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, 1999
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.
(Exact name of registrant as specified in its charter)
Delaware 04-3214691
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Avenue Olivier Perroy, 13790 Rousset, France
(Address of principal executive offices) (Zip code)
011-33-4-42-29-10-00
(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 13, 1999
----- -----------------------------
Common Stock, $.01 par value 15,150,329
<PAGE>
PIXTECH, INC.
TABLE OF CONTENTS
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Balance Sheets as of March 31, 1999
and December 31, 1998.................................... 3
Statements of Comprehensive Operations for the
Three Months Ended March 31, 1999 and 1998, and
the period from June 18, 1992 through
March 31, 1999........................................... 4
Statements of Cash Flows for the Three Months
ended March 31, 1999 and 1998, and the period
from June 18, 1992 through March 31, 1999................ 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
ITEM 3 Quantitative and Qualitative Disclosures About
Market Risk 15
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings........................................ 16
ITEM 2 Changes in Securities.................................... 16
ITEM 3 Default upon Senior Securities........................... 16
ITEM 4 Submission of matters to a Vote of Security Holders...... 16
ITEM 5 Other Information........................................ 16
ITEM 6 Exhibits and Reports on Form 8-K......................... 16
Signature............................................................... 17
Exhibit Index........................................................... 18
<PAGE>
PixTech, Inc.
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
March December
31, 31,
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets :
Cash available ........................................................... $ 4,155 $ 10,166
Restricted cash - short term ............................................. 3,397 1,685
Accounts receivable :
Trade ................................................................ 235 456
Other ................................................................ 347 161
Inventory ................................................................ 1,098 980
Other .................................................................... 1,374 1,354
-------- --------
Total current assets ................................................ 10,606 14,802
Restricted cash - long term ................................................... 6,667 8,427
Property, plant and equipment, net ............................................ 16,553 18,826
Goodwill, net ................................................................. 132 150
Deferred tax assets ........................................................... 4,275 4,643
Other assets - long term ...................................................... 201 546
Deferred offering costs ....................................................... 397 --
-------- --------
Total assets ........................................................ $ 38,831 $ 47,394
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities :
Current portion of long term debt ........................................ $ 3,143 $ 3,410
Current portion of capital lease obligations ............................. 2,353 2,189
Accounts payable ......................................................... 6,930 7,514
Accrued expenses ......................................................... 2,094 1,544
-------- --------
Total current liabilities ........................................... 14,520 14,657
Deferred revenue .............................................................. 82 2,162
Long term debt, less current portion .......................................... 8,499 8,391
Capital lease obligation, less current portion ................................ 8,296 8,399
Other long term liabilities, less current portion ............................. 32 528
-------- --------
Total liabilities ................................................... 31,429 34,137
======== ========
Stockholders' equity
Convertible preferred stock Series E, $0.01 par value, authorized
shares--500,000 ; issued and outstanding shares--none ; 367,269 respectively 4 4
Common stock, $0.01 par value, authorized shares--30,000,000; issued and
outstanding shares--15,000,329; 15,150,329 respectively ...................... 151 150
Additional paid-in capital .............................................. 69,190 68,999
Cumulative translation adjustment ....................................... (2,411) (1,740)
Deficit accumulated during development stage ............................ (59,532) (54,156)
-------- --------
Total stockholders' equity ........................................ 7,402 13,257
-------- --------
Total liabilities and stockholders' equity ........................ $ 38,831 $ 47,394
======== ========
</TABLE>
See accompanying notes.
<PAGE>
PixTech, Inc.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Period from
Three Months Ended June 18, 1992 (date
March 31, of inception) through
--------------------------- March 31,
1999 1998 1999
--------- --------- ---------------------
<S> <C> <C> <C>
Revenues
Cooperation and license revenues ......................................... $ -- $ -- $ 26,449
Product sales ............................................................ 161 21 2,987
Other revenues ........................................................... 2,000 1,232 7,906
--------- --------- ---------
Total revenues ..................................................... 2,161 1,253 37,342
--------- --------- ---------
Cost of revenues
License fees and royalties ............................................... (87) (79) (1,603)
--------- --------- ---------
Gross margin ................................................................. 2,074 1,174 35,739
--------- --------- ---------
Operating expenses
Research and development:
Acquisition of intellectual property rights .............................. -- (125) (4,890)
Other .................................................................... (5,587) (3,800) (78,115)
--------- --------- ---------
(5,587) (3,925) (83,005)
Marketing and sales ...................................................... (351) (339) (6,958)
Administrative and general expenses ...................................... (730) (637) (13,546)
--------- --------- ---------
(6,667) (4,901) (103,509)
--------- --------- ---------
Loss from operations ......................................................... (4,594) (3,727) (67,770)
Other income / (expense)
Interest income .......................................................... 174 205 3,022
Interest expense ......................................................... (440) (285) (3,187)
Foreign exchange gains / (losses) ........................................ (516) 285 510
--------- --------- ---------
(782) 205 345
Loss before income tax benefit ............................................... (5,376) (3,522) (67,425)
Income tax benefit ........................................................... -- -- 7,893
--------- --------- ---------
Net loss ..................................................................... $ (5,376) $ (3,522) $ (59,532)
========= ========= =========
Dividends accrued to holders of Preferred Stock .......................... (134) -- (146)
--------- --------- ---------
Net loss to holders of Common Stock .......................................... $ (5,510) $ (3,522) $ (59,678)
========= ========= =========
Net loss per share of Common Stock ....................................... $ (0.35) $ (0.25)
========= =========
Shares of Common Stock used in computing net loss per share .............. 15,143 13,821
Net loss ................................................................. $ (5,376) $ (3,522) $ (59,532)
Change in cumulative translation adjustment .............................. (671) (529) (2,411)
--------- --------- ---------
Comprehensive net loss ................................................... $ (6,047) $ (4,051) $ (61,943)
========= ========= =========
</TABLE>
See accompanying notes.
<PAGE>
PixTech, Inc.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Period from
June 18, 1992
(date of
Three Months Ended inception)
March 31, through
-------------------------- March 31,
1999 1998 1999
-------- -------- -------------
<S> <C> <C> <C>
Net loss ..................................................................... $ (5,376) $ (3,522) $(59,532)
Total adjustments to net loss ................................................ (747) 1,133 21,399
-------- -------- --------
Net cash (used in) / provided by operating activities ........................ (6,123) (2,389) (38,133)
-------- -------- --------
Investing activities
Additions to property plant and equipment .................................... (40) (221) (19,360)
Reclassification of cash available as restricted cash ........................ 49 -- (10,063)
Additions to intangible assets ............................................... -- -- (130)
-------- -------- --------
Net cash used in investing activities ........................................ 9 (221) (29,553)
Financing activities
Stock issued ................................................................. 325 3,980 67,829
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 ............. (250) (196) (8,067)
-------- -------- --------
Net cash (used in) / provided by financing activities ........................ 75 3,784 75,074
-------- -------- --------
Effect of exchange rates on cash ............................................. 28 (508) (3,233)
-------- -------- --------
Net (decrease) / increase in cash and cash equivalents ....................... (6,011) 666 4,155
Cash and cash equivalents beginning of period ................................ 10,166 12,428 --
-------- -------- --------
Cash and cash equivalents end of period ...................................... $ 4,155 $ 13,094 $ 4,155
======== ======== ========
</TABLE>
See accompanying notes.
<PAGE>
PixTech, Inc.
(a development stage company)
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
Convertible Preferred Stock
Series A Series B Series C
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 ............................. 1,557,003 2,368 363,447 589 3,044,846 8,615
Issuance of Common stock in 1992 and 1993
Issuance of Common stock under stock option plan in 1994
and 1995
Purchase of 28,761 shares of Common stock -- Treasury
stock in 1994
Reissuance of 28,761 shares of Common stock held in
treasury in 1995
Common stock issued in initial public offering in 1995,
net of issuance costs -- $1,080
Conversion of preferred stock in 1995 .................... (1,557,003) (2,368) (363,447) (589) (3,044,846) (8,615)
Translation adjustment
Net loss from June 18, 1992 (date of inception) through
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 -- $44
Issuance of Series E convertible preferred stock,
net of issuance costs -- $822
Issuance of Common stock under stock option plan
Translation adjustment
Net loss--Year ended December 31, 1998
---------- ------ -------- ---- ---------- ------
Balance at December 31, 1998
Common stock issued in private placements (unaudited)
Issuance costs and dividends accrued in relation to Series
E Convertible Preferred stock issued in December 1998
(unaudited)
Translation adjustment (unaudited)
Net loss--Three months ended March 31, 1999 (unaudited)
---------- ------ -------- ---- ---------- ------
Balance at March 31, 1999 .................................. -- -- -- -- -- --
========== ====== ======== ==== ========== ======
<CAPTION>
Series D Series E
Shares Shares
issued Amount issued Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Balance at June 18, 1992
Issuance of convertible preferred stock, net of issuance
costs in 1992, 1993 and 1994 ............................. 430,208 1,224
Issuance of Common stock in 1992 and 1993 ................
Issuance of Common stock under stock option plan in 1994
and 1995 .................................................
Purchase of 28,761 shares of Common stock -- Treasury
stock in 1994 ............................................
Reissuance of 28,761 shares of Common stock held in
treasury in 1995 .........................................
Common stock issued in initial public offering in 1995,
net of issuance costs -- $1,080 ..........................
Conversion of preferred stock in 1995 .................... (430,208) (1,224)
Translation adjustment ...................................
Net loss from June 18, 1992 (date of inception) through
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 -- $44 367,269 $ 4
Issuance of Series E convertible preferred stock, ........
net of issuance costs -- $822 ............................
Issuance of Common stock under stock option plan .........
Translation adjustment ...................................
Net loss--Year ended December 31, 1998 ...................
---------- ------ -------- ----
Balance at December 31, 1998 ............................... 367,269 4
Common stock issued in private placements (unaudited) ....
Issuance costs and dividends accrued in relation to Series
E Convertible Preferred stock issued in December 1998
(unaudited) ..............................................
Translation adjustment (unaudited) .......................
Net loss--Three months ended March 31, 1999 (unaudited)
---------- ------ -------- ----
Balance at March 31, 1999 .................................. -- -- 367,269 $ 4
========== ====== ======== ====
</TABLE>
See accompanying notes.
<PAGE>
PixTech, Inc.
(a development stage company)
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
Common Stock
------------
Dividends
accrued to
Additional holders of
Shares Paid-in Preferred
issued Amount Capital Stock
------ ------ ---------- ----------
<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 and 1995 ......................................... 84,258 1 31
Purchase of 28,761 shares of Common stock-- Treasury .
stock in 1994
Reissuance of 28,761 shares of Common stock held in
treasury in 1995 ...................................... 3
Common stock issued in initial public offering in
1995, net of issuance costs -- $1,080 ................. 2,500,000 25 20,973
Conversion of preferred stock in 1995 ................. 5,395,504 54 12,742
Translation adjustment ................................
Net loss from June 18, 1992 (date of inception)
through December 31, 1995 ............................. 3
------------ --------- --------- ---------
Balance at December 31, 1995 ............................ 8,112,063 81 33,844
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 ................................
Net loss--Year ended December 31, 1996 ...............
------------ --------- --------- ---------
Balance at December 31, 1996 ............................ 8,141,146 81 34,085
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 ................................
Net loss--Year ended December 31, 1997 ................
------------ --------- --------- ---------
Balance at December 31, 1997 ............................ 13,762,732 $ 138 $ 57,067
Common stock issued in private placements, net of
issuance costs -- $44 ................................. 1,236,222 12 4,493
Issuance of Series E convertible preferred stock,
net of issuance costs -- $822 ......................... 7,449 (12)
Issuance of Series E convertible preferred stock in
December, net of issuance costs -- $ 822 ..............
Issuance of Common stock under stock option plan ...... 1,375 1
Translation adjustment ................................
Net loss--Year ended December 31, 1998 ................
------------ --------- --------- ---------
Balance at December 31, 1998 ............................ 15,000,329 150 69,011 (12)
Common stock issued in private placements (unaudited) . 150,000 1 351
Issuance costs and dividends accrued in relation to ... (26) (134)
Series E Convertible Preferred stock issued in December
1998 (unaudited) ......................................
Translation adjustment (unaudited) ....................
Net loss--Three months ended March 31, 1999 (unaudited)
------------ --------- --------- ---------
Balance at March 31, 1999 ............................... 15,150,329 $ 151 $ 69,336 (146)
============ ========= ========= =========
<CAPTION>
Deficit
accumulated
Cumulative during
translation development Treasury
adjustment stage stock Total
---------- ----------- -------- -----
<S> <C> <C> <C> <C>
Balance at June 18, 1992
Issuance of convertible preferred stock, net of
issuance costs in 1992, 1993 and 1994 ................ $ 12,796
Issuance of Common stock in 1992 and 1993 ............. 97
Issuance of Common stock under stock option plan in
1994 and 1995 ......................................... 32
Purchase of 28,761 shares of Common stock-- Treasury . $ (11) (11)
stock in 1994
Reissuance of 28,761 shares of Common stock held in
treasury in 1995 ...................................... 11 14
Common stock issued in initial public offering in
1995, net of issuance costs -- $1,080 ................. 20,998
Conversion of preferred stock in 1995 .................
Translation adjustment ................................ $ 515 515
Net loss from June 18, 1992 (date of inception)
through December 31, 1995 ............................. $ (9,910) (9,910)
--------- --------- --------- ---------
Balance at December 31, 1995 ............................ 515 (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) (953)
Net loss--Year ended December 31, 1996 ............... (11,719) (11,719)
--------- --------- --------- ---------
Balance at December 31, 1996 ............................ (438) (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) (1,694)
Net loss--Year ended December 31, 1997 ................ (14,664) (14,664)
--------- --------- --------- ---------
Balance at December 31, 1997 ............................ $ (2,132) $ (36,293) $ 18,780
Common stock issued in private placements, net of
issuance costs -- $44 ................................. 4,506
Issuance of Series E convertible preferred stock,
net of issuance costs -- $822 ......................... 7,440
Issuance of Series E convertible preferred stock in
December, net of issuance costs -- $ 822 ..............
Issuance of Common stock under stock option plan ...... 1
Translation adjustment ................................ 392 392
Net loss--Year ended December 31, 1998 ................ (17,863) (17,863)
--------- --------- --------- ---------
Balance at December 31, 1998 ............................ (1,740) (54,156) 13,257
Common stock issued in private placements (unaudited) . 352
Issuance costs and dividends accrued in relation to ... (160)
Series E Convertible Preferred stock issued in December
1998 (unaudited) ......................................
Translation adjustment (unaudited) .................... (671) (671)
Net loss--Three months ended March 31, 1999 (unaudited) (5,376) (5,376)
--------- --------- --------- ---------
Balance at March 31, 1999 ............................... $ (2,411) $ (59,532) -- $ 7,402
========= ========= ========= =========
</TABLE>
See accompanying notes.
<PAGE>
PixTech, Inc.
(a development stage company)
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 31,1999
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended December 31, 1998
(the "1998 Financial Statements"), included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.
Note B - Inventories
Inventory consists of raw material and spare parts.
Note C - Restricted Cash
In August 1997, the Company provided Unipac Optoelectronics Corp. ("Unipac"),
its Asian manufacturing partner, with a written bank guaranty in an amount of
$10,000 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 FEDs at Unipac's 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 certain equipment to the Company. 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 is expected to decrease to match the net amount
of equipment leased by Unipac to the Company.
Note D - Property, Plant and Equipment
Pursuant to the Foundry Agreement, volume FEDs production equipment was
installed at Unipac's facility. That equipment was purchased and funded by
Unipac, and a portion of it is leased to PixTech, which amounts to $11,365 as of
March 31, 1999. According to Financial Accounting Standard 13, "Accounting for
leases", PixTech's share of equipment was recorded as assets under the caption
"Property, Plant and Equipment", in the net amount of $9,990. Depreciation of
$466 was recorded during the three-month period ended March 31, 1999. As of
March 31, 1999, the related capital lease obligation amounts to $9,877, of which
$1,912 has been recorded as current portion.
Note E - Deferred offering costs
On March 19, 1999, the Company entered into a definitive agreement to purchase
certain assets of Micron Technology, Inc. relating to field emission displays
including equipment and other tangible assets, certain contract rights and cash
(the "Micron Transaction"). Pursuant to the Micron Transaction, the Company will
issue 7,133,562 shares of the Company's Common Stock and a warrant to purchase
310,000 shares of the Company's Common Stock at an exercise price of
approximately $2.25 per share. In order to issue such number of shares, the
Company's Restated Certificate of Incorporation must be amended to increase the
number of authorized shares of capital stock of the Company. Such amendment is
subject to the approval of the Company's stockholders during the Annual Meeting
to be held on May 12, 1999. During the three months ended March 31, 1999, the
Company incurred expenses in connection with the Micron Transaction. These
expenses have been deferred and will be recorded as a reduction of paid-in
capital upon completion of the transaction.
<PAGE>
PixTech, Inc.
(a development stage company)
Notes to Condensed Consolidated Financial Statements
(all amounts in thousands except share amounts)
(unaudited)
Note F - Stockholders' equity
Common Stock : In January 1999, the Company sold 150,000 shares of the Company's
Common Stock in a private placement at a price of $2.35 per share, resulting in
net proceeds of $352.
Convertible preferred stock : The holders of Series E Preferred Stock issued in
December 1998 are entitled to receive cumulative dividends. As at March 31,
1999, a cumulative dividend of $146 was accrued and recorded against
Stockholders' Equity.
The 367,269 shares of Series E Preferred Stock outstanding as at March 31, 1999
are convertible into shares of Common Stock after June 21, 1999. As at March 31,
1999, the Series E Stock, including accrued dividends, would have been
convertible into 3,737,370 shares of Common Stock. Consequently, there were
18,887,699 shares of Common Stock or equivalent to shares of Common Stock
outstanding as at March 31, 1999.
Note G - Litigation
The Company has received correspondence from Futaba Corporation and its legal
counsel since January 1998 alleging the following : (i) PixTech is infringing
one or more patents owned by Futaba relating to the construction and manufacture
of its displays that are not expressly included under the license agreement
between Futaba and Pixtech, (ii) PixTech's use of terms such as "alliance" and
"partners" in describing the nature of its contractual relationships with
Motorola, Raytheon and Futaba in reports filed with the SEC is misleading and
(iii) certain provisions in the Foundry Agreement with Unipac constitute an
impermissible sublicense of Futaba technology. PixTech does not believe such
claims have any merit and has denied each of the allegations in correspondences
with Futaba and its counsel and is in discussions with Futaba concerning their
allegations. Futaba has also claimed that the Company improperly supplied
certain Futaba proprietary information to Unipac, and that Unipac has in turn
disclosed such information to a third party vendor. If Futaba were to prevail on
all of these claims, PixTech may be required, among other adverse consequences,
to modify the construction and manufacture of its displays and may, as a result,
be materially adversely affected.
To the Company's knowledge, there are no other exceptional facts or litigation
that could have or that have in the recent past had any significant impact on
its business, results, financial situation, or assets and liabilities.
Note H. - Financial position
During the three months ended March 31, 1999, the Company has continued to
experience losses and has used cash in operating activities, which has adversely
affected the Company's liquidity. At March 31,1999, the Company had net working
deficit of $3,914 and a deficit accumulated during the development stage of
$59,532. The Company intends to improve its liquidity and financial position
through capital increases expected to take place in 1999. In addition, upon
closing of the Micron Transaction, the Company will receive cash of
approximately $4.4 million (See "Note E - Deferred offering costs"). There can
be no assurance that additional funds will be available through capital
increases when needed or on terms acceptable to the Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of operations
Product sales. The Company recognized product sales of $161,000 in the
three-month period ended March 31,1999, as compared to $21,000 in the
three-month period ended March 31, 1998. In the three-month period ended March
31, 1998, these product sales primarily represented the shipment of a limited
number of high-priced FED displays and cathodes to customers for evaluation and
product development purposes, and the first shipments of displays to the
Company's first volume customer, Zoll Medical. In the three-month period ended
March 31,1999, product revenues primarily comprised shipments of displays sold
at volume prices to Zoll Medical, thus reflecting a significant increase of the
number of displays shipped. Since 1998, the Company has begun shipping its FED
displays manufactured by its contract manufacturer, Unipac, to its customers, in
limited quantities. The Company expects an increase of product shipments from
Taiwan in 1999.
Other revenues. Other revenues consist of funding under various public
development contracts and other miscellaneous revenues. The Company recognized
other revenues of $2.0 million in the three-month period ended March 31,1999, as
compared to $1.2 million in the three-month period ended March 31, 1998. Of
these revenues, in the three-month period ended March 31, 1999, $1.3 million
were related to an incentive from French Local Authorities awarded in 1994 to
the Company to establish its pilot plant in Montpellier, France, and $736,000
were related to a development contract from European Union signed in 1997, for
which the related contribution, received in 1997 and in 1998, had been deferred
until all conditions stipulated in the agreement were met. In the three-month
periods ended March 31, 1998, these revenues included $1.2 million related to a
development contract granted in December 1994 from the French Ministry of
Industry to support manufacturing of FEDs.
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, providing
PixTech with a worldwide, non exclusive royalty-free license on certain
technologies related to field emission displays. No such expenses were recorded
in the three-month period ended March 31,1999.
Other Research and Development Expenses. The Company expensed $5.6 million for
research and development costs during the three-month period ended March
31,1999, an increase of 47% over the $3.8 million incurred in the three-month
period ended March 31, 1998. These expenses include salaries and associated
expenses for in-house research and development activities conducted both in its
pilot plant 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 and adaptation of the Company's FED technology
to Unipac, as well as obligations to CEA under the LETI Research Agreement, and
miscellaneous contract consulting fees. This increase reflected primarily the
cost of supporting the transfer of FED manufacturing processes to Unipac and the
continued development of the Company's FED technology.
Sales and Marketing Expenses. The Company expensed $351,000 for sales and
marketing during the three-month period ended March 31,1999, as compared to
$339,000 during the three-month period ended March 31, 1998. The Company
believes sales and marketing expenses may increase in the future, reflecting the
expansion of the Company's sales and marketing organization both in the United
States and in Europe.
General and Administrative Expenses. General and administrative expenses
amounted to $730,000 in the three-month period ended March 31,1999, an increase
of 15% over general and administrative expenses incurred in the three-month
period ended March 31, 1998, which amounted to $637,000, reflecting an increase
in consulting expenses.
Interest Income (Expense), Net. Interest income is comprised of interest on
available and restricted cash. Interest expense is comprised of interest payable
on long-term obligations. Net interest expense was $266,000 in the three-month
period ended March 31,1999, as compared to $80,000 in the three-month period
ended March 31,1998, reflecting the decrease in cash balances and the increase
in long-term liabilities.
Currency Fluctuations. Although a significant portion of the Company's revenues
are denominated in U.S. dollars, a substantial portion of the Company's
operating expenses are denominated in Euros. Gains and losses on the conversion
to U.S. dollars of assets and liabilities denominated in Euros may contribute to
fluctuations in the Company's results of operations, which are reported in U.S.
dollars. Most of the Company's capital lease obligation is expressed in
Taiwanese dollars. In the past, fluctuations of the parity of the Taiwanese
dollar versus the Euro caused significant foreign exchange gains or losses and
may continue to do so in the future. The Company recorded net foreign exchange
loss of $516,000 in the three-month period ended March 31,1999, while the
Company recorded net foreign exchange gain of $285,000 in the three-month period
ended March 31,1998. The Company cannot predict the effect of exchange rate
fluctuations on future operating results. To date, the Company has not
undertaken hedging transactions to cover its currency exposure, but it may do so
in the future.
<PAGE>
Liquidity and Capital Resources.
Cash used in operations was $6.1 million for the three-month period ended March
31,1999, as compared to cash used in operations of $2.4 million for the
three-month period ended March 31, 1998. The increase in cash used in operations
between the three-month period ended March 31,1999 and the three-month period
ended March 31, 1998 is related to the following factors : (i) the absence of
significant cash receipts from revenues in the three-month period ended March
31,1999, and (ii) the increase in operating expenses in relation to Taiwan
start-up costs.
The Company has used $38.1 million in cash to fund its operating activities from
inception through March 31,1999 and has incurred $29.6 million in capital
expenditures and investments.
Cash flows generated from financing activities were $75,000 in the three-month
period ended March 31,1999, as compared to $3.8 million in the three-month
period ended March 31,1998. This net cash flow consisted primarily of sales of
shares of Common Stock in a private placement, resulting in net proceeds to the
Company of $352,000, while long term liabilities decreased by $250,000.
Since its inception, the Company has funded its operations and capital
expenditures primarily from the proceeds of equity financing aggregating $67.8
million and from proceeds aggregating $19.0 million from borrowings and
sale-leaseback transactions.
Capital expenditures were $40,000 during the three-month period ended March
31,1999 as compared to $221,000 during the same period of 1998. During the
three-month period ended March 31,1999, capital expenditures remained focused on
limited capacity expansion in the pilot manufacturing facility. Implementing
volume production at Unipac's manufacturing plant required significant capital
expenditures. An amount of $13.5 million of capital expenditures for equipment
only was required which, pursuant to the Foundry Agreement, was purchased and
funded by Unipac. A portion of that equipment is leased to PixTech and amounts
to $ 11.4 million as of March 31, 1999. The Company expects that additional
capital expenditure will be required in 1999 to increase capacity at Unipac and
to complete implementation of manufacturing processes, both for monochrome and
for color products.
As at March 31, 1999, restricted cash amounted to $10.1 million and was related
to the security interest granted in 1997 by the Company to its Taiwanese
manufacturing partner, Unipac, pursuant to the Foundry Agreement signed in 1997,
in relation to the purchase and funding by Unipac of volume FEDs production
equipment. The written bank guaranty provided by the Company to Unipac is
expected to decrease to match the net amount of equipment leased by Unipac to
the Company.
The Company has existing contracts with French authorities providing for the
payment of grants to the Company totaling approximately $4.0 million, which were
fully paid to the Company as of March 31, 1999. In 1997 and January 1999, the
Company entered into two R&D agreements with French authorities. Under these
agreements, the Company expects to benefit from zero-interest loans totaling
approximately $2.6 million, of which $2.0 million are expected to be collected
in 1999. The Company collected $1.5 million in May 1999 under one of these
agreements.
In February 1997, the Company entered into an R&D agreement with the European
Union and other European industrial companies. The contribution of the European
Union to the costs incurred by the Company amounts to $936,000 over the period,
of which $736,000 were collected in 1997 and 1998 and recognized as income in
the three-month period ended March 31, 1999, as all conditions stipulated in the
agreement were met. The Company expects to receive the remaining revenue from
this contract in 1999.
The Company recognized French income tax benefits of $7.9 million since
inception. These income tax benefits represent tax credits for research and
development activities conducted in France, which are paid in cash to the
Company if it is not able to credit them against future income tax liabilities
within three fiscal years. In 1998, the Company collected $2.8 million,
representing R&D tax credits recorded in 1993 and 1994. In April 1999, the
Company collected $2.9 million from R&D tax credits recorded in 1995.
<PAGE>
On March 19, 1999, the Company entered into a definitive agreement to purchase
certain assets of Micron Technology, Inc. relating to field emission displays
including equipment and other tangible assets, certain contract rights and cash
(the "Micron Transaction"). The Micron Transaction is subject to the approval of
the amendment of the Company's Restated Certificate of Incorporation by the
Company's stockholders (see "Notes to Condensed Consolidated Financial
Statements--Note E--Deferred Offering costs"). Upon closing of the Micron
Transaction, the Company will receive cash of approximately $4.4 million.
Cash available at March 31,1999 amounted to $4.2 million as compared to $10.2
million at December 31, 1998. The Company expects that cash available at March
31,1999 together with the anticipated increase in product sales in 1999 and the
anticipated proceeds from the Micron Transaction, from R&D tax credits and from
the various grants and loans described above will be sufficient to meet its cash
requirements, including repayment of the current portion of its long term
obligations in the amount of $5.5 million at March 31, 1999, until at least
September 30, 1999. The Company intends to improve its liquidity and financial
position through capital increases expected to take place in 1999.
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.
Year 2000 Disclosure
There is a significant uncertainty regarding the effect of the Year 2000 issue
because computer systems which do not properly recognize date sensitive
information when the year changes to 2000 could generate erroneous data or
altogether fail. The Company is in the process of conducting a comprehensive
review of its computer systems and manufacturing equipment to identify
applications that could be affected by the inability of certain computer systems
to format and manipulate data containing dates including the year 2000 and
subsequent years. Although management does not expect that costs associated with
modifying existing computer systems and manufacturing equipment will have a
significant impact on its financial position or result of operations, there can
be no assurance that such modifications will be successfully implemented or that
these costs will not be significant. The Company currently has no contingency
plans in place in the event it does not complete all phases of the year 2000
review. The Company plans to evaluate the status of completion during 1999 and
determine whether such a plan is necessary. In addition, the Company depends on
a limited group of suppliers. There can be no assurance that those suppliers
will not be significantly impacted by the "Year 2000" issue. If those suppliers
are significantly impacted by the "Year 2000" issue, such suppliers may not be
able to continue their supply of parts to the Company without interruption. The
Company is in the process of identifying third party vendors that are non-Year
2000 compliant and of assessing the following consequences. In particular, the
Company requested from Unipac, its Taiwanese manufacturing partner, to assess
whether its computer systems and manufacturing equipment could be affected by
the "Year 2000" issue and, if so, to present a contingency plan. To implement
its large volume manufacturing strategy, the Company is dependent on Unipac's
ability to be successful in addressing the "Year 2000" issue. The Company's
continued use of a vendor which is not Year 2000 compliant or the failure of the
Company's own computer systems or manufacturing equipment to be fully Year 2000
compliant could materially adversely affect the Company's business, financial
position and results of operations.
<PAGE>
Strategic issues and risks
The Company is currently focused on the following activities which it believes
are necessary to the success of its business: (i) successfully implementing the
manufacture of FEDs by its Taiwanese contract manufacturer, Unipac; (ii)
improving its manufacturing processes and yields, both in its pilot plant and at
Unipac; (iii) expanding its customer base and product offering, and (iv)
continuing the development of its FED technology, including the development of
large FED displays. In evaluating its outlook, the following risks and issues
should be considered, among others which are common with development stage
companies.
The Company May Not Have Operating Income or Net Income in the Future and It May
Have Problems Raising the Money It Needs in the Future At March 31,1999, the
Company had net working deficit of $3,914 and a deficit accumulated during the
development stage of $59,532. These conditions raise substantial doubt about its
ability to continue as a going concern. In the future, the Company expects that
it will need to obtain money from sources outside the Company, as it has done in
the past. There is no guarantee that any of the outside sources will provide the
Company with the money when needed. In addition, even if the Company is able to
find outside sources which will provide it with the money when needed, in order
to raise this money the Company may be required to issue securities with better
rights than the rights of its common stock or it may be required to take other
actions which lessen the value of its current common stock, including borrowing
money on terms that are not favorable to it.
There are Risks Associated with Using a Single Contract Manufacturer to
Manufacture its FEDs. The Company believes that its ability to commercialize
medium to large volumes of FEDs depends on its ability to have Unipac
manufacture FEDs. If the Company is not able to implement its manufacturing
plans with Unipac as expected, the Company will not be able to ship medium to
large volumes of FED products. Furthermore, the Company will not be able to
obtain an acceptable cost for its FED displays through high volume
manufacturing, as compared to manufacturing FEDs at its pilot production
facility. This situation would materially adversely affect its operations. In
May 1997, the Company signed a Foundry Agreement with Unipac, a liquid crystal
display manufacturer based in Taiwan. Under the agreement, Unipac has installed
volume production equipment to produce FEDs at its manufacturing plant, and has
begun production for exclusive delivery of FED displays to the Company.
Expectations about the final timing of this manufacturing plan with Unipac are
forward-looking statements that still involve risks and uncertainties, including
the ease or difficulty of the transfer of the FED technology to Unipac. The
Company's reliance on a single contract manufacturer will involve several risks.
For example, the Company could be unable to obtain an adequate supply of
required products if Unipac did not supply enough products. Moreover, the
Company will have less control over the price of the finished products, the
timeliness of their delivery and their reliability and quality. The Company's
failure to adequately manage this contract manufacturing relationship or any
delays in the shipment of its products would adversely effect the Company.
The Company's Products and Manufacturing Processes are Still under Development
and The Company Still Needs to Obtain Commercially Acceptable Yields and
Acceptable Costs of Products. In order for the Company to succeed, it must
continue to develop and produce a range of products incorporating its FED
technology. At this time, the Company has successfully developed only one
product that has been incorporated into a commercial end-user application. The
Company will need to complete the development of additional FED products before
they can be sold to the public, and there is no guaranty that the Company will
succeed in these development efforts. If the Company does not develop these new
products, it will not be successful. To date, the Company has used its pilot
manufacturing facility in Montpellier, France to produce only a limited number
of products suitable for sale. In addition, the Company has not completed
testing of its manufacturing processes at Unipac. In order for the Company to be
successful, it must make certain improvements to its manufacturing processes. In
particular, it must improve its manufacturing yields in order to demonstrate the
low cost potential of its FED technology. Even if the Company succeeds in
completing the development and testing of its manufacturing processes, it can
not be sure that the favorable characteristics demonstrated by its current
displays manufactured at its pilot manufacturing facility will be reproduced on
a cost- effective basis in commercial production. The Company has, at this time,
encountered a number of delays in the development of its products and processes,
and it is possible that further delays will occur. Any significant delays could
cause the Company to miss certain market opportunities and could have a material
adverse effect on its business.
The Company Needs to Further Enhance its Display Performance. The Company may
never improve the performance characteristics of its color FEDs to a level that
is commercially acceptable or fail to do so on a timely basis, either of which
could adversely affect its business. Key elements of display performance are
brightness, power efficiency and stability over time (life time and
reliability). The Company is seeking to balance brightness with power efficiency
to produce bright and low power-consumption displays. Display reliability
depends heavily on the manufacturing process used in assembling the displays as
well as the characteristics of the phosphors used in the display. In order to
produce color displays that will provide the product life and other
characteristics necessary for most applications, the Company needs to make
further advances in its manufacturing processes.
<PAGE>
The Company face Intense Competition and Needs to Compete with Current and
Future Competing Technologies. The Company's competitors may succeed in
developing products that outperform its displays or that are more cost
effective. If its competitors develop products that offer significant advantages
over its products and if the Company is unable to improve its technology, or
develop or acquire alternative technology that is more competitive, it would be
adversely affected. The market for "flat panel display," or "FPD", products is
currently dominated by products utilizing "liquid crystal display," or "LCD",
technology. Certain LCD manufacturers have substantially greater name
recognition and financial, technological, marketing and other resources than the
Company. Furthermore, LCD manufacturers have made, and continue to make,
substantial investments in improving LCD technology and manufacturing processes
and in the construction of manufacturing facilities for displays. The Company
believes that, over time, this will have the effect of reducing average selling
prices of FPDs. In addition, recently there have been substantial increases in
the worldwide manufacturing capacity of FPDs, and new competitors have entered
the FPD market. Such changes may cause over-supply conditions leading to
dramatic reductions in the price of FPDs. In order to effectively compete, the
Company could be required to increase the performance of its products or reduce
prices. In the event of price reductions, the Company will not be able to
maintain gross margins unless it reduces its cost of sales.
Potential Customers may not Accept the Company's Products. The Company is
uncertain about the potential size and timing of its target market
opportunities. It anticipates marketing its displays to "original equipment
manufacturer" or "OEM" customers Its success will depend, in part, on the
following factors: (i) whether OEMs select its products for incorporation into
their products; (ii) the successful introduction of such products by the OEMs;
and (iii) the successful commercialization of products developed by parties
incorporating its products. It is possible that demand for any particular
product will not last or that new markets will fail to develop as the Company
expects, or at all. Such deviations would materially and adversely effect the
Company.
The Company May Have Difficulty Protecting Patents and other Proprietary Rights
to its Technology. 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. However, rights granted under patents may not provide the Company
with any competitive advantage over competitors with similar technology, and any
issued patents may not contain claims sufficiently broad to protect against
these competitors.
The Company cannot be certain that it was the first creator of inventions
covered by pending patent applications or the first to file patent applications
on such inventions because patent applications in the United States are
maintained in secrecy until patents issue and the publication of discoveries in
scientific or patent literature tends to lag behind actual discoveries by
several months.
Moreover, claims that its products infringe on the proprietary rights of others
are more likely to be asserted after the Company begins commercial sales of
products using its technology. Although the Company believes that its products
do not infringe the patents or other proprietary rights of third parties, it is
possible that third parties will assert infringement claims against us and that
such claims will be successful. It is also possible that competitors will
infringe its patents. Even the successful defense and prosecution of patent
suits is costly and time consuming. The adverse outcome of a patent suit could
subject us to significant liabilities to other parties, require disputed rights
to be licensed from third parties or require us to stop selling its products.
The Company has received correspondence from Futaba Corporation and its legal
counsel beginning in February 1998 alleging the following: (i) the Company is
infringing one or more patents owned by Futaba relating to the construction and
manufacture of its displays that are not expressly included under the license
agreement between the Company and Futaba; (ii) its use of terms such as
"alliance" and "partners" in describing the nature of its contractual
relationships with Motorola, Raytheon and Futaba in reports filed with the SEC
is misleading; and (iii) certain provisions in the Foundry Agreement with Unipac
constitute an impermissible sublicense of Futaba technology. The Company does
not believe such claims have any merit and have denied each of the allegations
in correspondences with Futaba and its counsel. Futaba has also claimed that the
Company improperly supplied certain Futaba proprietary information to Unipac,
and that Unipac has, in turn, disclosed such information to a third party
vendor. If Futaba prevails on any of these claims, the Company may be required,
among other adverse consequences, to modify the construction and manufacture of
its displays and may, as a result, be materially adversely affected.
Currency Fluctuations May Cause Gains or Losses. A large percentage of its net
assets and of the Company's costs is expressed in Euros. Fluctuations of the
value of the U.S. dollar versus the Euro may cause significant foreign exchange
gains or losses. Most of the Company's capital lease obligation is expressed in
Taiwanese dollars. Fluctuations of the value of the Taiwanese dollar versus the
Euro or the US dollar may cause significant foreign exchange gains or losses.
<PAGE>
Holders of Common Stock May face Significant Dilution from the Conversion of
Series E Preferred Shares. In December 1998, the Company issued 367,269 shares
of Series E Preferred Stock (the "Series E Stock"), at a price of $22.5313 per
share, to certain institutional investors. The Series E Stock is generally
convertible after June 21, 1999 into Common Stock at a rate equal to the lesser
of (a) $2.25313, and (b) the average closing price Common Stock over the ten
trading day ending period ending on the day immediately preceding the day upon
conversion. As of March 31st, 1999, the Series E Stock would have been
convertible into 3,737,370 shares of Common Stock. Should the Company's stock
price fall below its current level, conversion of Series E stock may result into
the issuance of a significant additional number of shares of Common Stock, and
may cause significant dilution to current holders of Common Stock.
Certain Anti-Takeover Provisions May Limit the Company's Stock Price Certain
provisions of the Company's certificate of incorporation and by-laws may
discourage a third party from offering to purchase the Company. These
provisions, therefore, inhibit actions that would result in a change in control
of the company, including an action that may give the holders of the common
stock the opportunity to realize a premium over the then-prevailing market price
of their stock. These provisions may also adversely affect the market price of
the Common Stock. For example, under its certificate of incorporation, the
Company can issue "blank check" Preferred Stock with such designations, rights
and preferences as determined by its Board of Directors from time to time. This
type of Preferred Stock could be used as a method of discouraging, delaying or
preventing a change in control of the Company. In addition, the Preferred Stock
issued by the company in December 1998 and any additional shares of Preferred
Stock that the Company may issue in the future may adversely affect the voting
and dividend rights, rights upon liquidation and other rights of the holders of
common stock. The Company does not currently intend to issue any additional
shares of preferred stock, but it retains the right to do so in the future.
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk exposure inherent to the Company's international operations
creates potential for losses arising from adverse changes in foreign currency
exchange rates. The Company is exposed to such foreign currency exchange rate
risk in two main areas : (i) a substantial portion of the Company's operating
expenses are and are expected to be denominated in Euros, (ii) most of the
Company's capital lease obligation is expressed in Taiwanese dollars.
Fluctuations of the parity of the Taiwanese dollar versus the Euro or the US
dollar may cause significant foreign exchange gains or losses. In addition,
gains and losses arising from the conversion to U.S. dollars of assets and
liabilities denominated in Euros or in Taiwanese dollars may contribute to
fluctuations in the Company's results of operations, which are reported in U.S.
dollars. To date, the Company has not undertaken hedging transactions to cover
its currency exposure.
<PAGE>
PIXTECH, INC.
March 31, 1999
PART II Other Information
ITEM 1 Legal Proceedings:
Not applicable.
ITEM 2 Changes in Securities:
(a) Not applicable
(b) Not applicable
(c) Not applicable
ITEM 3 Defaults upon Senior Securities:
Not applicable.
ITEM 4 Submission of matters to a Vote of Security Holders :
Not applicable
ITEM 5 Other Information:
None.
ITEM 6 Exhibits and reports on Form 8-K:
(a) Exhibits :
27. Financial Data Schedule
2.1/++ Acquisition Agreement, dated March 19, 1999, between the
Registrant and Micron Technology, Inc. Pursuant to Item 601 (b)
(2) of Regulation S-K, the schedules and exhibits referred to in
the Agreement are omitted. The Registrant hereby undertakes to
furnish supplementally a copy of any omitted schedule or exhibit
to the Commission upon request.
2.2/++ Amendment No. 1 to Acquisition Agreement, dated as of
April 23, 1999, between the Registrant and Micron Technology,
Inc.
10.38 Employment Agreement of Jean-Luc Grand-Clement dated
January 19, 1999
10.39 Employment Agreement of Michel Garcia dated September 9,
1992
10.40 Employment Agreement of Francis Courreges dated June 28,
1993
10.41 Amendment No. 1 to Employment Agreement of Francis
Courreges dated September 27, 1996
10.42 Employment Agreement of Yves Morel dated March 16, 1994
10.43 Employment Agreement of Jean-Jacques Louart dated April 7,
1997
(b) Reports on Form 8-K :
Two reports on Form 8-K have been filed during the first quarter
of 1999 :
- on January 7, 1999, reporting under Item 5 the completion by
the Registrant of a Preferred Stock Purchase Agreement, and the
nomination by the Board of Directors, of Mr. Dieter Mezger, the
Company's President, as Chief Executive Officer to succeed
Jean-Luc Grand-Clement, and
- on March 24, 1999, reporting under Item 5 the completion by the
Registrant of an Acquisition Agreement with Micron Technology,
Inc.
<PAGE>
PIXTECH, INC.
March 31,1999
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 13, 1999 BY: /s/ Yves Morel
------------------------------------
Yves Morel
Vice President, Chief Financial Officer
Date: May 13, 1999 BY: /s/ Cathie Tomao
------------------------------------
Cathie Tomao
Chief Accounting Officer
<PAGE>
PIXTECH, INC.
March 31,1999
EXHIBIT INDEX
Exhibit No.
- -----------
2.1/++ Acquisition Agreement, dated March 19, 1999, between the Registrant
and Micron Technology, Inc. Pursuant to Item 601 (b) (2) of Regulation
S-K, the schedules and exhibits referred to in the Agreement are
omitted. The Registrant hereby undertakes to furnish supplementally a
copy of any omitted schedule or exhibit to the Commission upon
request.
2.2/++ Amendment No. 1 to Acquisition Agreement, dated as of April 23, 1999,
between the Registrant and Micron Technology, Inc.
10.38 Employment Agreement of Jean-Luc Grand-Clement dated January 19, 1999,
10.39 Employment Agreement of Michel Garcia dated September 9, 1992,
10.40 Employment Agreement of Francis Courreges dated June 28, 1993,
10.41 Amendment No. 1 to Employment Agreement of Francis Courreges dated
September 27, 1996,
10.42 Employment Agreement of Yves Morel dated March 16, 1994,
10.43 Employment Agreement of Jean-Jacques Louart dated April 7, 1997,
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.
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT, dated as of March 19, 1999, is between Micron
Technology, Inc., a Delaware corporation ("Micron"), and PixTech, Inc., a
Delaware corporation ("PixTech").
W I T N E S S E T H :
WHEREAS, Micron desires to sell to PixTech and PixTech desires to purchase
from Micron substantially all of the assets of Micron's Display Division
Business, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
ARTICLE I DEFINITIONS
SECTION I.1. Definitions.
(A) The following terms, as used herein, have the following meanings:
"Acquired Assets" means all of Micron's right, title and interest in (i)
the assets relating primarily or solely to the Display Division Business located
at 3000 South Denver Way, Boise, Idaho 83705, Boise, Idaho and which are more
particularly described on Schedule 1.1-A to this Agreement, and (ii) all of
Micron's rights under the Assumed Contracts.
"Acquired Business" means the Acquired Assets and the Assumed Liabilities.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
For purposes of this definition, "control" when used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Ancillary Agreements" means the Lease Agreement, the Patent Cross License
Agreement, the Micron Noncompete Agreement, the PixTech Warrant, the Investor
Rights Agreement, the Micron Guaranty, the PixTech Security Agreement and the
Consulting Agreement, and each other document or agreement delivered by Micron
or PixTech in connection with this Agreement.
<PAGE>
"Assumed Contracts" means those contracts, agreements, leases, commitments
and sales and purchase orders of Micron relating to the Display Division
Business listed on Schedule 1.1-B to this Agreement.
"Assumed Liabilities" means those debts, obligations, contracts and
liabilities of Micron of related to or arising out of the conduct of the Display
Division Business listed on Schedule 1.1-C to this Agreement.
"BancBoston" means BancBoston Leasing, Inc.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended on or prior to the date hereof, and any rules
or regulations promulgated thereunder.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consulting Agreement" means the consulting agreement among Micron, PixTech
and David A. Cathey, in form and substance reasonably satisfactory to Micron,
PixTech and David A. Cathey, containing, among other terms, the terms contained
in Schedule 9.5.
"DARPA" means the United States Defense Advance Research Projects Agency.
"DARPA Contract" means the agreements, as amended, between Micron and DARPA
relating to the development of a field emission display for use in an M1A2 tank
(Contract Nos. DABT 63-97-C-0001, DAB 63-94-C-0012, DAAB 07-97-C-J033 and DABT
63-93-C-0025).
"Display Division Business" means Micron's worldwide operations relating to
its Display Division, including the development, manufacture and sale of field
emission displays.
"Display Division Financing Agreements" means (i) the Security Agreement
dated February 21, 1997 by and between Micron Display Technology, Inc. and
BancBoston, the Promissory Note #1, dated February 21, 1997 by Micron Display
Technology, Inc. in favor of BancBoston, and the Assumption Agreement dated
December 30, 1997 by and between BancBoston and Micron; and (ii) the Amended and
Restated Promissory Note H-1D dated October 31, 1997 by Micron in favor of
Heller, the Amended and Restated Master Security Agreement dated October 31,
1997 by and between Micron and Heller, and the Assumption Agreement dated
October 31, 1997, by and between Micron and Heller.
"Environmental Laws" means any and all statutes, laws, regulations and
rules, in each case as in effect on the date hereof, that have as their
principal purpose the protection of human health, safety and the environment.
"Excluded Liabilities" means those debts, obligations, contracts and
liabilities of Micron other than Assumed Liabilities listed on Schedule 1.1-C to
this Agreement.
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"Hazardous Substance" means (i) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes, " " toxic substances," "toxic pollutants," "hazardous air
pollutants," "contaminants," "toxic chemicals," "toxic," "hazardous chemicals,"
"extremely hazardous substances," "pesticides," "oil" or related materials as
defined in any applicable Environmental Law or (ii) any petroleum or petroleum
products, oil, natural or synthetic gas, radioactive materials,
asbestos-containing materials, urea formaldehyde foam insulation, and radon.
"Heller" means Heller Financial, Inc.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Intellectual Property" means all rights arising out of: (i) patents,
pending patent applications and patent invention disclosures for which patent
applications have not yet been filed ("Patents"); (ii) trade secrets and know
how ("Trade Secrets"); (iii) trademarks, servicemarks and applications for
registration of such ("Trademarks"); (iv) copyrights, copyright registrations
and applications for registration ("Copyrights"); and (v) mask works, mask work
registrations and applications for such registration ("Mask Works"). "Non-Patent
Intellectual Property," as used in Section X shall consist of rights arising out
of the subject matter of forgoing categories (ii) through (v).
"Investor Rights Agreement" means the investor rights agreement
substantially in the form attached hereto as Exhibit A.
"Lease Agreement" means the lease agreement substantially in the form
attached hereto as Exhibit B with respect to the real property and premises
located at 3000 South Denver Way, Boise, Idaho 83705.
"Licensed Intellectual Property" means the Intellectual Property licensed
to PixTech pursuant to Section X herein.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest or other encumbrance in respect of such
property or asset.
"Material Adverse Effect" means (i) as to Micron, a material adverse effect
on the business, results of operations or financial condition of the Acquired
Business, taken as whole, except any such effect resulting from or arising in
connection with (x) this Agreement or the transactions contemplated hereby or
(y) changes in economic, regulatory or political conditions, and (ii) as to
PixTech, a material adverse effect on the business, results of operations or
financial condition, of PixTech, taken as whole, except any such effect
resulting from or arising in connection with (x) this Agreement or the
transactions contemplated hereby or (y) changes in economic, regulatory or
political conditions.
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"Micron Guaranty" means the guaranty or other credit support that may be
offered by Micron in favor of the lenders under the Display Division Financing
Agreements on terms required by such lenders and acceptable to Micron.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Patent Cross License Agreement" means the patent cross license agreement
in the form attached hereto as Exhibit C.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PixTech Closing Market Price" means $1.825.
"PixTech Warrant Agreement" means the warrant agreement substantially in
the form attached hereto as Exhibit D.
"Required Consents" means the Micron Required Consents and the PixTech
Required Consents.
"SEC" means the Securities and Exchange Commission or any successor agency.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shares" means the shares of PixTech Common Stock issued as part of the
Display Division Purchase Consideration and the PixTech Common Stock Purchase
Consideration.
"Small Area Display Business" means Micron's field emission display
business relating to flat panel screens of 0.55 inch or less diagonal size.
"Subsidiary" means a corporation, company or other entity:
(a) more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are, now or hereafter, owned or
controlled by a party hereto or such third party, but such
corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists; or
(b) which does not have outstanding shares or securities, as may be the
case in a partnership, joint venture or unincorporated association,
but more than fifty percent (50%) of whose ownership interest
representing the right to make the decisions for such corporation,
company or other entity is now or hereafter owned or controlled by
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a party hereto or such third party (regardless of whether such right to
make decisions is exercised or delegated to another), but such corporation,
company or other entity shall be deemed to be a Subsidiary only so long as
such ownership or control exists.
"Tax" means any tax, impost, license, fee, charge, levy, rate, penalty or
other assessment (including, without limitation, any sales, use, income, gross
receipts, net income, bulk sale, franchise, excise, property, and valorem, motor
vehicle, custom, duty, payroll, employment, environmental, net worth, capital,
withholding, occupancy, value-added gains and transfer taxes, any similar tax
and including all interest, penalties, or additions thereto) imposed or asserted
by any governmental authority, whether or not disputed.
"Tax Return" means any return, declaration, report, claim for refund,
information statement relating to Taxes including any schedule attached thereto
and any amendment thereto.
"Transaction Agreements" means this Agreement and the Ancillary Agreements.
(B) Each of the following terms is defined in the Section set forth
opposite such term:
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Term Section
Claim 12.3
Closing 4.1
Damages 12.2
Display Division Purchase Consideration 2.4
GAAP 6.6(b)
Indemnified Party 12.3
Indemnifying Party 12.3
Initial Period 9.6
Micron Disclosure Schedule Article V
Micron Required Consents 5.5
Nondisclosure Agreement 7.2
PixTech Balance Sheet Date 6.6(b)
PixTech Common Stock 2.4(a)
PixTech Disclosure Schedule Article VI
PixTech Required Consents 6.5
PixTech SEC Documents 6.6(a)
PixTech Security Agreement 9.6
PixTech Stockholder Approval 6.5
PixTech Taxes 9.7(b)
PixTech 10-K 6.6(a)
PixTech 10-Q 6.6(a)
PixTech Warrant 2.5(b)
Permits 5.8
Permitted Liens 5.10
Post-Closing Period 9.7(b)
Potential Contributor 12.5
Price Allocation 9.7(a)
Straddle Period 9.7(b)
Third Party Claim 12.3
Transferred Employee 9.5(a)
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ARTICLE II
PURCHASE AND SALE OF DISPLAY DIVISION BUSINESS
SECTION II.1. Purchase and
Upon the terms and subject to the conditions of this Agreement, at the
Closing, PixTech agrees to purchase from Micron, and Micron agrees to sell,
convey, transfer, assign and deliver to PixTech, the Acquired Assets, subject to
all Permitted Liens.
SECTION II.2. Excluded Assets SECTION II.2.
PixTech expressly understands and agrees that the Acquired Assets shall
not include any cash, real property or intellectual property (whether owned by
Micron or licensed to Micron from third parties) relating to the Display
Division Business, except (in the case of cash) to the extent expressly listed
on Schedule 1.1-A to this Agreement and (in the case of licensed intellectual
property) to the extent expressly provided pursuant to Section 9.4. Without
limiting the foregoing, PixTech expressly understands and agrees that while the
Display Division Business may presently benefit from agreements between Micron
and third parties related to the licensing of intellectual properties (whether
such licenses pertain specifically to the Display Division Business or to
Micron's business and operations generally), Micron's rights under such
licensing agreements constitute Excluded Assets.
SECTION II.3. Assumed Liabilities
Upon the terms and subject to the conditions of this Agreement and the
Ancillary Agreements and effective at the time of the Closing, PixTech shall
unconditionally assume and agree to pay, satisfy and discharge when due in
accordance with their terms, and PixTech shall fully and forever hold Micron and
its Affiliates harmless against, any and all Assumed Liabilities.
SECTION II.4. Excluded Liabilities
All Excluded Liabilities shall remain the exclusive liabilities,
obligations and commitments of Micron. However, to the extent necessary, in the
reasonable opinion of Micron, PixTech shall use commercially reasonable efforts
to cooperate with Micron in the defense of any claim or action with respect to
any Excluded Liability; provided, that promptly after written request from
PixTech, Micron shall reimburse PixTech for reasonable expenses (including
attorneys fees) actually incurred by PixTech in cooperating with Micron on such
defense.
SECTION II.5. Display Division Purchase Consideration
The purchase consideration for the Acquired Assets (the "Display Division
Purchase Consideration") shall consist of the following:
(A) 7,133,562 duly authorized, validly issued, fully paid and nonassessable
shares of common stock, $0.01 par value of PixTech ("PixTech Common Stock") as
such number shall be adjusted prior to the Closing Date to reflect any stock
split, stock dividend, recapitalization or other similar events; and
(B) A warrant of PixTech (the "PixTech Warrant"), to purchase 310,000
shares of PixTech Common Stock at $2.25313 (which number
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shall be adjusted prior to the Closing Date to reflect any stock split, stock
dividend, recapitalization or other similar events), exercisable at any time up
to the second anniversary of the Closing Date, which warrants will be issued
pursuant to the PixTech Warrant Agreement.
The Display Division Purchase Consideration shall be paid as provided in
Section 4.1(a).
SECTION II.6. Assignment of Contracts and Rights
This Agreement shall not constitute an agreement to assign any agreement or
any right thereunder if an attempted assignment, without the consent of a third
party, would constitute a breach or in any way adversely affect the rights of
PixTech or Micron thereunder in any material respect. If such consent is not
obtained, Micron and PixTech will cooperate in a mutually agreeable arrangement
under which PixTech would obtain the benefits and assume the obligations
thereunder in accordance with this Agreement. Without limiting the foregoing,
Micron and PixTech agree that PixTech shall not be required to assume the DARPA
Contract that is an Assumed Contract (Contract No. DABT 63-97-C-0001) unless (i)
PixTech will be subject to the same terms and conditions under such DARPA
Contract as are now applicable to Micron and (ii) such DARPA Contract shall be
amended to provide that PixTech's current base plate technology may be used to
manufacture displays required to be delivered to DARPA under such DARPA
Contract.
ARTICLE III
[INTENTIONALLY LEFT BLANK]
ARTICLE IV
CLOSING ARTICLE
SECTION IV.1. Closing
The Closing (the "Closing") of the purchase and sale of the Acquired Assets
and the assumption of the Assumed Liabilities hereunder shall take place at the
offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California, as soon as possible, but in no event later than 3 business days,
after satisfaction or waiver of the conditions set forth in Article X, or at
such other time or place as Micron and PixTech may agree. At the Closing:
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(A) PixTech shall deliver to Micron:
(I) a certificate representing the Shares described in Section 2.5(a)
in connection with the Display Division Purchase Consideration; and
(II) the PixTech Warrant;
(B) Micron shall assign and transfer to PixTech all Acquired Assets by
delivery of a General Assignment and Bill of Sale in form and substance
reasonably satisfactory to Micron and PixTech, duly executed by Micron;
(C) PixTech shall assume from Micron the due payment, performance and
discharge of the Assumed Liabilities in accordance with the terms of this
Agreement; and
(D) Micron and PixTech shall also deliver the certificates and other
contracts, documents and instruments required to be delivered under Article X,
including the Ancillary Agreements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MICRON
Except as disclosed in the disclosure schedule (the "Micron Disclosure
Schedule") dated the date hereof and delivered by Micron to PixTech in
connection with this Agreement, Micron represents and warrants to PixTech that:
SECTION V.1. Corporate Existence and PowerSECTION V.1.
Micron is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do business
as a foreign corporation and is in good standing under the laws of the State of
Idaho.
SECTION V.2. Corporate Authorization
Micron has the requisite corporate power and authority to enter into this
Agreement and the other Transaction Agreements to which it is a party and to
perform its obligations hereunder and thereunder. The execution and delivery of
this Agreement and the other Transaction Agreements to which it is a party, and
performance by Micron of its obligations hereunder and thereunder, have been
duly authorized by all necessary corporate action on the part of Micron. This
Agreement constitutes, and the Ancillary Agreements to which it is a party, when
executed and delivered by Micron, will constitute, valid and legally binding
obligations of Micron, enforceable against the Micron in accordance with their
respective terms, except (i) as may be limited by (x) applicable
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bankruptcy, insolvency, reorganization or others laws of general application
relating to or affecting the enforcement of creditors' rights generally and (y)
the effect of rules of law governing the availability of equitable remedies and
(ii) as rights to indemnity or contribution may be limited under federal or
state securities laws or by principles of public policy thereunder.
SECTION V.3. Governmental Authorization
No consent, approval, order or authorization of, or registration
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of Micron is required in connection
with the consummation of the transactions contemplated by this Agreement,
except: (i) compliance with any applicable requirements of the HSR Act; (ii)
compliance with any applicable requirements of the 1934 Act; and (iii) as may be
necessary in connection with any DARPA Contracts that are Assumed Contracts.
SECTION V.4. Noncontravention
Except as set forth on Schedule 5.4 to the Micron Disclosure Schedule, the
execution, delivery and performance by Micron of each Transaction Agreement to
which it is a party and the consummation of the transactions contemplated
thereby do not and will not (i) violate the Certificate of Incorporation or
Bylaws of Micron, (ii) assuming compliance with the governmental matters
referred to in Section 5.3, violate in any material respect any applicable law,
rule, regulation, judgment, injunction, order or decree, (iii) assuming the
obtaining of all Required Consents, constitute a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Micron or to a loss of any benefit to which Micron is entitled
under any provision of any material agreement or other instrument binding upon
Micron, or (iv) result in the creation or imposition of any Lien on any Acquired
Asset except for any Permitted Liens, except, in the case of clauses (ii) and
(iii), individually and in the aggregate, as would not have a Material Adverse
Effect.
SECTION V.5. Required Consents
Schedule 5.5 to the Micron Disclosure Schedule sets forth each material
agreement or other instrument binding upon Micron, including those listed in
Schedule 1.1-B to this Agreement, requiring a consent or other action by any
Person (the "Micron Required Consents") as a result of the execution, delivery
and performance of this Agreement, except such consents or actions as would not,
individually or in the aggregate, have a Material Adverse Effect if not received
or taken by the Closing.
SECTION V.6. Absence of Certain Changes
Except as disclosed in Schedule 5.6 to the Micron Disclosure Schedule,
since January 31, 1999, the Acquired Business has been conducted in the ordinary
course consistent with past practices by Micron and there has not been:
(A) any acquisition by Micron relating to assets or business material to
the Acquired Business, other than in the ordinary course of business consistent
with past practices and as contemplated by this Agreement;
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(B) any sale, lease or disposition by Micron relating to assets or business
material to the Acquired Business, other than in the ordinary course of business
consistent with past practices and as contemplated by this Agreement;
(C) any (i) employment, deferred compensation, severance, retirement or
other similar agreement (or any amendment to any such existing agreement)
entered into with any director, officer or employee of Micron engaged primarily
in the operations of the Acquired Business, (ii) grant of any severance or
termination pay to any director, officer or employee of Micron engaged primarily
in the operations of the Acquired Business or (iii) change in compensation or
other benefits payable to any director, officer or employee of Micron engaged
primarily in the operations of the Acquired Business pursuant to any severance
or retirement plans or policies thereof, in each case other than in the ordinary
course of business consistent with past practices.
(D) any transaction by Micron relating solely to material assets or
business of the Acquired Business except in the ordinary course of business as
conducted as of January 31, 1999 and consistent with past practices;
(E) any destruction of, damage to or loss of any assets material to Micron
relating to the Acquired Business taken as a whole (whether or not covered by
insurance);
(F) any material revaluation by Micron of any material assets of the
Acquired Business;
(G) any amendment or termination of any material contract, agreement or
license relating solely to material assets or business of the Acquired Business
to which Micron is a party or by which it is bound except for amendments in the
ordinary course of business that are not reasonably likely to have a Material
Adverse Effect or scheduled expiration pursuant to the terms of the contract,
agreement or license and not as a result of any breach;
(H) any loan by Micron relating to material assets or business of the
Acquired Business to any person or entity, or incurring by Micron of any
indebtedness (except for indebtedness incurred in the ordinary course under
existing credit lines or arrangements set forth in Micron Disclosure Schedule)
relating solely to material assets or business of the Acquired Business;
(I) any waiver or release of any material right or claim of Micron relating
solely to material assets or business of the Acquired Business, including any
write-off or other compromise of any account receivable of Micron relating
solely to material assets or business of the Acquired Business, other than in
the ordinary course of business and consistent with past practices;
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(J) any agreement by Micron to do any of the things described in the
preceding clauses (a) through (i) (other than this Agreement).
SECTION V.7. Material Contracts
Except for the contracts disclosed in Schedule 5.7 to the Micron Disclosure
Schedule, with respect to the Acquired Business primarily or solely (and not
with respect to any other business of Micron generally), Micron is not a party
to or bound by:
(A) any partnership, joint venture or other similar agreement or
arrangement;
(B) any agreement relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets or otherwise); or
(C) any agreement that limits the freedom of Micron, with respect to the
Acquired Business only, to compete in any line of business or with any Person or
in any area.
(D) any agreement, contract or commitment relating to capital expenditures
and involving future obligations in excess of $25,000 and not cancelable without
penalty;
(E) any mortgages, indentures, loans or credit agreements, security
agreements relating to a material amount of assets or other agreements or
instruments relating to the borrowing of money or extension of credit;
(F) any other agreement, contract, commitment or lease which requires
annual payments by Micron under any such agreement, contract, commitment or
lease of $25,000 or more in the aggregate and is not cancelable without penalty
within thirty (30) days;
(G) any consulting arrangements and contracts for professional, advisory
and other services involving payments of more than $25,000 in any year,
including contracts under which Micron performs services for others;
(H) any other material contracts made other than in the usual or ordinary
course of business of Micron to which Micron is a party or under which Micron or
any of its Subsidiaries is obligated.
Except as disclosed on Schedule 5.7 to the Micron Disclosure Schedule, Micron
has not breached, violated or defaulted under, or received notice that it has
breached, violated or defaulted under, any of the terms or conditions of any of
the agreements, contracts or commitments to which Micron is a
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party or by which it is bound of the type described in clauses (a) through (h)
above in such a manner as would permit any other party to cancel or terminate
any Assumed Contract, or would permit any other party to seek damages, in either
case, which is reasonably likely to have a Material Adverse Effect.
SECTION V.8. Licenses and Permits
Schedule 5.8 to the Micron Disclosure Schedule correctly describes each
governmental license, franchise, permit, certificate, approval or other similar
authorization of Micron, other than as contemplated by the Patent Cross License
Agreement, that is necessary to operate the Acquired Business as it is currently
operated, except those that the absence of which would not reasonably be likely
to have a Material Adverse Effect (the "Permits") together with the name of the
government agency or entity issuing such Permit. Except as set forth on Schedule
5.8 to the Micron Disclosure Schedule, (i) the Permits are valid and in full
force and effect, (ii) Micron is not in default, and no condition exists that
with notice or lapse of time or both would constitute a default, under the
Permits, (iii) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby and (iv) upon consummation of such transactions, PixTech will acquire all
of the right, title and interest in all the Permits except for those that are
not transferable in accordance with their terms, which are listed on Schedule
5.8 to the Micron Disclosure Schedule and those that are the subject of the
Patent Cross License Agreement.
SECTION V.9.
There is no action, suit, investigation or proceeding pending against, or
to the knowledge of Micron, threatened against or affecting, Micron relating to
the Acquired Business or any of Micron's properties relating to the Acquired
Business, before any court or arbitrator or any governmental body, agency or
official which is reasonably likely to have a Material Adverse Effect or which
in any manner challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated by this Agreement.
SECTION V.10. Properties
(A) Micron has good title to all material property and assets included in
the Acquired Assets.
(B) Schedule 5.10(b) to the Micron Disclosure Schedule lists all facts
presently known to Micron that may affect the operation of the Acquired Assets.
PixTech acknowledges that PixTech is acquiring the Acquired Assets AS IS, and
that MICRON MAKES NO EXPRESS OR IMPLIED WARRANTIES OF ANY KIND OR AS TO ANY
MATTER, INCLUDING AS TO THE MERCHANTABILITY OF ANY OF THE ACQUIRED ASSETS OR
THEIR FITNESS FOR A PARTICULAR PURPOSE.
(C) None of such property or assets is subject to any Lien, except:
(I) Liens disclosed on Schedule 5.10(c) to the Micron Disclosure
Schedule;
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(II) Liens for taxes, assessments and similar charges that are not yet
due or are being contested in good faith;
(III) mechanic's, materialman's and similar charges that are not yet
due or are being contested in good faith;
(IV) Liens arising or incurred in the ordinary course of business; or
(V) other Liens which do not materially interfere with the present use
of, or materially detract from the value of, any property or assets that
are material to the Acquired Business (paragraphs (i)-(iv) of this Section
5.10 are, collectively, the "Permitted Liens").
SECTION V.11. Environmental Matters
Except as set forth on Schedule 5.11 to the Micron Disclosure Schedule and
except for matters that would not reasonably be expected to have a Material
Adverse Effect, to the knowledge of Micron, with respect to the Acquired
Business:
(A) The Acquired Business has not violated, and is not in violation of, any
applicable Environmental Law and no notice, request for information, order,
complaint or penalty has been received by Micron, and there are no judicial,
administrative or other actions, suits or proceedings pending or threatened
against Micron which allege a violation of any Environmental Law with respect to
the Acquired Business;
(B) Micron has obtained or caused to be obtained all environmental permits
necessary for the operation of the Acquired Assets to comply with all applicable
Environmental Laws and Micron is in compliance with the terms of such permits
and other applicable Environmental Laws;
(C) Neither Micron nor the Acquired Business has unlawfully discharged,
disposed of or released, as those terms are defined in any Environmental Law,
any Hazardous Substance on the Acquired Assets, or on any property now or
previously owned, leased or used by the Acquired Business (including, without
limitation, soils, surface and ground water, air, sewer systems and buildings)
except for such discharge, disposal or release as would not have a material
adverse effect on the Acquired Business; and
(D) There are no underground storage tanks for Hazardous Substances, active
or abandoned, present at the Acquired Assets, or at any property now or
previously owned, leased or used by the Acquired Business, and Micron has not
received any written notice of the presence of any such tanks, to the extent
that any removal or remediation associated therewith would have a material
adverse effect on such property.
SECTION V.12. Purchase for Investment
Micron is acquiring the Shares and the PixTech Warrant for investment for
its own account and not with a view to, or for sale in connection with, any
distribution thereof.
SECTION V.13. Accredited Investor
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Micron is an "accredited investor" as that term is defined in Rule
501(a)(8) of Regulation D as promulgated by the SEC under the Securities Act.
SECTION V.14. Exempt from Registration; Restricted Securities
Micron understands that the sale of the Shares and the PixTech Warrant, and
the shares of PixTech Common Stock issuable upon exercise of the PixTech
Warrant, will not be registered under the Securities Act on the basis that the
sale provided for in this Agreement is exempt from registration under of the
Securities Act, and that the reliance of PixTech on such exemption is predicated
in part on Micron's representations set forth in this Agreement. Micron
understands that the Shares and the PixTech Warrant, and the shares of PixTech
Common Stock issuable upon exercise of the PixTech Warrant, are restricted
securities within the meaning of Rule 144 under the Act, and must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available.
SECTION V.15. Legends
Micron agrees that the Shares and the PixTech Warrant, and the shares
of PixTech Common Stock issuable upon exercise of the PixTech Warrant, will bear
legends and be subject to the restrictions on transfer as provided in the
Stockholder Rights Agreement. In addition, Micron agrees that PixTech may place
stop transfer orders with its transfer agents with respect to such instruments.
The appropriate portion of the legend shall be removed in accordance with the
provisions of the Stockholder Rights Agreement and the stop transfer orders
shall be removed promptly upon delivery to PixTech of such satisfactory evidence
as reasonably may be required by PixTech that such stop orders are not required
to ensure compliance with the Securities Act.
SECTION V.16. Employees
Schedule 5.16 to the Micron Disclosure Schedule sets forth, solely with
respect to the employees listed on Schedule 9.5 to the PixTech Disclosure
Schedule, each such employee's title, years of service, current annual
compensation, accrued and unpaid compensation, vacation and other amounts owed
to such employee and the number and type of stock options held by each such
employee (including the exercise price, vesting schedule and expiration date of
each such option).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PIXTECH
Except as disclosed in the disclosure schedule (the "PixTech Disclosure
Schedule") dated the date hereof and delivered by PixTech to Micron in
connection with this Agreement, PixTech represents and warrants to Micron that:
SECTION VI.1. Corporate Existence and Power . PixTech is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware
and has all corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted except those that the absence of which would not have a Material
Adverse Effect and is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect.
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SECTION VI.2. Corporate
PixTech has the requisite corporate power and authority to enter into this
Agreement and the other Transaction Agreements to which it is a party and to
perform its obligations hereunder and thereunder. Except as listed in Schedule
6.2 to the PixTech Disclosure Schedule, the execution and delivery of this
Agreement and the other Transaction Agreements to which it is a party, and
performance by PixTech of its obligations hereunder and thereunder, have been
duly authorized by all necessary corporate action on the part of PixTech. This
Agreement constitutes, and the Ancillary Agreements to which it is a party, when
executed and delivered by PixTech, will constitute, valid and legally binding
obligations of PixTech, enforceable against the PixTech in accordance with their
respective terms, except (i) as may be limited by (x) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to or
affecting the enforcement of creditors' rights generally and (y) the effect of
rules of law governing the availability of equitable remedies and (ii) as rights
to indemnity or contribution may be limited under federal or state securities
laws or by principles of public policy thereunder.
SECTION VI.3. Governmental Authorization
No consent, approval, order or authorization of, or registration
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of PixTech is required in connection
with the consummation of the transactions contemplated by this Agreement,
except: (i) compliance with any applicable requirements of the HSR Act; (ii)
compliance with any applicable requirements of the 1934 Act; and (iii) the
filing of such qualifications or filings under the Securities Act and the
regulations thereunder and all applicable state securities laws as may be
required in connection with the transactions contemplated by this Agreement,
including in connection with the issuance of the Shares and the PixTech Warrant,
and the PixTech Stockholder Approval. All such qualifications and filings will
have been made or be effective on the Closing.
SECTION VI.4. Noncontravention
The execution, delivery and performance by PixTech of each Transaction
Agreement to which it is a party and the consummation of the transactions
contemplated thereby do not and will not (i) assuming receipt of the PixTech
Stockholder Approval, violate the Restated Certificate of Incorporation or
Bylaws of PixTech, (ii) assuming compliance with the governmental matters
referred to in Section 6.3, violate in any material respect any applicable law,
rule, regulation, judgment, injunction, order or decree, (iii) constitute a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of PixTech or to a loss of any benefit
to which PixTech is entitled under any provision of any material agreement or
other instrument binding upon PixTech, or (iv) result in the creation or
imposition of any Lien on any the assets of PixTech, except, in the case of
clauses (ii) and (iii), individually and in the aggregate, as would not have a
Material Adverse Effect.
SECTION VI.5. Required Consents
Schedule 6.5 to the PixTech Disclosure Schedule sets forth each material
agreement or other instrument binding upon PixTech requiring a consent or other
action by any Person (the "PixTech Required Consents") as a result of the
execution, delivery and performance of this Agreement, except such consents or
actions as would not, individually or in the aggregate, have a Material
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Adverse Effect if not received or taken by the Closing. The PixTech Required
Consents include the affirmative vote of a majority of the holders of PixTech
Common Stock for (a) the increase of the Authorized Shares of Common Stock of
PixTech as set forth in PixTech's Restated Certificate of Incorporation, (b) an
increase in the number of shares authorized and reserved for issuance pursuant
to PixTech's 1993 Stock Option Plan and (c) the issuance of the PixTech Common
Stock to Micron as contemplated by this Agreement (collectively, the "PixTech
Stockholder Approval"). PixTech has, prior to the date of this Agreement,
provided Micron with a copy of the amendment to PixTech's Restated Certificate
of Incorporation that will be the subject of the PixTech Stockholder Approval.
SECTION VI.6. SEC Filings
(A) Reports. PixTech has furnished or made available to Micron prior to the
date hereof copies of its Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "PixTech Form 10-K"), its Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1998, June 30, 1998 and September 30,
1998 (the "PixTech Form 10-Q's") and its Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 (the "PixTech 1997 Form 10-K"), and all
other registration statements, reports and proxy statements filed by PixTech
with the SEC on or after December 31, 1998 (the PixTech Form 10-K, the PixTech
Form 10-Q's, the PixTech 1997 Form 10-K and such registration statements,
reports and proxy statements are collectively referred to herein as the "PixTech
SEC Documents"). Each of the PixTech SEC Documents, as of the respective date
thereof (or if amended or superseded by a filing prior to the closing date of
this Agreement, then on the date of such filing), did not, and each of the
registration statements, reports and proxy statements filed by PixTech with the
SEC after the date hereof and prior to the Closing will not, as of the date
thereof (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing), contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. PixTech is not a party to any material contract, agreement
or other arrangement which was required to have been filed as an exhibit to the
PixTech SEC Documents that was not so filed.
(B) Financial Statements. The SEC Documents include PixTech's audited
financial statements for the fiscal year ended December 31, 1998 (the "PixTech
Balance Sheet Date"). Since the PixTech Balance Sheet Date, PixTech has duly
filed with the SEC all registration statements, reports and proxy statements
required to be filed by it under the Exchange Act and the Securities Act. The
audited and unaudited consolidated financial statements of PixTech included in
the SEC Documents filed prior to the date hereof fairly present, in conformity
with generally accepted accounting principles ("GAAP") (except as permitted by
Form 10-Q) applied on a consistent basis (except as may be indicated in such
financial statements or the notes thereto), the consolidated financial position
of PixTech and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject to normal year-end audit adjustments in the case of unaudited
interim financial statements).
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(C) Absence of Certain Changes Since PixTech Balance Sheet. Since the
PixTech Balance Sheet Date, except as disclosed in or contemplated by the
PixTech SEC Documents, the business and operations of PixTech have been
conducted in the ordinary course consistent with past practice, and there has
not been:
(I) any declaration, setting aside or payment of any dividend or other
distribution of the assets of PixTech with respect to any shares of capital
stock of PixTech or any repurchase, redemption or other acquisition by
PixTech or any Subsidiary of PixTech of any outstanding shares of PixTech
capital stock;
(II) any damage, destruction or loss, whether or not covered by
insurance, except for such occurrences that have not resulted, and are not
expected to result, in a Material Adverse Effect;
(III) any waiver by PixTech of a valuable right or of a material debt
owed to it, except for such waivers that have not resulted and are not
expected to result, in a Material Adverse Effect;
(IV) any material change or amendment to, or any waiver of any
material rights under a material contract or arrangement by which PixTech
or any of its assets or properties is bound or subject, except for changes,
amendments or waivers that are expressly provided for or disclosed in this
Agreement or that have not resulted, and are not expected to result, in a
Material Adverse Effect;
(V) any change by PixTech in its accounting principles, methods or
practices or in the manner it keeps its accounting books and records,
except any such change required by a change in GAAP; and
(VI) any other event or condition of any character, except for such
events and conditions that have not resulted, either individually or
collectively, in a Material Adverse Effect.
(D) S-3 Eligibility. 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.
SECTION VI.7. Capitalization
The authorized and outstanding capital stock of PixTech as of the date
hereof, without giving effect to the transactions contemplated by this
Agreement, the authorized capital stock of PixTech consists of (a) 30,000,000
shares of common stock, $0.01 par value per share, of which 15,150,329 shares
were validly issued and outstanding, fully paid and non-assessable as of March
3, 1999, (b) 500,000 shares of Series E Preferred Stock, $0.01 par value per
share, of which 367,269 shares are validly issued and outstanding, fully paid
and non-assessable, and (c) 500,000 shares of undesignated preferred stock,
$0.01 par value per share, none of which are issued and outstanding. All
outstanding shares of capital stock have been duly authorized, and all such
issued and outstanding shares have been validly issued and are fully paid and
nonassessable. Schedule 6.7 to the PixTech Disclosure Schedule or the PixTech
SEC Documents include information regarding equity
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securities reserved for issuance to officers, directors, employees or
independent contractors or affiliates of PixTech under PixTech's employee stock
option and purchase plans and upon conversion of convertible securities. Except
as set forth in Schedule 6.7 to the PixTech Disclosure Schedule or the PixTech
SEC Documents, there are no other equity securities, options, warrants, calls,
rights, commitments or agreements of any character to which PixTech is a party
or by which it is bound obligating PixTech to issue, deliver, sell, repurchase
or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of PixTech or obligating PixTech to grant, extend or
enter into any such equity security, option, warrant, call, right, commitment or
agreement.
SECTION VI.8. Valid Issuance of Securities
Following receipt of the PixTech Stockholder Approval, the Shares and the
shares of PixTech Common Stock issuable upon exercise of the PixTech Warrant
will be duly authorized and reserved and, when delivered to and paid for by
Micron in accordance with the provisions of this Agreement and (in the case of
the shares of PixTech Common Stock issuable upon exercise of the PixTech
Warrant) the Warrant Agreement, will be validly issued, fully paid and
non-assessable.
SECTION VI.9. Compliance with Securities Laws
Assuming the accuracy of the representations made by Micron in Section 5
hereof, the Shares and the shares of PixTech Common Stock issuable upon exercise
of the PixTech Warrant will be issued to Micron in compliance with applicable
exemptions from (i) the registration and prospectus delivery requirements of the
Securities Act and (ii) the registration and qualification requirements of all
applicable securities laws of the states of the United States.
SECTION VI.10. Litigation
Except as set forth in Schedule 6.10 to the PixTech Disclosure Schedule,
there is no action, suit, investigation or proceeding pending against, or to the
knowledge of PixTech, threatened against or affecting PixTech before any court
or arbitrator or any governmental body, agency or official which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
SECTION VI.11. Finders' Fees
Except as set forth in Schedule 6.11 to the PixTech Disclosure Schedule,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of PixTech who might be
entitled to any fee or commission from Micron upon consummation of the
transactions contemplated by this Agreement.
SECTION VI.12. Full Disclosure
The information contained in this Agreement, the PixTech Disclosure
Schedule and the PixTech SEC Documents with respect to the business, operations,
results of operations and financial condition of PixTech, and the transactions
contemplated by this Agreement are true and complete in all material respects
and do not omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION VI.13. Investment Company Act
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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.
SECTION VI.14. 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.
SECTION VI.15. Possession of Intellectual Property
Except as disclosed in reports filed with the SEC pursuant to the Exchange
Act, 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, except as disclosed in
reports filed with the SEC pursuant to the Exchange Act, 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.
SECTION VI.16. 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.
SECTION VI.17. Taxes
PixTech has (a) filed or caused to be filed all Tax Returns which, to the
knowledge of PixTech, are required to be filed by it, and paid all Taxes shown
to be due and payable on said returns or on any Tax assessments made against it
or any property and all other Taxes imposed on it by any governmental authority
in the jurisdictions in which it operates, except for any such Taxes and
assessments (i) the amount of which is not individually or in the aggregate
material to the business or operations of PixTech or (ii) 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,
and (b) provided adequate accruals in all material respects in accordance with
GAAP in its financial
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statements for any taxes that have not been paid, whether or not shown on as
being due on any returns.
ARTICLE VII
COVENANTS OF MICRON WITH RESPECT TO ACQUIRED BUSINESS
Micron agrees that:
SECTION VII.1. Conduct of the Acquired Business
From the date hereof until the Closing Date, Micron shall conduct the
Acquired Business in the ordinary course consistent with past practice, (except
to the extent Micron believes it is necessary or prudent to reduce or limit the
scale of the Acquired Business as contemplated by this Agreement) and use
reasonable efforts to preserve intact the Acquired Assets and relationships with
third parties. From the date hereof to the Closing Date, Micron shall consult
with PixTech from time to time concerning any proposed activities that could
reasonably be expected to have a material effect on the Acquired Business.
Without limiting the generality of the foregoing, from the date hereof until the
Closing Date, except as disclosed on Schedule 7.1 to the Micron Disclosure
Schedule, Micron will not, with respect to the Acquired Business:
(A) encumber or license (except pursuant to existing contracts or
commitments), or sell, lease, license or otherwise dispose of, any material
assets or property, in each case except in the ordinary course consistent with
past practice;
(B) enter into any partnership arrangements, joint development agreements
or strategic alliances;
(C) acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a material portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any material amount of operating assets;
(D) incur any indebtedness for borrowed or guarantee any such indebtedness
(or enter any other guarantee, keep-well, capital maintenance or other similar
agreement);
(E) make any individual capital expenditure or commitment, or series of
related capital expenditures or commitments, outside the ordinary course of
business, exceeding $25,000; or
(F) engage in any activities to expand the Small Area Display Business.
SECTION VII.2. Access to Information, Confidentiality
From the date hereof until the Closing Date, subject to the provisions of
the Nondisclosure Agreement dated January 26, 1999 between Micron and PixTech
(the "Nondisclosure Agreement")
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and any other confidentiality, nondisclosure or applicable agreement to which
PixTech is bound, Micron will (i) give PixTech, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of the Acquired Business and to the books and
records of Micron relating to the Acquired Business, (ii) furnish, for the
Acquired Business, to PixTech, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information relating to the Acquired Business as such Persons may reasonably
request and (iii) instruct its employees, counsel and financial advisors, to
cooperate with PixTech in its investigation of the Acquired Business. Any
investigation pursuant to this Section shall be conducted in such manner as not
to interfere unreasonably with the conduct of the Acquired Business.
Notwithstanding the foregoing, PixTech shall not have access to confidential
information that relates to Micron as a whole, or to personnel records relating
to the Acquired Business relating to individual performance or evaluation
records except as to those individuals identified on Schedule 9.5 to the PixTech
Disclosure Schedule, medical histories or other information which in Micron's
good faith opinion is sensitive or the disclosure of which could subject Micron
to risk of liability.
SECTION VII.3. Notices of Certain Events Micron shall promptly notify
PixTech of:
(A) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(B) any notice or other communication from any government or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement;
(C) any actions, suits, claims, investigations or proceedings commenced
relating to the Acquired Business that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
5.9; and
(D) any written notice or communication received from a material vendor or
supplier that such vendor or supplier will no longer supply goods or services to
Micron relating to the Acquired Business, or from any Transferred Employee that
such employee is terminating his employment with Micron.
SECTION VII.4. Covenant Not to Compete
Micron covenants and agrees that for a period of three (3) years following
the Closing Date, Micron shall not, directly or indirectly, anywhere in the
world (the "Territory") manufacture, fabricate or assemble field emission
displays. Micron agrees that this restriction on competition shall be deemed to
be a series of separate covenants not-to-compete for each year within the
three-year period of non-competition and separate covenants not-to-compete for
each state within the United States and each country in the world. If any court
of competent jurisdiction shall determine the foregoing covenant to be
unenforceable with respect to the term thereof or the scope of the subject
matter or geography covered thereby, then such covenant shall nonetheless be
enforceable by
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such court against such other party or upon such shorter term or within such
lesser scope as may be determined by the court to be reasonable and enforceable.
Notwithstanding the foregoing, Micron may: (i) acquire all or a controlling
interest in, or all or a majority of the assets of, any Person engaged in the
manufacture, fabrication or assembly of field emission displays, provided,
however, that Micron shall use commercially reasonable efforts to promptly
divest itself of or shutdown that portion of the operation of such Person
engaged in the manufacture, fabrication or assembly of field emission displays;
(ii) acquire up to 5% of the outstanding capital stock or other ownership
interest in any Person engaged principally or otherwise in the manufacture,
fabrication or assembly of field emission displays having a class of equity
securities listed on any national or international securities exchange; (iii)
buy field emission displays for its own internal use; and (iv) purchase field
emission displays from another Person and resell such displays so long as Micron
did not assist in the manufacture, fabrication or assembly of the purchased and
resold field emission displays. The mere licensing of patents or other
intellectual property by Micron, without more, shall not be deemed to be
"assistance" in the manufacture, fabrication or assembly of field emission
displays.
SECTION VII.5. Transferred Employees
Micron covenants and agrees that (a) without PixTech's prior consent, it
shall not increase the salary payable to any Transferred Employee prior to the
Closing Date, and (b) as of the Closing Date, the only employees of the Display
Division Business shall be the Transferred Employees. Micron hereby waives,
effective on and after the Closing Date, any breach that would result under any
agreement made by any Transferred Employee in favor of Micron not to compete
with Micron, its business activities or otherwise, solely insofar as such breach
arises by virtue of such Transferred Employee's employment by PixTech after the
Closing Date.
ARTICLE VIII
COVENANTS OF PIXTECH ARTICLE
PixTech agrees that:
SECTION VIII.1. Stockholder Approval
PixTech will prepare and file with the SEC a proxy statement to its
stockholders for the 1999 annual meeting of PixTech's stockholders to be held on
or about April 27, 1999. Such proxy statement shall solicit to the PixTech
Stockholder Approval. Such proxy statement will comply in all material respects
with all applicable requirements of law and the rules and regulations
promulgated thereunder. Prior to filing such proxy statement or any amendment
thereto with the SEC, PixTech will afford Micron reasonable time to review and
comment on those portions of such proxy statement or amendment that describe the
transactions contemplated by this Agreement. Whenever any event occurs that is
required to be set forth in an amendment or supplement to such proxy statement,
PixTech will promptly inform Micron of such occurrence and shall make such
filings with the SEC or other appropriate governmental agencies and mail
appropriate notice to its stockholders. Such proxy statement will include the
recommendation of the Board of Directors of PixTech in favor of the Stockholder
Approval (except that the Board of Directors of PixTech may withdraw, modify or
refrain from making such recommendation to the extent that the Board
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determines, in good faith, after consultation with outside legal counsel, that
compliance with the Board's fiduciary duties under applicable law would require
it to do so).
SECTION VIII.2. Access to Information; Confidentiality
Subject to the provision of the Nondisclosure Agreement, PixTech will, with
respect to the Acquired Business, on and after the Closing Date, afford promptly
to Micron and its agents reasonable access to its properties, books, records,
employees and auditors as may be and to the extent necessary to permit Micron to
determine any matter relating to Micron's rights and obligations under this
Agreement or with respect to the Display Division Business for any period ending
on or before the Closing Date; provided that any such access by Micron shall not
unreasonably interfere with the conduct of the business of PixTech.
SECTION VIII.3. Notices of Certain Events PixTech shall promptly notify
Micron of:
(A) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(B) any notice or other communication from any government or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and
(C) any actions, suits, claims, investigations or proceedings commenced
relating to PixTech or the Acquired Business that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 6.10.
(D) any action by the Board of Directors of PixTech to withdraw or modify
its approval of this Agreement or the transactions contemplated hereby, or its
recommendation to the stockholders of PixTech to grant the PixTech Stockholder
Approval.
SECTION VIII.4. Cooperation
PixTech covenants and agrees to cooperate with Micron as Micron may
reasonably request, whether before, on or after the Closing Date, to enable such
DARPA Contracts to be audited by DARPA and "closed out."
ARTICLE IX
COVENANTS OF MICRON AND PIXTECH ARTICLE
Micron and PixTech each agree that:
SECTION IX.1. Commercially Reasonable Efforts; Further Assurances
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Subject to the terms and conditions of this Agreement, Micron and PixTech
will use their commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or desirable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. Micron and PixTech agree to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
SECTION IX.2. Certain Filings
Micron and PixTech shall cooperate with one another (i) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency, official or authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement , including pursuant to the HSR Act and (ii) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
SECTION IX.3. Public Announcements
The parties agree that the initial press release to be jointly issued by
the parties with respect to the transactions contemplated by this Agreement
shall be substantially and in all material respects in the form heretofore
agreed to by the parties, and shall be released by the parties following the
execution of this Agreement. The parties agree to consult with each other before
issuing any subsequent press release or making any subsequent public statement
with respect to this Agreement or the transactions contemplated hereby.
SECTION IX.4. Required Consents
Each of Micron and PixTech shall use its commercially reasonable efforts to
obtain prior to the Closing the Micron Required Consents and the PixTech
Required Consents, respectively. Prior to the Closing, PixTech shall cooperate
with Micron in connection with Micron's obtaining any Micron Required Consents,
including the consent of the lenders under the Financing Agreements to PixTech's
assumption of liabilities thereunder; and provided, however, that such
cooperation of Micron and PixTech hereunder shall not include any requirement of
Micron or PixTech to expend money, commence any litigation or offer or grant any
accommodation (financial or otherwise) to any third party. Without limiting the
foregoing, with respect to the consents listed in the list of "Miscellaneous
Software Contracts -Transfers Subject to Vendor Consent" set forth in Schedule
5.5 to the Micron Disclosure Schedule, Micron will request that the applicable
vendor consent to the assignment of each such contract. If the applicable vendor
gives its consent unconditionally, then such contract shall be considered an
Assumed Contract. If the applicable vendor gives its consent conditioned upon
the payment of any fee, then Micron shall so notify PixTech, and if PixTech
agrees within 10 days (or such shorter period as the vendor may require) to pay
such fee, then upon payment of such fee, such contract shall be considered an
Assumed Contract. If the applicable vendor does not give its consent, or such
consent is subject to any condition other than the payment of a fee, then such
contract shall not be considered an Assumed Contract.
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SECTION IX.5. Display Division Personnel
(A) Schedule 9.5 to the PixTech Disclosure Schedule identifies
approximately 40 employees of Display Division (the "Transferred Employees") to
be offered employment by PixTech on terms substantially equivalent to the terms
of their employment by Micron, except that each Transferred Employees will
receive a salary from PixTech in an amount at least equal to the amount
specified for such Transferred Employee, as a percentage of such Transferred
Employee's current salary, in such Schedule. Micron agrees that it shall not
offer employment to any Transferred Employee for a period of one year after the
Closing Date. In addition, PixTech will establish a stock option pool in which
the Transferred Employees will receive stock options for a total of
600,000shares of PixTech Common Stock. Schedule 9.5 to the PixTech Disclosure
Schedule also identifies the number of PixTech stock options to be received by
each Transferred Employee from such stock option pool. The exercise price for
the stock options will be the lesser of (i) the PixTech Closing Market Price and
(b) the average closing price for PixTech Common Stock for the five trading days
ending three trading days prior to the date of grant.
(B) Micron shall establish a [] * bonus pool to be allocated among the
Transferred Employees who remain employed by PixTech as of the date which is six
months after the Closing Date. The amount of the bonus to which each Transferred
Employee will be entitled is set forth on Schedule 9.5 to the PixTech Disclosure
Schedule. The scheduled bonus for any Transferred Employee who is not employed
by PixTech at the end of the six month period will not be paid from such bonus
pool, and such amount not paid shall not be used to increase the amount of any
other Transferred Employee's bonus payable from such bonus pool. The bonuses
will be payable by PixTech directly to the Transferred Employees, and Micron
will reimburse PixTech for the aggregate amount of such bonuses paid (not to
exceed []* and to be paid in accordance with Schedule 9.5 to the PixTech
Disclosure Schedule) within 10 business days after Micron receives evidence that
such bonuses were paid.
(C) On the Closing Date, and thereafter while employed by PixTech, each
Transferred Employee shall cease to be covered under Micron's employee benefit
plan and instead shall become covered under PixTech's employee benefit plans.
Micron and PixTech agree that PixTech shall provide or cause to be provided to
each Transferred Employee all notices required to be provided under applicable
law, except to the extent applicable law requires such notice to be provided by
Micron. Micron agrees to use commercially reasonable efforts to assist PixTech
in the transition of the Transferred Employees to coverage under PixTech's
employee benefit plan including, at PixTech's request, allowing PixTech to hold,
on a commercially reasonable basis, employee benefit plan open enrollment
meetings with the Transferred Employees at least thirty (30) days prior to the
Closing Date on Micron's premises.
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* Confidential treatment has been requested for this portion of the Agreement.
(D) PixTech shall credit each Transferred Employee with all service with
Micron prior to the Closing Date and with all amounts paid to each such employee
prior to the Closing Date to the extent that service or pay is relevant under
any employee benefit plan of PixTech for purposes of determining eligibility to
participate, vesting and benefit accrual. PixTech shall also provide Transferred
Employees with credit under its medical and
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dental employee benefit plans for deductible and co-payment amounts made by the
Transferred Employees under Micron's employee benefit plans prior to the Closing
Date. Micron agrees to provide deductible and co-payment information with
respect to the Transferred Employees as soon as is practicable following the
Closing Date to effectuate such crediting of deductibles and co-payment amounts.
Micron agrees to provide PixTech with service commencement date and prior
compensation information with respect to each Transferred Employee as soon as
practicable after the date upon which this Agreement is executed.
(E) Commencing on the date of this Agreement, Micron and PixTech agree to
cooperate fully with respect to the employment-related actions which are
necessary or reasonably desirable to accomplish the transactions contemplated
pursuant to this Agreement, including the provision of records and information
as each may reasonably request (including job titles, short and long-term
disability coverage, life insurance coverage, operator certification and
workers' compensation records and information) and the making of all appropriate
filings under the Law.
(F) With respect to Transferred Employees who are required to be furnished
a Form W-2 for the calendar year in which the Closing Date occurs, PixTech and
Micron agree to follow the "standard procedure" set forth in Revenue Procedure
96-60 with respect to discharging their respective income and employment tax
withholding and reporting obligations with respect to such employees.
(G) As promptly as practicable after the Closing Date, Micron shall pay to
the Transferred Employees all salary, overtime and other remuneration earned,
accrued and payable for all periods up to the Closing Date in a manner
consistent with Micron's policies for terminated employees.
SECTION IX.6. Display Division Financing Arrangements
In connection with obtaining the consent of the lenders under the Display
Division Financing Agreements to PixTech's assumption of liabilities thereunder,
PixTech shall use its best efforts to cause Micron to be released from all
liabilities thereunder, including, but not limited to, refinancing the assumed
debt on commercially reasonable terms that are not necessarily comparable to the
terms of the Financing Arrangements. Micron agrees, however, that in the event
that, despite PixTech's best efforts, the lenders under the Financing Agreements
do not agree to Micron's release prior to the Closing, then the Micron Guaranty
shall be offered as credit support for the obligations of PixTech assumed
thereunder. In consideration for the Micron Guaranty, and as support for
PixTech's reimbursement obligations to Micron thereunder, PixTech shall grant in
favor of Micron a security interest in the assets identified in Schedule 9.6,
which security interest shall be evidenced by a security agreement in form and
substance satisfactory to Micron (the "PixTech Security Agreement"), together
with such financing statements and other filings as Micron may request to
perfect such security interest. The Micron Guaranty shall be without a fee for a
period of no longer than (x) six months from the Closing Date in the case of the
Display Division Financing Agreement with BancBoston and (y) ten months from the
Closing Date in the case of the Display Division Financing Agreement with Heller
(such six month and ten month periods are each, an "Initial Period").
Notwithstanding the foregoing, PixTech shall use its best efforts to cause the
Micron
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Guaranty to be released as soon as possible following the Closing Date. In the
event the Micron Guaranty is not released with respect to the Display Division
Financing Agreement with BancBoston or the Display Division Financing Agreement
with Heller, as the case may be, within the applicable Initial Period, PixTech
shall pay a non-refundable guaranty fee to Micron, payable in cash in U.S.
dollars, in an amount equal to 8% per annum times the maximum principal amount
guaranteed under the Micron Guaranty as of the last day of such month in respect
of the Display Division Financing Agreement with BancBoston or the Display
Division Financing Agreement with Heller, as applicable, payable on the first
day of each month (and based on a year of twelve months) in advance until
termination of the Micron Guaranty.
SECTION IX.7. Tax matters
(a) Allocation. The parties hereto agree to allocate the Display Division
Purchase Consideration (plus the all consideration attributable to the portion
of the Assumed Liabilities which are treated as purchase price for federal
income tax purposes) to each Acquired Asset in accordance with the applicable
provisions of Section 1060 of the Code (such election and allocation being
referred to herein as the "Price Allocation"). Without limiting the foregoing,
each party hereto agrees that the PixTech Warrant has the value specified in the
Price Allocation and represents a payment of such amount made as of the Closing
Date. Accordingly, each party hereto shall adopt and utilize such Price
Allocation for purposes of all Tax Returns filed by them and shall not
voluntarily take any position inconsistent with the foregoing in connection with
any examination of any Tax Return, any refund claim, any litigation proceeding
or otherwise. In the event that the foregoing is disputed by any taxing
authority, the party receiving notice of the dispute shall promptly notify the
other parties hereto of such dispute and the parties hereto shall consult with
each other concerning resolution of the dispute. Each party agrees to timely
Internal Revenue Service Form 8594 reflecting the Price Allocation with its
applicable federal Tax Return for the taxable year that includes the Closing
Date.
(b) Tax Returns. Micron shall prepare and file, or cause to be filed, all
Tax Returns for Micron for all periods which include the operations of the
Acquired Business or the ownership of the Acquired Assets for any period ending
on or before the Closing Date. Subject to the last sentence of this Section
9.7(b), Micron will make all payments required with respect to any such Tax
Return. PixTech shall prepare and file, or cause to be filed, all Tax Returns of
PixTech which include the operations of the Acquired Business or the ownership
of the Acquired Assets for all periods as to which Tax Returns are due (without
regard to extensions) after the Closing Date (other than for Taxes with respect
to periods for which the Tax Returns of Micron will include the operations of
the Acquired Business or the ownership of the Acquired Assets pursuant to the
second preceding sentence). PixTech will make all payments required with respect
to any such Tax Return; provided, however, that Micron will reimburse PixTech
concurrently therewith to the extent that any payment PixTech is making relates
to the operations of the Acquired Business or the ownership of the Acquired
Assets for any period ending on or before the Closing Date, or otherwise relates
to any Tax liability which is an Excluded Liability. For purposes of this
Section 9.7(b), in the case of any taxable period commencing on or before the
Closing Date and ending after the Closing Date, the portion of any Tax that
relates to any period on or before the Closing Date shall be (i) in the case of
a Tax that is not based on net income, gross income, sales, premiums or gross
receipts, the total
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amount of such Tax for the taxable period in question multiplied by a fraction,
the numerator of which is the number of days in the portion of such taxable
period ending on or before the Closing Date, and the denominator of which is the
total number of days in such taxable period, and (ii) in the case of a Tax that
is based on any of net income, gross income, sales, premiums or gross receipts,
the Tax that would be due with respect to the portion of such taxable period
ending on or before the Closing Date if such period were a separate taxable
period, except that exemptions, allowances, deductions or credits that are
calculated on an annual basis (such as the deduction for depreciation or capital
allowances) shall be apportioned on a per diem basis. In the event that Micron
shall have properly filed a Tax Return which includes a payment of Tax by Micron
related to the operations of the Acquired Business or the ownership of the
Acquired Assets for any period beginning after the Closing Date for which Micron
cannot receive a refund, PixTech shall reimburse Micron for such Tax (calculated
in the same manner as set forth in the immediately preceding sentence).
(c) Taxes. Micron will be responsible for and make all payments required
with respect to, and will indemnify PixTech from and against, (i) any
liabilities of Micron for unpaid Taxes (with respect to the Acquired Business or
the ownership of the Acquired Assets, or otherwise) for the periods ending on or
prior to the closing Date, including without limitation any Tax for which Micron
is responsible under Section 9.7(b) hereof, and (ii) any liability for any
income, transfer, sales, use, or other similar Taxes arising in connection with
the consummation of the transactions contemplated by this Agreement. The parties
shall cooperate with each other to the extent reasonably requested and legally
permitted to minimize any such Taxes described in clause (ii) of the preceding
sentence.
(d) Cooperation. If Micron files any Tax Return which includes payment of
any Tax for which PixTech is responsible under this Section 9.7, PixTech shall
promptly reimburse Micron for such Taxes when such Tax Return is filed. If
PixTech files any Tax Return which includes payments of any Tax for which Micron
is responsible under this Section 9.7, Micron shall promptly reimburse PixTech
for such Taxes when such Tax Return is filed. PixTech and Micron shall timely
provide to each other all information and documents within their possession (or
their auditors, advisors or affiliates) and signatures and consents necessary
for each party to properly prepare and file the Tax Returns described in this
Section 9.7 or in connection with the determination of any Tax liability or any
audit, examination or proceeding. Each party hereto shall reasonably cooperate
(at their own expense) with the other party to obtain other information or
documents necessary or appropriate to prepare and file Tax Returns or elections
or necessary or appropriate in connection with the determination of any Tax
liability or any audit, examination or proceeding.
ARTICLE X
LICENSED INTELLECTUAL PROPERTY
SECTION X.1. Licensed Intellectual Property
Micron grants to PixTech a perpetual, royalty-free license, including the
right to sublicense its Subsidiaries, to all Non-Patent Intellectual Property
used in the Display Division Business, except that: (a) no license is granted
under Intellectual Property relating to Micron's process technology, equipment
recipes and wafer form probe and test used to manufacture and test
single-crystal silicon-substrate-based FED baseplates; (b) no license is granted
to use the trademark "MICRON" in any
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form or combination; and (c) no license is granted to any Micron-originated or
Micron-owned software, or to any documentation or materials relating thereto.
No license is granted to Micron Non-Patent Intellectual Property, except as
expressly provided herein, and no license is granted, either expressly or by
implication, if PixTech is in possession of, or later learns of or acquires
Micron Intellectual Property which is not within the scope of the license grant
above in the preceding paragraph of this Section. PixTech agrees to return any
such Micron Intellectual Property which is not Licensed Intellectual Property to
Micron, and agrees to take steps, where appropriate, to preserve the
confidentiality of any such information which is not manifestly public
information.
The license granted to PixTech under any Micron patents is governed
exclusively by the Patent License attached as Exhibit A to this Acquisition
Agreement, and the license granted under this Section does not grant any rights
under patents of Micron or under any patents which may issue to Micron in the
future. No sublicense granted under this Section shall be broader than the
license granted herein. Accordingly, no sublicense under this Section may
include or grant any rights, license or authority under any patent of Micron,
either now-issued or later-issued.
ARTICLE XI
CONDITIONS TO CLOSING
SECTION XI.1. Conditions to Obligations of Micron and PixTech
The obligations of Micron and PixTech to consummate the purchase and sale
of the Acquired Assets and the assumption of the Assumed Liabilities, and the
purchase and sale of the Shares and PixTech Warrant, are subject to the
satisfaction or waiver of the following conditions.
(A) any applicable waiting period under the HSR Act relating to the sale of
the Acquired Assets and the issuance of the Shares shall have expired or been
terminated; and
(B) no provision of any applicable law or regulation and no judgement,
injunction, order or decree shall prohibit the consummation of the Closing.
SECTION XI.2. Conditions to Obligations of Micron
The obligation of Micron to consummate the Closing is subject to the
satisfaction of the following further conditions:
(A) the Ancillary Agreements, in form and substance reasonably satisfactory
to Micron, shall have been executed and delivered by the parties thereto (other
than Micron) and shall be in full force and effect;
(B) PixTech shall have obtained the PixTech Stockholder Approval and the
waiver of Sumitomo Corporation as to Section 10.11 of the Credit
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Agreement dated as of July 21, 1997 by and between PixTech and Sumitomo
Corporation, as referenced on Schedule 6.5 to the PixTech Disclosure Schedule;
(C) (i) PixTech shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date, (ii) the representations and warranties of PixTech contained in this
Agreement and in any certificate or other writing delivered by PixTech pursuant
hereto shall be true in all material respects at and as of the Closing Date, as
if made at and as of such date, except for those representations and warranties
that speak as of a specified date, which shall be true in all material respects
at and as of such date, and (iii) Micron shall have received a certificate
signed by an executive officer of PixTech to the foregoing effect;
(D) the terms of the Micron Guaranty shall be reasonably acceptable to
Micron;
(E) actions by or in respect of or filings with any governmental body,
agency, official or authority required to permit the consummation of the Closing
shall have been taken, made or obtained, except for any such actions or filings
the failure to take, make or obtain would not reasonably be expected to have a
Material Adverse Effect as to Micron;
(F) the offer and sale of the Shares and the PixTech Warrant pursuant to
this Agreement shall be exempt from the registration requirements of the
Securities Act and the registration or qualification requirements of all
applicable state securities laws;
(G) Micron shall have received an opinion on behalf of PixTech, dated as of
the Closing Date, from counsel to PixTech, in form and substance reasonably
satisfactory to Micron;
(H) Micron shall have received a copy of PixTech's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, certified by PixTech as fairly
presenting, in conformity with GAAP applied on a consistent basis (except as may
be indicated in such financial statements or the notes thereto), the
consolidated financial position of PixTech and its consolidated Subsidiaries as
at the date thereof and the consolidated results of their operations and cash
flows for the period then ended;
(I) Micron shall have been afforded an opportunity to review the agreements
to which PixTech is a party referred to in Section 2.8(ii) to the Patent Cross
License Agreement; and
(J) Micron shall have received all documents it may reasonably request
relating to the existence of PixTech and the authority of PixTech to enter into
this Agreement and the Ancillary Agreements, and to perform its obligations
hereunder and thereunder, all in form and substance reasonably satisfactory to
Micron.
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SECTION XI.3. Conditions to Obligations of PixTech
The obligation of PixTech to consummate the Closing is subject to the
satisfaction of the following further conditions:
(A) the Ancillary Agreements, in form and substance reasonably satisfactory
to PixTech, shall have been executed and delivered by the parties thereto (other
than PixTech) and shall be in full force and effect;
(B) the PixTech Required Consents, including the PixTech Stockholder
Approval, shall have been obtained;
(C) (i) Micron shall have performed in all material respects of its
obligations hereunder required to be performed by it on or prior to the Closing
Date, (ii) the representations and warranties of Micron contained in this
Agreement and in any certificate or other writing delivered by Micron pursuant
hereto shall be true at and as of the Closing Date in all material respects, as
if made at and as of such date, except for those representations and warranties
that speak as of a specified date, which shall be true in all material respects
at and as of such date, and (iii) PixTech shall have received a certificate
signed by an officer of Micron to the foregoing effect;
(D) actions by or in respect of or filings with any governmental body,
agency, official or authority required to permit the consummation of the Closing
shall have been taken, made or obtained, except for any such actions or filings
the failure to take, make or obtain would not reasonably be expected to have a
Material Adverse Effect as to PixTech;
(E) PixTech shall have received an opinion on behalf of Micron, dated as of
the Closing Date, from counsel to Micron, in form and substance reasonably
satisfactory to PixTech;
(F) PixTech shall be reasonably satisfied that Micron shall have ceased to
engage in operations relating to the Small Area Display Business;
(G) PixTech shall have received all documents it may reasonably request
relating to (i) the existence of Micron and the authority of Micron to enter
into this Agreement and the Ancillary Agreements, and to perform its obligations
hereunder and thereunder and (ii) the conveyance of the Acquired Assets, all in
form and substance reasonably satisfactory to PixTech.
ARTICLE XII
SURVIVAL; INDEMNIFICATION
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SECTION XII.1. Survival
The representations and warranties of the parties hereto contained in this
Agreement or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing until one year after the Closing
Date, except for (a) any representation or warranty concerning (i) the authority
of either party to execute this Agreement and the Ancillary Agreements, (ii) any
environmental matters, which representations and warranties shall survive
indefinitely, and (b) any representation or warranty concerning tax matters,
which shall survive until the expiration or lapse of the applicable statute of
limitations. Notwithstanding the preceding sentence, any representation or
warranty in respect of which indemnity may be sought under this Agreement shall
survive the time at which it would otherwise terminate pursuant to the preceding
sentence, if notice of the inaccuracy or breach thereof giving rise to such
right of indemnity shall have been given to the party against whom such
indemnity may be sought prior to such time.
SECTION XII.2. Indemnification
(A Micron hereby indemnifies PixTech and its Affiliates against and agrees
to hold each of them harmless from any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) ("Damages") incurred or suffered by PixTech or any of its Affiliates
arising out of (i) any misrepresentation or breach of warranty made by or
covenant of Micron pursuant to this Agreement, or (ii) any Excluded Liability;
provided that (x) Micron shall not be liable under this Section 12.2 unless the
aggregate amount of Damages with respect to all matters referred to in this
Section 12.2(a) exceeds $100,000 in the aggregate and then only to the extent of
such excess and (y) Micron's maximum liability under this Section 12.2(a) shall
not exceed $7,000,000, and provided further that the limitation set forth in
clauses (x) and (y) shall not apply to Damages in respect of Excluded
Liabilities.
(B PixTech hereby indemnifies Micron and its Affiliates against and agrees
to hold each of them harmless from any and all Damages incurred or suffered by
Micron or any of its Affiliates arising out of (i) any misrepresentation or
breach of warranty made by or covenant of PixTech pursuant to this Agreement or
(ii) any Assumed Liability; provided that (x) PixTech shall not be liable under
this Section 12.2(b) unless the aggregate amount of Damages with respect to all
matters referred to in this Section 12.2 exceeds $100,000 in the aggregate and
then only to the extent of such excess and (y) PixTech's maximum liability under
this Section 12.2(b) shall not exceed $7,000,000, and provided further that the
limitation set forth in clauses (x) and (y) shall not apply to Damages in
respect of Assumed Liabilities.
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SECTION XII.3. Procedures
(A The party seeking indemnification under Section 12.2 (the "Indemnified
Party") agrees to give prompt notice to the party against whom indemnity is
sought (the "Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding ("Claim") in respect of which
indemnity may be sought under such Section and will provide the Indemnifying
Party such information with respect thereto that the Indemnifying Party may
reasonably request. The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder, except to the
extent such failure shall have prejudiced the Indemnifying Party.
(B The Indemnifying Party shall be entitled to participate in the defense
of any Claim asserted by any third party ("Third Party Claim") and, subject to
the limitations set forth in this Section, shall be entitled to control and
appoint lead counsel for such defense, in each case at its expense.
(C If the Indemnifying Party shall assume the control of the defense of any
Third Party Claim in accordance with the provisions of this Section 12.3, (i)
the Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld) before entering into any
settlement of such Third Party Claim, if the settlement does not release the
Indemnified Party from all liabilities and obligations with respect to such
Third Party Claim or the settlement imposes injunctive or other equitable relief
against the Indemnified Party and (ii) the Indemnified Party shall be entitled
to participate in the defense of such Third Party Claim and to employ separate
counsel of its choice for such purpose. The fees and expenses of such separate
counsel shall be paid by the Indemnified Party.
(D Each party shall cooperate, and cause their respective Affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and shall
furnish or cause to be furnished such records, information and testimony, and
attend such conferences, discovery proceedings, hearing, trials or appeals, as
may be reasonably requested in connection therewith.
SECTION XII.4. Calculation of Damages
(A The amount of any Damages payable under Section 12.2 by the Indemnifying
Party shall be reduced by (i) any amounts recovered or recoverable by the
Indemnified Party under applicable insurance policies and (ii) any tax benefit
realized by the Indemnified Party arising from the incurrence or payment of any
such Damages.
(B The Indemnifying Party shall not be liable under Section 12.2 for any
consequential or punitive Damages or Damages for lost profits.
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(C Notwithstanding any other provision of this Agreement to the contrary,
if on the Closing Date the Indemnified Party knows of any information that would
cause on or more of the representations and warranties made by the Indemnifying
Party to be inaccurate as of the date made, the Indemnified Party shall have not
right or remedy after the Closing with respect to such inaccuracy and shall be
deemed to have waived its rights to indemnification in respect thereof.
SECTION XII.5. Assignment of Claims
If the Indemnified Party receives any payment from an Indemnifying Party in
respect of any Damages pursuant to Section 12.2 and the Indemnified Party could
have recovered all or part of such Damages from a third party (a "Potential
Contributor") based on the underlying Claim asserted against the Indemnifying
Party, the Indemnified Party shall assign such of its rights to proceed against
the Potential Contributor as are necessary to permit the Indemnifying Party to
recover from the Potential Contributor the amount of such payment.
SECTION XII.6.
Except as specifically set forth in this Agreement, PixTech waives any
rights and claims PixTech may have against Micron, whether in law or in equity,
relating to the Display Division Business. The rights and claims waived by
PixTech include, without limitation claims for contribution or other rights of
recovery arising out of or relating to any Environmental Law, claims for breach
of contract, breach of representation or warranty, negligent misrepresentation
and all other claims for breach of duty. After the Closing, Section 12.2 will
provide the exclusive remedy for any misrepresentation, breach of warranty,
covenant or other agreement arising out of this Agreement or the transaction
contemplated hereby.
ARTICLE XIII
TERMINATION ARTICLE
SECTION XIII.1. Grounds for Termination
This Agreement maybe terminated at any time prior to the Closing:
(A by mutual written agreement of Micron and PixTech,
(B by either Micron or PixTech if the Closing shall not have been
consummated on or before May 20, 1999;
(C by either Micron or PixTech if PixTech shall not have received the
PixTech Stockholder Approval at a meeting of its stockholders duly convened
therefor or at any adjournment thereof; or
(D by either Micron or PixTech if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent jurisdiction; or
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(E by Micron in the event of any action by the Board of Directors of
PixTech to withdraw or modify its approval of this Agreement or the transactions
contemplated hereby, or its recommendation to the stockholders of PixTech to
grant the PixTech Stockholder Approval.
The party desiring to terminate this Agreement pursuant to clauses 13.1
(b), (c), (d) or (e) shall give notice of such termination to the other party.
SECTION XIII.2. Effect of Termination If this Agreement is terminated as
permitted by Section 13.1, such termination shall be without liability of either
party (or any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obligations of the other
party, (ii) failure to perform a covenant of this Agreement or (iii) breach by
either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all Damages incurred or
suffered by the other party as a result of such failure or breach.
ARTICLE XIV
MISCELLANEOUS
SECTION XIV.1. Notices
All notices, requests and other communications to any party hereunder shall
be in writing (including facsimile transmission) and shall be given,
if to Micron, to:
Micron Technology, Inc.
8000 S. Federal Way
Boise, ID 83716-9632
Attention: General Counsel
Telecopy: (208) 368-4540
Telephone: (208) 368-4000
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94034
Attention: John A. Fore, Esq.
Telecopy: 650-493-6811
Telephone: 650-493-9300
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if to PixTech, to:
PixTech, Inc.
Avenue Olivier Perroy
Zone Industrielle de Rousset
Rousset 13790 FRANCE
Attention: President
Telecopy: 011-33-4-47-29-05-09
Telephone: 011-33-4-42-29-10-00
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108-3190
Attention: Michael Lytton, Esq.
Telecopy: (617) 573-0100
Telephone: (617) 227-4420
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.
SECTION XIV.2. Amendments and Waivers
(A Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(B No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any or other further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION XIV.3. Expenses
All costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
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SECTION XIV.4. Successors and Assigns
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of each other
party hereto.
SECTION XIV.5. Governing LawSECTION XIV.5. Governing Law. This Agreement
shall be governed by and construed in accordance with the law of the State of
Delaware, without regard to the conflicts of law rules of such state.
SECTION XIV.6. Counterparts; Third Party Beneficiaries. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
SECTION XIV.7. Entire Agreement This Agreement, together with the Ancillary
Agreements and the Non-Disclosure Agreement, constitute the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this Agreement, except
for Section 16 of that certain letter of intent between the parties dated
January 22, 1999, which shall survive execution of this Agreement.
SECTION XIV.8. Captions
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
SECTION XIV.9. Disclosure Schedules
The parties acknowledge and agree that (i) the Schedules to this Agreement
may include certain items and information solely for informational purposes for
the convenience of the parties and (ii) the disclosure by a party of any matter
in the Schedules shall not be deemed to constitute an acknowledgment by the
other party that the matter is required to be disclosed by the terms of this
Agreement or that the matter is material. If any Schedule discloses an item or
information in such a way as to make its relevance to the disclosure required by
another Schedule readily apparent, the matter shall be deemed to have been
disclosed in such other Schedule, notwithstanding the omission of an appropriate
cross-reference to such other Schedule.
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IN WITNESS WHEREOF, the parties hereto have caused this Acquisition
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
MICRON TECHNOLOGY, INC.
By: /s/ Steven R. Appleton
-----------------------------------------
Name: Steven R. Appleton
Title: Chairman & Chief Executive Officer
PIXTECH, INC.
By: /s/ Dieter Mezger
-----------------------------------------
Name: Dieter Mezger
Title: Chairman & Chief Executive Officer
<PAGE>
SCHEDULE 1.1-A
ACQUIRED ASSETS
<PAGE>
SCHEDULE 1.1-B
ASSUMED CONTRACTS
<PAGE>
SCHEDULE 1.1-C
ASSUMED LIABILITIES
<PAGE>
SCHEDULE 9.6
SECURED ASSETS
AKT Deposition System
Balzers Deposition System
<PAGE>
EXHIBIT A
INVESTOR RIGHTS AGREEMENT
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EXHIBIT B
LEASE AGREEMENT
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EXHIBIT C
PATENT CROSS LICENSE AGREEMENT
<PAGE>
EXHIBIT D
PIXTECH WARRANT AGREEMENT
<PAGE>
ACQUISITION AGREEMENT
dated as of
March 19, 1999
between
MICRON TECHNOLOGY, INC.
and
PIXTECH, INC.
relating to the purchase and sale
of
Micron's Display Division Business
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................1
SECTION 1.1. Definitions.............................................1
ARTICLE II PURCHASE AND SALE OF DISPLAY DIVISION BUSINESS.....................7
SECTION 2.1. Purchase and Sale.......................................7
SECTION 2.2. Excluded Assets.........................................7
SECTION 2.3. Assumed Liabilities.....................................7
SECTION 2.4. Excluded Liabilities....................................7
SECTION 2.5. Display Division Purchase Consideration.................7
SECTION 2.6. Assignment of Contracts and Rights......................8
ARTICLE III [INTENTIONALLY LEFT BLANK]........................................8
ARTICLE IV CLOSING............................................................8
SECTION 4.1. Closing.................................................8
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MICRON............................9
SECTION 5.1. Corporate Existence and Power...........................9
SECTION 5.2. Corporate Authorization.................................9
SECTION 5.3. Governmental Authorization.............................10
SECTION 5.4. Noncontravention.......................................10
SECTION 5.5. Required Consents......................................10
SECTION 5.6. Absence of Certain Changes.............................10
SECTION 5.7. Material Contracts.....................................11
SECTION 5.8. Licenses and Permits...................................12
SECTION 5.9. Litigation.............................................13
SECTION 5.10. Properties............................................13
SECTION 5.11. Environmental Matters.................................13
SECTION 5.12. Purchase for Investment...............................14
SECTION 5.13. Accredited Investor...................................14
SECTION 5.14. Exempt from Registration; Restricted Securities.......14
SECTION 5.15. Legends...............................................14
SECTION 5.16. Employees.............................................15
-i-
<PAGE>
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PIXTECH.........................15
SECTION 6.1. Corporate Existence and Power..........................15
SECTION 6.2. Corporate Authorization................................15
SECTION 6.3. Governmental Authorization.............................15
SECTION 6.4. Noncontravention.......................................16
SECTION 6.5. Required Consents......................................16
SECTION 6.6. SEC Filings............................................16
SECTION 6.7. Capitalization.........................................18
SECTION 6.8. Valid Issuance of Securities...........................18
SECTION 6.9. Compliance with Securities Laws........................18
SECTION 6.10. Litigation............................................18
SECTION 6.11. Finders'Fees..........................................19
SECTION 6.12. Full Disclosure.......................................19
SECTION 6.13. Investment Company Act................................19
SECTION 6.14. No Investment Advisor Affiliation.....................19
SECTION 6.15. Possession of Intellectual Property...................19
SECTION 6.16. Possession of Licenses and Permits....................19
SECTION 6.17. Taxes.................................................20
ARTICLE VII COVENANTS OF MICRON WITH RESPECT TO ACQUIRED BUSINESS............20
SECTION 7.1. Conduct of the Acquired Business.......................20
SECTION 7.2. Access to Information, Confidentiality.................21
SECTION 7.3. Notices of Certain Events..............................21
SECTION 7.4. Covenant Not to Compete................................22
SECTION 7.5. Transferred Employees..................................22
ARTICLE VIII COVENANTS OF PIXTECH............................................22
SECTION 8.1. Stockholder Approval...................................22
SECTION 8.2. Access to Information; Confidentiality.................23
SECTION 8.3. Notices of Certain Events..............................23
SECTION 8.4. Cooperation............................................23
ARTICLE IX COVENANTS OF MICRON AND PIXTECH...................................23
SECTION 9.1. Commercially Reasonable Efforts; Further Assurances....24
SECTION 9.2. Certain Filings........................................24
SECTION 9.3. Public Announcements...................................24
SECTION 9.4. Required Consents......................................24
SECTION 9.5. Display Division Personnel.............................25
SECTION 9.6. Display Division Financing Arrangements................26
SECTION 9.7. Tax matters............................................27
-ii-
<PAGE>
ARTICLE X LICENSED INTELLECTUAL PROPERTY.....................................28
SECTION 10.1. Licensed Intellectual Property........................28
ARTICLE XI CONDITIONS TO CLOSING.............................................29
SECTION 11.1. Conditions to Obligations of Micron and PixTech.......29
SECTION 11.2. Conditions to Obligations of Micron...................29
SECTION 11.3. Conditions to Obligations of PixTech..................30
ARTICLE XII SURVIVAL; INDEMNIFICATION........................................31
SECTION 12.1. Survival..............................................31
SECTION 12.2. Indemnification.......................................32
SECTION 12.3. Procedures............................................32
SECTION 12.4. Calculation of Damages................................33
SECTION 12.5. Assignment of Claims..................................33
SECTION 12.6. Exclusivity...........................................33
ARTICLE XIII TERMINATION.....................................................34
SECTION 13.1. Grounds for Termination...............................34
SECTION 13.2. Effect of Termination.................................34
ARTICLE XIV MISCELLANEOUS....................................................35
SECTION 14.1. Notices...............................................35
SECTION 14.2. Amendments and Waivers................................36
SECTION 14.3. Expenses..............................................36
SECTION 14.4. Successors and Assigns................................36
SECTION 14.5. Governing Law.........................................36
SECTION 14.6. Counterparts; Third Party Beneficiaries...............36
SECTION 14.7. Entire Agreement......................................36
SECTION 14.8. Captions..............................................37
SECTION 14.9. Disclosure Schedules..................................37
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
Schedules and Exhibits
Schedule 1.1-A Acquired Assets
Schedule 1.1-B Assumed Contracts
Schedule 1.1-C Excluded Liabilities
Schedule 9.6 Secured Assets
Exhibit A Intellectual Property License
Exhibit B Investor Rights Agreement
Exhibit C Lease Agreement
Exhibit D PixTech Warrant Agreement
-iv-
<PAGE>
Amendment No. 1 to Acquisition Agreement
This Amendment No. 1 to Acquisition Agreement (the "Amendment") is dated as
of April 23, 1999 and amends that certain Acquisition Agreement (the
"Acquisition Agreement") dated as of March 19, 1999 between Micron Technology,
Inc. ("Micron") and PixTech Inc. ("PixTech"). Capitalized terms used but not
defined herein shall have the meaning given them in the Acquisition Agreement.
WHEREAS, Micron and PixTech have entered into the Acquisition Agreement
relating to the acquisition by PixTech of certain assets of Micron's Display
Division.
WHEREAS, Micron and PixTech desire to amend the Acquisition Agreement as
set forth herein.
NOW THEREFORE, for good and valuable consideration, including the
consideration referred to in paragraph 2 below, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows.
1. Amendments to Acquisition Agreement.
1.1 Section 2.6 of the Acquisition Agreement shall be amended by
deleting the last sentence thereof in its entirety.
1.2 Schedule 1.1-B to the Acquisition Agreement shall be amended by
deleting the contract entitled "DABT63-97-C-0001 executed March 25, 1997"
from such Schedule.
<PAGE>
2. The parties hereto acknowledge and agree that as a result of the
foregoing amendments, DARPA Contract No. DABT63-97-C-0001 executed March 25,
1997 (the "Specified Contract") will not be among the Assumed Contracts and
Assumed Liabilities to be acquired by PixTech pursuant to the Acquisition
Agreement, and the Specified Contract shall remain the asset and liability of
Micron. In consideration for deleting the Specified Contract from the Assumed
Contracts and Assumed Liabilities to be acquired by PixTech, PixTech agrees that
it shall cooperate fully with Micron to permit Micron to satisfy all of its
obligations under the Specified Contract. Among other things, PixTech agrees
that (i) Micron shall be entitled to satisfy its obligations under the Specified
Contract with all necessary assistance, whether technological, financial or
otherwise, from PixTech, at no expense to Micron, (ii) if requested by Micron,
PixTech shall cooperate with Micron to obtain an amendment to the Specified
Contract, whether prior to or following the Closing, to provide that Micron may
utilize PixTech's technology and fabrication resources, including its base plate
technology, to manufacture displays required to be delivered by Micron to DARPA
under the Specified Contract, and (iii) if requested by Micron, PixTech shall
deliver to Micron, at no cost to Micron, [] *. Each of the displays referenced
in clause (iii) above shall have sufficient electronics to run video images from
a PixTech-provided video source or sources. Process, design details, and all run
cards and probe/test results of the foregoing displays will be provided to
Micron by PixTech. Micron will have the right to share or use such information,
documents and displays with the U.S. Department of Defense, as it deems
appropriate. Micron, together with representatives of the U.S. Department of
Defense, will be allowed to observe and actively participate in any and all
fabrication and testing steps in connection with the displays, and to discuss
the fabrication and testing of the displays with PixTech technical staff. The
parties further agree that in no event shall any activities by Micron to satisfy
its obligations under the Specified Contract be construed as a violation of
Micron's agreement not to compete set forth in Section 7.4 of the Acquisition
Agreement, and the provisions of such Section 7.4 shall be suspended for such
purpose.
3. Counterparts. This Amendment may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their authorized officers as of the day and year first above
written.
MICRON TECHNOLOGY, INC.
By: /s/ Steven R. Appleton
-----------------------------------------
Name: Steven R. Appleton
Title: Chairman & Chief Executive Officer
PIXTECH, INC.
By: /s/ Dieter Mezger
-----------------------------------------
Name: Dieter Mezger
Title: Chairman & Chief Executive Officer
* Confidential treatment has been requested for this protion of the agreement.
PixTech
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT JEAN-LUC GRAND-CLEMENT
- --------------------------------------------------------------------------------
1. Job description
o Non executive Chairman of PixTech, Inc. working on the strategy of the
Company, and helping the CEO on the relationships with investors and
industrial partners, as well as on any special project related to
PixTech.
o Director of the Strategy of PixTech S. A.
2. Duration of the contract
o Three years from the effective date.
3. Employment conditions and compensation package
o Mr. Grand-Clement will spend a minimum of 50 % of his time (in
average) working for the Company. In case the circumstances would
require significantly more than 50 % of Mr. Grand-Clement's time, then
the situation should be discussed with the CEO.
o Salary: $60,000 per year in the U. S. for services rendered to
PixTech, Inc., plus FF. 360,000 per year in France, for services
rendered to PixTech, S. A.
o Company car, travel insurance and tax advice.
o Eligibility to the Management bonus plan and the Employee Stock Option
Plan.
4. Miscellaneous
o In order to compensate for the gradual decrease from full time
employment to half time employment, Mr. Grand-Clement present salary
will be maintained during three months after the effective date of the
contract.
o This agreement supersedes any previous arrangement or agreement.
o The effective date is defined as January 1st, 1999.
Jean-Luc Grand-Clement
By : /s/ Jean-Luc Grand-Clement
--------------------------
PixTech
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT MICHEL GARCIA
AS OF SEPTEMBER 9, 1992
- --------------------------------------------------------------------------------
Dear Sir :
Following our last conversation, we have the pleasure to inform you that Pixel
International (hereafter the Company") has decided to hire you starting October
12, 1992, under the following general conditions within the "Convention
Collective Nationale de la Metallurgie " (hereafter the Convention Collective")
and under the particular conditions as defined below :
Article 1 - Job Description
You shall be employed by our Company as Director of Engineering, "cadre"
position IIIC.
Your activities are detailed in attachment 1.
Article 2 - Non-commitment Clause
You strictly declare that you are no longer bound to any other company, that you
have left your previous employer free of any commitment and shall no longer be
bound to whatever non-competition obligation.
Article 3 - Term of the Agreement - Trial Period
You are employed for an undetermined period of time without any trial period.
Article 4 - Compensation
You shall get an annual gross compensation of FF 480,000 (four hundred and
eighty thousand).
This compensation shall be paid on a monthly basis over 12 months, by bank check
or mail or bank transfer at the end of each month.
Although you shall be joining our Company only on October 12, the month of
October shall be paid to you in full.
Article 5 - Working Hours
Due to the responsibilities resulting from your position, you may occasionally
do some overtime work. Your compensation takes this possibility into account and
you shall not be entitled to claim for an extra compensation.
<PAGE>
Article 6 - Place of Work
You shall be working in Rousset or in any other town in France.
During your employment with the Company you agree to travel as often as needed
in France or abroad.
Article 7 - Company car
You shall have the benefit of a Company car for your professional needs, which
you agree to give back upon request of the Company. This clause shall come into
effect as soon as Phase 3 (as described in the "Shareholders Agreement") has
started.
Article 8 - Obligations of the Employee - Exclusive Employment and
Non-Disclosure
You shall exclusively devote your time to the Company.
You may not, either during your employment or at any later date, give, provide
and supply, in any way to any person, firm, association or company, the name or
address of any customer of the Company, any trade secret of the profession or
any confidential information regarding the activity of the Company or the
members of its personnel, except with the written authorization given by a legal
representative of the Company.
Article 9 - Non-disclosure Agreement
Should the present agreement be terminated by any of the parties, for whatever
reason, you expressly agree not to (i) work in France or in any other country
where you have been employed by the Company, for a company manufacturing or
selling products or services likely to compete with those of the Company, (ii)
to set up in France or in any other country where you have been employed by the
Company, for your own account, a company of the same kind or to participate
directly or indirectly to such company, even as a sleeping partner, (iii) to
canvass for your own account or that of third parties, whatever the reason, the
customers of the Company.
It is expressly agreed that the execution of the present clause is limited to a
one year period starting from the date of your leaving the Company, this period
being renewable once by the Company.
It is agreed that under any circumstances, the Company may shorten the
application period of the non-competition clause, or even give it up, provided
however to inform you of this decision by registered letter with acknowledgment
receipt within 8 days following the notification of the employment contract
termination.
<PAGE>
Article 10 - Personnel of the Company non-solicitation clause
Should the present agreement be terminated by any of the parties, whatever the
reason, you agree not to, either for your own account of for the account of a
third party, try and hire either the personnel of the Company, or any person
having been a member of the personnel of the Company during the year preceding
your leaving the Company and during the following year.
Article 11 - Intellectual and/or Industrial Property
If, during your employment with the Company, which includes an inventive part,
you are to realize any invention, patentable or not, create designs or models,
methods, programs, formulas or processes related to the activity, studies or
research of the Company, and potentially patentable, the resulting intellectual
or industrial property rights would belong to the Company.
However, should you without the assistance of the Company, realize an invention
or a creation as above referred to, not related to the Company's activities,
studies or research, the resulting intellectual or industrial would be your
property.
Article 12 - Termination of employment agreement
Should the present employment agreement be terminated for whatever reason
(resignation, dismissal, retirement, sickness leave), you agree to give back to
the Company, the day of your departure, and whatever the term of the present
agreement, all documents, reports, drawings, plans, lists, credit cards and
correspondence as well as any equipment or products and cars belonging to the
Company.
In order to state your agreement on all of the above, please return to us one
copy of the present agreement after having initialed each page and signed the
last one after having handwritten "Read, approved and agreed" .
The Company, Michel Garcia
By : /s/ Jean-Luc Grand-Clement By : /s/ Michel Garcia
------------------------------- ----------------------
Jean-Luc Grand-Clement,
President
PixTech
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT FRANCIS COURREGES
AS OF JUNE 28th, 1993
- --------------------------------------------------------------------------------
Dear Sir :
Following our last conversation, we have the pleasure to inform you that Pixel
International (hereafter the "Company" ) has decided to hire you starting
July 19, 1993, under the following general conditions within the "Convention
Collective Nationale de la Metallurgie " (hereafter the " Convention
Collective" ) and under the particular conditions as defined below :
Article 1 - Job Description
You shall be employed by our Company as Vice President Marketing & Sales.
Your activities shall be, in particular:
o Management of marketing and sales,
o Management of industrial partner relationship.
Article 2 - Non-commitment clause
You strictly declare that you are no longer bound to any other company, that you
have left your previous employer free of any commitment and shall no longer be
bound to whatever non-competition obligation.
Article 3 - Term of the Agreement - Trial Period
You are employed for an undetermined period of time without any trial period.
Article 4 - Compensation
You shall get an annual gross compensation of FF 780,000 (seven hundred and
eighty thousand).
This compensation shall be paid on a monthly basis over 12 months, by bank check
or mail or bank transfer at the end of each month.
You shall benefit from the grant of 1,500 options to purchase shares of Pixel
International at an exercise price of FF. 100 per share. These stock options
shall vest as of the date of grant for 50% of the shares and as of the next
financing round scheduled for September 1993, for the remaining 50%.
Article 5 - Working Hours
Due to the responsibilities resulting from your position, you may occasionally
do some overtime work. Your compensation takes this possibility into account and
you shall not be entitled to claim for an extra compensation.
<PAGE>
Article 6 - Place of Work
You shall be working in Rousset or in any other place in France where the
Company might settle.
Article 7 - Obligations of the Employee - Exclusive Employment and
Non-Disclosure
You exclusively devote your time to the Company. However, you shall be
exceptionally authorized to keep your position as "Chief Executive Officer" of
Silverpool (swimming pool covering company) as well as to be a director of ES2,
should you be elected to this position.
You may not, either during your employment or at any later date, give, provide
and supply, in any way to any person, firm, association or company, the name or
address of any customer of the Company, any trade secret of the profession or
any confidential information regarding the activity of the Company or the
members of its personnel, except with the written authorization given by a legal
representative of the Company.
Article 8 - Non-disclosure Agreement
Should the present agreement be terminated by any of the parties, whatever the
reason, you expressly agree not to (i) work in France or in any other country
where you have been employed by the Company, for a company manufacturing or
selling products or services likely to compete with those of the Company, (ii)
to set up in France or in any other country where you have been employed by the
Company, for your own account, a company of the same kind or to participate
directly or indirectly to such company, even in quality of sleeping partner,
(iii) to canvass for your own account or that of third parties, whatever the
reason, the customers of the Company.
It is expressly agreed that the execution of the present clause is limited to a
one year period starting from the date of your leaving the Company, this period
being renewable once by the Company.
It is agreed that under any circumstances, the Company may shorten the
application period of the non-competition clause, or even give it up, provided
however to inform you of this decision by registered letter with acknowledgment
receipt within 8 days following the notification of the employment contract
termination.
Article 9 - Personnel of the Company non-solicitation clause
Should the present agreement be terminated by any of the parties, for whatever
reason, you agree not to act either for your own account of for the account of a
third party, as to try and hire either the personnel of the Company, or any
person having been a member of the personnel of the Company during the year
preceding your leaving the Company and during the following year.
<PAGE>
Article 10 - Intellectual and/or Industrial Property
If, during your employment with the Company, which includes an inventive part,
you are to realize any invention, patentable or not, create designs or models,
methods, programs, formulas or processes related to the activity, studies or
research of the Company, and potentially patentable, the resulting intellectual
or industrial property rights would belong to the Company.
However, should you without the assistance of the Company, realize an invention
or a creation as above referred to, not related to the Company's activities,
studies or research, the resulting intellectual or industrial rights would be
your property.
Article 11 - Termination of employment agreement
Should the present employment agreement be terminated for whatever reason
(resignation, dismissal, retirement, sickness leave), you agree to give back to
the Company, the day of your departure, and whatever the term of the present
agreement, all documents, reports, drawings, plans, lists, credit cards and
correspondence as well as any equipment or products and cars belonging to the
Company.
In order to state your agreement on all of the above, please return to us one
copy of the present agreement after having initialed each page and signed the
last one after having handwritten "Read, approved and agreed".
The Company, Francis Courreges
By : /s/ Jean-Luc Grand-Clement By : /s/ Francis Courreges
------------------------------- ----------------------
Jean-Luc Grand-Clement,
Chief executive Officer
- --------------------------------------------------------------------------------
AMENDMENT No. 1 TO THE EMPLOYMENT AGREEMENT OF FRANCIS COURREGES
AS OF SEPTEMBER 27, 1996
- --------------------------------------------------------------------------------
This amendment supersedes as of July 1st, 1996 "Article 12-Termination of
employment agreement" of the employment agreement signed on June 28, 1993.
New Article 12
"In case of termination or suspension of the present employment agreement,
whatever the reason (resignation, dismissal, retirement, sickness leave), you
agree to give back to the Company, as soon as you cease to work, any documents,
reports, drawings, plans, lists, credit cards and correspondence as well as any
equipment or products and cars belonging to the Company.
In case of termination of this employment agreement, the notice period shall be
extended to one year, except due to force majeure or professional misconduct.
We thank you for returning copy of this amendment dated, initialed and signed
after having handwritten "Read, approved and agreed" .
The Company, Francis Courreges
By : /s/ Jean-Luc Grand-Clement By : /s/ Francis Courreges
------------------------------- ----------------------
Jean-Luc Grand-Clement,
Chief executive Officer
PixTech
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT YVES MOREL
AS OF MARCH 16, 1994
- --------------------------------------------------------------------------------
Dear Sir :
Following our last conversation, we have the pleasure to inform you that Pixel
International (hereafter the "Company") has decided to hire you starting March
18, 1994, under the following general conditions within the "Convention
Collective Nationale de la Metallurgie" (hereafter the "Convention Collective")
and under the particular conditions as defined below :
Article 1 - Job Description
You shall be employed by our Company as Director of Finance and Administration,
"cadre" position IIIA. You shall report directly to the President.
Article 2 - Non-commitment Clause
You shall join the Company progressively according to a timing agreed in common.
This transitional period cannot however exceed May 1st, 1994, date as of which
you shall be working full time for Pixel International.
You strictly declare that, starting May 1st, 1994, you shall no longer be
employed by any other company, you shall have left your previous employer free
of any commitment and shall no longer be bound by any non-competition
obligation.
Article 3 - Term of the Agreement - Trial Period
You are employed for an undetermined period of time with a three month trial
period starting May 1st, 1994. During this trial period, each party may end the
employment agreement at any time, without notice or compensation.
At the end of the trial period, and after favorable opinion of the medical
authorities, this agreement may be ended by any of the parties only with a 3
month notice according to the Convention Collective.
Article 4 - Compensation
You shall get an annual gross compensation of FF 350,000 (three hundred and
fifty thousand).
This compensation shall be paid on a monthly basis over 12 months, by bank check
or mail or bank transfer at the end of each month.
Due to the responsibilities resulting from your position, this compensation is
considered as a lump sum.
<PAGE>
You shall also be granted options to purchase shares of PixTech, Inc., which
amount and condition of exercise shall be defined within the coming weeks.
Article 5 - Place of Work
You shall be working in Rousset or in any other town in the south of France.
During your employment with the Company you agree to travel as often as needed
in France or abroad.
Article 6 - Obligations of the Employee - Exclusive Employment and
Non-Disclosure
You exclusively devote your time to the Company.
You may not, either during your employment or at any later date, give, provide
and supply, in any way to any person, firm, association or company, the name or
address of any customer of the Company, any trade secret of the profession or
any confidential information regarding the activity of the Company or the
members of its personnel, except with the written authorization given by a legal
representative of the Company.
Article 7 - Non-disclosure Agreement
Should the present agreement be terminated by any of the parties, for whatever
reason, you expressly agree not to (i) work in France or in any other country
where you have been employed by the Company, for a company manufacturing or
selling products or services likely to compete with those of the Company, (ii)
to set up in France or in any other country where you have been employed by the
Company, for your own account, a company of the same kind or to participate
directly or indirectly to such company, even as a sleeping partner, (iii) to
canvass for your own account or that of third parties whatever the reason, the
customers of the Company.
It is expressly agreed that the execution of the present clause is limited to a
one year period starting from the date of your leaving the Company, this period
being renewable once by the Company.
It is agreed that under any circumstances, the Company may shorten the
application period of the non-competition clause, or even give it up, provided
however to inform you of this decision by registered letter with acknowledgment
receipt within 8 days following the notification of the employment contract
termination.
Article 8 - Non-solicitation
Should the present agreement be terminated by any of the parties, whatever the
reason, you agree not to, either for your own account of for the account of a
third party, try and hire either the personnel of the Company, or any person
having been a member of the personnel of the Company during the year preceding
your leaving the Company and during the following year.
<PAGE>
Article 9 - Intellectual and/or Industrial Property
If, during your employment with the Company, which includes an inventive part,
you are to realize any invention, patentable or not, create designs or models,
methods, programs, formulas or processes related to the activity, studies or
research of the Company, and potentially patentable, the resulting intellectual
or industrial property rights would belong to the Company.
However, should you without the assistance of the Company, realize an invention
or a creation as above referred to, not related to the Company's activities,
studies or research, the resulting intellectual or industrial rights would be
your property.
Article 10 - Termination of employment agreement
Should the present employment agreement be terminated, whatever the reason
(resignation, dismissal, retirement, sickness leave), you agree to give back to
the Company, the day of your departure, and whatever the term of the present
agreement, all documents, reports, drawings, plans, lists, credit cards and
correspondence as well as any equipment or products and cars belonging to the
Company.
In order to state your agreement on all of the above, please return to us one
copy of the present agreement after having initialed each page and signed the
last one after having handwritten "Read, approved and agreed" .
The Company, Yves Morel
By : /s/ Jean-Luc Grand-Clement By : /s/ Yves Morel
------------------------------- -------------------
Jean-Luc Grand-Clement,
President
PixTech
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT JEAN-JACQUES LOUART
AS OF APRIL 7, 1997
- --------------------------------------------------------------------------------
1. EMPLOYMENT
Our Company hires you, as soon as possible and not later than June 30,
1997, as Vice President, Operations, Cadre position IIIC.
The present agreement is signed for an undetermined period starting on the
date you shall join the Company.
It shall become permanent after a three month trial during which we are
free to part without notice nor compensation.
To be valid, any modification to the present agreement, any addition to be
brought, should be written and signed by both the Company and yourself.
Besides the following arrangements, the present agreement is governed by :
o the Convention Collective de la Metallurgie,
o the rules of the working organization and regulations which are or
shall be into effect within the Company.
You declare not to have any economical or personal interest in any company
or organization likely to compete with the activity of the Company, not to
be bound to any firm, to have left your previous employer free of any
commitment and not to be bound by any non-competition agreement likely to
limit in any way your action within the present agreement.
2. JOB DESCRIPTION
You shall assume the responsibilities lying with the position of a V. P. of
Operations within a Company of the size of PixTech.
According to the development of your activities or that of the Company, the
Company is authorized to modify this position or to add new assignments in
accordance with your background and experience.
3. OBLIGATION
You shall follow the instructions and orders of the person under which
authority you shall be placed.
You shall have in particular to :
o exclusively devote your professional activity to the Company and not
take any interest into activities likely to compete with the
Company's.
<PAGE>
o exercise all reasonable precautions to protect the integrity of the
Company's secret trade during your employment as well as during the
three years following its termination, regarding any business or
information related to the activities of the Company or of affiliated
companies, either economically or from an organization standpoint, and
which are not intended to be public.
Should the present agreement be terminated by any of the parties for whatever
reason, you agree not to act, for your own account of for a third party's in
order to hire the personnel of the Company or any person having been a member of
its personnel during the year preceding your departure as well as during the
year following it.
4. COMPENSATION
The annual gross compensation for your position shall be FF 600,000 (six hundred
thousand) including a 13th month. This annual compensation is payable on 12
installments and takes into account any overtime work related to your position
and your responsibilities.
In addition, you shall benefit from :
- the grant of 60,000 options of PixTech, Inc.
- the use of a Company car.
You shall benefit from the social advantages granted to the personnel of
your category, in particular regarding the retirement and health insurance.
5. VACATION
You shall benefit from the annual paid vacation as defined by the Company
and the Convention Collective.
6. MOVING CLAUSE
Your shall be working in Montpellier. However, if need be, you might be
appointed in any department or affiliated companies or firms in France,
juridically linked with the Company. This new position shall be notified to
you two months from its start.
7. TRAVEL EXPENSES
You shall travel in France and abroad as your position requires, whatever
the length and the frequency. The Company shall reimburse the expenses
incurred during such trips.
For the purpose of your travels for the Company, you shall use the Company
car which is at your disposal or a rented vehicle.
Should you have to use your personal vehicle, you should have subscribed an
insurance which allows you to use it during your working time. This
insurance should cover:
<PAGE>
o without limitation the civil liability which might result from the use
of the vehicle,
o the guaranty of the potential injuries to the persons transported,
o include a clause of renunciation to any action against the Company due
to the use of the vehicle for the purpose of your work.
If not, any accident or damage or injury would be your responsibility and in no
event that of the Company.
8. NON-COMPETION CLAUSE
Should the present agreement be terminated by any one of the parties,
whatever the reason, it is expressly agreed that you shall not either in
France or abroad :
o work for any company manufacturing or selling products or services
likely to compete with those of the Company in the field of Field
Emission Displays, and in particular with the following companies :
FED Corp., Candescent Technology (formerly Silicon Video), SI Diamond,
Philips, Samsung, Sony, Mitsubishi, Matsushita, Hitachi, Toshiba,
Motorola, Raytheon, Futaba ;
o found for your own account a company with the same activity or
participating directly or indirectly in such a company even as
sleeping partner ;
o solicit for your own account or for third parties', whatever your
position, the customers of the Company.
The execution of the present clause is limited to a one year period
starting from the date of your departure of the Company. It may be renewed
once by the Company.
The Company may reduce the term of the application period of the
non-competition clause or may renounce partly or totally or may reduce its
geographical area.
Should the Company decide to apply this clause you would receive a
compensation as defined by the enforced regulation. No compensation would
be paid should the Company renounce to apply this clause.
9. INTELLECTUAL OR INDUSTRIAL PROPERTY RIGHTS
Your activity includes an inventive mission. Should you realize any
invention patentable or not, create designs or models, methods, programs,
formulas or processes in relation with the activities, studies or research
of the Company and likely to be patentable, the resulting intellectual or
industrial property would belong to the Company.
Your annual compensation takes this inventive mission into account and
compensates for its results.
However, should you without the assistance of the Company, realize an
invention or a creation as described above, but not related to the
activities,
<PAGE>
studies or research of the Company, the resulting intellectual or
industrial property rights would belong to you.
10. TERMINATION OF EMPLOYMENT AGREEMENT
Should the present employment agreement be terminated for whatever reason
(resignation, dismissal, retirement, sickness leave), you agree to give
back to the Company, the day of your departure, and whatever the term of
the present agreement, all documents, reports, drawings, plans, lists,
credit cards and correspondence as well as any equipment or products and
cars belonging to the Company.
The present agreement cannot be terminated except with the observance of
the conventional notice according to the enforced law.
11. RETIREMENT AND HEALTH INSURANCE
You shall benefit from the date of your joining the Company, from a
retirement and health insurance plan subscribed by PixTech for its
personnel by the Capricel/Irpelec, Groupe Magdebourg, 45777 Saran and to
which the membership is mandatory. You shall also benefit from the social
advantages granted by the Company to its personnel.
12. DISCRETION
You shall not, during your employment or at a later date, give, provide,
supply in whatever way to any person, company, firm or association the name
or address of any of the customers of the Company, trade secret or
confidential information related to the activities of the Company or the
members of its personnel, except with written authorization of one of its
legal representatives.
In order to state your agreement on all of the above, please return to us one
copy of the present agreement after having initialed each page and signed the
last one after having handwritten "Read, approved and agreed".
Done in Rousset, April 7th, 1997 In two originals.
The Company, Jean-Jacques Louart
By : /s/ Yves Morel By : /s/ Jean-Jacques Louart
------------------- --------------------------
Yves Morel,
Chief Financial Officer
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