-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JjtA8yfhXm/Rc6Z+SCUwxCYLsII4/H3xzOPSYoVG0+gf5kAHtC2TIAkpbEF7NGOh YtmHHaZm4PkdUG283Q9g1g== 0000891554-99-001004.txt : 19990518 0000891554-99-001004.hdr.sgml : 19990518 ACCESSION NUMBER: 0000891554-99-001004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIXTECH INC /DE/ CENTRAL INDEX KEY: 0000946144 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER TERMINALS [3575] IRS NUMBER: 043214691 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26380 FILM NUMBER: 99625901 BUSINESS ADDRESS: STREET 1: AVENUE OLIVIER PERROY 13790 CITY: ROUSSET FRANCE STATE: I0 10-Q 1 QUARTERLY REPORT 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 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 PixTech, Inc. (a development stage company) CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited)
March December 31, 31, 1999 1998 -------- -------- 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 ======== ========
See accompanying notes. PixTech, Inc. (a development stage company) CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS (in thousands, except per share amounts) (unaudited)
Period from Three Months Ended June 18, 1992 (date March 31, of inception) through --------------------------- March 31, 1999 1998 1999 --------- --------- --------------------- 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) ========= ========= =========
See accompanying notes. PixTech, Inc. (a development stage company) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except per share amounts) (unaudited)
Period from June 18, 1992 (date of Three Months Ended inception) March 31, through -------------------------- March 31, 1999 1998 1999 -------- -------- ------------- 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 ======== ======== ========
See accompanying notes. PixTech, Inc. (a development stage company) Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) (unaudited)
Convertible Preferred Stock Series A Series B Series C Shares Shares Shares issued Amount issued Amount issued Amount ------ ------ ------ ------ ------ ------ 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 .................................. -- -- -- -- -- -- ========== ====== ======== ==== ========== ====== Series D Series E Shares Shares issued Amount issued Amount ------ ------ ------ ------ 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 ========== ====== ======== ====
See accompanying notes. PixTech, Inc. (a development stage company) Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) (unaudited)
Common Stock ------------ Dividends accrued to Additional holders of Shares Paid-in Preferred issued Amount Capital Stock ------ ------ ---------- ---------- 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) ============ ========= ========= ========= Deficit accumulated Cumulative during translation development Treasury adjustment stage stock Total ---------- ----------- -------- ----- 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 ========= ========= ========= =========
See accompanying notes. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 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. EX-2.1 2 ACQUISITION AGREEMENT 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. "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. -2- "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. -3- "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 -4- 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: -5- 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) - -------------------------------------------------------------------- -6- 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 -7- 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: -8- (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 -9- 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; -10- (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; -11- (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 -12- 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; -13- (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 -14- 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. -15- 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 -16- 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). -17- (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 -18- 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 -19- 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 -20- 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") -21- 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 -22- 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 -23- 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 -24- 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. -25- 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. - -------------------------------------------------------------------------------- * 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 -26- 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 -27- 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 -28- 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 -29- 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 -30- 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. -31- 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 -32- 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. -33- 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. -34- (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 -35- (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 -36- 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. -37- 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. -38- 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 SCHEDULE 1.1-A ACQUIRED ASSETS SCHEDULE 1.1-B ASSUMED CONTRACTS SCHEDULE 1.1-C ASSUMED LIABILITIES SCHEDULE 9.6 SECURED ASSETS AKT Deposition System Balzers Deposition System EXHIBIT A INVESTOR RIGHTS AGREEMENT -44- EXHIBIT B LEASE AGREEMENT -45- EXHIBIT C PATENT CROSS LICENSE AGREEMENT EXHIBIT D PIXTECH WARRANT AGREEMENT 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 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- 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- 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- 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- 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. 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. EX-10.38 3 EMPLOYMENT 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 -------------------------- EX-10.39 4 EMPLOYMENT 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. 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. 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 EX-10.40 5 EMPLOYMENT AGREEMENT 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. 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. 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 EX-10.41 6 AMENDMENT NO. 1 TO THE EMPLOYMENT AGREEMENT - -------------------------------------------------------------------------------- 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 EX-10.42 7 EMPLOYMENT AGREEMENT 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. 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. 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 EX-10.43 8 EMPLOYMENT AGREEMENT 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. 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: 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, 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 EX-27 9 FDS --
5 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 4,155 0 582 0 1,098 10,606 16,553 (13,269) 38,831 14,520 0 0 4 151 7,247 38,831 161 2,161 87 6,667 0 0 (266) (5,376) 0 0 0 0 0 (5,376) 0.35 0
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