Exhibit 10.24


 


VOID
AFTER 5:00 P.M., NEW YORK CITY TIME,


ON
APRIL 1, 2004


 


 


THIS WARRANT
AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.


 


	
   

  	
  Right to Purchase 145,495 Shares

  
	
   

  	
  of Common Stock, no par value per share

  



 


Date: April 1, 1999


 


MICROVISION, INC.


SERIES 1 STOCK PURCHASE WARRANT


 


THIS CERTIFIES
THAT, for value received, Capital Ventures International, or its registered
assigns, is entitled to purchase from MICROVISION, INC., a corporation
organized under the laws of the State of Washington (the “Company”), at any time or from time to
time during the period specified in Section 2 hereof, One Hundred and Forty
Five Thousand Four Hundred and Ninety Five (145,495) fully paid and
nonassessable shares of the Company’s common stock, no par value per share (the
“Common Stock”), at an exercise
price per share (the “Exercise Price”)
equal to $19.05225. The number of shares of Common Stock purchasable hereunder
(the “Warrant Shares”) and the
Exercise Price are subject to adjustment as provided in Section 4 hereof. The
term “Warrants” means this Warrant,
the other Series 1 Warrants (the “Series 1
Warrants”) and the Series 2 Warrants of the Company issued pursuant
to that certain Securities Purchase Agreement, dated as of April 1, 1999, by
and among the Company and the other signatories thereto (the “Securities Purchase Agreement”).


 


This Warrant
is subject to the following terms, provisions and conditions:


 

















 


1.             Manner of Exercise; Issuance of
Certificates; Payment for Shares. 
Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 7 hereof, this Warrant may be exercised at any
time during the Exercise Period (as defined below) by the holder hereof, in
whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the “Exercise Agreement”), to the Company by 11:59 p.m. New York
time on any business day at the Company’s principal executive offices (or such
other office or agency of the Company as it may designate by notice to the
holder hereof) and upon (i) payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of the
Exercise Price for the Warrant Shares specified in the Exercise Agreement or
(ii) if the holder is permitted to effect a Cashless Exercise (as defined in
Section 11(c) hereof) pursuant to Section 11(c) hereof, delivery to the Company
of a written notice of an election to effect a Cashless Exercise for the
Warrant Shares specified in the Exercise Agreement. The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such holder’s
designee, as the record owner of such shares, as of the close of business on
the date on which this Warrant shall have been surrendered and the completed
Exercise Agreement shall have been delivered and payment shall have been made
for such shares as set forth above or, if such day is not a business day, on
the next succeeding business day. The Warrant Shares so purchased, representing
the aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding two
business days, after this Warrant shall have been so exercised (the “Deliver Period”).  If the Company’s transfer agent is
participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer program, and so long as the certificates
therefor do not bear a legend and the holder is not obligated to return such
certificate for the placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the Warrant Shares so purchased to
the holder by crediting the account of the holder or its nominee with DTC
through its Deposit Withdrawal Agent Commission system (“DTC Transfer”). If the aforementioned conditions
to a DTC Transfer are not satisfied, the Company shall deliver to the holder
physical certificates representing the Warrant Shares so purchased. Further,
the holder may instruct the Company to deliver to the holder physical
certificates representing the Warrant Shares so purchased in lieu of delivering
such shares by way of DTC Transfer.  Any
certificates so delivered shall be in such denominations as may be requested by
the holder hereof, shall be registered in the name of such holder or such other
name as shall be designated by such holder and, following the date on which the
Warrant Shares have been registered under the Securities Act pursuant to that
certain Registration Rights Agreement, dated as of April 1, 1999, by and
between the Company and the other signatories thereto (the “Registration Rights Agreement”) or
otherwise may be sold by the holder pursuant to Rule 144 promulgated under the
Securities Act (or a successor rule), shall not bear any restrictive
legend.  If this Warrant shall have been
exercised only in part, then, unless this Warrant has expired, the Company
shall, as its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised.


 


If, at any
time during the Exercise Period, a holder of this Warrant submits this Warrant,
an Exercise Agreement and payment to the Company of the Exercise Price for each
of the Warrant Shares specified in the Exercise Agreement, and the Company
fails for any reason to deliver, on or prior to the third business day
following the expiration of the Delivery Period for such exercise, the number
of shares of Common Stock to which the holder is entitled upon such exercise (an
“Exercise


 


2

















 


Default”),
then the Company shall pay to the holder payments (“Exercise Default Payments”) for an Exercise Default in the
amount of (a) (N/365), multiplied by (b) the amount by which the Market Price
(as defined in Section 4(1) hereof) on the date the Exercise Agreement giving
rise to the Exercise Default is transmitted in accordance with this Section 1
(the “Exercise Default Date”)
exceeds the Exercise Price in respect of such Warrant Shares, multiplied by (c)
the number of shares of Common Stock the Company failed to so deliver in such
Exercise Default, multiplied by (d) .24, where N = the number of days from the
Exercise Default Date to the date that the Company effects the full exercise of
this Warrant which gave rise to the Exercise Default.  The accrued Exercise Default Payment for each calendar month
shall be paid in cash or shall be convertible into Common Stock (subject to the
limitations on the Company’s ability to issue such shares set forth in Rule
4460(i) of the National Association of Securities Dealers or any successor
rule), at the holder’s option, as follows:


 


(a)           In the event the holder elects to
take such payment in cash, cash payment shall be made to holder by the fifth
day of the month following the month in which it has accrued; and


 


(b)           In the event the holder elects to
take such payment in Common Stock, the holder may convert such payment amount
into Common Stock at a conversion price equal to the lower of the Exercise Price
or the Market Price (as defined in Section 4(1)) (as in effect at the time of
conversion ) at any time after the fifth day of the month following the month
in which it has accrued, which shares of Common Stock shall be delivered within
two (2) business days thereafter.


 


Nothing herein
shall limit the holder’s right to pursue actual damages for the Company’s
failure to maintain a sufficient number of authorized shares of Common Stock as
required pursuant to the terms of Section 3(b) hereof or to otherwise issue
shares of Common Stock upon exercise of this Warrant in accordance with the
terms hereof, and the holder shall have the right to pursue all remedies
available at law or in equity (including a decree of specific performance
and/or injunctive relief).


 


2.             Period of Exercise.  This Warrant may be exercised at any time or
from time to time during the period (the “Exercise
Period”) beginning on (a) the date hereof and ending (b) at 5:00
p.m., New York City time, on the fifth annual anniversary of the date of
original issuance hereof.


 


3.             Certain Agreements of the
Company.  The Company hereby
covenants and agrees as follows:


 


(a)           Shares to be Fully Paid.  All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid and
nonassessable and free from all taxes, liens, claims and encumbrances.


 


(b)           Reservation of Shares.  During the period (the “Investment Period”) beginning on the
Closing Date and ending upon the expiration of the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 7(g) hereof).


 


3

















 


(c)           Listing.  The Company has secured the listing of the
shares of Common Stock issuable upon exercise of this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed or become listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all
shares of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such listing
of, any other shares of capital stock of the Company issuable upon the exercise
of this Warrant if and so long as any shares of the same class shall be listed
on such national securities exchange or automated quotation system.


 


(d)           Certain Actions Prohibited.  The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder
of this Warrant in order to protect the economic benefit inuring to the holder
hereof and the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant.  Without limiting the generality
of the foregoing, the Company (i) will not increase the par value of any shares
of Common Stock receivable upon the exercise of this Warrant above the Exercise
Price then in effect, and (ii) will take all such actions as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.


 


(e)           Successors and Assigns.  This Warrant will be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all of the Company’s assets.


 


(f)            Blue Sky Laws.  The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or “blue sky” laws of the
states of the United States, and shall provide evidence of any such action so
taken to the holder of this Warrant prior to such date; provided, however, that
the Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction.


 


4.             Antidilution Provisions.  During the Investment Period, the Exercise
Price and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 4.


 


In the event
that any adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up or down to the
nearest cent.


 


4

















 


(a)           Adjustment of Exercise Price.
Except as otherwise provided in Sections 4(b)(vi), 4(c) and 4(e) hereof, if and
whenever during the Investment Period the Company issues or sells, or in
accordance with Section 4(b) hereof is deemed to have issued or sold, any
shares of Common Stock for no consideration or for a consideration per share less
than the Market Price (as hereinafter defined) on the date of issuance (a “Dilutive Issuance”), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be adjusted in
accordance with the following formula:


 


	
  E’  = 
  E  

  	
  x

  	
   

  	
  O + P/M

  	
   

  
	
   

  	
   

  	
   

  	
  CSDO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  E’

  	
  =

  	
   

  	
  the adjusted
  Exercise Price;

  
	
  E

  	
  =

  	
   

  	
  the then
  current Exercise Price;

  
	
  M

  	
  =

  	
   

  	
  the then
  current Market Price (as defined in Section 4(1)(ii));

  
	
  O

  	
  =

  	
   

  	
  the number
  of shares of Common Stock outstanding immediately prior to the Dilutive
  Issuance;

  
	
  P

  	
  =

  	
   

  	
  the
  aggregate consideration, calculated as set forth in Section 4(b) hereof,
  received by the Company upon such Dilutive Issuance; and

  
	
  CSDO

  	
  =

  	
   

  	
  the total
  number of shares of Common Stock Deemed Outstanding (as defined in Section
  4(1)(i) immediately after the Dilutive Issuance.

  



 


(b)           Effect on Exercise Price of
Certain Events.  For purposes of
determining the adjusted Exercise Price under Section 4(a) hereof, the
following will be applicable:


 


(i)            Issuance of Rights or Options.  If the Company in any manner issues or
grants any warrants, rights or options, whether or not immediately exercisable,
to subscribe for or to purchase Common Stock or other securities exercisable,
convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options
to purchase Common Stock or Convertible Securities are hereinafter referred to
as “Options”) and the price per
share for which Common Stock is issuable upon the exercise of such Options is
less than the Market Price in effect on the date of issuance of such Options (“Below Market Options”), then the maximum
total number of shares of Common Stock issuable upon the exercise of all such
Below Market Options (assuming full exercise, conversion or exchange of Convertible
Securities, if applicable) will, as of the date of the issuance or grant of
such Below Market Options, be deemed to be outstanding and to have been issued
and sold by the Company for such price per share.  For purposes of the preceding sentence, the “price per share for
which Common Stock is issuable upon the exercise of such Below Market Options”
is determined by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or granting of all such Below
Market Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Below Market
Options, plus, in the case of Convertible Securities issuable upon the exercise
of such Below Market Options, the minimum aggregate amount of additional
consideration payable upon the exercise, conversion or exchange thereof at the
time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Below Market Options (assuming


 


5

















 


full conversion of Convertible
Securities, if applicable). No further adjustment to the Exercise Price will be
made upon the actual issuance of such Common Stock upon the exercise of such
Below Market Options or upon the exercise, conversion or exchange of
Convertible Securities issuable upon exercise of such Below Market Options.


 


(ii)           Issuance of Convertible Securities.


 


(A)          If the Company in any manner issues or
sells any Convertible Securities, whether or not immediately exercisable,
convertible or exchangeable (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such exercise, conversion or exchange (as determined pursuant to Section
4(b)(ii)(B) if applicable) is less than the Market Price in effect on the date
of issuance of such Convertible Securities, then the maximum total number of
shares of Common Stock issuable upon the exercise, conversion or exchange of
all such Convertible Securities will, as of the date of the issuance of such
Convertible Securities, be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. 
For the purposes of the preceding sentence, the “price per share for
which Common Stock is issuable upon such exercise, conversion or exchange” is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof
at the time such Convertible Securities first become exercisable, convertible
or exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities.  No further adjustment to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon exercise, conversion or exchange of such Convertible Securities.


 


(B)           If the Company in any manner issues
or sells any Convertible Securities with a fluctuating conversion or exercise
price or exchange ratio (a “Variable Rate
Convertible Security”), then the “price per share for which Common
Stock is issuable upon such exercise, conversion or exchange” for purposes of
the calculation contemplated by Section 4(b)(ii)(A) shall be deemed to be the
lowest price per share which would be applicable (assuming all holding period
and other conditions to any discounts contained in such Convertible Security
have been satisfied) if the Market Price on the date of issuance of such
Convertible Security was 75% of the Market Price on such date (the “Assumed Variable Market Price”).  Further, if the Market Price at any time or
times thereafter is less than or equal to the Assumed Variable Market Price
last used for making any adjustment under this Section 4 with respect to any
Variable Rate Convertible Security, the Exercise Price in effect at such time
shall be readjusted to equal the Exercise Price which would have resulted if
the Assumed Variable Market Price at the time of issuance of the Variable Rate
Convertible Security had been 75% of the Market Price existing at the time of
the adjustment required by this sentence.


 


 


(iii)          Change in Option Price or
Conversion Rate.  If there is a
change at any time in (i) the amount of additional consideration payable to the
Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange of any Convertible Securities; or (iii) the rate at which any


 


6

















 


Convertible Securities are
convertible into, or exercisable or exchangeable for, Common Stock (in each
such case, other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such change will
be readjusted to the Exercise Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding provided for
such changed additional consideration or changed conversion rate, as the case
may be, at the time initially granted, issued or sold.


 


(iv)          Treatment of Expired Options and
Unexercised Conyertible Securities. If, in any case, the total number of
shares of Common Stock issuable upon exercise of any Option or upon exercise,
conversion or exchange of any Convertible Securities is not, in fact, issued
and the rights to exercise such Option or to exercise, convert or exchange such
Convertible Securities shall have expired or terminated, the Exercise Price
then in effect will be readjusted to the Exercise Price which would have been
in effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual number of shares
of Common Stock issued upon exercise or conversion thereof), never been issued.


 


(v)           Calculation of Consideration
Received. If any Common Stock, Options or Convertible Securities are
issued, granted or sold for cash, the consideration received therefor for
purposes of this Warrant will be the amount received by the Company therefor,
before deduction of reasonable commissions, underwriting discounts or
allowances or other reasonable expenses paid or incurred by the Company in
connection with such issuance, grant or sale. In case any Common Stock, Options
or Convertible Securities are issued or sold for a consideration part or all of
which shall be other than cash, the amount of the consideration other than cash
received by the Company will be the fair market value of such consideration,
except where such consideration consists of securities, in which case the
amount of consideration received by the Company will be the Market Price
thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued in connection with any merger or
consolidation in which the Company is the surviving corporation, the amount of
consideration therefor will be deemed to be the fair market value of such
portion of the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair market value of any consideration other than cash or
securities will be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by the Company and
reasonably acceptable to the holder hereof, with the costs of such appraisal to
be borne by the Company.


 


(vi)          Exceptions to Adjustment of Exercise
Price.  No adjustment to the
Exercise Price will be made (i) upon the exercise of any warrants, options or
convertible securities issued and outstanding on the Closing Date and set forth
on Schedule 4(c) of the Securities Purchase Agreement in accordance with the
terms of such securities as of such date; provided, however, that
an adjustment to the Exercise Price will be made if, and to the extent that,
the exercise price or conversion price of such outstanding warrants, options or
convertible securities is reduced by the Company in accordance with the terms
of such securities (other than a reduction in connection with a
recapitalization, reclassification, stock split, stock dividend or the like as
provided therein) or otherwise; (ii) upon the issuance of any securities
reserved for contingent issuance as set forth on


 


7

















 


Schedule 4(c) of the Securities
Purchase Agreement, and upon the exercise or conversion of such securities in
accordance with the terms thereof; (iii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan, stock option plan or stock purchase plan of the Company now
existing or to be implemented in the future, so long as the grant of such stock
or options is approved in accordance with the terms of any such plan and the
Company’s usual and customary approval procedures with respect thereto; (iv)
upon the issuance of any Common Stock or Warrants in accordance with the terms
of the Securities Purchase Agreement; (v) upon exercise of the Warrants; (vi)
upon the issuance or exercise of any Common Stock, warrants, options,
convertible securities or any combination of the foregoing, which are issued in
connection with an underwritten primary public offering for the account of the
Company, so long as the underwriting agreement with respect thereto contains
only usual and customary terms and provisions and so long as the underwriting
discounts and commissions in connection with such public offering are not in
excess of what is usual and customary in connection with a public offering of
comparable size with respect to like securities of a company, the common stock
of which is registered under the Securities Exchange Act of 1934, as amended; provided,
however, that the exception to the adjustment of the Exercise Price set
forth in this clause (vi) shall not be applicable if a Variable Rate
Convertible Security is issued in connection with such underwritten primary
public offering; or (vii) upon the issuance or exercise of any Common Stock,
warrants, options, convertible securities or any combination of the foregoing,
which are issued on or after the six (6) month anniversary of the Closing Date
in connection with the Company’s receipt of an aggregate of up to five million
dollars ($5,000,000) of private financing during any twelve month period, so
long as the Deemed Discount (as defined below) associated with the securities,
assets and other consideration, if any, issued or granted by the Company in
connection with such financing is not greater than 15% of the gross proceeds to
the Company of such financing (an “Excepted
Financing”); provided, however, that any financing in
which a Variable Rate Convertible Security is issued or in which the Deemed
Discount is in excess of 15% shall not be an Excepted Financing. For purposes
of this Section 4(b)(vi), “Deemed Discount”
shall mean the quotient obtained by dividing (I) the amount by which (A) the
sum of (x) the value of the securities, assets and any other consideration, if
any, issued or granted by the Company in connection with the Excepted
Financing, taking into account, with respect to securities, stated discounts,
liquidation preferences, conversion features, look-back mechanisms, warrant
coverage and any other feature representing value, plus (y) the amount of any
cash consideration from the Company to an investor in such Excepted Financing
or such investor’s affiliates in connection with the provision of such Excepted
Financing exceeds (B) the gross proceeds to the Company of the Excepted
Financing, by (II) the gross proceeds to the Company of the Excepted Financing.
The Company shall calculate, using commercial valuation methods appropriate for
valuing such securities, assets or other items of consideration , the Deemed
Discount within five (5) business days after the closing of the Excepted
Financing; provided, however, that if the holder of this Warrant
does not agree to such calculation within three (3) business days after receipt
thereof (and the details in respect thereto), then the Deemed Discount shall be
determined in good faith by an investment banker or other appropriate expert of
national reputation selected by the Company and reasonably acceptable to the
holder of this Warrant, with the costs of such determination to be borne by the
Company. For the avoidance of doubt, if the gross proceeds to the Company in an
Excepted Financing exceed five million dollars ($5,000,000), then the Exercise
Price shall be adjusted pursuant to this Section 4 based on the issuance of the
pro-rata amount and type of securities issued in such Excepted Financing in
respect of such excess.


 


8

















 


(c)           Subdivision or Combination of
Common Stock. If the Company, at any time during the Investment Period,
subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into
a greater number of shares, then, after the date of record for effecting such
subdivision, the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company, at any time during the
Investment Period, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into
a smaller number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such combination
will be proportionately increased.


 


(d)           Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to the provisions of this
Section 4, the number of shares of Common Stock issuable upon exercise of this
Warrant shall be increased or decreased to equal the quotient obtained by
dividing (i) the product of (A) the Exercise Price in effect immediately prior
to such adjustment, multiplied by (B) the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment, by
(ii) the adjusted Exercise Price.


 


(e)           Consolidation, Merger or Sale.
In case of any consolidation of the Company with, or merger of the Company
into, any other entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in connection with a
plan of complete liquidation of the Company at any time during the Investment
Period, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this Warrant in
lieu of the shares of Common Stock immediately theretofore acquirable upon the
exercise of this Warrant, such shares of stock, securities, cash or assets as
may be issued or payable with respect to or in exchange for the number of
shares of Common Stock immediately theretofore acquirable and receivable upon
exercise of this Warrant had such consolidation, merger or sale or conveyance
not taken place. In any such case, the Company will make appropriate provision
to insure that the provisions of this Section 4 will thereafter be applicable
as nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor entity (if other than the Company) assumes by written
instrument the obligations under this Warrant and the obligations to deliver to
the holder of this Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled to
acquire. Notwithstanding the foregoing, in the event of any consolidation of
the Company with, or merger of the Company into, any other entity, or the sale
or conveyance of all or substantially all of the assets of the Company, at any
time during the Investment Period, the holder of the Warrant shall, at its
option, have the right to receive, in connection with such transaction, cash
consideration equal to the fair value of this Warrant as determined in
accordance with customary valuation methodology used in the investment banking
industry.


 


(f)            Distribution of Assets. In
case the Company shall declare or make any distribution of its assets (or
rights to acquire its assets) to holders of Common Stock as a partial
liquidating dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to the Company’s shareholders
of cash or shares (or rights to acquire shares)


 


9

















 


of capital stock of a
subsidiary) (a “Distribution”), at
any time during the Investment Period, then, upon exercise of this Warrant for
the purchase of any or all of the shares of Common Stock subject hereto, the
holder of this Warrant shall be entitled to receive its pro-rata amount of such
assets (or such rights) as would have been payable to the holder had such
holder been the holder of such shares of Common Stock on the record date for
the determination of shareholders entitled to such Distribution.


 


(g)           Notice of Adjustment. Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the
holder of this Warrant, which notice shall state the Exercise Price resulting
from such adjustment and the increase or decrease in the number of Warrant
Shares issuable upon exercise of this Warrant, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based. Such calculation shall be certified by the chief financial officer of
the Company.


 


(h)           Minimum Adjustment of Exercise
Price. No adjustment of the Exercise Price shall be made in an amount of
less than 1% of the Exercise Price in effect at the time such adjustment is
otherwise required to be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward, shall
amount to not less than 1% of such Exercise Price.


 


(i)            No Fractional Shares.  No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but the Company shall pay a cash adjustment
in respect of any fractional share which would otherwise be issuable in an
amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.


 


(j)            Other Notices.  In case at any time:


 


(i)            the Company shall declare any
dividend upon the Common Stock payable in shares of stock of any class or make
any other distribution (other than dividends or distributions payable in cash
out of retained earnings consistent with the Company’s past practices with respect
to declaring dividends and making distributions) to the holders of the Common
Stock;


 


(ii)           the Company shall offer for
subscription pro rata to the holders of the Common Stock any additional shares
of stock of any class or other rights;


 


(iii)          there shall be any capital
reorganization of the Company, or reclassification of the Common Stock, or
consolidation or merger or the Company with or into, or sale of all or
substantially all of its assets to, another corporation or entity; or


 


(iv)          there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company; 


 


then, in each such case, the
Company shall give to the holder of this Warrant (a) notice of the date or
estimated date on which the books of the Company shall close or a record shall
be taken for


 


10

















 


determining the holders of
Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock entitled to
vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, notice of the date (or, if not then
known, a reasonable estimate thereof by the Company) when the same shall take
place. Such notice shall also specify the date on which the holders of Common
Stock shall be entitled to receive such dividend, distribution, or subscription
rights or to exchange their Common Stock for stock or other securities or
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such
notice shall be given at least thirty (30) days prior to the record date or the
date on which the Company’s books are closed in respect thereto. Failure to
give any such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
Notwithstanding the foregoing, the Company shall publicly disclose the
substance of any notice delivered hereunder prior to delivery of such notice to
the holder of this Warrant.


 


(k)           Certain Events.  If, at any time during the Investment
Period, any event occurs of the type contemplated by the adjustment provisions
of this Section 4 but not expressly provided for by such provisions, the
Company will give notice of such event as provided in Section 4(g) hereof, and
the Company’s Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock acquirable upon
exercise of this Warrant so that the rights of the holder shall be neither
enhanced nor diminished by such event.


 


(l)            Certain Definitions.


 


(i)            “Common
Stock Deemed Outstanding” shall mean the number of shares of Common
Stock actually outstanding, plus (x) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Options, the maximum total
number of shares of Common Stock issuable upon the exercise of the Options for
which the adjustment is required (including any Common Stock issuable upon the
conversion of Convertible Securities issuable upon the exercise of such
Options), and (y) in the case of any adjustment required by Section 4(a)
resulting from the issuance of any Convertible Securities, the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of the Convertible Securities for which the adjustment is required, as
of the date of issuance of such Convertible Securities, if any.


 


(ii)           “Market
Price,” as of any date, (i) means the average of the closing bid
prices of the shares of Common Stock as reported on The Nasdaq National Market
(“Nasdaq”) by Bloomberg Financial
Markets (“Bloomberg”) for the five
consecutive trading days immediately preceding such date, or (ii) if Nasdaq is
not the principal trading market for the shares of Common Stock, the average of
the last reported bid prices as reported by Bloomberg on the principal trading
market for the Common Stock during the same period, or, if there is no bid
price for such period, the last reported sales price as reported by Bloomberg
for such period, or (iii) if market value cannot be calculated as of such date
on any of the foregoing bases, the Market Price shall be the average fair
market value as reasonably determined by an investment banking firm selected by
the Company and reasonably acceptable to the holder, with the cost of the
appraisal to be borne by the Company. The


 


11

















 


manner of determining the
Market Price of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a determination as
to market value must be made hereunder.


 


(iii)          “Common
Stock,” for purposes of this Section 4, includes the Common Stock
and any additional class of stock of the Company having no preference as to
dividends or distributions on liquidation, provided that the shares purchasable
pursuant to this Warrant shall include only Common Stock in respect of which
this Warrant is exercisable, or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to
in Section 4(e) hereof, the stock or other securities or property provided for
in such Section.


 


5.             Issue Tax.  The issuance of certificates for Warrant
Shares upon the exercise of this Warrant shall be made without charge to the
holder of this Warrant or such shares for any issuance tax or other costs in
respect thereof, provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the holder of this Warrant.


 


6.             No Rights or Liabilities as a
Shareholder.  This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.


 


7.             Transfer, Exchange, Redemption
and Replacement of Warrant.


 


(a)           Restriction on Transfer. This
Warrant and the rights granted to the holder hereof are transferable, in whole
or in part, upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of the Company
referred to in Section 7(e) below, provided,
however, that any transfer or assignment shall be subject to the
conditions set forth in Sections 7(f) and 7(g) hereof and to the provisions of
Sections 3(e) and 3(f) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.


 


(b)           Warrant Exchangeable for Different
Denominations.  This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Series 1
Warrants of like tenor of different denominations representing in the aggregate
the right to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Series 1 Warrants to represent the right
to purchase such number of shares as shall be designated by the holder hereof
at the time of such surrender.


 


12

















 


(c)           Replacement of Warrant.  Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.


 


(d)           Cancellation; Payment of Expenses.  Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Series 1 Warrants pursuant to this Section 7. The Company shall
indemnify and reimburse the holder of this Warrant for all losses and damages
arising as a result of or related to any breach by the Company of the terms of
this Warrant, including costs and expenses (including legal fees) incurred by
such holder in connection with the enforcement of its rights hereunder.


 


(e)           Warrant Register.  The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.


 


(f)            Exercise or Transfer Without
Registration.  If, at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder or transferee of this Warrant, as the case may
be, furnish to the Company a written opinion of counsel (which opinion shall be
in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance reasonably
acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule
501(a) promulgated under the Securities Act; provided
that no such opinion, letter, or status as an “accredited investor”
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act.


 


(g)           Additional Restrictions on
Exercise or Transfer. 
Notwithstanding anything contained herein to the contrary, this Warrant
shall not be exercisable by a holder hereof to the extent (but only to the
extent) that (a) the number of shares of Common Stock beneficially owned by
such holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants or the unexercised or unconverted portion of any other securities
of the Company subject to a limitation on conversion or exercise analogous to
the limitation contained herein) and (b) the number of shares of Common


 


13

















 


Stock issuable upon exercise of
the Warrants (or portion thereof) with respect to which the determination
described herein is being made, would result in beneficial ownership by such
holder and its affiliates of more than 9.99% of the outstanding shares of
Common Stock. To the extent the above limitation applies, the determination of
whether and to what extent this Warrant shall be exercisable with respect to
other securities owned by such holder shall be in the sole discretion of the
holder and submission of this Warrant for full or partial exercise shall be
deemed to be the holder’s determination of whether and the extent to which this
Warrant is exercisable, in each case subject to such aggregate percentage
limitation. No prior inability to exercise the Warrants pursuant to this Section
shall have any effect on the applicability of the provisions of this Section
with respect to any subsequent determination of exercisability. For purposes of
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13D-G thereunder, except as otherwise provided in
clause (a) hereof. The restrictions contained in this Section 7(g) may not be
amended without the consent of the holder of this Warrant and the holders of a
majority of the Company’s then outstanding Common Stock.


 


8.             Registration
Rights. The initial holder of this Warrant (and certain assignees thereof)
is entitled to the benefit of such registration rights in respect of the Warrant
Shares as are set forth in the Registration Rights Agreement, including the
right to assign such rights to certain assignees, as set forth therein.


 


9.             Notices. Any
notices required or permitted to be given under the terms of this Warrant shall
be sent by certified or registered mail (return receipt requested) or delivered
personally or by courier or by confirmed telecopy, and shall be effective five
days after being placed in the mail, if mailed, or upon receipt or refusal of
receipt, if delivered personally or by courier, or by confirmed telecopy, in
each case addressed to a party. The addresses for such communications shall be:


 


If to the
Company:


 


Microvision,
Inc.


2203 Airport
Way South, Suite 100


Seattle,
Washington 98134


Telephone No.:
(206) 623-7055


Facsimile No.:
(206) 623-5961


Attention:
Richard Raisig


 


If to the holder, at such address as such holder shall have provided in
writing to the Company, or at such other address as such holder furnishes by
notice given in accordance with this Section 9.


 


10.           Governing Law;
Jurisdiction. This Warrant shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company irrevocably consents to the jurisdiction
of the United States federal courts and state courts located in New York, New
York in any suit or proceeding based on or arising under this Warrant and
irrevocably agrees that all claims in respect of such suit or


 


14

















 


proceeding may be determined in such courts. The Company irrevocably
waives any objection to the laying of venue and the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The Company further agrees
that service of process upon the Company mailed by certified or registered mail
to the address set forth in Section 9 shall be deemed in every respect
effective service of process upon the Company in any suit or proceeding.
Nothing herein shall affect the holder’s right to serve process in any other
manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.


 


11.           Miscellaneous.


 


(a)           Amendments. Except as provided
in Section 7(g) hereof, this Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder
hereof.


 


(b)           Descriptive Headings. The
descriptive headings of the several Sections of this Warrant are inserted for
purposes of reference only, and shall not affect the meaning or construction of
any of the provisions hereof.


 


(c)           Cashless Exercise.
Notwithstanding anything to the contrary contained in this Warrant, if the
resale of the Warrant Shares by the holder is not then registered pursuant to
an effective registration statement under the Securities Act, this Warrant may
be exercised at any time or from time to time during the Exercise Period, by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the holder’s intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a “Cashless Exercise”). In the event of a
Cashless Exercise, in lieu of paying the Exercise Price in cash, the holder
shall surrender this Warrant for that number of shares of Common Stock determined
by multiplying (i) the number of Warrant Shares to which it would otherwise be
entitled by (ii) a fraction, the numerator of which shall be the difference
between the last reported sale price per share of the Common Stock on the date
of exercise (as reported on the Nasdaq National Market, or if not so reported,
as reported on the principle United States securities market on which the
Common Stock is then traded) and the Exercise Price, and the denominator of
which shall be such last reported sale price per share of Common Stock.


 


(d)           Business Day.
For purposes of this Warrant, the term “business day” means any day, other than
a Saturday or Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law, regulation or executive order to
close.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]


 


15

















 


IN WITNESS WHEREOF,
the Company has caused this Warrant to be signed by its duly authorized
officer.


 


	
   

  	
  MICROVISION,
  INC.

  
	
   

  	
   

  	
   

  
	
    

  	
  By:

  	
  /s/ Richard
  A Raisig

  	
   

  
	
   

  	
   

  	
  Name:

  	
  RICHARD A
  RAISIG

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   CFO/VP OPERATIONS

  	
   

  
						



 


16

















 


FORM OF EXERCISE AGREEMENT


 


(To be Executed by the Holder in order to
Exercise the Warrant)


 


	
  To:

  	
  MICROVISION,
  INC.

  
	
   

  	
  2203 Airport
  Way South, Suite 100

  
	
   

  	
  Seattle,
  Washington 98134

  
	
   

  	
  Facsimile
  No.: (206) 623-5961

  
	
   

  	
  Attn:
  Richard Raisig

  



 


The
undersigned hereby irrevocably exercises the right to purchase
                       
shares of the Common Stock of MICROVISION, INC., a corporation organized under
the laws of the State of Washington (the “Company”),
evidenced by the attached Warrant and herewith makes payment of the
Exercise Price with respect to such shares in full, all in accordance with the
conditions and provisions of said Warrant.


 


The
undersigned agrees not to offer, sell, transfer or otherwise dispose of any
Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.


 


•                                            The
undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this Exercise
Agreement to the account of the undersigned or its nominee (which is
                                )
with DTC through its Deposit Withdrawal Agent Commission System (“DTC Transfer”).


 


•                                            In
lieu of receiving the shares of Common Stock issuable pursuant to this Exercise
Agreement by way of DTC Transfer, the undersigned hereby requests that the
Company cause its transfer agent to issue and deliver to the undersigned
physical certificates representing such shares of Common Stock.


 


The
undersigned requests that a Warrant representing any unexercised portion hereof
be issued, pursuant to the Warrant, in the name of the Holder and delivered to
the undersigned at the address set forth below:


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Signature of
  Holder

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name of
  Holder (Print)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


17

















 


FORM OF ASSIGNMENT


 


FOR VALUE
RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights
of the undersigned under the attached Warrant, with respect to the number of
shares of Common Stock covered thereby set forth hereinbelow, to:


 


Name of
Assignee                               Address                                 No of Shares


 


 


 


,and hereby irrevocably
constitutes and appoints
                                              
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.


 


Dated:
                                            ,
                     


 


In the presence of


 


                                                        


 


	
  Name: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature: 

  	
   

  
	
   

  	
  Title of
  Signing Officer or Agent (if

  
	
   

  	
  any):

  
	
   

  	
   

  	
   

  
	
   

  	
  Address: 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Note:

  	
  The above
  signature should correspond exactly with the name on the face of the within
  Warrant.

  
					



 


18