Prepared by MerrillDirect





Exhibit 10.1


MICROVISION, INC.


 


INDEPENDENT DIRECTOR

STOCK OPTION PLAN


 










MICROVISION, INC.

INDEPENDENT DIRECTOR STOCK OPTION PLAN


 


Table of Contents


1.       Purpose


2.       Administration


2.1     Procedures



2.2     Powers



2.3     Limited Liability



2.4     Securities Exchange Act
of 1934



3.       Stock Subject to This Plan


4.       Eligibility


5.       Independent Director
Stock Options


5.1     Awards



5.2     Exercise Price



5.3     Vesting



5.4     Nontransferability



5.5     Termination of Options



(a) Generally



(b) Disability or Death



(c) Failure to
Exercise Option; Expiration



6.       Option Agreements


7.       Exercise


7.1     Procedure



7.2     Payment



7.3     Withholding



7.4     Conditions Precedent to
Exercise



8.       Foreign Qualified Grants


9.       Adjustments On
Changes in Capitalization


9.1     Stock Splits, Capital Stock Adjustments



9.2     Effect of Certain Events



(a) Change in
Control



(b) Liquidation;
Dissolution



(c) Recapitalizations



9.3     Fractional Shares



9.4     Determination of
Board to Be Final



10.     Securities Regulations


11.     Amendment and Termination


11.1   Plan



11.2   Automatic Termination



12.     Miscellaneous


12.1   Time of Granting Options



12.2   No Status as Shareholder



12.3   Reservation of Shares



13.     Effectiveness of This Plan





 


          1.          Purpose.  The purpose of the Independent Director
Stock Option Plan (the “Plan”) is to provide a means by which Microvision, Inc.
(the “Company”), may attract and retain the best available personnel as
non-employee directors of the Company (“Independent Directors”) and of its
subsidiaries and to provide added incentive to such persons by increasing their
ownership interest in the Company.


          2.          Administration.  This Plan shall be
administered by the Board
of Directors of the Company (the “Board”) or, if the Board shall authorize a
committee of the Board to administer this Plan, by such committee to the extent
so authorized; provided, however, that only the Board of Directors may suspend,
amend or terminate this Plan as provided in Section 11.1.  The administrator of this Plan is referred
to as the “Plan Administrator.”


                    2.1          
Procedures.  The Board of Directors shall designate one
member of the Plan Administrator as chairman. 
The Plan Administrator may hold meetings at such times and places as it
shall determine. The acts of a majority of the members of the Plan
Administrator present at meetings at which a quorum exists, or acts approved in
writing by all Plan Administrator members, shall constitute valid acts of the
Plan Administrator.


                    2.2          
Powers.  Subject to the specific provisions of this
Plan, the Plan Administrator shall have the authority, in its discretion:  (a) to grant the stock options described in
Section 5; (b) to determine, in accordance with Section 5.2 of this Plan,
the exercise price per share of options; (c) to interpret this Plan; (d) to
prescribe, amend and rescind rules and regulations relating to this Plan; (e)
to determine the terms and provisions of each option granted and, with the
consent of the Optionee, modify or amend each option; (f) to defer, with the
consent of the Optionee, or to accelerate the exercise date of any option; (g)
to waive or modify any term or provision contained in any option applicable to
the underlying shares of common stock of the Company (the “Common Stock”); (h)
to authorize any executive officer to execute on behalf of the Company any
instrument required to effectuate the grant of an option; and (i) to make all
other determinations deemed necessary or advisable for the administration of
this Plan.  The interpretation and
construction by the Plan Administrator of any terms or provisions of this Plan,
any option issued hereunder or of any rule or regulation promulgated in
connection herewith and all actions taken by the Plan Administrator shall be
conclusive and binding on all interested parties.  The Plan Administrator may delegate administrative functions to
individuals who are officers or employees of the Company.


                    2.3          Limited
Liability.  No member of
the Board of Directors or the Plan Administrator or officer of the Company
shall be liable for any action or inaction of the entity or body, or another
person or, except in circumstances involving bad faith, of himself or herself.  Subject only to compliance with the explicit
provisions hereof, the Board of Directors and Plan Administrator may act in
their absolute discretion in all matters related to the Plan.





                    2.4          Securities
Exchange Act of 1934.  At
any time that the Company has a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), this Plan shall be administered in accordance with Rule 16b-3
adopted under the Exchange Act and Section 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code”), and the regulations, proposed and final,
thereunder, as all may be amended from time to time.


          3.          Stock
Subject to This Plan. 
Subject to adjustment as provided below and in Section 9 hereof,
the stock subject to this Plan shall be the Common Stock, and the total number
of shares of Common Stock to be delivered on the exercise of all options
granted under this Plan shall not exceed 150,000 shares as such Common Stock
was constituted on the date on which this Plan was first adopted by the Board
of Directors as set forth on the last page hereof.  If any option granted under this Plan expires, is surrendered,
exchanged for another option, canceled or terminated for any reason without
having been exercised in full, the unpurchased shares subject thereto shall
again be available for purposes of this Plan, including for replacement options
that may be granted in exchange for such surrendered, canceled or terminated
options.  Shares issued on exercise of
options granted under this Plan may be subject to restrictions on transfer,
repurchase rights or other restrictions as determined by the Plan
Administrator.


          4.          Eligibility.  The Plan Administrator shall
award options
to any current or future Independent Director of the Company, and may award
options to any current or future non-employee director of any subsidiary
thereof.  As used in this Plan, the term
“subsidiary” of the Company shall mean any corporation or other business entity
in which the Company owns, directly or indirectly, stock or other equity
interests equal to 50% or more of the total combined voting power of all
classes of stock or other equity interests thereof.  To the extent that the Plan Administrator awards options
hereunder to a non-employee director of any subsidiary of the Company, the term
“Independent Director” as used herein shall refer to such person and the term
“Company,” as required by the context, shall refer to the subsidiary and not to
Microvision, Inc.  Any party to whom an
option is granted under this Plan is referred to as an “Optionee.”





          5.          Independent
Director Stock Options.


                    5.1          
Awards.  The Plan Administrator shall grant to each
Independent Director an option to purchase 5,000 shares of Common Stock on the
date upon which he or she is elected, re-elected or appointed to the Board of
Directors of the Company.


                    5.2          Exercise
Price.  The exercise
price of options issued under the Plan will be the average closing price of the
Company’s Common Stock as reported on the Nasdaq National Market or, if the Common
Stock is no longer listed thereon, such other principal exchange or market
(including the over-the-counter market) for the Company’s Common Stock, during
the ten trading days prior to the date of grant.


                    5.3          
Vesting.  To ensure that the Company will achieve the
purposes of and receive the benefits contemplated in this Plan, options granted
pursuant to the Plan will vest in full as of the earlier of (i) the day prior
to the date of the Company’s Annual Meeting of Shareholders next following the
date of grant, or (ii) one year from the date of grant, provided the
Independent Director continues to serve as an Independent Director of the
Company or is employed by the Company or a subsidiary of the Company as of such
vesting date.


                    5.4          Nontransferability.
 Options granted under this Plan and the
rights and privileges conferred hereby may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and distribution,
shall not be subject to execution, attachment or similar process, and shall be
exercisable during the Optionee’s lifetime only by the Optionee.  Any purported transfer or assignment in
violation of this provision shall be void.





                    5.5          Termination
of Options.


          (a)  Generally.  Unless earlier termination results from the
application of the provisions of this Section 5.5, each option granted
hereunder shall expire and all rights of the Optionee thereunder shall cease
and terminate on the tenth anniversary of the date of its grant.



          (b)  Disability or Death.  If an Optionee is unable to continue his or
her service as an Independent Director of the Company as a result of his or her
permanent and total disability (as defined in Section 22(e)(3) of the Code) or
death, all unvested options issued under the Plan to such Optionee will become
vested immediately as of the date of disability or death.  In such an event, the option may be
exercised at any time before the earlier of (i) the expiration date of the
option or (ii) 12 months after the date of (x) permanent and total disability
or (y) death (by the person or persons to whom such Optionee’s rights under the
option shall pass by the Optionee’s will or by the applicable laws of descent
and distribution), for up to the full number of shares of Common Stock covered
thereby.



          (c)  Failure to Exercise Option; Expiration.  To the extent that an
Optionee fails to
exercise an option within the period provided in this Section 5.5, all rights
to purchase shares of Common Stock pursuant to such options shall cease and
terminate.



          6.          Option
Agreements.  Options
granted under this Plan shall be evidenced by written stock option agreements
(the “Option Agreements”) that shall contain such terms, conditions, limitations
and restrictions as the Plan Administrator shall deem advisable and that are
consistent with this Plan.  All Option
Agreements shall include or incorporate by reference the applicable terms and
conditions contained in this Plan.





          7.          Exercise.


                    7.1            Procedure.  Subject to Section 5.3 above, each option
may be exercised in whole or in part; provided, however, that no fewer than 100
shares (or the remaining shares then purchasable under the option, if less than
100 shares) may be purchased on any exercise of any option granted hereunder
and that only whole shares will be issued pursuant to the exercise of any
option (the number of 100 shares shall not be changed by any transaction or
action described in Section 9 unless the Plan Administrator determines that
such a change is appropriate).  Options
shall be exercised by delivery to the Secretary of the Company or his or her
designated agent of notice of the number of shares with respect to which the
option is exercised, together with payment in full of the exercise price and
any applicable withholding taxes.


                    7.2            Payment.  Payment of the option exercise price shall
be made in full when the notice of exercise of the option is delivered to the
Secretary of the Company or his or her designated agent and shall be by
personal, bank certified or cashier’s check or through irrevocable instructions
to a stock broker to deliver the amount of sales proceeds necessary to pay the
appropriate exercise price and withholding tax obligations, all in accordance
with applicable governmental regulations, for the shares of Common Stock being
purchased.  The Plan Administrator may
determine at any time before exercise that additional forms of payment will be
permitted.


                    7.3            Withholding.  Before the issuance of shares of Common
Stock on the exercise of an option, the Optionee shall pay to the Company the
amount of any applicable federal, state or local tax withholding
obligations.  The Company may withhold
any distribution in whole or in part until the Company is so paid.  The Company shall have the right, subject to
applicable law, to withhold such amount from any other amounts due or to become
due from the Company to the Optionee, or to retain and withhold a number of
shares having a market value not less than the amount of such taxes required to
be withheld by the Company, to reimburse it for any such taxes and cancel (in
whole or in part) any such shares so withheld.


                    7.4           Conditions
Precedent to Exercise. 
The Plan Administrator may establish conditions precedent to the exercise
of any option, which shall be described in the relevant Option Agreement.


          8.          Foreign
Qualified Grants. 
Options under this Plan may be granted to Independent Directors of the
Company who reside in foreign jurisdictions. 
The Board of Directors may adopt supplements to the Plan as needed to
comply with the applicable laws of such foreign jurisdictions and to give
Optionees favorable treatment under such laws; provided, however, that no award
shall be granted under any such supplement on terms more beneficial to such
Optionees than those permitted by this Plan.





          9.          Adjustments
On Changes in Capitalization.


                    9.1          Stock Splits, Capital Stock Adjustments.  The aggregate number of shares for which
options may be granted under this Plan, the number and class of shares covered
by each outstanding option and each such option shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a stock split, stock dividend or consolidation
of shares or any like capital stock adjustment.


                    9.2          Effect
of Certain Events.


          (a)  Change in Control.  In the event of a Change in Control
(hereinafter defined), any unvested options issued under the Plan will vest
automatically upon the closing of the event causing the Change in Control.  For the purpose of this Section 9.2, a
“Change in Control” means the sale of more than 50% of the voting control of
the Company or its business to a third party, whether by means of merger,
triangular merger, consolidation, sale of stock, sale of assets or similar
transaction, but excluding (i) any transaction among affiliated persons that
does not result in a material change in ultimate ownership of the Company by
individuals, or (ii) any transaction for the principal purpose of funding the
operations of the Company.



          (b)  Liquidation; Dissolution.  If the Company is liquidated or dissolved,
options shall be treated in accordance with Section 9.2(a).



          (c)  Recapitalizations.  If the outstanding Common Stock of the Company is hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split-up, combination of shares or dividend payable in
shares, (other than in the case of a Change in Control) appropriate adjustment
shall be made by the Company in the number and kind of shares issuable on
exercise of the Options granted hereunder, so that the Optionee's proportionate
interest before and after the occurrence of the event is maintained.



                    9.3          Fractional
Shares.  If the number of
shares covered by any option is adjusted, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.


                    9.4          Determination
of Board to Be Final. 
All adjustments under this Section 9 shall be made by the Board of
Directors, and its determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive.





          10.          Securities
Regulations.


                    Shares of Common Stock shall not be issued with respect to an option
granted under this Plan unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, applicable laws of foreign
countries and other jurisdictions and the requirements of any quotation service
or stock exchange on which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for
the issuance and sale of any shares hereunder. 
The inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company’s counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of
an exemption from registration for the issuance and sale of any shares
hereunder shall relieve the Company of any liability with respect of the
nonissuance or sale of such shares as to which such requisite authority shall
not have been obtained.


                    As a condition to the exercise of an option, the Company may require
the Optionee to represent and warrant at the time of any such exercise that the
shares of Common Stock are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any relevant
provision of the aforementioned laws. 
The Company may place a stop-transfer order against any shares of Common
Stock on the official stock books and records of the Company, and a legend may
be stamped on stock certificates to the effect that the shares of Common Stock
may not be pledged, sold or otherwise transferred unless an opinion of counsel
is provided (concurred in by counsel for the Company) stating that such
transfer is not in violation of any applicable law or regulation.  The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be
necessary to comply with the federal and state securities laws.  THIS PROVISION SHALL NOT OBLIGATE THE COMPANY
TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK THEREUNDER.





          11.          Amendment
and Termination.


                    11.1          
Plan.  The Board of Directors may at any time
suspend, amend or terminate this Plan, provided that, the approval of the
Company’s shareholders is necessary within twelve months before or after
the adoption by the Board of Directors of any amendment that will:


          (a)      increase the
number of shares of Common Stock to be reserved for the issuance of options
under this Plan;



          (b)      permit the
granting of stock options to a class of persons other than those now permitted
to receive stock options under this Plan; or



          (c)       require
shareholder approval under applicable law, including Section 16(b) of the
Exchange Act.



                    11.2          Automatic
Termination.  Unless
earlier suspended or terminated by the Board, the Plan will continue in effect
until the earlier of: (i) ten years from the date on which it was adopted by
the Board, or (ii) the date on which all shares available for issuance under
the Plan have been issued.  No option
may be granted after such termination or during any suspension of this
Plan.  The amendment or termination of
this Plan shall not, without the consent of the Optionee, alter or impair any
rights or obligations under any option theretofore granted under this Plan.





          12.          Miscellaneous.


                    12.1          Time
of Granting Options.  The
date of grant of an option shall, for all purposes, be the date on which the
Independent Director is elected, re-elected or appointed to the Board of
Directors of the Company, and the execution of an Option Agreement and the conditions
to the exercise of an option shall not defer the date of grant.


                    12.2          No
Status as Shareholder. 
Neither the Optionee nor any party to which the Optionee’s rights and
privileges under the option may pass shall be, or have any of the rights or privileges
of, a shareholder of the Company with respect to any of the shares of Common
Stock issuable on the exercise of any option granted under this Plan unless and
until such option has been exercised and the issuance (as evidenced by the
appropriate entry on the books of the Company or duly authorized transfer agent
of the Company) of the stock certificate evidencing such shares.


                    12.3          Reservation
of Shares.  The Company,
during the term of this Plan, at all times will reserve and keep available such
number of shares of Common Stock as shall be sufficient to satisfy the
requirements of this Plan.


          13.          Effectiveness
of This Plan.  This Plan
shall become effective on the date on which it is adopted by the Board of
Directors of the Company.  No option
granted under this Plan to any Independent Director of the Company shall become
exercisable until the Plan is approved by the shareholders, and any option
granted before such approval shall be conditioned on and is subject to such
approval.


Plan
adopted by the Board of Directors on February 16, 2000.


Plan
approved by the shareholders on June 22, 2000.


Plan
amended by the Board of Directors on October 19, 2000.


Plan
amended by the Board of Directors on February13, 2001.