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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000065770-09-000015.txt : 20090507
<SEC-HEADER>0000065770-09-000015.hdr.sgml : 20090507
<ACCEPTANCE-DATETIME>20090507153717
ACCESSION NUMBER:		0000065770-09-000015
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20090331
FILED AS OF DATE:		20090507
DATE AS OF CHANGE:		20090507

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MICROVISION INC
		CENTRAL INDEX KEY:			0000065770
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC COMPONENTS, NEC [3679]
		IRS NUMBER:				911600822
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-34170
		FILM NUMBER:		09805316

	BUSINESS ADDRESS:	
		STREET 1:		6222 185TH AVE NE
		CITY:			REDMOND
		STATE:			WA
		ZIP:			98052
		BUSINESS PHONE:		425-936-6847

	MAIL ADDRESS:	
		STREET 1:		6222 185TH AVE NE
		CITY:			REDMOND
		STATE:			WA
		ZIP:			98052
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>body10q.htm
<DESCRIPTION>10 Q
<TEXT>
<HTML>
<HEAD>
<TITLE>Q1 2008 DOC</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">
<font FACE="Times New Roman" SIZE="2">

<DIV align=left>
<HR size="4" noshade color="#000000" style="margin-top: -5px">
<HR size="1" noshade color="#000000" style="margin-top: -10px">
</DIV>

<font size="3"><B><p align="center">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</P></font></B>

<BR>
<HR WIDTH="25%">
<BR>
<font size="5"><B><p align="center">FORM 10-Q</P></font></B>
<BR>
<HR WIDTH="25%">

<font size="3"><B><p align="center">
   [X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934
</P></font></B>
<font size="4" color="FF0000"><B><p align="center">
             For the quarterly period ended March 31, 2009
</P></font></B>

<font size="3"><B><p align="center"> OR </P></font></B>

<font size="3"><B><p align="center">
[&nbsp;&nbsp;]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
</P></font></B>

<font size="3"><B><p align="center">
 For the transition period from ________to _________
</P></font></B>

<font size="3"><B><p align="center">
                       Commission file number&nbsp;&nbsp;&nbsp; <u>0-21221</u>
</P></font></B>
<P ALIGN="CENTER"><IMG SRC="logo.gif"></P>
<font size="6" color="#0000FF"><B><U><p align="center">
                                   Microvision, Inc.
</U></B></font><BR>
<font size="2">
               (Exact name of Registrant as Specified in its Charter)
</font></P>

<P>&nbsp;
<TABLE COLS=2 WIDTH="100%">
<TR>
<TD>
<font size="3"><B>
<CENTER><u>Delaware</u></CENTER>
</font></B>
</TD>
<TD>
<font size="3"><B>
<CENTER><u> 91-1600822 </u></CENTER>
</font></B>
</TD>
</TR>
<TR>
<TD>
<font size="2">
<CENTER>&nbsp; (State or Other Jurisdiction of Incorporation or Organization)&nbsp;</CENTER>
</font>
</TD>
<TD>
<font size="2">
<CENTER>(I.R.S. Employer Identification Number)</CENTER>
</font>
</TD>
</TR>
</TABLE>
<BR>



<font size="3"><B><p align="center">
                                6222 185th Avenue NE
<BR><U>
                              Redmond, Washington  &nbsp;&nbsp;  98052
</U></B></font><BR>

<font size="2">
        (Address of Principal Executive Offices including Zip Code)
</font></P>

<font size="3"><B><U><p align="center">
                                 (425) 936-6847
</U></B></font><BR>

<font size="2">
                 (Registrant's Telephone Number, Including Area Code)
</font></P>



<P>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#120; <FONT FACE="Times New Roman">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;   NO &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#168; <FONT FACE="Times New Roman"> </P>

<P>
Indicate by check mark whether the registrant has submitted electronically and posted
on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (&sect;232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).  YES &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#168; <FONT FACE="Times New Roman">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;   NO &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#168; <FONT FACE="Times New Roman"> </P>

<P>
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act. (Check one): </P>

<CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=100%>
<TR><TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>
Large accelerated filer  &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#168; <FONT FACE="Times New Roman">
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>
Accelerated filer &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#120; <FONT FACE="Times New Roman">
</FONT></TD>
<TD WIDTH="35%" VALIGN="TOP">
<FONT SIZE=2><P>
                                                                         Non-accelerated filer &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#168; <FONT FACE="Times New Roman">
<BR>(Do not check if a smaller reporting company)
</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=2><P>
Smaller reporting company &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#168; <FONT FACE="Times New Roman"></P>
</FONT></TD>
</TR>
</TABLE></CENTER>

<P>
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of 1934). YES &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#168; <FONT FACE="Times New Roman">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;   NO &nbsp;&nbsp; <FONT FACE="WINGDINGS">&#120; <FONT FACE="Times New Roman"> </P>

<P>
As of April 27, 2009, 68,080,000 shares of the Company's common stock, $0.001 par value, were outstanding.


<DIV align=left>
<HR size="1" noshade color="#000000" style="margin-top: -2px">
<HR size="4" noshade color="#000000" style="margin-top: -10px">
</DIV>
<P style="PAGE-BREAK-BEFORE: always" align=left>


<TABLE BORDER=0 CELLSPACING=1 CELLPADDING=5 WIDTH=85%>
<TR><TD WIDTH="94%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Page</FONT></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><B><P ALIGN="CENTER">Part I: Financial Information</B></FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Item 1.  Financial Statements:</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>         Consolidated Balance Sheets as of  March 31, 2009 and
December 31, 2008 (unaudited)</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER"></FONT><A HREF="#bs"><FONT SIZE=2>3</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="BOTTOM">
<FONT SIZE=2><P>         Consolidated Statements of Operations for the three
months ended March 31, 2009 and 2008 (unaudited)
</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM">
<FONT SIZE=4><P ALIGN="CENTER"></FONT><A HREF="#ops"><FONT SIZE=2>4</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="BOTTOM">
<FONT SIZE=2><P>         Consolidated Statements of Comprehensive Loss
for the three months ended March 31, 2009 and 2008 (unaudited)
</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM">
<FONT SIZE=5><P ALIGN="CENTER"></FONT><A HREF="#compinc"><FONT SIZE=2>5</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>         Consolidated Statements of Cash Flows for the three
months ended March 31, 2009 and 2008 (unaudited)</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=6><P ALIGN="CENTER"></FONT><A HREF="#flows"><FONT SIZE=2>6</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>         Notes to Consolidated Financial Statements
(unaudited)</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#notes"><FONT SIZE=2>8</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#mda"><FONT SIZE=2>14</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Item 3.  Quantitative and Qualitative Disclosures About Market
Risk</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#market"><FONT SIZE=2>19</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Item 4.  Controls and Procedures</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#controls"><FONT SIZE=2>20</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><B><P ALIGN="CENTER">Part II: Other Information</B></FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Item 1A. Risk Factors</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#item1a"><FONT SIZE=2>20</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Item 6.  Exhibits</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#item6"><FONT SIZE=2>27</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Signatures</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#sign"><FONT SIZE=2>28</FONT></A></TD>
</TR>
<TR><TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Exhibit Index</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></FONT><A HREF="#index"><FONT SIZE=2>29</FONT></A></TD>
</TR>
</TABLE>


<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>
<P style="PAGE-BREAK-BEFORE: always" align=left>
<A NAME="bs"></A>
<B><p align="center">
                              Microvision, Inc.
<BR>
                    Consolidated Balance Sheet
<BR></B>
                  (In thousands, except per share data)
<BR>
                            (Unaudited)
<PRE>
<B>
                                                                                     March 31,     December 31,
                                                                                       2009           2008
                                                                                   -------------  -------------
Assets                                                                                                         </B>
Current assets
   Cash and cash equivalents                                                      $      16,397  $      25,533
   Investment securities, available-for-sale                                              2,706          2,705
   Accounts receivable, net of allowances of $57 and $57                                    502            537
   Costs and estimated earnings in excess of billings on uncompleted contracts              325            695
   Inventory                                                                              1,439          1,525
   Other current assets                                                                     748            889
                                                                                   -------------  -------------
   Total current assets                                                                  22,117         31,884

Property and equipment, net                                                               3,671          3,701
Restricted investments                                                                    1,332          1,332
Other assets                                                                                 54             47
                                                                                   -------------  -------------
   Total assets                                                                   $      27,174  $      36,964
                                                                                   =============  =============
                                                                                                               <B>
Liabilities and Shareholders' Equity                                                                           </B>
Current liabilities
   Accounts payable                                                               $       2,299  $       3,487
   Accrued liabilities                                                                    3,574          3,545
   Billings in excess of costs and estimated earnings on uncompleted contracts               55             62
   Liability associated with common stock warrants                                          151            331
   Current portion of capital lease obligations                                              42             41
   Current portion of long-term debt                                                         72             71
                                                                                   -------------  -------------
   Total current liabilities                                                              6,193          7,537
Capital lease obligations, net of current portion                                            34             45
Long-term debt, net of current portion                                                      303            322
Deferred rent, net of current portion                                                     1,332          1,409
                                                                                   -------------  -------------
   Total liabilities                                                                      7,862          9,313
                                                                                   -------------  -------------
Commitments and contingencies                                                                --             --

Shareholders' equity
   Common stock, par value $.001; 125,000 shares authorized;
      68,080 and 68,080 shares issued and outstanding                                        68             68
   Additional paid-in capital                                                           320,187        319,662
   Accumulated other comprehensive loss                                                     (37)           (38)
   Accumulated deficit                                                                 (300,906)      (292,041)
                                                                                   -------------  -------------
   Total shareholders' equity                                                            19,312         27,651
                                                                                   -------------  -------------
   Total liabilities and shareholders' equity                                     $      27,174  $      36,964
                                                                                   =============  =============

</PRE>
<P ALIGN="CENTER">
The accompanying notes are an integral part of these financial statements.

<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>
<P style="PAGE-BREAK-BEFORE: always" align=left>
<A NAME="ops"></A>
<B><p align="center">
                              Microvision, Inc.
<BR>
                     Consolidated Statement of Operations
<BR></B>
                  (In thousands, except per share data)
<BR>
                            (Unaudited)
<BR></B>

<PRE>
<B>
                                                                               Three Months Ended
                                                                                   March 31,
                                                                             ----------------------
                                                                                2009        2008
                                                                             ----------  ----------                        </B>
Contract revenue                                                            $      712  $    2,281
Product revenue                                                                    239         289
                                                                             ----------  ----------
    Total revenue                                                                  951       2,570
                                                                             ----------  ----------
Cost of contract revenue                                                           383         762
Cost of product revenue                                                            241         339
                                                                             ----------  ----------
    Total cost of revenue                                                          624       1,101
                                                                             ----------  ----------
Gross margin                                                                       327       1,469
                                                                             ----------  ----------


Research and development expense                                                 5,610       4,426
Sales, marketing, general and administrative expense                             3,814       4,135
                                                                             ----------  ----------
    Total operating expenses                                                     9,424       8,561
                                                                             ----------  ----------
Loss from operations                                                            (9,097)     (7,092)
Interest income                                                                     64         412
Interest expense                                                                   (11)        (13)
Gain on derivative instruments, net                                                180       1,673
Other expense                                                                       (1)        (18)
                                                                             ----------  ----------
Net loss                                                                    $   (8,865) $   (5,038)
                                                                             ==========  ==========

Net loss per share - basic and diluted                                      $    (0.13) $    (0.09)
                                                                             ==========  ==========

Weighted-average shares outstanding - basic and diluted                         68,080      56,730
                                                                             ==========  ==========

</PRE>
<P ALIGN="CENTER">
The accompanying notes are an integral part of these financial statements.

<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>
<P style="PAGE-BREAK-BEFORE: always" align=left>
<A NAME="ops"></A>
<B><p align="center">
                              Microvision, Inc.
<BR>
                     Consolidated Statement of Comprehensive Income (Loss)
<BR></B>
                             (In thousands)
<BR>
                            (Unaudited)
<BR></B>

<PRE>
<B>
                                                                               Three Months Ended
                                                                                   March 31,
                                                                             ----------------------
                                                                                2009        2008
                                                                             ----------  ----------                        </B>
Net loss                                                                    $   (8,865) $   (5,038)

Other comprehensive gain (loss)
Unrealized gain on investment securities, available-for-sale                         1          38
                                                                             ----------  ----------
Comprehensive loss                                                          $   (8,864) $   (5,000)
                                                                             ==========  ==========

</PRE>

<P ALIGN="CENTER">
The accompanying notes are an integral part of these financial statements.


<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>
<P style="PAGE-BREAK-BEFORE: always" align=left>
<A NAME="flows"></A>
<B><p align="center">
                              Microvision, Inc.
<BR>
                    Consolidated Statement of Cash Flows
<BR></B>
                           (In thousands)
<BR>
                            (Unaudited)
<PRE>
<B>
                                                                                          Three Months Ended
                                                                                              March 31,
                                                                                        ----------------------
                                                                                           2009        2008
                                                                                        ----------  ----------
Cash flows from operating activities                                                                          </B>
    Net loss                                                                           $   (8,865) $   (5,038)
    Adjustments to reconcile net loss to net cash used in operations:
        Depreciation                                                                          245         228
        Non-cash stock-based compensation expense                                             548       1,066
        Gain on derivative instruments, net                                                  (180)     (1,673)
        Net accretion of discount on short-term investments                                    --         (65)
        Non-cash deferred rent                                                                (69)        (68)
            Change in:
            Accounts receivable, net                                                           35       1,163
            Costs and estimated earnings in excess of billings on uncompleted contracts       370         169
            Inventory                                                                          86        (575)
            Other current assets                                                              118        (210)
            Other assets                                                                       (7)         (3)
            Accounts payable                                                               (1,049)        369
            Accrued liabilities                                                                21          27
            Billings in excess of costs and estimated earnings on uncompleted contracts        (7)       (695)
                                                                                        ----------  ----------
            Net cash used in operating activities                                          (8,754)     (5,305)
                                                                                        ----------  ----------<B>
Cash flows from investing activities                                                                          </B>
    Sales of investment securities                                                             --       8,000
    Purchases of investment securities                                                         --        (986)
    Purchases of restricted investment securities                                              --        (350)
    Purchases of property and equipment                                                      (354)       (137)
                                                                                        ----------  ----------
            Net cash provided by (used in) investing activities                              (354)      6,527
                                                                                        ----------  ----------<B>
Cash flows from financing activities                                                                          </B>
    Principal payments under capital leases                                                   (10)        (12)
    Principal payments under long-term debt                                                   (18)        (16)
                                                                                        ----------  ----------
            Net cash used in financing activities                                             (28)        (28)
                                                                                        ----------  ----------
Net increase (decrease) in cash and cash equivalents                                       (9,136)      1,194
Cash and cash equivalents at beginning of period                                           25,533      13,399
                                                                                        ----------  ----------
Cash and cash equivalents at end of period                                             $   16,397  $   14,593
                                                                                        ==========  ==========<B>
Supplemental disclosure of cash flow information                                                              </B>
    Cash paid for interest                                                             $       11  $       13
                                                                                        ==========  ==========<B>
Supplemental schedule of non-cash investing and financing activities                                          </B>
    Other non-cash additions to property and equipment                                 $       60  $        9
                                                                                        ==========  ==========


</PRE>
<P ALIGN="CENTER">
The accompanying notes are an integral part of these financial statements.

<P style="PAGE-BREAK-BEFORE: always" align=left>
<A NAME="notes"></A>
<B><p align="center">
                              MICROVISION, INC.
<BR>
                    Notes to Consolidated Financial Statements
<BR></B>
                           March 31, 2009
<BR>
                            (Unaudited)
</P>


<B><P>1.  MANAGEMENT'S STATEMENT AND PRINCIPLES OF CONSOLIDATION</P>
</B><U><P>Management's Statement</P>

</U><P>The Consolidated Balance Sheet as of March 31, 2009, the Consolidated
Statements of Operations, Comprehensive Loss and Cash Flows for the three months
ended March 31, 2009 and 2008 have been prepared by Microvision, Inc. (the
&quot;Company&quot; or &quot;Microvision&quot;) and have not been audited.  In
the opinion of management, all adjustments necessary to state fairly the
financial position at March 31, 2009 and the results of operations,
comprehensive loss and cash flows for all periods presented have been made and
consist of normal recurring adjustments.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules of the SEC.  You should read these condensed financial
statements in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2008.  The results of operations for the three months ended March
31, 2009 are not necessarily indicative of the operating results that may be
attained for the entire fiscal year.</P>

<P>At March 31, 2009, Microvision had $19.1 million in cash, cash equivalents
and investment securities, available-for-sale.  Microvision's operating plan for
2009 includes the launch of the first accessory product, further development of
its PicoP display engine for embedded applications and further development of
automotive HUD and eyewear applications.  In order to fully fund its product
launch and its other development efforts, the Company will require additional
capital in 2009.  Microvision plans to obtain additional cash through the
issuance of equity or debt securities.  There can be no assurance that
additional cash will be available or that, if available, it will be available on
terms acceptable to the Company on a timely basis.  If adequate funds are not
available in the next couple of months to fully implement its plan the Company
will begin to reduce the scope of its business to extend its operations as it
pursues other financing opportunities and business relationships.  This
reduction in scope could include delaying product launch and development
projects resulting in reductions in staff, operating costs, capital expenditures
and investment in research and development.  With these adjustments to its
operating plan, the Company believes it currently has sufficient cash, cash
equivalents, and investment securities to fund operations through at least
February 28, 2010.   </P>

<B>
<P>2.  NET LOSS PER SHARE</P>
</B>
<P>Basic net loss per share is calculated on the basis of the weighted-average
number of common shares outstanding during the reporting periods.  Diluted net
loss per share is calculated on the basis of the weighted-average number of
common shares outstanding and taking into account the dilutive effect of all
potential common stock equivalents outstanding.  Potentially dilutive common
stock equivalents primarily consist of warrants, employee stock options,
and nonvested equity shares.  Diluted net loss per share for the
three months ended March 31, 2009 and 2008 is equal to basic net loss per share
because the effect of all potential common stock outstanding during the periods,
including options, warrants and nonvested equity shares is
anti-dilutive.  The components of basic and diluted net loss per share were as
follows (in thousands, except loss per share data): </P>

<PRE>
<B>
                                                                             Three Months Ended
                                                                                 March 31,
                                                                          --------------------------
                                                                              2009          2008
                                                                          ------------  ------------                            </B>
Numerator:
Net loss - basic and diluted                                             $     (8,865) $     (5,038)
                                                                          ============  ============
Denominator:
Weighted-average common shares outstanding - basic and diluted                 68,080        56,730
                                                                          ============  ============

Net loss per share - basic and diluted                                   $      (0.13) $      (0.09)
                                                                          ============  ============


</PRE>

<P>On March 31, 2009 and 2008, the Company excluded the following convertible
securities from diluted net loss per share as the effect of including them would
have been anti-dilutive: publicly traded warrants convertible into 6,703,000 and
0 shares of common stock, respectively, options and private warrants convertible
into a total of 9,686,000 and 10,940,000 shares of common stock, respectively,
and 125,000 shares of nonvested equity shares for both periods. </P>


<B><P>3.  CASH EQUIVALENTS, INVESTMENT SECURITIES AVAILABLE-FOR-SALE AND FAIR VALUE
MEASUREMENTS</P>

</B><P>The Company accounts for cash equivalents and investment securities in
accordance with the provisions of Statement of Financial Accounting Standards
(FAS) No. 115, <I>Accounting for Certain Investments in Debt and Equity
Securities</I> (FAS 115).  FAS 115 addresses the accounting and reporting for
investments in equity securities that have readily determinable fair values and
for investments in debt securities.  </P>

<P>The Company applies guidance in FAS No. 157, <I>Fair Value Measurements</I>
(FAS 157) when estimating fair values of its cash equivalents, investment
securities and liability associated with common stock warrants.  The Company
adopted FAS 157 on January 1, 2008 for financial assets and liabilities and for
nonfinancial assets and liabilities measured at fair value on a recurring basis.
It elected to defer the adoption of FAS 157 for nonfinancial assets and
liabilities accounted for on a nonrecurring basis until January 1, 2009 as
permitted by FAS Board Staff Position No. FAS 157-2, <I>Effective Date of FAS
157</I>.  Neither of the two stages of adopting FAS 157 resulted in a material
impact on the Company's consolidated financial position, results of operations
or cash flows.  </P>

<P>As of March 31, 2009, the Company held $3.0 million par value student loan
auction rate securities (SLARS), fair valued at approximately $2.7 million.  The
SLARS owned by the Company are investment grade long-term bonds, structured with
variable interest rate resets, purchases and sales to be determined via a Dutch
Auction process every 28 days.  They were issued to fund U.S. government
guaranteed student loans.  Beginning in February 2008 as global credit markets
significantly deteriorated, insufficient clearing bids have been submitted for
the SLARS.  The auctions have thus failed, the interest rates have been reset to
&quot;maximum rates&quot; instead of &quot;auction rates&quot; and the SLARS
have been and continue to be illiquid through the auction process and secondary
ARS markets.</P>

<P>At the time of the Company's initial investment, and through March 31, 2009,
the SLARS held by the Company have maintained the following positive credit
factors:</P>

<UL>

<P><LI> &nbsp;guaranteed by the Federal Family Education Loan Program (FFELP) and
other federal and state student loan guarantee programs, </P>
<P><LI> &nbsp;paying interest in accordance with agreements,</P>
<P><LI> &nbsp;collateralized by the student loans funded with the SLARS proceeds and
collections thereon, </P>
<P><LI> &nbsp;no declines in the credit ratings of the issuers; and, </P>
<P><LI> &nbsp;no material changes in loan collection rates.  </P>

</UL>

<P>At the time of the Company's initial investment, the SLARS and AMBAC, the
insurer of half of the SLARS, held AAA ratings.  As of March 31, 2009, one major
service rated both SLARS AAA, while two other services rated the SLARS in the
lower A range.  AMBAC is rated A and Baa1. The Company considers the breadth
of the services' ratings opinions among other contextual factors when evaluating
the impacts of ratings changes.  </P>

<P>The valuation inputs hierarchy classification for assets and liabilities
measured at fair value on a recurring basis in accordance with FAS 157 are
summarized below as of March 31, 2009:</P>

<PRE><B>
                                                 Level 1       Level 2       Level 3        Total
                                               ------------  ------------  ------------  ------------</B>
Assets
    Corporate debt and equity securities      $         --  $  1,006,000  $         --  $  1,006,000
    Auction rate securities                             --            --     2,700,000     2,700,000
                                               ------------  ------------  ------------  ------------
                                              $         --  $  1,006,000  $  2,700,000  $  3,706,000
                                               ============  ============  ============  ============
Liabilities
    Liability associated with
        common stock warrants                               $    151,000                $    151,000
                                                             ============                ============

</PRE>




<P>The corporate debt securities and liability associated with common stock
warrants are classified within Level 2 of the fair value hierarchy because they
are valued using valuation inputs and common methods with sufficient levels of
transparency and observability.  The SLARS are classified in Level 3 of the fair
value hierarchy because of the significance of sufficiently unobservable
assumptions and inputs developed by the Company and used in the valuations.
Financial assets and liabilities are classified in their entirety based on the
lowest level of input that is significant to the fair value measurement.  </P>

<P>The following table summarizes the activity for those financial assets where
fair value measurements are estimated utilizing Level 3 inputs:</P>


<PRE>

Balance, December 31, 2008                                                    $ 2,700,000
Transfer to (from)  Level 3, March 31, 2009                                            --
Recognized loss included in earnings                                                   --
                                                                               -----------
Balance, March 31, 2009                                                       $ 2,700,000
                                                                               ===========


</PRE>
<P>The Company's investments and liability associated with common stock warrants
are summarized below as of March 31, 2009 and December 31, 2008:</P>

<PRE><B>
                                                                                                       Classification on Balance Sheet
                                                                                             -----------------------------------------------
                                                                                                                                  Liability
                                                                                                                                  Associated
                                                                                                          Investment                 With
                                              Cost/       Gross       Gross                               Securities,    Other      Common
                                            Amortized   Unrealized  Unrealized   Estimated      Cash      Available-    Current     Stock
                                              Cost        Gains       Losses    Fair Value   Equivalents   For-Sale     Assets     Warrants
                                           -----------  ----------  ----------  -----------  -----------  -----------  ---------  ----------</B>
As of March 31, 2009:
  Assets
    Corporate debt and equity securities  $ 1,043,000  $       --  $  (37,000) $ 1,006,000  $ 1,000,000  $     6,000  $      --  $       --
    Auction rate securities                 2,700,000          --          --    2,700,000           --    2,700,000         --          --
                                           -----------  ----------  ----------  -----------  -----------  -----------  ---------  ----------
                                          $ 3,743,000  $       --  $  (37,000) $ 3,706,000  $ 1,000,000  $ 2,706,000  $      --  $       --
                                           ===========  ==========  ==========  ===========  ===========  ===========  =========  ==========
  Liabilities
    Liability associated with
       common stock warrants                                                   $   151,000                                       $  151,000
                                                                                ===========                                       ==========

<B>
                                                                                                       Classification on Balance Sheet
                                                                                             -----------------------------------------------
                                                                                                                                  Liability
                                                                                                                                  Associated
                                                                                                          Investment                 With
                                              Cost/       Gross       Gross                               Securities,    Other      Common
                                            Amortized   Unrealized  Unrealized   Estimated      Cash      Available-    Current     Stock
                                              Cost        Gains       Losses    Fair Value   Equivalents   For-Sale     Assets     Warrants
                                           -----------  ----------  ----------  -----------  -----------  -----------  ---------  ----------</B>
As of December 31, 2008:
  Assets
    Corporate debt and equity securities  $ 5,022,000  $       --  $  (38,000) $ 4,984,000  $ 4,979,000  $     5,000  $      --
    Auction rate securities                 2,700,000          --          --    2,700,000           --    2,700,000         --
                                           -----------  ----------  ----------  -----------  -----------  -----------  ---------
                                          $ 7,722,000  $       --  $  (38,000) $ 7,684,000  $ 4,979,000  $ 2,705,000  $      --
                                           ===========  ==========  ==========  ===========  ===========  ===========  =========
  Liabilities
    Liability associated with
        common stock warrants                                                  $   331,000                                       $  331,000
                                                                                ===========                                       ==========

</PRE>

<P>As of March 31, 2009, the unrealized losses on the Company's investments in
debt securities were due primarily to changes in interest rates and credit
market conditions.  The realized gains and losses resulting from the liability
associated with common stock warrants were primarily due to changes in the
Microvision stock price and decreasing terms to expiration.</P>

<P>The Company's significant nonfinancial assets and liabilities that are
subject to consideration for recognition and disclosure at fair value in the
financial statements on a nonrecurring basis primarily includes property and
equipment, long-term debt and deferred rent.  Under FAS 157, the fair value of
an asset or liability determined on a nonrecurring basis should be based on a
hypothetical transaction at the measurement date, with a valuation premise of
either &quot;in-use&quot; or &quot;in-exchange&quot; based on the highest and
best use of the asset from the perspective of market participants other than the
Company itself.  The highest and best use of an asset is in-use if the asset
would provide maximum value to market participants principally through its use
with other assets as a group, and in-exchange if maximum value is derived
principally on a stand-alone basis.  When valuing liabilities, instead of using
a valuation premise concept, one assumes the liability is transferred to a
market participant as a single unit of account, in a transaction that replicates
the credit conditions of the obligor.  The company applies guidance contained in
FAS 144, <I>Accounting for the Impairment or Disposal of Long-Lived Assets</I>
(FAS 144) when evaluating the recoverability of its property and equipment.  FAS
144 requires a long-lived asset be tested for recoverability upon the occurrence
of an indicating event, and absent such potential indications, periodically.  If
an impairment is indicated, the Company applies the guidance in FAS 157 to
determine fair value and records the adjustment in the period of impairment
determination.</P>


<B><P>4.  INVENTORY</P>

</B><P>Inventory at March 31, 2009 and December 31, 2008 consisted of the
following:</P>

<PRE>
<B>
                                                                           March 31,     December 31,
                                                                              2009          2008
                                                                          ------------  ------------                            </B>
Raw materials                                                            $     47,000  $     45,000
Finished goods                                                              1,392,000     1,480,000
                                                                          ------------  ------------
                                                                         $  1,439,000  $  1,525,000
                                                                          ============  ============

</PRE>


<P>The inventory at March 31, 2009 and December 31, 2008 consisted of raw
materials and finished goods for ROV, the Company's hand-held bar code scanner.
Inventory is stated at the lower of cost or market, with cost determined on a
weighted-average basis.  Management periodically assesses the need to provide
for obsolescence of inventory and adjusts the carrying value of inventory to its
net realizable value when required.  In addition, Microvision reduces the value
of its inventory to its estimated scrap value when management determines that it
is not probable that the inventory will be consumed through normal production
during the next twelve months.  </P>
<B>

<P>5.  SHARE-BASED COMPENSATION  </P>
</B>
<P>The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of FAS 123(R). The Company accounts for equity
instruments issued to non-employees in accordance with the provisions of
Emerging Issues Task Force Issue No. 96-18 and FAS No. 123. The following table
shows the amount of stock-based employee compensation expense included in the
Consolidated Statements of Operations:</P>


<PRE><B>
                                                                             Three Months Ended
                                                                                 March 31,
                                                                          --------------------------
                                                                              2009          2008
                                                                          ------------  ------------                            </B>
Cost of contract revenue                                                       10,000        50,000
Cost of product revenue                                                         6,000        11,000
Research and development expense                                              194,000       281,000
Sales, marketing, general and administrative expense                          365,000       724,000
                                                                          ------------  ------------
Share-based employee compensation cost charged against income            $    575,000  $  1,066,000
                                                                          ============  ============

</PRE>

<U><P>Options Activity and Positions</P></U>

<P>The following table summarizes shares, weighted average exercise price,
weighted average remaining contractual term and aggregate intrinsic value of
options outstanding and options exercisable as of March 31, 2009: </P>

<PRE>
<B>
                                                                  Weighted
                                                                  Average
                                                      Weighted   Remaining
                                                       Average  Contractual   Aggregate
                                                      Exercise      Term      Intrinsic
Options                                  Shares         Price     (years)       Value
- ---------------------------------------- -----------  --------- ------------  ----------</B>
Outstanding as of March 31, 2009          6,879,000  $    3.99          7.1  $    1,000

Exercisable as of March 31, 2009          3,649,000  $    4.79          6.2  $    1,000

</PRE>



<P>As of March 31, 2009, the Company's unamortized share-based compensation was
$4.0 million.  The Company plans to amortize this share-based compensation cost
over the next 2.1 years. </P>

<P>As of March 31, 2009, the Company's unamortized nonvested equity share-based
compensation was $158,000.  The Company plans to amortize this nonvested equity
share-based compensation cost over the next 2.0 years.</P>
<B>

<P>6.  LONG-TERM NOTES</P>
</B>
<U><P>Tenant Improvement Loan Agreement</P>
</U>
<P>During 2006, the Company entered into a loan agreement with the lessor of the
Company's corporate headquarters in Redmond to finance $536,000 in tenant
improvements.  The loan carries a fixed interest rate of 9% per annum, is
repayable over the initial term of the lease, which expires in 2013, and is
secured by a letter of credit.  The balance of the loan was $375,000 at March
31, 2009.</P>

<B>
<P>7.  RECEIVABLES FROM RELATED PARTIES</P>
</B>
<P>In 2000, 2001 and 2002, the Board of Directors authorized the Company to
provide unsecured lines of credit to each of the Company's three officers. The
lines of credit carry interest rates of 5.4% to 6.2% and were due within one
year of the officer's termination.</P>

<P>In January 2006, two officers with outstanding loans left the Company and
their loans became due in January 2007.  In May 2007, the Company foreclosed on
50,000 shares of Lumera common stock pledged as collateral for one of the
officer's loans and sold the shares for net proceeds of $227,000.  Under the
terms of a settlement agreement with one of the former officers who left in
January 2006, the Company received payments of $241,000 in 2008. </P>

<P>The Company has sued its former CEO and President Richard Rutkowski and his
spouse to collect $1,733,000 in outstanding loans that remain unpaid.
Counterclaims were filed by Mr. Rutkowski and his spouse, seeking to recover
damages in an amount in excess of $15,000,000. The Company believes these claims
are without merit and intends to defend them vigorously. However, an adverse
outcome could have a material adverse affect on the Company's financial
condition.  </P>

<P>A third officer with outstanding loans left the Company in August 2007 and
his loans became due in August 2008.  The Company is pursuing collection of the
remaining outstanding balance from the former officer.</P>
<P>As of March 31, 2009 and December 31, 2008, the total amount outstanding
under the lines of credit was $1,851,000.  As of March 31, 2009 and December 31,
2008, the allowance for receivables from related parties was $1,851,000.    </P>

<B>
<P>8.  COMMITMENTS AND CONTINGENCIES</P>

<P>Litigation</P>

</B><P>The Company is subject to various claims and pending or threatened
lawsuits in the normal course of business. Other than that described above in
Note 7, the Company is not currently party to any such legal proceedings that
management believes would have a material adverse effect on the Company's
financial position, results of operations or cash flows.</P>


<B><P>9.  NEW ACCOUNTING PRONOUNCEMENTS</P>

</B><P>In April 2009, the Financial Accounting Standards Board
(FASB) issued FASB Staff Position No. FAS 115-2 and FAS 124-2,
<I>Recognition and Presentation of Other-Than-Temporary Impairments</I> (FSP FAS
115-2 and FAS 124-2).  FSP FAS 115-2 and FAS 124-2 amend the other-than-temporary
impairment guidance for debt securities to make the guidance more
operational and to improve the presentation and disclosure of other-than-temporary
impairments on debt and equity securities in the financial statements.
FSP FAS 115-2 and FAS 124-2 do not amend existing recognition and measurement
guidance related to other-than-temporary impairments of equity securities.  FSP
FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009; however, early adoption is only permitted in conjunction
with the early adoptions of FSP FAS 157-4 and FSP FAS 107-1 and APB 28-1. The
Company is currently evaluating the impact that FSP FAS 115-2 and FAS 124-2 will
have on its financial statements.</P>

<P>In April 2009, the FASB released a FASB Staff Position - <I>Determining
Whether a Market Is Not Active and a Transaction Is Not Distressed </I>(FSP FAS
157-4<I>)</I>, to provide additional guidance for estimating fair value when
there has been a significant decrease in market activity for a financial asset
or liability.  FSP FAS 157-4 is effective for interim and annual reporting
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009; however, early adoption is only permitted in
conjunction with the early adoptions of FSP FAS 115-2 and FAS 124-2 and FSP FAS
107-1 and APB 28-1.  The Company is currently assessing the financial impact of
FSP FAS 157-4 on its financial statements.</P>

<P>In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB
28-1, <I>Interim Disclosures about Fair Value of Financial Instruments</I> (FSP
FAS 107-1 and APB 28-1).  FSP FAS 107-1 and APB 28-1 requires disclosures about
fair value of financial instruments for interim reporting periods of publicly
traded companies as well as in annual financial statements. FSP FAS 107-1 and
APB 28-1 are effective for interim and annual reporting periods ending after
June 15, 2009, with early adoption permitted for periods ending after March 15,
2009; however, early adoption is only permitted in conjunction with the early
adoptions of FSP FAS 115-2 and FAS 124-2 and FSP FAS 157-4.  The Company is
currently evaluating the impact that FSP FAS 107-1 and APB 28-1 will have on its
financial statements.</P>


<B><P><A NAME="mda"></A>ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P></B>

<U><P>Forward-Looking Statements</P>
</U>
<P>The information set forth in this report in Item 2, &quot;Management's
Discussion and Analysis of Financial Condition and Results of Operations,&quot;
and Item 3, &quot;Quantitative and Qualitative Disclosure about Market
Risk,&quot; includes &quot;forward-looking statements&quot; within the meaning
of Section 27A of the Securities Act of 1933, as amended (the &quot;Securities
Act&quot;), and Section 21E of the Securities Exchange Act of 1934, as amended
(the &quot;Exchange Act&quot;), and is subject to the safe harbor created by
that section.  Such statements may include, but are not limited to, projections
of revenues, income or loss, capital expenditures, plans for product development
and cooperative arrangements, future operations, financing needs or plans of
Microvision, as well as assumptions relating to the foregoing.  The words
&quot;anticipate,&quot; &quot;believe,&quot; &quot;estimate,&quot;
&quot;expect,&quot; &quot;goal,&quot; &quot;may,&quot; &quot;plan,&quot;
&quot;project,&quot; &quot;will,&quot; and similar expressions identify
forward-looking statements, which speak only as of the date the statement was made.
Factors that could cause actual results to differ materially from those
projected in our forward-looking statements include the following: our ability
to obtain financing; market acceptance of our technologies and products; our
financial and technical resources relative to those of our competitors; our
ability to keep up with rapid technological change; government regulation of our
technologies; our ability to enforce our intellectual property rights and
protect our proprietary technologies; the ability to obtain additional contract
awards and to develop partnership opportunities; the timing of commercial
product launches; the ability to achieve key technical milestones in key
products; and other risk factors identified in this report under the caption
&quot;Item 1A - Risk Factors.&quot;  </P>


<B><P ALIGN="CENTER">Overview</P>
</B>
<P>We are developing high-resolution miniature display and imaging engines based
upon our technology platform.  Our technology platform utilizes our expertise in
two dimensional Micro-Electrical Mechanical systems (MEMS), lasers, optics and
electronics to create a high quality video or still image from a small form
factor device with lower power needs than conventional display technologies.
</P>

<P>Our strategy is to develop and supply a proprietary display engine called
PicoP to potential OEM customers who will embed them into a variety of consumer
and automotive products.  The primary objective for consumer applications is to
provide users of mobile devices with a large screen viewing experience produced
by a small embedded projector. Mobile devices may include cell phones, PDA's,
gaming consoles and other consumer electronics products.  These potential
products would allow users to watch movies, play videos, display images, and
other data onto a variety of flat or curved surfaces. </P>

<P>We are currently developing a small accessory projector that would be the
first commercial product based on the PicoP display engine.  The accessory
projector is expected to display images from a variety of video sources
including cell phones, portable media players, PDAs, gaming consoles, laptop
computers, digital cameras, and other consumer electronics products.  We expect
that the accessory product will be commercially available during 2009.</P>

<P>The PicoP with some modification could be embedded into a vehicle or
integrated into a portable standalone aftermarket device to create a high-resolution
head-up display (HUD) that could project point-by-point navigation,
critical operational, safety and other information important to the driver or
pilot. The PicoP could be further modified to be embedded into a pair of glasses
to provide the mobile user with a see-through or occluded personal display to
view movies, play games or access other content.</P>

<B>
<U><P>Results of Operations </P>
</B></U>
<I><P>Contract revenue. </I> </P>



<PRE><B>
                                                  % of                  % of
                                                contract              contract
(in thousands)                         2009      revenue     2008      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31                                                                         </B>
Government revenue                  $     420       59.0  $     908       39.8  $    (488)    (53.7)
Commercial revenue                        292       41.0      1,373       60.2     (1,081)    (78.7)
                                     ---------             ---------             ---------
Total contract revenue              $     712             $   2,281             $  (1,569)    (68.8)
                                     =========             =========             =========

</PRE>

<P>We earn contract revenue from performance on development contracts with the
U.S. government and commercial customers and from the sale of prototype units
and evaluation kits based on our PicoP display engine.</P>

<P>Our contract revenue from development contracts in a particular period is
dependent upon when we enter into a contract, the value of the contracts we have
entered into, and the availability of technical resources to perform work on the
contracts.   </P>

<P>We recognize contract revenue as work progresses on long-term, cost plus
fixed fee and fixed price contracts using the percentage-of-completion method,
which relies on estimates of total expected contract revenue and costs.  Our
revenue contracts generally include a statement of the work we are to complete
and the total fee we will earn from the contract.  When we begin work on the
contract and at the end of each accounting period, we work with the members of
our technical team to estimate the labor and material and other cost required to
complete the statement of work compared to cost incurred to date.  We use
information provided by project mangers, vendors, outside consultants and others
as we deem necessary to develop our cost estimates.  Since our contracts
generally require some level of technology development to complete, the actual
cost required to complete a statement of work can vary from our estimated cost
to complete.   We have developed processes that allow us to make reasonable
estimates of the cost to complete a contract.  Historically, we have made only
immaterial revisions in the estimates to complete the contract at each reporting
period. Recognized revenues are subject to revisions as the contract progresses
to completion and actual revenue and cost become certain.  Revisions in revenue
estimates are reflected in the period in which the facts that give rise to the
revision become known.  In the future, revisions in these estimates could
significantly impact recognized revenue in any one reporting period.  If the
U.S. government cancels a contract, we would receive payment for work performed
and costs committed to prior to the cancellation.</P>

<P>During the three months ended March 31, 2009, we began selling prototype
units and evaluation kits based on our PicoP display engine.  We recognize
contract revenue on the sales of prototype units and evaluation kits upon
acceptance of the deliverables by the customer or expiration of the contractual
acceptance period.  While we anticipate future sales of these units, revenue may
vary substantially due to the timing of orders from customers and potential
constraints on resources.</P>

<P>Contract revenue was substantially lower during the three months ended March
31, 2009 than the same period in 2008, due to reduced contract activity and
lower beginning backlog in 2009 compared to the prior year.  We expect that we
will have fewer opportunities to enter into new development contracts as we move
closer to the commercialization of products based on our PicoP display engine.
</P>

<P>As long as most of our revenue is earned from performance on development
contracts, we believe there may be a high degree of variability in revenue from
quarter to quarter.</P>

<P>Our backlog of development contracts, including orders for prototype units,
at March 31, 2009 was $479,000 compared to $1.5 million at March 31, 2008, all
of which is scheduled for completion during the next twelve months.  </P>

<I><P>Product revenue</I>. </P>


<PRE><B>
                                                  % of                  % of
                                                 product               product
(in thousands)                         2009      revenue     2008      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31                                                                         </B>
Bar code revenue                    $     239      100.0  $     289      100.0  $     (50)    (17.3)

</PRE>

<P>Our bar code sales generally include acceptance provisions.  We recognize
revenue for bar code shipments upon acceptance of the product by the customer or
expiration of the contractual acceptance period.  Our quarterly bar code revenue
may vary substantially due to the timing of product orders from customers.</P>

<P>Bar code revenue was lower during the three months ended March 31, 2009 than
the same period in 2008, due to decreased purchasing volume of small and
mid-sized businesses as a result of the global economic conditions.</P>

<P>The backlog of bar code orders at March 31, 2009 was approximately $138,000,
compared to $338,000 at March 31, 2008, all of which is scheduled for delivery
during the next twelve months.  </P>
<I>
<P>Cost of contract revenue</I>. </P>


<PRE><B>
                                                  % of                  % of
                                                contract              contract
(in thousands)                         2009      revenue     2008      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------</B>
Three months ended March 31         $     383       53.8  $     762       33.4  $    (379)    (49.7)

</PRE>

<P>Cost of contract revenue includes both the direct and allocated indirect
costs of performing on development contracts.  Direct costs include labor,
materials and other costs incurred directly in performing on a contract.
Indirect costs include labor and other costs associated with operating our
research and development department and building our technical capabilities and
capacity.  Cost of contract revenue is determined both by the level of direct
costs incurred on development contracts and by the level of indirect costs
incurred in operating and building our technical capabilities and capacity.
Both the direct and indirect costs can fluctuate substantially from period to
period.</P>

<P>Cost of contract revenue was lower during the three months ended March 31,
2009 than March 31, 2008 as a result of the decreased activity on development
contracts.  The increase in cost of contract revenue as a percentage of contract
revenue was the result of differences in the cost mix of the contracts during
those periods.  During the three months ended March 31, 2008, cost of contract
revenue included contracts with more favorable cost structures and higher gross
margins.</P>


<P>The cost of revenue as a percentage of revenue can fluctuate significantly
from period to period, depending on the contract cost mix and the levels of
direct and indirect costs incurred.  However, over longer periods of time we
expect modest fluctuations in the cost of contract revenue, as a percentage of
contract revenue.</P>
<I>
<P>Cost of product revenue</I>.  </P>

<PRE><B>
                                                  % of                  % of
                                                 product               product
(in thousands)                         2009      revenue     2008      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------</B>
Three months ended March 31         $     241      100.8  $     339      117.3  $     (98)    (28.9)

</PRE>

<P>Cost of product revenue includes both the direct and allocated indirect costs
of manufacturing bar code scanners sold to customers.  Direct costs include
labor, materials and other costs incurred directly in the manufacture of bar
code scanners.  Indirect costs include labor and other costs associated with
operating our manufacturing capabilities and capacity. </P>

<P>Our overhead, which includes the costs of procuring, inspecting and storing
material, facility and depreciation costs, is allocated to inventory, cost of
product revenue, cost of contract revenue, and research and development expense
based on the proportion of direct material purchased for the respective
activity.  During the three months ending March 31, 2009 and 2008, we expensed
approximately $73,000 and $47,000, respectively, of manufacturing overhead
associated with production capacity in excess of production requirements.</P>

<P>The cost of product revenue as a percentage of product revenue can fluctuate
significantly from period to period, depending on the product mix, the level of
overhead expense and the volume of direct materials purchased.  </P>

<I><P>Research and development expense.</I>  </P>

<PRE><B>

(in thousands)                         2009       2008     $ change   % change
                                     ---------  ---------  ---------  ---------                     </B>
Three months ended March 31         $   5,610  $   4,426  $   1,184       26.8

</PRE>

<P>Research and development expense consists of:</P>

<UL>

<LI>Compensation related costs of employees and contractors engaged in internal
research and product development activities,</LI>
<LI>Laboratory operations, outsourced development and processing work, and</LI>
<LI>Other operating expenses. </LI>

</UL>


<P>We have increased spending in research and development as part of our
strategy to accelerate the time to market for products based on the PicoP.   The
increase in cost is primarily attributable to increases in payroll costs and
contracted services.</P>

<P>We believe that a substantial level of continuing research and development
expense will be required to develop additional commercial products using the
scanned beam display technology.  Accordingly, we anticipate our level of
research and development spending will continue to be substantial.  </P>
<I>
<P>Sales, marketing, general and administrative expense.</I>  </P>


<PRE><B>

(in thousands)                         2009       2008     $ change   % change
                                     ---------  ---------  ---------  ---------                     </B>
Three months ended March 31         $   3,814  $   4,135  $    (321)      (7.8)

</PRE>

<P>Sales, marketing, general and administrative expense includes compensation
and support costs for marketing, sales, management and administrative staff, and
for other general and administrative costs, including legal and accounting
services, consultants and other operating expenses.</P>

<P>The decrease in sales, marketing, general and administrative expense for the
three months ended March 31, 2009 compared to the same period in 2008 was
primarily the result of decreased payroll due to reduction in staffing
levels.</P>

<P>We continue to aggressively manage these costs as part of our strategy to
accelerate the development of PicoP-based products while controlling our cash
used in operations.</P>

<I><P>Interest income.  </P>
</I>

<PRE><B>

(in thousands)                         2009       2008     $ change   % change
                                     ---------  ---------  ---------  ---------                     </B>
Three months ended March 31         $      64  $     412  $    (348)     (84.5)

</PRE>

<P>The decrease in interest income for the three months ended March 31, 2009
compared to the same period in 2008 resulted primarily from lower average cash,
investment securities balances, and interest rates.</P>

<I><P>Interest expense.  </P></I>



<PRE><B>

(in thousands)                         2009       2008     $ change   % change
                                     ---------  ---------  ---------  ---------                     </B>
Three months ended March 31         $      11  $      13  $      (2)     (15.4)

</PRE>

<P>Gain on derivative instruments, net. </P>


<PRE><B>

(in thousands)                         2009       2008     $ change   % change
                                     ---------  ---------  ---------  ---------                     </B>
Three months ended March 31         $     180  $   1,673  $  (1,493)     (89.2)

</PRE>


<P>In March and December 2005, we issued convertible notes (the
&quot;Notes&quot;) with an aggregate principal amount of $20 million.  The last
payment on the Notes was made in March 2007.  In connection with the issuance of
the Notes we issued warrants to purchase 2,302,000 shares of common stock.  The
warrants met the definition of derivative instruments that must be accounted for
as liabilities under the provisions of Emerging Issues Task Force Issue No. 00-19,
<I>Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock, </I>because we cannot engage in
certain corporate transactions affecting the common stock unless we make a cash
payment to the holders of the warrants.  We record changes in the fair values of
the warrants in the statement of operations each period.  In July 2008, warrants
to purchase 750,000 shares of common stock expired unexercised.
We valued the remaining warrants to
purchase 1,552,000 shares of common stock at March 31, 2009 using the
Black-Scholes option-pricing model with the following assumptions: expected
volatilities of 75%; expected dividend yields of 0%; risk free interest rates of
from 0.6% to 0.7%; and contractual lives ranging from 1.0 year to 1.7 years.
The change in value of the warrants of $180,000 for the three months ended March
31, 2009 was recorded as a non-operating gain and is included in "Gain on
derivative instruments, net" in the consolidated statement of
operations.  We valued the warrants at March 31, 2008 using the Black-Scholes
option-pricing model with the following assumptions:  expected
volatilities ranging from 65% to 67%; expected dividend yields of 0%; risk free
interest rates ranging from 1.4% to 1.7%; and contractual lives ranging from 0.3
years to 2.7 years.  The change in value of the warrants of $1,736,000 for the
three months ended March 31, 2008 was recorded as a non-operating gain and is
included in "Gain on derivative instruments, net" in the consolidated statement
of operations.</P>

<P>Prior to December 9, 2008, we held warrants to purchase 170,500 shares of
Lumera common stock.  On December 9, 2008, Lumera merged with GigOptix, LLC and
the combined company now conducts business as GigOptix, Inc.  Our Lumera
warrants were exchanged for warrants to purchase shares of the new company's
common stock, after applying a 0.125 exchange ratio and exercise price
escalation.  As of December 31, 2008, the fair value of the warrants was
determined to be zero.  As of March 31, 2008, the warrants were valued using the
Black-Scholes option-pricing model with the following assumptions:  expected
volatility of 83%; expected dividend yields of 0%; risk free interest rates of
1.78%; and contractual lives of 3.0 years.  The change in value of $64,000 for
the three months ended March 31, 2008 was recorded as a non-operating loss and
is included in &quot;Gain on derivative instruments, net&quot; in the
consolidated statement of operations.</P>

<U><P>Liquidity and Capital Resources</P>
</U>
<P>We have funded our operations to date primarily through the sale of equity
and debt securities and, to a lesser extent, from development contract revenues
and product sales.  At March 31, 2009, we had $19.1 million in cash, cash
equivalents and investment securities, available-for-sale.  Our operating plan
for 2009 includes the launch of the first accessory product, further development
of our PicoP display engine for embedded applications and further development of
automotive HUD and eyewear applications.  In order to fully fund our product
launch and our other development efforts, we will require additional capital in
2009.  We plan to obtain additional cash through the issuance of equity or debt
securities.  There can be no assurance that additional cash will be available or
that, if available, it will be available on terms acceptable to us on a timely
basis.  If adequate funds are not available in the next couple of months to fully
implement our plan we will begin to reduce the scope of the business to extend
our operations as we pursue other financing opportunities and business
relationships.  This reduction in scope could include delaying product launch
and development projects resulting in reductions in staff, operating costs,
capital expenditures and investment in research and development.  With these
adjustments to our operating plan, we believe we currently have sufficient cash,
cash equivalents, and investment securities to fund operations through at least
February 28, 2010.  </P>

<P>Cash used in operating activities totaled $8.8 million during the three
months ended March 31, 2009, compared to $5.3 million during the same period in
2008.  During the three months ended March 31, 2009, the increase in cash used in
operating activities was primarily driven by lower contract activity and higher research
and development costs as we move closer to the commercialization of PicoP based products.</P>
<P>We had the following material gains and charges, and changes in assets during
the three months ended March 31, 2009:</P>

<UL>
<I><LI> &quot;Gain on derivative instruments, net&quot;  </I>In connection with
the issuance of the Notes, we issued warrants to purchase 2,302,000 shares of
common stock, of which 1,552,000 remain outstanding as of March 31, 2009.  Due
to changes in our stock price and declining terms to expiry on the warrants, we
recognized a $180,000 non-operating gain during the three months ended March 31,
2009.</LI>
<I><LI>&quot;Accounts payable&quot;</I>  During the three months ended March 31,
2009, accounts payable decreased by $1,049,000 due to payments made for
inventory, research and development expenses, and general operating expenses
that were billed to us in 2008.</LI></UL>


<P>Cash used in investing activities totaled $354,000 for the three months ended
March 31, 2009 compared to cash provided by investing activities of $6.5 million
during the three months ended March 31, 2008.  During the three months ended
March 31, 2009, we used cash of $354,000 for capital expenditures, compared to
$137,000 during the same period in 2008.  During the three months ended March
31, 2008, we had net sales of investment securities totaling
$7.0 million.</P>

<P>Cash generated and used in financing activities during the three months ended
March 31, 2009 and 2008 was not significant.</P>

<FONT FACE="Times New Roman" SIZE="2">
<B><P><A NAME="market"></A>ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</P></B>

<U><P>Interest Rate and Market Liquidity Risks</P>
</U><P>As of March 31, 2009, 86% of our total cash, cash equivalents and
investment securities, available-for-sale have variable interest rates or are
very short-term discount notes traded in active markets.  Therefore, we believe
our exposure to the market and interest rate risk is not material.  The
remaining 14% is composed of $3.0 million par student loan auction-rate
securities (SLARS).  The SLARS owned by the Company are investment grade
long-term bonds, structured with variable interest rate resets, purchases and sales
to be determined via a Dutch Auction process every 28 days.  They were issued to
fund U.S. government guaranteed student loans.  Beginning in February 2008 as
global credit markets significantly deteriorated, insufficient clearing bids
have been submitted for the SLARS.  The auctions have thus failed and the
interest rates have been reset to &quot;maximum rates&quot; instead of
&quot;auction rates&quot;.  The SLARS have been illiquid through the auction
process in addition to through inactive secondary ARS markets.</P>

<P>Given the adverse credit market conditions, the fair value of the principal
of these bonds has become affected by changes in interest rates, the spread
between short and long rates, and credit market liquidity.  As a result, at
December 31, 2008, we estimated that the fair value of our SLARS to be
approximately $2.7 million.  If market conditions worsen, we may have to further
adjust the estimated fair value of the SLARS, including additional charges to
earnings, if we believe the adjustment is other than temporary.  In the event we
need access to the funds invested in the SLARS, we could be required to sell
these securities at an amount below our original purchase value.  Any of these
events could affect our consolidated financial condition, results of operations
and cash flows.  However, based on our current operating plan and ability to
access our $16.4 million held in cash and cash equivalents and other investment
securities available for sale held as of March 31, 2009, we do not expect to be
required to sell these securities materially below their current estimated
values.  </P>

<P>Our investment policy generally directs that the investment managers should
select investments to achieve the following goals: principal preservation,
adequate liquidity and return.  As of March 31, 2009, our cash and cash
equivalents and investments available-for-sale securities portfolio are
comprised of short-term highly rated money market funds, corporate bonds and the
SLARS.  </P>

<PRE>
<B>
                                      Amount      Percent
                                     ---------  ---------</B>
Cash                                  $14,506      75.94%
Less than one year                     $1,897       9.93%
One to two years                           --         --
Greater than five years                $2,700      14.13%
                                     ---------  ---------
                                       19,103     100.00%
                                     =========  =========

</PRE>

<U><P>Foreign Exchange Rate Risk</P>
</U><P>All of our development contract payments are made in U.S. dollars.
However, in the future we may enter into additional development contracts in
foreign currencies that may subject us to foreign exchange rate risk.  We intend
to enter into foreign currency hedges to offset material exposure to currency
fluctuations when we can adequately determine the timing and amounts of the
foreign currency exposure.</P>


<B><P><A NAME="controls"></A>ITEM 4.</B>&#9;<B>CONTROLS AND PROCEDURES</P></B>


<P>Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we have
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by
this report and, based on this evaluation, our principal executive officer and
principal financial officer have concluded that these disclosure controls and
procedures are effective.  There were no changes in our internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) that occurred
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.</P>


<B><P>PART II</P>
<P ALIGN="CENTER">OTHER INFORMATION</P></B>

<B><P><A NAME="item1a"></A>ITEM 1A </B>- <B>RISK FACTORS</P>
</B>
<B><P>Risk Factors Relating to the Microvision Business</P></B>

<B><P>We have a history of operating losses and expect to incur significant
losses in the future. </P>
</B>
<P>We have had substantial losses since our inception.  We cannot assure you
that we will ever become or remain profitable. </P>

<UL>

<LI>As of March 31, 2009, we had an accumulated deficit of $300.9 million. </LI>
<LI>We incurred consolidated net losses of $239.6 million from inception through
2006, $19.8 million in 2007, $32.6 million in 2008, and consolidated net loss of
$8.9 million in the three months ended March 31, 2009.</LI>
</UL>


<P>The likelihood of our success must be considered in light of the expenses,
difficulties and delays frequently encountered by companies formed to develop
and market new technologies.  In particular, our operations to date have focused
primarily on research and development of the scanned beam technology and
development of demonstration units.  We are unable to accurately estimate future
revenues and operating expenses based upon historical performance. </P>

<P>We cannot be certain that we will succeed in obtaining additional development
contracts or that we will be able to obtain substantial customer orders for our
products.  In light of these factors, we expect to continue to incur substantial
losses and negative cash flow through 2009 and likely thereafter.  We cannot be
certain that we will achieve positive cash flow at any time in the future. </P>


<B><P>We will require additional capital to fund our operations and to implement
our business plan.  If we do not obtain additional capital, we may be required
to curtail our operations substantially.  Raising additional capital may dilute
the value of current shareholders' shares. </P>
</B>
<P>Our operating plan for 2009 includes the launch of our first accessory
product, further development of the PicoP display engine for embedded
applications and further development of automotive HUD and eyewear applications.
In order to fully fund our product launch and our other development efforts, we
will require additional capital in the next couple of months.  We plan to obtain
additional cash through the issuance of equity or debt securities. We will
require additional capital in the future to fund our operations, including to:
</P>

<UL>

<LI>Further develop the technology platform and PicoP display engine, </LI>
<LI>Develop and protect our intellectual property rights, and </LI>
<LI>Fund long-term marketing and business development opportunities.</LI>
</UL>

<P>Our capital requirements will depend on many factors, including, but not
limited to, the rate at which we can, directly or through arrangements with
original equipment manufacturers, introduce products incorporating the PicoP
display engine and image capture technologies and the market acceptance and
competitive position of such products.  If revenues are less than we anticipate,
if the level and mix of revenues vary from anticipated amounts and allocations
or if expenses exceed the amounts budgeted, we may require additional capital
earlier than expected to further the development of our technologies, for
expenses associated with product development, and to respond to competitive
pressures or to meet unanticipated development difficulties.  In addition, our
operating plan provides for the development of strategic relationships with
systems and equipment manufacturers that may require additional investments by
us. </P>

<P>Additional capital may not be available to us, or if available, on terms
acceptable to us or on a timely basis.  Raising additional capital may involve
issuing securities with rights and preferences that are senior to our common
stock and may dilute the value of current shareholders' shares.  If adequate
funds are not available in the next couple of months to fully implement our plan
we will begin to reduce the scope of our business to extend our operations as we
pursue other financing opportunities and business relationships.  This reduction
in scope could include delaying product launch and projects resulting in
reductions in staff and operating costs as well as reductions in capital
expenditures and investment in research and development.  With these adjustments
to our operating plan, we believe we currently have sufficient cash, cash
equivalents, and investment securities to fund operations through at least
February 28, 2010.</P>

<B><P>If we cannot manufacture products at competitive prices, our financial
results will be adversely affected.</P>
</B>
<P>We are currently negotiating component pricing with suppliers for our future
products.  The cost per unit for PicoP based accessory projectors currently
exceeds the level at which we could expect to profitably sell these products.
If we cannot lower our cost of production, we may face increased demands on our
financial resources, possibly requiring additional equity and/or debt financing
to sustain our business operations.</P>
<B>
<P>We cannot be certain that our technology platform or products incorporating
our PicoP display engine will achieve market acceptance.  If products
incorporating the PicoP display engine do not achieve market acceptance, our
revenues may not grow.</P>
</B>
<P>Our success will depend in part on customer acceptance of the PicoP display
engine.  The PicoP display engine may not be accepted by manufacturers who use
display technologies in their products, by systems integrators who incorporate
our products into their products or by end users of these products.  To be
accepted, the PicoP display engine must meet the expectations of our potential
customers in the consumer, defense, industrial and medical markets.  If our
technology fails to achieve market acceptance, we may not be able to continue to
develop our technology platform.</P>

<B><P>Our planned future products are dependent on advances in technology by
other companies.</P>
</B>
<P>We rely on and will continue to rely on technologies, such as light sources,
MEMS and optical components that are developed and produced by other companies.
The commercial success of certain of our planned future products will depend in
part on advances in these and other technologies by other companies.  We may,
from time to time, contract with and support companies developing key
technologies in order to accelerate the development of them for our specific
uses.  There are no guarantees that such activities will result in useful
technologies or components for us.</P>
<B>
<P>It may become more difficult to sell our stock in the public market.</P>
</B>
<P>Our common stock is listed for quotation on The NASDAQ Global Market.  To
keep our listing on this market, we must meet NASDAQ's listing maintenance
standards.  If we are unable to continue to meet NASDAQ's listing maintenance
standards, our common stock could be delisted from The NASDAQ Global Market.  If
our common stock were delisted, we likely would seek to list the common stock on
the NASDAQ Capital Market, the American Stock Exchange or on a regional stock
exchange.  Listing on such other market or exchange could reduce the liquidity
for our common stock.  If our common stock were not listed on the Capital Market
or an exchange, trading of our common stock would be conducted in the
over-the-counter market on an electronic bulletin board established for unlisted
securities or directly through market makers in our common stock.  If our common
stock were to trade in the over-the-counter market, an investor would find it
more difficult to dispose of, or to obtain accurate quotations for the price of,
the common stock.  A delisting from The NASDAQ Global Market and failure to
obtain listing on such other market or exchange would subject our securities to
so-called penny stock rules that impose additional sales practice and
market-making requirements on broker-dealers who sell or make a market in such
securities.  Consequently, removal from The NASDAQ Global Market and failure to
obtain listing on another market or exchange could affect the ability or
willingness of broker-dealers to sell or make a market in our common stock and
the ability of purchasers of our common stock to sell their securities in the
secondary market.  In addition, when the market price of our common stock is
less than $5.00 per share, we become subject to penny stock rules even if our
common stock is still listed on The NASDAQ Global Market.  While the penny stock
rules should not affect the quotation of our common stock on The NASDAQ Global
Market, these rules may further limit the market liquidity of our common stock
and the ability of investors to sell our common stock in the secondary market.
The market price of our stock has mostly traded below $5.00 per share during
2008 and 2007.  On April 27, 2009, the closing price of our stock was $1.81.</P>

<B><P>Our lack of the financial and technical resources relative to our
competitors may limit our revenues, potential profits, overall market share or
value.</P>
</B>
<P>Our current products and potential future products will compete with
established manufacturers of existing products and companies developing new
technologies.  Many of our competitors have substantially greater financial,
technical and other resources than we have.  Because of their greater resources,
our competitors may develop products or technologies that are superior to our
own.  The introduction of superior competing products or technologies could
result in reduced revenues, lower margins or loss of market share, any of which
could reduce the value of our business.</P>

<B><P>We may not be able to keep up with rapid technological change and our
financial results may suffer.</P>
</B>
<P>The information display industry has been characterized by rapidly changing
technology, accelerated product obsolescence and continuously evolving industry
standards.  Our success will depend upon our ability to further develop our
technology platform and to cost effectively introduce new products and features
in a timely manner to meet evolving customer requirements and compete with
competitors' product advances.</P>

<P>We may not succeed in these efforts because of:</P>

<UL>

<LI>delays in product development,</LI>
<LI>lack of market acceptance for our products, or</LI>
<LI>lack of funds to invest in product development and marketing.</LI>
</UL>


<P>The occurrence of any of the above factors could result in decreased
revenues, market share and value.</P>

<B><P>We could face lawsuits related to our use of the PicoP display engine or
other technologies.  Defending these suits would be costly and time consuming.
An adverse outcome in any such matter could limit our ability to commercialize
our technology and products, reduce our revenues and increase our operating
expenses.</P>
</B>
<P>We are aware of several patents held by third parties that relate to certain
aspects of light scanning displays and image capture products.  These patents
could be used as a basis to challenge the validity, limit the scope or limit our
ability to obtain additional or broader patent rights of our patents or patents
we have licensed.  A successful challenge to the validity of our patents or
patents we have licensed could limit our ability to commercialize our technology
and the PicoP display engine and, consequently, materially reduce our revenues.
Moreover, we cannot be certain that patent holders or other third parties will
not claim infringement by us with respect to current and future technology.
Because U.S. patent applications are held and examined in secrecy, it is also
possible that presently pending U.S. applications will eventually be issued with
claims that will be infringed by our products or our technology.  The defense
and prosecution of a patent suit would be costly and time consuming, even if the
outcome were ultimately favorable to us.  An adverse outcome in the defense of a
patent suit could subject us to significant cost, to require others and us to
cease selling products that incorporate the PicoP display engine, to cease
licensing our technology or to require disputed rights to be licensed from third
parties.  Such licenses, if available, would increase our operating expenses.
Moreover, if claims of infringement are asserted against our future co-development
partners or customers, those partners or customers may seek
indemnification from us for damages or expenses they incur.</P>

<B><P>Our products may be subject to future health and safety regulations that
could increase our development and production costs.</P>
</B>
<P>Products incorporating the PicoP display engine could become subject to new
health and safety regulations that would reduce our ability to commercialize the
PicoP display engine.  Compliance with any such new regulations would likely
increase our cost to develop and produce products using the PicoP display engine
and adversely affect our financial results.</P>

<B><P>Our dependence on sales to distributors increases the risks of managing
our supply chain and may result in excess inventory or inventory shortages.</P>
</B>
<P>Currently, the majority of our distributor relationships for the ROV Scanner
and its accessories involve the distributor taking inventory positions and
reselling to multiple customers.  With these distributor relationships, we do
not recognize revenue until the distributors sell the product through to their
end user customers.  Our distributor relationships do reduce our ability to
forecast sales and increases risks to our business. Since our distributors act
as intermediaries between us and the end user customers, we must rely on our
distributors to accurately report inventory levels and production forecasts.
This requires us to manage a more complex supply chain and monitor the financial
condition and credit worthiness of our distributors and the end user customers.
Our failure to manage one or more of these risks could result in excess
inventory or shortages that could adversely impact our operating results and
financial condition.</P>

<B><P>We do not have long-term commitments from our ROV customers, and plan
purchases based upon our estimates of customer demand, which may require us to
contract for the manufacture of our products based on inaccurate estimates.</P>
</B>
<P>Our ROV sales are made on the basis of purchase orders rather than long-term
commitments.  Our customers may cancel or defer purchases at any time.  This
requires us to forecast demand based upon assumptions that may not be correct.
If our customers or we overestimate demand, we may create inventory that we may
not be able to sell or use, resulting in excess inventory, which could become
obsolete or negatively affect our operating results.  Conversely, if our
customers or we underestimate demand, or if sufficient manufacturing capacity is
not available, we may lose revenue opportunities, damage customer relationships,
and we may not achieve expected revenues.</P>
<B>
<P>Our future growth will suffer if we do not achieve sufficient market
acceptance of our products to compete effectively.</P>
</B>
<P>Our success depends, in part, on our ability to gain acceptance of our
current and future products by a large number of customers.  Achieving market
based acceptance for our products will require marketing efforts and the
expenditure of financial and other resources to create product awareness and
demand by potential customers.  We may be unable to offer products consistently
or at all that compete effectively with products of others on the basis of price
or performance.  Failure to achieve broad acceptance of our products by
potential customers and to effectively compete would have a material adverse
effect on our operating results.</P>
<B>
<P>Our operating results may be adversely impacted by worldwide political and
economic uncertainties and specific conditions in the markets we address. </P>


</B><P>In the recent past, general worldwide economic conditions have
experienced a downturn due to slower economic
activity, concerns about inflation, increased energy costs, decreased consumer
confidence, reduced corporate profits and capital spending, and adverse business
conditions. Any continuation or </FONT><FONT SIZE=2>worsening of the current
global economic and financial conditions could materially adversely affect our
ability to raise, or the cost of, needed capital and could materially adversely
affect our ability to commercialize products.
We cannot predict the timing, strength, or duration of any economic
slowdown or subsequent economic recovery, worldwide, or in the display industry.
</P>
<B>
<P>Because we plan to continue using foreign contract manufacturers, our
operating results could be harmed by economic, political, regulatory and other
factors in foreign countries.</P>
</B>
<P>We currently use a contract manufacturer in Asia to manufacture our ROV
product, and we plan to use foreign manufacturers to manufacture future
products, where appropriate.  These international operations are subject to
inherent risks, which may adversely affect us, including:</P>

<UL>


<LI>political and economic instability;</LI>
<LI>high levels of inflation, historically the case in a number of countries in
Asia;</LI>
<LI>burdens and costs of compliance with a variety of foreign laws;</LI>
<LI>foreign taxes;</LI>
<LI>changes in tariff rates or other trade and monetary policies; and</LI>
<LI>changes or volatility in currency exchange rates.</LI>
</UL>


<B><P>If we have to qualify a new contract manufacturer or foundry for our
products, we may experience delays that result in lost revenues and damaged
customer relationships.</P>
</B>
<P>We rely on single suppliers to manufacture our ROV Scanner product and our
MEMS chips in wafer form.  The lead time required to establish a relationship
with a new contract manufacturer or foundry is long, and it takes time to adapt
a product's design to a particular manufacturer's processes.  Accordingly, there
is no readily available alternative source of supply for these products and
components in high volumes.  This could cause significant delays in shipping
products if we have to change our source of supply and manufacture quickly,
which may result in lost revenues and damaged customer relationships.</P>
<B>
<P>If we experience delays or failures in developing commercially viable
products, we may have lower revenues.</P>
</B>
<P>We have developed demonstration units incorporating the PicoP display engine.
However, we must undertake additional research, development and testing before
we are able to develop additional products for commercial sale.  Product
development delays by us or our potential product development partners, or the
inability to enter into relationships with these partners, may delay or prevent
us from introducing products for commercial sale.  We intend to rely on third
party developments or to contract with other companies to continue development
of green laser devices we will need for our products.  </P>

<B><P>Our success will depend, in part, on our ability to secure significant
third party manufacturing resources.</P>
</B>
<P>We are developing our capability to manufacture products in commercial
quantities.  Our success depends, in part, on our ability to provide our
components and future products in commercial quantities at competitive prices.
Accordingly, we will be required to obtain access, through business partners or
contract manufacturers, to manufacturing capacity and processes for the
commercial production of our expected future products.  We cannot be certain
that we will successfully obtain access to sufficient manufacturing resources.
Future manufacturing limitations of our suppliers could result in a limitation
on the number of products incorporating our technology that we are able to
produce.</P>

<B><P>If our licensors and we are unable to obtain effective intellectual
property protection for our products and technology, we may be unable to compete
with other companies.</P>
</B>
<P>Intellectual property protection for our products is important and uncertain.
If we do not obtain effective intellectual property protection for our products,
processes and technology, we may be subject to increased competition.  Our
commercial success will depend in part on our ability and the ability of the
University of Washington and our other licensors to maintain the proprietary
nature of the PicoP display and other key technologies by securing valid and
enforceable patents and effectively maintaining unpatented technology as trade
secrets.  We try to protect our proprietary technology by seeking to obtain
United States and foreign patents in our name, or licenses to third-party
patents, related to proprietary technology, inventions, and improvements that
may be important to the development of our business.  However, our patent
position and the patent position of the University of Washington and other
licensors involve complex legal and factual questions.  The standards that the
United States Patent and Trademark Office and its foreign counterparts use to
grant patents are not always applied predictably or uniformly and can change.
Additionally, the scope of patents are subject to interpretation by courts and
their validity can be subject to challenges and defenses, including challenges
and defenses based on the existence of prior art.  Consequently, we cannot be
certain as to the extent to which we will be able to obtain patents for our new
products and technology or the extent to which the patents that we already own
or license from others protect our products and technology.  Reduction in scope
of protection or invalidation of our licensed or owned patents, or our inability
to obtain new patents, may enable other companies to develop products that
compete with ours on the basis of the same or similar technology.</P>

<P>We also rely on the law of trade secrets to protect unpatented know-how and
technology to maintain our competitive position.  We try to protect this know-how
and technology by limiting access to the trade secrets to those of our
employees, contractors and partners with a need to know such information and by
entering into confidentiality agreements with parties that have access to it,
such as our employees, consultants and business partners.  Any of these parties
could breach the agreements and disclose our trade secrets or confidential
information, or our competitors might learn of the information in some other
way.  If any trade secret not protected by a patent were to be disclosed to or
independently developed by a competitor, our competitive position could be
materially harmed.</P>

<B><P>We could be exposed to significant product liability claims that could be
time-consuming and costly, divert management attention and adversely affect our
ability to obtain and maintain insurance coverage.</P>
</B>
<P>We may be subject to product liability claims if any of our product
applications are alleged to be defective or cause harmful effects.  For example,
because some of our PicoP displays are designed to scan a low power beam of
colored light into the user's eye, the testing, manufacture, marketing and sale
of these products involve an inherent risk that product liability claims will be
asserted against us.  Product liability claims or other claims related to our
products, regardless of their outcome, could require us to spend significant
time and money in litigation, divert management time and attention, require us
to pay significant damages, harm our reputation or hinder acceptance of our
products.  Any successful product liability claim may prevent us from obtaining
adequate product liability insurance in the future on commercially desirable or
reasonable terms.  An inability to obtain sufficient insurance coverage at an
acceptable cost or otherwise to protect against potential product liability
claims could prevent or inhibit the commercialization of our products.</P>

<B><P>We rely heavily on a limited number of development contracts with the U.S.
government, which are subject to immediate termination by the government for
convenience at any time, and the termination of one or more of these contracts
could have a material adverse impact on our operations.</P>
</B>
<P>During the first quarter of 2009 and the full year of 2008, 44% and 34%,
respectively, of our revenue was derived from performance on a limited number of
development contracts with the U.S. government.  Therefore, any significant
disruption or deterioration of our relationship with the U.S. government would
significantly reduce our revenues.  Our government programs must compete with
programs managed by other contractors for limited amounts and uncertain levels
of funding.  The total amount and levels of funding are susceptible to
significant fluctuations on a year-to-year basis.  Our competitors continuously
engage in efforts to expand their business relationships with the government and
are likely to continue these efforts in the future.  Our contracts with the
government are subject to immediate termination by the government for
convenience at any time.  The government may choose to use contractors with
competing display technologies or it may decide to discontinue any of our
programs altogether.  In addition, those development contracts that we do obtain
require ongoing compliance with applicable government regulations.  Termination
of our development contracts, a shift in government spending to other programs
in which we are not involved, a reduction in government spending generally, or
our failure to meet applicable government regulations could have severe
consequences for our results of operations.</P>

<B><P>Our development agreements have long sales cycles, which make it difficult
to plan our expenses and forecast our revenues.</P>
</B>
<P>Our development agreements have lengthy sales cycles that involve numerous
steps including determination of a product application, exploring the technical
feasibility of a proposed product, evaluating the costs of manufacturing a
product and manufacturing or contracting out the manufacturing of the product.
Our long sales cycle, which can last several years, makes it difficult to
predict the quarter in which contract signing and revenue recognition will
occur.  Delays in entering into development agreements could cause significant
variability in our revenues and operating results for any particular quarterly
period.</P>

<B><P>Our development contracts may not lead to products that will be
profitable.</P>
</B>
<P>Our development contracts, including without limitation those discussed in
this document are exploratory in nature and are intended to develop new types of
products for new applications.  These efforts may prove unsuccessful and these
relationships may not result in the development of products that will be
profitable.</P>

<B><P>Our revenues are highly sensitive to developments in the defense
industry.</P>
</B>
<P>Our revenues to date have been derived principally from product development
research relating to defense applications of our technology.  We believe that
development programs and sales of potential products in this market will
represent a significant portion of our future revenues.  Developments that
adversely affect the defense sector, including delays in government funding and
a general economic downturn, could cause our revenues to decline
substantially.</P>

<B><P>If we lose our rights under our third party technology licenses, our
operations will be adversely affected.</P>
</B>
<P>Our business depends in part on technology rights licensed from third
parties.  We could lose our exclusivity or other rights to use the technology
under our licenses if we fail to comply with the terms and performance
requirements of the licenses.    In addition, certain licensors may terminate a
license upon our breach and have the right to consent to sublicense
arrangements.  If we were to lose our rights under any of these licenses, or if
we were unable to obtain required consents to future sublicenses, we would lose
a competitive advantage in the market, and may even lose the ability to
commercialize our products completely.  Either of these results could
substantially decrease our revenues.</P>

<B><P>We are dependent on third parties in order to develop, manufacture, sell
and market our products.</P>
</B>
<P>Our strategy for commercializing our technology and products incorporating
the PicoP display engine includes entering into cooperative development,
manufacturing, sales and marketing arrangements with corporate partners,
original equipment manufacturers and other third parties.  We cannot be certain
that we will be able to negotiate arrangements on acceptable terms, if at all,
or that these arrangements will be successful in yielding commercially viable
products.  If we cannot establish these arrangements, we would require
additional capital to undertake such activities on our own and would require
extensive manufacturing, sales and marketing expertise that we do not currently
possess and that may be difficult to obtain.  In addition, we could encounter
significant delays in introducing the PicoP display engine or find that the
development, manufacture or sale of products incorporating the PicoP display
engine would not be feasible.  To the extent that we enter into cooperative
development, sales and marketing or other joint venture arrangements, our
revenues will depend upon the performance of third parties.  We cannot be
certain that any such arrangements will be successful.</P>

<B><P>Loss of any of our key personnel could have a negative effect on the
operation of our business.</P>
</B>
<P>Our success depends on our executive officers and other key personnel and on
the ability to attract and retain qualified new personnel.  Achievement of our
business objectives will require substantial additional expertise in the areas
of sales and marketing, research and product development and manufacturing.
Competition for qualified personnel in these fields is intense, and the
inability to attract and retain additional highly skilled personnel, or the loss
of key personnel, could reduce our revenues and adversely affect our
business.</P>

<B><P>We are dependent on a small number of customers for our revenue.  Our
quarterly performance may vary substantially and this variance, as well as
general market conditions, may cause our stock price to fluctuate greatly and
potentially expose us to litigation.</P>
</B>
<P>Our revenues to date have been generated primarily from a limited number of
development contracts with U.S. government entities and commercial partners.
Our quarterly operating results may vary significantly based on:</P>

<UL>

<LI>reductions or delays in funding of development programs involving new
information display technologies by the U.S. government or our current or
prospective commercial partners;</LI>
<LI>changes in evaluations and recommendations by any securities analysts
following our stock or our industry generally;</LI>
<LI>announcements by other companies in our industry;</LI>
<LI>changes in business or regulatory conditions;</LI>
<LI>announcements or implementation by our competitors of technological
innovations or new products;</LI>
<LI>the status of particular development programs and the timing of performance
under specific development agreements;</LI>
<LI>economic and stock market conditions; or</LI>
<LI>other factors unrelated to our company or industry.</LI>
</UL>


<P>In one or more future quarters, our results of operations may fall below the
expectations of securities analysts and investors and the trading price of our
common stock may decline as a consequence.  In addition, following periods of
volatility in the market price of a company's securities, shareholders often
have instituted securities class action litigation against that company.  If we
become involved in a class action suit, it could divert the attention of
management, and, if adversely determined, could require us to pay substantial
damages.</P>

<B><P>If we fail to manage expansion effectively, our revenue and expenses could
be adversely affected.</P>
</B>
<P>Our ability to successfully offer products and implement our business plan in
a rapidly evolving market requires an effective planning and management process.
The growth in business and relationships with customers and other third parties
has placed, and will continue to place, a significant strain on our management
systems and resources.  We will need to continue to improve our financial and
managerial controls, reporting systems and procedures and will need to continue
to train and manage our work force.</P>

<B><P><A NAME="item6">
ITEM 6.</B>&#9;<B>Exhibits </A></P></B>


<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=85%>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>10.1</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Employment Agreement effective as of April 7, 2009 between
Microvision, Inc. and Alexander Y. Tokman</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>31.1</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Executive Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>31.2</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Financial Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>32.1</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Executive Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>32.2</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Financial Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2>

<P ALIGN="CENTER"><A NAME="sign"></A>SIGNATURES</P>

<P>Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.</P>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=95%>
<TR><TD WIDTH="53%" VALIGN="TOP">
<FONT SIZE=2><P><A NAME="OLE_LINK3"></FONT></TD>
<TD WIDTH="47%" VALIGN="TOP">
<B><FONT SIZE=2><P>MICROVISION, INC.</B></FONT></TD>
</TR>
</TABLE>


<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=95%>
<TR><TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>Date: May 7, 2009</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P>BY:</FONT></TD>
<TD WIDTH="47%" VALIGN="TOP">
<U><FONT SIZE=2><P>   /s/  Alexander Y. Tokman         </U></FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>Alexander Y. Tokman</FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Executive Officer</P>
<P>(Principal Executive Officer)</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2><P>&#9;</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=619>
<TR><TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>Date:  May 7, 2009</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P>BY:</FONT></TD>
<TD WIDTH="47%" VALIGN="TOP">
<U><FONT SIZE=2><P>   /s/  Jeff Wilson            </U></FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>Jeff Wilson</FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Financial Officer</P>
<P>(Principal Financial Officer) </FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2><P></A></P>





<P ALIGN="CENTER"><A NAME="index">
                              EXHIBIT INDEX</A></P>

<P>The following documents are filed.</P>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=85%>
<TR><TD WIDTH="11%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P>Exhibit Number</U></FONT></TD>
<TD WIDTH="89%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P>Description</U></FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>10.1</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Employment Agreement effective as of April 7, 2009 between
Microvision, Inc. and Alexander Y. Tokman</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>31.1</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Executive Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>31.2</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Financial Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>32.1</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Executive Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P>32.2</FONT></TD>
<TD WIDTH="89%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Financial Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
</TABLE>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>exh31-1.htm
<DESCRIPTION>EXHIBIT 31-1
<TEXT>

<TITLE>Q1 2008 Exhibit 31.1 </TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080" BGCOLOR="#ffffff">
<font FACE="Times New Roman" SIZE="2">


<FONT SIZE=2><B><P ALIGN="RIGHT">Exhibit 31.1 </P>
</B>

<B><P ALIGN="CENTER">
                    CERTIFICATION PURSUANT TO<BR>
       RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,<BR>
                  AS ADOPTED PURSUANT TO<BR>
       SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</P>
</B>


<P ALIGN="JUSTIFY">
I, Alexander Y. Tokman, certify that:

<DIR>

<P ALIGN="JUSTIFY">
1.   I have reviewed this quarterly report on Form 10-Q of Microvision, Inc;


<P ALIGN="JUSTIFY">
2.   Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

<P ALIGN="JUSTIFY">
3.   Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;


<P ALIGN="JUSTIFY">
4.   The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

<DIR>

<P ALIGN="JUSTIFY">
(a)   Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;

<P ALIGN="JUSTIFY">
(b)   Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles:

<P ALIGN="JUSTIFY">
(c)   Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

<P ALIGN="JUSTIFY">
(d)   Disclosed in this report any change in the registrant's internal control over financial reporting
that occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting; and
</DIR>

<P ALIGN="JUSTIFY">
5.   The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

<DIR>

<P ALIGN="JUSTIFY">
(a)   All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

<P ALIGN="JUSTIFY">
(b)   Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
</DIR>
</DIR>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=85%>
<TR><TD WIDTH="54%" VALIGN="TOP">
<FONT SIZE=2><P>Date:<U> May 7, 2009 </U></FONT></TD>
<TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=2><P>By: <U>/s/ Alexander Y. Tokman <BR>
</U>   Alexander Y. Tokman <BR>
 Chief Executive Officer
</FONT></TD>
</TR>
</TABLE>


<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>4
<FILENAME>exh31-2.htm
<DESCRIPTION>EXHIBIT 31-2
<TEXT>
<HTML>
<HEAD>
<TITLE>Q1 2008 Exhibit 31.2 </TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080" BGCOLOR="#ffffff">
<font FACE="Times New Roman" SIZE="2">


<FONT SIZE=2><B><P ALIGN="RIGHT">Exhibit 31.2 </P>
</B>


<B><P ALIGN="CENTER">
                    CERTIFICATION PURSUANT TO<BR>
       RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,<BR>
                  AS ADOPTED PURSUANT TO<BR>
       SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</P>
</B>


<P ALIGN="JUSTIFY">
I, Jeff T. Wilson, certify that:

<DIR>

<P ALIGN="JUSTIFY">
1.   I have reviewed this quarterly report on Form 10-Q of Microvision, Inc.;


<P ALIGN="JUSTIFY">
2.   Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

<P ALIGN="JUSTIFY">
3.   Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;


<P ALIGN="JUSTIFY">
4.   The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:


<DIR>

<P ALIGN="JUSTIFY">
(a)   Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;

<P ALIGN="JUSTIFY">
(b)   Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;

<P ALIGN="JUSTIFY">
(c)   Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

<P ALIGN="JUSTIFY">
d)   Disclosed in this report any change in the registrant's internal control over financial reporting
that occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting; and
</DIR>

<P ALIGN="JUSTIFY">
5.   The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

<DIR>

<P ALIGN="JUSTIFY">
(a)   All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

<P ALIGN="JUSTIFY">
(b)   Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
</DIR>
</DIR>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=85%>
<TR><TD WIDTH="54%" VALIGN="TOP">
<FONT SIZE=2><P>Date:<U> May 7, 2009 </U></FONT></TD>
<TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=2><P>By: <U>/s/ Jeff T. Wilson<BR>
</U>   Jeff T. Wilson<BR>
 Chief Financial Officer
</FONT></TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>exh32-1.htm
<DESCRIPTION>EXHIBIT 32-1
<TEXT>
<HTML>
<HEAD>
<TITLE>Q1 2008 Exhibit 32.1 </TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080" BGCOLOR="#ffffff">
<font FACE="Times New Roman" SIZE="2">

<FONT SIZE=2><B><P ALIGN="RIGHT">Exhibit 32.1 </P>
</B>

<B><P ALIGN="CENTER">
                           CERTIFICATION PURSUANT TO<BR>
                       SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,<BR>
                                 AS ADOPTED PURSUANT TO<BR>
                              SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</P>
</B>

<FONT SIZE=2><P ALIGN="JUSTIFY">
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, the undersigned, as chief executive officer of
Microvision, Inc. (the "Company"), does hereby certify that to the undersigned's knowledge:

<DIR>

<FONT SIZE=2><P ALIGN="JUSTIFY">
 1) &nbsp;&nbsp;  the Company's Form 10-Q for the quarter ended March 31, 2009
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

<FONT SIZE=2><P ALIGN="JUSTIFY">
2) &nbsp;&nbsp; the information contained in the Company's Form 10-Q for the quarter ended March 31, 2009
fairly presents, in all material respects, the financial condition and results of operations of the Company.

</DIR>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=85%>
<TR><TD WIDTH="54%" VALIGN="TOP">
<FONT SIZE=2><P>Date:<U>May 7, 2009 </U></FONT></TD>
<TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=2><P>By: <U>/s/ Alexander Y. Tokman <BR>
</U>   Alexander Y. Tokman <BR>
 Chief Executive Officer
</FONT></TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>6
<FILENAME>exh32-2.htm
<DESCRIPTION>EXHIBIT 32-2
<TEXT>
<HTML>
<HEAD>
<TITLE>Q1 2008 Exhibit 32.2 </TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080" BGCOLOR="#ffffff">
<font FACE="Times New Roman" SIZE="2">

<FONT SIZE=2><B><P ALIGN="RIGHT">Exhibit 32.2 </P>
</B>

<B><P ALIGN="CENTER">
                           CERTIFICATION PURSUANT TO<BR>
                       SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,<BR>
                                 AS ADOPTED PURSUANT TO<BR>
                              SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</P>
</B>

<FONT SIZE=2><P ALIGN="JUSTIFY">
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, the undersigned, as chief financial officer of
Microvision, Inc. (the "Company"), does hereby certify that to the undersigned's knowledge:

<DIR>

<FONT SIZE=2><P ALIGN="JUSTIFY">
 1) &nbsp;&nbsp;  the Company's Form 10-Q for the quarter ended March 31, 2009
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

<FONT SIZE=2><P ALIGN="JUSTIFY">
2) &nbsp;&nbsp; the information contained in the Company's Form 10-Q for the quarter ended March 31, 2009
fairly presents, in all material respects, the financial condition and results of operations of the Company.

</DIR>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=85%>
<TR><TD WIDTH="54%" VALIGN="TOP">
<FONT SIZE=2><P>Date:<U> May 7, 2009 </U></FONT></TD>
<TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=2><P>By: <U>/s/ Jeff T. Wilson<BR>
</U>   Jeff T. Wilson<BR>
 Chief Financial Officer
</FONT></TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<HR WIDTH="85%">
<BR>
<BR>
<BR>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>atempagree.htm
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>

<FONT SIZE=1><P ALIGN="CENTER">&nbsp;</FONT><B><FONT SIZE=3>EMPLOYMENT AGREEMENT
</P>
</B><P>&nbsp;</P>
<B><P>AGREEMENT</B> made and entered into in Seattle, Washington, by and between
MICROVISION, Inc. (the &quot;Company&quot;), a Delaware corporation with its
principal place of business in Seattle, Washington, and Alexander Y. Tokman
(&quot;Executive&quot;), effective as of the 7th day of April, 2009. </P>
<P>&nbsp;</P>
<B><P>WHEREAS</B>, subject to the terms and conditions hereinafter set forth,
the Company wishes to employ Executive as its President and Chief Executive
Officer and Executive wishes to accept such employment; </P>
<P>&nbsp;</P>
<B><P>NOW, THEREFORE</B>, in consideration of the foregoing premises and the
mutual promises, terms, provisions and conditions set forth in this Agreement,
the parties hereby agree: </P>
<P>&nbsp;</P>
<P>1. <U>Employment</U>. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers, and Executive hereby accepts, employment.
</P>
<P>&nbsp;</P>
<P>2. <U>Term</U>. Subject to earlier termination as hereafter provided,
Executive's employment hereunder shall be for a term of three (3) years,
commencing as of the effective date of this Agreement, and ending on April 7,
2012, (&quot;Employment Term&quot;), subject to earlier termination as set forth
in Section 5 below. Following the expiration of the Employment Term, this
Agreement shall be automatically renewed for successive one (1) year periods
(&quot;Renewal Term&quot;) unless, at least ninety (90) days prior to the
expiration of the Employment Term or the then current Renewal Term, either party
provides the other with written notice of intention not to renew, in which case
this Agreement shall terminate as of the end of the Employment Term or the
Renewal Term, as applicable. If this Agreement is renewed, the terms of this
Agreement during any Renewal Term shall be the same as the terms in effect
immediately prior to such renewal (including but not limited to, the provisions
set forth in Sections 4 and 5 below), subject to any changes or modifications as
mutually may be agreed between the Parties as evidenced in a written instrument
signed by both the Company and Executive.   "Term" as used in this Agreement
without further modification shall mean the Employment Term together with any
Renewal Term.</P>
<P>&nbsp;</P>
<P>3. <U>Capacity and Performance</U>. </P>
<P>&nbsp;</P>
<P>a. During the Term, Executive shall serve the Company as its President and
Chief Executive Officer, reporting to the Company's Board of Directors (the
"Board"). In addition, and without further compensation, Executive may also
serve as a member of the Board.  In addition, Executive may also serve as a
director and/or officer of one or more of the Company's Affiliates, if so
elected or appointed from time to time. </P>
<P>&nbsp;</P>
<P>b. During the Term, Executive shall be employed by the Company on a full-time
basis and shall perform such duties as are intrinsic to his position and such
other duties and responsibilities on behalf of the Company and its Affiliates as
may reasonably be designated from time to time by the Board or by its designees.
</P>
<P>&nbsp;</P>
<P>c. During the Term, Executive shall devote his full business time and his
best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and its Affiliates and
to the discharge of his duties and responsibilities hereunder. Executive shall
not actively engage in any other business activity during the Term, but may
participate in industry, trade, professional, charitable and community
activities and manage personal investments so long as such activities, either
individually or in the aggregate, do not <A NAME="OLE_LINK1"><A
NAME="OLE_LINK2">conflict with the interests of the Company and its Affiliates
or interfere with the discharge of Executive's responsibilities to the Company
and its Affiliates</A></A>.  Executive may serve on the boards of directors of
other companies only with the prior express permission of the Board.  The Board
has given its permission for Executive to serve on the Board of Endra, Inc.</P>
<P>&nbsp;</P>
<P>4. <U>Compensation and Benefits</U>. As compensation for all services
performed by Executive under and during the Term and subject to performance of
Executive's duties and of the obligations of Executive to the Company and its
Affiliates, pursuant to this Agreement or otherwise: </P>
<P>&nbsp;</P>
<P>a. <U>Base Salary</U>. Beginning with the effective date of this Agreement,
the Company shall pay Executive a base salary at the rate of Three Hundred Forty
Seven Thousand Two Hundred Eighty Eight Dollars ($347,288) per year (&quot;Base
Salary&quot;), payable in accordance with the payroll practices of the Company
for its executives and subject to annual review by the Board or a committee
thereof and to such increases as the Board or a committee thereof, in its sole
discretion, may from time to time determine.  No decreases may be made in
Executive's Base Salary without prior written consent by Executive. </P>
<P>&nbsp;</P>
<P>b. <U>Bonus Compensation</U>. During the Term, Executive will be eligible for
an annual bonus opportunity (the &quot;Bonus&quot;) at a level commensurate with
his position and responsibilities as Chief Executive Officer of the Company, as
reasonably determined by the Board or a committee thereof.   The Parties agree
that the target equivalent of such Bonus will be no less than 50% of the Base
Salary.  The actual amount of the payment under any Bonus shall be determined by
the Board or a committee thereof, based on its assessment, in its sole
discretion, of Executive's performance and that of the Company against
appropriate and reasonably attainable goals established by the Board or a
committee thereof after consultation with Executive, in the calendar year
following the performance year.  To the extent consistent with bonus
opportunities (and payments thereunder) awarded to other executive officers of
the Company whose compensation is subject to Section 162(m) of the Code, the
Board or a committee thereof may structure any Bonus for Executive with the
intent that it comply with the performance-based compensation exception
requirements under Section 162(m), provided that the target equivalent of the
Bonus shall not go below 50% of the Base Salary.   If so determined by the Board
or a committee thereof, after soliciting Executive's input, Bonus compensation
may be paid (i) in cash and/or in equity or (ii) in such form (cash or equity or
a combination thereof) as Executive may elect, subject to such limitations on
any such election as the Board or a committee thereof may impose.  Any Bonus
compensation earned by Executive shall be paid to Executive in the calendar year
following the performance year, no later than bonus payments to other Executives
and in all events by December 31 of such following year. </P>
<P>&nbsp;</P>
<P>c. <U>Long Term Incentives</U>. During the Term, Executive will be eligible
for stock or stock-based awards ("Stock Awards") at a level commensurate with
his position and responsibilities as Chief Executive Officer of the Company, as
reasonably determined by the Board or a committee thereof, each such award to be
made under the Company's 2006 Equity Incentive Plan or any successor thereto.
Subject to the terms of such Plan, the Board or a committee thereof shall have
the discretion to determine (i) the type of each Stock Award (<I>e.g.</I>, stock
option, restricted stock or restricted stock unit); (ii) the number and shares
subject to each Stock Award; (iii) the performance conditions, if any, and other
vesting terms applicable to each Stock Award; and (iv) all other terms of each
Stock Award; <I>provided</I>, that except as the Board or a committee thereof
and Executive may otherwise agree, Stock Awards during the Term shall be granted
on a basis, as determined by the Board or a committee thereof, that is
reasonably calculated to meet the objectives described in Exhibit A hereto. </P>

<P>d. <U>Vacations</U>. During the Term, Executive shall be entitled to four (4)
weeks of paid vacation per year to be taken at such times and intervals as shall
be determined by Executive, subject to the reasonable business needs of the
Company. Vacation shall otherwise be governed by the policies of the Company, as
in effect from time to time; provided, however, that nothing in Company policy
or practice shall prevent Executive from receiving pay for accrued but unused
vacation at the time of Executive's termination from employment pursuant to the
terms of this Agreement. </P>
<P>&nbsp;</P>
<P>e. <U>Other Benefits</U>. During the Term and subject to any contribution
therefore generally required of employees of the Company, Executive shall be
entitled to participate in any and all employee benefit plans from time to time
in effect for employees of the Company generally, except to the extent such
plans provide a category of benefit (for example, but without limitation,
severance) otherwise provided to Executive pursuant to this Agreement. Such
participation shall be subject to the terms of the applicable plan documents and
generally applicable Company policies. The Company may alter or terminate its
employee benefit plans at any time, as it, in its sole judgment, determines to
be appropriate. </P>
<P>&nbsp;</P>
<P>f. <U>Business Expenses</U>. The Company shall pay or reimburse Executive for
all reasonable business expenses incurred or paid by Executive in the
performance of his duties and responsibilities hereunder, subject to such
policies as may be established by the Company from time to time, any maximum
annual limit or other restrictions on such expenses and to provision of such
reasonable substantiation and documentation as may be specified by the Company
from time to time.   Any such payment or reimbursement that could constitute
"nonqualified deferred compensation" subject to Section 409A of the Code shall
be subject to the requirements that: (i) the amount of expenses eligible for
payment or reimbursement during any calendar year may not affect the expenses
eligible for payment or  reimbursement in any other taxable year, (ii) the
payment or reimbursement must be made, if at all, not later than December 31 of
the calendar year following the calendar year in which the expense was incurred,
and (iii) any right that Executive may have to reimbursement shall in no event
be subject to liquidation or exchange for any other benefit.</P>
<P>&nbsp;</P>
<P>5. <U>Termination of Employment and Severance Benefits</U>. Notwithstanding
the provisions of Section 2 hereof, Executive's employment hereunder shall
terminate prior to the expiration of the Term under the following circumstances:
</P>
<P>&nbsp;</P>
<P>a. <U>Death</U>. In the event of Executive's death during the Term,
Executive's employment hereunder shall immediately and automatically terminate.
In such event, the Company shall pay to Executive's designated beneficiary or,
if no beneficiary has been designated by Executive, to his estate: (i) any
earned and unpaid Base Salary, payable on the Company's next regular pay day
following termination, (ii) any vacation time earned but not used through the
date of termination, payable on the Company's next regular pay day following the
termination, (iii)&nbsp;any bonus compensation earned for the Bonus Year
preceding that in which the termination occurs and unpaid on the date of
termination (&quot;Awarded Bonus&quot;), payable in accordance with Section 4.b
hereof, (iv) subject to Section 4(f) above, any reimbursable business expenses
incurred by Executive but not yet reimbursed on the date of termination,
provided that such expenses and required substantiation and documentation are
submitted within sixty (60) days of termination, with reimbursement being made
promptly after receipt of documentation (amounts provided in (i) through (iv),
&quot;Final Payment&quot;); and (v) payment for a pro-rata portion of
Executive's Bonus for the Bonus Year in which the termination occurs in the
event that bonuses are paid to other officers of the Company for the same Bonus
Year and provided that the timing of such pro-rata bonus payment will be made in
the same form of consideration and at the same time as the bonus payments made
to other officers.  The Company shall also make provision, in a manner
consistent with Section 409A of the Code, such that for a period of up to
eighteen (18) months following Executive's death Executive's surviving spouse,
if any, and his surviving dependents, if any, if they are eligible for and elect
continuation of health coverage pursuant to the so-called "COBRA" coverage-
continuation provisions applicable to the Company's group health plan, shall be
required to contribute to such coverage only so much as they would have
contributed for comparable family coverage had Executive continued to be
employed.  The Company shall have no further obligations to Executive. </P>
<P>&nbsp;</P>
<P>b. <U>Disability</U>. </P>
<P>&nbsp;</P>
<P>i. To the extent permitted by applicable law, the Company may terminate
Executive's employment hereunder, upon notice to Executive, in the event that
Executive becomes disabled during his employment hereunder through any illness,
injury, accident or condition of either a physical or psychological nature and,
as a result, is unable to perform substantially all of his duties and
responsibilities hereunder, with or without reasonable accommodation as required
by law, for a period of more than one hundred twenty (120) days during any
period of three hundred and sixty-five (365) consecutive calendar days. In the
event of such termination, the Company shall pay Executive the Final Payment and
payment for a pro-rata portion of Executive's Bonus for the Bonus Year in which
the termination occurs in the event that bonuses are paid to other officers of
the Company for the same Bonus Year and provided that the timing of such pro-
rata bonus payment will be made in the same form of consideration and at the
same time as the bonus payments made to other officers.  The Company shall also
make provision, in a manner consistent with Section 409A of the Code, such that
for a period of up to eighteen (18) months following such termination Executive
and his family members, to the extent they are eligible for and elect
continuation of health coverage (including pursuant to the so-called "COBRA"
coverage-continuation provisions applicable to the Company's group health plan),
shall be required to contribute to such coverage only so much as they would have
contributed for comparable family coverage had Executive continued to be
employed.  The Company shall have no further obligations to Executive.</P>

<P>ii. Prior to termination as provided at clause i. above, the Board may
designate another employee to act in Executive's place during any period of
Executive's disability. Notwithstanding any such designation, Executive shall
continue to receive the compensation and benefits in accordance with Sections
4.a through 4.d and benefits in accordance with Section 4.e, to the extent
permitted by the then-current terms of the applicable benefit plans, until
Executive becomes eligible for disability income benefits under the Company's
disability income plan or until the termination of his employment, whichever
shall first occur.</P>
<P>&nbsp;</P>
<P>iii. While receiving disability income payments under the Company's
disability income plan, Executive shall not be entitled to receive any Base
Salary under Section 4.a hereof, but shall continue to participate in Company
benefit plans in accordance with Section 4.e and the terms of such plans, until
the termination of his employment. </P>
<P>&nbsp;</P>
<P>iv. If any question shall arise as to whether during any period Executive is
disabled through any illness, injury, accident or condition of either a physical
or psychological nature so as to be unable to perform substantially all of his
duties and responsibilities hereunder, a determination of whether Executive has
a disability shall be made by Executive's health care provider. In the event the
Company questions the medical opinion of Executive's health care provider, the
Company may require Executive to obtain a second opinion from a different health
care provider chosen by the Company at its own expense. If there is a conflict
between the opinion of Executive's health care provider and the opinion of the
Company's selected health care provider, the Company may require Executive to
obtain a third opinion from a health care provider jointly approved by the
Company and Executive at the Company's expense, and this third opinion shall be
binding on Executive and the Company. Any such determination of disability under
this Section 5.b.iv is not intended to alter any benefits any party may be
entitled to receive under any long-term disability insurance policy carried by
either the Company or Executive with respect to Executive, which benefits shall
be governed solely by the terms of any such insurance policy. If the Executive
fails to submit to a medical examination at the request of the Company as
provided above, the Company's determination of the issue shall be binding on
Executive. </P>
<P>&nbsp;</P>
<P>c. <U>By the Company for Cause</U>. The Company may terminate Executive's
employment hereunder for Cause at any time upon notice to Executive setting
forth in reasonable detail the nature of such Cause. The following, as
determined by the Board in its reasonable judgment, shall constitute Cause for
termination: (i) Executive's repeated willful failure to perform, or gross
negligence in the performance of, his duties and responsibilities to the Company
or any of its Affiliates; (ii) fraud, embezzlement or other dishonesty with
respect to the Company or any of its Affiliates; (iii) breach of any of his
obligations under Section 7, 8 or 9 hereof or (iv) commission of a felony or
other crime involving moral turpitude. Upon termination of Executive's
employment hereunder for Cause, the Company shall have no further obligations to
Executive other than to pay Executive the Final Payment. </P>
<P>&nbsp;</P>
<P>d. <U>By the Company Other than for Cause</U>. The Company may terminate
Executive's employment hereunder other than for Cause at any time upon notice to
Executive. In the event of such termination during the Employment Term or a
Renewal Term, then, the Company (i) shall pay Executive (A) the Final Payment
and (B) severance pay in an amount equal to eighteen (18) months of Base Salary,
at the rate in effect at the date of termination, plus an amount equal to (I)
Executive's target Bonus amount for  the year of termination, or (II) if no such
target has been fixed for the year of termination, the actual bonus paid or
payable to Executive for the most  recently completed fiscal year of the Company
for which an annual bonus was paid or is payable to Executive; <I>provided</I>,
that in the case of any termination under this subsection (d) occurring after
December 31, 2009, in lieu of the amount described in (I) above there shall be
paid to Executive the actual bonus paid or payable to him for the most  recently
completed fiscal year of the Company for which an annual bonus was paid or is
payable to him; and (ii) shall continue, while Executive is receiving severance
pay hereunder, to contribute to the premium cost of participation by Executive
and his eligible dependents in the Company's group medical and dental plans,
provided that Executive is entitled to continue such participation under
applicable law and plan terms and pays the remainder of the premium cost from
month to month in accordance with the schedule established by the Company. Any
obligation of the Company to Executive under clause (i) or (ii) hereof, however,
shall be reduced by any other payments from the Company to which Executive is
entitled as a result of termination (exclusive of any Final Payment due) and is
conditioned on Executive signing and delivering to the Company, not later than
the earlier of (i) sixty (60) days after termination of employment or (ii) the
deadline for consideration and execution thereof specified in the form of
release of claims attached hereto as Exhibit&nbsp;B, together with the end of
any applicable revocation period (the &quot;Release Deadline&quot;), a release
in such form (the &quot;Employee Release&quot;).  Severance pay and Target Bonus
to which Executive is entitled hereunder shall be payable pro-rata at the
Company's regular payroll periods during the eighteen (18) month period
immediately following termination of Executive's employment, with the first
payment being made on the Company's next regular payday following the Release
Deadline, but retroactive to the next business day following the date of
termination of employment; <I>provided</I>, that no payment will be made prior
to the effective date of the Employee Release in the form attached hereto as
Exhibit B and that if at the relevant time Executive is a Specified Employee, so
much of the amounts payable hereunder as constitutes nonqualified deferred
compensation subject to Section 409A of the Code and that would be payable
during the six-month period following Executive's termination shall instead be
accumulated and paid in a single sum upon the day after the conclusion of such
six-month period.  </P>
<P>&nbsp;</P>
<P>e. <U>By Executive for Good Reason</U>. Executive may terminate his
employment hereunder for Good Reason provided that (A) he give notice to the
Company within ninety (90) days of the initial occurrence of the event or
condition constituting Good Reason, setting forth in reasonable detail the
nature of such Good Reason; (B)&nbsp;the Company fails to cure within thirty
(30) days following such notice; and (C) Executive terminates his employment
within thirty (30) days following the end of the thirty (30)-day cure period (if
the Company fails to cure).  The following shall constitute Good Reason for
termination by Executive: (i) failure of the Company to continue Executive in
the position of Chief Executive Officer; (ii) substantial diminution in the
nature and scope of Executive's responsibilities, duties, authority, and
reporting up requirements of Executive, provided, however, that the Company's
failure to continue Executive's appointment or election as a director or officer
of one of the Company's Affiliates and any diminution of the business at the
Company or any of its Affiliates shall not constitute &quot;Good Reason&quot;;
(iii) material failure of the Company to provide Executive with the Base Salary
and benefits in accordance with the terms of Section 4 hereof; or (iv)
relocation of Executive's office more than thirty-five (35) miles from the then-
current location of the Company's principal offices without his consent. In the
event of termination in accordance with this Section 5.e during the Employment
Term or Renewal Term, then Executive will be entitled to the same pay and
benefits he would have been entitled to receive had Executive been terminated by
the Company other than for Cause in accordance with Section 5.d above; provided
that Executive satisfies all conditions to such entitlement, including without
limitation the timely signing of an effective Employee Release in the form
attached hereto as Exhibit B, in accordance with the requirements set forth in
Section 5.d.  </P>
<P>&nbsp;</P>
<P>f. <U>By Executive Other than for Good Reason</U>. Executive may terminate
his employment hereunder at any time upon sixty (60) days' notice to the
Company. In the event of termination by Executive pursuant to this Section 5.f,
the Board may elect to waive the period of notice, or any portion thereof, and,
if the Board so elects, the Company will pay Executive the Base Salary for the
notice period (or for any remaining portion of the period) and the Final
Payment. The Company shall have no further obligation to Executive. </P>
<P>&nbsp;</P>
<P>g. <U>Upon a Change of Control</U>. </P>
<P>&nbsp;</P>
<P>i. If a Change of Control occurs and the Company terminates Executive's
employment hereunder other than for Cause during the Employment Term or Renewal
Term and within two (2) years following such Change of Control or Executive
terminates his employment hereunder for any reason during the Employment Term or
Renewal Term and within two (2) years following such Change of Control, then, in
lieu of any payments to or on behalf of Executive under Section 5.d or 5.e
hereof, the Company, in addition to providing Executive the Final Payment, (A)
shall pay Executive an amount equal to two times the sum of one year of Base
Salary at the rate in effect at the date of termination or, if higher, on the
date of the Change of Control plus a payment equal to the Target Bonus for which
Executive is eligible, which amount shall be payable in a single lump sum within
ten (10) business days following the later of the effective date of the Employee
Release in the form attached hereto as Exhibit B  or the date it is received by
the Company and (B) shall pay the full cost of Executive's continued
participation in the Company's group health and dental plans for two years or,
if less, for so long as Executive remains entitled to continue such
participation under applicable law. In addition, 100% of those Options which are
not exercisable, and which have not been exercised and have not expired or been
surrendered or cancelled, shall become exercisable upon such termination and
shall otherwise be and remain exercisable in accordance with the terms of the
Options subject to the Option Agreement. The obligations of the Company
hereunder, however, other than for the Final Payment, if any, are subject to
Executive signing a timely and effective Employee Release in the form attached
hereto as Exhibit B in accordance with the rules specified in subsection (d)
above.   Notwithstanding the generality of the foregoing, (i) if the Change of
Control is not a "change in control event" (as that term is defined at Section
1.409A-3(i)(5) of the Treasury Regulations), so much of the amounts described in
this paragraph as does not exceed the amounts that would have been payable to
Executive under Section 5.d. or Section 5.e., as the case may be, had
termination occurred prior to the Change of Control, and that constitutes
nonqualified deferred compensation subject to Section 409A of the Code, shall be
paid in the same manner and on the same schedule as described in Sections 5.d.
and 5.e., and (ii) if at the relevant time Executive is a Specified Employee, so
much of the amounts payable hereunder as constitutes nonqualified deferred
compensation subject to Section 409A of the Code and that would be payable
during the six-month period following Executive's termination shall instead be
accumulated and paid in a single lump sum upon the day after the conclusion of
such six-month period. </P>
<P>&nbsp;</P>
<P>ii. <U>Certain Additional Payments by the Employer</U>. </P>
<P>&nbsp;</P>
<P>(A) Payments under this Agreement shall be made without regard to whether the
deductibility of such payments (or any other payments or benefits to or for the
benefit of Executive) would be limited or precluded by Section 280G of the Code
(&quot;Section 280G&quot;) and without regard to whether such payments (or any
other payments or benefits) would subject Executive to the federal excise tax
levied on certain &quot;excess parachute payments&quot; under Section 4999 of
the Code (the &quot;Excise Tax&quot;). If any portion of the payments or
benefits to or for the benefit of Executive (including, but not limited to,
payments and benefits under this Agreement but determined without regard to this
paragraph) constitutes an &quot;excess parachute payment&quot; within the
meaning of Section 280G (the aggregate of such payments being hereinafter
referred to as the &quot;Excess Parachute Payments&quot;), the Company shall
promptly pay (and to the extent practicable, no later than ten (10) days prior
to the date Executive is required to make any Excise Tax payment to the Internal
Revenue Service) to Executive an additional amount (the &quot;gross-up
payment&quot;) that after reduction for all taxes (including but not limited to
the Excise Tax) with respect to such gross-up payment equals the Excise Tax with
respect to the total of the Excess Parachute Payments and the Gross-Up Payment.
In no event shall the gross-up payment be made later than by the deadline
specified in the regulations under Section 409A of the Code for the payment of
gross-up amounts.</P>
<P>&nbsp;</P>
<P>(B) The determination as to whether Executive's payments and benefits include
Excess Parachute Payments and, if so, the amount of such payments, the amount of
any Excise Tax owed with respect thereto, and the amount of any gross-up payment
shall be made at the Company's expense by PricewaterhouseCoopers LLP or by such
other certified public accounting firm as the Committee may designate prior to a
Change of Control (the &quot;accounting firm&quot;). Notwithstanding the
foregoing, if the Internal Revenue Service shall assert an Excise Tax liability
that is higher than the Excise Tax (if any) determined by the accounting firm,
the Company shall, promptly (and to the extent practicable, no later than ten
(10) days prior to the date Executive is required to make any Excise Tax payment
to the Internal Revenue Service) augment the gross-up payment to address such
higher Excise Tax liability. </P>
<P>&nbsp;</P>
<P>iii. &quot;Change of Control&quot; means the occurrence of any of the
following events after the effective date hereof: </P>
<P>&nbsp;</P>
<P>(A) The acquisition by any Person or group of the ultimate beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the &quot;Exchange Act&quot;)) of more than
50% of the then outstanding securities of the Company entitled to vote generally
in the election of directors; excluding, however, the following: (i) any
acquisition directly from the Company (other than any acquisition by virtue of
the exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was itself acquired directly
from the Company); (ii) any acquisition by the Company; (iii) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by the
Company or by any corporation controlled by the Company; (iv) any acquisition by
Executive, by all Executive Related Party (as defined herein) or by a group of
which the Executive is a member; or (v) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
this subsection g.(iii)(A); or </P>
<P>&nbsp;</P>
<P>(B) Individuals who, as of the date hereof, constitute the Board (the
&quot;Incumbent Board&quot;) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election, by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or </P>
<P>&nbsp;</P>
<P>(C) A reorganization, recapitalization, merger or consolidation (a
&quot;Corporate Transaction&quot;) of the Company, unless (i) securities
representing more than 50% of the then outstanding securities entitled to vote
generally in the election of directors of the Company or the corporation
resulting from or surviving such Corporate Transaction (or the ultimate parent
of the Company or such corporation after such Corporate Transaction) are
beneficially owned subsequent to such Corporate Transaction by the Person or
Persons who were the beneficial owners of the outstanding securities of the
Company entitled to vote generally in the election of directors immediately
prior to such Corporate Transaction, in substantially the same proportions as
their ownership immediately prior to such Corporate Transaction, (ii) no Person
(excluding any corporation resulting from such Corporate Transaction or any
employee benefit plan (or related trust) of the Company of such corporation
resulting from such Corporate Transaction) ultimately beneficially owns,
directly or indirectly, more than 50% of the then outstanding securities
entitled to vote generally in the election of directors of the Company or the
corporation resulting from or surviving such Corporate Transaction (or the
ultimate parent of the Company or such corporation after such Corporate
Transaction) except to the extent that such ownership existed prior to the
Corporate Transaction; and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Corporate Transaction were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Corporate
Transaction; or </P>
<P>&nbsp;</P>
<P>(D) The sale, transfer or other disposition of all or substantially all of
the assets of the Company; or </P>
<P>&nbsp;</P>
<P>(E) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company. </P>
<P>&nbsp;</P>
<P>For purposes of this definition, securities entitled to vote generally in the
election of directors that are issuable upon exercise of an exercise, conversion
or exchange shall be deemed to be outstanding. In addition, for purposes of this
definition, the following terms have the meanings set forth below: </P>
<P>&nbsp;</P>
<P>A Person shall be deemed to be the &quot;owner&quot; of any securities of
which such Person would be the &quot;beneficial owner,&quot; as such term is
defined in Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Exchange Act. </P>
<P>&nbsp;</P>
<P>&quot;Person&quot; has the meaning used in Section 13.d of the Exchange Act,
except that &quot;Person&quot; does not include (i) the Executive, an Executive
Related Party, or any group of which Executive or Executive Related Party is a
member, or (ii) the Company or a wholly owned subsidiary of the Company or an
employee benefit plan (or related trust) of the Company or of a wholly owned
subsidiary. </P>
<P>&nbsp;</P>
<P>An &quot;Executive Related Party&quot; means any affiliate or associate of
Executive other than the Company or a subsidiary of the Company. The terms
&quot;affiliate&quot; and &quot;associate&quot; have the meanings given in Rule
12b-2 under the Exchange Act; the term &quot;registrant&quot; in the definition
of &quot;associate&quot; means, in this case, the Company. </P>
<P>&nbsp;</P>
<P>6. <U>Effect of Termination</U>. The provisions of this Section 6 shall apply
to termination of employment pursuant to Section 5 or otherwise. </P>
<P>&nbsp;</P>
<P>a. Payment by the Company in accordance with the applicable termination
provision of Section 5, if any, shall constitute the entire obligation of the
Company to Executive. Executive shall promptly give the Company notice of all
facts necessary for the Company to determine the amount and duration of its
obligations in connection with any termination pursuant to Section 5.d, 5.e or
5.g hereof. </P>
<P>&nbsp;</P>
<P>b. Except for medical and dental plan coverage continued pursuant to Section
5.d, 5.e or 5.g hereof, benefits shall terminate pursuant to the terms of the
applicable benefit plans based on the date of termination of Executive's
employment without regard to any payments to Executive following such date of
termination. </P>
<P>&nbsp;</P>
<P>c. Provisions of this Agreement shall survive expiration of the Employment
Term and any termination hereunder if so provided herein or if necessary or
desirable to accomplish the purposes of other surviving provisions, including
without limitation the obligations of Executive under Sections 7, 8 and 9
hereof. The obligation of the Company to make payments to or on behalf of
Executive under Section 5.d, 5.e or 5.g hereof is expressly conditioned upon
Executive's continued full performance of obligations under Sections 7, 8 and 9
hereof. Executive recognizes that, except as expressly provided in Section 5.d,
5.e or 5.g no compensation is earned after termination of employment. </P>
<P>&nbsp;</P>
<P>7. <U>Confidential Information</U>. </P>
<P>&nbsp;</P>
<P>a. Executive acknowledges that the Company and its Affiliates continually
develop Confidential Information, that Executive may in the future develop
Confidential Information for the Company or its Affiliates and that Executive
has in the past and may in the future learn of Confidential Information during
the course of employment. Executive will comply with the policies and procedures
of the Company and its Affiliates for protecting Confidential Information and
shall not use or disclose to any Person (except as required by applicable law or
for the proper performance of his duties and responsibilities to the Company and
its Affiliates hereunder) any Confidential Information obtained by Executive
incident to his employment or other association with the Company or any of its
Affiliates. Executive understands that this restriction shall continue to apply
after his employment terminates, regardless of the reason for such termination.
</P>
<P>&nbsp;</P>
<P>b. All documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the Company or
its Affiliates and any copies, in whole or in part, thereof (the
&quot;Documents&quot;), whether or not prepared by Executive, shall be the sole
and exclusive property of the Company and its Affiliates. Executive shall
safeguard all Documents and shall surrender to the Company at the time his
employment terminates, or at such earlier time or times as the Board or its
designee may specify, all Documents then in Executive's possession or control.
</P>
<P>&nbsp;</P>
<P>8. <U>Assignment of Rights to Intellectual Property</U>. </P>
<P>&nbsp;</P>
<P>a. Executive shall promptly and fully disclose all Intellectual Property to
the Company. Executive hereby assigns and agrees to assign to the Company (or as
otherwise directed by the Company) Executive's full right, title and interest in
and to all Intellectual Property. Executive agrees to execute any and all
applications for domestic and foreign patents, copyrights or other proprietary
rights and to do such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the
Intellectual Property. Executive will not charge the Company for time spent in
complying with these obligations. All copyrightable works that Executive creates
shall be considered &quot;work made for hire.&quot; </P>
<P>&nbsp;</P>
<P>b. For purposes of this Agreement, &quot;Intellectual Property&quot; means
inventions, discoveries, developments, methods, processes, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or constituting
trade secrets) conceived, made, created, developed or reduced to practice by
Executive (whether alone or with others, whether or not during normal business
hours or on or off Company premises) during Executive's employment; provided,
however, that the Company shall have no rights to any invention for which no
equipment, supplies, facilities or trade secret information of the Company was
used and which was developed entirely on Executive's own time, unless (a) the
invention relates (i) directly to the business of the Company or (ii) to the
Company's actual or demonstrably anticipated research or development; or (b) the
invention results from any work performed by Executive for the Company. </P>
<P>&nbsp;</P>
<P>9. <U>Restricted Activities</U>. Executive agrees that some restrictions on
his activities during and after his employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Affiliates: </P>
<P>&nbsp;</P>
<P>a. While Executive is employed by the Company and for the eighteen (18) month
period immediately following termination of his employment with the Company (the
&quot;Non-Competition Period&quot;), Executive shall not, directly or
indirectly, whether as owner, partner, investor, consultant, agent, employee,
co-venturer or otherwise, compete with the Company anywhere worldwide.
Specifically, but without limiting the foregoing, Executive agrees not to engage
in any manner of any activity that is directly or indirectly competitive or
potentially competitive with the business of the Company as conducted at any
time during Executive's employment. For the purposes of this Section 9, the
business of the Company shall include all Products and Executive's undertaking
shall encompass all items, products and services that may be used in
substitution for Products. The foregoing, however, shall not prevent Executive's
passive ownership of two percent (2%) or less of the equity securities of any
publicly traded company. </P>
<P>&nbsp;</P>
<P>&nbsp;b.  Executive agrees that, during his employment with the Company, in
addition to complying with the limitations of Section 3.c., he will not
undertake any outside activity, whether or not competitive with the business of
the Company or its Affiliates, that could reasonably give rise to a conflict of
interest or otherwise interfere with his duties and obligations to the Company
or any of its Affiliates and that would not otherwise be prohibited under
Section 3.c.</P>

<P> c.  Executive further agrees that while he is employed by the Company and
for twelve (12) months following termination of his employment (the &quot;Non-
Solicitation Period&quot;), Executive will not solicit any employee of the
Company or encourage any customer or vendor of the Company to terminate or
diminish its relationship with the Company, or, in the case of a customer, to
conduct with any Person any business or activity which such customer conducts
with the Company. It shall not be a violation of this Agreement for Executive to
hire, interview, recruit or otherwise discuss employment or other business
relationship with any employee of the Company that (i) has been given notice of
involuntary termination by the Company, or (ii) response to a general
advertisement or otherwise initiates contact with Executive for purposes of
seeking employment or other business relationship. For purposes of this
Agreement, an employee or customer of the Company is any Person who was a
current employee or customer of the Company at the time Executive's employment
with the Company ended. </P>
<P>&nbsp;</P>
<P>For purposes of this Section 9, &quot;Company&quot; shall include Affiliates
of the Company with which Executive has had involvement in the course of his
employment or about which Affiliate or Affiliate's activities he has acquired or
received any Confidential Information until a Change of Control has occurred,
after such time Company shall not be broadened to include any new Affiliates.
</P>
<P>&nbsp;</P>
<P>10. <U>Notification Requirement</U>. Until the conclusion of the Non-
Competition Period, Executive shall give notice to the Company of each new
business activity he plans to undertake that could reasonably be construed to
potentially violate Section 7, 8 or 9 above, at least ten (10) business days
prior to beginning any such activity. Such notice shall state the name and
address of the Person for whom such activity is undertaken and the nature of
Executive's business relationship(s) and position(s) with such Person. Executive
shall provide the Company with such other pertinent information concerning such
business activity as the Company may reasonably request in order to determine
Executive's continued compliance with his obligations under Sections 7, 8 and 9
hereof.</P>
<P>&nbsp;</P>
<P>11. <U>Enforcement of Covenants</U>. Executive acknowledges that he has
carefully read and considered all the terms and conditions of this Agreement,
including the restraints imposed upon him pursuant to Sections 7, 8 and 9
hereof. Executive agrees that said restraints are necessary for the reasonable
and proper protection of the Company and its Affiliates (as defined in Section
9) and that each and every one of the restraints is reasonable in respect to
subject matter, length of time and geographic area. Executive further
acknowledges that, were he to breach any of the covenants contained in Sections
7, 8 and 9 hereof, the damage to the Company would be irreparable. Executive
therefore agrees that the Company, in addition to any other remedies available
to it, shall be entitled to preliminary relief against any breach or threatened
breach by Executive of any of said covenants, without having to post bond. The
parties further agree that, in the event that any provision of Sections 7, 8 or
9 hereof shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time, too large a
geographic area or too great a range of activities, such provision shall be
deemed to be modified to permit its enforcement to the maximum extent permitted
by law. </P>
<P>&nbsp;</P>
<P>12. <U>Conflicting Agreements</U>. Executive hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
Executive is a party or is bound and that Executive is not now subject to any
covenants against competition or similar covenants or any court order or other
obligation that would affect the performance of his obligations hereunder.
Executive will not disclose to or use on behalf of the Company any proprietary
information of a third party without such party's consent. </P>
<P>&nbsp;</P>
<P>13. <U>Arbitration</U>. </P>
<P>&nbsp;</P>
<P>a. Any dispute, controversy or claim between the parties arising out of this
Agreement shall be settled by arbitration conducted in Seattle, Washington in
accordance with the rules and procedures of JAMS for the resolution of
employment disputes (the &quot;Rules&quot;) and the laws of the State of
Washington. </P>
<P>&nbsp;</P>
<P>b. In the event that a party requests arbitration (the &quot;Requesting
Party&quot;), it shall serve upon the other party (the &quot;Non-Requesting
Party&quot;) within ninety (90) days of the date the Requesting Party knew, or
reasonably should have known, of the facts on which the controversy, dispute or
claim is based, a written demand for arbitration stating the substance of the
controversy, dispute or claim and the contention of the Requesting Party. An
arbitrator shall be selected in accordance with the Rules, with the Requesting
Party initiating that process within thirty (30) days of the date it serves
demand for arbitration on the Non-Requesting Party (or such longer period to
which the parties shall agree in writing.). </P>
<P>&nbsp;</P>
<P>c. The function of the arbitrator shall be to determine the interpretation
and application of the specific provisions of this Agreement to the issues
submitted to arbitration. There shall be no right in arbitration to obtain, and
no arbitrator shall have any authority to award or determine, any change in,
addition to, or detraction from, any of the provisions of this Agreement. The
decision of the arbitrator shall be in writing, shall set forth the basis for
the </P>
<P>&nbsp;</P>
<P>decision and shall be rendered within thirty (30) business days following the
hearing. The decision of the arbitrator acting within the scope of his/her
authority shall be final and binding upon the parties and may be enforced and
executed upon in any court having jurisdiction over the party against whom
enforcement of such decision is sought. </P>
<P>&nbsp;</P>
<P>d. The parties involved in the dispute shall divide equally the
administrative charges, arbitrator's fees and related expenses of the
arbitration, but each party shall pay its own legal fees and expenses incurred
in connection with such arbitration. </P>
<P>&nbsp;</P>
<P>e. Nothing contained herein, however, shall limit the right of the Company to
seek equitable or other relief from any court of competent jurisdiction for
violation of Section 7, 8 or 9 of this Agreement. </P>
<P>&nbsp;</P>
<P>14. <U>Definitions</U>. Words or phrases which are initially capitalized or
are within quotation marks shall have the meanings provided in this Section 14
and as provided elsewhere in this Agreement. For purposes of this Agreement, the
following definitions apply: </P>
<P>&nbsp;</P>
<P>a. &quot;Affiliates&quot; means any parent and subsidiaries of the Company
and any entities directly or indirectly controlling, controlled by or under
common control with the Company, where control may be by either management
authority or equity interest. </P>
<P>&nbsp;</P>
<P>b. &quot;Code&quot; means the U.S. Internal Revenue Code of 1986, as amended.
</P>
<P>&nbsp;</P>
<P>c. &quot;Confidential Information&quot; means any and all information of the
Company and its Affiliates that is not generally known by others with whom they
compete or do business, or with whom they plan to compete or do business.
Confidential Information includes without limitation such information relating
to (i) the development, research, testing, manufacturing, marketing and
financial activities of the Company and its Affiliates, (ii) the Products, (iii)
the costs, sources of supply, financial performance and strategic plans of the
Company and its Affiliates, (iv) the identity and special needs of the customers
of the Company and its Affiliates and (v) the people and organizations with whom
the Company and its Affiliates have business relationships and those
relationships. Confidential Information also includes information that the
Company or any of its Affiliates have received belonging to others with any
understanding, express or implied, that it would not be disclosed. Confidential
Information does not include information which is in the public domain without
fault by Executive or any third party. </P>
<P>&nbsp;</P>
<P>d. Exclusive of Section iii of this Agreement, &quot;Person&quot; means an
individual, a corporation, an association, a partnership, an estate, a trust and
any other entity or organization, other than the Company or any of its
Affiliates. </P>
<P>&nbsp;</P>
<P>e. &quot;Products&quot; mean all products planned, researched, developed,
tested, manufactured, sold, licensed, leased or otherwise distributed or put
into use by the Company, or prior to a change of Control, of its Affiliates with
which Affiliate or Affiliate's activities Executive has had involvement in the
course of his employment or about which he has acquired or received any
Confidential Information, together with all services provided or planned by the
Company, or prior to a change of Control, of its Affiliates with which Executive
has had involvement in the course of his employment or about which Affiliate or
Affiliate's activities he has acquired or received any Confidential Information,
during Executive's employment.</P>

<P>f.   References to termination of employment, retirement, separation from
service and similar or correlative terms mean a "separation from service" (as
defined at Section 1.409A-1(h) of the Treasury Regulations) from the Company and
from all other corporations and trades or businesses, if any, that would be
treated as a single "service recipient" with the Company under Section 1.409A-
1(h)(3) of the Treasury Regulations.</P>

<P>g.   "Specified employee" means an individual who is determined by the
Company to be a specified employee as defined in subsection (a)(2)(B)(i) of
Section 409A of the Code.  The Company may, but need not, elect in writing,
subject to the applicable limitations under Section 409A of the Code, any of the
special elective rules prescribed in Section 1.409A-1(i) of the Treasury
Regulations for purposes of determining "specified employee" status.  Any such
written election shall be deemed part of this Agreement.</P>
<P>&nbsp;</P>
<P>15. <U>Withholding</U>. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law. </P>
<P>&nbsp;</P>
<P>16. <U>Assignment</U>. Neither the Company nor Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of Executive to one of its Affiliates or to a Person with
whom the Company shall hereafter effect a reorganization, consolidation or
merger or to whom the Company transfers all or substantially all of its business
or assets. This Agreement shall inure to the benefit of and be binding upon the
Company and Executive, their respective successors, executors, administrators,
heirs and permitted assigns. </P>
<P>&nbsp;</P>
<P>17. <U>Severability</U>. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement; or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. </P>
<P>&nbsp;</P>
<P>18. <U>Waiver</U>. No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party. The failure of either
party to require the performance of any term or obligation of this Agreement, or
the waiver by either party of any breach of this Agreement, shall not prevent
any subsequent enforcement of such term or obligation or be deemed a waiver of
any subsequent breach. </P>
<P>&nbsp;</P>
<P>19. <U>Notices</U>. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person, consigned to a national overnight courier
service or deposited in the United States mail, postage prepaid, and addressed
to Executive at his last known address on the books of the Company or, in the
case of the Company, at its principal place of business, attention of the
Chairman of the Board, or to such other address as either party may specify by
notice to the other actually received. </P>
<P>&nbsp;</P>
<P>20. <U>Entire Agreement</U>. As of the effective date, this Agreement
constitutes the entire agreement between the parties and supersedes all prior
communications, agreements and understandings, written or oral, with respect to
the terms and conditions of Executive's employment. </P>
<P>&nbsp;</P>
<P>21. <U>Amendment</U>. This Agreement may be amended or modified only by a
written instrument signed by Executive and by a expressly authorized
representative of the Company. </P>
<P>&nbsp;</P>
<P>22. <U>Headings</U>. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement. </P>
<P>&nbsp;</P>
<P>23. <U>Counterparts</U>. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument. </P>
<P>&nbsp;</P>
<P>24. <U>Governing Law</U>. This Agreement shall be construed and enforced
under, and be governed in all respects by, the laws of the State of Washington,
without regard to the conflict of laws principles thereof; provided, however,
that in the event the Company relocates its principal place of business and
Executive's principal place of work to another state, the laws of that state
shall apply without regard to the conflict of laws principles thereof. </P>
<P>&nbsp;</P>
<B><P>IN WITNESS WHEREOF</B>, this Agreement has been executed as a sealed
instrument by Executive and by the Company, by its duly authorized
representative, as of the date first above written. </P>
<P>&nbsp;</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 WIDTH=588>
<TR><TD WIDTH="50%" VALIGN="MIDDLE">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="50%" VALIGN="MIDDLE" COLSPAN=2>&nbsp;</TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<B><FONT SIZE=3><P>THE EXECUTIVE:</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<FONT SIZE=3><P>&nbsp;</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=3><P>THE COMPANY:</B></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="MIDDLE" HEIGHT=16><P></P></TD>
<TD WIDTH="1%" VALIGN="MIDDLE" HEIGHT=16><P></P></TD>
<TD WIDTH="50%" VALIGN="MIDDLE" COLSPAN=2 HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=3><P>/s/ Alexander Tokman</P>
</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<FONT SIZE=3><P>&nbsp;</FONT></TD>
<TD WIDTH="0%" VALIGN="TOP">
<FONT SIZE=3>
<P>&nbsp;</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=3><P>/s/ Jeff Wilson</P>
<FONT SIZE=3><P>Chief Finanical Officer</P>
</FONT></TD>
</TR>
</TABLE>



<P>&nbsp;</P>
<TABLE CELLSPACING=0 BORDER=0 WIDTH=588>
<TR><TD WIDTH="50%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="0%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT SIZE=3><P>&nbsp;</P>
<U><P ALIGN="CENTER">Exhibit A</P>
</U><P ALIGN="CENTER"></P>
<U><P ALIGN="CENTER">Long-Term Incentive Award Objectives</P>
</U><P ALIGN="CENTER"></P>
<P>The purpose of this Exhibit A is to set out the mutual understanding of the
Company and Executive as to the objectives underlying Stock Awards to be granted
to Executive during the Term pursuant to Section 4.c. of the Agreement.  This
Exhibit A is not intended, nor shall it be construed, as a requirement that any
specific Stock Awards be granted or as a guarantee that the objectives set out
below, or any of them, will be met.</P>

<P>The parties agree that it is in their mutual interest that Executive acquire
and maintain, by the end of the Employment Term, equity ownership in the Company
represented by (i) the actual ownership of shares, whether or not vested, and/or
(ii) share units, whether or not vested, entitling or conditionally entitling
Executive to the future delivery of shares (but not including, for the avoidance
of doubt, unexercised stock options or stock appreciation rights), at a level
commensurate with Executive's position as Chief Executive Officer of the Company
as reasonably determined by the Board or a committee thereof (the "share
ownership objective").  The Board or a committee thereof shall give due
consideration to the share ownership objective in determining the nature, amount
and terms of Stock Awards to be granted to Executive pursuant to Section 4.c. of
the Agreement.</P>

<P>In determining the nature, amount and terms of Stock Awards to be granted to
Executive, the Board or a committee thereof shall also give due consideration to
the objectives of (i) promoting shareholder value by conditioning vesting and/or
the delivery of shares on achievement by the Company of key performance
milestones; (ii) enabling Executive to share in any appreciation in the value of
the Company's equity; and (iii) enabling Executive to capture any recognized
gain in a manner that as closely as possible harmonizes Executive's interests
with those of the Company.</P>

<P ALIGN="CENTER">&nbsp;</P>
<B><P ALIGN="CENTER">EXHIBIT B</P>
<P ALIGN="CENTER"></P>
</B><P ALIGN="CENTER">RELEASE OF CLAIMS</P>
<P ALIGN="CENTER"></P>
<P>&nbsp;</P>
<P>FOR AND IN CONSIDERATION OF the benefits to be provided me in connection with
the termination of my employment, as set forth in the agreement between me and
MICROVISION, INC. (the "Company") dated as of<B> </B>July 18, 2005 <B> </B>(the
&quot;Agreement&quot;), which are conditioned on my signing this Release of
Claims and to which I am not otherwise entitled, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, I,
on my own behalf and on behalf of my heirs, executives, administrators,
beneficiaries, representatives and assigns, and all others connected with me,
hereby release and forever discharge the Company, its subsidiaries and other
affiliates and all of their respective past, present and future officers,
directors, trustees, shareholders, employees, agents, general and limited
partners, members, managers, joint venturers, representatives, successors and
assigns, and all others connected with any of them, both individually and in
their official capacities, from any and all causes of action, rights and claims
of any type or description, known or unknown, which I have had in the past, now
have, or might now have, through the date of my signing of this Release of
Claims, in any way resulting from, arising out of or connected with my
employment by the Company or any of its subsidiaries or other affiliates or the
termination of that employment or pursuant to any federal, state or local law,
regulation or other requirement (including without limitation Washington Law
Against Discrimination (RCW 49.60), the Washington Prohibited Employment
Practices Law (RCW 49.44), the Washington Minimum Wage Act (RCW 49.46),
Washington's Little Norris-LaGuardia Act (RCW 49.32), the Civil Rights Act of
1964 (including Title VII of that Act), the Equal Pay Act of 1963, the Age
Discrimination in Employment Act of 1967 (ADEA), the Americans with Disabilities
Act of 1990 (ADA), the Fair Labor Standards Act of 1938 (FLSA), the Family and
Medical Leave Act of 1993 (FMLA), the Worker Adjustment and Retraining
Notification Act (WARN), the Employee Retirement Income Security Act of 1974
(ERISA), the National Labor Relations Act (NLRA), and the fair employment
practices laws of the state or states in which I have been employed by the
Company or any of the subsidiaries or other affiliates, each as amended from
time to time). </P>

<P>Excluded from the scope of this Release of Claims is (i) the Final Payment
(as defined in the Agreement) owed to Executive pursuant to the Agreement; (ii)
any claim arising under the terms of the Agreement after the effective date of
this Release of Claim,  (iii) any right of indemnification or contribution that
I have pursuant to the Articles of Incorporation or By-Laws of the Company or
any of its subsidiaries or other affiliates and (iv) any non-forfeitable rights
to accrued benefits, if any, arising under any applicable employee benefit
plans. </P>
<P>&nbsp;</P>
<P>In signing this Release of Claims, I acknowledge my understanding that I may
not sign it prior to the termination of my employment, but that I may consider
the terms of this Release of Claims for up to twenty-one (21) days (or such
longer period as the Company may specify) from the later of the date my
employment with the Company terminates or the date I receive this Release of
Claims.  I also acknowledge that I am advised by the Company and its
subsidiaries and other affiliates to seek the advice of an attorney prior to
signing this Release of Claims; that I have had sufficient time to consider this
Release of Claims and to consult with an attorney, if I wished to do so, or to
consult with any other person of my choosing before signing; and that I am
signing this Release of Claims voluntarily and with a full understanding of its
terms.  </P>
<P>I further acknowledge that, in signing this Release of Claims, I have not
relied on any promises or representations, express or implied, that are not set
forth expressly in the Agreement.  I understand that I may revoke this Release
of Claims at any time within seven (7) days of the date of my signing by written
notice to the<B> [Director, Human Resources]</B> of the Company and that this
Release of Claims will take effect only upon the expiration of such seven-day
revocation period and only if I have not timely revoked it.</P>

<P>Intending to be legally bound, I have signed this Release of Claims under
seal as of the date written below.</P>

<P>Signature: _____________________________________________</P>

<P>Name (please print):  ____________________________________&#9;        </P>

<P>Date Signed: ___________________________________________</P></FONT>
</TEXT>
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