<PAGE>
FORM 10-Q
---------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
--------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______
Commission file number 0-26380
PIXTECH, INC.
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(Exact name of registrant as specified in its charter)
Delaware 04-3214691
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Avenue Olivier Perroy, 13790 Rousset, France
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(Address of principal executive offices) (Zip code)
011-33-4-42-29-10-00
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(Registrant's telephone number, including area code)
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 such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
The number of shares outstanding of each of the issuer's classes of
common stock as of
Class Outstanding at May 7, 1998
----- --------------------------
Common Stock, $.01 par value 14,776,732
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PIXTECH, INC.
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TABLE OF CONTENTS
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PAGE NO.
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PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Balance Sheets as of March 31, 1998
and December 31, 1997................................. 3
Statements of Operations for the Three Months
Ended March 31, 1998 and 1997,
and the period from June 18, 1992 through
March 31, 1998........................................ 4
Statements of Cash Flows for the Three Months
ended March 31, 1998 and 1997, and the period
from June 18, 1992 through March 31, 1998............. 5
Statement of Stockholders' Equity..................... 6 - 7
Notes to Financial Statements......................... 8 - 9
ITEM 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................................... 10 - 14
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings..................................... 15
ITEM 2 Changes in Securities................................. 15
ITEM 3 Default upon Senior Securities........................ 15
ITEM 4 SUBMISSION of MATTERS to a VOTE of
SECURITY HOLDERS...................................... 15
ITEM 5 Other Information..................................... 15
ITEM 6 Exhibits and Reports on Form 8-K...................... 16
</TABLE>
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<TABLE>
<S> <C>
Signature................................................................................. 17
Exhibit Index............................................................................. 18
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash available........................................................ $13,094 $12,428
Restricted cash - short term.......................................... 1,676 1,259
Accounts receivable:
Trade............................................................... 520 953
Other............................................................... 80 82
Inventory............................................................. 716 702
Other................................................................. 1,152 2,166
-------- --------
Total current assets................................................ 17,238 17,590
Restricted cash - long term............................................. 8,380 8,816
Property, plant and equipment, net...................................... 20,824 9,353
Goodwill, net........................................................... 208 226
Deferred tax assets..................................................... 4,896 5,058
Other assets - long term................................................ 265 605
-------- --------
Total assets........................................................ $ 51,811 $ 41,648
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt..................................... $ 1,305 $ 1,364
Current portion of capital lease obligations.......................... 2,404 599
Accounts payable...................................................... 4,327 5,053
Accrued expenses...................................................... 1,415 1,284
-------- --------
Total current liabilities........................................... 9,451 8,300
Deferred revenue........................................................ 1,294 2,546
Long term debt, less current portion.................................... 10,974 11,024
Capital lease obligation, less current portion.......................... 10,811 441
Other long term liabilities, less current portion....................... 522 557
-------- --------
Total liabilities................................................... 33,052 22,868
======== ========
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, authorized shares--30,000,000;
issued and outstanding shares--14,776,732; 13,762,732 respectively... 148 138
Additional paid-in capital............................................ 61,087 57,067
Cumulative translation adjustment..................................... (2,661) (2,132)
Deficit accumulated during development stage.......................... (39,815) (36,293)
-------- --------
Total stockholders' equity......................................... 18,759 18,780
-------- --------
Total liabilities and stockholders' equity......................... $ 51,811 $ 41,648
======== ========
</TABLE>
See accompanying notes.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED PERIOD FROM
MARCH 31, JUNE 18, 1992
------------------------ (DATE OF INCEPTION)
THROUGH
MARCH 31,
1998 1997 1998
------------- ------------- -------------
<S> <C> <C> <C>
Revenues
Cooperation & license revenues............................... $ -- $ 707 $ 25,210
Product sales................................................ 21 173 2,402
Other revenues............................................... 1,232 673 5,171
------- ------- --------
Total revenues............................................ 1,253 1,553 32,782
------- ------- --------
Cost of revenues
License fees and royalties................................... (79) -- (1,619)
------- ------- --------
Gross margin................................................... 1,174 1,553 31,163
------- ------- --------
Operating expenses
Research and development:
Acquisition of intellectual property rights.................. (125) -- (4,890)
Other........................................................ (3,800) (4,174) (57,039)
------- ------- --------
(3,925) (4,174) (61,929)
Marketing & sales............................................ (339) (380) (5,513)
Administrative & general expenses............................ (637) (606) (10,938)
------- ------- --------
(4,901) (5,160) (78,380)
------- ------- --------
Loss from operations........................................... (3,727) (3,607) (47,217)
Other income / (expense)
Interest income / (expense).................................. (80) 131 730
Foreign exchange gains / (losses)............................ 285 (238) 939
------- ------- --------
205 107 1,669
Loss before income tax benefit................................. (3,522) (3,714) (45,548)
Income tax benefit............................................. -- -- 5,734
------- ------- --------
Net loss....................................................... $(3,522) $(3,714) $(39,814)
======= ======= ========
Net loss per share........................................... $(0.25) $(0.33)
====== ======
Shares used in computing net loss per share.................. 13,821 11,144
</TABLE>
See accompanying notes.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JUNE 18, 1992
THREE MONTHS ENDED (DATE OF
MARCH 31, INCEPTION)
THROUGH
March 31,
---------------------------- -------------
1998 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net loss................................................... $(3 ,522) $(3,714) $(39,815)
Total adjustments to net loss.............................. 1,133 2,689 14,759
-------- ------- --------
Net cash (used in) / provided by operating activities...... (2,389) (1,025) (25,056)
-------- ------- --------
INVESTING ACTIVITIES
Additions to property plant and equipment.................. (221) (113) (17,681)
Reclassification of cash available as restricted cash...... -- -- (10,080)
Additions to intangible assets............................. -- -- (130)
-------- ------- --------
Net cash used in investing activities...................... (221) (113) (27,891)
FINANCING ACTIVITIES
Stock issued............................................... 3 ,980 21,617 59,578
Proceeds from long-term borrowings......................... -- -- 16,287
Proceeds from sale leaseback transactions.................. -- -- 2,731
Payments for equipment purchases financed by accounts
payable................................................... -- -- (3,706)
Repayments of long term borrowing and capital lease
obligations............................................... (196) (628) (5,579)
-------- ------- --------
Net cash provided by financing activities.................. 3,784 20,989 69,311
Effect of exchange rates on cash........................... (508) (186) (3,270)
Net increase in cash and cash equivalents.................. 666 19,665 13,094
Cash and cash equivalents beginning of period.............. 12,428 4,266 --
-------- ------- --------
Cash and cash equivalents end of period.................... $ 13,094 $23,931 $ 13,094
======== ======= ========
</TABLE>
See accompanying notes.
<PAGE>
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK
----------------------------
SERIES A
--------------------
SHARES
-----------
ISSUED AMOUNT
----------- -------
<S> <C> <C>
Balance at June 18, 1992
Issuance of convertible preferred stock, net of issuance
costs in 1992, 1993 and 1994................................ 1,557,003 2,368
Issuance of Common stock in 1992 and 1993.....................
Issuance of Common stock under stock option plan in 1994
Purchase of 28,761 shares of Common stock-- Treasury stock
in 1994......................................................
Translation adjustment........................................
Net loss from June 18, 1992 (date of inception) through
December 31, 1994............................................
---------- ------
Balance at December 31, 1994 1,557,003 2,368
Reissuance of 28,761 shares of Common stock held in
treasury....................................................
Issuance of Common stock under stock option plan..............
Common stock issued in initial public offering, net of
issuance costs -- $ 1,080....................................
Conversion of preferred stock................................. (1,557,003) (2,368)
Translation adjustment........................................
Net loss--Year ended December 31, 1995........................
---------- ------
Balance at December 31, 1995
Issuance of Common stock under stock option plan..............
Issuance of warrants in connection with acquisition of the
assets of Panocorp...........................................
Translation adjustment........................................
Net loss--Year ended December 31, 1996.......................
---------- ------
Balance at December 31, 1996
Common stock issued in public offering, net of issuance
costs -- $ 796...............................................
Issuance of Common stock under stock option plan..............
Translation adjustment........................................
Net loss--Year ended December 31, 1997........................
---------- ------
Balance at December 31, 1997
Common stock issued in private placements, net of issuance
costs -- $ 20 (unaudited)....................................
Issuance of Common stock under stock option plan (unaudited)
Translation adjustment (unaudited)............................
Net loss--Three Months ended March 31, 1998
(unaudited).................................................
---------- ------
Balance at March 31, 1998 -- --
========== ======
</TABLE>
<TABLE>
CONVERTIBLE PREFERRED STOCK
-------------------------------------------------------------
SERIES B SERIES C SERIES D
------------------ -------------------- ------------------
SHARES SHARES SHARES
--------- ----------- ---------
ISSUED AMOUNT ISSUED AMOUNT ISSUED AMOUNT
--------- ------ ----------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 18, 1992
Issuance of convertible preferred stock, net of issuance
costs in 1992, 1993 and 1994................................ 363,447 589 3,044,846 8,615 430,208 1,224
Issuance of Common stock in 1992 and 1993.....................
Issuance of Common stock under stock option plan in 1994
Purchase of 28,761 shares of Common stock-- Treasury stock
in 1994......................................................
Translation adjustment........................................
Net loss from June 18, 1992 (date of inception) through
December 31, 1994............................................
-------- ------ ---------- ------ -------- ------
Balance at December 31, 1994 363,447 589 3,044,846 8,615 430,208 1,224
Reissuance of 28,761 shares of Common stock held in
treasury....................................................
Issuance of Common stock under stock option plan..............
Common stock issued in initial public offering, net of
issuance costs -- $ 1,080....................................
Conversion of preferred stock................................. (363,447) (589) (3,044,846) (8,615) (430,208) (1,224)
Translation adjustment........................................
Net loss--Year ended December 31, 1995........................
-------- ------ ---------- ------ -------- ------
Balance at December 31, 1995
Issuance of Common stock under stock option plan..............
Issuance of warrants in connection with acquisition of the
assets of Panocorp...........................................
Translation adjustment........................................
Net loss--Year ended December 31, 1996.......................
-------- ------ ---------- ------ -------- ------
Balance at December 31, 1996
Common stock issued in public offering, net of issuance
costs -- $ 796...............................................
Issuance of Common stock under stock option plan..............
Translation adjustment........................................
Net loss--Year ended December 31, 1997........................
-------- ------ ---------- ------ -------- ------
Balance at December 31, 1997
Common stock issued in private placements, net of issuance
costs -- $ 20 (unaudited)....................................
Issuance of Common stock under stock option plan (unaudited)
Translation adjustment (unaudited)............................
Net loss--Three Months ended March 31, 1998
(unaudited).................................................
-------- ------ ---------- ------ -------- ------
Balance at March 31, 1998 -- -- -- -- -- --
======== ====== ========== ====== ======== ======
</TABLE>
See accompanying notes.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
------------------
ADDITIONAL CUMULATIVE
---------- ------------
SHARES PAID-IN TRANSLATION
---------- ---------- ------------
ISSUED AMOUNT CAPITAL ADJUSTMENT
---------- ------ ---------- ------------
<S> <C> <C> <C> <C>
Balance at June 18, 1992
Issuance of convertible preferred stock, net of issuance
costs in 1992, 1993 and 1994................................
Issuance of Common stock in 1992 and 1993..................... 132,301 $ 1 $ 96
Issuance of Common stock under stock option plan in 1994...... 77,356 1 28
Purchase of 28,761 shares of Common stock--Treasury stock
in 1994......................................................
Translation adjustment........................................ $ 181
Net loss from June 18, 1992 (date of inception) through
December 31, 1994............................................
---------- ---- ------- -------
Balance at December 31, 1994 209,657 2 123 181
Reissuance of 28,761 shares of Common stock held in
treasury.................................................... 3
Issuance of Common stock under stock option plan.............. 6,902 0 3
Common stock issued in initial public offering, net of
issuance costs -- $ 1,080.................................... 2,500,000 25 20,973
Conversion of preferred stock................................. 5,395,504 54 12,742
Translation adjustment........................................ 334
Net loss--Year ended December 31, 1995........................
---------- ---- ------- -------
Balance at December 31, 1995 8,112,063 81 33,844 515
Issuance of Common stock under stock option plan.............. 29,083 0 11
Issuance of warrants in connection with acquisition of the
assets of Panocorp........................................... 230
Translation adjustment........................................ (953)
Net loss--Year ended December 31, 1996........................
---------- ---- ------- -------
Balance at December 31, 1996 8,141,146 81 34,085 (438)
Common stock issued in public offering, net of issuance
costs -- $ 796............................................... 5,570,819 56 22,958
Issuance of Common stock under stock option plan.............. 50,767 1 25
Translation adjustment........................................ (1,694)
Net loss--Year ended December 31, 1997........................
---------- ---- ------- -------
Balance at December 31, 1997 13,762,732 $138 $57.067 $(2,132)
Common stock issued in private placements, net of issuance
costs -- $ 20 (unaudited).................................... 1,014,000 10 4,020
Issuance of Common stock under stock option plan (unaudited)
Translation adjustment........................................ (529)
Net loss--Three Months ended March 31, 1998
(unaudited).................................................
---------- ---- ------- -------
Balance at March 31, 1998 14,776,732 $148 $61,087 $(2,661)
</TABLE>
<TABLE>
<CAPTION>
DEFICIT
-----------
CCUMULATED
-----------
DURING
-----------
EVELOPMENT TREASURY
----------- ---------
STAGE STOCK TOTAL
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<S> <C> <C> <C>
Balance at June 18, 1992
Issuance of convertible preferred stock, net of issuance $ 12,796
costs in 1992, 1993 and 1994................................
Issuance of Common stock in 1992 and 1993..................... 97
Issuance of Common stock under stock option plan in 1994...... 29
Purchase of 28,761 shares of Common stock--Treasury stock
in 1994...................................................... $(11) (11)
Translation adjustment........................................ 181
Net loss from June 18, 1992 (date of inception) through
December 31, 1994............................................ $ (3,605) (3,605)
-------- -------- --------
Balance at December 31, 1994 (3,605) (11) 9,487
Reissuance of 28,761 shares of Common stock held in
treasury.................................................... 11 14
Issuance of Common stock under stock option plan.............. 3
Common stock issued in initial public offering, net of
issuance costs -- $ 1,080.................................... 20,998
Conversion of preferred stock.................................
Translation adjustment........................................ 334
Net loss--Year ended December 31, 1995........................ (6,305) (6,305)
-------- -------- --------
Balance at December 31, 1995 (9,910) 24,530
Issuance of Common stock under stock option plan.............. 11
Issuance of warrants in connection with acquisition of the
assets of Panocorp........................................... 230
Translation adjustment........................................ (953)
Net loss--Year ended December 31, 1996....................... (11,719) (11,719)
-------- -------- --------
Balance at December 31, 1996 (21,629) 12,099
Common stock issued in public offering, net of issuance
costs -- $ 796............................................... 23,014
Issuance of Common stock under stock option plan.............. 25
Translation adjustment........................................ (1,694)
Net loss--Year ended December 31, 1997........................ (14,664) (14,664)
-------- -------- --------
Balance at December 31, 1997 $(36,293) $ 18,780
Common stock issued in private placements, net of issuance
costs -- $ 20 (unaudited).................................... 4,030
Issuance of Common stock under stock option plan (unaudited)
Translation adjustment........................................ (529)
Net loss--Three Months ended March 31, 1998
(unaudited)................................................. (3,522) (3,522)
-------- -------- --------
Balance at March 31, 1998 $(39,815) $ 18,759
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
(UNAUDITED)
Note A -- Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results of the three-month periods ending March 31,
1998 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto for the year ended
December 31, 1997 (the "1997 Financial Statements"), included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
NOTE B -- INVENTORIES
Inventory consists of raw material and spare parts.
NOTE C RESTRICTED CASH
In August 1997, the Company provided Unipac, its Asian manufacturing partner,
with a written bank guaranty in an amount of $10.0 million pursuant to the
Display Foundry Agreement (the "Foundry Agreement") signed in May 1997 between
the Company and Unipac in order to implement volume production of Field Emission
Displays ("FEDs") at its manufacturing line. The Company granted the issuing
banks a security interest in its cash and cash equivalents for the same amount.
The pledged cash and cash equivalents have been recorded as short-term and long-
term restricted cash in the balance sheet. Under certain conditions of the
Foundry Agreement, Unipac can sell to the Company certain equipment. The payment
for such equipment will be secured by Unipac through the exercise of the bank
guaranty. Both the amount of the guaranty to Unipac and the amount of the
security interest to the banks will be reduced by 1/24th of the initial amount
at the end of each quarter, starting June 1998.
NOTE D PROPERTY, PLANT AND EQUIPMENT
In 1997, the Company signed a Display Foundry Agreement with Unipac, a Taiwanese
AMLCD manufacturer, in order to implement high-volume manufacturing of FEDs at
Unipac's plant. Pursuant to this agreement, Unipac began to install volume FEDs
production equipment. As of March 31, 1998, most of the required equipment have
been installed at the contract manufacturers' facility, for a total amount of
$12,340. These capital expenditures have been purchased and funded by Unipac.
PixTech will pay Unipac a Foundry Service Fee based on the depreciation of such
equipment. As of March 31, 1998, such payments have not commenced.
According to Financial Accounting Standard 13, "Accounting for leases", these
capital expenditures have been recorded as assets under the caption "Property,
Plant and Equipment", in the amount of $12,340. As of March 31, 1998, a capital
lease obligation has been recorded in the same amount, of which $1,885 has been
recorded as current portion.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
(UNAUDITED)
NOTE E PRIVATE PLACEMENTS
In March 1998, the Company sold 1,000,000 shares of the Company's Common Stock
to The Kaufmann Fund Inc., in a private placement at a price of $4.00 per share,
resulting in net cash proceeds of $4,000 before expenses payable by the Company,
which amounted to $20.
In March 1998, the Company entered into a license agreement with Coloray
Display Corporation, a California corporation ("Coloray"), providing PixTech
with a worldwide, nonexclusive royalty-free license on certain technologies
related to field emission displays. In consideration of the license and rights
granted to PixTech, the Company paid an amount of $75 and issued 14,000 shares
of the Company's Common Stock, valued at a price of $3.57 per share,
representing a total amount of $50.
NOTE F FAS 130
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income",("SFAS 130"), effective for the Company for the
first quarter of 1998. SFAS 130 requires that items defined as other
comprehensive income, such as foreign currency translation adjustments, be
separately classified in the financial statements and that the accumulated
balance of other comprehensive income be reported separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. The components of comprehensive income for the three months ended March
31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
COMPREHENSIVE LOSS: THREE MONTHS ENDED MARCH 31,
1998 1997
<S> <C> <C>
Net loss $(3,522) $(3,714)
Change in cumulative translation adjustment (529) (478)
------- -------
Comprehensive net loss $(4,051) $(4,192)
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Cooperation and License Revenues. PixTech is a party to a cooperative effort,
between select display manufacturers (the "FED Alliance") to advance FED
technology. Each agreement signed between the Company and a FED Alliance member
provides the member with a license to all FED technology of Laboratoire
d'Electronique, de Technologie et d'Instrumentation ("LETI") and the Company and
a sublicense to all FED technology of the other FED Alliance members, a transfer
of know-how from the Company, as well as access to Pixtech's pilot line. The
Company did not recognize any cooperation and license revenue under the FED
Alliance agreements in the three-month period ended March 31, 1998, as compared
to $707,000 in the three-month period ended March 31, 1997. The decrease in
cooperation and license revenues reflects the achievement by the Company of most
of the contractual milestones with FED Alliance members. The Company does not
expect any significant additional milestone related revenues to be directly
derived from existing FED Alliance members. Future cooperation and license
revenues are mostly subject to execution, by the Company, of cooperation and/or
license agreements with third parties that are not FED Alliance members. The
terms of the existing FED Alliance agreements do not permit expansion of the
Alliance after June 29, 1998. After this date, the Company may grant royalty-
bearing licenses to the FED cross-licensed technology to third parties subject
to certain restrictions as to the geographic location and number of such third-
party licensees. A portion of the proceeds PixTech will receive pursuant to such
third-party licenses may be shared with the other FED Alliance members. To the
extent the members of the FED Alliance successfully incorporate the cross-
licensed technology in their own products, the Company will recognize royalty
revenues as such members sell the products.
Product sales. The Company recognized product sales of $21,000 in the three-
month period ended March 31, 1998, as compared to $173,000 in the three-month
period ended March 31, 1997. These product sales represented the shipment of FED
displays and FED cathodes in limited quantities to members of the FED Alliance
and the shipment of FED displays for evaluation by original equipment
manufacturer ("OEM") customers. While the number of displays shipped
significantly increased between the three-month periods ended March 31, 1997 and
March 31, 1998, the average selling price was reduced, reflecting a different
mix between high valued prototypes and cathodes revenues and displays revenues.
The Company expects to increase product shipments in 1998, both from products
manufactured at its pilot production plant in France and from its expected
volume source of manufacturing by Unipac, which is not expected to begin until
the second half of 1998.
Other revenues. Other revenues is comprised of funding under French or European
Union development contracts and other miscellaneous revenues. The Company
recognized other revenues of $1.2 million in the three-month period ended March
31, 1998, as compared to $673,000 in the three-month period ended March 31,
1997. Of these revenues, $1.2 million and $663,000 are related to a development
contract granted in December 1994 from the French Ministry of Industry to
support manufacturing of FEDs, in the three-month periods ended 1998 and 1997,
respectively. Total funding under this contract approximated $2.7 million. The
Company recognized portions of this revenue as contractual conditions were met.
The Company recognized $800,000 in 1996, $663,000 in 1997 and $1.2 million in
the three-month period ended March 31, 1998.
Research and Development Expenses--Acquisition of Intellectual Property Rights.
The Company expensed $125,000 in the three-month period ended March 31, 1998 for
the acquisition of intellectual property rights from Coloray Display Corporation
(see "Notes to Condensed Consolidated Financial Statements -- Note E -- Private
Placements").
Other Research and Development Expenses. The Company expensed $3.8 million for
research and development costs during the three-month period ended March 31,
1998, as compared to $4.2 million in the three-month period ended March 31,
1997. These expenses include obligations to the French atomic energy agency
(the "CEA") under the LETI Research Agreement, contract consulting fees,
salaries and associated operating expenses for in-house research and development
activities conducted both in its pilot plant in Montpellier and its research and
development facility in Santa Clara, the cost of staffing and operating the
Company's pilot manufacturing facility and the cost of supporting the transfer
of the FED technology to Unipac.
<PAGE>
This decrease reflected the increase of the parity of the U.S. dollar versus the
French Franc in the three-month period ended March 31, 1998 versus the three-
month period ended March 31, 1997, as most of the Company's research and
development costs is incurred in French Francs. After excluding the effects of
currency fluctuation, research and development expenses remained stable in the
three-month period ended March 31, 1998 as compared to the three-month period
ended March 31, 1997.
Sales and Marketing Expenses. The Company expensed $339,000 for sales and
marketing during the three-month period ended March 31, 1998, as compared to
$380,000 during the three-month period ended March 31, 1997, reflecting both the
effects of currency fluctuation and a decrease in staff expenses. The Company
believes sales and marketing expenses may increase in the future, as potential
customers and anticipated shipments of FED displays develop. In July 1997, the
Company signed a distribution agreement of its FED products with Sumitomo
Corporation ("Sumitomo") for the Japanese and Asian market areas. In 1998, the
Company intends to progress on its efforts to conclude similar distribution
agreements for both the United States and Europe, in order to expand market
reach in a cost effective manner.
General and Administrative Expenses. General and administrative expenses
amounted to $637,000 in the three-month period ended March 31, 1998, an increase
of 5% over general and administrative expenses incurred in the three-month
period ended March 31, 1997, which amounted to $606,000, reflecting an increase
in staff expenses.
STRATEGIC ISSUES AND RISKS
The Company is focused on the continued development of the FED technology, the
improvement of manufacturing yields, the successful implementation of contract
manufacturing of FEDs with its Asian contract manufacturer, Unipac, and the
reliability testing of new products which the Company expects will lead to the
shipment of commercial products in the near future. In evaluating this outlook,
the following risks and issues, among others, which are common with development
stage companies, should be considered.
Risks Associated with Contract Manufacturing of FEDs. The Company believes that
its ability to commercialize medium to large volumes of FEDs is highly dependent
on its ability to have FEDs manufactured by Unipac. In May 1997, the Company
signed a Foundry Agreement with Unipac, an AMLCD manufacturer based in Taiwan.
Under the agreement, Unipac has installed volume production equipment to produce
FEDs at its manufacturing plant, and will begin production for exclusive
delivery of FED displays to PixTech. Expectations about the timing of this
manufacturing plan with Unipac are forward-looking statements that involve risks
and uncertainties, including the ease or difficulty of the transfer of the FED
technology to Unipac. If such manufacturing plans are not implemented on a
timely basis, the Company will not be able to ship medium to large volumes of
FED products, or to obtain a commercially acceptable cost for its FED displays.
If the Company is unable to have its FED manufactured in a cost effective
manner, the Company would be materially adversely affected. Significant capital
expenditure is required in order to install, at the contract manufacturers'
facility, equipment that is not common to the AMLCD manufacturing process. A
total amount of $16.5 million of capital expenditures is expected to be required
which, pursuant to the Foundry Agreement, is expected to be purchased and funded
by Unipac, and leased to PixTech. The amount actually expended on capital
expenditures could vary significantly depending upon numerous factors, including
the inherent unpredictability of the total amount of a large scale capital
expenditure program. Should the Company be successful in implementing this
contract manufacturing relationship, the Company's reliance on a single contract
manufacturer will involve several risks, including a potential inability to
obtain an adequate supply of required products, and reduced control over the
price, timeliness of delivery, reliability and quality of finished products. Any
inability to manage this contract manufacturing relationship or any circumstance
that would cause the Company to delay the shipment of its products would have an
adverse effect on the Company.
<PAGE>
Products and Manufacturing Processes under Development, Need to Obtain
Commercial Yields, Costs of Products. The Company's products and its
manufacturing processes are in the development stage. The Company has to date
encountered a number of delays in the development of its products and
manufacturing processes. No assurance can be given that further delays will not
occur. The Company does not plan to increase production from its pilot facility
beyond low volume levels. The Company believes that contract manufacturing with
Unipac (see "Risks Associated with Contract Manufacturing of FEDs") will make it
possible to manufacture volume quantities of FEDs at commercially acceptable
costs. However, moving from pilot production to volume production involves a
number of steps and challenges. In particular, in order to demonstrate the low
cost potential of its FED technology, the Company will need to improve its
manufacturing yields. There can be no assurance that the Company will be able to
implement processes for the manufacture of volume quantities of FED products at
commercially viable cost levels or on a timely basis. If such processes are not
successfully implemented, the Company would be adversely affected.
Display Performance Enhancement. Key elements of display performance are
brightness, and stability over time (life time and reliability), as well as
power efficiency. PixTech is seeking to balance luminous efficiency with power
efficiency to produce bright and low power-consumption displays. Display
reliability is heavily dependent upon the manufacturing process used in
assembling the displays as well as upon the characteristics of the phosphors
used on the anode. In order to produce color displays that will provide the
product life necessary for most applications, the Company needs to make further
advances in manufacturing processes. There can be no assurance that the Company
will be able to improve the reliability and life time of its color FEDs to
achieve commercially acceptable performance, or achieve commercially acceptable
performance on a timely basis. If such displays performance enhancements are
not successfully completed, the Company could be adversely affected.
Cooperation and License Revenues. To date, the Company has recorded most of the
expected revenues associated with the achievement of contractual milestones
under existing FED Alliance agreements. Under the agreements with the existing
FED Alliance members, the Company cannot expand the Alliance after June 29,
1998. Future cooperation and license revenues are mostly subject to execution,
by the Company, of cooperation and/or license agreements with third parties that
are not existing FED Alliance members. These agreements may be subject to
certain restrictions, such as geographic location and number of such third
parties. Should the Company succeed in executing such agreements, a portion of
the revenues from such contracts could be shared with the other FED Alliance
members. Failure to conclude new royalty-bearing licenses or cooperation
agreements could adversely affect the Company.
Competition and Competing Technologies. The market for flat panel display
products is intensely competitive and is expected to remain so in the future.
The market is currently dominated by products utilizing liquid crystal display
("LCD") technology. LCD technology has continued to improve, and there can be no
assurance that advances in LCD technology will not overcome its current
limitations. In addition, as some of the basic FED technology is in the public
domain, the Company has a number of potential direct competitors developing FED
displays. In the event that efforts by the Company's competitors result in the
development of products that offer significant advantages over the Company's
products, the Company could be adversely affected.
No Assurance of Market Acceptance. The potential size and timing of market
opportunities targeted by the Company and the members of the FED Alliance are
uncertain. The Company anticipates marketing its displays to OEMs, and its
success will depend on whether OEMs select the Company's products for
incorporation into their products and upon their successful introduction of such
products, as well as the successful commercialization of products developed by
members of the FED Alliance.
Patents and Protection of Proprietary Technology. The Company's ability to
compete effectively with other companies will depend, in part, on the ability of
the Company to maintain the proprietary nature of its technology. Although the
Company has been granted, has filed applications for and has been licensed under
a number of patents in the United States and other countries, there can be no
assurance as to the degree of protection offered by these patents, as to the
likelihood that pending patents will be issued or as to the validity or
enforceability of any issued patents.
In addition, because of the developmental stage of the Company, claims that
the Company's products infringe on the proprietary rights of others are more
likely to be asserted after commencement of commercial sales incorporating the
Company's technology. While there is currently no pending intellectual property
litigation against the Company, the
<PAGE>
Company receives from time to time notices of potential infringement of third
party rights and there can be no assurance that third parties will not assert
claims against the Company with respect to existing or future products or that
licenses will be available on reasonable terms, or at all, with respect to any
third party technology. In the event of litigation to determine the validity of
any third-party claims, such litigation could result in significant expense to
the Company and divert the efforts of the Company's technical and management
personnel, whether or not such litigation is determined in favor of the Company.
In the event of an adverse result in any such litigation, the Company could be
required to pay substantial amounts in damages and to cease selling the
infringing product unless and until the Company is able to develop non-
infringing technology or to obtain licenses to the technology which was the
subject of the litigation. There can also be no assurance that competitors will
not infringe the Company's patents. An adverse outcome in a suit in which the
Company asserts its patent rights could result in the loss of such rights, and
could subject the Company to substantial costs and diversion of Company
resources.
Foreign exchange. A large percentage of the Company's net assets and of the
Company's costs is expressed in French Francs. Fluctuations of the parity of the
U.S. dollar versus the French Franc may cause significant foreign exchange gains
or losses.
Impact of Year 2000. The Company has conducted a comprehensive review of its
computer systems to identify applications that could be affected by the "Year
2000" issue, and has developed an implementation plan to resolve the issue.
Management does not expect these costs to have a significant impact on its
financial position or results of operations.
FINANCIAL CONDITION
Cash used in operations was $2.4 million for the three-month period ended March
31, 1998, as compared to cash used in operations of $1.0 million for the three-
month period ended March 31, 1997.
The Company has used $25.1 million in cash to fund its operating activities from
inception through March 31, 1998 and has incurred $27.9 million in capital
expenditures and investments.
Cash flows generated from financing activities were $3.8 million in the three-
month period ended March 31, 1998, as compared to $20.9 million in the three-
month period ended March 31,1997.
These financings consisted primarily of sales of shares of Common Stock in a
private placement, resulting in net proceeds to the Company of $4.0 million (net
of issuance costs), while long term liabilities decreased by $196,000. Cash flow
generated from financing activities exclude non-cash transactions related to the
issuance of 14,000 shares of the Company's Common Stock to Coloray (See "Notes
to Condensed Consolidated Financial Statements -- Note E --- Private
placements").
Since its inception, the Company has funded its operations and capital
expenditures primarily from the proceeds of equity financing aggregating $59.6
million and from proceeds aggregating $19.0 million from borrowings and sale-
leaseback transactions.
Capital expenditures were $221,000 during the three-month period ended March 31,
1998 as compared to $113,000 during the same period of 1997. During the three-
month period ended March 31, 1998, capital expenditures remained focused on
limited capacity expansion in the pilot manufacturing facility. Implementing
volume production at Unipac's manufacturing plant requires significant capital
expenditures. An amount of $16.5 million of capital expenditures is expected to
be required which, pursuant to the Foundry Agreement, is expected to be
purchased and funded by Unipac. The written bank guaranty provided by the
Company to Unipac is expected to be increased from $10.0 million to $13.5
million.
<PAGE>
The Company has existing contracts with two different French ministries
providing for the payment of grants to the Company totaling approximately $3.4
million, of which the Company has collected an aggregate amount of $2.7 million
through March 31, 1998 and for which the Company has recognized revenues to date
in the aggregate amount of $2.7 million.
In 1997, the Company entered into a research and development agreement with the
European Union and other European industrial companies for an 18 month-period,
which began in February 1997. The contribution of the European Union to the
costs incurred by the Company amounts to $840,000 over the period. The Company
received $423,000 in 1997 from this contribution, which were not recognized as
income in 1997 as all conditions stipulated in the agreement were not met.
Cash available at March 31, 1998 amounted to $13.1 million as compared to $12.4
million at December 31, 1997. The Company expects that cash available at March
31, 1998 together with anticipated proceeds from the various grants described
above and the anticipated increase in product sales will be sufficient to meet
its cash requirements, including repayment of the current portion of its long
term obligations in the amount of $3.7 million at March 31, 1998, for at least
12 months.
The Company will require substantial funds to conduct research, development and
testing, to develop and expand commercial-scale manufacturing systems and to
market any resulting products. Changes in technology or a growth of sales beyond
currently anticipated levels will also require further investment. The Company's
capital requirements will depend on many factors, including the rate at which
the Company can develop its products, the market acceptance of such products,
the levels of promotion and advertising required to launch such products and
attain a competitive position in the marketplace and the response of competitors
to the Company's products. There can be no assurance that funds for these
purposes, whether from equity or debt financing, or other sources, will be
available when needed or on terms acceptable to the Company.
<PAGE>
PIXTECH, INC.
March 31, 1998
PART II Other Information
ITEM 1 Legal Proceedings:
Not applicable.
ITEM 2 Changes in Securities:
(a) Not applicable
(b) Not applicable
(c) In March 1998, the Company sold 14,000 and 1,000,000
shares of its Common Stock to Standard Energy Company
("Standard Energy") and The Kaufmann Fund, Inc.
("Kaufmann"), respectively, in private placements exempt
from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended. The offering price to
Standard Energy and Kaufmann was $3.57 per share and
$4.00 per share, respectively, and these offerings
resulted in net proceeds to the Company of approximately
$4,000,000. As consideration for issuance of the Common
Stock to Kaufmann. Kaufmann paid $4,000,000 in cash. As
consideration for the issuance of Common Stock to
Standard Energy, Coloray Display Corporation granted
certain license and rights to the Company.
ITEM 3 Defaults upon Senior Securities:
Not applicable.
ITEM 4 Submission of Matters to a Vote of Security Holders :
None
ITEM 5 Other Information:
None.
<PAGE>
ITEM 6 Exhibits and reports on Form 8-K:
(a) Exhibits:
10.1 License Agreement, dated March 16, 1998, between
the Registrant and Coloray Display Corporation.
10.2 Stock Issuance Agreement, dated March 16, 1998,
between the Registrant and Standard Energy Company
10.3 Stock Purchase Agreement, dated March 27, 1998,
between the Registrant and Kaufmann Fund Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K : None
<PAGE>
PIXTECH, INC.
March 31, 1998
SIGNATURE
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.
PIXTECH, INC.
Date: May 14, 1998 BY: /s/ Yves Morel
--------------------------
Yves Morel
Chief Financial Officer
<PAGE>
PIXTECH, INC.
March 31, 1998
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<C> <S>
10.1++ License Agreement, dated March 16, 1998, between the
Registrant and Coloray Display Corporation.
10.2++ Stock Issuance Agreement, dated March 16, 1998,
between the Rgistrant and Standard Energy Company
10.3 Stock Purchase Agreement, dated March 27, 1998,
between the Registrant and Kaufmann Fund Inc.
27 Financial Data Schedule.
++ Confidential treatment has been requested for certain
portions of these Exhibits pursuant to rule 24b-2 of
the Securities Exchange Act of 1934, as amended.
</TABLE>
<PAGE>
LICENSE AGREEMENT
This LICENSE AGREEMENT ("Agreement"), dated and effective as of March 16,
1998 ("Effective Date"), is entered into by and between PixTech, Inc., a
Delaware corporation having offices at 3350 Scott Boulevard, Building 37, Santa
Clara, California 95054 ("PixTech") and Coloray Display Corporation, a
California corporation ("Coloray"), whose mailing address is Suite 602, 1105
Schrock Road, Columbus, Ohio 43229.
RECITALS
A. Coloray has rights in and to certain technologies related to field
emission displays ("Licensed Technology" as further defined below), some of
which rights are subject to the terms and conditions of the Restated License
Agreement and Release dated July 31, 1997, between SRI International and Coloray
(the "SRI Restated License").
B. PixTech desires to obtain, and Coloray desires to grant, a license to
the Licensed Technology in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the promises and
conditions contained herein, the parties hereby agree as follows:
1. DEFINITIONS
-----------
1.1 "Licensor" shall mean Coloray and "Licensee" shall mean PixTech.
---------- ----------
1.2 "Licensed Technology" shall mean all technical data, inventions,
---------------------
technologies, concepts, processes, formulae, know-how, systems, apparatuses,
software, designs, drawings, and any other subject matter, including all
patents, copyrights, trade secrets, mask works, industrial designs and other
intellectual property rights therein protected under the laws of any country of
the world (whether or not rights therein are currently perfected), whether now
existing or hereinafter obtained by Coloray during the term of this Agreement,
in each case to the extent that it pertains to or may be useful within the
Field. The Licensed Technology as defined herein shall be divided into two
subsets as follows:
(a) "Coloray Licensed Technology" shall only include: (i) Licensed
Technology related to the patents, patent applications and Inventions
listed in Exhibit A hereto (collectively, the "Coloray Patents"); (ii)
any Licensed Technology prepared for or in connection with the Coloray
Patent filings for Licensor but not yet filed, provided that, if any
of the Coloray Patent filings related to the Field are filed by
Licensee, then Licensor shall receive a non-exclusive license; and
(iii) all continuations, continuations-in-part, divisionals, and other
related patent applications and any patents issuing thereon in any
country and all patent rights therein, to the extent any of the
foregoing is directly related to the Coloray Patents; and
(b) "Other Licensed Technology" shall not include the "Coloray
Licensed Technology," but shall include without limitation: (i) the
patents, patent applications, and Inventions listed in Exhibit B
hereto; (ii) any Licensed Technology related to research and
<PAGE>
development projects within the Field, if any, undertaken between
Licensor and the University of New Mexico ("UNM"), provided that, if
any new licenses are created from this UNM research, Licensee shall
receive a non-exclusive license expiring on December 31, 1999; (iii)
any Licensed Technology prepared for or in connection with patent
filings for Licensor , other than related to Coloray Patents, but not
yet filed, provided that, if any of the patent filings related to the
Field are filed by Licensee, then Licensor shall receive a non-
exclusive license; (iv) all continuations, continuations-in-part,
divisionals, and other related patent applications and any patents
issuing thereon, other than related to Coloray Patents, in any country
and all patent rights therein; and (v) any Licensed Technology related
to the Field from AMOCO, its successors or assigns.
1.3 "Confidential Information" means confidential information in any
--------------------------
form that may be disclosed by a Party hereto (the "Disclosing Party") to the
other Party (the "Receiving Party"), that is either (a) conspicuously marked
"Confidential" or "Proprietary" if disclosed to the receiving Party in tangible
form or (b) if disclosed orally, is reduced by the Disclosing Party to a
writing, conspicuously marked "Confidential" or "Proprietary", given to the
Receiving Party within 30 days of such oral disclosure. As used in this
paragraph, "waiting" or "written" include any form of tangible embodiment of
information including, without limitation, hard disk, magnetic tape or diskette,
CD-ROM or sample device.
1.4 "Invention" means both patentable inventions as well as
-----------
nonpatentable subject matter, irrespective of whether patent protection is
sought for such Invention or retained as a trade secret, as the case may be,
including all intellectual property rights therein.
1.5 "Affiliate" means an entity controlling, controlled by, or under
-----------
common control with another entity, such control being exercised through
ownership or control, directly or indirectly, of 50% or more of the voting power
of the shares. References to each Party herein shall include such Party's
Affiliates.
1.6 "Party" means PixTech, Licensor or both, as the case may be.
-------
1.7 "Field" means any activity or apparatus relating to (i) the
-------
design,development, manufacture, sale, distribution and/or use of FED Products;
(ii) the design, development, manufacture, sale, distribution and/or use of
equipment, devices and/or other subject matter for use in designing, developing,
manufacturing, producing, testing or otherwise using such FED Products.
1.8 "FED Products" means products consisting in whole or in part of
--------------
any of the following: (i) a display subsystem including a field emission
cathode, a component thereof, and/or related accessories; (ii) a lamp,
consisting of a field emission cathode or component thereof; or (iii) a
backlight.
1.9 "Encumbrance" means any lien, claim, charge, security interest,
-------------
mortgage, pledge, easement, license, conditional assignment or other title
retention agreement, defect in title, covenant, or other restriction of any kind
other than the security interest of Standard Energy Company ("Standard Energy"),
an Ohio corporation having offices at 1105 Schrock Road, Suite 602, Columbus,
Ohio 43229, which security interests do not have priority over the rights and
licenses granted to PixTech hereunder as acknowledged and agreed by Standard
Energy below.
<PAGE>
2. GRANT OF LICENSE TO PIXTECH
---------------------------
Licensor hereby grants to PixTech and its Affiliates, under all of
Licensor's rights in and to the Licensed Technology, a perpetual, nonexclusive,
fully paid-up, royalty-free, world-wide right and license to make, have made,
use, sell, offer for sale, and import any system, device, apparatus, method,
process or other Invention, and to reproduce, prepare derivative works of,
distribute, and otherwise use and exploit subject matter within the Licensed
Technology. SUBJECT TO THE TERMS AND CONDITIONS OF THE PRIOR AGREEMENTS (AS
DEFINED BELOW), PixTech shall have the right to grant and authorize sublicenses
to the rights and licenses granted to PixTech under this Section 2; provided,
however, that: (a) for a period of four years from the Effective Date, PixTech
will not sublicense the right to commercially sell products embodying patented
Inventions of Coloray to more than three Manufacturing Partners of PixTech; and
(b) without the prior written consent of Licensor, no sublicense shall be
granted to SI Diamond Technology, Inc., UNM or any Affiliate of either SI
Diamond or UNM. As used above, a "Manufacturing Partner" means a third party
who, at the time that a respective sublicense is granted, has been granted or is
concurrently granted a license for at least a portion of the Field under
PixTech's own patent rights subject to terms and conditions (including scope of
license and termination provisions) agreed upon by PixTech in good faith. The
license and rights granted by Licensor to PixTech under this Section 2 shall
apply retroactively to activities of PixTech prior to the Effective Date.
Licensor hereby releases PixTech from any and all claims of infringement of the
Licensed Technology or any part thereof prior to the Effective Date of this
Agreement.
3. COMPENSATION TO LICENSOR
------------------------
3.1 License Fee. In consideration of the license and rights granted
-----------
to PixTech under Section 2 above, PixTech shall pay to Standard Energy, on
behalf of Coloray, the following:
(a) within two (2) business days of the Effective Date of this
Agreement, the sum of $75,000, of which $10,000 has already been
deposited by PixTech with Standard Energy; and
(b) no later than the first anniversary of the Effective Date, the
sum of [ ]*
3.2 Stock Issuance. In consideration of the license and rights
--------------
granted to PixTech under Section 2 above, PixTech shall issue to Standard
Energy, on behalf of Coloray the following:
(a) 14,000 shares of Common Stock of PixTech pursuant to the terms
and conditions set forth in Exhibit C hereto as soon as possible
after, and in all events within thirty (30) days of, the Effective
Date of this Agreement; and
(b) no later than the first anniversary of the Effective Date, [ ]*
additional shares of Common Stock of PixTech pursuant to the terms and
conditions of Exhibit C hereto.
3.3 Restricted License. Until such time as PixTech pays and issues
------------------
to Standard Energy the consideration stated under Sections 3.1(b) and 3.2(b)
above (collectively the "Final Payment"), PixTech's rights under this Agreement
shall be limited to a perpetual, nonexclusive, fully paid-up, royalty-free,
world-wide right and license as described in section 2 above, but in the Coloray
Licensed Technology only and, until the Final Payment is timely made, for all
purposes of this Agreement, the term "Licensed Technology" as used herein shall
mean only, and be restricted to, the "Coloray Licensed Technology," as defined
herein and shall not include the "Other Licensed
* Confidential information omitted and filed with the Commission.
<PAGE>
Technology" as defined. Until the Final Payment is timely made, this Agreement
shall be referred to as the "Restricted License Agreement." In the event the
Final Payment is not timely made on or before the first anniversary of the
Effective Date, then: (a) this Agreement shall immediately and permanently
thereafter be limited to the terms and conditions of the Restricted License
Agreement, with PixTech having no rights or interests in the Other Licensed
Technology; and (b) neither Coloray nor Standard Energy shall have any (i) right
to demand or receive the Final Payment or (ii) obligations to PixTech except to
the extent of the Restricted License Agreement.
3.4 Sole Remuneration. The payment of both the license fee set forth
-----------------
in Section 3.1 and the issuance of stock set forth in Section 3.2, both to
Standard Energy on behalf of Coloray, shall be Licensor's sole remuneration for
the license and rights granted by Licensor to PixTech hereunder and no payments,
royalties or other compensation shall accrue or be due to Coloray under this
Agreement except as specifically set forth in this Section 3.
4. PATENT PROSECUTION AND MAINTENANCE
----------------------------------
4.1 Prosecution and Maintenance. Licensor has previously executed a
---------------------------
License Agreement with each of [ ]*, a California corporation [ ]*, and
[ ]*, a California corporation [ ]*, giving [ ]*and [ ]*, inter alia, the
----- ----
right to prosecute and maintain patent and other intellectual property
protection related to the "Licensed Technology" as defined within such
Agreements as may be amended from time to time (the "Prior Agreements"). In the
event that both [ ]* and [ ]* decline to "Pursue Protection" ( as defined in
the Prior Agreements) with respect to any Invention falling within its
definition of its Licensed Technology, or in the event that both [ ]* and
[ ]* abandon a previous decision to Pursue Protection, PixTech shall have the
next and exclusive Right to Pursue Protection under the remaining terms of this
Section 4.1, if applicable.
As to Inventions falling under the paragraph immediately above as well as
Inventions originally within the Field of this Agreement and within the
description of the Licensed Technology, but not within the Field of the Prior
Agreements, PixTech shall have the first Right and option to pursue, prosecute
and maintain patent or other intellectual property protection for such
Inventions within the Licensed Technology (hereinafter "Pursue Protection"), at
PixTech's sole expense. PixTech may exercise such option at any time during the
period from the Effective Date and prior to January 1, 2000 (the "Non-Exclusive
Period") by providing Licensor with written notice of such election ("Elected
Inventions"). In the event that any patent applications are filed for
Inventions within the Field which have not yet been elected by PixTech, Licensor
will promptly notify PixTech and provide PixTech with a copy of such application
and the amount of attorneys' fees and filing fees incurred for such filing.
PixTech will either reimburse Licensor for the reasonable attorneys' fees and
filing fees incurred for such filing within sixty (60) days after receipt of
such notice or waive its option to have such application included in the Elected
Inventions. PixTech will Pursue Protection for the Elected Inventions at its
sole expense using its reasonable business judgment. PixTech will notify
Licensor at least sixty (60) days prior to allowing any patent or patent
application for an Elected Invention to become abandoned during the Non-
Exclusive Period, in which event Licensor may assume control of such patent or
patent application and it will be removed from the Elected Inventions. For
purposes hereof, a patent application will be considered to become abandoned
only if all further rights of prosecution, appeal and issuance lapse without the
right to file a continuation, continuation-in-part, divisional re-examination,
reissue or other application with respect to the Invention covered by such
application. As used hereinafter "Pursue Protection" includes, without
limitation, filing and prosecuting patent applications, conducting interferences
of opposition, requesting re-examination, reissue or extension, paying
maintenance fees and the like. Licensor agrees to provide PixTech all
reasonable cooperation and assistance requested by PixTech in evaluating
* Confidential information omitted and filed with the Commission.
<PAGE>
Inventions in the Licensed Technology and Pursuing Protection for Elected
Inventions. Such cooperation shall include providing, and obtaining from the
respective inventors, prompt production of pertinent facts and documents, giving
of testimony, execution of petitions, oaths, powers of attorney, specifications,
declarations or other papers, and other assistance for (i) prosecuting any-of
said applications or substitute, divisional, continuing or additional
applications covering the respective Elected Invention, (ii) for filing and
prosecuting applications for reissuance of any patents for the respective
Elected Invention (iii) interference or other priority proceedings involving the
respective Elected Invention, and (iv) legal proceedings involving in the
respective Elected Invention and any applications therefore and any patents
granted thereon, including without limitation reissues and reexaminations,
opposition proceedings, cancellation proceedings, priority contests, public use
proceedings, and infringement actions; provided, however, that the reasonable
expenses incurred by Licensor and the respective inventors in providing such
cooperation shall be paid for by Licensee.
4.2 Third Party Licenses; Exclusivity. Both during and after the
---------------------------------
NonExclusive Period, Licensor shall have the unrestricted right to grant
licenses to make, use, sell and import subject matter solely outside of the
Field under the Licensed Technology. During the Non-Exclusive Period, Licensor
will have the right to grant non-exclusive licenses to make, use, sell and
import subject matter in the Field under the Licensed Technology to third
parties for fair consideration on such terms and conditions as reasonably
determined by Licensor. All such consideration shall accrue to Licensor. After
the NonExclusive Period, the rights and licenses granted to PixTech under
Section 4.1 above with respect to Patents maintained either by [ ]*, [ ]* or
PixTech ("Maintained Patents") and Elected Inventions shall become exclusive
within the Field (even as to Licensor). Thereafter, PixTech shall have the sole
and exclusive right to Pursue Protection and enforce patents and other rights in
and to the Maintained Patents and Elected Inventions, including pursuing
remedies for past infringement and injunctive relief, subject only to the non-
exclusive licenses granted by Licensor to third parties during the Non-Exclusive
Period as set forth above. Licensor shall have the sole and exclusive right to
Pursue Protection and enforce patents and other rights in and to the Licensed
Technology other than the Maintained Patents and elected Inventions, including
pursuing remedies for past infringement and injunctive relief.
4.3 Enforcement of Legal Rights. PixTech shall have the right to
---------------------------
initiate or defend any legal action of any nature at its expense for the
defense, protection or preservation of any of the intellectual property rights
derived from this Agreement (or, indirectly, the Prior Agreements), acting in
all circumstances on behalf of Licensor as Licensor's agent. PixTech shall be
entitled to recover from the first proceeds of any adjudication or other
resolution of such action all of its costs and expenses, including reasonable
attorney and expert-witness fees, expended in such action, and shall be entitled
to share with Coloray the benefit of any royalty stream, settlement or other
adjudicated or agreed resolution of the matter in proportion to PixTech's proven
enhancements after the Effective Date of this Agreement to the Licensed
Technology which was the subject of such action; provided, however, that in no
event shall such share to PixTech be less than 20% of such benefit as and when
realized; except that, if and to the extent that Licensor is obliged to
------ ----
participate in financing such action there shall be an equitable division of
such proceeds reflecting each party's relative participation.
5. CONFIDENTIALITY
---------------
5.1 Confidential Information. The Parties acknowledge that
------------------------
Confidential Information disclosed to it by the other Party constitutes valuable
trade secrets of such other Party and each Party agrees that it shall use such
Confidential Information received by it from the other Party solely in
accordance with the provisions of this Agreement and will not disclose, or
permit to be disclosed, the same, directly or indirectly, to any third party
without the other Party's prior written
* Confidential information omitted and filed with the Commission.
<PAGE>
consent. Each Party agrees to exercise due care in protecting the confidential
Information from unauthorized use and disclosure. Notwithstanding the foregoing,
provisions of this Section 5.1, and except to the extent that it can be
established by the receiving Party by competent proof, "Confidential
Information" excludes information that: (i) is or becomes part of the public
domain through no fault or breach of the Receiving Party; (ii) is known to the
Receiving Party prior to disclosure thereof, or (iii) is subsequently rightfully
obtained by the Receiving Party from a third party that has the legal right to
disclose such information to the Receiving Party; (iv) is independently
developed by the receiving Party without use of or reference to the Disclosing
Party's Confidential Information; (v) is furnished to a third parry by the
Disclosing Party without restrictions similar to the terms hereof on the third
party's right to use or disclose; (vi) is required by law to be disclosed by the
Receiving Party, provided that the Receiving Party gives the Disclosing Party
prompt written notice of such requirement prior to such disclosure; or (vii) has
been approved for use or disclosure by the Disclosing Party.
5.2 Permitted Use and Disclosures. Notwithstanding the provisions
-----------------------------
of Section 5.1, PixTech may use or disclose Confidential Information disclosed
to it in connection with this Agreement, to the extent such use or disclosure is
reasonably necessary to exercise the rights granted to it hereunder (including
granting permitted sublicenses) or as required by law, provided that it uses
reasonable efforts to secure confidential treatment of such information prior to
its disclosure (whether through confidentiality agreements, protective orders or
otherwise).
5.3 Non-Disclosure of Terms. Each of the Parties hereto agrees not
-----------------------
to disclose to any third party the terms of this Agreement without the prior
written consent of the other Party, except to the Party's attorneys, advisors,
investors and others on a need to know basis under circumstances that reasonably
ensure the confidentiality thereof, or to the extent required by law.
6. REPRESENTATIONS, WARRANTIES AND INDEMNITY
-----------------------------------------
6.1 Licensor represents, warrants and covenants that: (i) it has and
--------
will continue to have the full right and authority to enter into this Agreement,
perform its obligations hereunder, and grant the rights and licenses granted
herein, (ii) other than the existing agreements with [ ], [ ]* and SRI
International, copies of which have been previously provided to Licensee, and
any other license entered into by Licensor prior to its bankruptcy (completed in
1993), Licensor has not previously granted and will not grant any rights
inconsistent or in conflict with the rights and licenses granted to PixTech
herein, (iii) to the best of Licensor's knowledge, there are no existing or
threatened actions, suits or claims pending or threatened against Licensor, nor
is there any basis therefor, with respect to the Licensed Technology or the
right of Licensor to enter into and perform its obligations under this
Agreement, and the Licensed Technology is subject to any outstanding injunction,
judgment, order, decree, ruling or charge; (iv) to the best of Licensor's
knowledge, the manufacture, sale and use of FED Products in accordance with the
Licensed Technology will not infringe any intellectual property rights of a
third party; (v) to the best of Licensor's knowledge, it owns, and is the record
holder of title of, all rights in and to the patents, patent applications and
Inventions listed in Schedule A free and clear of any Encumbrances; (vi) to the
best of Licensor's knowledge, it is the exclusive licensee of a rights in and to
the patents, patent applications and Inventions listed in Schedule B, free and
clear of any Encumbrances and is in compliance with all terms of all licenses
relating to any Licensed Technology licensed to Licensor; (vii) to the best of
Licensee's knowledge, the patents listed Schedule A are valid and enforceable;
(viii) to the best of Licensor's knowledge, no third party is infringing or
otherwise violating Licensor's rights in the Licensed Technology other than any
alleged infringements of which PixTech is
* Confidential information omitted and filed with the Commission.
<PAGE>
aware; (ix) Licensor has not had a receiver or similar officer appointed for it,
and has not had proceedings under insolvency or bankruptcy laws commenced by or
against Licensor as of the Effective Date; and (x) Standard Energy is the
secured creditor of Coloray, with a security interest in the Licensed Technology
pursuant to Patent Pledge Agreements and other instruments, and pursuant to such
security interests, Standard Energy is entitled to receive directly the
compensation otherwise due to Coloray for application on amounts owed by Coloray
to Standard Energy.
6.2 Licensor Indemnity. Licensor agrees to defend, indemnify and
------------------
hold PixTech harmless against any loss, cost, damage or liability (including
reasonable attorneys' fees and costs) arising from or related to any material
breach of Licensor's representations and warranties set forth above, including
without limitation any action or claim brought or threatened against PixTech or
its customers as a result thereof.
6.3 PixTech Indemnity. PixTech agrees to defend, indemnify and hold
-----------------
Licensor harmless against any loss, cost, damage or liability (including
reasonable attorneys' fees and costs) arising from or related to any material
breach of its obligations hereunder and any claim that FED products
manufactured by or for PixTech under the Licensed Technology are defective under
product liability law, provided that such claim is not due in whole or in part
to any negligent act or omission or willful misconduct of Licensor or Licensor's
employees, agents, or independent contractors. PixTech's indemnity obligation
under this Section 6.3 shall be subject to Licensor: (i) promptly notifying
PixTech of the claim or action giving rise to the indemnity; (ii) providing
PixTech with control and authority over the defense of such action or claim,
(iii) providing PixTech with proper and full information and reasonable
assistance to defend and/or settle any such claim or action. PixTech shall not
be responsible for indemnifying any party with respect to costs incurred, or
amounts paid in any settlement, unless PixTech has approved such costs or
settlements in advance.
7. TERM AND TERMINATIONS
---------------------
7.1 Term. This Agreement will take effect on the Effective Date and
----
shall remain in effect perpetually, unless earlier terminated in accordance with
the provisions of this Agreement.
7.2 Termination for Breach. Either Party may terminate this
----------------------
Agreement, immediately upon written notice at any time if the other Party is in
material breach of any warranty, term, condition or provision of this Agreement,
which breach, if capable of being cured, is not cured within thirty (30) days
after written notice of said breach by the nonbreaching Party. It is understood
and agreed that Coloray may not terminate this Agreement for any reason other
than for an uncured material breach by PixTech as set forth in this Section 7.2.
Breaches by PixTech that shall constitute a material breach for purposes of this
Section 7.2 shall be limited to failure by PixTech to pay the license fee set
forth in Section 3.1 above and failure by PixTech to issue the stock set forth
in Section 3.2 above.
7.3 Effect of Termination. Sections 7.3 and 8 shall survive the
---------------------
expiration or termination of this Agreement for any reason. Section 5 shall
survive expiration or termination of this Agreement for a period of three (3)
years. Section 2 shall survive any termination of this Agreement for breach by
Licensor. Section 2 shall not survive any termination of this Agreement for
breach by PixTech. Termination of this Agreement for any reason shall not
release any Party hereto from any liability which at the time of such
termination has already accrued to the other Party or which is attributable to a
period prior to such termination, nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity with respect to
any breach of this Agreement.
<PAGE>
8. MISCELLANEOUS
-------------
8.1 Waiver. It is agreed that no waiver by any Party hereto of any
------
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
8.2 Government Laws. This Agreement and any dispute arising from the
---------------
performance or breach hereof shall be governed by and construed and enforced in
accordance with the laws of the State of Ohio, without reference to conflicts of
laws principles.
8.3 Jurisdiction Venue. All disputes arising out of this Agreement
------------------
will be subject to the exclusive jurisdiction and venue of the California state
courts of Santa Clara County, California (or, if there is exclusive federal
jurisdiction, the United States District Court for the Northern District of
California), and the Parties consent to the personal and exclusive jurisdiction
of these courts.
8.4 Assignment. This Agreement shall not be assignable by either
----------
Party to any third party without the written consent of the other Party hereto;
except either Party may assign this Agreement without such consent, to a
successor-in-interest to all or substantially all of the business or assets of
such Party to which this Agreement pertains, whether by merger, reorganization
acquisition, sale, or otherwise.
8.5 Notices. All notices, requests and other communications
-------
hereunder shall be in writing and shall be personally delivered or sent by
telecopy or other electronic facsimile transmission or by registered or
certified mail, return receipt requested, postage prepaid, in each case to the
respective address specified below, or such other address as may be specified in
writing to the other party hereto:
PixTech: PixTech, Inc.
3350 Scott Boulevard, Building 37
Santa Clara, CA 95054
Attn: Michel Garcia
With a required copy to:
Michael Lytton, Esq.
Palmer & Dodge, LLP
One Beacon Street
Boston, Ma 02108
<PAGE>
Licensor: Coloray Display Corporation
c/o Suite 602
1105 Schrock Road
Columbus, OH 43229
With a required copy to:
Thomas E. Moloney, Esq.
Baker & Hostetler, LLP
65 East State Street
Columbus, Ohio 43215
In addition, for a separate and valuable consideration, receipt of
which is hereby acknowledged, Coloray agrees that in the event that Coloray
liquidates, sells its assets, files for protection under any Chapter of the
Federal Bankruptcy Act, or ceases to do active business, PixTech shall become
entitled to receive copies of all Notices of any kind or character which Coloray
is entitled to receive under the Prior Agreements identified in Section 4.1.
8.6 Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
8.7 Force Majeure. Nonperformance of any Party shall be excused to
-------------
the extent that performance is rendered impossible by strike, fire, earthquake,
flood, governmental acts or orders or restrictions, failure of suppliers, or any
other reason where failure to perform is beyond the reasonable control and not
caused by the negligence, willful misconduct of the nonperforming Party.
8.8 Complete Agreement. This Agreement including the Exhibits
------------------
attached hereto, constitutes the entire agreement, both written and oral,
between the Parties with respect to the subject matter hereof, and all prior
agreements respecting the subject matter hereof, either written or oral,
expressed or implied, shall be abrogated, canceled and are null and void and of
no effect. No amendment or change hereof or addition hereto shall be effective
or binding on either of the Parties hereto unless reduced to writing and
executed by the respective duty authorized representatives of PixTech and
Licensor.
8.9 Headings. The captions to the several Sections hereof are not a
--------
part of this Agreement, but are included merely for convenience of reference
only and shall not affect its meaning or interpretation.
8.10 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original and both together shall be
deemed to be one and the same agreement.
8.11 SRI Restated License. This Agreement is expressly subject to
--------------------
the terms and conditions of the SRI Restated License to the extent applicable to
the Licensed Technology, and to the extent that any of the terms of this
Agreement is inconsistent with the terms of the SRI Restated License as
applicable to the Licensed Technology, then the terms of the SRI Restated
License shall prevail.
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement, by their
respective officers hereunto duly authorized, the day and year first above
written.
LICENSEE: LICENSOR:
- --------- ---------
PIXTECH, INC. COLORAY DISPLAY CORPORATION
By: /s/ Yves Morel By: /s/ Philip A. Schlosser
---------------------------- ---------------------------------
Name: Yves Morel Name: Philip A. Schlosser
-------------------------- -------------------------------
Title: CFO Title: President
------------------------- ------------------------------
<PAGE>
EXHIBIT A
PATENTS, PATENT APPLICATIONS AND INVENTION DISCLOSURES
OWNED BY COLORAY
[ ]*
* Confidential information omitted and filed with the Commission.
<PAGE>
EXHIBIT B
PATENT, PATENT APPLICATIONS, AND INVENTION DISCLOSURES EXCLUSIVELY LICENSED TO
COLORAY
[ ]*
* Confidential information omitted and filed with the Commission.
<PAGE>
STOCK ISSUANCE AGREEMENT
This Agreement is made as of March 16, 1998, between PixTech, Inc., a
Delaware corporation ("PixTech") having offices at 3350 Scott Boulevard,
Building 37, Santa Clara, California 94505, and Standard Energy Company, an
Ohio corporation ("Standard Energy") having offices at 1105 Schrock Road, Suite
602, Columbus, Ohio 43229, in conjunction with that certain License Agreement
between PixTech and Coloray Display Corporation of even date herewith (the
"License Agreement"), under which PixTech has agreed to issue certain stock to
Standard Energy hereunder, on behalf of Coloray, in consideration for the
license and rights granted to PixTech under the License Agreement.
1. Issuance of Stock. Subject to the terms and conditions of Section 3 of
-----------------
the License Agreement, PixTech hereby agrees to issue to Standard Energy and
Standard Energy agrees to accept an aggregate of [ ]* shares of PixTech's
Common Stock (the "Shares") in consideration for the license and rights granted
under the License Agreement.
2. Delivery. PixTech will use all reasonable efforts to issue and deliver
--------
to Standard Energy a duly executed certificate evidencing 14,000 of the Shares
in the name of Standard Energy as soon as possible, but in no event more than
thirty (30) days, after receipt of both the executed License Agreement and the
executed copy of this Agreement. The remaining [ ]* shares shall be
delivered to Standard Energy if and when directed by PixTech as contemplated by
Section 3 of the License Agreement.
3. Representation and Warranties of PixTech. PixTech hereby represents
----------------------------------------
and warrants to Standard Energy as follows:
3.1 Organization, Good Standing and Qualification. PixTech is a
---------------------------------------------
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. PixTech has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and sell the Shares and to carry out the provisions of this
Agreement.
3.2 Stock. All issued and outstanding shares of PixTech's capital
-----
stock (i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, and (iii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. When issued in compliance
with the provisions of this Agreement, the Shares will be validly issued, fully
paid and nonassessable, and will be free of any liens or encumbrances; provided,
however, that the Shares may be subject to restrictions on transfer under the
state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time a transfer is proposed.
* Confidential information omitted and filed with the Commission.
<PAGE>
4. Investment Representations.
--------------------------
4.1 In connection with the purchase of Shares, Standard Energy
represents to PixTech the following:
4.1.1 Standard Energy has been given information regarding
PixTech's business affairs and financial condition and has requested, received,
reviewed and considered sufficient information about PixTech to reach an
informed and knowledgeable decision to acquire the securities. Standard Energy
is acquiring these securities for investment for its own account only and not
with a view to, or for resale in connection with any "distribution" thereof
within the meaning of the Securities Act of 1933 (the "Securities Act").
4.1.2 Standard Energy understands that the securities have not
been registered under the Securities Act by reason of a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Standard Energy's investment intent as expressed herein. In this
connection Standard Energy understands that in view of the Securities and
Exchange Commission ("Commission"), the statutory basis for such exemption may
not be present if Standard Energy's representation meant that its present
intention was to hold these securities for a minimum capital gains period under
the tax statutes, for a deferred sale for a market rise, for a sale if the
market does not rise, or for a year or any other fixed period in the future.
4.1.3 Standard Energy further acknowledges and understands that
the securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Standard Energy further acknowledges and understands that Standard Energy is
under no obligation to register the securities, except as provided in Section 5
hereof. Standard Energy understands that the certificate evidencing the
securities will be imprinted with a legend which prohibits the transfer of the
securities unless they are registered or such registration is not required in
the opinion of the counsel for PixTech.
4.1.4 Standard Energy is aware of the adoption of Rule 144 by the
Commission, promulgated under the Securities Act, which permits limited public
resale of the securities acquired in a non-public offering subject to the
satisfaction of certain conditions.
4.1.5 Standard Energy further acknowledges that in the event all
of the requirements of Rule 144 are not met, compliance with Regulation A or
some other registration exemption will be required, and that although Rule 144
is not exclusive, the staff of the Commission has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and other than pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales and that such persons and the brokers who participate
in the transaction do so at their own risk.
4.1.6 Standard Energy qualifies as an "accredited investor"
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act.
4.2 Standard Energy agrees in connection with PixTech's initial
public offering of PixTech's securities (i) not to sell, make short sales of,
loan, grant any options for the purchase of, or otherwise dispose of any shares
of Common Stock of PixTech held by Standard Energy (other than those shares
included in the registration) without the prior written consent of PixTech of
the underwriters managing such initial underwritten public offering of PixTech's
securities during the one hundred eighty
<PAGE>
(180) day period (or such longer or shorter period or periods as shall be
required by the underwriters) following the date of the final prospectus for
PixTech's initial public offering and (ii) further agrees to execute any
agreement reflecting (i) above as may be requested by the underwriters at the
time of the public offering.
5. Registration Rights. PixTech agrees to afford Standard Energy
-------------------
piggyback registration rights with respect the Shares, subject to customary
reasonable restrictions imposed from time to time by PixTech's underwriters.
Standard Energy's registration rights pursuant to this Section 5 are exclusive
to Standard Energy, are not transferable, and shall expire on the date that
Standard Energy is eligible to sell the Shares pursuant to Rule 144(d) under the
Securities Act.
6. Legends. The share certificate evidencing the Shares issued hereunder
-------
shall be endorsed with the following or any other similar legend required by
Delaware or any other applicable federal or state securities laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR, IF REQUESTED BY PIXTECH, AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO PIXTECH AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
7. Adjustment for Stock Split. All references to the number of Shares and
--------------------------
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend, or other change in the
Shares which may be made by PixTech after the date of this Agreement.
8. General Provisions.
------------------
8.1 This Agreement shall be governed by the internal laws of the
State of Delaware. This Agreement represents the entire agreement between the
parties with respect to the acquisition of the Common Stock by Standard Energy,
may only be modified or amended in writing signed by both parties, and satisfies
all of PixTech's obligations to Standard Energy with regard to the issuance or
sale of securities.
8.2 Any notice, demand, or request required or permitted to be given
by either PixTech or Standard Energy pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid and addressed to
the parties at the addresses of the parties set forth at the beginning of this
Agreement or such other address as a party may request be notifying the other in
writing.
8.3 The rights and benefits of PixTech under this Agreement shall be
transferable to any one or more persons entities, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by
PixTech's successors and assigns. The rights and obligations of Standard Energy
under this Agreement may only be assigned with the prior written consent of
PixTech.
8.4 Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, not prevent the party
<PAGE>
thereafter from enforcing each and every other provision of this Agreement. The
rights granted bother parties herein are cumulative and shall not constitute a
waiver of either party's rights to assert all other legal remedies available to
it under the circumstances.
8.5 Standard Energy agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
PIXTECH, INC. STANDARD ENERGY COMPANY
By: /s/ Yves Morel By: /s/ Gerald S. Jacobs
------------------------------ ------------------------------
Name: Yves Morel Name: Gerald S. Jacobs
Title: Chief Financial Officer Title: President
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
between
PIXTECH, INC.
and
THE KAUFMANN FUND, INC.
dated as of March 25, 1998
<PAGE>
TABLE OF CONTENTS
Page No.
--------
1. Authorization of Sale of the Shares................................... 1
-----------------------------------
2. Delivery of the Shares at the Closing................................. 1
-------------------------------------
3. Representations, Warranties and Covenants of PixTech.................. 1
----------------------------------------------------
3.1. Organization and Qualification.................................. 2
------------------------------
3.2. Authorized Capital Stock........................................ 2
------------------------
3.3. Consents; Due Execution; Delivery and Performance of the
--------------------------------------------------------
Agreement......................................................... 2
---------
3.4. Issuance, Sale and Delivery of the Shares........................ 2
-----------------------------------------
3.5. Exempt Transaction............................................... 2
-----------------
3.6. Compliance with Rule 144......................................... 3
------------------------
3.7. Disclosure....................................................... 3
----------
3.8. Additional Information; Eligibility for Use of Form S-3.......... 3
-------------------------------------------------------
3.9. No Material Changes.............................................. 3
-------------------
3.10. Investment Company Act........................................... 4
----------------------
3.11. No Investment Advisor Affiliation................................ 4
---------------------------------
3.12. Possession of Intellectual Property.............................. 4
-----------------------------------
3.13. Possession of Licenses and Permits............................... 4
----------------------------------
3.14. Legal Proceedings................................................ 4
-----------------
3.15. Taxes............................................................ 4
-----
4. Representations, Warranties and Covenants of Kaufmann.................. 5
-----------------------------------------------------
4.1. Investment Considerations........................................ 5
-------------------------
4.2. Due Execution, Delivery and Performance of the Agreement......... 6
--------------------------------------------------------
5. Conditions to the Obligations of the Purchaser......................... 6
----------------------------------------------
5.1. Accuracy of Representations and Warranties....................... 6
------------------------------------------
5.2. Performance...................................................... 6
-----------
5.3. Opinion of Counsel............................................... 6
------------------
5.4. Certificates and Documents....................................... 7
--------------------------
5.5. Sumitomo Consent................................................. 7
----------------
5.6. Extraordinary Events............................................. 7
--------------------
5.7. Material Changes................................................. 7
----------------
5.8. Other Matters.................................................... 7
-------------
6. Conditions to the Obligations of PixTech............................... 7
----------------------------------------
6.1. Accuracy of Representations and Warranties....................... 7
------------------------------------------
6.2. Performance...................................................... 8
-----------
7. Survival of Representations, Warranties and Agreements; Assignability of
------------------------------------------------------------------------
Rights................................................................. 8
------
8. Registration Rights.................................................... 8
-------------------
8.1. Registration of Shares on Form S-3............................... 8
------------------------------------
8.2. Information by Holder............................................ 9
---------------------
<PAGE>
8.3. Indemnification.................................................. 9
---------------
8.4. Contribution..................................................... 11
------------
8.5. Non-Exclusivity.................................................. 11
---------------
8.6. Termination...................................................... 12
-----------
8.7. Public Availability of Information............................... 12
----------------------------------
8.8. Supplying Information............................................ 12
---------------------
9. Miscellaneous.......................................................... 12
-------------
9.1. Notices.......................................................... 12
-------
9.2. Entire Agreement................................................. 13
----------------
9.3. Assignment....................................................... 13
----------
9.4. Amendments and Waivers........................................... 13
------------------
9.5. Headings......................................................... 13
--------
9.6. Severability..................................................... 14
------------
9.7. Governing Law.................................................... 14
-------------
9.8. Counterparts..................................................... 14
------------
9.9. Expenses......................................................... 14
--------
9.10. Publicity........................................................ 14
---------
9.11. Specific Performance............................................. 14
--------------------
Exhibit A Form of Opinion of Palmer & Dodge LLP
- ---------
Exhibit B Form of Secretary's Certificate
- ---------
Exhibit C Form of Officer's Certificate
- ---------
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT dated as of March 25, 1998 (the
"Agreement") is made between PIXTECH, INC., a corporation organized under the
laws of the State of Delaware having its principal offices at Avenue Olivier
Perroy, Zone Industrielle de Rousset, 13790 Rousset France, ("PixTech"), and The
Kaufmann Fund, Inc., a corporation organized under the laws of Maryland having
its principal offices at 140 East 45th Street, New York, New York ("Kaufmann").
R E C I T A L
WHEREAS, PixTech desires to sell to Kaufmann, and Kaufmann desires to
purchase from PixTech, shares of PixTech's common stock on the terms described
herein.
NOW THEREFORE, in consideration of the promises and of the covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto mutually agree
as follows:
1. Authorization of Sale of the Shares. Subject to the terms and
conditions of this Agreement, PixTech has authorized the issuance and sale of
one million (1,000,000) shares (the "Shares") of the Common Stock, par value
$0.01 per share (the "Common Stock"), of PixTech to Kaufmann at a price of four
dollars ($4.00) per share. The aggregate purchase price for the Shares (the
"Stock Purchase Price")shall be four million dollars ($4,000,000.00).
2. Delivery of the Shares at the Closing. The closing of the purchase
and sale of the Shares (the "Closing") shall occur on March 30, 1998 (the
"Closing Date") at 10:00 a.m., eastern standard time at the offices of Palmer &
Dodge LLP, One Beacon Street, Boston, Massachusetts, or on such other business
day thereafter on or prior to March 31, 1998 as may be agreed upon by PixTech
and Kaufmann. Subject to the terms and conditions of this Agreement, at the
Closing, Kaufmann shall pay to PixTech an amount in cash or by wire transfer
equal to the Stock Purchase Price and PixTech shall deliver to Kaufmann or its
agent one or more stock certificates (the "Stock Certificates") registered in
the name of Kaufmann, or in such nominee name(s) as designated by Kaufmann,
representing the aggregate number of Shares. If prior to the Closing, the Stock
Certificate(s) has already been provided to Kaufmann, Kaufmann, or its agent,
agrees to hold such Stock Certificates in escrow until PixTech has given oral
confirmation of receipt of the funds required to be delivered by Kaufmann under
this Agreement. If at the Closing, PixTech shall fail to tender the Stock
Certificates to Kaufmann as provided above in this Section 2 or any of the
conditions specified in Section 5 shall not have been fulfilled to the
satisfaction of Kaufmann, Kaufmann, in its sole discretion, may elect to be
relieved of all further obligations under this Agreement, without thereby
waiving any rights it may have by reason of such failure or such nonfulfillment.
3. Representations, Warranties and Covenants of PixTech. PixTech hereby
represents and covenants with Kaufmann as follows:
<PAGE>
3.1. Organization and Qualification. PixTech (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to conduct
its business as currently conducted, (b) has the power and authority, and the
legal right, to own and operate its property, to lease the property it operates
as lessee and to conduct its business in which it is currently engaged and (c)
is duly qualified as a foreign corporation and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a material
adverse effect on PixTech.
3.2. Authorized Capital Stock. As of the date hereof, the authorized
capital stock of PixTech consists of (a) 30,000,000 shares of common stock,
$0.01 par value per share, of which on March 12, 1998, 13,762,732 shares were
validly issued and outstanding, fully paid and non-assessable, and (b) 1,000,000
shares of undesignated preferred stock, $0.01 par value per share, none of which
are issued and outstanding.
3.3. Consents; Due Execution; Delivery and Performance of the
Agreement. PixTech's execution, delivery and performance of this Agreement (a)
has been duly authorized by all requisite corporate action by PixTech, (b) will
not violate any material law or the Restated Certificate of Incorporation or
Restated By-laws of PixTech or any other corporation of which PixTech owns at
least 50% of the outstanding voting stock (a "PixTech Subsidiary") or any
provision of any material indenture, mortgage, agreement, contract or other
material instrument to which PixTech or any PixTech Subsidiary is a party or by
which any of their respective properties or assets is bound as of the date
hereof, (c) will not require any consent, except as stated in Section 5.5 below,
by any person under, constitute or result (upon notice or lapse of time or both)
in a breach of any term, condition or provision of, or constitute a default or
give rise to any right of termination or acceleration under any such indenture,
mortgage, agreement, contract or other material instrument or result in the
creation or imposition of any lien, security interest, mortgage, pledge, charge
or other encumbrance, of any material nature whatsoever, upon any properties or
assets of PixTech or any PixTech Subsidiary and (d) will not require any
consent, authorization, approval, filing, notice to, or other act, by or in
respect of any governmental authority. Upon its execution and delivery, and
assuming the valid execution thereof by Kaufmann, the Agreement will constitute
a valid and binding obligation of PixTech, enforceable against PixTech in accor
dance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
3.4. Issuance, Sale and Delivery of the Shares. When issued and paid
for, the Shares to be sold hereunder by PixTech will be validly issued and
outstanding, fully paid and non-assessable.
3.5. Exempt Transaction. Subject to the accuracy of Kaufmann's
represen tations in Section 4.1 of this Agreement, the issuance and sale of the
Shares will constitute a transaction exempt from the registration requirements
of Section 5 of the Securities Act of
<PAGE>
1933, as amended (the "Securities Act") in reliance upon Section 4(2) of the
Securities Act and the regulations promulgated pursuant thereto and state
securities laws; and neither PixTech nor any affiliate (as defined in Rule
501(b) of Regulation D of the Securities Act) or any agent acting on behalf of
PixTech or any such affiliate has directly, or through any agent, sold, offered
for sale or solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be integrated with
the sale of the Shares in a manner that would require registration under the
Securities Act of the offering of the Shares contemplated by this Agreement.
3.6. Compliance with Rule 144. At the written request of Kaufmann at
any time and from time to time, PixTech shall furnish to Kaufmann, within three
days after receipt of such request, a written statement confirming PixTech's
compliance with the filing requirements of the Securities and Exchange
Commission (the "SEC") set forth in Rule 144 of the Securities Act as amended
from time to time.
3.7. Disclosure. Neither this Agreement, nor any other items prepared
or supplied to Kaufmann by or on behalf of PixTech with respect to the
transactions contemplated hereby contain any untrue statement of a material fact
required to be stated therein or omit a material fact necessary to make each
statement contained herein or therein not misleading. There is no fact which
PixTech has not disclosed to Kaufmann in writing and of which any of its
directors or executive officers is aware (other than general economic
conditions) and which has had or would reasonably be expected to have a material
adverse effect upon the financial condition, results of operations, earnings,
assets, properties, customer, supplier or employee relations or business
prospects (a "Material Adverse Effect") of PixTech or PixTech Subsidiaries taken
as a whole.
3.8. Additional Information; Eligibility for Use of Form S-3. All
reports filed by PixTech with the SEC pursuant to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), when
filed, did not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading. PixTech has made all filings with the SEC which it is required to
make, and PixTech has not received any request from the SEC to file any
amendment or supplement to any such reports. PixTech meets the eligibility
requirements set forth in paragraph I of the General Instructions to Form S-3
for the use of such Form for the registration of securities in a transaction
involving secondary offerings, as described in such General Instructions.
3.9. No Material Changes. As of the date hereof, there has been no
material adverse change in the financial condition, or any development involving
a prospective material adverse change in the financial condition, results of
operations, earnings, assets, operations, properties, customer, supplier or
employee relations (a "Material Adverse Change") of PixTech since the filing
date of PixTech's last report with the Securities and Exchange Commission
pursuant to the reporting requirements of the Exchange Act.
<PAGE>
3.10. Investment Company Act. PixTech is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), and PixTech will
not be required to register as an "investment company" as a result of the
transactions contemplated herein.
3.11. No Investment Advisor Affiliation. PixTech is not an
"investment advisor," "affiliated company" or an "affiliated person" of an
"investment advisor" within the meaning of the 1940 Act.
3.12. Possession of Intellectual Property. PixTech owns or
possesses, or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, the "Intellectual Property") necessary to carry on the business
now operated by PixTech, and PixTech has not received or is otherwise aware of
any infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would render
any Intellectual Property invalid or inadequate to protect the interest of
PixTech, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
3.13. Possession of Licenses and Permits. PixTech possesses such
permits, licenses, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by it; PixTech is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure to so comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse
Effect; and PixTech has not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
3.14. Legal Proceedings. There are no legal, governmental,
administrative or arbitration proceedings pending to which PixTech is a party or
to which any of the properties of PixTech are subject or, to the best of
PixTech's knowledge, threatened against it, that would, if adversely determined
against it, have a Material Adverse Effect on PixTech or on the power of PixTech
to perform its obligations hereunder or to consummate the transactions
contemplated hereby.
3.15. Taxes. PixTech has filed or caused to be filed all tax returns
which, to the knowledge of PixTech, are required to be filed and has paid all
taxes shown to be due and payable on said returns or on any assessments made
against it or any property and all other taxes, fees or other charges imposed on
it any property by an governmental authority in the jurisdictions in which it
operates, except for (a) any taxes and assessments the amount of which is not
individually or in the aggregate material to the business or operations of
<PAGE>
PixTech or (b) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
PixTech has established adequate reserves in accordance with generally accepted
accounting principles.
4. Representations, Warranties and Covenants of Kaufmann
4.1. Investment Considerations. Kaufmann represents and warrants to,
and covenants with, PixTech that:
(a) Kaufmann is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares presenting an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by companies comparable
to PixTech, and has requested, received, reviewed and considered all information
it deems relevant in making an informed decision to purchase the Shares;
(b) Kaufmann is acquiring the Shares in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of such Shares or any arrangement or understanding
with any other persons regarding the distribution of such Shares;
(c) Kaufmann understands that the Shares are "restricted securities"
under the federal securities laws inasmuch as they are being acquired from
PixTech in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection Kaufmann represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act;
(d) Kaufmann will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act, and the rules and regulations promulgated thereunder;
(e) Kaufmann qualifies as an "accredited investor" within the meaning
of Rule 501(a) of Regulation D promulgated under the Securities Act and is a
resident of the state of New York and the state of Maryland; and
(f) It is understood that the Stock Certificates shall bear the
following legend unless and until the resale of the Shares pursuant to an
effective Registration Statement or until the Shares may be sold under Rule 144
without restrictions:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR, IF REQUESTED BY PIXTECH, AN
<PAGE>
OPINION OF COUNSEL REASONABLY SATISFACTORY TO PIXTECH AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
4.2. Due Execution, Delivery and Performance of the Agreement.
Kaufmann further represents and warrants to, and covenants with, PixTech that
(a) Kaufmann is a corporation duly organized, validly existing and in good
standing under the laws of the Maryland and has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, (b) the execution,
delivery and performance of this Agreement will not violate any law or the
charter documents of Kaufmann or any other corporation of which Kaufmann owns at
least 50% of the outstanding voting stock (a "Kaufmann Subsidiary") or any
provision of any material indenture, mortgage, agreement, contract or other
material instrument to which Kaufmann or any Kaufmann Subsidiary is a party or
by which Kaufmann, any Kaufmann Subsidiary, or any of their respective
properties or assets is bound as of the date hereof, or result in a breach of or
constitute (upon notice or lapse of time or both) a default under any such
indenture, mortgage, agreement, contract or other material instrument or result
in the creation or imposition of any lien, security interest, mortgage, pledge,
charge or encumbrance, of any material nature whatsoever, upon any assets of
Kaufmann or any Kaufmann Subsidiary, and (c) upon the execution and delivery of
this Agreement, and assuming the valid execution thereof by PixTech, this
Agreement shall constitute a valid and binding obligation of Kaufmann
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5. Conditions to the Obligations of the Purchaser.
The obligations of Kaufmann under this Agreement are subject to the
fulfillment, or the waiver by Kaufmann, of the conditions set forth in this
Section 5 on or before the Closing Date.
5.1. Accuracy of Representations and Warranties. Each representation
and warranty of PixTech contained in this Agreement shall be true on and as of
the Closing Date with the same effect as though such representation and warranty
had been made on and as of that date.
5.2. Performance. PixTech shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by PixTech prior to or at the Closing.
5.3. Opinion of Counsel. Kaufmann shall have received an opinion from
Palmer & Dodge LLP, counsel to PixTech, dated as of the Closing Date, addressed
to Kaufmann, and substantially in the form attached hereto as Exhibit A.
<PAGE>
5.4. Certificates and Documents. PixTech shall have delivered to
counsel to Kaufmann:
(a) a certificate of the Secretary or Assistant Secretary of PixTech
dated as of the Closing Date, substantially in the form attached hereto as
Exhibit B certifying as to (i) the incumbency of officers of PixTech executing
this Agreement and all other documents executed and delivered in connection
herewith, (ii) a copy of the By-Laws of PixTech, as in effect on and as of the
Closing Date, (iii) a copy of the resolutions of the Board of Directors of
PixTech, and (iv) a copy of the authorization of Sumitomo approving PixTech's
execution, delivery and performance of this Agreement, all matters in connection
with this Agreement, and the transactions contemplated thereby; and
(b) a certificate substantially in the form attached hereto as Exhibit
C, executed by the Chief Financial Officer of PixTech as of the Closing Date,
certifying to the fulfillment of all of the conditions to Kaufmann's obligations
under this Agreement, as set forth in this Section 5.
5.5. Sumitomo Consent. PixTech shall have received the written
consent or waiver by Sumitomo Corporation under the Credit Agreement dated July
21, 1997 between Sumitomo Corporation and PixTech, permitting PixTech to enter
into this Agreement, the sale of the Shares to Kaufmann and the transactions
contemplated thereby.
5.6. Extraordinary Events. Since the date of this Agreement, there
shall not have occurred (a) a suspension or material limitation in the trading
in securities generally on the Nasdaq National Market System or the
establishment of minimum prices on such exchange, (b) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities; or (c) any outbreak or escalation of hostilities involving the
United States or any other national or international calamity or emergency.
5.7. Material Changes. Since the date of this Agreement, there has
not been any Material Adverse Change in PixTech.
5.8. Other Matters. All corporate and other proceedings in connection
with the transactions contemplated at the Closing by this Agreement, and all
documents and instruments incident to such transactions, shall be reasonably
satisfactory in substance and form to Kaufmann and its counsel, and Kaufmann and
its counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
6. Conditions to the Obligations of PixTech.
The obligations of PixTech under this Agreement are subject to the
fulfillment, or the waiver by PixTech, of the conditions set forth in this
Section 6 on or before the Closing Date.
6.1. Accuracy of Representations and Warranties. Each representation
and warranty of Kaufmann contained in this Agreement shall be true on and as of
the Closing
<PAGE>
Date with the same effect as though such representations and warranties had been
made on and as of that date.
6.2. Performance. Kaufmann shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by Kaufmann prior to or at the Closing.
7. Survival of Representations, Warranties and Agreements; Assignability
of Rights. Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by
PixTech and Kaufmann herein, except as otherwise provided herein, shall survive
the execution of this Agreement, the delivery to Kaufmann of the Shares being
purchased and the payment therefor. Except as otherwise provided herein, (i)
the covenants, agreements, representations and warranties of Pixtech made herein
shall bind the Company's successors and assigns and shall insure to the benefit
of Kaufmann and Kaufmann's successors and assigns and (ii) the covenants,
agreements, representations and warranties of Kaufmann made herein shall bind
Kaufmann's successors and assigns and shall insure to the benefit of Pixtech and
PixTech's successors and assigns.
8. Registration Rights
8.1. Registration of Shares on Form S-3. PixTech covenants and agrees
that it will:
(a) promptly following the Closing, prepare and file a registration
statement on one or more Forms S-3 covering the resale of the Shares by Kaufmann
(or, if PixTech is not then eligible to use such Form, on any other form of
registration statement promulgated by the SEC which would cover the resale of
the Shares) and use its best efforts to cause such registration statement to
become effective in order that Kaufmann may sell its Shares in accordance with
the proposed plan of distribution; provided, however, that PixTech will furnish
to Kaufmann and its counsel copies of all documents proposed to be filed, which
documents will be subject to the review of such counsel, and PixTech will give
reasonable consideration in good faith to any comments of Kaufmann and such
counsel regarding such registration statement.
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement(s) and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the resale of the Shares covered by such registration statement(s)
until such time as Kaufmann no longer holds any Shares, subject to earlier
termination as provided in Section 8.6, and to correct an untrue statement of a
material fact or omission to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances then existing, not misleading; provided, however, that PixTech
will furnish to Kaufmann and its counsel copies of all such amendments and
supplements proposed to be filed and the proposed prospectus and any supplements
thereto, which documents will be subject to the review of such counsel,
<PAGE>
and PixTech will give reasonable consideration in good faith to any comments of
Kaufmann and such counsel regarding such registration statement.
(c) furnish Kaufmann such number of copies of such prospectus as it
may reasonably request in order to facilitate the resale of the Shares;
(d) file documents required of PixTech to comply with state securities
laws regarding the registration and offering of the Shares in states specified
in writing by Kaufmann; provided, however, that PixTech shall not be required to
qualify to do business or consent to service of process in any jurisdiction in
which it is now not so qualified or has not so consented; and
(e) do any and all other reasonable acts and things which may be
reasonably necessary or advisable to enable Kaufmann to consummate the sale of
the Shares as contemplated in this Section 8.1;
(f) bear all expenses in connection with the procedures set forth in
paragraphs (a) through (e) of this Section 8.1 and the registration of the
Shares covered by the registration statement, other than fees and expenses, if
any, of counsel or other advisors to Kaufmann.
8.2. Information by Holder. Kaufmann shall promptly furnish to
PixTech such information regarding Kaufmann and the distribution proposed by
Kaufmann as PixTech may request in writing and as shall be required from time to
time in connection with any registration, qualification or compliance referred
to in this Section 8.
8.3. Indemnification. For the purpose of this Section 8.3,
(a) the term "Selling Stockholder" shall mean Kaufmann and any
officer, director, employee, agent, affiliate or person deemed to be in control
of Kaufmann within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act;
(b) the term "Registration Statement" shall mean any final prospectus,
exhibit, supplement or amendment included in or relating to the registration
statement referred to in Sections 8.1; and
(c) the term "untrue statement" shall mean any untrue statement or
alleged untrue statement of, or any omission or alleged omission to state, in
the Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
PixTech agrees to indemnify and hold harmless each Selling Stockholder from
and against any losses, claims, damages or liabilities to which such Selling
Stockholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement on the
effective date thereof, or arise out of any failure by PixTech to fulfill any
undertaking included in the Registration Statement and PixTech will
<PAGE>
reimburse such Selling Stockholder for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that PixTech shall not be liable in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to PixTech by
or on behalf of such Selling Stockholder specifically for use in preparation of
the Registration Statement, or any statement or omission in any Prospectus that
is corrected in any subsequent Prospectus that was delivered to Kaufmann prior
to the pertinent sale or sales by Kaufmann. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of any
Selling Stockholder and shall survive the transfer of such securities by the
seller.
Kaufmann agrees to indemnify and hold harmless PixTech (and each person, if
any, who controls PixTech within the meaning of Section 15 of the Securities
Act, each officer of PixTech who signs the Registration Statement and each
director of PixTech) and each underwriter (if any) from and against any losses,
claims, damages or liabilities to which PixTech (or any such officer, director
or controlling person) or each underwriter (if any) may become subject (under
the Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement on the effective date thereof if such untrue
statement was made in reliance upon and in conformity with written information
furnished by or on behalf of Kaufmann specifically for use in preparation of the
Registration Statement, and Kaufmann will reimburse PixTech (or such officer,
director or controlling person, as the case may be) or each underwriter (if
any), for any legal or other expenses reasonably incurred in investigating,
defending, or preparing to defend any such action, proceeding or claim;
provided, however, that (i) no Selling Stockholder shall be liable for any
untrue statement that is corrected by any Selling Stockholder in writing to
PixTech or its agents prior to the sale of the Shares, whether or not such
correction was made in any amendment or supplement to any Registration Statement
by PixTech; and (ii) in no event shall the liability of any Selling Stockholder
exceed the amount of the proceeds of the sale of the Shares received by such
Selling Stockholder giving rise to such indemnification obligation.
Promptly after receipt by any indemnified person of a notice of a claim or
the commencement of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 8.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person; provided that the failure of any indemnified person to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 8.3, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice; provided, however,
that the indemnifying person shall not agree to a settlement of any such action
without the consent of the indemnified person, which consent shall not be
unreasonably withheld. After notice from the indemnifying person to such
indemnified persons of its election to assume the defense thereof, such
indemnifying person shall not be liable to such
<PAGE>
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any officer, director, employee, agent, affiliate or person deemed to be in
control of such indemnifying person within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, the indemnified person
shall be entitled to retain its own counsel at the expense of such indemnifying
person. It is understood, however, that PixTech shall, in connection with any
one such action, suit or proceeding or separate but substantially similar or
related actions, suits, or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such indemnified parties not having actual or
potential differing interests with PixTech or among themselves.
8.4. Contribution. If the indemnification provided for in this
Section 8 for any reason is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative fault of the
indemnified party in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party under this Section 8.4 as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
8.5. Non-Exclusivity. The obligations of the parties under this
Section 8 shall be in addition to any liability which any party may otherwise
have to any other party.
<PAGE>
8.6. Termination. Kaufmann's rights under Section 8.1 hereunder
shall terminate as to any Shares upon the earlier of (i) the time that such
Shares may be sold pursuant to Rule 144 of the Securities Act or (ii) at such
time as no such Shares are held by Kaufmann.
8.7. Public Availability of Information. PixTech shall comply with
all public information reporting requirements of the Commission, to the extent
required from time to time to enable Kaufmann to sell the Shares without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the Commission.
8.8. Supplying Information. PixTech shall cooperate with Kaufmann
in supplying such information as may be necessary for Kaufmann to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any Shares.
9. Miscellaneous.
9.1. Notices. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
If to PixTech: PixTech, Inc.
Avenue Olivier Perroy
Zone Industrielle de Rousset
13790 Rousset France
Attention: Chief Executive Officer
Telephone: 011 334 4229 1000
Telecopy: 011 334 4229 0509
with a copy to: Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: Michael Lytton, Esq.
Telephone: (617) 573-0100
Telecopy: (617) 227-4420
<PAGE>
If to Kaufmann: The Kaufmann Fund, Inc.
140 East 45th Street
43rd Floor
New York, New York 10017
Attention: Jonathan Art
Telephone: (212) 922-0123
Telecopy: (212) 661-2266
with a copy to: Gary S. Schpero, Esq.
Simpson, Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telephone: (212) 455-2000
Telecopy: (212) 455-2502
9.2. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either oral or written,
heretofore made are expressly merged in and made a part of this Agreement.
9.3. Assignment. Neither this Agreement nor any of the rights and
obligations contained herein may be assigned or otherwise transferred by either
party without the consent of the other party; provided, however, that either
PixTech or Kaufmann may, without such consent, assign its rights and obligations
under this Agreement (i) to any entity, all or substantially all of the equity
interest of which is owned and controlled by such party or its direct or
indirect parent corporation, or (ii) in connection with a merger, consolidation
or sale of substantially all of such party's assets to an unrelated third party;
provided, however, that such party's rights and obligations under this Agreement
shall be assumed by its successor in interest in any such transaction and shall
not be transferred separate from all or substantially all of its other business
assets, including those business assets. Any purported assignment in violation
of the preceding sentence shall be void. Any permitted assignee shall assume
all obligations of its assignor under this Agreement.
9.4. Amendments and Waivers. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by PixTech and
Kaufmann. The waiver by either party hereto of any right hereunder or the
failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
9.5. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
<PAGE>
9.6. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
9.7. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.
9.8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
9.9. Expenses. Except as otherwise specifically provided herein, each
party shall bear its own expenses in connection with this Agreement.
9.10. Publicity. The parties to this Agreement agree that shortly
after the Closing Date, PixTech will issue a press release to disclose the
transaction contemplated by this agreement, provided, however, that any such
press release does not cause the offering contemplated by this Agreement to
violate Section 5 of the Securities Act, including but not limited to Rule 135c
of the Securities Act. However, neither party hereto shall issue any press
releases or otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the other
party, which may not be unreasonably withheld, except as may be required by
applicable law or regulation.
9.11. Specific Performance. Each party hereto acknowledges and
agrees that each other party hereto would be irreparably harmed and would have
no adequate remedy of law if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, it is agreed that, in addition to any other remedies by law or in
equity which may be available, the parties hereto shall be entitled to obtain
temporary and permanent injunctive relief with respect to any breach or
threatened breach of, or otherwise obtain specific performance of the covenants
and other agreements contained in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PIXTECH, INC.
By: /s/ Yves Morel
-------------------------------------------
Yves Morel
Chief Financial Officer
THE KAUFMANN FUND, INC.
By: /s/ Laurence Auriana
------------------------------------------
Title: Chairman
------------------------------------------
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