-----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, JPcOLtZnAoWiXSTIiGYUbCWfUUSLPh7uWeMx3B/HRcK8POsGMM2aSx/noVJfCVlh ZDswcRFXdGXAiK8dErFOfw== 0000927016-98-002068.txt : 19980515 0000927016-98-002068.hdr.sgml : 19980515 ACCESSION NUMBER: 0000927016-98-002068 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NASD 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: 98620308 BUSINESS ADDRESS: STREET 1: AVENUE VICTOIRE 13790 CITY: ROUSSET FRANCE STATE: I0 10-Q 1 FORM 10-Q FORM 10-Q --------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 -------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 0-26380 PIXTECH, INC. - ------------------------------------------------------------------------------- (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 7, 1998 ----- -------------------------- Common Stock, $.01 par value 14,776,732 PIXTECH, INC. ------------- TABLE OF CONTENTS -----------------
PAGE NO. PART I FINANCIAL INFORMATION ITEM 1 Financial Statements Balance Sheets as of March 31, 1998 and December 31, 1997................................. 3 Statements of Operations for the Three Months Ended March 31, 1998 and 1997, and the period from June 18, 1992 through March 31, 1998........................................ 4 Statements of Cash Flows for the Three Months ended March 31, 1998 and 1997, and the period from June 18, 1992 through March 31, 1998............. 5 Statement of Stockholders' Equity..................... 6 - 7 Notes to Financial Statements......................... 8 - 9 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 10 - 14 PART II OTHER INFORMATION ITEM 1 Legal Proceedings..................................... 15 ITEM 2 Changes in Securities................................. 15 ITEM 3 Default upon Senior Securities........................ 15 ITEM 4 SUBMISSION of MATTERS to a VOTE of SECURITY HOLDERS...................................... 15 ITEM 5 Other Information..................................... 15 ITEM 6 Exhibits and Reports on Form 8-K...................... 16
Signature................................................................................. 17 Exhibit Index............................................................................. 18
CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
MARCH 31, DECEMBER 31, 1998 1997 --------- ----------- ASSETS Current assets: Cash available........................................................ $13,094 $12,428 Restricted cash - short term.......................................... 1,676 1,259 Accounts receivable: Trade............................................................... 520 953 Other............................................................... 80 82 Inventory............................................................. 716 702 Other................................................................. 1,152 2,166 -------- -------- Total current assets................................................ 17,238 17,590 Restricted cash - long term............................................. 8,380 8,816 Property, plant and equipment, net...................................... 20,824 9,353 Goodwill, net........................................................... 208 226 Deferred tax assets..................................................... 4,896 5,058 Other assets - long term................................................ 265 605 -------- -------- Total assets........................................................ $ 51,811 $ 41,648 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long term debt..................................... $ 1,305 $ 1,364 Current portion of capital lease obligations.......................... 2,404 599 Accounts payable...................................................... 4,327 5,053 Accrued expenses...................................................... 1,415 1,284 -------- -------- Total current liabilities........................................... 9,451 8,300 Deferred revenue........................................................ 1,294 2,546 Long term debt, less current portion.................................... 10,974 11,024 Capital lease obligation, less current portion.......................... 10,811 441 Other long term liabilities, less current portion....................... 522 557 -------- -------- Total liabilities................................................... 33,052 22,868 ======== ======== STOCKHOLDERS' EQUITY Common stock, $0.01 par value, authorized shares--30,000,000; issued and outstanding shares--14,776,732; 13,762,732 respectively... 148 138 Additional paid-in capital............................................ 61,087 57,067 Cumulative translation adjustment..................................... (2,661) (2,132) Deficit accumulated during development stage.......................... (39,815) (36,293) -------- -------- Total stockholders' equity......................................... 18,759 18,780 -------- -------- Total liabilities and stockholders' equity......................... $ 51,811 $ 41,648 ======== ========
See accompanying notes. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED PERIOD FROM MARCH 31, JUNE 18, 1992 ------------------------ (DATE OF INCEPTION) THROUGH MARCH 31, 1998 1997 1998 ------------- ------------- ------------- Revenues Cooperation & license revenues............................... $ -- $ 707 $ 25,210 Product sales................................................ 21 173 2,402 Other revenues............................................... 1,232 673 5,171 ------- ------- -------- Total revenues............................................ 1,253 1,553 32,782 ------- ------- -------- Cost of revenues License fees and royalties................................... (79) -- (1,619) ------- ------- -------- Gross margin................................................... 1,174 1,553 31,163 ------- ------- -------- Operating expenses Research and development: Acquisition of intellectual property rights.................. (125) -- (4,890) Other........................................................ (3,800) (4,174) (57,039) ------- ------- -------- (3,925) (4,174) (61,929) Marketing & sales............................................ (339) (380) (5,513) Administrative & general expenses............................ (637) (606) (10,938) ------- ------- -------- (4,901) (5,160) (78,380) ------- ------- -------- Loss from operations........................................... (3,727) (3,607) (47,217) Other income / (expense) Interest income / (expense).................................. (80) 131 730 Foreign exchange gains / (losses)............................ 285 (238) 939 ------- ------- -------- 205 107 1,669 Loss before income tax benefit................................. (3,522) (3,714) (45,548) Income tax benefit............................................. -- -- 5,734 ------- ------- -------- Net loss....................................................... $(3,522) $(3,714) $(39,814) ======= ======= ======== Net loss per share........................................... $(0.25) $(0.33) ====== ====== Shares used in computing net loss per share.................. 13,821 11,144
See accompanying notes. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
PERIOD FROM JUNE 18, 1992 THREE MONTHS ENDED (DATE OF MARCH 31, INCEPTION) THROUGH March 31, ---------------------------- ------------- 1998 1997 1998 ----------- ----------- ----------- Net loss................................................... $(3 ,522) $(3,714) $(39,815) Total adjustments to net loss.............................. 1,133 2,689 14,759 -------- ------- -------- Net cash (used in) / provided by operating activities...... (2,389) (1,025) (25,056) -------- ------- -------- INVESTING ACTIVITIES Additions to property plant and equipment.................. (221) (113) (17,681) Reclassification of cash available as restricted cash...... -- -- (10,080) Additions to intangible assets............................. -- -- (130) -------- ------- -------- Net cash used in investing activities...................... (221) (113) (27,891) FINANCING ACTIVITIES Stock issued............................................... 3 ,980 21,617 59,578 Proceeds from long-term borrowings......................... -- -- 16,287 Proceeds from sale leaseback transactions.................. -- -- 2,731 Payments for equipment purchases financed by accounts payable................................................... -- -- (3,706) Repayments of long term borrowing and capital lease obligations............................................... (196) (628) (5,579) -------- ------- -------- Net cash provided by financing activities.................. 3,784 20,989 69,311 Effect of exchange rates on cash........................... (508) (186) (3,270) Net increase in cash and cash equivalents.................. 666 19,665 13,094 Cash and cash equivalents beginning of period.............. 12,428 4,266 -- -------- ------- -------- Cash and cash equivalents end of period.................... $ 13,094 $23,931 $ 13,094 ======== ======= ========
See accompanying notes. Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) (unaudited)
CONVERTIBLE PREFERRED STOCK ---------------------------- SERIES A -------------------- SHARES ----------- 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 Issuance of Common stock in 1992 and 1993..................... Issuance of Common stock under stock option plan in 1994 Purchase of 28,761 shares of Common stock-- Treasury stock in 1994...................................................... Translation adjustment........................................ Net loss from June 18, 1992 (date of inception) through December 31, 1994............................................ ---------- ------ Balance at December 31, 1994 1,557,003 2,368 Reissuance of 28,761 shares of Common stock held in treasury.................................................... Issuance of Common stock under stock option plan.............. Common stock issued in initial public offering, net of issuance costs -- $ 1,080.................................... Conversion of preferred stock................................. (1,557,003) (2,368) Translation adjustment........................................ Net loss--Year ended December 31, 1995........................ ---------- ------ Balance at December 31, 1995 Issuance of Common stock under stock option plan.............. Issuance of warrants in connection with acquisition of the assets of Panocorp........................................... Translation adjustment........................................ Net loss--Year ended December 31, 1996....................... ---------- ------ Balance at December 31, 1996 Common stock issued in public offering, net of issuance costs -- $ 796............................................... Issuance of Common stock under stock option plan.............. Translation adjustment........................................ Net loss--Year ended December 31, 1997........................ ---------- ------ Balance at December 31, 1997 Common stock issued in private placements, net of issuance costs -- $ 20 (unaudited).................................... Issuance of Common stock under stock option plan (unaudited) Translation adjustment (unaudited)............................ Net loss--Three Months ended March 31, 1998 (unaudited)................................................. ---------- ------ Balance at March 31, 1998 -- -- ========== ======
CONVERTIBLE PREFERRED STOCK ------------------------------------------------------------- SERIES B SERIES C SERIES D ------------------ -------------------- ------------------ 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................................ 363,447 589 3,044,846 8,615 430,208 1,224 Issuance of Common stock in 1992 and 1993..................... Issuance of Common stock under stock option plan in 1994 Purchase of 28,761 shares of Common stock-- Treasury stock in 1994...................................................... Translation adjustment........................................ Net loss from June 18, 1992 (date of inception) through December 31, 1994............................................ -------- ------ ---------- ------ -------- ------ Balance at December 31, 1994 363,447 589 3,044,846 8,615 430,208 1,224 Reissuance of 28,761 shares of Common stock held in treasury.................................................... Issuance of Common stock under stock option plan.............. Common stock issued in initial public offering, net of issuance costs -- $ 1,080.................................... Conversion of preferred stock................................. (363,447) (589) (3,044,846) (8,615) (430,208) (1,224) Translation adjustment........................................ Net loss--Year ended December 31, 1995........................ -------- ------ ---------- ------ -------- ------ Balance at December 31, 1995 Issuance of Common stock under stock option plan.............. Issuance of warrants in connection with acquisition of the assets of Panocorp........................................... Translation adjustment........................................ Net loss--Year ended December 31, 1996....................... -------- ------ ---------- ------ -------- ------ Balance at December 31, 1996 Common stock issued in public offering, net of issuance costs -- $ 796............................................... Issuance of Common stock under stock option plan.............. Translation adjustment........................................ Net loss--Year ended December 31, 1997........................ -------- ------ ---------- ------ -------- ------ Balance at December 31, 1997 Common stock issued in private placements, net of issuance costs -- $ 20 (unaudited).................................... Issuance of Common stock under stock option plan (unaudited) Translation adjustment (unaudited)............................ Net loss--Three Months ended March 31, 1998 (unaudited)................................................. -------- ------ ---------- ------ -------- ------ Balance at March 31, 1998 -- -- -- -- -- -- ======== ====== ========== ====== ======== ======
See accompanying notes. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (unaudited)
COMMON STOCK ------------------ ADDITIONAL CUMULATIVE ---------- ------------ SHARES PAID-IN TRANSLATION ---------- ---------- ------------ ISSUED AMOUNT CAPITAL ADJUSTMENT ---------- ------ ---------- ------------ Balance at June 18, 1992 Issuance of convertible preferred stock, net of issuance costs in 1992, 1993 and 1994................................ Issuance of Common stock in 1992 and 1993..................... 132,301 $ 1 $ 96 Issuance of Common stock under stock option plan in 1994...... 77,356 1 28 Purchase of 28,761 shares of Common stock--Treasury stock in 1994...................................................... Translation adjustment........................................ $ 181 Net loss from June 18, 1992 (date of inception) through December 31, 1994............................................ ---------- ---- ------- ------- Balance at December 31, 1994 209,657 2 123 181 Reissuance of 28,761 shares of Common stock held in treasury.................................................... 3 Issuance of Common stock under stock option plan.............. 6,902 0 3 Common stock issued in initial public offering, net of issuance costs -- $ 1,080.................................... 2,500,000 25 20,973 Conversion of preferred stock................................. 5,395,504 54 12,742 Translation adjustment........................................ 334 Net loss--Year ended December 31, 1995........................ ---------- ---- ------- ------- Balance at December 31, 1995 8,112,063 81 33,844 515 Issuance of Common stock under stock option plan.............. 29,083 0 11 Issuance of warrants in connection with acquisition of the assets of Panocorp........................................... 230 Translation adjustment........................................ (953) Net loss--Year ended December 31, 1996........................ ---------- ---- ------- ------- Balance at December 31, 1996 8,141,146 81 34,085 (438) Common stock issued in public offering, net of issuance costs -- $ 796............................................... 5,570,819 56 22,958 Issuance of Common stock under stock option plan.............. 50,767 1 25 Translation adjustment........................................ (1,694) Net loss--Year ended December 31, 1997........................ ---------- ---- ------- ------- Balance at December 31, 1997 13,762,732 $138 $57.067 $(2,132) Common stock issued in private placements, net of issuance costs -- $ 20 (unaudited).................................... 1,014,000 10 4,020 Issuance of Common stock under stock option plan (unaudited) Translation adjustment........................................ (529) Net loss--Three Months ended March 31, 1998 (unaudited)................................................. ---------- ---- ------- ------- Balance at March 31, 1998 14,776,732 $148 $61,087 $(2,661)
DEFICIT ----------- CCUMULATED ----------- DURING ----------- EVELOPMENT TREASURY ----------- --------- STAGE STOCK TOTAL ----------- --------- --------- Balance at June 18, 1992 Issuance of convertible preferred stock, net of issuance $ 12,796 costs in 1992, 1993 and 1994................................ Issuance of Common stock in 1992 and 1993..................... 97 Issuance of Common stock under stock option plan in 1994...... 29 Purchase of 28,761 shares of Common stock--Treasury stock in 1994...................................................... $(11) (11) Translation adjustment........................................ 181 Net loss from June 18, 1992 (date of inception) through December 31, 1994............................................ $ (3,605) (3,605) -------- -------- -------- Balance at December 31, 1994 (3,605) (11) 9,487 Reissuance of 28,761 shares of Common stock held in treasury.................................................... 11 14 Issuance of Common stock under stock option plan.............. 3 Common stock issued in initial public offering, net of issuance costs -- $ 1,080.................................... 20,998 Conversion of preferred stock................................. Translation adjustment........................................ 334 Net loss--Year ended December 31, 1995........................ (6,305) (6,305) -------- -------- -------- Balance at December 31, 1995 (9,910) 24,530 Issuance of Common stock under stock option plan.............. 11 Issuance of warrants in connection with acquisition of the assets of Panocorp........................................... 230 Translation adjustment........................................ (953) Net loss--Year ended December 31, 1996....................... (11,719) (11,719) -------- -------- -------- Balance at December 31, 1996 (21,629) 12,099 Common stock issued in public offering, net of issuance costs -- $ 796............................................... 23,014 Issuance of Common stock under stock option plan.............. 25 Translation adjustment........................................ (1,694) Net loss--Year ended December 31, 1997........................ (14,664) (14,664) -------- -------- -------- Balance at December 31, 1997 $(36,293) $ 18,780 Common stock issued in private placements, net of issuance costs -- $ 20 (unaudited).................................... 4,030 Issuance of Common stock under stock option plan (unaudited) Translation adjustment........................................ (529) Net loss--Three Months ended March 31, 1998 (unaudited)................................................. (3,522) (3,522) -------- -------- -------- Balance at March 31, 1998 $(39,815) $ 18,759
See accompanying notes. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (ALL AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS) (UNAUDITED) Note A -- Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results of the three-month periods ending March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 1997 (the "1997 Financial Statements"), included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. NOTE B -- INVENTORIES Inventory consists of raw material and spare parts. NOTE C RESTRICTED CASH In August 1997, the Company provided Unipac, its Asian manufacturing partner, with a written bank guaranty in an amount of $10.0 million pursuant to the Display Foundry Agreement (the "Foundry Agreement") signed in May 1997 between the Company and Unipac in order to implement volume production of Field Emission Displays ("FEDs") at its manufacturing line. The Company granted the issuing banks a security interest in its cash and cash equivalents for the same amount. The pledged cash and cash equivalents have been recorded as short-term and long- term restricted cash in the balance sheet. Under certain conditions of the Foundry Agreement, Unipac can sell to the Company certain equipment. The payment for such equipment will be secured by Unipac through the exercise of the bank guaranty. Both the amount of the guaranty to Unipac and the amount of the security interest to the banks will be reduced by 1/24th of the initial amount at the end of each quarter, starting June 1998. NOTE D PROPERTY, PLANT AND EQUIPMENT In 1997, the Company signed a Display Foundry Agreement with Unipac, a Taiwanese AMLCD manufacturer, in order to implement high-volume manufacturing of FEDs at Unipac's plant. Pursuant to this agreement, Unipac began to install volume FEDs production equipment. As of March 31, 1998, most of the required equipment have been installed at the contract manufacturers' facility, for a total amount of $12,340. These capital expenditures have been purchased and funded by Unipac. PixTech will pay Unipac a Foundry Service Fee based on the depreciation of such equipment. As of March 31, 1998, such payments have not commenced. According to Financial Accounting Standard 13, "Accounting for leases", these capital expenditures have been recorded as assets under the caption "Property, Plant and Equipment", in the amount of $12,340. As of March 31, 1998, a capital lease obligation has been recorded in the same amount, of which $1,885 has been recorded as current portion. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (ALL AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS) (UNAUDITED) NOTE E PRIVATE PLACEMENTS In March 1998, the Company sold 1,000,000 shares of the Company's Common Stock to The Kaufmann Fund Inc., in a private placement at a price of $4.00 per share, resulting in net cash proceeds of $4,000 before expenses payable by the Company, which amounted to $20. In March 1998, the Company entered into a license agreement with Coloray Display Corporation, a California corporation ("Coloray"), providing PixTech with a worldwide, nonexclusive royalty-free license on certain technologies related to field emission displays. In consideration of the license and rights granted to PixTech, the Company paid an amount of $75 and issued 14,000 shares of the Company's Common Stock, valued at a price of $3.57 per share, representing a total amount of $50. NOTE F FAS 130 The Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income",("SFAS 130"), effective for the Company for the first quarter of 1998. SFAS 130 requires that items defined as other comprehensive income, such as foreign currency translation adjustments, be separately classified in the financial statements and that the accumulated balance of other comprehensive income be reported separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. The components of comprehensive income for the three months ended March 31, 1998 and 1997 are as follows:
COMPREHENSIVE LOSS: THREE MONTHS ENDED MARCH 31, 1998 1997 Net loss $(3,522) $(3,714) Change in cumulative translation adjustment (529) (478) ------- ------- Comprehensive net loss $(4,051) $(4,192)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Cooperation and License Revenues. PixTech is a party to a cooperative effort, between select display manufacturers (the "FED Alliance") to advance FED technology. Each agreement signed between the Company and a FED Alliance member provides the member with a license to all FED technology of Laboratoire d'Electronique, de Technologie et d'Instrumentation ("LETI") and the Company and a sublicense to all FED technology of the other FED Alliance members, a transfer of know-how from the Company, as well as access to Pixtech's pilot line. The Company did not recognize any cooperation and license revenue under the FED Alliance agreements in the three-month period ended March 31, 1998, as compared to $707,000 in the three-month period ended March 31, 1997. The decrease in cooperation and license revenues reflects the achievement by the Company of most of the contractual milestones with FED Alliance members. The Company does not expect any significant additional milestone related revenues to be directly derived from existing FED Alliance members. Future cooperation and license revenues are mostly subject to execution, by the Company, of cooperation and/or license agreements with third parties that are not FED Alliance members. The terms of the existing FED Alliance agreements do not permit expansion of the Alliance after June 29, 1998. After this date, the Company may grant royalty- bearing licenses to the FED cross-licensed technology to third parties subject to certain restrictions as to the geographic location and number of such third- party licensees. A portion of the proceeds PixTech will receive pursuant to such third-party licenses may be shared with the other FED Alliance members. To the extent the members of the FED Alliance successfully incorporate the cross- licensed technology in their own products, the Company will recognize royalty revenues as such members sell the products. Product sales. The Company recognized product sales of $21,000 in the three- month period ended March 31, 1998, as compared to $173,000 in the three-month period ended March 31, 1997. These product sales represented the shipment of FED displays and FED cathodes in limited quantities to members of the FED Alliance and the shipment of FED displays for evaluation by original equipment manufacturer ("OEM") customers. While the number of displays shipped significantly increased between the three-month periods ended March 31, 1997 and March 31, 1998, the average selling price was reduced, reflecting a different mix between high valued prototypes and cathodes revenues and displays revenues. The Company expects to increase product shipments in 1998, both from products manufactured at its pilot production plant in France and from its expected volume source of manufacturing by Unipac, which is not expected to begin until the second half of 1998. Other revenues. Other revenues is comprised of funding under French or European Union development contracts and other miscellaneous revenues. The Company recognized other revenues of $1.2 million in the three-month period ended March 31, 1998, as compared to $673,000 in the three-month period ended March 31, 1997. Of these revenues, $1.2 million and $663,000 are related to a development contract granted in December 1994 from the French Ministry of Industry to support manufacturing of FEDs, in the three-month periods ended 1998 and 1997, respectively. Total funding under this contract approximated $2.7 million. The Company recognized portions of this revenue as contractual conditions were met. The Company recognized $800,000 in 1996, $663,000 in 1997 and $1.2 million in the three-month period ended March 31, 1998. Research and Development Expenses--Acquisition of Intellectual Property Rights. The Company expensed $125,000 in the three-month period ended March 31, 1998 for the acquisition of intellectual property rights from Coloray Display Corporation (see "Notes to Condensed Consolidated Financial Statements -- Note E -- Private Placements"). Other Research and Development Expenses. The Company expensed $3.8 million for research and development costs during the three-month period ended March 31, 1998, as compared to $4.2 million in the three-month period ended March 31, 1997. These expenses include obligations to the French atomic energy agency (the "CEA") under the LETI Research Agreement, contract consulting fees, salaries and associated operating expenses for in-house research and development activities conducted both in its pilot plant in Montpellier and its research and development facility in Santa Clara, the cost of staffing and operating the Company's pilot manufacturing facility and the cost of supporting the transfer of the FED technology to Unipac. This decrease reflected the increase of the parity of the U.S. dollar versus the French Franc in the three-month period ended March 31, 1998 versus the three- month period ended March 31, 1997, as most of the Company's research and development costs is incurred in French Francs. After excluding the effects of currency fluctuation, research and development expenses remained stable in the three-month period ended March 31, 1998 as compared to the three-month period ended March 31, 1997. Sales and Marketing Expenses. The Company expensed $339,000 for sales and marketing during the three-month period ended March 31, 1998, as compared to $380,000 during the three-month period ended March 31, 1997, reflecting both the effects of currency fluctuation and a decrease in staff expenses. The Company believes sales and marketing expenses may increase in the future, as potential customers and anticipated shipments of FED displays develop. In July 1997, the Company signed a distribution agreement of its FED products with Sumitomo Corporation ("Sumitomo") for the Japanese and Asian market areas. In 1998, the Company intends to progress on its efforts to conclude similar distribution agreements for both the United States and Europe, in order to expand market reach in a cost effective manner. General and Administrative Expenses. General and administrative expenses amounted to $637,000 in the three-month period ended March 31, 1998, an increase of 5% over general and administrative expenses incurred in the three-month period ended March 31, 1997, which amounted to $606,000, reflecting an increase in staff expenses. STRATEGIC ISSUES AND RISKS The Company is focused on the continued development of the FED technology, the improvement of manufacturing yields, the successful implementation of contract manufacturing of FEDs with its Asian contract manufacturer, Unipac, and the reliability testing of new products which the Company expects will lead to the shipment of commercial products in the near future. In evaluating this outlook, the following risks and issues, among others, which are common with development stage companies, should be considered. Risks Associated with Contract Manufacturing of FEDs. The Company believes that its ability to commercialize medium to large volumes of FEDs is highly dependent on its ability to have FEDs manufactured by Unipac. In May 1997, the Company signed a Foundry Agreement with Unipac, an AMLCD manufacturer based in Taiwan. Under the agreement, Unipac has installed volume production equipment to produce FEDs at its manufacturing plant, and will begin production for exclusive delivery of FED displays to PixTech. Expectations about the timing of this manufacturing plan with Unipac are forward-looking statements that involve risks and uncertainties, including the ease or difficulty of the transfer of the FED technology to Unipac. If such manufacturing plans are not implemented on a timely basis, the Company will not be able to ship medium to large volumes of FED products, or to obtain a commercially acceptable cost for its FED displays. If the Company is unable to have its FED manufactured in a cost effective manner, the Company would be materially adversely affected. Significant capital expenditure is required in order to install, at the contract manufacturers' facility, equipment that is not common to the AMLCD manufacturing process. A total amount of $16.5 million of capital expenditures is expected to be required which, pursuant to the Foundry Agreement, is expected to be purchased and funded by Unipac, and leased to PixTech. The amount actually expended on capital expenditures could vary significantly depending upon numerous factors, including the inherent unpredictability of the total amount of a large scale capital expenditure program. Should the Company be successful in implementing this contract manufacturing relationship, the Company's reliance on a single contract manufacturer will involve several risks, including a potential inability to obtain an adequate supply of required products, and reduced control over the price, timeliness of delivery, reliability and quality of finished products. Any inability to manage this contract manufacturing relationship or any circumstance that would cause the Company to delay the shipment of its products would have an adverse effect on the Company. Products and Manufacturing Processes under Development, Need to Obtain Commercial Yields, Costs of Products. The Company's products and its manufacturing processes are in the development stage. The Company has to date encountered a number of delays in the development of its products and manufacturing processes. No assurance can be given that further delays will not occur. The Company does not plan to increase production from its pilot facility beyond low volume levels. The Company believes that contract manufacturing with Unipac (see "Risks Associated with Contract Manufacturing of FEDs") will make it possible to manufacture volume quantities of FEDs at commercially acceptable costs. However, moving from pilot production to volume production involves a number of steps and challenges. In particular, in order to demonstrate the low cost potential of its FED technology, the Company will need to improve its manufacturing yields. There can be no assurance that the Company will be able to implement processes for the manufacture of volume quantities of FED products at commercially viable cost levels or on a timely basis. If such processes are not successfully implemented, the Company would be adversely affected. Display Performance Enhancement. Key elements of display performance are brightness, and stability over time (life time and reliability), as well as power efficiency. PixTech is seeking to balance luminous efficiency with power efficiency to produce bright and low power-consumption displays. Display reliability is heavily dependent upon the manufacturing process used in assembling the displays as well as upon the characteristics of the phosphors used on the anode. In order to produce color displays that will provide the product life necessary for most applications, the Company needs to make further advances in manufacturing processes. There can be no assurance that the Company will be able to improve the reliability and life time of its color FEDs to achieve commercially acceptable performance, or achieve commercially acceptable performance on a timely basis. If such displays performance enhancements are not successfully completed, the Company could be adversely affected. Cooperation and License Revenues. To date, the Company has recorded most of the expected revenues associated with the achievement of contractual milestones under existing FED Alliance agreements. Under the agreements with the existing FED Alliance members, the Company cannot expand the Alliance after June 29, 1998. Future cooperation and license revenues are mostly subject to execution, by the Company, of cooperation and/or license agreements with third parties that are not existing FED Alliance members. These agreements may be subject to certain restrictions, such as geographic location and number of such third parties. Should the Company succeed in executing such agreements, a portion of the revenues from such contracts could be shared with the other FED Alliance members. Failure to conclude new royalty-bearing licenses or cooperation agreements could adversely affect the Company. Competition and Competing Technologies. The market for flat panel display products is intensely competitive and is expected to remain so in the future. The market is currently dominated by products utilizing liquid crystal display ("LCD") technology. LCD technology has continued to improve, and there can be no assurance that advances in LCD technology will not overcome its current limitations. In addition, as some of the basic FED technology is in the public domain, the Company has a number of potential direct competitors developing FED displays. In the event that efforts by the Company's competitors result in the development of products that offer significant advantages over the Company's products, the Company could be adversely affected. No Assurance of Market Acceptance. The potential size and timing of market opportunities targeted by the Company and the members of the FED Alliance are uncertain. The Company anticipates marketing its displays to OEMs, and its success will depend on whether OEMs select the Company's products for incorporation into their products and upon their successful introduction of such products, as well as the successful commercialization of products developed by members of the FED Alliance. Patents and Protection of Proprietary Technology. The Company's ability to compete effectively with other companies will depend, in part, on the ability of the Company to maintain the proprietary nature of its technology. Although the Company has been granted, has filed applications for and has been licensed under a number of patents in the United States and other countries, there can be no assurance as to the degree of protection offered by these patents, as to the likelihood that pending patents will be issued or as to the validity or enforceability of any issued patents. In addition, because of the developmental stage of the Company, claims that the Company's products infringe on the proprietary rights of others are more likely to be asserted after commencement of commercial sales incorporating the Company's technology. While there is currently no pending intellectual property litigation against the Company, the Company receives from time to time notices of potential infringement of third party rights and there can be no assurance that third parties will not assert claims against the Company with respect to existing or future products or that licenses will be available on reasonable terms, or at all, with respect to any third party technology. In the event of litigation to determine the validity of any third-party claims, such litigation could result in significant expense to the Company and divert the efforts of the Company's technical and management personnel, whether or not such litigation is determined in favor of the Company. In the event of an adverse result in any such litigation, the Company could be required to pay substantial amounts in damages and to cease selling the infringing product unless and until the Company is able to develop non- infringing technology or to obtain licenses to the technology which was the subject of the litigation. There can also be no assurance that competitors will not infringe the Company's patents. An adverse outcome in a suit in which the Company asserts its patent rights could result in the loss of such rights, and could subject the Company to substantial costs and diversion of Company resources. Foreign exchange. A large percentage of the Company's net assets and of the Company's costs is expressed in French Francs. Fluctuations of the parity of the U.S. dollar versus the French Franc may cause significant foreign exchange gains or losses. Impact of Year 2000. The Company has conducted a comprehensive review of its computer systems to identify applications that could be affected by the "Year 2000" issue, and has developed an implementation plan to resolve the issue. Management does not expect these costs to have a significant impact on its financial position or results of operations. FINANCIAL CONDITION Cash used in operations was $2.4 million for the three-month period ended March 31, 1998, as compared to cash used in operations of $1.0 million for the three- month period ended March 31, 1997. The Company has used $25.1 million in cash to fund its operating activities from inception through March 31, 1998 and has incurred $27.9 million in capital expenditures and investments. Cash flows generated from financing activities were $3.8 million in the three- month period ended March 31, 1998, as compared to $20.9 million in the three- month period ended March 31,1997. These financings consisted primarily of sales of shares of Common Stock in a private placement, resulting in net proceeds to the Company of $4.0 million (net of issuance costs), while long term liabilities decreased by $196,000. Cash flow generated from financing activities exclude non-cash transactions related to the issuance of 14,000 shares of the Company's Common Stock to Coloray (See "Notes to Condensed Consolidated Financial Statements -- Note E --- Private placements"). Since its inception, the Company has funded its operations and capital expenditures primarily from the proceeds of equity financing aggregating $59.6 million and from proceeds aggregating $19.0 million from borrowings and sale- leaseback transactions. Capital expenditures were $221,000 during the three-month period ended March 31, 1998 as compared to $113,000 during the same period of 1997. During the three- month period ended March 31, 1998, capital expenditures remained focused on limited capacity expansion in the pilot manufacturing facility. Implementing volume production at Unipac's manufacturing plant requires significant capital expenditures. An amount of $16.5 million of capital expenditures is expected to be required which, pursuant to the Foundry Agreement, is expected to be purchased and funded by Unipac. The written bank guaranty provided by the Company to Unipac is expected to be increased from $10.0 million to $13.5 million. The Company has existing contracts with two different French ministries providing for the payment of grants to the Company totaling approximately $3.4 million, of which the Company has collected an aggregate amount of $2.7 million through March 31, 1998 and for which the Company has recognized revenues to date in the aggregate amount of $2.7 million. In 1997, the Company entered into a research and development agreement with the European Union and other European industrial companies for an 18 month-period, which began in February 1997. The contribution of the European Union to the costs incurred by the Company amounts to $840,000 over the period. The Company received $423,000 in 1997 from this contribution, which were not recognized as income in 1997 as all conditions stipulated in the agreement were not met. Cash available at March 31, 1998 amounted to $13.1 million as compared to $12.4 million at December 31, 1997. The Company expects that cash available at March 31, 1998 together with anticipated proceeds from the various grants described above and the anticipated increase in product sales will be sufficient to meet its cash requirements, including repayment of the current portion of its long term obligations in the amount of $3.7 million at March 31, 1998, for at least 12 months. The Company will require substantial funds to conduct research, development and testing, to develop and expand commercial-scale manufacturing systems and to market any resulting products. Changes in technology or a growth of sales beyond currently anticipated levels will also require further investment. The Company's capital requirements will depend on many factors, including the rate at which the Company can develop its products, the market acceptance of such products, the levels of promotion and advertising required to launch such products and attain a competitive position in the marketplace and the response of competitors to the Company's products. There can be no assurance that funds for these purposes, whether from equity or debt financing, or other sources, will be available when needed or on terms acceptable to the Company. PIXTECH, INC. March 31, 1998 PART II Other Information ITEM 1 Legal Proceedings: Not applicable. ITEM 2 Changes in Securities: (a) Not applicable (b) Not applicable (c) In March 1998, the Company sold 14,000 and 1,000,000 shares of its Common Stock to Standard Energy Company ("Standard Energy") and The Kaufmann Fund, Inc. ("Kaufmann"), respectively, in private placements exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The offering price to Standard Energy and Kaufmann was $3.57 per share and $4.00 per share, respectively, and these offerings resulted in net proceeds to the Company of approximately $4,000,000. As consideration for issuance of the Common Stock to Kaufmann. Kaufmann paid $4,000,000 in cash. As consideration for the issuance of Common Stock to Standard Energy, Coloray Display Corporation granted certain license and rights to the Company. ITEM 3 Defaults upon Senior Securities: Not applicable. ITEM 4 Submission of Matters to a Vote of Security Holders : None ITEM 5 Other Information: None. ITEM 6 Exhibits and reports on Form 8-K: (a) Exhibits: 10.1 License Agreement, dated March 16, 1998, between the Registrant and Coloray Display Corporation. 10.2 Stock Issuance Agreement, dated March 16, 1998, between the Registrant and Standard Energy Company 10.3 Stock Purchase Agreement, dated March 27, 1998, between the Registrant and Kaufmann Fund Inc. 27 Financial Data Schedule. (b) Reports on Form 8-K : None PIXTECH, INC. March 31, 1998 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PIXTECH, INC. Date: May 14, 1998 BY: /s/ Yves Morel -------------------------- Yves Morel Chief Financial Officer PIXTECH, INC. March 31, 1998 EXHIBIT INDEX
Exhibit No. - ----------- 10.1++ License Agreement, dated March 16, 1998, between the Registrant and Coloray Display Corporation. 10.2++ Stock Issuance Agreement, dated March 16, 1998, between the Rgistrant and Standard Energy Company 10.3 Stock Purchase Agreement, dated March 27, 1998, between the Registrant and Kaufmann Fund Inc. 27 Financial Data Schedule. ++ Confidential treatment has been requested for certain portions of these Exhibits pursuant to rule 24b-2 of the Securities Exchange Act of 1934, as amended.
EX-10.1 2 LICENSE AGREEMENT LICENSE AGREEMENT This LICENSE AGREEMENT ("Agreement"), dated and effective as of March 16, 1998 ("Effective Date"), is entered into by and between PixTech, Inc., a Delaware corporation having offices at 3350 Scott Boulevard, Building 37, Santa Clara, California 95054 ("PixTech") and Coloray Display Corporation, a California corporation ("Coloray"), whose mailing address is Suite 602, 1105 Schrock Road, Columbus, Ohio 43229. RECITALS A. Coloray has rights in and to certain technologies related to field emission displays ("Licensed Technology" as further defined below), some of which rights are subject to the terms and conditions of the Restated License Agreement and Release dated July 31, 1997, between SRI International and Coloray (the "SRI Restated License"). B. PixTech desires to obtain, and Coloray desires to grant, a license to the Licensed Technology in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the foregoing and of the promises and conditions contained herein, the parties hereby agree as follows: 1. DEFINITIONS ----------- 1.1 "Licensor" shall mean Coloray and "Licensee" shall mean PixTech. ---------- ---------- 1.2 "Licensed Technology" shall mean all technical data, inventions, --------------------- technologies, concepts, processes, formulae, know-how, systems, apparatuses, software, designs, drawings, and any other subject matter, including all patents, copyrights, trade secrets, mask works, industrial designs and other intellectual property rights therein protected under the laws of any country of the world (whether or not rights therein are currently perfected), whether now existing or hereinafter obtained by Coloray during the term of this Agreement, in each case to the extent that it pertains to or may be useful within the Field. The Licensed Technology as defined herein shall be divided into two subsets as follows: (a) "Coloray Licensed Technology" shall only include: (i) Licensed Technology related to the patents, patent applications and Inventions listed in Exhibit A hereto (collectively, the "Coloray Patents"); (ii) any Licensed Technology prepared for or in connection with the Coloray Patent filings for Licensor but not yet filed, provided that, if any of the Coloray Patent filings related to the Field are filed by Licensee, then Licensor shall receive a non-exclusive license; and (iii) all continuations, continuations-in-part, divisionals, and other related patent applications and any patents issuing thereon in any country and all patent rights therein, to the extent any of the foregoing is directly related to the Coloray Patents; and (b) "Other Licensed Technology" shall not include the "Coloray Licensed Technology," but shall include without limitation: (i) the patents, patent applications, and Inventions listed in Exhibit B hereto; (ii) any Licensed Technology related to research and development projects within the Field, if any, undertaken between Licensor and the University of New Mexico ("UNM"), provided that, if any new licenses are created from this UNM research, Licensee shall receive a non-exclusive license expiring on December 31, 1999; (iii) any Licensed Technology prepared for or in connection with patent filings for Licensor , other than related to Coloray Patents, but not yet filed, provided that, if any of the patent filings related to the Field are filed by Licensee, then Licensor shall receive a non- exclusive license; (iv) all continuations, continuations-in-part, divisionals, and other related patent applications and any patents issuing thereon, other than related to Coloray Patents, in any country and all patent rights therein; and (v) any Licensed Technology related to the Field from AMOCO, its successors or assigns. 1.3 "Confidential Information" means confidential information in any -------------------------- form that may be disclosed by a Party hereto (the "Disclosing Party") to the other Party (the "Receiving Party"), that is either (a) conspicuously marked "Confidential" or "Proprietary" if disclosed to the receiving Party in tangible form or (b) if disclosed orally, is reduced by the Disclosing Party to a writing, conspicuously marked "Confidential" or "Proprietary", given to the Receiving Party within 30 days of such oral disclosure. As used in this paragraph, "waiting" or "written" include any form of tangible embodiment of information including, without limitation, hard disk, magnetic tape or diskette, CD-ROM or sample device. 1.4 "Invention" means both patentable inventions as well as ----------- nonpatentable subject matter, irrespective of whether patent protection is sought for such Invention or retained as a trade secret, as the case may be, including all intellectual property rights therein. 1.5 "Affiliate" means an entity controlling, controlled by, or under ----------- common control with another entity, such control being exercised through ownership or control, directly or indirectly, of 50% or more of the voting power of the shares. References to each Party herein shall include such Party's Affiliates. 1.6 "Party" means PixTech, Licensor or both, as the case may be. ------- 1.7 "Field" means any activity or apparatus relating to (i) the ------- design,development, manufacture, sale, distribution and/or use of FED Products; (ii) the design, development, manufacture, sale, distribution and/or use of equipment, devices and/or other subject matter for use in designing, developing, manufacturing, producing, testing or otherwise using such FED Products. 1.8 "FED Products" means products consisting in whole or in part of -------------- any of the following: (i) a display subsystem including a field emission cathode, a component thereof, and/or related accessories; (ii) a lamp, consisting of a field emission cathode or component thereof; or (iii) a backlight. 1.9 "Encumbrance" means any lien, claim, charge, security interest, ------------- mortgage, pledge, easement, license, conditional assignment or other title retention agreement, defect in title, covenant, or other restriction of any kind other than the security interest of Standard Energy Company ("Standard Energy"), an Ohio corporation having offices at 1105 Schrock Road, Suite 602, Columbus, Ohio 43229, which security interests do not have priority over the rights and licenses granted to PixTech hereunder as acknowledged and agreed by Standard Energy below. 2. GRANT OF LICENSE TO PIXTECH --------------------------- Licensor hereby grants to PixTech and its Affiliates, under all of Licensor's rights in and to the Licensed Technology, a perpetual, nonexclusive, fully paid-up, royalty-free, world-wide right and license to make, have made, use, sell, offer for sale, and import any system, device, apparatus, method, process or other Invention, and to reproduce, prepare derivative works of, distribute, and otherwise use and exploit subject matter within the Licensed Technology. SUBJECT TO THE TERMS AND CONDITIONS OF THE PRIOR AGREEMENTS (AS DEFINED BELOW), PixTech shall have the right to grant and authorize sublicenses to the rights and licenses granted to PixTech under this Section 2; provided, however, that: (a) for a period of four years from the Effective Date, PixTech will not sublicense the right to commercially sell products embodying patented Inventions of Coloray to more than three Manufacturing Partners of PixTech; and (b) without the prior written consent of Licensor, no sublicense shall be granted to SI Diamond Technology, Inc., UNM or any Affiliate of either SI Diamond or UNM. As used above, a "Manufacturing Partner" means a third party who, at the time that a respective sublicense is granted, has been granted or is concurrently granted a license for at least a portion of the Field under PixTech's own patent rights subject to terms and conditions (including scope of license and termination provisions) agreed upon by PixTech in good faith. The license and rights granted by Licensor to PixTech under this Section 2 shall apply retroactively to activities of PixTech prior to the Effective Date. Licensor hereby releases PixTech from any and all claims of infringement of the Licensed Technology or any part thereof prior to the Effective Date of this Agreement. 3. COMPENSATION TO LICENSOR ------------------------ 3.1 License Fee. In consideration of the license and rights granted ----------- to PixTech under Section 2 above, PixTech shall pay to Standard Energy, on behalf of Coloray, the following: (a) within two (2) business days of the Effective Date of this Agreement, the sum of $75,000, of which $10,000 has already been deposited by PixTech with Standard Energy; and (b) no later than the first anniversary of the Effective Date, the sum of [ ]* 3.2 Stock Issuance. In consideration of the license and rights -------------- granted to PixTech under Section 2 above, PixTech shall issue to Standard Energy, on behalf of Coloray the following: (a) 14,000 shares of Common Stock of PixTech pursuant to the terms and conditions set forth in Exhibit C hereto as soon as possible after, and in all events within thirty (30) days of, the Effective Date of this Agreement; and (b) no later than the first anniversary of the Effective Date, [ ]* additional shares of Common Stock of PixTech pursuant to the terms and conditions of Exhibit C hereto. 3.3 Restricted License. Until such time as PixTech pays and issues ------------------ to Standard Energy the consideration stated under Sections 3.1(b) and 3.2(b) above (collectively the "Final Payment"), PixTech's rights under this Agreement shall be limited to a perpetual, nonexclusive, fully paid-up, royalty-free, world-wide right and license as described in section 2 above, but in the Coloray Licensed Technology only and, until the Final Payment is timely made, for all purposes of this Agreement, the term "Licensed Technology" as used herein shall mean only, and be restricted to, the "Coloray Licensed Technology," as defined herein and shall not include the "Other Licensed * Confidential information omitted and filed with the Commission. Technology" as defined. Until the Final Payment is timely made, this Agreement shall be referred to as the "Restricted License Agreement." In the event the Final Payment is not timely made on or before the first anniversary of the Effective Date, then: (a) this Agreement shall immediately and permanently thereafter be limited to the terms and conditions of the Restricted License Agreement, with PixTech having no rights or interests in the Other Licensed Technology; and (b) neither Coloray nor Standard Energy shall have any (i) right to demand or receive the Final Payment or (ii) obligations to PixTech except to the extent of the Restricted License Agreement. 3.4 Sole Remuneration. The payment of both the license fee set forth ----------------- in Section 3.1 and the issuance of stock set forth in Section 3.2, both to Standard Energy on behalf of Coloray, shall be Licensor's sole remuneration for the license and rights granted by Licensor to PixTech hereunder and no payments, royalties or other compensation shall accrue or be due to Coloray under this Agreement except as specifically set forth in this Section 3. 4. PATENT PROSECUTION AND MAINTENANCE ---------------------------------- 4.1 Prosecution and Maintenance. Licensor has previously executed a --------------------------- License Agreement with each of [ ]*, a California corporation [ ]*, and [ ]*, a California corporation [ ]*, giving [ ]*and [ ]*, inter alia, the ----- ---- right to prosecute and maintain patent and other intellectual property protection related to the "Licensed Technology" as defined within such Agreements as may be amended from time to time (the "Prior Agreements"). In the event that both [ ]* and [ ]* decline to "Pursue Protection" ( as defined in the Prior Agreements) with respect to any Invention falling within its definition of its Licensed Technology, or in the event that both [ ]* and [ ]* abandon a previous decision to Pursue Protection, PixTech shall have the next and exclusive Right to Pursue Protection under the remaining terms of this Section 4.1, if applicable. As to Inventions falling under the paragraph immediately above as well as Inventions originally within the Field of this Agreement and within the description of the Licensed Technology, but not within the Field of the Prior Agreements, PixTech shall have the first Right and option to pursue, prosecute and maintain patent or other intellectual property protection for such Inventions within the Licensed Technology (hereinafter "Pursue Protection"), at PixTech's sole expense. PixTech may exercise such option at any time during the period from the Effective Date and prior to January 1, 2000 (the "Non-Exclusive Period") by providing Licensor with written notice of such election ("Elected Inventions"). In the event that any patent applications are filed for Inventions within the Field which have not yet been elected by PixTech, Licensor will promptly notify PixTech and provide PixTech with a copy of such application and the amount of attorneys' fees and filing fees incurred for such filing. PixTech will either reimburse Licensor for the reasonable attorneys' fees and filing fees incurred for such filing within sixty (60) days after receipt of such notice or waive its option to have such application included in the Elected Inventions. PixTech will Pursue Protection for the Elected Inventions at its sole expense using its reasonable business judgment. PixTech will notify Licensor at least sixty (60) days prior to allowing any patent or patent application for an Elected Invention to become abandoned during the Non- Exclusive Period, in which event Licensor may assume control of such patent or patent application and it will be removed from the Elected Inventions. For purposes hereof, a patent application will be considered to become abandoned only if all further rights of prosecution, appeal and issuance lapse without the right to file a continuation, continuation-in-part, divisional re-examination, reissue or other application with respect to the Invention covered by such application. As used hereinafter "Pursue Protection" includes, without limitation, filing and prosecuting patent applications, conducting interferences of opposition, requesting re-examination, reissue or extension, paying maintenance fees and the like. Licensor agrees to provide PixTech all reasonable cooperation and assistance requested by PixTech in evaluating * Confidential information omitted and filed with the Commission. Inventions in the Licensed Technology and Pursuing Protection for Elected Inventions. Such cooperation shall include providing, and obtaining from the respective inventors, prompt production of pertinent facts and documents, giving of testimony, execution of petitions, oaths, powers of attorney, specifications, declarations or other papers, and other assistance for (i) prosecuting any-of said applications or substitute, divisional, continuing or additional applications covering the respective Elected Invention, (ii) for filing and prosecuting applications for reissuance of any patents for the respective Elected Invention (iii) interference or other priority proceedings involving the respective Elected Invention, and (iv) legal proceedings involving in the respective Elected Invention and any applications therefore and any patents granted thereon, including without limitation reissues and reexaminations, opposition proceedings, cancellation proceedings, priority contests, public use proceedings, and infringement actions; provided, however, that the reasonable expenses incurred by Licensor and the respective inventors in providing such cooperation shall be paid for by Licensee. 4.2 Third Party Licenses; Exclusivity. Both during and after the --------------------------------- NonExclusive Period, Licensor shall have the unrestricted right to grant licenses to make, use, sell and import subject matter solely outside of the Field under the Licensed Technology. During the Non-Exclusive Period, Licensor will have the right to grant non-exclusive licenses to make, use, sell and import subject matter in the Field under the Licensed Technology to third parties for fair consideration on such terms and conditions as reasonably determined by Licensor. All such consideration shall accrue to Licensor. After the NonExclusive Period, the rights and licenses granted to PixTech under Section 4.1 above with respect to Patents maintained either by [ ]*, [ ]* or PixTech ("Maintained Patents") and Elected Inventions shall become exclusive within the Field (even as to Licensor). Thereafter, PixTech shall have the sole and exclusive right to Pursue Protection and enforce patents and other rights in and to the Maintained Patents and Elected Inventions, including pursuing remedies for past infringement and injunctive relief, subject only to the non- exclusive licenses granted by Licensor to third parties during the Non-Exclusive Period as set forth above. Licensor shall have the sole and exclusive right to Pursue Protection and enforce patents and other rights in and to the Licensed Technology other than the Maintained Patents and elected Inventions, including pursuing remedies for past infringement and injunctive relief. 4.3 Enforcement of Legal Rights. PixTech shall have the right to --------------------------- initiate or defend any legal action of any nature at its expense for the defense, protection or preservation of any of the intellectual property rights derived from this Agreement (or, indirectly, the Prior Agreements), acting in all circumstances on behalf of Licensor as Licensor's agent. PixTech shall be entitled to recover from the first proceeds of any adjudication or other resolution of such action all of its costs and expenses, including reasonable attorney and expert-witness fees, expended in such action, and shall be entitled to share with Coloray the benefit of any royalty stream, settlement or other adjudicated or agreed resolution of the matter in proportion to PixTech's proven enhancements after the Effective Date of this Agreement to the Licensed Technology which was the subject of such action; provided, however, that in no event shall such share to PixTech be less than 20% of such benefit as and when realized; except that, if and to the extent that Licensor is obliged to ------ ---- participate in financing such action there shall be an equitable division of such proceeds reflecting each party's relative participation. 5. CONFIDENTIALITY --------------- 5.1 Confidential Information. The Parties acknowledge that ------------------------ Confidential Information disclosed to it by the other Party constitutes valuable trade secrets of such other Party and each Party agrees that it shall use such Confidential Information received by it from the other Party solely in accordance with the provisions of this Agreement and will not disclose, or permit to be disclosed, the same, directly or indirectly, to any third party without the other Party's prior written * Confidential information omitted and filed with the Commission. consent. Each Party agrees to exercise due care in protecting the confidential Information from unauthorized use and disclosure. Notwithstanding the foregoing, provisions of this Section 5.1, and except to the extent that it can be established by the receiving Party by competent proof, "Confidential Information" excludes information that: (i) is or becomes part of the public domain through no fault or breach of the Receiving Party; (ii) is known to the Receiving Party prior to disclosure thereof, or (iii) is subsequently rightfully obtained by the Receiving Party from a third party that has the legal right to disclose such information to the Receiving Party; (iv) is independently developed by the receiving Party without use of or reference to the Disclosing Party's Confidential Information; (v) is furnished to a third parry by the Disclosing Party without restrictions similar to the terms hereof on the third party's right to use or disclose; (vi) is required by law to be disclosed by the Receiving Party, provided that the Receiving Party gives the Disclosing Party prompt written notice of such requirement prior to such disclosure; or (vii) has been approved for use or disclosure by the Disclosing Party. 5.2 Permitted Use and Disclosures. Notwithstanding the provisions ----------------------------- of Section 5.1, PixTech may use or disclose Confidential Information disclosed to it in connection with this Agreement, to the extent such use or disclosure is reasonably necessary to exercise the rights granted to it hereunder (including granting permitted sublicenses) or as required by law, provided that it uses reasonable efforts to secure confidential treatment of such information prior to its disclosure (whether through confidentiality agreements, protective orders or otherwise). 5.3 Non-Disclosure of Terms. Each of the Parties hereto agrees not ----------------------- to disclose to any third party the terms of this Agreement without the prior written consent of the other Party, except to the Party's attorneys, advisors, investors and others on a need to know basis under circumstances that reasonably ensure the confidentiality thereof, or to the extent required by law. 6. REPRESENTATIONS, WARRANTIES AND INDEMNITY ----------------------------------------- 6.1 Licensor represents, warrants and covenants that: (i) it has and -------- will continue to have the full right and authority to enter into this Agreement, perform its obligations hereunder, and grant the rights and licenses granted herein, (ii) other than the existing agreements with [ ], [ ]* and SRI International, copies of which have been previously provided to Licensee, and any other license entered into by Licensor prior to its bankruptcy (completed in 1993), Licensor has not previously granted and will not grant any rights inconsistent or in conflict with the rights and licenses granted to PixTech herein, (iii) to the best of Licensor's knowledge, there are no existing or threatened actions, suits or claims pending or threatened against Licensor, nor is there any basis therefor, with respect to the Licensed Technology or the right of Licensor to enter into and perform its obligations under this Agreement, and the Licensed Technology is subject to any outstanding injunction, judgment, order, decree, ruling or charge; (iv) to the best of Licensor's knowledge, the manufacture, sale and use of FED Products in accordance with the Licensed Technology will not infringe any intellectual property rights of a third party; (v) to the best of Licensor's knowledge, it owns, and is the record holder of title of, all rights in and to the patents, patent applications and Inventions listed in Schedule A free and clear of any Encumbrances; (vi) to the best of Licensor's knowledge, it is the exclusive licensee of a rights in and to the patents, patent applications and Inventions listed in Schedule B, free and clear of any Encumbrances and is in compliance with all terms of all licenses relating to any Licensed Technology licensed to Licensor; (vii) to the best of Licensee's knowledge, the patents listed Schedule A are valid and enforceable; (viii) to the best of Licensor's knowledge, no third party is infringing or otherwise violating Licensor's rights in the Licensed Technology other than any alleged infringements of which PixTech is * Confidential information omitted and filed with the Commission. aware; (ix) Licensor has not had a receiver or similar officer appointed for it, and has not had proceedings under insolvency or bankruptcy laws commenced by or against Licensor as of the Effective Date; and (x) Standard Energy is the secured creditor of Coloray, with a security interest in the Licensed Technology pursuant to Patent Pledge Agreements and other instruments, and pursuant to such security interests, Standard Energy is entitled to receive directly the compensation otherwise due to Coloray for application on amounts owed by Coloray to Standard Energy. 6.2 Licensor Indemnity. Licensor agrees to defend, indemnify and ------------------ hold PixTech harmless against any loss, cost, damage or liability (including reasonable attorneys' fees and costs) arising from or related to any material breach of Licensor's representations and warranties set forth above, including without limitation any action or claim brought or threatened against PixTech or its customers as a result thereof. 6.3 PixTech Indemnity. PixTech agrees to defend, indemnify and hold ----------------- Licensor harmless against any loss, cost, damage or liability (including reasonable attorneys' fees and costs) arising from or related to any material breach of its obligations hereunder and any claim that FED products manufactured by or for PixTech under the Licensed Technology are defective under product liability law, provided that such claim is not due in whole or in part to any negligent act or omission or willful misconduct of Licensor or Licensor's employees, agents, or independent contractors. PixTech's indemnity obligation under this Section 6.3 shall be subject to Licensor: (i) promptly notifying PixTech of the claim or action giving rise to the indemnity; (ii) providing PixTech with control and authority over the defense of such action or claim, (iii) providing PixTech with proper and full information and reasonable assistance to defend and/or settle any such claim or action. PixTech shall not be responsible for indemnifying any party with respect to costs incurred, or amounts paid in any settlement, unless PixTech has approved such costs or settlements in advance. 7. TERM AND TERMINATIONS --------------------- 7.1 Term. This Agreement will take effect on the Effective Date and ---- shall remain in effect perpetually, unless earlier terminated in accordance with the provisions of this Agreement. 7.2 Termination for Breach. Either Party may terminate this ---------------------- Agreement, immediately upon written notice at any time if the other Party is in material breach of any warranty, term, condition or provision of this Agreement, which breach, if capable of being cured, is not cured within thirty (30) days after written notice of said breach by the nonbreaching Party. It is understood and agreed that Coloray may not terminate this Agreement for any reason other than for an uncured material breach by PixTech as set forth in this Section 7.2. Breaches by PixTech that shall constitute a material breach for purposes of this Section 7.2 shall be limited to failure by PixTech to pay the license fee set forth in Section 3.1 above and failure by PixTech to issue the stock set forth in Section 3.2 above. 7.3 Effect of Termination. Sections 7.3 and 8 shall survive the --------------------- expiration or termination of this Agreement for any reason. Section 5 shall survive expiration or termination of this Agreement for a period of three (3) years. Section 2 shall survive any termination of this Agreement for breach by Licensor. Section 2 shall not survive any termination of this Agreement for breach by PixTech. Termination of this Agreement for any reason shall not release any Party hereto from any liability which at the time of such termination has already accrued to the other Party or which is attributable to a period prior to such termination, nor preclude either Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement. 8. MISCELLANEOUS ------------- 8.1 Waiver. It is agreed that no waiver by any Party hereto of any ------ breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent and/or similar breach or default. 8.2 Government Laws. This Agreement and any dispute arising from the --------------- performance or breach hereof shall be governed by and construed and enforced in accordance with the laws of the State of Ohio, without reference to conflicts of laws principles. 8.3 Jurisdiction Venue. All disputes arising out of this Agreement ------------------ will be subject to the exclusive jurisdiction and venue of the California state courts of Santa Clara County, California (or, if there is exclusive federal jurisdiction, the United States District Court for the Northern District of California), and the Parties consent to the personal and exclusive jurisdiction of these courts. 8.4 Assignment. This Agreement shall not be assignable by either ---------- Party to any third party without the written consent of the other Party hereto; except either Party may assign this Agreement without such consent, to a successor-in-interest to all or substantially all of the business or assets of such Party to which this Agreement pertains, whether by merger, reorganization acquisition, sale, or otherwise. 8.5 Notices. All notices, requests and other communications ------- hereunder shall be in writing and shall be personally delivered or sent by telecopy or other electronic facsimile transmission or by registered or certified mail, return receipt requested, postage prepaid, in each case to the respective address specified below, or such other address as may be specified in writing to the other party hereto: PixTech: PixTech, Inc. 3350 Scott Boulevard, Building 37 Santa Clara, CA 95054 Attn: Michel Garcia With a required copy to: Michael Lytton, Esq. Palmer & Dodge, LLP One Beacon Street Boston, Ma 02108 Licensor: Coloray Display Corporation c/o Suite 602 1105 Schrock Road Columbus, OH 43229 With a required copy to: Thomas E. Moloney, Esq. Baker & Hostetler, LLP 65 East State Street Columbus, Ohio 43215 In addition, for a separate and valuable consideration, receipt of which is hereby acknowledged, Coloray agrees that in the event that Coloray liquidates, sells its assets, files for protection under any Chapter of the Federal Bankruptcy Act, or ceases to do active business, PixTech shall become entitled to receive copies of all Notices of any kind or character which Coloray is entitled to receive under the Prior Agreements identified in Section 4.1. 8.6 Severability. In the event that any provision of this Agreement ------------ becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision. 8.7 Force Majeure. Nonperformance of any Party shall be excused to ------------- the extent that performance is rendered impossible by strike, fire, earthquake, flood, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, willful misconduct of the nonperforming Party. 8.8 Complete Agreement. This Agreement including the Exhibits ------------------ attached hereto, constitutes the entire agreement, both written and oral, between the Parties with respect to the subject matter hereof, and all prior agreements respecting the subject matter hereof, either written or oral, expressed or implied, shall be abrogated, canceled and are null and void and of no effect. No amendment or change hereof or addition hereto shall be effective or binding on either of the Parties hereto unless reduced to writing and executed by the respective duty authorized representatives of PixTech and Licensor. 8.9 Headings. The captions to the several Sections hereof are not a -------- part of this Agreement, but are included merely for convenience of reference only and shall not affect its meaning or interpretation. 8.10 Counterparts. This Agreement may be executed in counterparts, ------------ each of which shall be deemed to be an original and both together shall be deemed to be one and the same agreement. 8.11 SRI Restated License. This Agreement is expressly subject to -------------------- the terms and conditions of the SRI Restated License to the extent applicable to the Licensed Technology, and to the extent that any of the terms of this Agreement is inconsistent with the terms of the SRI Restated License as applicable to the Licensed Technology, then the terms of the SRI Restated License shall prevail. IN WITNESS WHEREOF, the Parties have executed this Agreement, by their respective officers hereunto duly authorized, the day and year first above written. LICENSEE: LICENSOR: - --------- --------- PIXTECH, INC. COLORAY DISPLAY CORPORATION By: /s/ Yves Morel By: /s/ Philip A. Schlosser ---------------------------- --------------------------------- Name: Yves Morel Name: Philip A. Schlosser -------------------------- ------------------------------- Title: CFO Title: President ------------------------- ------------------------------ EXHIBIT A PATENTS, PATENT APPLICATIONS AND INVENTION DISCLOSURES OWNED BY COLORAY [ ]* * Confidential information omitted and filed with the Commission. EXHIBIT B PATENT, PATENT APPLICATIONS, AND INVENTION DISCLOSURES EXCLUSIVELY LICENSED TO COLORAY [ ]* * Confidential information omitted and filed with the Commission. EX-10.2 3 STOCK ISSUANCE AGREEMENT STOCK ISSUANCE AGREEMENT This Agreement is made as of March 16, 1998, between PixTech, Inc., a Delaware corporation ("PixTech") having offices at 3350 Scott Boulevard, Building 37, Santa Clara, California 94505, and Standard Energy Company, an Ohio corporation ("Standard Energy") having offices at 1105 Schrock Road, Suite 602, Columbus, Ohio 43229, in conjunction with that certain License Agreement between PixTech and Coloray Display Corporation of even date herewith (the "License Agreement"), under which PixTech has agreed to issue certain stock to Standard Energy hereunder, on behalf of Coloray, in consideration for the license and rights granted to PixTech under the License Agreement. 1. Issuance of Stock. Subject to the terms and conditions of Section 3 of ----------------- the License Agreement, PixTech hereby agrees to issue to Standard Energy and Standard Energy agrees to accept an aggregate of [ ]* shares of PixTech's Common Stock (the "Shares") in consideration for the license and rights granted under the License Agreement. 2. Delivery. PixTech will use all reasonable efforts to issue and deliver -------- to Standard Energy a duly executed certificate evidencing 14,000 of the Shares in the name of Standard Energy as soon as possible, but in no event more than thirty (30) days, after receipt of both the executed License Agreement and the executed copy of this Agreement. The remaining [ ]* shares shall be delivered to Standard Energy if and when directed by PixTech as contemplated by Section 3 of the License Agreement. 3. Representation and Warranties of PixTech. PixTech hereby represents ---------------------------------------- and warrants to Standard Energy as follows: 3.1 Organization, Good Standing and Qualification. PixTech is a --------------------------------------------- corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. PixTech has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement and sell the Shares and to carry out the provisions of this Agreement. 3.2 Stock. All issued and outstanding shares of PixTech's capital ----- stock (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, and (iii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. When issued in compliance with the provisions of this Agreement, the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under the state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. * Confidential information omitted and filed with the Commission. 4. Investment Representations. -------------------------- 4.1 In connection with the purchase of Shares, Standard Energy represents to PixTech the following: 4.1.1 Standard Energy has been given information regarding PixTech's business affairs and financial condition and has requested, received, reviewed and considered sufficient information about PixTech to reach an informed and knowledgeable decision to acquire the securities. Standard Energy is acquiring these securities for investment for its own account only and not with a view to, or for resale in connection with any "distribution" thereof within the meaning of the Securities Act of 1933 (the "Securities Act"). 4.1.2 Standard Energy understands that the securities have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Standard Energy's investment intent as expressed herein. In this connection Standard Energy understands that in view of the Securities and Exchange Commission ("Commission"), the statutory basis for such exemption may not be present if Standard Energy's representation meant that its present intention was to hold these securities for a minimum capital gains period under the tax statutes, for a deferred sale for a market rise, for a sale if the market does not rise, or for a year or any other fixed period in the future. 4.1.3 Standard Energy further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Standard Energy further acknowledges and understands that Standard Energy is under no obligation to register the securities, except as provided in Section 5 hereof. Standard Energy understands that the certificate evidencing the securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such registration is not required in the opinion of the counsel for PixTech. 4.1.4 Standard Energy is aware of the adoption of Rule 144 by the Commission, promulgated under the Securities Act, which permits limited public resale of the securities acquired in a non-public offering subject to the satisfaction of certain conditions. 4.1.5 Standard Energy further acknowledges that in the event all of the requirements of Rule 144 are not met, compliance with Regulation A or some other registration exemption will be required, and that although Rule 144 is not exclusive, the staff of the Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and other than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transaction do so at their own risk. 4.1.6 Standard Energy qualifies as an "accredited investor" within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act. 4.2 Standard Energy agrees in connection with PixTech's initial public offering of PixTech's securities (i) not to sell, make short sales of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock of PixTech held by Standard Energy (other than those shares included in the registration) without the prior written consent of PixTech of the underwriters managing such initial underwritten public offering of PixTech's securities during the one hundred eighty (180) day period (or such longer or shorter period or periods as shall be required by the underwriters) following the date of the final prospectus for PixTech's initial public offering and (ii) further agrees to execute any agreement reflecting (i) above as may be requested by the underwriters at the time of the public offering. 5. Registration Rights. PixTech agrees to afford Standard Energy ------------------- piggyback registration rights with respect the Shares, subject to customary reasonable restrictions imposed from time to time by PixTech's underwriters. Standard Energy's registration rights pursuant to this Section 5 are exclusive to Standard Energy, are not transferable, and shall expire on the date that Standard Energy is eligible to sell the Shares pursuant to Rule 144(d) under the Securities Act. 6. Legends. The share certificate evidencing the Shares issued hereunder ------- shall be endorsed with the following or any other similar legend required by Delaware or any other applicable federal or state securities laws: "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR, IF REQUESTED BY PIXTECH, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PIXTECH AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT." 7. Adjustment for Stock Split. All references to the number of Shares and -------------------------- the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock split, stock dividend, or other change in the Shares which may be made by PixTech after the date of this Agreement. 8. General Provisions. ------------------ 8.1 This Agreement shall be governed by the internal laws of the State of Delaware. This Agreement represents the entire agreement between the parties with respect to the acquisition of the Common Stock by Standard Energy, may only be modified or amended in writing signed by both parties, and satisfies all of PixTech's obligations to Standard Energy with regard to the issuance or sale of securities. 8.2 Any notice, demand, or request required or permitted to be given by either PixTech or Standard Energy pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered personally or deposited in the U.S. mail, First Class with postage prepaid and addressed to the parties at the addresses of the parties set forth at the beginning of this Agreement or such other address as a party may request be notifying the other in writing. 8.3 The rights and benefits of PixTech under this Agreement shall be transferable to any one or more persons entities, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by PixTech's successors and assigns. The rights and obligations of Standard Energy under this Agreement may only be assigned with the prior written consent of PixTech. 8.4 Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, not prevent the party thereafter from enforcing each and every other provision of this Agreement. The rights granted bother parties herein are cumulative and shall not constitute a waiver of either party's rights to assert all other legal remedies available to it under the circumstances. 8.5 Standard Energy agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written. PIXTECH, INC. STANDARD ENERGY COMPANY By: /s/ Yves Morel By: /s/ Gerald S. Jacobs ------------------------------ ------------------------------ Name: Yves Morel Name: Gerald S. Jacobs Title: Chief Financial Officer Title: President EX-10.3 4 STOCK PURCHASE AGREEMENT COMMON STOCK PURCHASE AGREEMENT between PIXTECH, INC. and THE KAUFMANN FUND, INC. dated as of March 25, 1998 TABLE OF CONTENTS Page No. -------- 1. Authorization of Sale of the Shares................................... 1 ----------------------------------- 2. Delivery of the Shares at the Closing................................. 1 ------------------------------------- 3. Representations, Warranties and Covenants of PixTech.................. 1 ---------------------------------------------------- 3.1. Organization and Qualification.................................. 2 ------------------------------ 3.2. Authorized Capital Stock........................................ 2 ------------------------ 3.3. Consents; Due Execution; Delivery and Performance of the -------------------------------------------------------- Agreement......................................................... 2 --------- 3.4. Issuance, Sale and Delivery of the Shares........................ 2 ----------------------------------------- 3.5. Exempt Transaction............................................... 2 ----------------- 3.6. Compliance with Rule 144......................................... 3 ------------------------ 3.7. Disclosure....................................................... 3 ---------- 3.8. Additional Information; Eligibility for Use of Form S-3.......... 3 ------------------------------------------------------- 3.9. No Material Changes.............................................. 3 ------------------- 3.10. Investment Company Act........................................... 4 ---------------------- 3.11. No Investment Advisor Affiliation................................ 4 --------------------------------- 3.12. Possession of Intellectual Property.............................. 4 ----------------------------------- 3.13. Possession of Licenses and Permits............................... 4 ---------------------------------- 3.14. Legal Proceedings................................................ 4 ----------------- 3.15. Taxes............................................................ 4 ----- 4. Representations, Warranties and Covenants of Kaufmann.................. 5 ----------------------------------------------------- 4.1. Investment Considerations........................................ 5 ------------------------- 4.2. Due Execution, Delivery and Performance of the Agreement......... 6 -------------------------------------------------------- 5. Conditions to the Obligations of the Purchaser......................... 6 ---------------------------------------------- 5.1. Accuracy of Representations and Warranties....................... 6 ------------------------------------------ 5.2. Performance...................................................... 6 ----------- 5.3. Opinion of Counsel............................................... 6 ------------------ 5.4. Certificates and Documents....................................... 7 -------------------------- 5.5. Sumitomo Consent................................................. 7 ---------------- 5.6. Extraordinary Events............................................. 7 -------------------- 5.7. Material Changes................................................. 7 ---------------- 5.8. Other Matters.................................................... 7 ------------- 6. Conditions to the Obligations of PixTech............................... 7 ---------------------------------------- 6.1. Accuracy of Representations and Warranties....................... 7 ------------------------------------------ 6.2. Performance...................................................... 8 ----------- 7. Survival of Representations, Warranties and Agreements; Assignability of ------------------------------------------------------------------------ Rights................................................................. 8 ------ 8. Registration Rights.................................................... 8 ------------------- 8.1. Registration of Shares on Form S-3............................... 8 ------------------------------------ 8.2. Information by Holder............................................ 9 --------------------- 8.3. Indemnification.................................................. 9 --------------- 8.4. Contribution..................................................... 11 ------------ 8.5. Non-Exclusivity.................................................. 11 --------------- 8.6. Termination...................................................... 12 ----------- 8.7. Public Availability of Information............................... 12 ---------------------------------- 8.8. Supplying Information............................................ 12 --------------------- 9. Miscellaneous.......................................................... 12 ------------- 9.1. Notices.......................................................... 12 ------- 9.2. Entire Agreement................................................. 13 ---------------- 9.3. Assignment....................................................... 13 ---------- 9.4. Amendments and Waivers........................................... 13 ------------------ 9.5. Headings......................................................... 13 -------- 9.6. Severability..................................................... 14 ------------ 9.7. Governing Law.................................................... 14 ------------- 9.8. Counterparts..................................................... 14 ------------ 9.9. Expenses......................................................... 14 -------- 9.10. Publicity........................................................ 14 --------- 9.11. Specific Performance............................................. 14 -------------------- Exhibit A Form of Opinion of Palmer & Dodge LLP - --------- Exhibit B Form of Secretary's Certificate - --------- Exhibit C Form of Officer's Certificate - --------- COMMON STOCK PURCHASE AGREEMENT THIS COMMON STOCK PURCHASE AGREEMENT dated as of March 25, 1998 (the "Agreement") is made between PIXTECH, INC., a corporation organized under the laws of the State of Delaware having its principal offices at Avenue Olivier Perroy, Zone Industrielle de Rousset, 13790 Rousset France, ("PixTech"), and The Kaufmann Fund, Inc., a corporation organized under the laws of Maryland having its principal offices at 140 East 45th Street, New York, New York ("Kaufmann"). R E C I T A L WHEREAS, PixTech desires to sell to Kaufmann, and Kaufmann desires to purchase from PixTech, shares of PixTech's common stock on the terms described herein. NOW THEREFORE, in consideration of the promises and of the covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto mutually agree as follows: 1. Authorization of Sale of the Shares. Subject to the terms and conditions of this Agreement, PixTech has authorized the issuance and sale of one million (1,000,000) shares (the "Shares") of the Common Stock, par value $0.01 per share (the "Common Stock"), of PixTech to Kaufmann at a price of four dollars ($4.00) per share. The aggregate purchase price for the Shares (the "Stock Purchase Price")shall be four million dollars ($4,000,000.00). 2. Delivery of the Shares at the Closing. The closing of the purchase and sale of the Shares (the "Closing") shall occur on March 30, 1998 (the "Closing Date") at 10:00 a.m., eastern standard time at the offices of Palmer & Dodge LLP, One Beacon Street, Boston, Massachusetts, or on such other business day thereafter on or prior to March 31, 1998 as may be agreed upon by PixTech and Kaufmann. Subject to the terms and conditions of this Agreement, at the Closing, Kaufmann shall pay to PixTech an amount in cash or by wire transfer equal to the Stock Purchase Price and PixTech shall deliver to Kaufmann or its agent one or more stock certificates (the "Stock Certificates") registered in the name of Kaufmann, or in such nominee name(s) as designated by Kaufmann, representing the aggregate number of Shares. If prior to the Closing, the Stock Certificate(s) has already been provided to Kaufmann, Kaufmann, or its agent, agrees to hold such Stock Certificates in escrow until PixTech has given oral confirmation of receipt of the funds required to be delivered by Kaufmann under this Agreement. If at the Closing, PixTech shall fail to tender the Stock Certificates to Kaufmann as provided above in this Section 2 or any of the conditions specified in Section 5 shall not have been fulfilled to the satisfaction of Kaufmann, Kaufmann, in its sole discretion, may elect to be relieved of all further obligations under this Agreement, without thereby waiving any rights it may have by reason of such failure or such nonfulfillment. 3. Representations, Warranties and Covenants of PixTech. PixTech hereby represents and covenants with Kaufmann as follows: 3.1. Organization and Qualification. PixTech (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to conduct its business as currently conducted, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct its business in which it is currently engaged and (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on PixTech. 3.2. Authorized Capital Stock. As of the date hereof, the authorized capital stock of PixTech consists of (a) 30,000,000 shares of common stock, $0.01 par value per share, of which on March 12, 1998, 13,762,732 shares were validly issued and outstanding, fully paid and non-assessable, and (b) 1,000,000 shares of undesignated preferred stock, $0.01 par value per share, none of which are issued and outstanding. 3.3. Consents; Due Execution; Delivery and Performance of the Agreement. PixTech's execution, delivery and performance of this Agreement (a) has been duly authorized by all requisite corporate action by PixTech, (b) will not violate any material law or the Restated Certificate of Incorporation or Restated By-laws of PixTech or any other corporation of which PixTech owns at least 50% of the outstanding voting stock (a "PixTech Subsidiary") or any provision of any material indenture, mortgage, agreement, contract or other material instrument to which PixTech or any PixTech Subsidiary is a party or by which any of their respective properties or assets is bound as of the date hereof, (c) will not require any consent, except as stated in Section 5.5 below, by any person under, constitute or result (upon notice or lapse of time or both) in a breach of any term, condition or provision of, or constitute a default or give rise to any right of termination or acceleration under any such indenture, mortgage, agreement, contract or other material instrument or result in the creation or imposition of any lien, security interest, mortgage, pledge, charge or other encumbrance, of any material nature whatsoever, upon any properties or assets of PixTech or any PixTech Subsidiary and (d) will not require any consent, authorization, approval, filing, notice to, or other act, by or in respect of any governmental authority. Upon its execution and delivery, and assuming the valid execution thereof by Kaufmann, the Agreement will constitute a valid and binding obligation of PixTech, enforceable against PixTech in accor dance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.4. Issuance, Sale and Delivery of the Shares. When issued and paid for, the Shares to be sold hereunder by PixTech will be validly issued and outstanding, fully paid and non-assessable. 3.5. Exempt Transaction. Subject to the accuracy of Kaufmann's represen tations in Section 4.1 of this Agreement, the issuance and sale of the Shares will constitute a transaction exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the "Securities Act") in reliance upon Section 4(2) of the Securities Act and the regulations promulgated pursuant thereto and state securities laws; and neither PixTech nor any affiliate (as defined in Rule 501(b) of Regulation D of the Securities Act) or any agent acting on behalf of PixTech or any such affiliate has directly, or through any agent, sold, offered for sale or solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Shares in a manner that would require registration under the Securities Act of the offering of the Shares contemplated by this Agreement. 3.6. Compliance with Rule 144. At the written request of Kaufmann at any time and from time to time, PixTech shall furnish to Kaufmann, within three days after receipt of such request, a written statement confirming PixTech's compliance with the filing requirements of the Securities and Exchange Commission (the "SEC") set forth in Rule 144 of the Securities Act as amended from time to time. 3.7. Disclosure. Neither this Agreement, nor any other items prepared or supplied to Kaufmann by or on behalf of PixTech with respect to the transactions contemplated hereby contain any untrue statement of a material fact required to be stated therein or omit a material fact necessary to make each statement contained herein or therein not misleading. There is no fact which PixTech has not disclosed to Kaufmann in writing and of which any of its directors or executive officers is aware (other than general economic conditions) and which has had or would reasonably be expected to have a material adverse effect upon the financial condition, results of operations, earnings, assets, properties, customer, supplier or employee relations or business prospects (a "Material Adverse Effect") of PixTech or PixTech Subsidiaries taken as a whole. 3.8. Additional Information; Eligibility for Use of Form S-3. All reports filed by PixTech with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), when filed, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. PixTech has made all filings with the SEC which it is required to make, and PixTech has not received any request from the SEC to file any amendment or supplement to any such reports. PixTech meets the eligibility requirements set forth in paragraph I of the General Instructions to Form S-3 for the use of such Form for the registration of securities in a transaction involving secondary offerings, as described in such General Instructions. 3.9. No Material Changes. As of the date hereof, there has been no material adverse change in the financial condition, or any development involving a prospective material adverse change in the financial condition, results of operations, earnings, assets, operations, properties, customer, supplier or employee relations (a "Material Adverse Change") of PixTech since the filing date of PixTech's last report with the Securities and Exchange Commission pursuant to the reporting requirements of the Exchange Act. 3.10. Investment Company Act. PixTech is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"), and PixTech will not be required to register as an "investment company" as a result of the transactions contemplated herein. 3.11. No Investment Advisor Affiliation. PixTech is not an "investment advisor," "affiliated company" or an "affiliated person" of an "investment advisor" within the meaning of the 1940 Act. 3.12. Possession of Intellectual Property. PixTech owns or possesses, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, the "Intellectual Property") necessary to carry on the business now operated by PixTech, and PixTech has not received or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of PixTech, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. 3.13. Possession of Licenses and Permits. PixTech possesses such permits, licenses, consents and other authorizations (collectively, "Governmental Licenses") issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by it; PixTech is in compliance with the terms and conditions of all such Governmental Licenses, except where the failure to so comply would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect; and PixTech has not received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. 3.14. Legal Proceedings. There are no legal, governmental, administrative or arbitration proceedings pending to which PixTech is a party or to which any of the properties of PixTech are subject or, to the best of PixTech's knowledge, threatened against it, that would, if adversely determined against it, have a Material Adverse Effect on PixTech or on the power of PixTech to perform its obligations hereunder or to consummate the transactions contemplated hereby. 3.15. Taxes. PixTech has filed or caused to be filed all tax returns which, to the knowledge of PixTech, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any property and all other taxes, fees or other charges imposed on it any property by an governmental authority in the jurisdictions in which it operates, except for (a) any taxes and assessments the amount of which is not individually or in the aggregate material to the business or operations of PixTech or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which PixTech has established adequate reserves in accordance with generally accepted accounting principles. 4. Representations, Warranties and Covenants of Kaufmann 4.1. Investment Considerations. Kaufmann represents and warrants to, and covenants with, PixTech that: (a) Kaufmann is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares presenting an investment decision like that involved in the purchase of the Shares, including investments in securities issued by companies comparable to PixTech, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (b) Kaufmann is acquiring the Shares in the ordinary course of its business and for its own account for investment only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares; (c) Kaufmann understands that the Shares are "restricted securities" under the federal securities laws inasmuch as they are being acquired from PixTech in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection Kaufmann represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act; (d) Kaufmann will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Securities Act, and the rules and regulations promulgated thereunder; (e) Kaufmann qualifies as an "accredited investor" within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act and is a resident of the state of New York and the state of Maryland; and (f) It is understood that the Stock Certificates shall bear the following legend unless and until the resale of the Shares pursuant to an effective Registration Statement or until the Shares may be sold under Rule 144 without restrictions: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR, IF REQUESTED BY PIXTECH, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PIXTECH AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT. 4.2. Due Execution, Delivery and Performance of the Agreement. Kaufmann further represents and warrants to, and covenants with, PixTech that (a) Kaufmann is a corporation duly organized, validly existing and in good standing under the laws of the Maryland and has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, (b) the execution, delivery and performance of this Agreement will not violate any law or the charter documents of Kaufmann or any other corporation of which Kaufmann owns at least 50% of the outstanding voting stock (a "Kaufmann Subsidiary") or any provision of any material indenture, mortgage, agreement, contract or other material instrument to which Kaufmann or any Kaufmann Subsidiary is a party or by which Kaufmann, any Kaufmann Subsidiary, or any of their respective properties or assets is bound as of the date hereof, or result in a breach of or constitute (upon notice or lapse of time or both) a default under any such indenture, mortgage, agreement, contract or other material instrument or result in the creation or imposition of any lien, security interest, mortgage, pledge, charge or encumbrance, of any material nature whatsoever, upon any assets of Kaufmann or any Kaufmann Subsidiary, and (c) upon the execution and delivery of this Agreement, and assuming the valid execution thereof by PixTech, this Agreement shall constitute a valid and binding obligation of Kaufmann enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 5. Conditions to the Obligations of the Purchaser. The obligations of Kaufmann under this Agreement are subject to the fulfillment, or the waiver by Kaufmann, of the conditions set forth in this Section 5 on or before the Closing Date. 5.1. Accuracy of Representations and Warranties. Each representation and warranty of PixTech contained in this Agreement shall be true on and as of the Closing Date with the same effect as though such representation and warranty had been made on and as of that date. 5.2. Performance. PixTech shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by PixTech prior to or at the Closing. 5.3. Opinion of Counsel. Kaufmann shall have received an opinion from Palmer & Dodge LLP, counsel to PixTech, dated as of the Closing Date, addressed to Kaufmann, and substantially in the form attached hereto as Exhibit A. 5.4. Certificates and Documents. PixTech shall have delivered to counsel to Kaufmann: (a) a certificate of the Secretary or Assistant Secretary of PixTech dated as of the Closing Date, substantially in the form attached hereto as Exhibit B certifying as to (i) the incumbency of officers of PixTech executing this Agreement and all other documents executed and delivered in connection herewith, (ii) a copy of the By-Laws of PixTech, as in effect on and as of the Closing Date, (iii) a copy of the resolutions of the Board of Directors of PixTech, and (iv) a copy of the authorization of Sumitomo approving PixTech's execution, delivery and performance of this Agreement, all matters in connection with this Agreement, and the transactions contemplated thereby; and (b) a certificate substantially in the form attached hereto as Exhibit C, executed by the Chief Financial Officer of PixTech as of the Closing Date, certifying to the fulfillment of all of the conditions to Kaufmann's obligations under this Agreement, as set forth in this Section 5. 5.5. Sumitomo Consent. PixTech shall have received the written consent or waiver by Sumitomo Corporation under the Credit Agreement dated July 21, 1997 between Sumitomo Corporation and PixTech, permitting PixTech to enter into this Agreement, the sale of the Shares to Kaufmann and the transactions contemplated thereby. 5.6. Extraordinary Events. Since the date of this Agreement, there shall not have occurred (a) a suspension or material limitation in the trading in securities generally on the Nasdaq National Market System or the establishment of minimum prices on such exchange, (b) a general moratorium on commercial banking activities declared by either Federal or New York State authorities; or (c) any outbreak or escalation of hostilities involving the United States or any other national or international calamity or emergency. 5.7. Material Changes. Since the date of this Agreement, there has not been any Material Adverse Change in PixTech. 5.8. Other Matters. All corporate and other proceedings in connection with the transactions contemplated at the Closing by this Agreement, and all documents and instruments incident to such transactions, shall be reasonably satisfactory in substance and form to Kaufmann and its counsel, and Kaufmann and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 6. Conditions to the Obligations of PixTech. The obligations of PixTech under this Agreement are subject to the fulfillment, or the waiver by PixTech, of the conditions set forth in this Section 6 on or before the Closing Date. 6.1. Accuracy of Representations and Warranties. Each representation and warranty of Kaufmann contained in this Agreement shall be true on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of that date. 6.2. Performance. Kaufmann shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by Kaufmann prior to or at the Closing. 7. Survival of Representations, Warranties and Agreements; Assignability of Rights. Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by PixTech and Kaufmann herein, except as otherwise provided herein, shall survive the execution of this Agreement, the delivery to Kaufmann of the Shares being purchased and the payment therefor. Except as otherwise provided herein, (i) the covenants, agreements, representations and warranties of Pixtech made herein shall bind the Company's successors and assigns and shall insure to the benefit of Kaufmann and Kaufmann's successors and assigns and (ii) the covenants, agreements, representations and warranties of Kaufmann made herein shall bind Kaufmann's successors and assigns and shall insure to the benefit of Pixtech and PixTech's successors and assigns. 8. Registration Rights 8.1. Registration of Shares on Form S-3. PixTech covenants and agrees that it will: (a) promptly following the Closing, prepare and file a registration statement on one or more Forms S-3 covering the resale of the Shares by Kaufmann (or, if PixTech is not then eligible to use such Form, on any other form of registration statement promulgated by the SEC which would cover the resale of the Shares) and use its best efforts to cause such registration statement to become effective in order that Kaufmann may sell its Shares in accordance with the proposed plan of distribution; provided, however, that PixTech will furnish to Kaufmann and its counsel copies of all documents proposed to be filed, which documents will be subject to the review of such counsel, and PixTech will give reasonable consideration in good faith to any comments of Kaufmann and such counsel regarding such registration statement. (b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement(s) and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the resale of the Shares covered by such registration statement(s) until such time as Kaufmann no longer holds any Shares, subject to earlier termination as provided in Section 8.6, and to correct an untrue statement of a material fact or omission to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances then existing, not misleading; provided, however, that PixTech will furnish to Kaufmann and its counsel copies of all such amendments and supplements proposed to be filed and the proposed prospectus and any supplements thereto, which documents will be subject to the review of such counsel, and PixTech will give reasonable consideration in good faith to any comments of Kaufmann and such counsel regarding such registration statement. (c) furnish Kaufmann such number of copies of such prospectus as it may reasonably request in order to facilitate the resale of the Shares; (d) file documents required of PixTech to comply with state securities laws regarding the registration and offering of the Shares in states specified in writing by Kaufmann; provided, however, that PixTech shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is now not so qualified or has not so consented; and (e) do any and all other reasonable acts and things which may be reasonably necessary or advisable to enable Kaufmann to consummate the sale of the Shares as contemplated in this Section 8.1; (f) bear all expenses in connection with the procedures set forth in paragraphs (a) through (e) of this Section 8.1 and the registration of the Shares covered by the registration statement, other than fees and expenses, if any, of counsel or other advisors to Kaufmann. 8.2. Information by Holder. Kaufmann shall promptly furnish to PixTech such information regarding Kaufmann and the distribution proposed by Kaufmann as PixTech may request in writing and as shall be required from time to time in connection with any registration, qualification or compliance referred to in this Section 8. 8.3. Indemnification. For the purpose of this Section 8.3, (a) the term "Selling Stockholder" shall mean Kaufmann and any officer, director, employee, agent, affiliate or person deemed to be in control of Kaufmann within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act; (b) the term "Registration Statement" shall mean any final prospectus, exhibit, supplement or amendment included in or relating to the registration statement referred to in Sections 8.1; and (c) the term "untrue statement" shall mean any untrue statement or alleged untrue statement of, or any omission or alleged omission to state, in the Registration Statement a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. PixTech agrees to indemnify and hold harmless each Selling Stockholder from and against any losses, claims, damages or liabilities to which such Selling Stockholder may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, any untrue statement on the effective date thereof, or arise out of any failure by PixTech to fulfill any undertaking included in the Registration Statement and PixTech will reimburse such Selling Stockholder for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that PixTech shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon, an untrue statement made in such Registration Statement in reliance upon and in conformity with written information furnished to PixTech by or on behalf of such Selling Stockholder specifically for use in preparation of the Registration Statement, or any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to Kaufmann prior to the pertinent sale or sales by Kaufmann. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Selling Stockholder and shall survive the transfer of such securities by the seller. Kaufmann agrees to indemnify and hold harmless PixTech (and each person, if any, who controls PixTech within the meaning of Section 15 of the Securities Act, each officer of PixTech who signs the Registration Statement and each director of PixTech) and each underwriter (if any) from and against any losses, claims, damages or liabilities to which PixTech (or any such officer, director or controlling person) or each underwriter (if any) may become subject (under the Securities Act or otherwise), insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, any untrue statement on the effective date thereof if such untrue statement was made in reliance upon and in conformity with written information furnished by or on behalf of Kaufmann specifically for use in preparation of the Registration Statement, and Kaufmann will reimburse PixTech (or such officer, director or controlling person, as the case may be) or each underwriter (if any), for any legal or other expenses reasonably incurred in investigating, defending, or preparing to defend any such action, proceeding or claim; provided, however, that (i) no Selling Stockholder shall be liable for any untrue statement that is corrected by any Selling Stockholder in writing to PixTech or its agents prior to the sale of the Shares, whether or not such correction was made in any amendment or supplement to any Registration Statement by PixTech; and (ii) in no event shall the liability of any Selling Stockholder exceed the amount of the proceeds of the sale of the Shares received by such Selling Stockholder giving rise to such indemnification obligation. Promptly after receipt by any indemnified person of a notice of a claim or the commencement of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 8.3, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, and, subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person and such indemnifying person shall have been notified thereof, such indemnifying person shall be entitled to participate therein, and, to the extent it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person; provided that the failure of any indemnified person to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section 8.3, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice; provided, however, that the indemnifying person shall not agree to a settlement of any such action without the consent of the indemnified person, which consent shall not be unreasonably withheld. After notice from the indemnifying person to such indemnified persons of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate, in the opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any officer, director, employee, agent, affiliate or person deemed to be in control of such indemnifying person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person. It is understood, however, that PixTech shall, in connection with any one such action, suit or proceeding or separate but substantially similar or related actions, suits, or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys (in addition to any local counsel) at any time for all such indemnified parties not having actual or potential differing interests with PixTech or among themselves. 8.4. Contribution. If the indemnification provided for in this Section 8 for any reason is held by a court of competent jurisdiction to be unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative fault of the indemnified party in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 8.4 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 8.5. Non-Exclusivity. The obligations of the parties under this Section 8 shall be in addition to any liability which any party may otherwise have to any other party. 8.6. Termination. Kaufmann's rights under Section 8.1 hereunder shall terminate as to any Shares upon the earlier of (i) the time that such Shares may be sold pursuant to Rule 144 of the Securities Act or (ii) at such time as no such Shares are held by Kaufmann. 8.7. Public Availability of Information. PixTech shall comply with all public information reporting requirements of the Commission, to the extent required from time to time to enable Kaufmann to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. 8.8. Supplying Information. PixTech shall cooperate with Kaufmann in supplying such information as may be necessary for Kaufmann to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Shares. 9. Miscellaneous. 9.1. Notices. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the parties hereto to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by telephone, personal delivery or courier) or courier, postage prepaid (where applicable), addressed to such other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective upon receipt by the addressee. If to PixTech: PixTech, Inc. Avenue Olivier Perroy Zone Industrielle de Rousset 13790 Rousset France Attention: Chief Executive Officer Telephone: 011 334 4229 1000 Telecopy: 011 334 4229 0509 with a copy to: Palmer & Dodge LLP One Beacon Street Boston, Massachusetts 02108 Attention: Michael Lytton, Esq. Telephone: (617) 573-0100 Telecopy: (617) 227-4420 If to Kaufmann: The Kaufmann Fund, Inc. 140 East 45th Street 43rd Floor New York, New York 10017 Attention: Jonathan Art Telephone: (212) 922-0123 Telecopy: (212) 661-2266 with a copy to: Gary S. Schpero, Esq. Simpson, Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Telephone: (212) 455-2000 Telecopy: (212) 455-2502 9.2. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. 9.3. Assignment. Neither this Agreement nor any of the rights and obligations contained herein may be assigned or otherwise transferred by either party without the consent of the other party; provided, however, that either PixTech or Kaufmann may, without such consent, assign its rights and obligations under this Agreement (i) to any entity, all or substantially all of the equity interest of which is owned and controlled by such party or its direct or indirect parent corporation, or (ii) in connection with a merger, consolidation or sale of substantially all of such party's assets to an unrelated third party; provided, however, that such party's rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction and shall not be transferred separate from all or substantially all of its other business assets, including those business assets. Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement. 9.4. Amendments and Waivers. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by PixTech and Kaufmann. The waiver by either party hereto of any right hereunder or the failure to perform or of a breach by the other party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. 9.5. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement. 9.6. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 9.7. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. 9.8. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 9.9. Expenses. Except as otherwise specifically provided herein, each party shall bear its own expenses in connection with this Agreement. 9.10. Publicity. The parties to this Agreement agree that shortly after the Closing Date, PixTech will issue a press release to disclose the transaction contemplated by this agreement, provided, however, that any such press release does not cause the offering contemplated by this Agreement to violate Section 5 of the Securities Act, including but not limited to Rule 135c of the Securities Act. However, neither party hereto shall issue any press releases or otherwise make any public statement with respect to the transactions contemplated by this Agreement without the prior written consent of the other party, which may not be unreasonably withheld, except as may be required by applicable law or regulation. 9.11. Specific Performance. Each party hereto acknowledges and agrees that each other party hereto would be irreparably harmed and would have no adequate remedy of law if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, it is agreed that, in addition to any other remedies by law or in equity which may be available, the parties hereto shall be entitled to obtain temporary and permanent injunctive relief with respect to any breach or threatened breach of, or otherwise obtain specific performance of the covenants and other agreements contained in this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written. PIXTECH, INC. By: /s/ Yves Morel ------------------------------------------- Yves Morel Chief Financial Officer THE KAUFMANN FUND, INC. By: /s/ Laurence Auriana ------------------------------------------ Title: Chairman ------------------------------------------ EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-30-1998 13,094 0 520 0 716 17,238 20,824 0 51,811 9,451 0 0 0 148 18,611 51,811 21 1,253 0 (4,901) 0 0 (80) (3,522) 0 0 0 0 0 (3,522) (.25) 0
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