Document:

Warrant No. 88 to Purchase Common Stock of Microvision, Inc.

  
 Exhibit 4.1 

 
 THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER. SUBJECT TO COMPLIANCE WITH THE
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE PLEDGED OR HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
THIS WARRANT OR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT. 
  
 WARRANT 
  
 TO PURCHASE
COMMON STOCK 
  
 OF 
  
 MICROVISION, INC. 
  

					
	Issue Date: August 31, 2005	 	 	 	Warrant No. 88

  
 THIS CERTIFIES that
OMICRON MASTER TRUST or any subsequent holder hereof (the “Holder”), has the right to purchase from MICROVISION, INC., a Delaware corporation (the “Company”), upon the terms and subject to the limitations on
exercise and conditions hereinafter set forth, up to 64,373 fully paid and nonassessable shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), subject to adjustment as provided herein, at a
price per share equal to the Exercise Price (as defined below), at any time and from time to time beginning on the date on which this Warrant is originally issued (the “Issue Date”) and ending at 6:00 p.m., eastern time, on the date
that is the fifth (5th) anniversary of the Issue Date (or, if such date is not a Business Day, on the Business Day
immediately following such date) (the “Expiration Date”). This Warrant is issued pursuant to a Securities Purchase Agreement, dated as of August 31, 2005 (the “Securities Purchase Agreement”). Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth in the Securities Purchase Agreement. 

 1. Exercise. 
  
 (a) Right to Exercise; Exercise Price. The Holder shall have the right to exercise this Warrant at any time and from
time to time during the period beginning on the Issue Date and ending on the Expiration Date as to all or any part of the shares of Common Stock covered hereby (the “Warrant Shares”). The “Exercise Price” for each
Warrant Share purchased by the Holder upon the exercise of this Warrant shall be equal to $6.50, subject to adjustment for the events specified in Section 6 below.  
  
 (b) Exercise Notice. In order to exercise this Warrant, the Holder shall send to the Company by facsimile
transmission, at any time prior to 6:00 p.m., eastern time, on the Business Day on which the Holder wishes to effect such exercise (the “Exercise Date”), (i) a notice of exercise in substantially the form attached hereto as Exhibit
A (the “Exercise Notice”), and (ii) a copy of the original Warrant, and, in the case of a Cash Exercise (as defined below), the Holder shall pay the Exercise Price to the Company by wire transfer. The Exercise Notice shall state the
name or names in which the shares of Common Stock that are issuable on such exercise shall be issued. In the case of a dispute between the Company and the Holder as to the calculation of the Exercise Price or the number of Warrant Shares issuable
hereunder (including, without limitation, the calculation of any adjustment pursuant to Section 6 below), the Company shall issue to the Holder the number of Warrant Shares that are not disputed within the time periods specified in Section 2 below
and shall submit the disputed calculations to a certified public accounting firm of national recognition (other than the Company’s regularly retained accountants) within three (3) Business Days following the Company’s receipt of the
Holder’s Exercise Notice. The Company shall cause such accountant to calculate the Exercise Price and/or the number of Warrant Shares issuable hereunder and to notify the Company and the Holder of the results in writing no later than three (3)
Business Days following the day on which such accountant received the disputed calculations (the “Dispute Procedure”). Such accountant’s calculation shall be deemed conclusive absent manifest error. The fees of any such
accountant shall be borne by the party whose calculations were most at variance with those of such accountant. 
  
 (c) Holder of Record. The Holder shall, for all purposes, be deemed to have become the holder of record of the Warrant Shares specified in an
Exercise Notice on the Exercise Date specified therein, irrespective of the date of delivery of such Warrant Shares. Except as specifically provided herein, nothing in this Warrant shall be construed as conferring upon the Holder hereof any rights
as a stockholder of the Company prior to the Exercise Date. 
  
 (d) Cancellation of Warrant. This Warrant shall be canceled upon its exercise in full and, if this Warrant is exercised in part, the Company shall, at the time that it delivers Warrant Shares to the Holder pursuant to such exercise
as provided herein, issue a new warrant, and deliver to the Holder a certificate representing such new warrant, with terms identical in all respects to this Warrant (except that such new warrant shall be exercisable into the number of shares of
Common Stock with respect to which this Warrant shall remain unexercised); provided, however, that the Holder shall be entitled to exercise all or any portion of such new warrant at any time following the time at which this Warrant is
exercised, regardless of whether the Company has actually issued such new warrant or delivered to the Holder a certificate therefor. 
  

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 2. Delivery of Warrant Shares Upon Exercise. Upon receipt of an Exercise Notice pursuant to
Section 1 above, the Company shall, (A) in the case of a Cash Exercise, no later than the close of business on the later to occur of (i) the third (3rd) Business Day following the Exercise Date set forth in such Exercise Notice and (ii) such later
date on which the Company shall have received payment of the Exercise Price, (B) in the case of a Cashless Exercise (as defined below), no later than the close of business on the third (3rd) Business Day following the Exercise Date set forth in such
Exercise Notice, and (C) with respect to Warrant Shares that are the subject of a Dispute Procedure, the close of business on the third (3rd) Business Day following the determination made pursuant to Section 1(b) (each of the dates specified in (A),
(B) or (C) being referred to as a “Delivery Date”), issue and deliver or caused to be delivered to the Holder the number of Warrant Shares as shall be determined as provided herein. As long as the Company’s transfer agent
(“Transfer Agent”) participates in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program (“FAST”), and except as otherwise provided in the next following sentence of this
Section 2, the Company shall effect delivery of Warrant Shares to the Holder by crediting the account of the Holder or its nominee at DTC (as specified in the applicable Exercise Notice) with the number of Warrant Shares required to be delivered, no
later than the close of business on such Delivery Date. In the event that the Transfer Agent is not a participant in FAST, or if the Warrant Shares are not otherwise eligible for delivery through FAST, or if the Holder so specifies in an Exercise
Notice or otherwise in writing on or before the Exercise Date, the Company shall effect delivery of Warrant Shares by delivering to the Holder or its nominee physical certificates representing such Warrant Shares, no later than the close of business
on such Delivery Date. Warrant Shares delivered to the Holder shall not contain any restrictive legend as long as the resale of such Warrant Shares (x) has been or will be made (as certified in writing by the Holder to the Company) pursuant to an
effective Registration Statement (as defined in the Registration Rights Agreement), (y) has been made pursuant to Rule 144, or (z) may be made pursuant to Rule 144(k) or any successor rule or provision. 
  
 3. Failure to Deliver Warrant Shares. 
  
 (a) In the event that the Company fails for any reason to deliver to the
Holder the number of Warrant Shares specified in the applicable Exercise Notice on or before the Delivery Date therefor (an “Exercise Default”), the Company shall pay to the Holder payments (“Exercise Default
Payments”) in the amount of (i) (N/365) multiplied by (ii) the aggregate Exercise Price of the Warrant Shares which are the subject of such Exercise Default multiplied by (iii) the lower of twelve percent (12%) per annum and
the maximum rate permitted by applicable law (the “Default Interest Rate”), where “N” equals the number of days elapsed between the original Delivery Date of such Warrant Shares and the date on which all of such Warrant
Shares are issued and delivered to the Holder. Cash amounts payable hereunder shall be paid on or before the fifth (5th) Business Day of each calendar month following the calendar month in which such amount has accrued. 
  
 (b) In the event of an Exercise Default, the Holder may, upon written notice
to the Company, regain on the date of such notice the rights of the Holder under the exercised portion of this Warrant that is the subject of such Exercise Default. In such event, the Holder shall retain all of the Holder’s rights and remedies
with respect to the Company’s failure to deliver such Warrant Shares (including without limitation the right to receive the cash payments specified in 

  

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Section 3(a) above); provided, however, that such cash payments shall cease to accrue effective as of the date of such notice. 
  
 (c) The Holder’s rights and remedies hereunder are cumulative, and no
right or remedy is exclusive of any other. In addition to the amounts specified herein, the Holder shall have the right to pursue all other remedies available to it at law or in equity (including, without limitation, a decree of specific performance
and/or injunctive relief). Nothing herein shall limit the Holder’s right to pursue actual damages for the Company’s failure to issue and deliver Warrant Shares on the applicable Delivery Date (including, without limitation, damages
relating to any purchase of Common Stock by the Holder to make delivery on a sale effected in anticipation of receiving Warrant Shares upon exercise, such damages to be in an amount equal to (A) the aggregate amount paid by the Holder for the Common
Stock so purchased minus (B) the aggregate amount of net proceeds, if any, received by the Holder from the sale of the Warrant Shares issued by the Company pursuant to such exercise). 
  
 4. Exercise Limitations. In no event shall a Holder be permitted to
exercise this Warrant, or part hereof, if, upon such exercise, the number of shares of Common Stock beneficially owned by the Holder (other than shares which would otherwise be deemed beneficially owned except for being subject to a limitation on
conversion or exercise analogous to the limitation contained in this Section 4(a)), would exceed 4.99% of the number of shares of Common Stock then issued and outstanding. As used herein, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder. To the extent that the limitation contained in this Section 4(a) applies, the submission of an Exercise Notice by the Holder shall be deemed to be the
Holder’s representation that this Warrant is exercisable pursuant to the terms hereof and the Company shall be entitled to rely on such representation without making any further inquiry as to whether this Section 4(a) applies. Nothing contained
herein shall be deemed to restrict the right of a Holder to exercise this Warrant, or part thereof, at such time as such exercise will not violate the provisions of this Section 4(a). This Section 4(a) may not be amended unless such amendment is
approved by the holders of a majority of the Common Stock then outstanding; provided, however, that the limitations contained in this Section 4(a) shall cease to apply (x) upon sixty (60) days’ prior written notice from the Holder to the
Company, or (y) immediately upon written notice from the Holder to the Company at any time after the public announcement or other disclosure of a Major Transaction (as defined below) or a Change of Control. 
  
 5. Payment of the Exercise Price; Cashless Exercise. The Holder may
pay the Exercise Price in either of the following forms or, at the election of Holder, a combination thereof: 
  
 (a) through a cash exercise (a “Cash Exercise”) by delivering immediately available funds, or 
  
 (b) if an effective Registration Statement is not available for the resale of
all of the Warrant Shares issuable hereunder at the time an Exercise Notice is delivered to the Company, through a cashless exercise (a “Cashless Exercise”), as hereinafter provided. The Holder may effect a Cashless Exercise by
surrendering this Warrant to the Company and noting on the 

  

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Exercise Notice that the Holder wishes to effect a Cashless Exercise, upon which the Company shall issue to the Holder the number of Warrant Shares
determined as follows: 
  
 X = Y x (A-B)/A

  

	where:	      X = the number of Warrant Shares to be issued to the Holder; 

  
 Y = the number of Warrant Shares with respect to which this Warrant is being exercised; 
  
 A = the Market Price as of the Exercise Date; and

  
 B = the Exercise Price. 
  
 For purposes of Rule 144, it is intended and acknowledged that the Warrant
Shares issued in a Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares required by Rule 144 shall be deemed to have been commenced, on the Issue Date. 
  
 6. Anti-Dilution Adjustments; Distributions; Other Events. 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 6. In the event that any adjustment of the Exercise Price or the number of Warrant Shares as required
herein results in a fraction of a cent or fraction of a share, as applicable, such Exercise Price or number of Warrant Shares shall be rounded up or down to the nearest cent or share, as applicable. 
  
 (a) Subdivision or Combination of Common Stock. If the Company, at any
time after the Execution Date, subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the outstanding shares of Common Stock into a greater number of shares, then effective upon the close of
business on the record date for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company, at any time after the Issue Date, combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) the outstanding shares of Common Stock into a smaller number of shares, then, effective upon the close of business on the record date for effecting such combination, the Exercise Price
in effect immediately prior to such combination will be proportionally increased. 
  
 (b) Distributions. If the Company shall declare or make any distribution of cash or any other assets (or rights to acquire such assets) to holders of Common Stock, as a partial liquidating dividend or
otherwise, including without limitation any dividend or distribution to the Company’s stockholders in shares (or rights to acquire shares) of capital stock of a subsidiary) (a “Distribution”), the Company shall deliver written
notice of such Distribution (a “Distribution Notice”) to the Holder at least thirty (30) days prior to the earlier to occur of (i) the record date for determining stockholders entitled to such Distribution (the “Record
Date”) and (ii) the date on which such Distribution is made (the “Distribution Date”). In the Distribution Notice to a Holder, the Company must indicate whether the Company has elected (A) to deliver to such Holder the same
amount and type of assets being distributed in such Distribution as though the 

  

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Holder were a holder on the Determination Date therefor of a number of shares of Common Stock into which the this Warrant is exercisable as of such
Determination Date (such number of shares to be determined at the Exercise Price then in effect and without giving effect to any limitations on such exercise) or (B) to reduce the Exercise Price as of the Determination Date therefor by an amount
equal to the fair market value of the assets to be distributed divided by the number of shares of Common Stock as to which such Distribution is to be made, such fair market value to be reasonably determined in good faith by the independent
members of the Company’s Board of Directors. If the Company does not notify the Holders of its election pursuant to the preceding sentence within two (2) Business Days following the date on which the Company publicly announces a Distribution,
the Company shall be deemed to have elected clause (A) of the preceding sentence. 
  
 (c) Dilutive Issuances. 
  
 (i) Adjustment Upon Dilutive Issuance. If, at any time after the Issue Date, the Company issues or sells, or in accordance with subparagraph (iii) of this paragraph (c), is deemed to have issued or sold, any
shares of Common Stock for no consideration or for a consideration per share less than the Exercise Price on the date of such issuance or sale (or deemed issuance or sale) (a “Dilutive Issuance”), then the Exercise Price shall be
adjusted as follows: 
  
 (A) If such Dilutive
Issuance occurs prior to the Effective Date (as defined in the Registration Rights Agreement), then effective immediately upon the Dilutive Issuance, the Exercise Price shall be adjusted so as to equal the consideration received or receivable by the
Company (on a per share basis) for the additional shares of Common Stock so issued, sold or deemed issued or sold in such Dilutive Issuance (which, in the case of a deemed issuance or sale, shall be calculated in accordance with subparagraph (iii)
below). Notwithstanding the foregoing, prior to the Effective Date, the Company shall not engage in any transaction that would result in the issuance or deemed issuance of shares of Common Stock (other than Excluded Securities (as defined below))
for no consideration. 
  
 (B) If such Dilutive
Issuance occurs on or after the Effective Date, then effective immediately upon the Dilutive Issuance, the Exercise Price shall be adjusted so as to equal an amount determined by multiplying such Exercise Price by the following fraction: 

 
 N0 + N1 
  
 N0 + N2 
  
 where: 
  

					
	 N0
	 	 =
	  	the number of shares of Common Stock outstanding immediately prior to the issuance, sale or deemed issuance or sale of such additional shares of Common Stock in such Dilutive Issuance
(without taking into account any shares of Common Stock issuable upon conversion, exchange or exercise of any securities or other

  

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	 	 	 	  	instruments which are convertible into or exercisable or exchangeable for Common Stock (“Convertible Securities”) or options, warrants or other rights to purchase or
subscribe for Common Stock or Convertible Securities (“Purchase Rights”), other than the shares of Common Stock issuable under the Warrants, which will be taken into account);
			
	 N1
	 	 =
	  	the number of shares of Common Stock which the aggregate consideration, if any, received or receivable by the Company for the total number of such additional shares of Common Stock so issued,
sold or deemed issued or sold in such Dilutive Issuance (which, in the case of a deemed issuance or sale, shall be calculated in accordance with subparagraph (iii) below) would purchase at the Exercise Price in effect immediately prior to such
Dilutive Issuance; and
			
	 N2
	 	 =
	  	the number of such additional shares of Common Stock so issued, sold or deemed issued or sold in such Dilutive Issuance.

  
 Notwithstanding the foregoing, no
adjustment shall be made pursuant hereto if such adjustment would result in an increase in the Exercise Price. 
  
 (ii) Adjustment Upon Below Market Issuance. If, at any time after the Issue Date, the Company issues or sells, or in accordance
with subparagraph (iii) of this paragraph (c), is deemed to have issued or sold, any shares of Common Stock for per share consideration less than an amount equal to 95% of the Five (5) Day VWAP (as defined below) on the date of such issuance or sale
(or deemed issuance or sale) (a “Below Market Issuance”), then effective immediately upon the Dilutive Issuance, the Exercise Price shall be adjusted so as to equal an amount determined by multiplying such Exercise Price by the
following fraction: 
  
 N0 + N1 
 N0 + N2 
  
 where: 
  

					
	 N0
	 	 =
	  	the number of shares of Common Stock outstanding immediately prior to the issuance, sale or deemed issuance or sale of such additional shares of Common Stock in such Below Market Issuance
(without taking into account any shares of Common Stock issuable upon conversion, exchange or exercise of any Convertible Securities or Purchase Rights, other than the shares of Common Stock issuable under the Warrants, which will be taken into
account);
			
	 N1
	 	 =
	  	the number of shares of Common Stock which the aggregate consideration, if any, received or receivable by the Company for the total number of such additional shares of Common Stock so issued,
sold or deemed issued or sold in such Below Market

  

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	 	 	 	  	Issuance (which, in the case of a deemed issuance or sale, shall be calculated in accordance with subparagraph (iii) below) would purchase at the Market Price in effect on the date of such
Below Market Issuance; and
			
	 N2
	 	 =
	  	the number of such additional shares of Common Stock so issued, sold or deemed issued or sold in such Below Market Issuance.

  
 Notwithstanding the foregoing, no
adjustment shall be made pursuant to this paragraph (c)(ii) if such adjustment would result in an increase in the Exercise Price. In the event that the Company effects an issuance that is both a Dilutive Issuance and a Below Market Issuance, the
Exercise Price will be adjusted to the lower of the prices calculated pursuant to subparagraphs (i) and (ii) of this paragraph (c). 
  
 As used herein, the term “Five (5) Day VWAP” means, as of a particular date, the average of each daily VWAP for the five (5) consecutive
Trading Days occurring immediately prior to (but not including) such date. For the avoidance of doubt, the Five (5) Day VWAP shall be determined by calculating the daily VWAP for each of the five (5) Trading Days immediately preceding the relevant
date, adding together all of the daily VWAPs for such five (5) Trading Day period, and dividing such sum by five (5). 
  
 (iii) Effect On Exercise Price Of Certain Events. For purposes of determining the adjusted Exercise Price under subparagraph (i) or
(ii) of this paragraph (c), the following will be applicable: 
  
 (A) Issuance Of Purchase Rights. If the Company issues or sells any Purchase Rights, whether or not immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such
Purchase Rights (and the price of any conversion of Convertible Securities, if applicable) is less than either or both of an amount equal to 95% of the Five (5) Day VWAP and the Exercise Price in effect on the date of issuance or sale of such
Purchase Rights, then the maximum total number of shares of Common Stock issuable upon the exercise of all such Purchase Rights (assuming full conversion, exercise or exchange of Convertible Securities, if applicable) shall, as of the date of the
issuance or sale of such Purchase Rights, 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 Purchase Rights” shall be determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Purchase Rights, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the exercise of all such Purchase Rights, plus, in the case of Convertible Securities issuable upon the exercise of such Purchase Rights, the minimum aggregate amount of
additional consideration payable upon the conversion, exercise or exchange thereof (determined in accordance with the calculation method set forth in subparagraph (iii)(B) below) at the time such Convertible Securities first become convertible,
exercisable or exchangeable, by (y) the maximum total number of shares of Common Stock issuable upon the exercise of all such Purchase Rights (assuming full conversion, exercise or exchange of Convertible Securities, if applicable). No further
adjustment to the Exercise Price shall be made upon 

  

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the actual issuance of such Common Stock upon the exercise of such Purchase Rights or upon the conversion, exercise or exchange of Convertible Securities
issuable upon exercise of such Purchase Rights. 
  
 (B) Issuance Of Convertible Securities. If the Company issues or sells any Convertible Securities, whether or not immediately convertible, exercisable or exchangeable, and the price per share for which Common Stock is issuable upon
such conversion, exercise or exchange is less than either or both of an amount equal to 95% of the Five (5) Day VWAP and the Exercise Price in effect on the date of issuance or sale of such Convertible Securities, then the maximum total number of
shares of Common Stock issuable upon the conversion, exercise or exchange of all such Convertible Securities shall, as of the date of the issuance or sale of such Convertible Securities, be deemed to be outstanding and to have been issued and sold
by the Company for such price per share. If the Convertible Securities so issued or sold do not have a fluctuating conversion or exercise price or exchange ratio, then for the purposes of the immediately preceding sentence, the “price per share
for which Common Stock is issuable upon such conversion, exercise or exchange” shall be determined by dividing (x) 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 conversion, exercise or exchange thereof (determined in accordance with the calculation method set forth in this subparagraph
(iii)(B)), by (y) the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities. If the Convertible Securities so issued or sold have a fluctuating conversion or exercise
price or exchange ratio (a “Variable Rate Convertible Security”) (provided, however, that if the conversion or exercise price or exchange ratio of a Convertible Security may fluctuate solely as a result of provisions designed
to protect against dilution, such Convertible Security shall not be deemed to be a Variable Rate Convertible Security), then for purposes of the first sentence of this subparagraph (B), the “price per share for which Common Stock is issuable
upon such conversion, exercise or exchange” 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 Variable Rate Convertible Security have
been satisfied) if the conversion price of such Variable Rate Convertible Security on the date of issuance or sale thereof were seventy-five percent (75%) of the actual conversion price on such date (the “Assumed Variable Market
Price”), and, further, if the conversion price of such Variable Rate Convertible Security 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 paragraph
(c) 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 seventy-five percent (75%) of the actual conversion price of such Variable Rate Convertible Security existing at the time of the adjustment required by this sentence. No further adjustment to the Exercise
Price shall be made upon the actual issuance of such Common Stock upon conversion, exercise or exchange of such Convertible Securities. 
  

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 (C) Change In Option Price Or Conversion Rate. If, following an adjustment to the
Exercise Price upon the issuance of Purchase Rights or Convertible Securities pursuant to a Dilutive Issuance or a Below Market Issuance, there is a change at any time in (x) the amount of additional consideration payable to the Company upon the
exercise of any Purchase Rights; (y) the amount of additional consideration, if any, payable to the Company upon the conversion, exercise or exchange of any Convertible Securities; or (z) the rate at which any 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), then in any such case, the Exercise Price in effect at the time of such change shall be
readjusted to the Exercise Price which would have been in effect at such time had such Purchase Rights or Convertible Securities still outstanding provided for such changed additional consideration or changed conversion, exercise or exchange rate,
as the case may be, at the time initially issued or sold. 
  
 (D) Calculation Of Consideration Received. If any Common Stock, Purchase Rights or Convertible Securities are issued or sold for cash, the consideration received therefor will be the amount received by the
Company therefore. In case any Common Stock, Purchase Rights or Convertible Securities are issued or sold for a consideration part or all of which shall be other than cash, including in the case of a strategic or similar arrangement in which the
other entity will provide services to the Company, purchase services from the Company or otherwise provide intangible consideration to the Company, the amount of the consideration other than cash received by the Company (including the net present
value of the consideration expected by the Company for the provided or purchased services) shall be the fair market value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of
consideration received by the Company will be the Market Price thereof on the date of receipt. In case any Common Stock, Purchase Rights 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, Purchase Rights or
Convertible Securities, as the case may be. Notwithstanding anything else herein to the contrary, if Common Stock Purchase Rights or Convertible Securities are issued or sold in conjunction with each other as part of a single transaction or in a
series of related transactions, the Holder may elect to determine the amount of consideration deemed to be received by the Company therefor by deducting the fair value of any type of securities (the “Disregarded Securities”) issued
or sold in such transaction or series of transactions. If the Holder makes an election pursuant to the immediately preceding sentence, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) for the issuance of the
Disregarded Securities or upon any conversion, exercise or exchange thereof. The independent members of the Company’s Board of Directors shall calculate reasonably and in good faith, using standard commercial valuation methods appropriate for
valuing such assets, the fair market value of any consideration other than cash or securities. 
  

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 (E) Issuances Without Consideration Pursuant to Existing Securities. If the
Company issues (or becomes obligated to issue) shares of Common Stock pursuant to any anti-dilution or similar adjustments (other than as a result of stock splits, stock dividends and the like) contained in any Convertible Securities or Purchase
Rights outstanding as of the date hereof, then all shares of Common Stock so issued shall be deemed to have been issued for no consideration. 
  
 (iv) Exceptions To Adjustment Of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made
pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon exercise of
the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted by the Board of Directors, pursuant to one or more
stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s stockholders, or (y) consultants, either directly or
pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s stockholders; (IV) except
as required by subparagraph (c)(ii)(E) above, shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; (V) shares of Common Stock issued to a Person in connection with a joint
venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the purpose of raising equity capital; and (VI) securities issued with respect to which the Holders
consents that no such adjustment shall be made as a result of such issuance. 
  
 (v) Notice Of Adjustments. Upon the occurrence of one or more adjustments or readjustments of the Exercise Price pursuant to this paragraph (c) or any change in the number or type of stock, securities and/or
other property issuable upon exercise of this Warrant, the Company, at its expense, shall promptly compute such adjustment or readjustment or change and prepare and furnish to the Holder a notice (an “Adjustment Notice”) setting
forth such adjustment or readjustment or change and showing in detail the facts upon which such adjustment or readjustment or change is based, and, on or before the time that it delivers an Adjustment Notice, publicly disclose the contents thereof.
The failure of the Company to deliver an Adjustment Notice shall not affect the validity of any such adjustment. 
  
 (d) Major Transactions. In the event of a merger, consolidation, business combination, tender offer, exchange of shares, recapitalization,
reorganization, redemption or other similar event, as a result of which shares of Common Stock shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities or other assets of the
Company or another entity or the Company shall sell all or substantially all of its assets (each of the foregoing being a “Major Transaction”), the Company will give the Holder at least ten (10) Trading Days written notice prior to
the earlier of (I) the closing or effectiveness of such Major Transaction and (II) the record date for the receipt of such shares of stock or securities or other assets, and: (i) the Holder shall be permitted to exercise this Warrant in whole or in
part at any time prior to the record date for the receipt of such consideration and shall be entitled to receive, for each share of Common Stock issuable to Holder upon such exercise, the 

  

 -11- 

 
same per share consideration payable to the other holders of Common Stock in connection with such Major Transaction, and (ii) if and to the extent that the
Holder retains any portion of this Warrant following such record date, the Company will cause the surviving or, in the event of a sale of assets, purchasing entity, as a condition precedent to such Major Transaction, to assume the obligations of the
Company under this Warrant, with such adjustments to the Exercise Price and the securities covered hereby as may be reasonably determined in good faith by the Board of Directors to be necessary in order to preserve the economic benefits of this
Warrant to the Holder. 
  
 (e) Adjustments; Additional Shares,
Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant to this Section 6, the Holder of this Warrant shall, upon exercise of this Warrant, become entitled to receive securities or assets (other than
Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 6. Any adjustment made herein pursuant to Section 6(a) that results in a decrease in the
Exercise Price shall also effect a proportional increase in the number of shares of Common Stock into which this Warrant is exercisable. 
  
 7. Fractional Interests. 
  
 No fractional shares or scrip representing fractional shares shall be issuable upon the exercise of this Warrant, but on exercise of this
Warrant, the Holder hereof may purchase only a whole number of shares of Common Stock. If, on exercise of this Warrant, the Holder hereof would be entitled to a fractional share of Common Stock or a right to acquire a fractional share of Common
Stock, the Company shall, in lieu of issuing any such fractional share, pay to the Holder an amount in cash equal to the product resulting from multiplying such fraction by the Market Price as of the Exercise Date. 
  
 8. Transfer of this Warrant. 
  
 The Holder may sell, transfer, assign, pledge or otherwise
dispose of this Warrant, in whole or in part, as long as such sale or other disposition is made pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act. Upon such transfer or other
disposition (other than a pledge), the Holder shall deliver this Warrant to the Company together with a written notice to the Company, substantially in the form of the Transfer Notice attached hereto as Exhibit B (the “Transfer
Notice”), indicating the person or persons to whom this Warrant shall be transferred and, if less than all of this Warrant is transferred, the number of Warrant Shares to be covered by the part of this Warrant to be transferred to each such
person. Within three (3) Business Days of receiving a Transfer Notice and the original of this Warrant, the Company shall deliver to the each transferee designated by the Holder a Warrant or Warrants of like tenor and terms for the appropriate
number of Warrant Shares and, if less than all this Warrant is transferred, shall deliver to the Holder a Warrant for the remaining number of Warrant Shares. 
  

 -12- 

 9. Benefits of this Warrant. 
  
 This Warrant shall be for the sole and exclusive benefit of the Holder of this Warrant and nothing in this
Warrant shall be construed to confer upon any person other than the Holder of this Warrant any legal or equitable right, remedy or claim hereunder. 
  
 10. Loss, theft, destruction or mutilation of Warrant. 
  
 Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity reasonably satisfactory to the Company, and upon surrender of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. 
  
 11. Notice or Demands. 
  
 Any notice, demand or request required or permitted to be
given by the Company or the Holder pursuant to the terms of this Warrant shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business Day actually received if deposited in the
U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows: 
  
 If to the Company: 
  
 Microvision, Inc. 
 19910 North Creek Parkway

 Bothell, WA 98011 
 Attn:
General Counsel 
 Tel: (425) 415-6847 
 Fax: (425) 415-6795 
  
 with a copy to:

  
 Ropes & Gray LLP 
 One International Place 
 Boston, MA 02110

 Attn: Joel F. Freedman 
 Tel:
(617) 951-7000 
 Fax: (617) 951-7050 
  
 and if to the Holder, to such address as shall be designated by the Holder in writing to the Company. 
  

 -13- 

 12. Applicable Law. 
  
 This Warrant is issued under and shall for all purposes be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York. 
  
 13. Amendments. 
  
 No amendment, modification or other change to, or waiver of any provision of, this Warrant may be made unless such amendment, modification
or change is (A) set forth in writing and is signed by the Company and (B) agreed to in writing by the holders of Warrants exercisable for a majority of the number of shares into which the all of the then outstanding Warrants issued pursuant to the
Securities Purchase Agreement are exercisable (without regard to any limitation contained herein on such exercise), it being understood that upon the satisfaction of the conditions described in (A) and (B) above, each Warrant (including any Warrant
held by the Holder who did not execute the agreement specified in (B) above) shall be deemed to incorporate any amendment, modification, change or waiver effected thereby as of the effective date thereof. 
  
 14. Entire Agreement. 
  
 This Warrant, the Securities Purchase Agreement, the
Registration Rights Agreement, and the other Transaction Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Warrant, the Securities Purchase Agreement, the Registration Rights Agreement, and the other Transaction Documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof. 
  
 15. Headings. 
  
 The headings in
this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 
  
 [Signature Page to Follow] 
  

 -14- 

 IN WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as of the Issue Date.

  

			
	 MICROVISION, INC.

		
	By:	 	 /s/ Richard A. Raisig

	 	 	 Name: Richard A. Raisig
 Title: Chief Financial Officer

  
 EXHIBIT A to WARRANT

  
 EXERCISE NOTICE 
  
 The undersigned Holder hereby irrevocably exercises the right to purchase
                         of the shares of Common Stock (“Warrant Shares”) of
                                        
     evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant. 
  
 1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as: 
  
              a Cash Exercise with respect to
                             Warrant Shares; and/or 
  
              a Cashless Exercise with respect to
                             Warrant Shares, as permitted by Section 5(b) of the attached Warrant.

  
 2. Payment of Exercise Price. In the event that the Holder has
elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay the sum of
$                         to the Company in accordance with the terms of the Warrant. 
  
 Date:
                     
  

	
	
	  
	Name of Registered Holder

  

			
		
	By:	 	 
	 	 	 Name:
 Title:

  
 EXHIBIT B to WARRANT

  
 TRANSFER NOTICE 
  
 FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells, assigns and
transfers unto the person or persons named below the right to purchase                          shares of the
Common Stock of                          evidenced by the attached Warrant. 
  
 Date:
                         
  

	
	
	  
	Name of Registered Holder

  

			
		
	By:	 	 
	 	 	 Name:
 Title:

	
	Transferee Name and Address:
	
	______________________________________________________
	
	______________________________________________________
	
	______________________________________________________Securities Purchase Agreement

  
 Exhibit 10.1

  
 SECURITIES PURCHASE AGREEMENT 
  
 SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as
of August 31, 2005, by and between Microvision, Inc., a Delaware corporation (the “Company”), and each of the entities whose names appear on the signature pages hereof. Such entities are each referred to herein as an
“Investor” and, collectively, as the “Investors”. 
  
 A. The Company wishes to sell to each Investor, and each Investor wishes to purchase, on the terms and subject to the conditions set forth in this Agreement, (i) 285,714 shares (the “Shares”) of the
Company’s common stock, $.001 par value per share (the “Common Stock”), and (ii) a Warrant in the form attached hereto as Exhibit A (each, a “Warrant” and, collectively with the other Warrants issued
hereunder, the “Warrants”). The shares of Common Stock into which the Warrants are exercisable are referred to herein as the “Warrant Shares”, and the Shares, the Warrants and the Warrant Shares are collectively
referred to herein as the “Securities”. 
  
 B.
Each Warrant will entitle an Investor to purchase a number of Warrant Shares equal to (i) the number of Shares being purchased by such Investor pursuant to this Agreement times (ii) $5.25 times (iii) twenty-five percent (25%) divided by $5.8254,
will have an exercise price equal to $6.50 (subject to adjustment as provided therein), and will expire on the fifth (5th) anniversary of the Closing Date. 
  
 C. The Company has agreed to effect the registration of the Shares and the Warrant Shares for resale by the holders thereof under the Securities Act of
1933, as amended (the “Securities Act”), pursuant to a Registration Rights Agreement in the form attached hereto as Exhibit B (the “Registration Rights Agreement”). 
  
 D. The sale of the Shares and the Warrants by the Company to the Investors
will be effected in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“Regulation D”), as promulgated by the Commission (as defined below) under the Securities Act. 
  
 In consideration of the mutual promises made herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Investor hereby agree as follows: 
  
 1. PURCHASE AND SALE OF SHARES AND WARRANTS. 
  
 1.1 Closing of Purchase and Sale; Purchase Price. Upon the terms and subject to the satisfaction or waiver of the conditions set forth herein, the
Company agrees to sell and each Investor agrees to purchase (i) the number of Shares set forth below such Investor’s name on the signature pages hereof, and (ii) a Warrant. The date on which the closing of such purchase and sale occurs (the
“Closing”) is hereinafter referred to as the “Closing Date”. The Closing will be deemed to occur at the offices of Ropes & Gray, One International Place, Boston, MA 02110, when (A) this Agreement and 

 
the other Transaction Documents (as defined below) have been executed and delivered by the Company and, to the extent applicable, by each Investor, (B) each
of the conditions to the Closing described in Section 5 hereof has been satisfied or waived as specified therein and (C) full payment of each Investor’s Purchase Price (as defined below) has been made by such Investor to the Company by
wire transfer of immediately available funds against physical delivery by the Company of a duly executed certificates representing the Shares and Warrant being purchased by such Investor. 
  
 1.2 Certain Definitions. When used herein, the following terms shall have the respective meanings indicated:

  
 “Affiliate” means, as to any
Person (the “subject Person”), any other Person (a) that directly or indirectly through one or more intermediaries controls or is controlled by, or is under direct or indirect common control with, the subject Person, (b) that
directly or indirectly beneficially owns or holds ten percent (10%) or more of any class of voting equity of the subject Person, or (c) ten percent (10%) or more of the voting equity of which is directly or indirectly beneficially owned or held by
the subject Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, through representation on such Person’s board of directors or other management committee or group, by contract or otherwise. 
  
 “Board of Directors” means the Company’s board of directors. 
  
 “Business Day” means any day other than a
Saturday, a Sunday or a day on which the New York Stock Exchange is closed or on which banks in the City of New York are required or authorized by law to be closed. 
  
 “Closing” and “Closing Date” have the respective meanings set forth in
Section 1.1 hereof. 
  
 “Commission” means the Securities and Exchange Commission. 
  
 “Common Stock” has the meaning specified in the preamble to this Agreement. 
  
 “Debt” means, as to any Person at any time:
(a) all indebtedness, liabilities and obligations of such Person for borrowed money; (b) all indebtedness, liabilities and obligations of such Person to pay the deferred purchase price of Property or services (except trade accounts payable, accrued
compensation, accrued expenses, and unearned revenue and customer deposits of such Person that, in any such case, arise in the ordinary course of business and are not more than sixty (60) days past due); (c) all capital lease obligations of such
Person; (d) all indebtedness, liabilities and obligations of others guaranteed by such Person; (e) all indebtedness, liabilities and obligations secured by a Lien existing on Property owned by such Person, whether or not the indebtedness,
liabilities or obligations secured thereby have been assumed by such Person or are non-recourse to such Person; (f) all reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers’
acceptances, surety or other bonds and similar 

  

 2 

 
instruments; and (g) all indebtedness, liabilities and obligations of such Person to redeem or retire shares of capital stock of such Person. 
  
 “Disclosure Documents” means all SEC
Documents filed by the Company at least two (2) Business Days prior to the date of this Agreement via the Commission’s Electronic Data Gathering, Analysis and Retrieval system (EDGAR) in accordance with the requirements of Regulation S-T under
the Exchange Act. 
  
 “Effective
Date” has the meaning set forth in the Registration Rights Agreement. 
  
 “Environmental Law” means any federal, state, provincial, local or foreign law, statute, code or ordinance, principle of
common law, rule or regulation, as well as any Permit, order, decree, judgment or injunction issued, promulgated, approved or entered thereunder, relating to pollution or the protection, cleanup or restoration of the environment or natural
resources, or to the public health or safety, or otherwise governing the generation, use, handling, collection, treatment, storage, transportation, recovery, recycling, discharge or disposal of hazardous materials. 
  
 “ERISA” means the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

  
 “Execution Date” means the
date of this Agreement. 
  
 “Filed S-3
Effective Date” means the date on which the Company’s registration statement on Form S-3, as amended, File No.: 333-123902, is declared effective by the Commission. 
  
 “GAAP” means generally accepted accounting principles, applied on a consistent basis, as
set forth in (i) opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements of the Financial Accounting Standards Board and (iii) interpretations of the Commission and the staff of the
Commission. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

  
 “Governmental Authority”
means any nation or government, any state, provincial or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including without limitation
any stock exchange, securities market or self-regulatory organization. 
  
 “Governmental Requirement” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, license or other directive or requirement of 

  

 3 

 
any federal, state, county, municipal, parish, provincial or other Governmental Authority or any department, commission, board, court, agency or any other
instrumentality of any of them. 
  
 “Intellectual Property” means any U.S. or foreign patents, patent rights, patent applications, trademarks, trade names, service marks, brand names, logos and other trade designations (including unregistered names and
marks), trademark and service mark registrations and applications, copyrights and copyright registrations and applications, inventions, invention disclosures, protected formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar technical information, engineering know-how, customer and supplier information, assembly and test data drawings or royalty rights. 
  
 “Lien” means, with respect to any Property,
any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, tax lien, financing statement, pledge, charge, or other lien, charge, easement, encumbrance, preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to such Property (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing).

  
 “Market Price” means, as of
a particular date, the average of each daily VWAP for the ten (10) consecutive Trading Days occurring immediately prior to (but not including) such date. For the avoidance of doubt, the Market Price shall be determined by calculating the daily VWAP
for each of the ten (10) Trading Days immediately preceding the relevant date, adding together all of the daily VWAP’s for such ten (10) Trading Day period, and dividing such sum by ten (10). 
  
 “Material Adverse Effect” means an effect
that is material and adverse to (i) the consolidated business, properties, assets, operations, results of operations or financial condition of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its
obligations under this Agreement or the other Transaction Documents (as defined below) or (iii) the rights and benefits to which an Investor is entitled under this Agreement and the other Transaction Documents. 
  
 “Material Contracts” means, as to the
Company, any agreement required pursuant to Item 601 of Regulation S-B or Item 601 of Regulation S-K, as applicable, promulgated under the Securities Act to be filed as an exhibit to any report, schedule, registration statement or definitive proxy
statement filed or required to be filed by the Company with the Commission under the Exchange Act or any rule or regulation promulgated thereunder, and any and all amendments, modifications, supplements, renewals or restatements thereof. 

 
 “NASD” means the National Association of
Securities Dealers, Inc. 
  
 “Pension
Plan” means an employee benefit plan (as defined in ERISA) maintained by the Company for employees of the Company or any of its Affiliates. 
  

 4 

 “Permitted Liens” means the following: 
  
 (a) encumbrances consisting of easements, rights-of-way,
zoning restrictions or other restrictions on the use of Real Property or imperfections to title that do not (individually or in the aggregate) materially impair the ability of the Company to use such Property in its businesses, and none of which is
violated in any material respect by existing or proposed structures or land use; 
  
 (b) Liens for taxes, assessments or other governmental charges (including without limitation in connection with workers’ compensation
and unemployment insurance) that are not delinquent or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such Liens, and for which
adequate reserves (as determined in accordance with GAAP) have been established; and 
  
 (c) Liens of mechanics, materialmen, warehousemen, carriers, landlords or other similar statutory Liens securing obligations that are not
yet due and are incurred in the ordinary course of business or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such Liens, for
which adequate reserves (as determined in accordance with GAAP) have been established. 
  
 “Person” means any individual, corporation, trust, association, company, partnership, joint venture, limited liability
company, joint stock company, Governmental Authority or other entity. 
  
 “Principal Market” means the principal exchange or market on which the Common Stock is listed or traded. 
  
 “Property” means property and/or assets of all kinds, whether real, personal or mixed, tangible or intangible (including,
without limitation, all rights relating thereto). 
  
 “Pro Rata Share” means, with respect to an Investor, the ratio determined by dividing (i) the number of Shares purchased hereunder by such Investor by (ii) the aggregate number of Shares purchased hereunder by all of the
Investors. 
  
 “Purchase Price”
means, with respect to an Investor, the number of Shares purchased by such Investor at the Closing times $5.25. 
  
 “Real Property” has the meaning specified in Section 3.22 hereof. 
  
 “Registrable Securities” has the meaning
set forth in the Registration Rights Agreement. 
  
 “Rule 144” means Rule 144 under the Securities Act or any successor provision. 
  
 “SEC Documents” has the meaning specified in Section 3.4 hereof. 
  
 “Securities” has the meaning specified in
the preamble to this Agreement. 
  

 5 

 “Subsequent Placement” means the issuance, sale, exchange, or agreement
or obligation to issue, sell or exchange or reserve, or agreement to or set aside for issuance, sale or exchange, (i) any shares of Common Stock, (ii) any other equity security of the Company, including without limitation shares of preferred stock,
(iii) any other security of the Company which by its terms is convertible into or exchangeable or exercisable for any equity security of the Company, or (iv) any option, warrant or other right to subscribe for, purchase or otherwise acquire any such
security described in the foregoing clauses (i) through (iii). 
  
 “Subsidiary” means, with respect to the Company, any corporation or other entity (other than an entity having no material operations or business during the twelve month period immediately preceding
the Execution Date) of which at least a majority of the outstanding shares of stock or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors (or Persons performing similar
functions) of such corporation or entity (regardless of whether or not at the time, in the case of a corporation, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by the Company or one or more of its Affiliates. 
  
 “Termination Date” means the first date on which there are no Warrants outstanding. 
  
 “Trading Day” means any day on which the
Common Stock is purchased and sold on the Principal Market. 
  
 “Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement, the Warrants, and all other agreements, documents and other instruments executed and delivered by or on
behalf of the Company or any of its officers at the Closing. 
  
 “VWAP” on a Trading Day means the volume weighted average price of the Common Stock for such Trading Day on the Principal Market as reported by Bloomberg Financial Markets or, if Bloomberg Financial
Markets is not then reporting such prices, by a comparable reporting service of national reputation selected by the Investors and reasonably satisfactory to the Company. If the VWAP cannot be calculated for the Common Stock on such Trading Day on
any of the foregoing bases, then the Company shall submit such calculation to an independent investment banking firm of national reputation reasonably acceptable to the Investors, and shall cause such investment banking firm to perform such
determination and notify the Company and the Investors of the results of determination no later than two (2) Business Days from the time such calculation was submitted to it by the Company. All such determinations shall be appropriately adjusted for
any stock dividend, stock split or other similar transaction during such period. 
  
 1.3 Other Definitional Provisions. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. The words “hereof”, “herein” and
“hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. 
  

 6 

 2. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR. 
  
 Each Investor (with respect to itself only) hereby represents and warrants
to the Company and agrees with the Company that, as of the Execution Date and as of the Closing Date: 
  
 2.1 Authorization; Enforceability. Such Investor is duly and validly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization as set forth below such Investor’s name on the signature page hereof with the requisite corporate power and authority to purchase the Shares and Warrant to be purchased by it hereunder and to
execute and deliver this Agreement and the other Transaction Documents to which it is a party. This Agreement constitutes, and upon execution and delivery thereof, each other Transaction Document to which such Investor is a party will constitute,
such Investor’s valid and legally binding obligation, enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application
relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity. 
  
 2.2 Accredited Investor. Such Investor (i) is an “accredited investor” as that term is defined in Rule 501 of Regulation D, (ii) is
acquiring the Securities in the ordinary course of its business, solely for its own account, and not with a view to the public resale or distribution of all or any part thereof, except pursuant to sales that are registered under the Securities Act
or are exempt from the registration requirements of, the Securities Act and does not have any agreement or understanding with any person to distribute any of the Securities; provided, however, that, in making such representation, such
Investor does not agree to hold the Securities for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of the Securities at any time in accordance with the provisions of this Agreement and with Federal and
state securities laws applicable to such sale, transfer or disposition. 
  
 2.3 Information. The Company has, prior to the Execution Date, provided such Investor with information regarding the business, operations and financial condition of the Company and has, prior to the Execution Date, granted to such
Investor the opportunity to ask questions of and receive satisfactory answers from representatives of the Company, its officers, directors, employees and agents concerning the Company and materials relating to the terms and conditions of the
purchase and sale of the Securities hereunder, as such Investor deems relevant in making an informed decision with respect to its investment in the Securities. Such Investor is able to bear the economic risk of an investment in the Securities and,
at the present time, is able to afford a complete loss of such investment. Neither such information nor any other investigation conducted by such Investor or any of its representatives shall modify, amend or otherwise affect such Investor’s
right to rely on the Company’s representations and warranties contained in this Agreement. 
  
 2.4 Limitations on Disposition. Such Investor acknowledges that, except as provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the Securities Act and may not be transferred or resold without registration under the Securities Act or unless pursuant to an exemption therefrom. 
  

 7 

 2.5 Legend. Such Investor understands that the certificates representing the Securities may bear
at issuance a restrictive legend in substantially the following form: 
  
 “The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and may not be offered, transferred, pledged,
hypothecated, sold or otherwise disposed of unless a registration statement under the Securities Act and applicable state securities laws shall have become effective with regard thereto, or an exemption from registration under the Securities Act and
applicable state securities laws is available in connection with such offer or sale.” 
  
 Notwithstanding the foregoing, it is agreed that, as long as (A) the resale or transfer (including without limitation a pledge) of any of the Securities is registered pursuant to an effective registration statement
and the holder represents in writing to the Company that such Securities have been or will be sold pursuant to such registration statement, (B) such Securities have been sold pursuant to Rule 144, subject to receipt by the Company of customary
documentation in connection therewith, or (C) such Securities are eligible for resale under Rule 144(k) or any successor provision and the holder thereof represents in writing to the Company that it is eligible to use such rule for public resales of
such Securities, the certificates representing such Securities shall be issued without any legend or other restrictive language and, with respect to Securities upon which such legend is stamped, the Company shall issue new certificates without such
legend to the holder upon request. 
  
 2.6 Reliance on
Exemptions. Such Investor understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying upon the
truth and accuracy of the representations and warranties of such Investor set forth in this Section 2 in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Securities. 
  
 2.7 Non-Affiliate Status; Common Stock Ownership. Such Investor is not
an Affiliate of the Company or of any other Investor and is not acting in association or concert with any other Person in regard to its purchase of the Securities or otherwise in respect of the Company. Such Investor’s investment in the
Securities is not for the purpose of acquiring, directly or indirectly, control of, and it has no intent to acquire or exercise control of, the Company or to influence the decisions or policies of the Board of Directors. 
  
 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to each Investor that, except as expressly set forth on the disclosure schedules to this Agreement, as of the Execution Date and as of the Closing Date: 
  
 3.1 Organization, Good Standing and Qualification. The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization and has all requisite power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each
jurisdiction in which it conducts business except where the failure so to qualify has not had or would not reasonably be expected to have a Material Adverse Effect. The Company does not have any Subsidiaries. 
  
 3.2 Authorization; Consents. The Company has the requisite corporate
power and authority to enter into and perform its obligations under the Transaction Documents, including, without limitation, its obligations to issue and sell the Securities to the Investors in accordance with the terms 

  

 8 

 
hereof and thereof, and to issue the Warrant Shares upon exercise of the Warrants. All corporate action on the part of the Company by its officers, directors
and stockholders necessary for the authorization, execution and delivery of, and the performance by the Company of its obligations under, the Transaction Documents has been taken, and no further consent or authorization of the Company, its Board of
Directors, stockholders, any Governmental Authority or organization (other than such approval as may be required under the Securities Act and applicable state securities laws in respect of the Registration Rights Agreement), or any other person or
entity is required (pursuant to any rule of the NASD or otherwise). 
  
 3.3 Due Execution; Enforceability. This Agreement has been and, at or prior to the Closing, each other Transaction Document to be delivered at the Closing will be, duly executed and delivered by the Company. This Agreement
constitutes and, upon the execution and delivery thereof by the Company, each other Transaction Document will constitute the valid and legally binding obligation of the Company, enforceable against it in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity.

  
 3.4 Disclosure Documents; Agreements; Financial Statements;
Other Information. The Company is subject to the reporting requirements of the Exchange Act and has filed with the Commission all reports, schedules, registration statements and definitive proxy statements that the Company was required to file
with the Commission on or after December 31, 2004 (collectively, the “SEC Documents”). The Company is not aware of any event occurring or expected to occur on or prior to the Closing Date (other than the transactions effected hereby
and quarterly releases of financial results) that would require the filing of, or with respect to which the Company intends to file, a Form 8-K after the Closing. Each SEC Document, as of the date of the filing thereof with the Commission (or if
amended or superseded by a filing prior to the Execution Date, then on the date of such amending or superseding filing), complied in all material respects with the requirements of the Securities Act or Exchange Act, as applicable, and the rules and
regulations promulgated thereunder and, as of the date of such filing (or if amended or superseded by a filing prior to the Execution Date, then on the date of such filing), such SEC Document (including all exhibits and schedules thereto and
documents incorporated by reference therein) did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading. All documents required to be filed as exhibits to the SEC Documents have been filed as required. Except as set forth in the Disclosure Documents, the Company has no liabilities, contingent or otherwise, other than
liabilities incurred in the ordinary course of business which, under GAAP, are not required to be reflected in the financial statements included in the Disclosure Documents and which, individually or in the aggregate, are not material to the
business or financial condition of the Company. As of their respective dates, the financial statements of the Company included in the SEC Documents have been prepared in accordance with GAAP (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of
the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end adjustments). 
  

 9 

 3.5 Capitalization; Debt Schedule. The capitalization of the Company as of the date hereof,
including its authorized capital stock, the number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company’s stock option plans and agreements, the number of shares issuable and reserved
for issuance pursuant to securities (other than the Warrants) exercisable for, or convertible into or exchangeable for any shares of Common Stock and the number of shares initially to be reserved for issuance upon exercise of the Warrants, is set
forth on Schedule 3.5 hereto. All issued and outstanding shares of capital stock of the Company have been, or upon issuance will be, validly issued, fully paid and non-assessable. No shares of the capital stock of the Company were issued in
violation of preemptive rights or any other similar rights of security holders of the Company or any Liens created by or through the Company. Except as disclosed on Schedule 3.5 or as contemplated herein, there are no outstanding preemptive
rights, rights of first refusal, shareholder rights, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company, or arrangements by which the Company is or may become (as a result of the transactions contemplated hereby or the other Transaction Documents or otherwise) bound to issue additional shares of capital stock of
the Company (whether pursuant to anti-dilution, “reset” or other similar provisions). Except as described on Schedule 3.5 hereto, the Company has no material Debt outstanding as of the date hereof. Except as described on Schedule
3.5 hereto, the Company’s shares of the capital stock of Lumera Corporation are held by the Company free and clear of all Liens. 
  
 3.6 Due Authorization; Valid Issuance. The Shares and Warrants are duly authorized and, when issued, sold and delivered in accordance with the
terms hereof, (i) the Shares and Warrants will be duly and validly issued, and the Shares will be fully paid and nonassessable; in each case, free and clear of any Liens imposed by or through the Company, and (ii) assuming the accuracy of each
Investor’s representations in this Agreement, the Shares and Warrants will be issued, sold and delivered in compliance with all applicable Federal and state securities laws. The Warrant Shares are duly authorized and reserved for issuance and,
when issued in accordance with the terms of the Warrants, will be duly and validly issued, fully paid and nonassessable, free and clear of any Liens imposed by or through the Company and, assuming the accuracy of each Investor’s representations
in this Agreement at the time of exercise, will be issued, sold and delivered in compliance with all applicable Federal and state securities laws. 
  
 3.7 No Conflict with Other Instruments. The Company is not in violation of any provisions of its charter, bylaws or any other governing document or
in default (and no event has occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any instrument or contract to which it is a party or by which it or any of its Property is bound, or in violation
of any provision of any Governmental Requirement applicable to it, except for any violation or default under any such instrument or contract or any violation of any provision of a Governmental Requirement that, in either such case, has not had or
would not reasonably be expected to have a Material Adverse Effect (any such violation or default being referred to herein as a “Current Violation”). The (i) execution, delivery and performance of this Agreement and the other Transaction
Documents, and (ii) consummation of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Shares and the Warrants and the reservation for issuance and issuance of the Warrant Shares) will not result in
any violation of any provisions of the Company’s charter, Bylaws or any other 

  

 10 

 
governing document or in a default under any provision of any instrument or contract to which it is a party or by which it or any of its Property is bound,
or in violation of any provision of any Governmental Requirement applicable to the Company or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or
contract or an event which results in the creation of any Lien upon any assets of the Company. 
  
 3.8 Financial Condition; Taxes; Litigation. 
  
 3.8.1 The Company’s financial condition is, in all material respects, as described in the Disclosure Documents, except for changes in
the ordinary course of business and normal year-end adjustments that are not, in the aggregate, materially adverse to the business or financial condition of the Company. There has been no (i) material adverse change to the Company’s business,
operations, properties, financial condition, or results of operations since the date of the Company’s most recent audited financial statements contained in the Disclosure Documents or (ii) change by the Company in its accounting principles,
policies and methods except as required by changes in GAAP or applicable law. 
  
 3.8.2 The Company (i) has prepared in good faith and duly and timely filed all tax returns required to be filed by it and such returns are complete and accurate in all material respects and (ii) has paid all taxes
required to have been paid by it, except for taxes which it reasonably disputes in good faith or the failure of which to pay has not had or would not reasonably be expected to have a Material Adverse Effect, and has no liability with respect to
accrued taxes in excess of the amounts that are described as accrued in the most recent financial statements included in the Disclosure Documents. 
  
 3.8.3 Except as described in Schedule 3.8.3, the Company is not the subject of any pending or, to the Company’s knowledge,
threatened inquiry, investigation or administrative or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction (other than with respect to taxes which it reasonably disputes in good faith or the
failure of which to pay has not had or would not reasonably be expected to have a Material Adverse Effect), the Commission, the NASD, any state securities commission or other Governmental Authority. 
  
 3.8.4 Except as described in Schedule 3.8.4, there is
no material claim, litigation or administrative proceeding pending or, to the Company’s knowledge, threatened or contemplated, against the Company or, to the Company’s knowledge, against any officer, director or employee of the Company in
connection with such person’s employment therewith. The Company is not a party to or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or Governmental Authority which has had or would reasonably be
expected to have a Material Adverse Effect. 
  
 3.9 Form
S-3. The Company is eligible to register the Registrable Securities for resale by each Investor on a registration statement on Form S-3 under the Securities Act. To the Company’s knowledge, there exist no facts or circumstances (including
without limitation any required approvals or waivers of any circumstances that may delay or prevent the obtaining of accountant’s consents) that could reasonably be expected to prohibit or delay the preparation, filing or effectiveness of such
registration statement. 
  

 11 

 3.10 Acknowledgement of Dilution. The Company acknowledges that the issuance of Warrant Shares
upon exercise of the Warrants may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligation to issue Warrant Shares upon
exercise of the Warrants in accordance with the terms of the Warrants, is unconditional (other than with respect to the conditions set forth in the Warrants) regardless of the effect of any such dilution. 
  
 3.11 Intellectual Property. Except as set forth in Schedule
3.11: 
  
 (a) The Company owns, free and
clear of claims or rights or any other Person, with full right to use, sell, license, sublicense, dispose of, and bring actions for infringement of, or, to the knowledge of the Company, has acquired licenses or other rights to use, all Intellectual
Property necessary for the conduct of its business as presently conducted (other than with respect to software which is generally commercially available and not used or incorporated into the Company’s products and open source software which may
be subject to one or more “general public” licenses). All works that are used or incorporated into the Company’s services, products or services or products actively under development and which is proprietary to the Company was
developed by or for the Company by the current or former employees, consultants or independent contractors of the Company or its predecessors in interest or purchased or licensed by the Company or its predecessors in interest. 
  
 (b) The business of the Company as presently conducted and
the production, marketing, licensing, use and servicing of any products or services of the Company do not, to the knowledge of the Company, infringe or conflict with any patent, trademark, copyright, or trade secret rights of any third parties or
any other Intellectual Property of any third parties in any material respect. The Company has not received written notice from any third party asserting that any Intellectual Property owned or licensed by the Company, or which the Company otherwise
has the right to use, is invalid or unenforceable by the Company and, to the Company’s knowledge, there is no valid basis for any such claim (whether or not pending or threatened). 
  
 (c) No claim is pending or, to the Company’s knowledge, threatened against the Company nor has the
Company received any written notice or other written claim from any Person asserting that any of the Company’s present or contemplated activities infringe or may infringe in any material respect any Intellectual Property of such Person and the
Company is not aware of any infringement by any other Person of any material rights of the Company under any Intellectual Property Rights. 
  
 (d) All licenses or other agreements under which the Company is granted Intellectual Property (excluding licenses to use software utilized
in the Company’s internal operations and which is generally commercially available) are in full force and effect and, to the Company’s knowledge, there is no material default by any party thereto. The Company has no reason to believe that
the licensors under such licenses and other agreements do not have and did not have all requisite power and authority to grant the rights to the Intellectual Property purported to be granted thereby. 
  
 (e) All licenses or other agreements under which the Company
has granted rights to Intellectual Property to others (including all end-user agreements) since January 1, 2003, are in full force and effect, unless otherwise terminated in accordance with the terms of such licenses or 

  

 12 

 
arrangements, there has been no material default by the Company thereunder and, to the Company’s knowledge, there is no material default by any other
party thereto. 
  
 (f) The Company has taken all
steps required in accordance with commercially reasonable business practice to establish and preserve its ownership in its owned Intellectual Property and to keep confidential all material technical information developed by or belonging to the
Company which has not been patented or copyrighted. To the Company’s knowledge, the Company is not making any material unlawful use of any Intellectual Property of any other Person, including, without limitation, any former employer of any past
or present employees of the Company. To the Company’s knowledge, neither the Company nor any of its employees has any agreements or arrangements with former employers of such employees relating to any Intellectual Property of such employers,
which materially interfere or conflict with the performance of such employee’s duties for the Company or result in any former employers of such employees having any rights in, or claims on, the Company’s Intellectual Property. Except as
set forth on Schedule 3.11(f)(i), each current and former employee of the Company has executed agreements regarding confidentiality, proprietary information and assignment of inventions and copyrights to the Company, each independent
contractor or consultant of the Company has executed agreements regarding confidentiality and proprietary information, and the Company has not received written notice that any employee, consultant or independent contractor is in violation of any
agreement or in breach of any agreement or arrangement with former or present employers relating to proprietary information or assignment of inventions. Without limiting the foregoing: (i) the Company has taken reasonable security measures to guard
against unauthorized disclosure or use of any of its Intellectual Property; and (ii) the Company has no reason to believe that any Person (including, without limitation, any former employee or consultant of the Company) has unauthorized possession
of any of its Intellectual Property, or any part thereof, or that any Person has obtained unauthorized access to any of its Intellectual Property. The Company is in compliance in all material respects with its obligations pursuant to all agreements
relating to Intellectual Property rights that are the subject of licenses granted by third parties, except for any non-compliance that has not had or would not reasonably be expected to have a Material Adverse Effect. 
  
 3.12 Registration Rights; Rights of Participation. Except as described
on Schedule 3.12 hereto, the Company has not granted or agreed to grant to any person or entity any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any
other governmental authority which has not been satisfied in full prior or waived to the date hereof. 
  
 3.13 Fees. Except as contemplated by Section 6.11 hereof and as set forth on Schedule 3.13 or disclosed in writing to the Investor by the
Company, the Company is not obligated to pay any compensation or other fee, cost or related expenditure to any underwriter, broker, agent or other representative in connection with the transactions contemplated hereby. The Company will indemnify and
hold harmless each Investor from and against any claim by any person or entity alleging that, as a result of any agreement or arrangement between such Person and the Company, such Investor is obligated to pay any such compensation, fee, cost or
related expenditure in connection with the transactions contemplated hereby or the other Transaction Documents. 
  
 3.14 Solicitation; Other Issuances of Securities. Neither the Company nor any of its Subsidiaries or Affiliates, nor any person acting on its or
their behalf, (i) has engaged in any form of 

  

 13 

 
general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities, or (ii) has,
directly or indirectly, made any offers or sales of any security or the right to purchase any security, or solicited any offers to buy any security or any such right, under circumstances that would require registration of the Securities under the
Securities Act. 
  
 3.15 Foreign Corrupt Practices. Neither
the Company, nor to the Company’s knowledge any director, officer, agent, employee or other person acting on behalf of the Company, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee (including without limitation any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment), or (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended. 
  
 3.16 Key Employees. Each of the Company’s executive officers (as defined in Rule 501(f) of the Securities Act) (each, a “Key
Employee”) is currently serving in the capacity described in the Disclosure Documents. The Company has no knowledge of any fact or circumstance (including without limitation (i) the terms of any agreement to which such person is a party or
any litigation in which such person is or may become involved and (ii) any illness or medical condition that could reasonably be expected to result in the disability or incapacity of such person) that would limit or prevent any such person from
serving in such capacity on a full-time basis in the foreseeable future, or of any intention on the part of any such person to limit or terminate his or her employment with the Company. 
  
 3.17 Employee Matters. There is no strike, labor dispute or union organization activities pending or, to the
knowledge of the Company, threatened between it and its employees. No employees of the Company belong to any union or collective bargaining unit. The Company has complied in all material respects with all applicable federal and state equal
opportunity and other laws related to employment. 
  
 3.18
Environment. To the Company’s knowledge, the Company does not have any current liability under any Environmental Law, nor, to the knowledge of the Company, do any factors exist that are reasonably likely to give rise to any such
liability that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect. To the Company’s knowledge, the Company has not violated any Environmental Law applicable to it now or previously in
effect, other than such violations or infringements that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. 
  
 3.19 ERISA. Except as described on Schedule 3.19, the Company does not maintain or contribute to, or have any
obligation under, any Pension Plan. The Company is in compliance in all material respects with the presently applicable provisions of ERISA and the United States Internal Revenue Code of 1986, as amended, with respect to each Pension Plan except in
any such case for any such matters that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Material Adverse Effect. 
  
 3.20 Insurance. The Company maintains insurance in such amounts and covering such losses and risks as the Company
believes to be reasonably prudent in relation to the businesses in which the Company is engaged. No notice of cancellation has been received for any of such policies 

  

 14 

 
and the Company reasonably believes that is in compliance with all of the terms and conditions thereof. The Company has no reason to believe that it will not
be able to renew any existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue doing business as currently conducted without a significant increase in cost,
other than normal increases in the industry. Without limiting the generality of the foregoing, the Company maintains Director’s and Officer’s insurance in an amount deemed to be reasonable and appropriate by the Company’s Board of
Directors. 
  
 3.21 Property. The Company does not own any
real property. The Company has good and marketable title to all personal Property owned by it which, in each such case free and clear of all Liens except for Permitted Liens and except for such Liens which, individually and together with all other
Liens (including without limitation Permitted Liens) do not have, and cannot reasonably be expected to have, a Material Adverse Effect. Any Property held under lease by the Company is held by it under valid, subsisting and enforceable leases with
such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such Property by the Company. 
  
 3.22 Regulatory Permits. The Company possesses all material certificates, authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct its businesses other than where the failure to possess such certificates, authorizations or permits, individually or in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect. The Company has not received any notice or otherwise become aware of any proceedings, inquiries or investigations relating to the revocation or modification of any such certificate, authorization or permit. 
  
 3.23 Exchange Act Registration; Listing. The Company files
supplementary and periodic information, documents, and reports pursuant to Section 15(d) of the Exchange Act. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq National Market.
The Company currently meets the continuing eligibility requirements for listing on the Nasdaq National Market and has not received any notice from such market or the NASD that it does not currently satisfy such requirements or that such continued
listing is in any way threatened. The Company has taken no action designed to, or which, to the knowledge of the Company, would reasonably be expected to have the effect of, terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq National Market. 
  
 3.24 Investment Company Status. The Company is not, and immediately after receipt of payment for the Shares and the Warrants issued under this Agreement will not be, an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and shall conduct its business in a manner so that it
will not become subject to the Investment Company Act. 
  
 3.25
Transfer Taxes. No stock transfer or other taxes (other than income taxes) are required to be paid in connection with the issuance and sale of any of the Securities, other than such taxes for which the Company has established appropriate
reserves and intends to pay in full on or before the Closing. 
  

 15 

 3.26 Sarbanes-Oxley Act; Internal Controls and Procedures. The Company is in material compliance
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof. The Company maintains internal accounting
controls, policies and procedures, and such books and records as are reasonably designed to provide reasonable assurance that (i) all transactions to which the Company is a party or by which its properties are bound are effected by a duly authorized
employee or agent of the Company, supervised by and acting within the scope of the authority granted by the Company’s senior management; (ii) the recorded accounting of the Company’s consolidated assets is compared with existing assets at
regular intervals; and (iii) all transactions to which the Company is a party, or by which its properties are bound, are recorded (and such records maintained) in accordance with all Governmental Requirements and as may be necessary or appropriate
to ensure that the financial statements of the Company are prepared in accordance with GAAP. 
  
 3.27 Embargoed Person. None of the funds or other assets of the Company shall constitute property of, or shall be beneficially owned, directly or indirectly, by any person subject to trade restrictions under
United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated under any such United States laws (each, an “Embargoed Person”), with the result that the investments evidenced by the Securities are or would be in violation of law. No Embargoed Person shall have any interest of any
nature whatsoever in the Company with the result that the investments evidenced by the Securities are or would be in violation of law. None of the funds or other assets of the Company shall be derived from any unlawful activity with the result that
the investments evidenced by the Securities are or would be in violation of law. 
  
 3.28 Solvency. As of the Execution Date and as of the Closing Date, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the
Company’s existing Debt as such Debt matures or is otherwise payable; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be
conducted taking into account the current and projected capital requirements of the business conducted by the Company and projected capital availability; and (iii) the current cash flow of the Company, together with the proceeds the Company would
receive upon liquidation of its assets, after taking into account all anticipated uses of such amounts, would be sufficient to pay all Debt when such Debt is required to be paid. The Company has no knowledge of any facts or circumstances which lead
it to believe that it will be required to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction, and has no present intention to so file. 
  
 3.29 Transactions with Interested Persons. Except as set forth in Schedule 3.29, no officer, director or
employee of the Company is or has made any arrangements with the Company to become a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any 

  

 16 

 
entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 
  
 3.30 Customers and Suppliers. The relationships of the Company with
its customers and suppliers are maintained on commercially reasonable terms. Except as set forth on Schedule 3.30 hereto, to the Company’s knowledge, no customer or supplier of the Company has any plan or intention to terminate its
agreement with the Company, which termination would reasonably be expected to have a Material Adverse Effect. 
  
 3.31 Full Disclosure. The representations, warranties and written statements contained in this Agreement and the other Transaction Documents and in
the certificates, exhibits and schedules delivered to such Investor by the Company pursuant to this Agreement and the other Transaction Documents and in connection with such Investor’s due diligence investigation of the Company, do not contain
any untrue statement of a material fact, and do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances under which
they were made. Neither the Company nor any Person acting on its behalf or at its direction has provided such Investor with material non-public information. Following the issuance of the press release in accordance with Section 4.1(c) hereof, to the
Company’s knowledge, such Investor will not possess any material non-public information concerning the Company. The Company acknowledges that such Investor is relying on the representations, acknowledgments and agreements made by the Company in
this Section 3.31 and elsewhere in this Agreement in making trading and other decisions concerning the Company’s securities. 
  
 3.32 No Other Agreements. The Company has not, directly or indirectly, entered into any agreement with or granted any right to any Investor
relating to the terms or conditions of the transactions contemplated by the Transaction Documents, except as expressly set forth in the Transaction Documents. 
  

4. COVENANTS OF THE COMPANY AND EACH INVESTOR. 
  
 4.1 The Company agrees with each Investor that the Company will: 
  

(a) file a Form D with respect to the Securities issued at the Closing as and when required under Regulation D and provide a copy
thereof to such Investor promptly after such filing; 
  
 (b) take such action as the Company reasonably determines upon the advice of counsel is necessary to qualify the Shares and Warrants for sale under applicable state or “blue-sky” laws or obtain an exemption therefrom, and shall
promptly provide evidence of any such action to such Investor at such Investor’s request; and 
  
 (c) (i) on or prior to 8:30 a.m. (eastern time) on the Business Day immediately following the Execution Date, issue a press release
disclosing the material terms of this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, and (ii) on or prior to 5:00 p.m. (eastern time) on the second Business Day following the Execution Date, file
with the Commission a Current Report on Form 8-K disclosing the material terms 

  

 17 

 
of this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, including as exhibits this Agreement and the
other Transaction Documents; provided, however, that each Investor shall have a reasonable opportunity to review and comment on any such press release or Form 8-K prior to the issuance or filing thereof. Thereafter, the Company shall timely
file any filings and notices required by the Commission or applicable law with respect to the transactions contemplated hereby. 
  
 4.2 The Company agrees that it will, during the period beginning on the Execution Date and ending on the Termination Date: 
  
 (a) maintain its corporate existence in good standing;

  
 (b) maintain, keep and preserve all of its
Properties necessary in the proper conduct of its businesses in good repair, working order and condition (ordinary wear and tear excepted) and make all necessary repairs, renewals and replacements and improvements thereto, except where the failure
to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; 
  
 (c) pay or discharge before becoming delinquent (a) all taxes, levies, assessments and governmental charges imposed on it or its income or
profits or any of its Property and (b) all lawful claims for labor, material and supplies, which, if unpaid, might become a Lien upon any of its Property, except where the failure to do so would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; provided, however, that the Company shall not be required to pay or discharge any tax, levy, assessment or governmental charge, or claim for labor, material or supplies, whose amount,
applicability or validity is being contested in good faith by appropriate proceedings being diligently pursued and for which appropriate reserves have been established under GAAP; 
  
 (d) comply with all Governmental Requirements applicable to the operation of its business, except for
instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; 
  
 (e) comply with all agreements, documents and instruments binding on it or affecting its Properties or business, including, without
limitation, all Material Contracts, except for instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; 
  
 (f) provide each Investor with copies of all materials sent to its stockholders, in each such case at the
same time as delivered to such stockholders; 
  
 (g) timely file with the Commission all reports required to be filed pursuant to the Exchange Act and refrain from terminating its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the
rules or regulations thereunder would permit such termination; 
  
 (h) until the earlier of (A) Effective Date of the Registration Statement and (B) the six (6) month anniversary of the Closing Date, take commercially reasonable steps to restrict 

  

 18 

 
each of the Company’s Chief Executive Officer, President and Chief Financial Officer (each, a “Specified Employee”) from selling shares
of Common Stock, other than (i) in connection with any 10b-5(1) trading plans in effect as of the Execution Date and disclosed to each Investor in writing and (ii) with respect to each Specified Employee, unless and until the VWAP for 10 consecutive
Trading Days exceeds 140% of the Market Price on the Closing Date (the “Specified Employee Threshold”), up to 15% of the shares of Common Stock and vested options held on the date hereof by such Specified Employee; provided,
that in the event the Specified Employee Threshold occurs, the restriction contained in this section shall terminate, and each Specified Employee shall be free to sell any Common Stock held by such Specified Employee; and 
  
 (i) use commercially reasonable efforts to maintain adequate
insurance coverage (including D&O insurance) for the Company and each Subsidiary. 
  
 4.3 Reservation of Common Stock. The Company shall, on the Closing Date, have authorized and reserved for issuance to the Investors free from any preemptive rights, and shall keep available at all times during
which any Warrants are outstanding, a number of shares of Common Stock (the “Reserved Amount”) that, on the Closing Date, is not less than one hundred percent (100%) of the number of Warrant Shares issuable upon exercise of all of
the Warrants issued at the Closing, without regard to any limitation or restriction on such conversion or exercise that may be set forth in the Warrants. The Reserved Amount shall be allocated in accordance with each Investor’s Pro Rata Share.
In the event that an Investor shall sell or otherwise transfer any of such Investor’s Warrants, each transferee shall be allocated a pro rata portion of such transferor’s Reserved Amount. Any portion of the Reserved Amount allocated
to any Investor or other Person which no longer holds any Warrants shall be reallocated to the remaining Investors pro rata based on the number of Registrable Securities held by such Investors at such time. In the event that the Reserved
Amount is insufficient at any time to cover one hundred percent 100% of the Registrable Securities issuable upon the exercise of the Warrants (without regard to any restriction on such conversion or exercise), the Company shall take such action
(including without limitation holding a meeting of its stockholders) to increase the Reserved Amount to cover 100% of the Registrable Securities issuable upon such conversion and exercise, such increase to be effective not later than the thirtieth
(30th) day (or sixtieth (60th) day, in the event stockholder approval is required for such increase) following the Company’s receipt of written notice of such deficiency. While any Warrants are outstanding, the Company shall not reduce the
Reserved Amount without obtaining the prior written consent of each Investor then holding Warrants. 
  
 4.4 Use of Proceeds. The Company shall use the proceeds from the sale of the Shares and Warrants for general business purposes; provided,
that the Company shall not use any of such proceeds (i) to pay any dividend or make any distribution on any of its securities, or (ii) to repay any loan made to or incurred by any Key Employee or any other officer or director or Affiliate of the
Company. 
  
 4.5 Use of Investor Name. Except as may be
required by applicable law and/or this Agreement, the Company shall not use, directly or indirectly, any Investor’s name or the name of any of its Affiliates in any advertisement, announcement, press release or other similar communication
unless it has received the prior written consent of any Investor for the specific use contemplated or as otherwise required by applicable law or regulation. 
  
 4.6 Company’s Instructions to Transfer Agent. As soon as practicable following the Closing Date (but in no event later than five Business Days
after the Closing Date), the Company shall 

  

 19 

 
execute and deliver irrevocable written instructions to the transfer agent for its Common Stock (the “Transfer Agent”), and provide each
Investor with a copy thereof, directing the Transfer Agent (i) to issue certificates representing Warrant Shares upon exercise of the Warrants and (ii) to deliver such certificates to such Investor no later than the close of business on the third
(3rd) Business Day following the related Exercise Date (as defined in the Warrants). Such certificates may bear legends pursuant to applicable provisions of this Agreement or applicable law. The Company shall instruct the transfer agent that, in
lieu of delivering physical certificates representing shares of Common Stock to an Investor upon exercise of the Warrants, and as long as the Transfer Agent is a participant in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer program, and such Investor has not informed the Company that it wishes to receive physical certificates therefor, and no legend is required to appear on any physical certificate if issued, the transfer agent shall effect delivery
of Warrant Shares by crediting the account of such Investor or its nominee at DTC for the number of shares for which delivery is required hereunder within the time frame specified above for delivery of certificates. The Company represents to and
agrees with each Investor that it will not give any instruction to the Transfer Agent that will conflict with the foregoing instruction or otherwise restrict such Investor’s right to exercise the Warrant or to receive Warrant Shares upon
exercise of the Warrants. In the event that the Company’s relationship with the Transfer Agent should be terminated for any reason, the Company shall use its best efforts to cause the Transfer Agent to continue acting as transfer agent pursuant
to the terms hereof until such time that a successor transfer agent is appointed by the Company and receives the instructions described above. 
  
 4.7 Limitations on Disposition. No Investor shall sell, transfer, assign or dispose of any Securities, unless: 
  
 (a) there is then in effect an effective registration
statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or 
  
 (b) such Investor has notified the Company in writing of any such disposition, and furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require registration of such Securities under the Securities Act; provided, however, that no such opinion of counsel will be required (A) if the sale, transfer or
assignment complies with federal and state securities laws and is made to a fund or other institutional investor that is an Affiliate of such Investor and which is also an “accredited investor” as that term is defined in Rule 501 of
Regulation D; provided, that such Affiliate provides the Company with customary accredited investor and investment representations (comparable with those set forth in Section 2.2 hereof), and agrees to be bound by the terms and conditions of
this Agreement, (B) if the sale, transfer or assignment is made pursuant to Rule 144 and such Investor provides the Company with evidence reasonably satisfactory to the Company that the proposed transaction satisfies the requirements of Rule 144 or
(C) in connection with a bona fide pledge or hypothecation of any Securities under a margin arrangement with a broker-dealer or other financial institution or the sale of any such Securities by such broker-dealer or other financial
institution following such Investor’s default under such margin arrangement. 
  
 4.8 Disclosure of Non-public Information. The Company agrees that it will not at any time following the Execution Date disclose material non-public information to any Investor without first 

  

 20 

 
obtaining such Investor’s written consent to such disclosure, except to the extent required by any Transaction Documents. 
  
 4.9 Listing. The Company (i) has, or promptly following the Closing
shall, use its best efforts to include all of the Warrant Shares issuable upon exercise of the Warrants (without regard to any limitation on such exercise) for listing on the Nasdaq National Market, and (ii) shall use its best efforts to maintain
the designation and quotation, or listing, of the Common Stock on the Nasdaq National Market, the Nasdaq Small Cap Market or the New York Stock Exchange for a minimum of five (5) years following the Closing Date. 
  
 4.10 Indemnification of Investors. The Company will indemnify and hold
each Investor and its directors, managers, officers, shareholders, members, partners, employees and agents (each, an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs
and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Investor Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against an Investor, or any of them or their respective Affiliates, by any stockholder
of the Company who is not an Affiliate of such Investor, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Investor’s representation, warranties or covenants
under the Transaction Documents or any agreements or understandings such Investor may have with any such stockholder or any violations by such Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud,
gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Investor Party in respect of which indemnity may be sought pursuant to this Agreement, such Investor Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel of its own choosing. Any Investor Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Investor Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
following such Investor Party’s written request that it do so, to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between
the position of the Company and the position of such Investor Party. The Company will not be liable to any Investor Party under this Agreement (i) for any settlement by an Investor Party effected without the Company’s prior written consent,
which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to such Investor Party’s wrongful actions or omissions, or gross negligence or to such
Investor Party’s breach of any of the representations, warranties, covenants or agreements made by such Investor in this Agreement or in the other Transaction Documents. 
  
 4.11 Restriction on Issuances. During the period beginning on the Execution Date and ending on the Filed S-3
Effective Date, the Company will not, directly or indirectly, effect a Subsequent Placement. 
  

 21 

 5. CONDITIONS TO CLOSING. 
  
 5.1 Conditions to Investors’ Obligations at the Closing. Each Investor’s obligations to effect the Closing,
including without limitation its obligation to purchase Shares and Warrant at the Closing, are conditioned upon the fulfillment (or waiver by such Investor in its sole and absolute discretion) of each of the following events as of the Closing Date,
and the Company shall use commercially reasonable efforts to cause each of such conditions to be satisfied: 
  

	 	5.1.1	the representations and warranties of the Company set forth in this Agreement and in the other Transaction Documents shall be true and correct in all material respects as of such
date as if made on such date (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all material respects as of that particular date);

  

	 	5.1.2	the Company shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be
complied with or performed by the Company on or before the Closing; 

  

	 	5.1.3	the Closing Date shall occur on a date that is not later than September 2, 2005; 

  

	 	5.1.4	the Company shall have delivered to such Investor a certificate, signed by the Chief Executive Officer and Chief Financial Officer of the Company, certifying that the conditions
specified in this Section 5.1.1, 5.1.2, 5.1.10, 5.1.11, 5.1.12 and 5.1.13 have been fulfilled as of the Closing, it being understood that such Investor may rely on such certificate as though it were a representation and warranty of the
Company made herein; 

  

	 	5.1.5	the Company shall have delivered to such Investor an opinion of counsel for the Company, dated as of the Closing Date, in form and substance satisfactory to such Investor;

  

	 	5.1.6	the Company shall have delivered to such Investor duly executed certificates representing the Shares and the Warrants being purchased by such Investor; 

  

	 	5.1.7	the Company shall have executed and delivered to the Investor the Registration Rights Agreement; 

  

	 	5.1.8	 the Company shall have delivered to such Investor a certificate, signed by the Secretary or an Assistant Secretary of the Company, attaching (i) the charter and
By-Laws of the Company, and (ii) resolutions passed by its Board of Directors to authorize the transactions contemplated hereby and by the other Transaction Documents, and certifying that such documents are true and complete copies of the originals
and that such 

  

 22 

	 	 
resolutions have not been amended or superseded, it being understood that such Investor may rely on such certificate as a representation and warranty of the
Company made herein; 

  

	 	5.1.9	the Company shall have obtained the written agreement of each Key Employee to refrain from selling shares of Common Stock for the period specified in, and in accordance with,
Section 4.2(h) hereof; 

  

	 	5.1.10	there shall have occurred no material adverse change in the Company’s consolidated business or financial condition since the date of the Company’s most recent financial
statements contained in the Disclosure Documents; 

  

	 	5.1.11	the Common Stock shall be listed on the Nasdaq National Market 

  

	 	5.1.12	the Company shall have authorized and reserved for issuance the aggregate number of shares of Common Stock issuable upon exercise of all of the Warrants to be issued at the Closing
(such number to be determined without regard to any restriction on such exercise); and 

  

	 	5.1.13	there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that restrains or prohibits
the consummation of the transactions contemplated hereby and by the other Transaction Documents. 

  
 5.2 Conditions to Company’s Obligations at the Closing. The Company’s obligations to effect the Closing with each Investor are
conditioned upon the fulfillment (or waiver by the Company in its sole and absolute discretion) of each of the following events as of the Closing Date: 
  

	 	5.2.1	the representations and warranties of such Investor set forth in this Agreement and in the other Transaction Documents shall be true and correct in all material respects as of such
date as if made on such date (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all material respects as of that date);

  

	 	5.2.2	such Investor shall have complied with or performed all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed
by such Investor on or before the Closing; 

  

	 	5.2.3	 there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the 

  

 23 

	 	 
transactions contemplated hereby and by the other Transaction Documents; 

  

	 	5.2.4	such Investor shall have executed each Transaction Document to which it is a party and shall have delivered the same to the Company; and 

  

	 	5.2.5	such Investor shall have tendered to the Company the Purchase Price for the Shares and the Warrant being purchased by it at the Closing by wire transfer of immediately available
funds. 

  
 6. MISCELLANEOUS. 
  
 6.1 Survival; Severability. The representations, warranties, covenants
and indemnities made by the parties herein and in the other Transaction Documents shall survive the Closing notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely thereon. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that in such case the parties shall
negotiate in good faith to replace such provision with a new provision which is not illegal, unenforceable or void, as long as such new provision does not materially change the economic benefits of this Agreement to the parties. 
  
 6.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. After the Closing, the Investors may assign their respective rights and
obligations hereunder, in connection with any private sale or transfer of the Shares or Warrants in accordance with the terms hereof, as long as, as a condition precedent to such transfer, the transferee executes an acknowledgment agreeing to be
bound by the applicable provisions of this Agreement, in which case the term “Investor” shall be deemed to refer to such transferee as though such transferee were an original signatory hereto. The Company may not assign its rights or
obligations under this Agreement. 
  
 6.3 No Reliance. Each
party acknowledges that (i) it has such knowledge in business and financial matters as to be fully capable of evaluating this Agreement, the other Transaction Documents, and the transactions contemplated hereby and thereby, (ii) it is not relying on
any advice or representation or warranty of any other party in connection with entering into this Agreement, the other Transaction Documents, or such transactions (other than the representations and warranties made in this Agreement or the other
Transaction Documents), (iii) it has not received from any party any assurance or guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this Agreement or the other Transaction Documents or the
performance of its obligations hereunder and thereunder, and (iv) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and has entered into this
Agreement and the other Transaction Documents based on its own independent judgment and on the advice of its advisors as it has deemed necessary, and not on any view (whether written or oral) expressed by any party. 
  

 24 

 6.4 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor
hereunder are several and not joint with the obligations of the other Investors hereunder, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor hereunder. The Company acknowledges and agrees
that nothing contained herein or in any other agreement or document delivered at Closing, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture
or any other kind of entity, or a “group” as described in Section 13(d) of the Exchange Act, or create a presumption that the Investors are in any way acting in concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Investor has been represented by its own separate counsel in connection with the transactions contemplated hereby, shall be entitled to protect and enforce its rights, including without limitation rights arising out of this
Agreement or the other Transaction Documents, individually, and shall not be required to be join any other Investor as an additional party in any proceeding for such purpose. 
  
 6.5 Injunctive Relief. The parties hereto acknowledge and agree that a breach by either of their obligations
hereunder will cause irreparable harm the other party and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the event of any such breach, in addition to all other available remedies, the non-breaching party
shall be entitled to an injunction restraining any breach and requiring immediate and specific performance of such obligations 
  
 6.6 Investors’ Trading Activity. The Company acknowledges that, following the Closing and the press release described in paragraph 4.1 above,
each Investor shall have the right to purchase or sell, long or short, Common Stock and instruments or contracts whose value is derived from the market value of the Common Stock, and that sales of or certain derivative transactions relating to the
Common Stock may have a negative impact on the market price of the Common Stock. 
  
 6.7 Governing Law; Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City and County of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby and hereby irrevocably waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in
an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. 
  
 6.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Agreement may be executed and
delivered by facsimile transmission. 
  

 25 

 6.9 Headings. The headings used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. 
  
 6.10
Notices. Any notice, demand or request required or permitted to be given by the Company or the Investor pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to an overnight
courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows: 
  
 If to the Company: 
  
 Microvision, Inc. 
 19910 North Creek Parkway

 Bothell, WA 98011 
 Attn:    General Counsel 
 Tel:       (425) 415-6847 
 Fax:       (425) 415-6795 
  
 with a copy to: 
  
 Ropes & Gray LLP 
 One International Place

 Boston, MA 02110 
 Attn:     Joel F. Freedman 
 Tel:       (617) 951-7000 
 Fax:       (617) 951-7050 
  
 and if to any Investor, to such address for such Investor as shall appear on the signature page hereof executed by such Investor, or as shall be designated by such
Investor in writing to the Company in accordance with this Section 6.10. 
  
 6.11 Expenses. The Company and each Investor shall pay all costs and expenses that it incurs in connection with the negotiation, execution, delivery and performance of this Agreement or the other Transaction
Documents, provided, however, that that the Company shall, at the Closing, pay up to $10,000 in immediately available funds for all reasonable, documented out-of-pocket expenses (including without limitation reasonable legal fees and
expenses) incurred or to be incurred by Omnicron Master Trust (“Omnicron”) in connection its due diligence investigation of the Company and the negotiation, preparation, execution, delivery and performance of this Agreement and the
other Transaction Documents. At the Closing, the amount due for such fees and expenses (which may include fees and expenses estimated to be incurred for completion of the transaction and post-closing matters) may be netted out of the Purchase Price
payable by Omnicron. In the event the amount paid by the Company for such fees and expenses is less than the amount of such reasonable, documented, fees and expenses actually incurred by Omnicron, the Company shall promptly pay such deficiency (up
to 

  

 26 

 
$10,000 in the aggregate, including any amounts paid at Closing) within thirty (30) days following receipt of an invoice therefor. 
  
 6.12 Entire Agreement; Amendments. This Agreement and the other
Transaction Documents constitute the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties. Except as
expressly provided herein, neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the holders of at least a majority of the Shares and Warrant Shares into which all of the
Warrants then outstanding are exercisable (without regard to any limitation on such exercise), and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement of any such waiver is sought. Any
waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 
  
 [Signature Pages to Follow] 
  

 27 

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

  

			
	 MICROVISION, INC.

		
	By:	 	 /s/ Richard F. Rutkowski

	 	 	 Name: Richard F. Rutkowski
 Title: Chief Executive
Officer

  

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

				
	 	 	 	 	By:	 	 /s/ Bruce Bernstein

	 	 	 	 	 	 	 Name: Bruce Bernstein
 Title: Managing
Partner

  
 ADDRESS: 
 c/o Omicron Capital L.P. 
 650 Fifth Ave., 24th Floor 
 New York, New York 10019

 Attention: Bruce Bernstein 
 Telephone: (212) 258-2301

 Facsimile: (212) 258-2315 
  
 With a copy to: 
  
 Attn:    Brian Daly 
 Tel:       212 258-2302 
 Fax:       212 258-2315 

 Schedule 3.5 
  
 Microvision, Inc. 
  
 Capitalization and Debt 
 At August 25, 2005 
  

				
	 	  	Shares

	 A. Shares Capitalization
	  	 	 
	 Preferred Stock
	  	 	 
	 Authorized
	  	 	25,000,000
	 Outstanding-Convertible Preferred Series A
	  	 	5,000
	 Retired-Convertible Preferred Series A
	  	 	5,000
	 	  	
	

	 Available
	  	 	24,990,000
	 	  	
	

	 Common Stock
	  	 	 
	 Authorized
	  	 	73,000,000
	 	  	
	

	 Issued and outstanding
	  	 	23,299,848
	 	  	
	

	 Reserved for warrants issued (A)
	  	 	1,523,200
	 Reserved for options issued (B)
	  	 	5,388,978
	 Conversion of Debt & Related Warrants:
	  	 	 
	 Common Stock (C)
	  	 	2,069,546
	 Warrants (C)
	  	 	1,212,330
	 Additional Reserve
	  	 	984,564
	 Conversion of Series A Preferred & Related Warrants:
	  	 	 
	 Common Stock (C)
	  	 	736,155
	 Warrants (C)
	  	 	361,795
	 Additional Reserve
	  	 	162,048
	 	  	
	

	 	  	 	12,438,616
	 	  	
	

	 Available
	  	 	37,261,536
	 	  	
	

	  
 (A)   Balance
includes 360,301 Warrants subject to anti-dilution rights
  
 (B)   Balance excludes 3,069,570 authorized but ungranted option shares
  
 (C)   Subject to anti-dilution rights
	  	 	 
		
	 B. Initial Warrant Reserve For This Agreement
	  	 	 
	 Warrant shares initially to be reserved for issuance upon exercise of the Warrants per this agreement
	  	 	64,373
	 	  	
	

		
	 	  	Balance

		
	 C. Debt
	  	 	 
	 Redeemable Preferred Stock
	  	$	5,000,000
	 	  	
	

	 Convertible Notes
	  	$	10,000,000
	 	  	
	

	 Tenant improvement loan, capital leases, other
	  	$	243,487
	 	  	
	

		
	 D. Participation Rights of Existing Security Holders
	  	 	 
	 The holder of the convertible notes has the option to participate in certain subsequent transactions on the same
terms as other investors.
 See Note Agreement.

		
	 	  	Shares

		
	 E. Lumera Corporation Common Stock Pledged
	  	 	 
	 Lumera Corp. common stock pledged as collateral
	  	 	1,750,000
	 	  	
	

 Schedule 3.5 
 (continued) 
  
 1,750,000 shares of Lumera Stock
are pledged to secure obligations relating to the Company’s Senior Secured Convertible Notes (the “Notes”) originally issued in March 2005, as amended to date. 
  
 Pursuant to the Securities Purchase Agreement dated as of March 11, 2005 by and among the Company and the buyers listed on the Schedule of
Buyers thereto, the holders of the Notes have the right to participate in any Subsequent Placement (as defined therein) of equity securities other than Excluded Securities (as defined therein) in the manner provided in Section 4(o) of such
Agreement. The Company intends to satisfy its obligations pursuant to Section 4(o) of such Agreement by providing the notice required by Section 4(o)(iii) of such Agreement, offering to issue to the Buyers a pro rata portion of 33 1/3% of the
Post-Offered Securities (as defined therein) issued to the Investors on the same terms and conditions as those of the issuance to Investors. 
  
 The securities issued to such Buyers (the Notes and related Warrants) have anti-dilution rights that will be triggered by the issuance of the Post-Offered Securities.

  
 The Company’s Series A Convertible Preferred Stock and the warrant dated
September 10, 2004 issued in favor of Satellite Strategic Finance Associates, LLC have anti-dilution rights that will be triggered by the issuance of the Post-Offered Securities. 
  
 Satellite Strategic Finance Associates, LLC and Satellite Strategic Finance Partners, Ltd. have waived certain anti-dilution rights granted
in connection with the issuance of securities pursuant to the Securities Purchase Agreement dated as of August 8, 2005 by and among the Company, Satellite Strategic Finance Associates, LLC and Satellite Strategic Finance Partners, Ltd. 

 Schedules 3.8.3 and 3.8.4 
  
 None 

 Schedule 3.11 
  
 None 

 Schedule 3.11(f) 
  

None 

 Schedule 3.12 
  
 Microvision, Inc. 
  
 Registration Rights 
  
 A. Restricted Common Stock 
  

											
	 Issue
 Date

	  	 Common
 Shares

	  	 Exercise
 Price

	  	 Expiration
 Date

	  	Demand

	  	Piggyback

	11/11/03	  	8,625	  	N/A	  	N/A	  	No	  	Yes
	9/1/04	  	6,601	  	N/A	  	N/A	  	No	  	Yes

  
 B.
Warrants 
  

													
	 Warrant
No.

	  	 Issue
 Date

	  	 Warrant
 Shares

	  	 Exercise
 Price

	  	 Expiration
 Date

	  	Demand

	  	Piggyback

	 70
	  	09/12/03	  	60,000	  	7.50	  	09/12/07	  	Yes	  	Yes
	 71
	  	09/12/03	  	10,000	  	12.00	  	09/12/07	  	Yes	  	Yes
	 77 - 80
	  	03/11/05	  	462,330	  	6.84	  	03/11/10	  	No	  	No
	 82 - 85
	  	07/25/05	  	750,000	  	6.84	  	07/25/08	  	No	  	No

  
 C. The Company has granted
registration rights in connection with (1) the issuance of the Notes described on Schedule 3.5 and related Warrants, (2) the issuance of its Series A Convertible Preferred Stock and related warrants and (3) the issuance of the shares of common stock
and related warrants pursuant to the Securities Purchase Agreement dated as of August 8, 2005 by and among the Company, Satellite Strategic Finance Associates, LLC and Satellite Strategic Finance Partners, Ltd. 
  

 -5- 

 Schedule 3.13 
  
 Fees 
  
 The Company pays fees to American Stock Transfer & Trust Company to issue and deliver shares and will incur legal fees and expenses. 
  

 -6- 

 Schedule 3.19 
  
 ERISA/Pension Plans 
  
 The Company has a retirement savings plan that qualifies under Internal Revenue Code Section 401(k). 
  

 -7- 

 Schedule 3.29 
  
 Transactions with Interested Persons 
  
 In August 2000, the Company entered into a five-year consulting agreement with Jacqueline Brandwynne, a director of the Company. In consideration for entering into the
agreement, the Company issued warrants to purchase an aggregate of 100,000 shares of common stock to Ms. Brandwynne. 
  
 The Company has two existing executive loan plans under which Richard F. Rutkowski, Stephen R. Willey, and Richard A. Raisig have borrowed funds from the Company.

  

 -8- 

 Schedule 3.30 
  
 None 
  

 -9-

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