Buyer pursuant to the Securities Purchase
Agreement on the Closing Date and the denominator of which is the aggregate
principal amount of all Notes issued to the Buyers pursuant to the Securities
Purchase Agreement on the Closing Date (with respect to each Buyer, the
“Exchange Cap Allocation”). In the event that any Buyer shall sell or otherwise
transfer any of such Buyer’s SPA Warrants, the transferee shall be allocated a
pro rata portion of such Buyer’s Exchange Cap Allocation, and the restrictions
of the prior sentence shall apply to such transferee with respect to the portion
of the Exchange Cap Allocation allocated to such transferee. In the event that
any holder of SPA Warrants shall exercise all of such holder’s SPA Warrants into
a number of shares of Common Stock which, in the aggregate, is less than such
holder’s Exchange Cap Allocation, then the difference between such holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued
to such holder shall be allocated to the respective Exchange Cap Allocations of
the remaining holders of SPA Warrants on a pro rata basis in proportion to the
shares of Common Stock underlying the SPA Warrants then held by each such
holder.

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4. Termination of Lumera Registration Rights Agreement.

 

4.1 The Company and the Buyers hereby agree that the Lumera Registration Rights
Agreement is hereby terminated and cancelled in its entirety ab initio and shall
be of no further force, effect or validity.

 

5. Waiver. Each of the Buyers expressly waives any breach of any representation,
warranty or covenant contained in the Securities Purchase Agreement relating to
any failure or potential failure to register the resale of the Exchange Shares
as contemplated by the Lumera Registration Rights Agreement.

 

6. Miscellaneous.

 

6.1 Effect of this Amendment. This Amendment constitutes the entire agreement of
the parties with respect to the subject matter hereof, and supersedes all prior
oral or written communications, memoranda, proposals, negotiations, discussions,
term sheets and commitments with respect to the subject matter hereof.

 

6.2 Amendments. No amendment of any provision of this Agreement will be valid
and binding unless it is in writing and signed by the Company and the holders of
the Amended and Restated Notes representing at least a majority of the aggregate
principal amount of the Amended and Restated Notes.

 

6.3 Governing Law. The validity, interpretation and enforcement of this
Amendment whether in contract, tort, equity or otherwise, shall be governed by
the laws of the State of New York.

 

6.4 Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.

 

6.5 Counterparts. This Amendment may be executed in any number of counterparts,
but all of such counterparts shall together constitute but one and the same
agreement. In making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart thereof signed by each of the
parties hereto. Delivery of an executed counterpart of this Amendment by
telefacsimile shall have the same force and effect as delivery of an original
executed counterpart of this Amendment. Any party delivering an executed
counterpart of this Amendment by telefacsimile also shall deliver an original
executed counterpart of this Amendment, but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Amendment as to such party or any other party.

 

6.6 Expenses. The Company shall, upon execution of this Agreement, reimburse the
Buyers for reasonable legal expenses incurred in connection with the execution
of this Agreement and any and all documents executed in connection therewith, up
to a maximum of $5,000.00 in the aggregate.

 

[Signature page follows]

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Master Amendment Agreement to be duly executed as of the
date first written above.

 

COMPANY: MICROVISION, INC. By:  

/s/ Richard F. Rutkowski

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Name:   Richard F. Rutkowski Title:   Chief Executive Officer

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Master Amendment Agreement to be duly executed as of the
date first written above.

 

BUYERS: IROQUOIS CAPITAL, L.P. By:  

/s/    JOSHUA SILVERMAN

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Name:  

Joshua Silverman

Title:  

Partner

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Master Amendment Agreement to be duly executed as of the
date first written above.

 

BUYERS: SMITHFIELD FIDUCIARY LLC By:  

/s/    ADAM J. CHILL

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Name:   Adam J. Chill Title:   Authorized Signatory

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Master Amendment Agreement to be duly executed as of the
date first written above.

 

BUYERS: OMICRON MASTER TRUST By:   Omicron Capital L.P., as advisor By:  
Omicron Capital Inc., its general partner By:  

/s/    BRUCE BERNSTEIN

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Name:  

Bruce Bernstein

Title:  

Managing Partner

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Master Amendment Agreement to be duly executed as of the
date first written above.

 

BUYERS: CRANSHIRE CAPITAL L.P. By:  

/s/    MITCHELL KOPIN

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Name:  

Mitchell Kopin

Title:   The General Partner

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SCHEDULE OF BUYERS

 

(1)    (2)    (3)    (4)

Buyer

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Address and Facsimile Number

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   Aggregate Principal
Amount of Notes

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   Aggregate Number of
Warrants

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Iroquois Capital, L.P.

   Iroquois Capital, L.P.    $ 2,000,000    150,000      641 Lexington Ave.     
            26th Floor                  New York, New York 10022              
   Facsimile:   (212) 207-3452                  Telephone:   (212) 974-3070     
            E-mail: jsilverman@icfund.com                  Attention:   Joshua
Silverman                  Residence:   Delaware            

Smithfield Fiduciary LLC

   c/o Highbridge Capital Management, LLC    $ 3,000,000    225,000      9 West
57th Street, 27th Floor                  New York, New York 10019              
   Attention:   Ari J. Storch                      Adam J. Chill              
   Facsimile:   (212) 751-0755                  Telephone:   (212) 287-4720     
            E-mail:   ari.storch@hcmny.com                     
adam.chill@hcmny.com                  Residence:   Cayman Islands            

Omicron Master Trust

   c/o Omicron Capital L.P.    $ 3,000,000    225,000      153 E. 53rd Street   
              48th Floor                  New York, New York 10022              
   Attention:   Bruce Bernstein                  Facsimile:   (212) 508-7028   
              Telephone:   (212) 508-7027                  E-mail:  
bb@omicroncapital.com                  Residence:   Bermuda            

Cranshire Capital L.P.

   c/o Downsview Capital, Inc.    $ 2,000,000    150,000      The General
Partner                  666 Dundee Road, Suite 1901                 
Northbrook, IL 60062                  Attention:   Mitchell D. Kopin            
     Facsimile:   (847) 562-9031                  Telephone:   (847) 562-9030   
              E-mail:   mkopin@cranshirecapital.com                  Residence:
  Illinois