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Exhibit 10.6  

        [*****] = Certain
confidential information contained in this document, marked with brackets, has been omitted and filed separately with the
Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. 

 
 

STOCK PURCHASE AGREEMENT    
    

        THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated effective as of March 24, 2004, by and among Displaytech, Inc., a Colorado corporation (the
"Company") and the purchasers set forth on Schedule 1 hereto (each referred to as
"Purchaser" and collectively as "Purchasers"). 

W I T N E S S E T H: 

        WHEREAS,
the Company desires to issue and sell to the Purchasers, and the Purchasers desire to purchase from the Company, shares of the Company's Series E-1 Senior
Preferred Stock, par value $.001 per share (the "Series E-1 Preferred Stock"), which at the Closing (as defined below) will be
immediately exchanged for shares of the Company's Series F Convertible Preferred Stock, par value $.001 per share (the "Series F Preferred
Stock") on a one-for-one basis pursuant to the terms of the Series E Exchange Agreement, and, if applicable, shares of the Company's
Series G Convertible Preferred Stock, par value $.001 per share (the "Series G Preferred Stock"), upon the terms and provisions
hereinafter set forth. 

        NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows: 

SECTION 1. SALE AND PURCHASE OF PREFERRED STOCK  

        1.1    Purchase of Shares.    The Company agrees to sell to the Purchasers and, subject to the terms and conditions
hereof and in reliance upon the representations and warranties of the Company contained herein or made pursuant hereto, the Purchasers severally agree to purchase from the Company at the Closing, the
number of shares of Series E-1 Preferred Stock and Series G Preferred Stock set forth opposite each Purchaser's name on  Schedule 1 hereto. The shares of Series E-1 Preferred Stock
and Series G Preferred Stock being acquired under this
Agreement are referred to herein collectively as the "Shares." 

        1.2    Purchase Price.    The aggregate purchase price to be paid to the Company by each Purchaser for that portion of
the Shares to be purchased by such Purchaser pursuant to this Agreement shall be the amount set forth opposite such Purchaser's name on  Schedule 1 hereto. 

SECTION 2. CLOSING  

        2.1    Closing.    Subject to the terms and conditions hereof, the initial closing of the purchase and sale of the
Shares to be purchased by the Purchasers (the "Closing") will take place at the offices of Faegre & Benson LLP, 3200 Wells Fargo Center, 1700
Lincoln Street, Denver, Colorado at 10:00 A.M., Mountain Standard Time, on the date hereof, or such other time and date as shall be mutually agreed to by the Company and the Purchasers (such
time and date are herein referred to as the "Closing Date"). 

        2.2    Closing Deliveries.    Subject to the terms and conditions hereof, at the Closing (i) the Company will
deliver to each Purchaser a certificate registered in the respective Purchaser's name (or the name of its nominee, if any, as specified on  Schedule 1 hereto) evidencing the number of Shares set
forth opposite each Purchaser's name on  Schedule 1 and (ii) substantially simultaneously with the Purchaser's receipt thereof, each Purchaser shall deliver to the Company a
certified or official bank check (or wire transfer) in an amount equal to the aggregate purchase price (as specified in Section 1.2 

 

hereof)
for the Shares to be purchased by such Purchaser payable to the order of the Company in federal or other immediately available funds. 

SECTION 3. DEFINITIONS  

        3.1   For
purposes of this Agreement, the following definitions shall apply (such definitions to be equally applicable to both the singular and plural forms of the terms
defined): 

        "Affiliate", when used with respect to any Person, means (i) if such Person is a corporation, any officer or director thereof and
any Person which is, directly or indirectly, the beneficial owner (by itself or as part of any group) of more than five percent (5%) of any class of any equity security (within the meaning of the
Exchange Act) thereof, and, if such beneficial owner is a partnership, any general partner thereof, or if such beneficial owner is a corporation, any Person controlling, controlled by or under common
control with such beneficial owner, or any officer or director of such beneficial owner or of any corporation occupying any such control relationship, (ii) if such Person is a partnership, any
general or limited partner thereof, and (iii) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person. For purposes of this
definition, "control" (including the correlative terms "controlling", "controlled by" and "under common control with"), with respect to any Person, shall mean possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. The holding of Shares and the
rights under this Agreement or under the Certificates of Designation or the Shareholders Agreement, shall not in and of itself cause a Purchaser to be deemed to be an "Affiliate" of the Company. 

        "Benefit Plan" means, as of the Closing Date, any Plan, existing at the Closing Date or prior thereto, established or to which
contributions have at any time been made by the Company, or any predecessor of any of the foregoing, or under which any employee, former employee or director of the Company or any beneficiary thereof
is covered, is eligible for coverage or has benefit rights. 

        "Board" or "Board of Directors" means with respect to any Person which is a corporation, a
business trust or other entity, the board of directors or other group, however designated, which is charged with legal responsibility for the management of such Person, or any committee of such board
of directors or group, however designated, which is authorized to exercise the power of such board or group in respect of the matter in question. 

        "Capital Stock" means any class of capital stock of the Company authorized by its articles of incorporation, as amended. 

        "Capitalized Lease" means any lease to which the Company is party as lessee, or by which it is bound, under which it leases any property
(personal or mixed) from any lessor other than the Company, and which either is required to be capitalized in accordance with generally accepted accounting principles consistently applied, or, even if
not so required to be capitalized, shall have (or have had), at the time first entered into, an initial term of greater than three (3) years (including leases of shorter duration which are or
were extendible to a total term greater than three (3) years at the option of the lessor). 

        "Certificates of Designation" means the Certificate of Designation and Determination of Preferences of the Series E-1
Senior Preferred Stock, the Certificate of Designation and Determination of Preferences of the Series F Convertible Preferred Stock, the Certificate of Designation and Determination of
Preferences of the Series G Convertible Preferred Stock, the Certificate of Designation and Determination of Preferences of the Series E-D Convertible Preferred Stock, the
Certificate of Designation and Determination of Preferences of the Series E-B Convertible Preferred Stock, the Amended and Restated Certificate of Designation and 

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Determination
of Preferences of the Series D Convertible Preferred Stock and the Amended and Restated Certificate of Designation and Determination of Preferences of the Series B
Convertible Preferred Stock. 

        "Closing" has the meaning set forth in Section 2.1 hereof. 

        "Closing Date" has the meaning set forth in Section 2.1 hereof. 

        "Code" means the Internal Revenue Code of 1986, as amended. 

        "Commission" means the Securities and Exchange Commission and any other similar or successor agency of the federal government
administering the Securities Act or the Exchange Act. 

        "Common Stock" means the Company's Common Stock, par value $.001 per share, and shall also include any common stock of the Company
hereafter authorized and any Capital Stock of the Company of any other class hereafter authorized which is not preferred as to dividends or assets over any other class of Capital Stock of the Company
or which has ordinary voting power for the election of directors of the Company. 

        "Consolidated" or "consolidated", when used with reference to any financial term in this
Agreement, means the aggregate for the Company and any of its majority-owned subsidiaries of the amounts signified by such term for all such Persons, with intercompany items eliminated, and, with
respect to net worth, after eliminating the portion of net worth properly attributable to minority interests, if any, in the capital of any such Person (other than in the capital of the Company) and
otherwise as determined in accordance with generally accepted accounting principles consistently applied (except as otherwise expressly provided herein). 

        "Convertible Securities" means any warrants, options or other rights to acquire shares of Capital Stock (whether upon exercise,
conversion, exchange or otherwise). 

        "Disclosure Material" has the meaning set forth in Section 4.6(a) hereof. 

        "Environmental Laws" means all federal, state, local, foreign, civil and criminal laws, statutes, ordinances, orders, codes, rules,
policies, and regulations and common law relating to the protection of the environment and human health or relating to the handling, use, generation, treatment, storage, transportation or disposal of
Hazardous Materials, including but not limited to the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq.; the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. § 9601 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et
seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
§ 1801 et seq.; The Occupational Safety and Health Act, 29 U.S.C. § 651; the Federal Insecticide, Fungicide and Rodenticide Act,
7 U.S.C. § 136y et seq.; and the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et
seq., all as may be amended or superseded from time to time, and all common law claims relating to the same. 

        "Environmental Lien" has the meaning set forth in Section 4.16(f) hereof. 

        "Environmental Permits" means all permits, licenses, approvals, authorizations or consents required by any Governmental Authority under
any applicable Environmental Law and includes any and all orders, consent orders or binding agreements issued or entered into by a Governmental Authority under any applicable Environmental Law. 

        "ERISA" means Employee Retirement Income Security Act of 1974, as amended. 

        "ERISA Affiliate" means each "person" (as defined in Section 3(9) of ERISA) which is under "common control" with the Company
(within the meaning of Section 414(b), (c), (m) or (o) of the Code). 

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        "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules, regulations and interpretations thereunder. 

        "Governmental Authority" means any federal, state, or local governmental agency or authority (including regulatory authority) having
jurisdiction over the Company or any of its respective assets or businesses. 

        "Hazardous Materials" means any petroleum, petroleum hydrocarbons, petroleum waste or petroleum products, underground storage tanks,
asbestos or asbestos-containing materials, pesticides, lead and lead-containing materials, urea formaldehyde insulation and polychlorinated biphenyls (PCBs), ionizing and
non-ionizing radiation including radon and electromagnetic frequency radiation; and any chemicals, materials, substances or wastes in any amount or concentration which are "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants" or words of similar import, under any
applicable Environmental Law. 

        "Indebtedness" means, with respect to any Person, without duplication, (a) all liabilities of such Person for borrowed money or for
the deferred purchase price of property or services, excluding, any (i) trade account payables arising in the ordinary course of business and (ii) other accrued current liabilities
incurred in the ordinary course of business, including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit, banker's acceptance or
other similar credit transaction; (b) all obligations of such Person evidenced by bonds, debentures or other similar instruments; (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), but excluding trade accounts payable arising in the ordinary course of business; (d) all obligations of such Person under any
Capitalized Leases; (e) all Indebtedness referred to in the preceding clauses of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon property (including, without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such Indebtedness (the amount of such obligation being deemed to be the lesser of the value of such property or asset or the
amount of the obligation so secured); (f) all guarantees of Indebtedness referred to in this definition by such Person; and (g) all obligations under or in respect of currency agreements
(other than the provisions in the Miyota Co. Ltd. Agreement, dated December 10, 1998, as amended, related to currency exchange rates) and interest rate protection obligations of such
Person. 

        "Intellectual Property" has the meaning set forth in Section 4.12(a) hereof. 

        "Intellectual Property Licenses" has the meaning set forth in Section 4.12(a) hereof. 

        "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, or preference, priority or other security
interest of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same effect as any of
the foregoing, any assignment or other conveyance of any right to receive income and any assignment of receivables with recourse against the assignor), any filing of a financing statement as debtor
under the Uniform Commercial Code or any similar statute and any agreement to give or make any of the foregoing; provided that the term "Lien" shall not
include Permitted Liens. 

        "Patents and Applications" has the meaning set forth in Section 4.12(c) hereof. 

        "Pension Plan" means any "employee pension benefit plan" as defined in Section 3(2) of ERISA. 

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        "Permitted Lien" means (i) any Lien for Taxes, governmental charges or levies not yet due or delinquent or being contested in good
faith by appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles, (ii) any imperfections of title, easements,
rights of way or similar Liens, zoning laws or land use restrictions as normally exist with respect to property similar in character to the property affected thereby and which individually or in the
aggregate with other such Liens, zoning laws or land use restrictions do not materially impair the value or marketability of the property subject to such Liens, zoning laws or land use restrictions or
interfere with the use of such property in the conduct of the business of the Company and which do not secure obligations for money borrowed, (iii) Liens imposed by any law, such as mechanic's,
materialman's, landlord's, warehouseman's and carrier's Liens, securing obligations incurred in the ordinary course of business which are not yet overdue or which are being diligently contested in
good faith by appropriate proceedings and, with respect to such obligations which are being contested, for which the Company has set aside adequate reserves, if appropriate, and (iv) any Lien
resulting from purchase by the Company of goods in the ordinary course of business as to which Liens are not filed of record. 

        "Person" or "person" means an individual, partnership, corporation, trust, unincorporated
organization, joint venture, government or agency, political subdivision thereof, or any other entity of any kind. 

        "Plan" means any bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence, layoff, vacation day or dependent care, legal services, cafeteria, life, health, accident, disability, workmen's
compensation or other insurance, severance, separation or other employee benefit plan, practice, policy or arrangement of any kind, whether written or oral, or whether for the benefit of a single
individual or more than one individual including, but not limited to, any "employee benefit plan" within the meaning of Section 3(3) of ERISA. 

        "Preferred Stock" means any class of the capital stock of the Company (whether or not convertible into any other class of such capital
stock) which has any right, whether absolute or contingent, to receive dividends or other distributions of the assets of the Company (including, without limitation, amounts payable in the event of the
voluntary or involuntary liquidation, dissolution or winding-up of such corporation), which right is superior to the rights of another class of the capital stock of the Company. "Preferred
Stock" includes, without limitation, the Series B Preferred Stock, the Series D Preferred Stock, the Series E-B Preferred Stock, the Series E-D
Preferred Stock, the Series E-1 Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock. 

        "Purchaser" and "Purchasers" each has the meaning set forth in the Preamble of this
Agreement. 

        "Securities Act" means the Securities Act of 1933, as amended, and the rules, regulations and interpretations thereunder. 

        "Series B Exchange Agreement" means the Agreement of Tender, Exchange and Transmittal of Series B Stock in the form attached
hereto as Exhibit A. 

        "Series B Preferred Stock" means the Company's Series B Convertible Preferred Stock, par value $.001 per share. 

        "Series D Exchange Agreement" means the Agreement of Tender, Exchange and Transmittal of Series D Stock in the form attached
hereto as Exhibit B. 

        "Series D Preferred Stock" means the Company's Series D Convertible Preferred Stock, par value $.001 per share. 

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        "Series E Exchange Agreement" means the Agreement of Tender, Exchange and Transmittal of Series E-1 Stock in the
form attached hereto as Exhibit C. 

        "Series E-1 Preferred Stock" has the meaning set forth in the recitals hereto. 

        "Series E-B Preferred Stock" means the Company's Series E-B Convertible Preferred Stock, par value
$.001 per share. 

        "Series E-D Preferred Stock" means the Company's Series E-D Convertible Preferred Stock, par value
$.001 per share. 

        "Series F Preferred Stock" has the meaning set forth in the recitals hereto. 

        "Series G Preferred Stock" has the meaning set forth in the recitals hereto. 

        "Shares" has the meaning set forth in Section 1.1 hereof. In the event that any Shares are sold in a public offering pursuant to a
registration statement under Section 5 of the Securities Act, then the transferees of such Shares shall not be entitled to any benefits under this Agreement with respect to such Shares and such
Shares shall no longer be considered to be "Shares" for purposes of any consent or waiver provision of this Agreement. 

        "Stock Incentive Plans" means any stock plan or stock option plan authorized by the Company's Board of Directors prior to the date hereof
and/or as permitted by the terms and conditions of this Agreement. 

        "Subscription Agreement" means any Subscription Agreement and Letter of Investment Intent entered into by a Purchaser. 

        "Subsidiary", with respect to any Person, means any corporation, association or other entity of which more than 50% of the total voting
power of shares of stock or other equity interests (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is, at the time as of which
any determination is being made, owned or controlled, directly or indirectly, by such Person or one or more of its Subsidiaries, or both. The term
"Subsidiary" when used herein without reference to any particular Person, means a Subsidiary of the Company. 

        "Tax Returns" means any returns, reports or statements (including any information returns) required to be filed for purposes of a
particular Tax. 

        "Taxes" means all federal, state, local or foreign net or gross income, gross receipts, net proceeds, sales, use,  ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, alternative or add-on minimum,
environmental or other taxes, assessments, duties, fees, levies or other governmental charges of any nature whatsoever, whether disputed or not, together with any interest, penalties, additions to tax
or additional amounts with respect thereto. 

        "Taxing Authority" means any governmental agency, board, bureau, body, department or authority of any United States federal, state or
local jurisdiction, or any foreign jurisdiction, having or purporting to exercise jurisdiction with respect to any Tax. 

        "Transaction Documents" means this Agreement, the Series B Exchange Agreement, the Series D Exchange Agreement and the
Series E Exchange Agreement. 

        "Transferees" shall mean any transferee of the Shares from a Purchaser. Transferees shall not include a transferee of the Shares sold in a
public offering pursuant to a registration statement under the Securities Act. 

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        3.2   For
all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: 

        (a)   the
words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision; 

        (b)   all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles consistently applied
(except as otherwise provided herein); 

        (c)   any
uses of the masculine, feminine or neuter gender shall also be deemed to include any other gender, as appropriate; 

        (d)   all
references herein to actions by the Company, such as "create", "sell", "transfer", "dispose of", etc., mean such action whether voluntary or involuntary, by
operation of law or otherwise; and 

        (e)   the
exhibits and schedules to this Agreement shall be deemed a part of this Agreement. 

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY  

        The Company represents and warrants to the Purchasers as follows as of the date hereof, except as set forth in the schedules attached hereto: 

        4.1    Corporate Existence, Power and Authority.    

        (a)   The
Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. The Company is duly qualified,
licensed and authorized to do business and is in good standing in each jurisdiction in which it owns or leases any property or in which the conduct of its business requires it to so qualify or be so
licensed, except for such jurisdictions where the failure to so qualify or be so licensed would not have a material adverse effect on the Company's assets, properties, liabilities, business, affairs,
results of operations, condition (financial or otherwise) or prospects. 

        (b)   No
proceeding has been commenced looking toward the dissolution or merger of the Company or the amendment of its articles of incorporation. 

        (c)   The
Company has all requisite power, authority (corporate and other) and legal right to own or to hold under lease and to operate the properties it owns or holds and to
conduct its business as now being conducted. 

        (d)   The
Company has all requisite power, authority (corporate and other) and legal right to execute, deliver, enter into, and consummate the transactions contemplated by and
perform its obligations under each of the Transaction Documents, including, without limitation, the issuance by the Company of the Shares as contemplated herein. The Company has duly executed and
delivered each of the Transaction Documents. Each of the Transaction Documents constitutes the legal, valid and binding obligations of
the Company enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to the rights of creditors generally or
under general principles of equity. 

        4.2    Capital Stock.    

        (a)   Schedule 4.2(a) hereto correctly and completely lists (i) the authorized Capital Stock of the Company
(Common Stock and Preferred Stock), (ii) the number of designated shares of Preferred Stock in each series or class after giving effect to the Certificates of Designation and
(iii) before giving effect to the issuance of Shares on the Closing Date, as contemplated by this Agreement, the number of shares outstanding in each series or class. All of such outstanding 

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shares
are, and on the Closing Date the Shares will be, duly authorized, validly issued and outstanding, fully paid and non-assessable. Except as provided in the Certificates of
Designation or in Schedule 4.2(a), none of the shares of the Company's Capital Stock which will be outstanding at the Closing (x) were or
will be subject to preemptive rights when issued or (y) provide the holders thereof with any preemptive rights with respect to any issuances of Capital Stock. 

        (b)   Except
as referred to in Schedule 4.2(b), there are no outstanding options, warrants, subscriptions, rights,
convertible securities or other agreements or plans under which the Company may become obligated to issue, sell or transfer shares of its Capital Stock or other securities. 

        (c)   Except
as set forth in Schedule 4.2(c), there are no voting agreements, voting trusts, proxies or other agreements
or understandings with respect to the voting of any Capital Stock of the Company of which the Company is a party, except as provided herein and in the Certificates of Designation. 

        (d)   Except
as set forth in Schedule 4.2(d) and except for anti-dilution protections in the Certificates of
Designation and other agreements the Company is a party to providing for adjustments for stock splits, dividends, combinations, reclassifications and the like, there are no anti-dilution
protections or other adjustment provisions in existence with respect to any Capital Stock of the Company. 

        (e)   Each
Certificate of Designation has been duly adopted by the Company and is fully effective as an amendment to the Company's articles of incorporation. The Shares will
have all of the rights, priorities and terms set forth in the applicable Certificate of Designation. 

        (f)    To
the knowledge of the Company, Schedule 4.2(f) hereto correctly and completely lists the names of those persons
who beneficially own, directly or indirectly, more than 5% (calculated in accordance with Rule 13d-3 under the Exchange Act) of the Company's outstanding Capital Stock. 

        4.3    Subsidiaries.    The Company has two wholly-owned Subsidiaries, Displaytech International, Inc., a
Colorado corporation, and Displaytech Asia-Pacific K.K., a Japanese corporation. 

        4.4    Business.    The Company is engaged in the business of designing, developing, manufacturing and marketing
Ferroelectric Liquid Crystal microdisplays used to provide superior image quality in electronic devices such as digital still camera and camcorder viewfinders. 

        4.5    No Defaults or Conflicts.    

        (a)   Except
as provided in Schedule 4.5(a), the Company is not in violation or default in any material respect (and is
not in default in any respect regarding any Indebtedness) under any indenture, agreement or instrument to which it is a party or by which it or its properties may be bound. The Company is not in
default in any material respect under any material order, writ, injunction, judgment or decree of any court or other governmental authority or arbitrator(s). 

        (b)   The
execution, delivery and performance by the Company of each of the Transaction Documents and any of the transactions contemplated thereby (including, without
limitation, the issuance of the Shares as contemplated herein) do not and will not (i) violate or conflict with, with or without the giving of notice or the passage of time or both, any
provision of (A) the articles of incorporation or bylaws of the Company, (B) any law, rule, regulation or order of any federal, state, county, municipal or other Governmental Authority,
(C) any judgment, writ, injunction, decree, award or other action of any court or Governmental Authority or arbitrator(s), or (D) any agreement, indenture or other instrument applicable
to the Company or any of its respective properties, (ii) result in the creation of any Lien upon any of the Company's properties, assets or revenues, except as provided in the Certificates of
Designation, (iii) require the consent, waiver, approval, order or authorization of, or declaration, registration, qualification or filing with, any 

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Person
(whether or not a Governmental Authority and including, without limitation, any shareholder approval) (other than any necessary approvals which have been obtained prior to the Closing Date), or
(iv) cause antidilution clauses of any outstanding securities to become operative or give rise to any preemptive rights (except as contemplated by Section 4.2(d)). No provision of any
item referred to in the preceding clause (i) materially adversely affects the assets, properties, liabilities, business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company on a consolidated basis or the ability of the Company to perform its obligations under this Agreement, the Certificates of Designation, or any of the transactions contemplated
hereby or thereby. 

        4.6    Disclosure Materials; Other Information.    

        (a)   The
Company has previously furnished to the Purchasers or their counsel the materials described on Schedule 4.6(a)
hereto (the "Disclosure Material"). The audited and unaudited financial statements referred to or contained in the materials referred to on  Schedule 4.6(a) fairly present the consolidated financial condition of the Company as of the respective dates thereof in all material respects
and the consolidated results of the operations of the Company for such periods and have been prepared in accordance with generally accepted accounting principles consistently applied, except that any
such unaudited statements may omit notes and may be subject to normal recurring adjustments and year-end adjustments. 

        (b)   Since
December 31, 2003, (i) the business of the Company has been conducted in the ordinary course and (ii) there has been no material adverse
change in the assets, properties, liabilities, business, affairs, results of operations, condition (financial or otherwise) or prospects of the Company on a consolidated basis. As of the Closing Date
and as of the date hereof, there are no material liabilities of the Company which would be required to be provided for in a consolidated balance sheet of the Company as of any such date prepared in
accordance with generally accepted accounting principles consistently applied, other than liabilities provided for in the financial statements referred to in Section 4.6(a). 

        (c)   There
are no material liabilities, contingent or otherwise, of the Company that have not been disclosed in the financial statements referred to in Section 4.6(a)
or otherwise disclosed in the schedules hereto. 

        4.7    Litigation.    Except as set forth on Schedule 4.7,
there is no action, suit, proceeding, investigation or claim pending or, to the knowledge of the Company, threatened in law, equity or otherwise before any court, administrative agency or arbitrator
which (i) questions the validity of this Agreement, the Certificates of Designation or the Shares or any action taken or to be taken pursuant hereto or thereto, (ii) might adversely
affect the right, title or interest of any Purchaser to the Shares or (iii) might result in a material adverse change in the assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects of the Company on a consolidated basis. 

        4.8    Taxes.    The Company has duly and timely filed all material Tax Returns required to be filed by it, and each
such Tax Return correctly and completely reflects, in all material respects, the Tax liability and all other information required to be reported thereon. The Company has paid or caused to be paid all
material Taxes (whether or not reflected on such Tax Returns) that are due and payable. The provision for Taxes due by the Company in the most recent financial statement included in the Disclosure
Material is sufficient for all material unpaid Taxes, being current Taxes not yet due and payable, of the Company, as of the end of the period covered by such financial statement, and as of the
Closing Date, such provision, as adjusted for the passage of time through the Closing Date, will be sufficient for the then-accrued and unpaid Taxes not yet due and payable of the Company.
No Tax Returns of the Company have ever been audited by any Taxing Authority, there is no dispute concerning any Tax liability of the Company either threatened, claimed or raised by any Taxing 

9

   
Authority, and the Company does not expect any Taxing Authority to assess additional Taxes against or in respect of it for any past period. The Company has withheld and paid, or, if not yet due for
payment, set aside in accounts for such purposes, all Taxes required to have been withheld in connection with amounts paid or owing to any employee, creditor, independent contractor or other third
party. Other than stamp taxes, the Company has no liability for Taxes of any Person other than the Company (i) as a transferee or successor, (ii) by contract, or (iii) otherwise. 

        4.9    ERISA.    

        (a)   All
Benefit Plans are listed in Schedule 4.9(a), and copies of all documentation relating to such Benefit Plans
have been delivered to or made available for review by the Purchasers (including copies of written Benefit Plans, written descriptions of oral Benefit Plans, summary plan descriptions, trust
agreements, the three most recent annual returns, employee communications, and IRS determination letters). 

        (b)   Each
Benefit Plan has at all times been maintained and administered in all material respects in accordance with its terms and with the requirements of all applicable
law, including ERISA and the Code, and each Benefit Plan intended to qualify under Section 401(a) of the Code has at all times since its adoption been so qualified, and each trust which forms a
part of any such plan has at all times since its adoption been tax-exempt under Section 501(a) of the Code. 

        (c)   No
Benefit Plan has incurred any "accumulated funding deficiency" within the meaning of Section 302 of ERISA or Section 412 of the Code, and the "amount of
unfunded benefit liabilities" within the meaning of Section 4001(a)(18) of ERISA does not exceed zero with respect to any Benefit Plan subject to Title IV of ERISA. 

        (d)   No
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred with respect to any Benefit Plan or any Plan maintained by an ERISA Affiliate
since the effective date of said Section 4043 for which notice is not waived under the regulations issued pursuant to said Section 4043. 

        (e)   No
Benefit Plan is a multiemployer plan within the meaning of Section 3(37) of ERISA. 

        (f)    No
direct, contingent or secondary liability has been incurred or is expected to be incurred by the Company under Title IV of ERISA to any party with respect to any
Benefit Plan, or with respect to any other Plan presently or heretofore maintained or contributed to by any ERISA Affiliate. 

        (g)   Neither
the Company nor any ERISA Affiliate has incurred any liability for any tax imposed under Section 4971 through 4980B of the Code or civil liability under
Section 502(i) or (l) of ERISA. 

        (h)   No
benefit under any Benefit Plan, including, without limitation, any severance or parachute payment plan or agreement, will be established or become accelerated, vested
or payable by reason of any transaction contemplated under this Agreement. 

        (i)    No
Benefit Plan provides health or death benefit coverage beyond the termination of an employee's employment, except as required by Part 6 of Subtitle B of Title
I of ERISA or Section 4980B of the Code or any State laws requiring continuation of benefits coverage following termination of employment. 

        (j)    No
suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of plan activities and any other claim which could not reasonably be
expected to result in a material liability or expense to the Company) has been brought or, to the knowledge of the Company, threatened against or with respect to any Benefit Plan and there are no
facts or circumstances known to the Company that could reasonably be expected to give rise to any such suit, action or other litigation. 

10

 

        (k)   All
contributions to Benefit Plans that were required to be made under such Benefit Plans have been made, and all benefits accrued under any unfunded Benefit Plan have
been paid, accrued or otherwise adequately reserved in accordance with generally accepted accounting principles, all of which accruals under unfunded Benefit Plans are as disclosed in  Schedule 4.9(k), and the Company has performed all material obligations required to be performed under all Benefit Plans. 

        (l)    The
execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby
(including, without limitation, the offer, issue and sale by the Company, and the purchase by any Purchaser of the Shares) will not involve any "prohibited transaction" within the meaning of ERISA or
the Code with respect to any Benefit Plan. 

        4.10    Legal Compliance.    

        (a)   The
Company has complied with all applicable laws, rules, regulations, orders, licenses, judgments, writs, injunctions, decrees or demands, except to the extent that
failure to so comply would not materially adversely affect the assets, properties, liabilities, business affairs, results of operations or financial condition of the Company on a consolidated basis. 

        (b)   There
are no adverse orders, judgments, writs, injunctions, decrees, or demands of any court or administrative body, domestic or foreign, or of any governmental agency
or instrumentality, domestic or foreign, outstanding against the Company. 

        4.11    Offering of Securities.    Subject in part to the truth and accuracy of each Purchaser's representations set
forth in Section 5 of this Agreement and each of their applicable Subscription Agreements, the offer, sale and issuance of the Shares, as contemplated by this Agreement are, and will be as of
the Closing, exempt from the registration requirements of the Securities Act and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the
loss of such exemption. 

        4.12    Intellectual Property and Other Rights.    

        (a)   (i)    Except
as set forth on Schedule 4.12(a), the Company owns, or has the right to use, all United
States and foreign patents, trademarks, service marks, trade names, computer software and programs, technology, know-how and processes, and registered copyrights, and any applications for
any of the foregoing of any kind which is used in its business (collectively, the "Intellectual Property").  Schedule 4.12(a) hereto contains a true,
correct and complete list of all registered trademarks and service marks, all reserved trade names, all
registered copyrights and all filed patent applications and issued patents that are material to the Company's business or are otherwise necessary for the conduct of its business as heretofore
conducted and as currently proposed to be conducted and all licenses, permits, consents, approvals or agreements that in any way affect the rights of the Company to any of its Intellectual Property or
any trade secret material (the "Intellectual Property Licenses"). 

         (ii)  Subject
to the limitations set forth in the Intellectual Property Licenses, except as otherwise set forth in any exceptions listed under  Schedule 4.12(a), the Company has all right, title and interest in
all of the Intellectual Property, free and clear of all Liens. The Company
owns or has the exclusive or non-exclusive right to use all Intellectual Property or trade secrets necessary to conduct its business as now being conducted. The Company owns or possesses
sufficient licenses, permits, consents, approvals or other rights to use all Intellectual Property covered by its patents or patent applications necessary to conduct its business as now being
conducted and as currently proposed to be conducted. 

        (iii)  The
Company has at all times maintained reasonable procedures to protect and has enforced all of its Intellectual Property and trade secrets. 

11

 

        (iv)  The
consummation of the transactions contemplated under this Agreement will not alter, adversely affect or impair the rights of the Company to any of the Intellectual
Property, any trade secret material to it, or under any of the Intellectual Property Licenses. 

        (b)   (i)    No
claim with respect to the Intellectual Property, any trade secret material to the Company, or any Intellectual Property License which would adversely
affect the ability of the Company to conduct its business as presently conducted is currently pending or, to the knowledge of the Company, has been asserted, or overtly threatened by any Person, nor
does the Company know of any grounds for any claim against the Company, (A) to the effect that any material operation or activity of the Company presently occurring, including,  inter alia, the
manufacture, use or sale of any product, device, instrument, or other material made or used according to the patents or patent
applications included in the Intellectual Property or Intellectual Property Licenses, infringes or misappropriates any valid United States or foreign copyright, patent, trademark, service mark or
trade secret; (B) to the effect that any other Person infringes on the Intellectual Property or misappropriates any trade secret or know-how or other proprietary rights material to
the Company; (C) challenging the ownership, validity or effectiveness of any of the Intellectual Property or trade secret material of the Company; or (D) challenging the license of the
Company or other legally enforceable right under, any Intellectual Property or the Intellectual Property Licenses. 

         (ii)  The
Company is not aware of any presently existing valid United States or foreign patents or any patent applications which if issued as patents would be infringed by
any activity contemplated by the Company. 

        (c)   The
United States and foreign patents and patent applications owned by the Company listed in Schedule 4.12(a)
hereto (the "Patents and Applications") as part of the Intellectual Property have been filed on behalf of the Company as named therein, are being
diligently pursued by the Company and, to the Company's knowledge, have been properly prepared. To the Company's knowledge, there are no defects in any of the Patents and Applications that would cause
any of them to be held invalid or unenforceable. 

        4.13    Key Employees.    The Company has good relationships with its employees and has not had and does not expect
any substantial labor problems. The Company has no knowledge as to any intentions of any key employee or any group of employees to leave the employ of the Company. The employees of the Company are not
and have never been represented by any labor union, and no collective bargaining agreement is binding and in force against the Company or currently being negotiated by the Company. 

        4.14    Properties.    The Company does not and has never owned any real property. Other than the Permitted Liens, the
Company has good and marketable title to each of its other properties other than leased properties, all of which are disclosed on Schedule 4.14
hereto. Certain real property used by the Company in the conduct of its business is held under lease (as identified on Schedule 4.14 hereto), and
the Company is not aware of any pending or threatened claim or action by any lessor of any such property to terminate any such lease. All such leases are valid and in full force and effect, and none
of such leases is in default. None of the properties owned or leased by the Company is subject to any Liens which could materially and adversely affect the assets, properties, liabilities, business,
affairs, results of operations, condition (financial or otherwise) or prospects of the Company on a consolidated basis. 

        4.15    Suppliers and Customers.    

        (a)   The
Company has adequate sources of supply for its business as currently conducted and as proposed to be conducted. The Company has good relationships with all of its
material sources of supply of goods and services and does not anticipate any material problem with any such material sources of supply. 

12

 

        (b)   Except
as set forth on Schedule 4.15(b), the Company has no knowledge that the customer base of the Company might
materially decrease. 

        4.16    Environmental Compliance.    

        (a)   Except
as set forth on Schedule 4.16(a), there is no Hazardous Material on, about, under or in, any property, real
or personal, in which the Company has or has formerly had any interest in an amount or concentration which could constitute a violation that would result in a liability in excess of $75,000 or
otherwise result in a liability in excess of $75,000 to the Company under any applicable Environmental Law. 

        (b)   There
is no (and has not been any) off-site use, handling, storage or disposal or, except as set forth on  Schedule 4.16(b), on-site use, handling, storage or disposal of Hazardous Material at or from any
locations currently or formerly
owned, leased, operated or occupied by the Company as a result of which use, handling, storage or disposal the Company could incur a material liability or obligation under any applicable Environmental
Law. 

        (c)   Except
as set forth on Schedule 4.16(a), the Company has not received any verbal or written notice, citation,
subpoena, summons, complaint or other correspondence or communication from any person with respect to the presence of any non-indigenous Hazardous Material upon, into, beneath, or
emanating from or affecting any of the real property (including improvements) currently or formerly owned or occupied by the Company that could result in a liability to the Company in excess of
$75,000 under any applicable Environmental Law. 

        (d)   Except
as set forth on Schedule 4.16(a), there has been no intentional or unintentional, gradual or sudden,
release, disposal or discharge by the Company or, to the Company's knowledge, by others, upon, into or beneath the real property (including improvements) currently or formerly owned or occupied by the
Company that has caused or is causing soil or groundwater contamination which, under applicable Environmental Laws could require investigation or remediation or could otherwise create a material
liability or obligation on the part of the Company under any applicable Environmental Law. 

        (e)   The
Company is in material compliance with all applicable Environmental Laws, has received all required Environmental Permits and is in material compliance with the
terms and conditions of all Environmental Permits. 

        (f)    To
the best knowledge of the Company, after reasonable inquiry, there are no Liens arising under or pursuant to any Environmental Law
("Environmental Liens") relating to any real property (including improvements thereon) currently owned by the Company. 

        (g)   There
are no (i) underground storage tanks, (ii) polychlorinated biphenyl containing equipment or (iii) asbestos-containing materials at any site
currently owned, operated or leased by the Company, except in compliance with all applicable Environmental Laws. 

        4.17    No Burdensome Agreements.    To the knowledge of the Company, the Company is not a party to any contract or
agreement with any Affiliate of the Company, the terms of which are less favorable to the Company than those which might have been obtained, at the time such contract or agreement was entered into,
from a person who was not such an Affiliate. 

        4.18    Indebtedness.    Schedule 4.18 hereto sets forth
(i) the amount of all Indebtedness of the Company outstanding as of January 31, 2003 (and there is no additional material amount of Indebtedness of the Company outstanding other than as
set forth on such Schedule 4.18), (ii) any Lien with respect to such Indebtedness and (iii) a description of each instrument or
agreement governing such Indebtedness. The Company has made available to the Purchasers a complete and correct copy of each such instrument or agreement (including all amendments, supplements or
modifications thereto). Except as otherwise set forth in Schedule 4.5(a), no material default exists with respect to or under any 

13

 

such
Indebtedness or any instrument or agreement relating thereto and no event or circumstance exists with respect thereto that (with notice or the lapse of time or both) could give rise to such a
default. 

        4.19    Use of Proceeds.    The Company will use the net proceeds realized from the sale of the Shares to fund future
development opportunities, for working capital purposes and for such other purposes as necessary or advisable in the sole judgment of the Company's Board of Directors. 

        4.20    Brokers.    No broker, finder or investment banker or other party is entitled to any brokerage, finder's or
other similar fee or commission in connection with the Transaction Documents. Any such fees and commissions shall be the sole responsibility of the Company and in no circumstance shall the Purchasers
have any liability therefor. 

        4.21    Insurance.    

        (a)   Schedule 4.21(a) contains a list and description of all insurance policies maintained by or on behalf of the
Company on its assets, operations, properties and personnel. Such insurance is of the kind, covering such risks and in such amounts and with such deductibles and exclusions, as are consistent with
those maintained by businesses similarly situated to the Company and are, in the opinion of the Company, reasonable for the business, assets and properties of the Company. All such policies are in
full force and effect. 

        (b)   The
Company has not received any notice of cancellation or termination with respect to any material insurance policy thereof and there are no pending disputes or
controversies between the Company, on the one hand, and the carrier of any such insurance policy, on the other. 

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS  

        The
Purchasers represent and warrant, severally and not jointly, to the Company as follows: 

        5.1    Corporate Power and Authority.    Each Purchaser has all requisite power, authority and legal right to execute,
deliver, enter into, and consummate the transactions contemplated by and perform its obligations under each of the Transaction Documents and the applicable Subscription Agreement. The execution,
delivery and performance of each of the Transaction Documents and its applicable Subscription Agreement by each Purchaser has been duly authorized by all required corporate and other actions. Each
Purchaser has duly executed and delivered each of the Transaction Documents and its Subscription Agreement, and each of the Transaction Documents and the applicable Subscription Agreement constitutes
the legal, valid and binding obligations of each Purchaser enforceable against each Purchaser in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to the rights of creditors generally or under general principles of equity. 

        5.2    Investment Intent.    Each Purchaser is capable of evaluating the risk of its investment in the Shares being
purchased by it hereunder and is able to bear the economic risk of such investment. Each Purchaser is purchasing the Shares to be purchased by it for its own account for investment and not with a
present view to any distribution thereof in violation of applicable securities laws; provided, however,
that each Purchaser may transfer record and/or beneficial ownership of the Shares to one or more Affiliates, officers or employees of Affiliates or investment funds managed by Affiliates of such
Purchaser, in all cases in compliance with federal securities laws. It is understood that the disposition of each Purchaser's property shall at all times be within such Purchaser's control. If the
Purchasers should in the future decide to dispose of any of their Shares, it is understood that each Purchaser may do so only in compliance with the Securities Act, applicable state and federal
securities laws, this Agreement and the other agreements and documents contemplated herein, or pursuant to an applicable exemption therefrom. Each Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act. 

14

 

        5.3    Brokers.    No broker, finder, or investment banker or other party is entitled to any brokerage, finder's or
other similar fee or commission in connection with the Transaction Documents, based upon arrangements made by or on behalf of each Purchaser or any of its Affiliates. 

SECTION 6. PURCHASER COVENANTS  

        6.1    Restrictions on Transfer.    Each Purchaser agrees that it shall not sell or otherwise dispose of any Shares
unless such Shares have been registered under the Securities Act and, to the extent required, under any applicable state securities laws, or pursuant to an applicable exemption from such registration
requirements. The Company may endorse on all certificates representing Shares a legend stating or referring to such transfer restrictions and those as set forth in Section 6.2;  provided, that no
such legend shall be endorsed on any Share certificates that, when issued, are no longer subject to the restrictions of this
Section 6. Each Purchaser shall provide the Company with an opinion of its counsel stating that the transfer of such Shares is in compliance with all federal securities laws or an applicable
exemption therefrom. The Company shall not unreasonably delay the transfer of such Shares. 

        6.2    "Market Stand-Off" Agreement.    Each Purchaser hereby agrees that it will not, without the prior
written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company's initial public offering ("IPO") and ending on the date specified
by the Company and the managing underwriter (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock
(whether such shares or any such securities are then owned by the Purchaser or are thereafter acquired) held immediately prior to the effectiveness of the registration statement for such offering, or
(ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise. The foregoing provisions of this Section 6.2 shall
not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Purchasers if all officers, directors and greater than 5% shareholders
of the Company enter into similar agreements. The underwriters in connection with the Company's IPO are intended third-party beneficiaries of this Section 6.2 and shall have the right, power
and authority to enforce the provisions hereof as though they were a party hereto. Each Purchaser further agrees to execute such agreements as may be reasonably requested by the underwriters in the
Company's IPO that are consistent with this Section 6.2 or that are necessary to give further effect thereto. 

        In
order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the shares of Capital Stock held by each Purchaser (and the
shares or securities of every other person subject to the foregoing restriction) until the end of such period. 

SECTION 7. CONDITIONS TO PURCHASER'S OBLIGATIONS  

        The
obligations of each Purchaser to the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise
waived: 

        7.1    Representations and Warranties.    The representations and warranties of the Company contained in
Section 2 shall be true and correct in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of
the Closing. 

15

 

        7.2    Performance.    The Company shall have performed and complied with all covenants, agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 

        7.3    Transaction Documents.    The Company and each Purchaser (other than the Purchaser relying upon this condition
to excuse such Purchaser's performance hereunder) shall have executed and delivered each of the Transaction Documents. 

        7.4    Compliance Certificate.    An officer of the Company shall deliver to the Purchasers at the Closing a
certificate certifying that the conditions specified in Sections 7.1 and 7.2 have been fulfilled. 

SECTION 8. CONDITIONS TO COMPANY'S OBLIGATIONS  

        The
obligations of the Company to each Purchaser under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise
waived: 

        8.1    Representations and Warranties.    The representations and warranties of each Purchaser contained in
Section 5 and under each applicable Subscription Agreement shall be true and correct in all material respects on and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing. 

        8.2    Performance.    All covenants, agreements and conditions contained in this Agreement to be performed by the
Purchasers on or prior to the Closing shall have been performed or complied with in all material respects. 

        8.3    Transaction Documents.    Each Purchaser shall have executed and delivered each of the Transaction Documents to
the Company. 

        8.4    Qualifications.    All authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing. 

SECTION 9. MISCELLANEOUS  

        9.1    Survival.    Unless otherwise set forth in this Agreement, the warranties, representations and covenants of the
Company and the Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement. 

        9.2    Transfer; Successors and Assigns.    The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 

        9.3    Governing Law.    This Agreement and all acts and transactions pursuant hereto and the rights and obligations
of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Colorado, without giving effect to principles of conflicts of law. 

        9.4    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument. 

        9.5    Notices.    All notices, requests, demands, consents and other communications hereunder shall be in writing and
shall be delivered by hand or shall be sent by facsimile (confirmed by registered, certified or overnight mail or courier, postage and delivery charges prepaid), (i) if to the Company, to
Displaytech, Inc., 2602 Clover Basin Drive, Longmont, CO 80503-7603, Attention: Richard D. Barton, 

16

 

Facsimile:
(303) 772-2193, or (ii) if to the Purchasers, at the address indicated on Schedule 1 hereto, or at such
other address as a party may from time to time designate as its address in writing to the other party to this Agreement. Whenever any notice is required to be given hereunder, such notice shall be
deemed given and such requirement satisfied only when such notice is delivered or, if sent by telex or telecopier, when received. 

        9.6    Fees and Expenses.    Each of the parties shall pay all of its own fees and expenses incurred in connection
with the negotiation, execution, delivery and performance of this Agreement. 

        9.7    Attorney's Fees.    If any action at law or in equity (including arbitration) is necessary to enforce or
interpret the terms of any of the Transaction Documents, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled. 

        9.8    Amendments and Waivers.    Any term of this Agreement may be amended or waived only with the written consent of
the Company and the holders of at least a majority of the Common Stock issued or issuable upon conversion of the shares of Series F Preferred Stock and the shares of Series G Preferred
Stock. Any amendment or waiver effected in accordance with this Section 9.8 shall be binding upon the Purchasers and each transferee of the Shares (or the Common Stock issuable upon conversion
thereof), each future holder of all such securities, and the Company. 

        9.9    Severability.    If one or more provisions of this Agreement are held to be unenforceable under applicable law,
the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be
enforceable in accordance with its terms. 

        9.10    Delays or Omissions.    No delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting
party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this Agreement or by law or in equity or otherwise afforded to any party, shall be cumulative and not alternative. 

        9.11    Entire Agreement.    This Agreement, together with the other Transaction Documents, constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto
are expressly canceled. 

        9.12    Exculpation Among Purchasers.    Each Purchaser acknowledges that it is not relying upon any person, firm or
corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore or hereafter taken or omitted to be taken by
any of them in connection with the purchase of the Shares. 

        [The remainder of this page is intentionally left blank.]

17

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. 

	 	 	COMPANY:
	

 	
 	
DISPLAYTECH, INC.
	

 	
 	

By:	
 	

/s/  RICHARD D. BARTON      

	 	 	 	 	Name:	 	Richard D. Barton
	 	 	 	 	Title:	 	Chief Executive Officer
	

 	
 	
PURCHASERS:
	

 	
 	
ANALYSIS GROUP FUND I, L.P.
	

 	
 	

By:	
 	

/s/  NORMAN W. GORIN      

	 	 	 	 	Name:	 	Norman W. Gorin
	 	 	 	 	Title:	 	Chief Financial Officer
	

 	
 	

/s/  MARK A. HANDSCHY      
MARK A. HANDSCHY, individually
	

 	
 	

/s/  MICHAEL J. O'CALLAGHAN      
MICHAEL J. O'CALLAGHAN, individually

SCHEDULE 1  

	Name and Address of Purchase
 
	 	Shares of

Series E-1

Preferred

stock at $100

per share
	 	Shares of

Series G

Preferred

Stock at $100

per Share
	 	Aggregate

Purchase

Price

	Analysis Group Fund I, L.P.

111 Huntington Ave., 10th FL

Boston, MA 02199	 	176	 	44	 	$	22,000
	Mark A. Handschy

3230 11th Street

Boulder, CO 80304	 	52	 	13	 	$	6,500
	Michael J. O'Callaghan

964 W. Maple Court

Louisville, CO 80027	 	52	 	13	 	$	6,500

SCHEDULES  

        The following is a list of schedules and exceptions to certain of the representations and warranties made by Displaytech, Inc. (the "Company") in that
certain Stock Purchase Agreement (the "Agreement"), dated March 24, 2004, among the Company (collectively, the "Purchasers"). Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Agreement. All descriptions of agreements or other matters appearing herein are summary in nature and are qualified by reference to the complete documents. 

        Nothing
in this Schedule shall constitute an admission of any liability or obligation of the Company to any third party, an admission against the Company's interests or an acknowledgment
that any matter disclosed in this Schedule is required to be disclosed (particularly where such disclosure is required in accordance with a materiality standard or as not in the ordinary course of
business). 

        The
information contained in this Schedule is confidential and proprietary information of the Company. 

Schedule 4.2(a) - (i)  

Authorized capital stock of the Company:  

	Common Stock	 	25,000,000
	Preferred Stock	 	5,000,000

Schedule 4.2(a) - (ii)  

Number of designated shares in each Series or Class:  

	Series B Convertible Preferred Stock	 	750,000
	Series D Convertible Preferred Stock	 	510,000
	Series E-B Convertible Preferred Stock	 	500,000
	Series E-D Convertible Preferred Stock	 	510,000
	Series E-l Senior Preferred Stock	 	600,000
	Series E-2 Senior Preferred Stock	 	400,000
	Series F Convertible Preferred Stock	 	200,000
	Series G Convertible Preferred Stock	 	200,000

Schedule 4.2(a) - (iii)  

Number of shares outstanding in each Series or Class immediately prior to the issuance of shares on Closing Date:  

	Common Stock	 	17
	Series B Convertible Preferred Stock	 	260,051
	Series D Convertible Preferred Stock	 	144,856
	Series E-1 Senior Preferred Stock	 	0
	Series E-2 Senior Preferred Stock	 	0
	Series E-B Convertible Preferred Stock	 	225,638
	Series E-D Convertible Preferred Stock	 	185,785
	Series F Convertible Preferred Stock	 	78,548
	Series G Convertible Preferred Stock	 	15,160

Schedule 4.2(a) - (x)  

Shares of capital stock outstanding at Closing which were subject to preemptive rights when issued:  

        None. 

Schedule 4.2(a) - (y)  

Shares of capital stock outstanding at Closing which provide the holders thereof preemptive rights:  

        None. 

Schedule 4.2(b)  

        The Company has reserved 740,000 Shares of Common Stock for issuance under its 1988 Incentive Stock Option Plan. 

        The
Company has reserved 18,667,321 Shares of Common Stock for issuance under its 1998 Stock Incentive Plan. 

        Warrants
to purchase 289,242 Shares of Common Stock. 

        All
subscriptions to purchase stock pursuant to the Agreement. 

        Consultants
to the Company have been granted options to purchase a total of 26,374 common shares that have not been issued under an existing Plan and which have not been reserved by the
Company. 

Schedule 4.2(c)  

Other Agreements regarding voting of stock:  

        On January 1, 1992 certain employees signed an Employee Stock Purchase and Restriction Agreement that obligated the employees to vote any shares purchased
pursuant to stock options granted under the Company's 1988 Incentive Stock Option Plan in favor of any merger or sale of the Company approved by the Company's Board of Directors. These agreements were
later amended on March 31, 1995 to require the employees to vote their option shares in favor of the election of Richard Hokin and J. Kermit Birchfield, Jr. to the Company's Board of Directors. 

        Series G
Shareholders' Rights Agreement, dated March 3, 2004. 

Schedule 4.2(d)  

Anti-dilution protections in effect under various Agreements:  

        None other than adjustments for stock splits, dividends, recapitalizations and similar events under the Company's 1998 Stock Incentive Plan (and related optoin
agreements), 1988 Incentive Stock Plan (and related optoin agreements), all outstanding warrants issued by the Company, the HP Note and all of the Certificates of Designations for the Company's
Preferred Stock. 

Schedule 4.2(f)  

Owners of 5% or more of outstanding Capital Stock:  

	InterWest Capital, Inc.*

Century America LLC*

JKB-Displaytech LLC*

Guthrie Birchfield*

J. Kermit Birchfield, Jr.*	 	

Combined
	Fleming US Discovery Fund III, L.P.**

Fleming US Discovery Offshore Fund III, LP**	 	

Combined

	*
	Combined

	**
	Combined

Schedule 4.5(a) - (b)  

 Defaults or Conflicts:  

        [*****] 

Schedule 4.6(a)  

Disclosure Materials previously provided:  

	1.
	Audited
financial statements of the Company at December 31, 2001.

	2.
	Audited
financial statements of the Company at December 31, 2002.

	3.
	Unaudited
financial statements of the Company at December 31, 2003.

	4.
	Unaudited
financial statements of the Company at January 31, 2004.

	5.
	Capitalization
table of the Company at March 3, 2004.

	6.
	Summary
of Proposed Terms of Series G Preferred Stock Financing and Exchange of Series E-1 Senior Preferred Stock for Series F
Convertible Preferred Stock.

	7.
	Certificate
of Designation and Determination of Preferences of the Series G Convertible Preferred Stock.

	8.
	Certificate
of Designation and Determination of Preferences of the Series F Convertible Preferred Stock.

	9.
	Certificate
of Designation and Determination of Preferences of the Series E- Senior Preferred Stock.

	10.
	Series G
Shareholders' Rights Agreement, dated March 3, 2004.

	11.
	Agreement
of Tender, Exchange and Transmittal of Series E-1 Stock.

	12.
	Agreement
of Tender, Exchange and Transmittal of Series B Stock.

	13.
	Agreement
of Tender, Exchange and Transmittal of Series D Stock.

	14.
	Confidential
Business Plan. 

Schedule 4.7  

        [*****] 

Schedule 4.9(a)  

List of Benefit Plans:  

Medical
insurance, administered by Humana Insurance Co.

Dental insurance provided by MetLife

Vision Service Plan

Life Insurance provided by GE Financial Assurance Co.

Disability Insurance provided by GE Financial Assurance Co.

Displaytech, Inc. Profit Sharing and 401(k) Plan 

Schedule 4.9(k)  

Accruals under Unfunded Benefit Plans:  

        None. 

Schedule 4.12(a)  

List of Intellectual Property:  

        See attached. 

Schedule §4.12(a)(iii)  

Statement re suspected infringement:  

        [*****] 

Schedule §4.12(b)(i)  

Statement re grounds for claim against Company of patent infringement:  

        [*****] 

Schedule §4.12(b)(ii)  

Statement re third party patent applications:  

        [*****] 

Schedule 4.14  

Leased Property:  

        The Company leases approximately 30,000 square feet of office and manufacturing space from Pratt Land LLC located at 2602 Clover Basin Drive,
Longmont, CO. 

        The
Company leases office space in Tokyo, Japan at the Yurakucho Business Center. The material terms of the lease are as follows: 

	Landlord:	 	Mitsubishi Estate Co., Ltd.
	Address:	 	Business Center Yurakucho

11F Yurakucho Bldg.

1-10-1 Yurakucho, Chiyoda-ku

Tokyo 100-0006, Japan
	Lease Amount:	 	472,500 yen monthly
	Term:	 	Month to month renewal

Schedule 4.15(b)  

        None. 

Schedule 4.16(a)  

        None. 

Schedule 4.16(b)  

        None. 

Schedule 4.18  

List the amount of all Indebtedness, any Lien with respect thereto, and a description of the agreement therefore:  

	EQUIPMENT LEASES WITH FOLLOWING LESSORS
 
	 	MONTHLY RENTAL
	 	LIABILITY @2/29/04

	Wells Fargo Financial (formerly Conseco Finance) pursuant to that certain Lease Agreement, dated July 7, 2000, by and between Conseco Vendor Services Corporation and Displaytech, Inc.	 	1,922.36	 	$	28,387
	 	 	
	 	

	 	TOTAL	 	1,922,36	 	$	28,387
	 	 	
	 	

	
OTHER INDEBTEDNESS
 
	
 	

 
	
 	

LIABILITY @2/29/04

	Amended and Restated Convertible Note, dated February 11, 2003 payable to HP as well as the HP Agreement	 	$	14,342,500
	

Amkor Technology Letter Agreement, dated June 11, 2002	
 	
$	

210,713
	

Miyota (payables under that certain Manufacturing Agreement, dated December 10, 1998, by and between Displaytech, Inc. and Miyota Co., Ltd., as amended	
 	
$	

280,335
	

Silicon Valley Bank pursuant to the SVB Loan Agreement and related documents (including, but not limited to, the Negative Pledge Agreement, dated April 4, 2003, by and between the Company and Silicon Valley Bank	
 	
$	

384,497
	

 	
 	

 	
 	

	 	
 TOTAL	
 	
$	

15,218,045
	

 	
 	

 	
 	

Liens:  

	1.
	UCC-1
Financing Statement

Filed: CO Secretary of State—7/28/2000—Reception No. 20002068604

Secured Party: Conseco Finance Vendor Services Corp.

Collateral: Specific equipment (Computer/telephone)

	2.
	UCC-1
Financing Statement

Filed: CO Secretary of State—3/21/2002—Reception No. 20022030043

Secured Party: Transamerica Technology Finance Corporation, successor in interest to Transamerica Business Credit Corporation

Collateral: Filed as evidence of equipment lease only (specific equipment)

The indebtedness relating to the foregoing lien has been paid in full and the Company expects that a UCC-3 termination statement will be filed

	3.
	UCC-1
Financing Statement

Filed: CO Secretary of State—6/14/2002—Reception No. 20022063462

Secured Party: Silicon Valley Bank

Collateral: Purchased accounts receivable of account debtors Miyota Co. Ltd. and Nissho Electronics

	4.
	UCC-1
Financing Statement

Filed: CO Secretary of State—4/08/2003—Reception No. 20032036771

Secured Party: Silicon Valley Bank

Collateral: Goods and equipment, inventory, contract rights, general intangibles, accounts, documents, etc. 

	5.
	UCC-1
Financing Statement

Filed: CO Secretary of State—4/9/2003—Reception No. 20032037894

Secured Party: Silicon Valley Bank

Collateral: Goods and equipment, inventory, contract rights, general intangibles, copyright rights and applications, etc. 

Schedule 4.21(a)  

List all the Company's insurance policies:  

        Commercial general liability insurance provided by The Hartford: 

Personal
Property

Business Income and Extra Expense

Accounts Receivable

Original Information Property

Hired and Non-owned Autos

General Liability

Products Completed Operations

Personal & Advertising Injury

Manufacturer's Errors and Omissions Liability

Crime Coverage, Employee Dishonesty

Commercial Catastrophe Liability

Worker's Compensation 

        Policies
provided through AIG American International Companies: 

Directors,
Officers and Private Company Liability Insurance

Employee Benefit Plan Fiduciary Liability Insurance 

        Life
Insurance/Individual provided by Sun Life of Canada for: 

Mark
Handschy (Chief Scientist) 

SCHEDULE 4.12(a)  

Displaytech Owned US Patents  

	Patent No.
 
	 	Title
	 	Issue Date
	 	Expires

	6,703,082	 	Bookshelf Liquid Crystal Materials and Devices	 	3/9/04	 	 
	

6,690,499	
 	

Multi-State Light Modulator With Non-Zero Response Time and Linear Gray Scale	
 	

2/10/04	
 	

 
	

6,633,301	
 	

RGB Illuminator with Calibration Via Single Detector Servo	
 	

10/14/03	
 	

5/17/19
	

6,580,078	
 	

Ferroelectric Liquid Crystal Infrared Chopper	
 	

6/17/03	
 	

4/6/21
	

6,570,550	
 	

Active Matrix Liquid Crystal Image Generator	
 	

5/27/03	
 	

12/22/14
	

6,569,504	
 	

Mesogenic Materials with Anomalous Birefringence Dispersion and	
 	

5/27/03	
 	

4/4/17
	

6,525,709	
 	

Miniature Display Apparatus and Method	
 	

2/25/03	
 	

10/17/17
	

6,507,330	
 	

DC-balanced and Non-DC-balanced Drive Schemes for Liquid Crystal Devices	
 	

1/14/03	
 	

9/1/19
	

6,426,783	
 	

Continuously Viewable DC-Field Balanced, Reflective, Ferroelectric Liquid Crystal Image Generator	
 	

7/30/02	
 	

2/18/18
	

6,413,448	
 	

Cyclohexyl- and Cyclohexynl-substituted Liquid Crystals with Low Birefringence	
 	

7/20/02	
 	

4/26/19
	

6,369,933	
 	

Optical Correlator Having Multiple Active Components Formed on a Single Integrated Circuit	
 	

4/9/02	
 	

12/18/19
	

6,359,723	
 	

Optics Arrangements Including Light Source Arrangements for an Active Matrix Crystal Image Generator	
 	

3/19/02	
 	

12/12/14
	

6,317,112	
 	

Active Matrix Liquid Crystal Image Generator with Hybrid Writing Scheme	
 	

11/13/01	
 	

12/22/14
	

6,310,664	
 	

Continuously Viewable, DC Field-Balanced, Reflective, Ferroelectric Liquid Crystal Image Generator	
 	

10/30/01	
 	

2/18/18
	

6,247,037	
 	

Optical Correlator Having Multiple Active Components Formed on a Single Integrated Circuit	
 	

6/12/01	
 	

1/28/19
	

6,195,136	
 	

Optics Arrangements including Light Source Arrangements for an Active Matrix Liquid Crystal Image Generator	
 	

2/27/01	
 	

12/22/14
	

6,144,421	
 	

Continuously Viewable, DC-Field Balanced Reflective, Ferroelectric Liquid Crystal Image Generator	
 	

11/7/00	
 	

2/18/18
	

6,139,771	
 	

Mesogenic Materials with Anomalous Birefringence Dispersion and High Second Order Susceptibility	
 	

10/31/00	
 	

4/4/17
	

6,100,945	
 	

Compensator Arrangements for a Continuously Viewable, DC Field-Balanced, Reflective, Ferroelectric Liquid Crystal Display System	
 	

8/8/00	
 	

2/18/18
	

6,075,577	
 	

Continuously Viewable, DC Field-Balanced, Reflective, Ferroelectric Liquid Crystal Image Generator	
 	

6/13/00	
 	

2/18/18
	

6,038,005	
 	

Optics Arrangerrants Including Light Source Arrangements for an Active Matrix Liquid Crystal Image Generator	
 	

3/14/00	
 	

12/22/14
	 	 	 	 	 	 	 

	

6,025,890	
 	

Beam Splitter Element Including a Beam Splitting Layer and a Polarizing Layer for use in a Light Polarization Modulating Display System	
 	

2/15/00	
 	

2/20/18
	

6,016,173	
 	

Optics Arrangement Including a Compensator Cell and Static Wave Plate For a Continuously Viewable, Reflection Mode, Ferroelectric Liquid Crystal Spatial Light Modulating System	
 	

1/18/00	
 	

2/18/18
	

5,900,976	
 	

Display System including a Polarizing Beam Splitter	
 	

5/4/99	
 	

2/20/18
	

5,808,800	
 	

Optics Arrangements Including Light Source Arrangements for an Active Matrix Liquid Crystal Image Generator	
 	

9/15/98	
 	

9/15/15
	

5,757,348	
 	

Active Matrix Liquid Crystal Image Generator with Hybrid Writing Scheme	
 	

5/26/98	
 	

5/26/15
	

5,753,139	
 	

High Contrast Distorted Helix Effect Electro-Optic Devices and Tight Ferroelectric Pitch Ferroelectric Liquid Crystal Compositions Useful Therein	
 	

5/19/98	
 	

5/19/15
	

5,748,164	
 	

Active Matrix Liquid Crystal Image Generator	
 	

5/5/98	
 	

5/5/15
	

5,694,147	
 	

Liquid Crystal Integrated Circuit Display Including an Arrangement for Maintaining the Liquid Crystal at a Controlled Temperature	
 	

12/2/97	
 	

4/14/15
	

5,626,792	
 	

High Birefringence Liquid Crystal Compounds	
 	

5/6/97	
 	

9/6/14
	

5,596,451	
(1)	

Miniature Image Generator Including Optics Arrangement	
 	

1/21/97	
 	

1/30/15
	

5,585,036	
 	

Liquid Crystal Compounds Containing Chiral 2-Halo-2-Methyl Ether and Ester Tails	
 	

12/17/96	
 	

12/17/13
	

5,552,916	
 	

Diffractive Light Modulator	
 	

9/3/96	
 	

9/3/13
	

5,539,555	
(2)	

High Contrast Distorted Helix Effect Electro-Optic Devices and Tight Ferroelectric Pitch Ferroelectric Liquid Crystal Compositions Useful Therein	
 	

7/23/96	
 	

7/23/13
	

5,523,864	
 	

Analog Liquid Crystal Spatial Light Modulator including an Internal Voltage Booster	
 	

6/4/96	
 	

1/26/14
	

5,500,748	
(3)	

Liquid Crystal Spatial Light Modulator Including an Internal Voltage Booster	
 	

3/19/96	
 	

1/26/14
	

5,453,218	
 	

Liquid Crystal Compounds Containing Chiral 2-Halo-2 Methyl Alkoxy Tails	
 	

9/26/95	
 	

9/26/12
	

5,380,460	
 	

Ferroelectric Liquid Crystal Compounds Containing Chiral Haloalkoxy Tail Units and Compositions Containing Them	
 	

1/10/95	
 	

1/10/12
	

RE 34,726	
 	

Ferroelectric Liquid Crystal Compositions Containing Chiral Haloalkoxy Tail Units	
 	

9/13/94	
 	

7/14/09
	

5,347,378	
 	

Fast Switching Color Filters for Frame-Sequential Video Using Ferroelectric Liquid Crystal Color-Selective Filters	
 	

9/13/94	
 	

9/13/11
	

5,271,864	
 	

Ferroelectric Liquid Crystal Compounds with Cyclohexenyl Cores and Compositions Containing Them	
 	

12/21/93	
 	

8/7/12
	

5,182,665	
 	

Diffractive Light Modulator	
 	

1/26/93	
 	

9/7/10
	 	 	 	 	 	 	 

	

5,180,520	
(4)	

Ferroelectric Liquid Crystal Compositions Containing Halogenated Cores and Chiral Halogenated Cores and Chiral Haloalkoxy Tail Units	
 	

1/19/93	
 	

1/19/10
	

5,178,791	
 	

Halogenated Diphenyldiacetylene Liquid Crystals	
 	

1/12/93	
 	

3/11/11
	

5,178,445	
(5)	

Optically Addressed Spatial Light Modulator	
 	

1/12/93	
 	

1/12/10
	

5,167,855	
(4)	

Ferroelectric Liquid Crystal Compositions Chiral Haloalkoxyl Tail Units	
 	

12/1/92	
 	

12/1/09
	

5,051,506	
 	

Ferroelectric Liquid Crystal Compounds Containing Chiral Haloalkoxy Tail Units and Compositions Containing Them	
 	

9/24/91	
 	

9/24/08
	

4,813,771	
 	

Electro-Optic Switching Devices Using Ferroelectric Liquid Crystals	
 	

3/21/89	
 	

10/15/07

        1—jointly
owned by Displaytech, Inc. and Martin Shenker Optical Design, Inc. 

        2—jointly
owned by Displaytech, Inc. and Hoechst Aktiengesellschaft (with bilateral restrictions on field of use based on display size; Displaytech has exclusive right
to displays with an active area of 10 cm. or less in diameter, Hoechst has exclusive right to displays with an active area greater than 10 cm. in diameter) 

        3—jointly
owned by Displaytech, Inc. and Stephen D. Gaalema 

        4—owned
solely by Displaytech, Inc.; assignee data on patent cover sheet is incorrect 

        5—jointly
owned by Displaytech, Inc. and University of Colorado Foundation (assignment not recorded at PTO 

SCHEDULE 4.12(a)  

Displaytech Owned Foreign Patents  

	Country
 
	 	Patent No.
	 	Title
	 	Issue Date
	 	Expires

	Canada	 	2,087,592	 	Ferroelectric Liquid Crystal Compositions Containing Chiral Haloalkoxy Tail Units	 	4/16/02	 	7/22/11
	

Canada	
 	

2,088,934	
 	

High Contrast Distorted Helix Effect Electro-Optic Devices and Tight Ferroelectric Pitch FLC Compositions Useful Therein	
 	

6/3/03	
 	

2/8/13
	

Germany	
 	

69109680	
 	

Ferroelectric Liquid Crystal Compositions Containing Chiral Haloalkoxy Tail Units	
 	

5/10/95	
 	

7/22/11
	

Japan	
 	

2868774	
 	

Electro-Optic Switching Devices Using Ferroelectric Liquid Crystals	
 	

12/25/98	
 	

10/14/08
	

Japan	
 	

3124772	
 	

Ferroelectric Liquid Crystal Compositions Containing Chiral Haloalkoxy Tail Units	
 	

10/27/00	
 	

7/22/11
	

Korea	
 	

184,242	
 	

Ferroelectric Liquid Crystal Compositions Containing Chiral Haloalkoxy Tail Units	
 	

12/17/98	
 	

7/22/11
	

Korea	
 	

261,354	
 	

High Contrast Distorted Helix Effect Etectro-Optic Devices and Tight Ferroelectric Pitch FLC Compositions Useful Therein	
 	

4/18/00	
 	

2/6/13
	

Korea	
 	

283,163	
 	

Ferroelectric Liquid Crystal Compounds with Cyclohexenyl Cores and Compositions Containing Them	
 	

12/6/00	
 	

8/6/13
	

Sweden	
 	

0 540 648	
 	

Ferroelectric Liquid Crystal Compositions Containing Chiral Haloalkoxy Tail Units	
 	

5/10/95	
 	

7/22/11
	

Sweden	
 	

515 705	
 	

High Contrast Distorted Helix Effect Eleclro-Optic Devices and Tight Ferroelectric Pitch FLC Compositions Useful Therein	
 	

9/24/01	
 	

2/5/13
	

United Kingdom	
 	

0 540 648	
 	

Ferroelectric Liquid Crystal Compositions Containing Chiral Haloalkoxy Tail Units	
 	

5/10/95	
 	

7/22/11
	

United Kingdom	
 	

2 263 982	
 	

Ferroelectric Liquid Crystals	
 	

2/28/96	
 	

1/29/13

Displaytech Owned Pending US Patent Applications  

	App. No.
 
	 	Title
	 	Date Filed

	[*****]	 	 	 	 
	

09/754,033	
 	

Alkyl Silane Liquid Crystal Compounds	
 	

1/3/01
	

09/753,749	
 	

Liquid Crystal Compounds Having a Silane Tail with a Perfluoroalkyl Terminal Portion	
 	

1/3/01
	

09/754,034	
 	

Liquid Crystalline Materials Containing Perfluoroalkyl and Alkenyl Tails	
 	

1/3/01
	

09/854,181	
 	

Partially Fluorinated Liquid Crystal Materials	
 	

5/11/01
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 
	

09/992,097	
 	

Active Matrix Liquid Crystal Image Generator with Hybrid Writing Scheme	
 	

11/5/01
	

09/989,976	
 	

Dual Mode Near-Eye and Projection Display System	
 	

11/20/01
	

[*****]	
 	

 	
 	

 
	

10/067,516	
 	

Optics Arrangements Including Light Source Arrangements for an Active Matrix Liquid Crystal Image Generator	
 	

2/4/02
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 
	

[*****]	
 	

 	
 	

 

Displaytech Owned Pending Foreign Patent Applications  

	Date Filed
 
	 	App. No.
	 	Country
	 	Title

	2/05/93	 	9300375-4	 	China	 	High Contrast Distorted Helix Effect Electro-Optic Devices and Tight Ferroelectric Pitch Ferroelectric Liquid Crystal Compositions Useful Therein
	

2/05/93	
 	

43 03 335.0	
 	

Germany	
 	

High Contrast Distorted Helix Effect Electro-Optic Devices and Tight Ferroelectric Pitch Ferroelectric Liquid Crystal Compositions Useful Therein
	

2/08/93	
 	

5-20412	
 	

Japan	
 	

High Contrast Distorted Helix Effect Electro-Optic Devices and Tight Ferroelectric Pitch Ferroelectric Liquid Crystal Compositions Useful Therein
	

2/08/93	
 	

2003-37499	
 	

Japan	
 	

High Contrast Distorted Helix Effect Electro-Optic Devices and Tight Ferroelectric Pitch Ferroelectric Liquid Crystal Compositions Useful Therein
	

8/04/93	
 	

5-193688	
 	

Japan	
 	

Ferroelectric Liquid Crystal Compounds with Cyclohexenyl Cores and Compositions Containing Them
	

12/14/95	
 	

95943444.0	
 	

Europe	
 	

Active Matrix Liquid Crystal Image Generator
	

2/17/99	
 	

10-2000-7008981	
 	

Korea	
 	

Image Generating System
	

11/20/01	
 	

01995158.1	
 	

Europe	
 	

Dual Mode Near-Eye and Projection Display System
	

11/20/01	
 	

2002-544703	
 	

Japan	
 	

Dual Mode Near-Eye and Projection Display System

License Agreements  

	1)
	Company
has various rights to the following patents pursuant to an agreement with Clark and Lagerwall: 

	Country
 
	 	Patent No.
	 	Title
	 	Issue Date
	 	Expires

	United States	 	RE 34,942	 	Surface Stabilized Ferroelectric Liquid Crystal Devices with Means for Aligning LC molecules at Omega (Alpha) from Normal to the Means	 	5/16/95	 	6/20/06
	

United States	
 	

RE 34,949	
 	

Surface Stabilized Ferroelectric Liquid Crystal Devices	
 	

5/23/95	
 	

9/25/07
	

United States	
 	

RE 34,950	
 	

Surface Stabilized Ferroelectric Liquid Crystal Devices with Means for Aligning LC Molecules at Omega(alpha) from Normal to the Means	
 	

5/23/95	
 	

3/21/06
	

United States	
 	

RE 34,966	
 	

Surface Stabilized Ferroelectric Liquid Crystal Devices with LC Molecules Aligned at Angle Omega (Alpha) from Normal to Substrates	
 	

6/13/95	
 	

1/7/03
	

United States	
 	

RE 34,967	
 	

Surface Stabilized Ferroelectric Liquid Crystal Devices with Plural Orientation States of Different Colors or Separated by Domain Walls	
 	

6/13/95	
 	

7/13/10
	

United States	
 	

RE 34,973	
 	

Surface Stabilized Ferroelectric Liquid Crystal Devices with Total Reflection in One State and Transmission in Another State	
 	

6/20/95	
 	

1/28/09
	

United States	
 	

5,555,111	
 	

Surface Stabilized Ferroelectric Liquid Crystal Devices with Dielectric Torques Greater Than Ferroelectric Torques	
 	

9/10/96	
 	

3/21/06
	

United States	
 	

5,555,117	
 	

Surface Stabilized Ferroelectric Liquid Crystal Devices	
 	

9/10/96	
 	

9/10/13

	2)
	Company
is a party to that certain "Technology License and Industrial Research Agreement" with University Research Corporation effective as of May 1, 1994, which amended and
superceded that certain "Technology Licensing and Industrial Research Agreement" between the parties dated May 1, 1990. On August 28, 2003 the University Research Corporation sent
Company a letter indicating its intent to terminate the agreement. Pursuant to the terms of the agreement, certain license rights to various patents (including those identified below) would continue.
The University Research Corporation has requested that Company amend certain termination provisions of the agreement that currently grant Company rights to certain specified future technology. Company
and University Research Corporation are continuing to discuss appropriate consideration to be given to Company in the event Company approves such amendment. 

	Patent No.
 
	 	Title
	 	Issue Date
	 	Expires

	5,168,381	 	Smectic Liquid Crystal Devices Using SSFLC and Electroclinic Effect Based Cells	 	12/1/92	 	12/1/09
	

5,178,793	
 	

Ferroelectric Liquid Crystal Compounds and Compositions	
 	

1/12/93	
 	

1/12/10
	

5,543,078	
 	

Ferroelectric Liquid Crystals for Nonlinear Optics Applications	
 	

8/6/96	
 	

8/6/13
	

5,596,434	
 	

Self-Assembled Monolayers for Liquid Crystal Alignment	
 	

1/21/97	
 	

1/21/14
	

5,637,256	
 	

Ferroelectric Liquid Crystals for Nonlinear Optics Applications	
 	

6/10/97	
 	

6/10/14
	

5,658,493	
 	

Ferroelectric Liquid Crystals for Nonlinear Optics Applications	
 	

8/19/97	
 	

8/19/14

	3)
	Company
has various rights to the following patents pursuant to an agreement with Georgia Tech Research Corp: 

US Patents  

	Patent No.
 
	 	Title
	 	Issue Date
	 	Expires

	6,141,072	 	System and Method for Efficient Manufacturing of Liquid Crystal Displays	 	10/31/00	 	4/2/18
	

6,469,761	
 	

System and Method for Efficient Manufacturing of Liquid Crystal Displays	
 	

10/22/02	
 	

4/2/18

Foreign Patent Applications  

	Priority Date
 
	 	App. No.
	 	Country
	 	Title

	4/3/98	 	10-542913	 	Japan	 	System and Method for Efficient Manufacturing of Liquid Crystal Displays
	

4/3/98	
 	

98915254.1	
 	

Europe	
 	

System and Method for Efficient Manufacturing of Liquid Crystal Displays
	

4/3/98	
 	

2,285,924	
 	

Canada	
 	

System and Method for Efficient Manufacturing of Liquid Crystal Displays

	4)
	Company
is a party to that certain "Winding-Up of Alliance, Production and Marketing Framework" agreement with Agilent Technologies, Inc. (formerly Hewlett-Packard
Company) effective November 15, 1999 and amended April 26, 2002 that amends and supercedes that certain "Alliance, Production and Marketing Framework Agreement" effective
January 31, 1999 between the parties and that certain "Second Side Letter Agreement" effective February 2, 1999 between the parties. Pursuant to the terms of the amended agreement,
Company and Agilent have granted each other various intellectual property rights. Company has certain license rights to various patents (including those identified below): 

Licensed Patent Registrations  

	Patent No.
 
	 	Title
	 	Issue Date
	 	Expires

	6,249,269	 	Analog Pixel Driver Circuit for an Electro-Optical Material-Based Display Device	 	6/19/01	 	4/30/18
	

6,329,974	
 	

Electro-Optical Material-Based Display Device Having Analog Pixel Drivers	
 	

12/11/01	
 	

4/30/18

Licensed US Patent Applications  

Title  

        [*****] 

        [*****]

        [*****]

	5)
	Company
is a party to that certain "Joint Venture Agreement" with Inphase Technologies. Pursuant to the agreement, Company and Inphase will attempt to research and develop technologies
related to holographic data storage under a grant from the National Institute of Standards and Technology. Company and Inphase have granted each other licenses to certain of each's existing
technology. Company and Inphase have granted each other and the government 

licenses
to certain of the technology developed under this agreement. The agreement effects the assignment, between the parties, of certain intellectual property. The agreement also places certain
obligations on Company and Inphase with respect to the filing and prosecution of patents. 

	6)
	Company
is a party to that certain "Manufacturing Agreement" dated December 10, 1998 with Miyota Co., Ltd. as amended from time to time. Pursuant to the agreement, the
Company and Miyota have granted each other various licenses to certain existing and future developed technology. The agreement also effects the assignment, between the parties, of certain future
developed intellectual property. 

Displaytech Owned Trademark Registrations and Applications  

	Country
 
	 	Registration No.
	 	Trademark
	 	Registration Date
	 	Renewal Date

	United States	 	2,164,479	 	CHRONOCOLOR®	 	6/9/98	 	6/9/08
	

European Union	
 	

1032499	
 	

DISPLAYTECH®	
 	

7/26/01	
 	

12/31/08
	

Japan	
 	

4416882	
 	

DISPLAYTECH®	
 	

9/14/00	
 	

9/14/10
	

United States	
 	

2,337,454	
 	

DISPLAYTECH®	
 	

1/11/00	
 	

1/11/10
	

United States	
 	

2,444,452	
 	

DESIGN

(Stylized Displaytech Red Block)	
 	

4/17/01	
 	

4/17/11
	

United States	
 	

2,546,134	
 	

FLCD®	
 	

3/12/02	
 	

3/12/12
	

European Union	
 	

1032564	
 	

LIGHTCASTER®	
 	

3/30/00	
 	

12/31/08
	

Japan	
 	

4412349	
 	

LIGHTCASTER®	
 	

8/25/00	
 	

8/25/10
	

Korea	
 	

462068	
 	

LIGHTCASTER®	
 	

12/29/99	
 	

12/29/09
	

United States	
 	

2,283,078	
 	

LIGHTCASTER®	
 	

10/5/99	
 	

10/5/09

EXHIBIT A

Series B Exchange Agreement  

        [Separately filed as Exhibit 10.7 to this registration statement.] 

EXHIBIT B

Series D Exchange Agreement  

        [Separately filed as Exhibit 10.7 to this registration statement.] 

EXHIBIT C

Series E Exchange Agreement  

        [Separately filed as Exhibit 10.7 to this registration statement.] 

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Exhibit 10.8  

 
 

DISPLAYTECH, INC.
  AMENDED AND RESTATED
  SHAREHOLDERS' RIGHTS AGREEMENT    
    

        This Amended and Restated Shareholders' Rights Agreement (this "Agreement") is made as of July 30, 2001, by and among Displaytech, Inc., a Colorado
corporation (the "Company"), and the persons and entities listed as Investors in the signature section at the end of this Agreement (the "Investors"). 

        The
Company and the Investors hereby desire to amend and restate the Shareholders' Rights Agreement, dated as of October 2, 1995, by and among the Company and the Investors named
therein, as amended by Amendment No. 1 to the Shareholders' Rights Agreement, dated October 10, 1997, Amendment No. 2 to the Shareholders' Rights Agreement, dated
January 27, 1998, Amendment No. 3 to the Shareholders' Rights Agreement, dated February 17, 1999, Amendment No. 4 to the Shareholders' Rights Agreement, dated
January 7, 2000, Amendment No. 5 to the Shareholders' Rights Agreement, dated January 31, 2000, Amendment No. 6 to the Shareholders' Rights Agreement, dated March 3,
2000, and Amendment No. 7 to the Shareholders' Rights Agreement, dated December 15, 2000 (collectively, the "Original Agreement"), in its entirety as provided in this Agreement for the
purposes of: (i) including the purchasers of the Company's Series D Convertible Preferred Stock, pursuant to that certain Stock Purchase Agreement dated as of July 30, 2001 (the
"Stock Purchase Agreement") and (ii) modifying and establishing the respective rights and obligations of the parties to the Original Agreement pursuant to the terms and conditions set forth
herein. 

        Accordingly,
for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Company and the Investors, severally and not jointly, hereby
agrees as follows: 

        1.    Definitions.    For purposes of this Agreement, the following definitions shall apply (such definitions to be
equally applicable to both the singular and plural forms of the terms defined): 

        "Agreement" means this Amended and Restated Shareholders' Rights Agreement (together with any exhibits and schedules) as such may be from
time to time assigned, supplemented or amended or as the terms hereof may be waived. 

        "Century Investors" means Century Partners-Dtech, L.P., InterWest Capital, Inc. and JKB-Displaytech, LLC, collectively. 

        "Common Stock" means the shares of common stock of the Company then outstanding and the shares of common stock of the Company at the time
issuable upon exercise or conversion of outstanding options, warrants, and convertible securities of the Company. 

        "Company" has the meaning set forth in the preamble to this Agreement. 

        "Controlled Subsidiary" means a wholly-owned direct or indirect subsidiary of any Parent. 

        "Co-Sellers" has the meaning set forth in Section 2.1 hereof. 

        "DBCP" means DB Capital Partners, SBIC, L.P. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Fleming Investors" means Fleming US Discovery Fund III, L.P. and Fleming US Discovery Offshore Fund III, L.P., collectively. 

        "Form S-3" means such form under the Securities Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. 

 

        "Holder" means any person owning or having the right to acquire Registrable Securities or any permitted assignee thereof pursuant to
Section 3.12. 

        "Initiating Holders" means the Holder initiating a registration request under Section 3.1. 

        "Investors" has the meaning set forth in the preamble to this Agreement. 

        "Kingdon Investors" means Kingdon Associates, L.P., Kingdon Partners, L.P. and M. Kingdon Offshore NV, collectively. 

        "Notice Period" has the meaning set forth in Section 2.2 hereof. 

        "Offering Terms" has the meaning set forth in Section 2.2 hereof. 

        "Original Agreement" has the meaning set forth in the preamble to this Agreement. 

        "Parent" means the ultimate corporate parent of any corporation. 

        "Participating Holder" has the meaning set forth in Section 3.7 hereof. 

        "Participating Sellers" has the meaning set forth in Subsection 2.2(a) hereof. 

        "Proposed Purchaser" has the meaning set forth in Section 2.1 hereof. 

        "Purchase Notice" has the meaning set forth in Section 2.2 hereof. 

        "Qualified Public Offering" means a firm commitment underwritten public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of shares of Common Stock in which (i) proceeds to the Company, net of underwriting discounts, commissions and other expenses, are at least
$35,000,000, and (ii) the price per share of Common Stock sold in such offering reflects a pre-money valuation of the Company at the time of the consummation of such sale of at
least $250,000,000. 

        "Qualifying Request" means a request that (i) is made after the earlier of (X) October 1, 2002, or (Y) three
(3) months after the effective date of the first registration statement for a public offering of securities of the Company (other than a registration statement relating solely either to the
sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or a transaction pursuant to Rule 145 under the Securities Act) and (ii) is from
any Holder(s), who in the aggregate hold at least fifty percent (50%) of the Registrable Securities then outstanding, provided that such request covers the registration of at least thirty percent
(30%) of the Registrable Securities then outstanding (or a lesser percentage if the anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed $5,000,000). 

        "Register," "registered," and
"registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration statement or document. 

        "Registrable Securities" means the Common Stock acquired or acquirable by the Investors, and any Common Stock issued as a dividend or
distribution with respect to or in exchange for such Common Stock, excluding, however, (a) any Common Stock that would otherwise be Registrable Securities transferred in a transaction in which
the Investors' rights under Section 3 are not properly assigned pursuant to Section 3.12 and (b) any Common Stock that would otherwise be Registrable Securities, if such
securities, in the hands of the Holder thereof (A) are no longer restricted securities under the Securities Act or (B) may be sold, together with all other Common Stock (whether
Registrable Securities or otherwise) held by such Holder, in any three-month period, because the volume limitations of Rule 144 are not applicable or otherwise. 

        "SEC" means the United States Securities and Exchange Commission. 

2

 

        "Securities Act" means the Securities Act of 1933, as amended. 

        "Selling Investors" has the meaning set forth in Section 2.1 hereof. 

        "Stock Purchase Agreement" has the meaning set forth in the preamble to this Agreement. 

        "Violation" means any of the following statements, omissions or violations: (i) any untrue statement or alleged untrue statement of
a material fact contained in a registration statement filed pursuant to Section 5, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements
thereto or any documents filed under state securities or "blue sky" laws in connection therewith, (ii) the omission or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law. 

        "Voting Stock" means the Company's outstanding capital stock entitled to vote for the election of directors at meetings of shareholders. 

        2.    Tag-Along Rights.    

        2.1.    Restriction on Transfer.    No Investor or group of Investors may sell, dispose of or otherwise transfer for
consideration, in one transaction or in a series of related transactions, a number of shares of Common Stock representing more than ten percent (10%) of the outstanding Common Stock, unless prior to
the consummation thereof each of the other Investors (the "Co-Sellers") shall have been afforded the opportunity to participate in such transfer as provided in this Section 2. 

        It
shall be the responsibility of each Investor to determine whether any transaction to which it is a party is subject to this Section 2. The selling Investor or group of selling
Investors (the "Selling Investors") shall notify the person or group of persons that proposes to acquire shares of Common Stock (the "Proposed Purchaser") that such sale or other transfer is subject
to this Section 2 and shall ensure that no sale or other transfer is consummated without the Proposed Purchaser first complying with this Section 2. The Co-Sellers shall have
the right to specifically enforce their rights hereunder and any transfer of Common Stock in violation of this Section 2 shall be null and void. The following transfers are excluded from the
restrictions of this Section 2: 

        (a)   Transfers
in a registered public offering under the Securities Act. 

        (b)   "Open
Market" transfers pursuant to Rule 144 under the Securities Act (or any successor rule or regulation) that are in compliance with the requirements of
paragraphs (c), (e) and (f) of such Rule, without giving effect to paragraph (k) of such Rule. 

        (c)   Transfers
by an Investor to (i) such Investor's spouse or lineal descendants (including adopted children) or (ii) trusts for the benefit of the Investor or
the Investor's spouse or lineal descendants (including adopted children); provided that any such transferee shall agree in writing to take subject to and to comply with the restrictions contained in
this Agreement and shall be deemed an Investor upon consummation of such transfer. 

        (d)   Transfers
by an Investor to (i) the Parent of such Investor or to a Controlled Subsidiary of such Parent or (ii) officers, directors, employees or
partners, if any, of such Investor or (iii) an affiliate of such Investor; provided that any such transferee shall agree in writing to take subject to and to comply with the restrictions
contained in this Agreement and shall be deemed an Investor upon consummation of such transfer. 

        2.2.    Right to Participate in Sale.    At least twenty (20) days prior to the consummation of any sale
subject to this Section 2 (the "Notice Period"), the Selling Investors shall notify in writing the 

3

 

Company
(which writing shall also be signed by the Proposed Purchaser), and the Company shall notify in writing the Co-Sellers, of the number of shares of Common Stock and the terms and
conditions (collectively, the "Offering Terms") upon which the Proposed Purchaser has offered to purchase shares of Common Stock (the "Purchase Notice"). Each Co-Seller shall have the
right to participate in the proposed sale at the same price per share (treating options, warrants and convertible securities on an as converted basis, and adjusting for any consideration payable upon
exercise or conversion thereof) and on the same Offering Terms as those offered to the Selling Investors subject to the following terms and conditions: 

        (a)   Each
Selling Investor and Co-Seller electing to participate in the proposed sale (collectively, together with the Selling Investors, the "Participating
Sellers") shall have the right to sell that number of shares of Common Stock equal to the product obtained by multiplying (i) the aggregate number of shares of Common Stock covered by the
Purchase Notice by (ii) a fraction the numerator of which is the number of shares of Common Stock then owned by such Participating Sellers and the denominator of which is the number of shares
of Common Stock then owned in the aggregate by all Participating Sellers. To the extent that any Participating Seller elects to sell less than the full number of shares of Common Stock which such
Participating Seller is entitled to sell as determined pursuant to the previous sentence, each other Participating Seller's rights to participate in the sale shall be increased pro rata based on the
number of shares of Common Stock then owned by such Participating Seller. 

        (b)   If
a Co-Seller elects to become a Participating Seller, it shall give notice of such election by a writing signed by the Co-Seller and stating
the maximum number of shares the Co-Seller desires to sell. Such notice shall be delivered to the Proposed Purchaser within twenty (20) days of its receipt of the Purchase Notice. 

        (c)   If
the Proposed Purchaser is acquiring shares of Common Stock in a single transaction from more than one Selling Investor or in a series of related transactions from one
or more Selling Investors, then the price per share shall be determined based on the highest of the prices and the Offering Terms shall be the most favorable of the terms offered by the Proposed
Purchaser to any Selling Investor. 

        2.3.    Sale After Notice.    After lapse of the Notice Period, the Selling Investors may sell to one or more
purchasers the number of shares of Common Stock covered by the Purchase Notice, reduced to the extent that the Co-Sellers elect to participate, at a price equal to or less than the price
specified in the Purchase Notice and on terms no more favorable to the Selling Investors than those specified in the Purchase Notice; provided that the price to be paid by such purchasers to the
Co-Sellers shall equal the price specified in the Purchase Notice. In the event the shares of Common Stock covered by the Purchase Notice are not disposed of within ninety (90) days
following the lapse of the Notice Period, then they shall once again be subject to the rights set forth in this Section 2. 

        2.4.    Stock Certificate Legend.    Each certificate representing shares of Common Stock now or hereafter owned by
the Investors shall be endorsed with the following legend until termination of the terms of this Section 2: 

"THE
RIGHT TO VOTE THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE AMENDED AND
RESTATED SHAREHOLDERS' RIGHTS AGREEMENT, DATED AS OF JULY    , 2001, BY AND AMONG THE HOLDER OF THESE SHARES, CERTAIN OTHER HOLDERS OF THE CAPITAL STOCK OF THE CORPORATION, AND THE
CORPORATION. COPIES OF SUCH 

4

 

AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION." 

        2.5.    Termination.    The terms of this Section 2 shall terminate upon the consummation of a Qualified Public
Offering. 

        2.6.    Assignment.    In connection with any sale or transfer of Common Stock, each Investor and each permitted
assignee thereof, may assign in whole or in part its tag-along rights under this Section 2; provided, the assignee of such right (other than assignees allowed by
Section 2.1(c) and 2.1(d) above) shall own or have the right to acquire following such assignment five percent (5%) or more of the Common Stock held by such assignor and provided, further, that
any assignee shall agree in writing to take subject to and to comply with the restrictions contained in this Agreement and shall be deemed, for purposes of this Section 2, an Investor, upon
consummation of such transfer. 

        2.7.    Amendment.    (a) The provisions of this Section 2 (other than the last sentence of this
Section 2.7) may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of
Investors holding a majority of the shares of Common Stock held in the aggregate by the Investors. Any such amendment or waiver shall be effective and shall be binding upon all Investors and their
assignees if and only if the effect thereof will be that all Investors and their assignees will be treated equally. 

        3.    Registration Rights.    

        3.1.    Request for Registration.    

        (a)   If
the Company shall receive a written Qualifying Request that the Company file a registration statement under the Securities Act, then the Company shall, within
ten (10) days of the receipt thereof, give written notice of such request to all Holders and shall, subject to the limitations of Subsection 3.1(b) below, effect as soon as practicable, and in
any event within ninety (90) days of the receipt of such request, the registration under the Securities Act of all Registrable Securities which the Holders request to be registered within
twenty (20) days of the mailing of such notice by the Company, in accordance with Section 3.3. 

        (b)   If
the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to this Section 3.1, and the Company shall include such information in the written notice referred to in Subsection 3.1(a). In such event, the right
of any Holder to include such Holder's Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed upon by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall (together with the Company, as provided in Subsection 3.3(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority-in-interest of the Initiating Holders. Notwithstanding any other provision of this Section 3.1,
if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Initiating Holders shall so advise the
Company and the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be
included in the underwriting shall be allocated among all Holders thereof, including the Initiating Holders, in proportion (as nearly as practicable) to the amount of Registrable Securities of the
Company owned by each Holder. 

5

  

        (c)   The
Company is obligated to effect no more than three (3) registrations pursuant to a Qualifying Request. 

        (d)   Notwithstanding
the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 3.1, a certificate signed by
the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for
such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer such filing for a period of not more
than ninety (90) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve-month period. 

        3.2.    Company Registration.    If (but without any obligation to do so) the Company proposes to register (including
for this purpose, without limitation, a registration effected by the Company for shareholders other than the Holders) any of its stock or other securities under the Securities Act in connection with
the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan, or a registration solely to effect
a merger, consolidation or acquisition, or a registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering
the sale of the Registrable Securities, including without limitation, a registration statement on Form S-8 or S-4), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each Holder, given within twenty (20) days after mailing of such notice by the Company in accordance with this
Section 3.2, the Company shall, subject to the provisions of Section 3.7, cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has
requested to be registered. 

        3.3.    Obligations of the Company.    Whenever required under this Section 3 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably possible: 

        (a)   Prepare
and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to one hundred eighty
(180) days (or, in the case of a registration filed on Form S-3 pursuant to Section 3.11, for two (2) years) or until the Holders have completed the
distribution referred to in such registration statement, whichever occurs first. 

        (b)   Prepare
and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as
may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. 

        (c)   Furnish
to the Holders participating in such registration or to the underwriters, if any, of the securities being registered, such number of copies of the registration
statement, the preliminary prospectus and the final prospectus, in each case in conformity with the requirements of the Securities Act, and such other documents as such Holders or underwriters may
reasonably request in order to facilitate the disposition of Registrable Securities covered by such registration. 

        (d)   Use
its best efforts to register and qualify the securities covered by such registration statement under such other securities or "blue sky" laws of such jurisdictions
as shall be 

6

 

reasonably
requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions. 

        (e)   In
the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form (except as
otherwise provided in Section 3.7), with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such
an agreement. 

        (f)    Notify
each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the
Securities Act or of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 

        (g)   Furnish,
at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 3, on the date that such Registrable Securities
are delivered to the underwriters for sale in connection with a registration pursuant to this Section 3 or, if such securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities
and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. 

        (h)   As
soon as practicable after the effective date of the registration statement, and in any event within sixteen (16) months thereafter, have "made generally
available to its security holders" (within the meaning of Rule 158 under the Securities Act) an earnings statement (which need not be audited) covering a period of at least twelve
(12) months, beginning after the effective date of the registration statement, and otherwise complying with Section 11(a) of the Securities Act. 

        (i)    Use
its best efforts (a) to cause the Registrable Securities covered by the registration statement to be listed on a national securities exchange (if not then so
listed), and on each additional national securities exchange on which similar securities issued by the Company are then listed, if the listing of such Registrable Securities is then permitted under
the rules of such exchange, or (b) to secure designation of all such Registrable Securities covered by such registration statement as a NASDAQ "national market system security," or
(c) failing (a) or (b), to secure NASDAQ authorization for such shares and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as
such with respect to such Registrable Securities with NASDAQ. 

        (j)    Provide
a transfer agent and registrar (which may be the same entity) for the Registrable Securities. 

        (k)   In
the event of any underwritten public offering, participate in customary efforts to sell the Registrable Securities under the offering, including, without limitation,
"road shows." 

        3.4.    Furnish Information.    It shall be a condition precedent to the obligations of the Company to take any action
pursuant to this Section 3 with respect to the Registrable Securities of 

7

 

any
selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities, as
shall be required to effect the registration of such Holder's Registrable Securities. If any registration statement or comparable statement under the Securities Act refers to any Investor, or any of
their affiliates, by name or otherwise, as the holder of any securities of the Company then, unless counsel to the Company advises the Company that the Securities Act requires that such reference be
included in any such statement, each such Investor shall have the right to require the deletion of such reference to itself and its affiliates. 

        3.5.    Expenses of Demand Registration.    All expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Section 3.1, including (without limitation) all registration, filing and qualification fees, printer's and accounting fees,
fees and
disbursements of counsel for the Company, and the reasonable fees (up to $25,000) and disbursements of one counsel for the selling Holders (selected by a majority in interest of the participating
Holders) shall be borne by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration begun pursuant to Section 3.1 if the registration
request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses pro
rata), unless the Holders of more than seventy-five percent (75%) of the Registrable Securities agree to forfeit their right to one (1) demand registration pursuant to
Section 3.1; provided further, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company
from that known to the Holders at the time of their request, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 3.1. 

        3.6.    Expenses of Company Registration.    The Company shall bear and pay all expenses incurred in connection with
any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to Section 3.2 for each Holder, including (without limitation) all registration,
filing and qualification fees, printers' and accounting fees, and fees and disbursements of counsel for the Company relating or apportionable thereto and the reasonable fees (up to $25,000) and
disbursements of one counsel for the selling Holders (selected by a majority in interest of the participating Holders), but excluding underwriting discounts and commissions relating to Registrable
Securities. 

        3.7.    Underwriting Requirements.    In connection with any offering involving an underwriting of shares being issued
by the Company, the Company shall not be required under Section 3.2 to include any of the Holders' securities in such underwriting unless they agree to the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it, and then only in such quantity as will not, in the opinion of the underwriters, jeopardize the success of the offering by the Company;
provided, however, that no Holder participating in such underwriting (a "Participating Holder") shall be required to make any representations or warranties except as they relate to such Participating
Holder and its intended method of distribution, and that the liability of such Participating Holder shall be limited to an amount equal to the net proceeds from the offering received by such
Participating Holder. If the total amount of securities, including Registrable Securities, requested by the Participating Holders exceeds the amount of securities to be sold other than by the Company
that the underwriters reasonably believe to be compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the Participating Holders according
to the total amount of securities entitled to be included therein owned by each Participating Holder, or in such other proportions as shall mutually be agreed to by such Participating Holders), but in
no event shall the amount of securities of the Participating 

8

 

Holders
included in the offering be reduced below seventy-five percent (75%) of the total amount of securities included in such offering, unless such offering is the initial public
offering of the Company's securities, in which case the Participating Holders may be excluded if the underwriters make the determination described above and no other shareholder's securities are
included. For purposes of the preceding parenthetical concerning apportionment, for any Participating Holder which is a partnership or corporation, the partners, retired partners and shareholders of
such Participating Holder, or the estates and family members of any such partners and retired partners, and any trusts for the benefit of any of the foregoing persons, shall be deemed to be a single
Participating Holder with such partnership or corporation, and any pro rata reduction with respect to such Participating Holder shall be based upon the aggregate amount of shares carrying registration
rights owned by all entities and individuals included in such Participating Holder, as defined in this sentence. 

        3.8.    Delay of Registration.    No Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 3. 

        3.9.    Indemnification.    In the event any Registrable Securities are included in a registration statement under
this Section 3: 

        (a)   To
the extent permitted by law, the Company will indemnify and hold harmless each Holder, each of such Holder's officers, directors, employees and affiliates, any
underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act against any
losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect
thereof) arise out of or are based upon a Violation; and the Company will pay to each such indemnified party, as incurred, any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Subsection 3.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case to a particular indemnified party for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such indemnified party. 

        (b)   To
the extent permitted by law, each Holder that has included shares in such registration statement will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified
pursuant to this Subsection 3.9(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this
Subsection 3.9(b) 

9

 

shall
not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder, which consent shall not be
unreasonably withheld; and provided further, that, in no event shall any indemnity under this Subsection 3.9(b) exceed the net proceeds from the offering received by such Holder. 

        (c)   Promptly
after receipt by an indemnified party under this Section 3.9 of notice of the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 3.9, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 3.9 except if, and only to the extent that, the
indemnified party is actually prejudiced thereby; and such failure to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 3.9. 

        (d)   In
order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which a party exercising its rights under this
Section 3.9 makes a claim for indemnification pursuant to this Section, but it is judicially determined (by entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding that this Section provides for indemnification, then,
in such case, the Company and each Holder that has included shares in such registration statement, will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion as is appropriate to reflect the relative fault of the parties in connection with the statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by a particular party, and each party's relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission; provided that, in any such case, (1) a Holder will not be required to contribute any amount in excess of the net
proceeds from the offering received by such Holder pursuant to such registration statement; and (2) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. 

        (e)   The
obligations of the Company and Holders under this Section 3.9 shall survive the completion of any offering of Registrable Securities in a registration
statement under this Section 3, and otherwise. 

        3.10.    Reports Under the Exchange Act.    With a view to making available to the Holders the benefits of
Rule 144 under the Securities Act and any other rule or regulation of the SEC that 

10

 

may
at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to: 

        (a)   make
and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the earlier of
(i) the effective date of the first registration statement filed by the Company for the offering of its securities to the general public and (ii) the date the Company becomes subject to
the reporting requirements of the Exchange Act; 

        (b)   take
such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize
Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal
year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective; 

        (c)   file
with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and 

        (d)   furnish
to any Holder, so long as such Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied
with the reporting requirements of Rule 144 under the Securities Act (at any time after ninety (90) days after the effective date of the first registration statement filed by the
Company), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant
to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in availing such Holder of any rule or regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form. 

        3.11.    Form S-3 Registration.    In case the Company shall receive from any Holder or Holders a
written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will: 

        (a)   promptly
give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and 

        (b)   as
soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the
Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 3.11, for securities then held by Investors, (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $300,000;
(3) if the Company shall furnish to the Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would
be seriously detrimental to the Company and its shareholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the
filing of 

11

 

the
Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 3.11;
provided, however, that the Company shall not utilize this right more than once in any twelve month period; (4) if the Company has, within the twelve (12) month period preceding the date
of such request, already effected two registrations on Form S-3 for the Holders pursuant to this Section 3.11; or (5) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. 

        (c)   subject
to the foregoing, prepare and file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon
as practicable after receipt of the request or requests of the Holders. All expenses incurred in connection with a registration requested pursuant to this Section 3.11, including (without
limitation) all registration, filing and qualification, printer's and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees (up to $7,500) and disbursements of one
counsel for the selling Holders (selected by a majority in interest of the participating Holders), but excluding any underwriters' discounts or commissions associated with Registrable Securities which
shall be allocated to or among the selling Holders pursuant to the underwriting agreement, shall be borne by the Company. Registrations effected pursuant to this Section 3.11 shall not be
counted as demands for registration or registrations effected pursuant to Sections 3.1 or 3.2, respectively. 

        3.12.    Assignment of Registration Rights.    The rights to cause the Company to register Registrable Securities
pursuant to this Section 3 may be assigned in whole or in part by a Holder to one or more transferees or assignees of not less than 150,000 shares (subject to appropriate adjustment in the
event of a stock split, stock dividend, recapitalization or the like) of such securities (or 100% of the shares of such securities then held by such Holder), provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the Registrable Securities with respect to which such registration rights
are being assigned, and such assignee or transferee agrees to be bound by the obligations contained in this Agreement to which the transferor was subject immediately prior to such transfer; provided,
further, that such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act; and provided, further, that the minimum number of shares specified above respecting a transfer of these registration rights shall not
apply to any transfer effected pursuant to Section 2.1(c) or 2.1(d). 

        3.13.    Limitations on Subsequent Registration Rights.    From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities (including Investors holding a majority of the Registrable Securities held by
Investors), enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder (a) to include such securities in
any registration filed under Section 3.1 or Section 3.2, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration
only to the extent that the inclusion of such holder's securities will not reduce the amount of the Registrable Securities of the Holders which is included or (b) to make a demand registration
which could result in such registration statement being declared effective prior to or within one hundred eighty (180) days following a Qualified Public Offering or within one hundred eighty
(180) days of the effective date of any registration effected pursuant to Section 3.1. 

        3.14.    "Market Stand-Off" Agreement.    Each Holder hereby agrees that during the period of
(i) one hundred eighty (180) days following the effective date of the first registration statement of the Company filed under the Securities Act which covers Common Stock (or other
securities) to 

12

 

be
sold on its behalf to the public in an underwritten offering and (ii) ninety (90) days following each subsequent registration statement of the Company filed under the Securities Act,
it shall not, to the extent requested by the Company or, if applicable, the managing underwriter with respect to the securities registered pursuant to such registration statement, sell or otherwise
transfer or dispose of (other than pursuant to Section 2.1(c) or 2.1(d) to transferees who agree to be similarly bound) any Common Stock of the Company held by it, except Common Stock included
in such registration; provided, however, that such agreement shall be applicable only if all officers
and directors and shareholders individually holding five percent (5%) or more of the Common Stock of the Company and all other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements. 

        In
order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or
securities of every other person subject to the foregoing restriction) until the end of such period. 

        3.15.    Amendment of Registration Rights.    Any provision of this Section 3 may be amended and the observance
thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holders of a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this Section 3 shall be binding upon each Holder of Registrable Securities at the time outstanding,
each future Holder of all such securities, and the Company. 

        4.    Corporate Governance.    

        4.1.    Shareholder Action.    The Investors shall vote their shares of Common Stock to cause the Company's
Certificate of Incorporation and Bylaws to be in the form attached hereto as Exhibit A and B, respectively. 

        4.2.    Board of Directors.    

        (a)   The
Investors shall at all times vote their shares of Voting Stock so that the Bylaws of the Company provide that the Board of Directors shall consist of not less than
five (5) and no more than eleven (11) directors, the exact number of which shall be fixed from time to time within such limits by resolution of the Board of Directors. The Investors
agree to vote their shares of Voting Stock for the election to the Company's Board of Directors of two (2) designees of the Kingdon Investors, two (2) designees of the Century Investors,
two (2) designees of DBCP, two (2) designees of the Fleming Investors, Haviland Wright and Bruce Spenner. The obligations set forth herein in respect to the election of directors apply
each time the shareholders of the Company meet, or act by written consent in lieu of meeting, for the purpose of electing directors. In addition, the Investors agree to approve and continue to support
a resolution adopted by the Board of Directors authorizing the formation of (i) a Compensation Committee, consisting of one director designated by each of the Kingdon Investors, the Century
Investors, DBCP and the Fleming Investors, (ii) an Audit Committee, consisting of one director designated by each of the Kingdon Investors, the Century Investors, DBCP and the Fleming Investors
and (iii) a Scientific Advisory Committee, chaired by Mark Handschy and also to include Haviland Wright, Noel Clark, David Walba and such other members to be determined in the future by the
Board of Directors. The Company agrees that at all times (i) prior to a Qualified Public Offering and (ii) during which the Investors are required to vote their shares of Voting Stock to
elect the Investors' designees to the Board of Directors of the Company in accordance with the terms of this Agreement, the Company shall cause (i) the appropriate Investor designees so elected
to be appointed to such Compensation Committee, which committee shall have, among other powers, exclusive authority to grant stock options/restricted stock to employees, officers and directors of, and
consultants to, the Company at all times after the date of this Agreement and (ii) the appropriate Investor 

13

 

designees
so elected to be appointed to the Audit Committee. The Company and the Investors agree to cause the resolutions described herein to remain in effect, without modification, unless Investors
holding a majority of the shares of Common Stock held by Investors agree otherwise. 

        (b)   The
Investors shall be allowed, from time to time, to change their respective designees to the Board of Directors of the Company, in which case the Investors agree to
vote their shares of Voting Stock for the removal of such Investors' existing designees on the Board of Directors and for the election of the person that such Investors then designate in his place.
The parties acknowledge that the shareholders of the Company may remove any individual elected to the Board of Directors in accordance with the
applicable provisions of the Company's Bylaws and the Colorado Business Corporation Act. Notwithstanding the foregoing, each Investor agrees not to vote his shares of Voting Stock for the removal of
any individual elected to the Board of Directors of the Company in accordance with this Section 4 unless such individual (i) engages in fraudulent or dishonest conduct or gross abuse of
authority or discretion with respect to the Company, as determined by a majority of the disinterested members of the Board of Directors, (ii) competes with the Company or performs services for
any other person, firm or corporation who competes with the Company (provided that merely owning stock or other equity in a competing firm or corporation, without performing services for its board of
directors, or as an officer, executive, employee or consultant, shall not be deemed a breach of this restriction), or (iii) breaches his fiduciary duty to the Company, as determined by a
majority of the disinterested members of the Board of Directors. The Investors shall not be obligated to vote their shares of Voting Stock for the election of any individual who has been removed from
the Board of Directors in accordance with this Section 4.2(b). If the designee of any Investor has been removed from the Board of Directors in accordance with this Section 4.2(b), the
Investor whose designee has been removed shall have the right to designate a different individual for election to the Board of Directors and the Investors agree to vote their shares of Voting Stock to
elect such new designee to the Board of Directors in accordance with Section 4.2(a). 

        4.3.    Transferees.    The provisions of this Section 4 shall be binding upon the
successors-in-interest to any of the Voting Stock held by the Investors. Prior to the consummation of a Qualified Public Offering, the Company shall not permit the transfer of
any of the Voting Stock on its books or issue a new certificate representing any of the Voting Stock (other than in connection with a public offering pursuant to a registration statement under the
Securities Act) unless and until the person to whom such security is to be transferred shall have executed a written agreement, containing the terms set forth in this Section 4, pursuant to
which such person becomes a party to the agreements set forth in this Section 4 and agrees to be bound by all of the provisions of this Section 4 as if such person were an Investor. 

        4.4.    Termination.    The provisions of this Section 4 shall terminate upon the consummation of a Qualified
Public Offering. 

        5.    Miscellaneous.    

        5.1.    Entire Agreement; Amendment.    This Agreement constitutes the full and entire understanding and agreement
among the parties with regard to the subject matter hereof. Nothing in this Agreement, express or implied, is intended to confer upon any person or entity, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided herein. Except as otherwise provided in
Section 2 and Section 3 above, this Agreement may be amended (and the observance of any term hereof may be waived) only with the written consent of (i) the Company and
(ii) holders of a majority of the shares of Common Stock held by Investors; provided, however, 

14

 

that
(A) no term of this Agreement regarding (X) the minimum number of shares necessary to receive certain rights or (Y) the consent or approval of Investors (or Investors'
designees on the Board of Directors), may be amended, or the observance thereof waived, in a manner that adversely affects any Investor (or Investor's designee), unless (in addition to the other
requirements of this Section 5.1) each Investor adversely affected thereby consents thereto and (B) any such amendment or waiver shall be effective and binding upon the Investors and
their assignees only if the effect thereof will be that all Investors and their assignees will be treated equally thereby. 

        5.2.    Governing Law.    This Agreement shall be governed in all respects by the laws of the State of Colorado as
such laws are applied to agreements between Colorado residents entered into and to be performed entirely within Colorado. 

        5.3.    Successors and Assigns.    Except as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 

        5.4.    Notices.    Unless otherwise provided herein, any notice required or permitted under this Agreement shall be
given in writing and shall be deemed effectively given upon receipt by the party to be notified (including by facsimile) or upon deposit with the United States Post Office or with a recognized
overnight mail courier, by registered or certified mail, postage prepaid or by recognized overnight mail courier, as applicable, and addressed to the party to be notified (a) if to a party
other than the Company, at such party's address set forth at the end of this Agreement or at such other address as such party shall have furnished the Company in writing, or, until any such party so
furnishes an address to the Company, then to and at the address of the last holder of the shares covered by this Agreement who has so furnished an address to the Company, or (b) if to the
Company, at its address set forth at the end of this Agreement, or at such other address as the Company shall have furnished to the parties in writing. 

        5.5.    Severability.    Any invalidity, illegality or limitation on the enforceability of this Agreement or any part
thereof, by any party, whether arising by reason of the law of the respective party's domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement
with respect to other parties. If any provision of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

        5.6.    Titles and Subtitles.    The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. 

        5.7.    Specific Performance.    The parties acknowledge that any breach or violation of the agreements contained in
this Agreement would be likely to be highly injurious to the non-breaching parties. Accordingly, the parties acknowledge and agree that, in addition to any other remedies which may be
available, the non-breaching parties shall be entitled to enforcement of the rights granted herein by a decree of specific performance entered by a court of competent jurisdiction. 

        5.8.    Attorney's Fees.    If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled. 

        5.9.    Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. 

        5.10.    Controlling Agreement.    The terms and conditions of this Agreement supercede those of any prior agreement
relating to the subject matter herein, including the Original Agreement. 

15

 

This
Agreement and any other agreements referenced herein, excluding the Original Agreement, represent the full and complete understanding among the Company and the Investors relating to the subject
matter herein, and any provisions to the contrary contained in any prior agreement, including, without limitation, the Original Agreement, are hereby deemed and declared to be null, void and of no
force or effect. 

16

   
        IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above. 

	 	 	COMPANY:
	

 	
 	

Displaytech, Inc.
	

 	
 	

 	

 
	 	 	By:	/s/  HAVILAND WRIGHT      

	 	 	Name:	Haviland Wright
	 	 	Title:	Chief Executive Officer
	 	 	Address:	2602 Clover Basin Drive

Longmont, CO 80503
	

 	
 	

 	

 
	 	 	INVESTORS:
	

 	
 	

KINGDON ASSOCIATES, L.P.
	

 	
 	

By:	

Kingdon Capital Management Corp.,

its General Partner
	

 	
 	

 	

 
	 	 	By:	/s/  PETER J. COBOS      

	 	 	Name:	Peter J. Cobos
	 	 	Title:	 
	

 	
 	

 	

 
	 	 	KINGDON PARTNERS, L.P.
	

 	
 	

By:	

Kingdon Capital Management Corp.,

its General Partner
	

 	
 	

 	

 
	 	 	By:	/s/  PETER J. COBOS      

	 	 	Name:	Peter J. Cobos
	 	 	Title:	 
	 	 	 	 

17

 

	

 	
 	

M. KINGDON OFFSHORE NV
	

 	
 	

By:	

Kingdon Capital Management Corp.,

its investment advisor
	

 	
 	

By:	

/s/  PETER J. COBOS      

	 	 	Name:	Peter J. Cobos
	 	 	Title:	 
	 	 	Address:	c/o Kingdon Capital Management Corp.

152 W. 57th Street, 50th Floor

New York, NY 10019
	

 	
 	

 	

 
	 	 	/s/  J. KERMIT BIRCHFIELD, JR.      

	 	 	 	J. Kermit Birchfield, Jr.

33 Way Road

Gloucester, MA 01930
	

 	
 	

 	

 
	 	 	CENTURY PARTNERS, L.P.-DTECH, L.P.
	

 	
 	

 	

 
	 	 	By:	/s/  RICHARD HOKIN      
 Richard Hokin, its general partner

Address: 800 Post Road

Darien, CT 06821
	

 	
 	

 	

 
	 	 	JKB- DISPLAYTECH, LLC
	

 	
 	

 	

 
	 	 	By:	/s/  J. KERMIT BIRCHFIELD, JR.      
 J. Kermit Birchfield, Jr.

33 Way Road

Gloucester, MA 01930
	 	 	 	 

18

 

	

 	
 	

INTERWEST CAPITAL, INC.
	

 	
 	

 	

 
	 	 	By:	/s/  WM. C. GLYNN      

	 	 	Name:	Wm. C. Glynn
	 	 	Title:	President
	 	 	Address:	555 South Cole Road

Boise, Idaho 83709
	

 	
 	

 	

 
	 	 	FLEMING US DISCOVERY FUND III, L.P.
	

 	
 	

By:	

FLEMING US DISCOVERY PARTNERS, L.P.,

its general partner
	

 	
 	

By:	

FLEMING US DISCOVERY, LLC,

its general partner
	

 	
 	

 	

 
	 	 	By:	/s/  ROBERT L. BURR      
 Robert L. Burr, member
	

 	
 	

 	

 
	 	 	FLEMING US DISCOVERY OFFSHORE FUND III, L.P.
	

 	
 	

By:	

FLEMING US DISCOVERY PARTNERS, L.P.,

its general partner
	

 	
 	

By:	

FLEMING US DISCOVERY, LLC,

its general partner
	

 	
 	

 	

 
	 	 	By:	/s/  ROBERT L. BURR      
 Robert L. Burr, member
	 	 	 	 

19

 

	

 	
 	

D.A. DAVIDSON & CO. DISPLAYTECH

    INVESTMENT PARTNERSHIP
	

 	
 	

 	

 
	 	 	By:	/s/  MARK J. SEMMENS      
 Mark J. Semmens, General Partner
	

 	
 	

 	

 
	 	 	DADCO Incorporated
	

 	
 	

 	

 
	 	 	By:	/s/  ILLEGIBLE      
 Authorized Officer
	

 	
 	

 	

 
	 	 	DB CAPITAL PARTNERS SBIC, L.P.
	

 	
 	

 	

 
	 	 	By:	/s/  ROBERT A. SHARP      
 Robert A. Sharp
	

 	
 	

 	

 
	 	 	HEWLETT-PACKARD COMPANY
	

 	
 	

 	

 
	 	 	By:	/s/  CHARLES N. CHARMAS      
 Charles N. Charmas

20

 
 

DISPLAYTECH, INC.    
    
    AMENDED AND RESTATED
  SHAREHOLDERS' RIGHTS AGREEMENT
  AMENDMENT NO. 1    
    

        This Amendment to the Amended and Restated Shareholders' Rights Agreement dated July 30, 2001 ("Agreement") is made as of April 9, 2002, by and
among Displaytech, Inc., a Colorado corporation (the "Company") and the persons and entities listed as Investors in the signature section at the end of this Amendment (the "Investors"). 

        Pursuant
to an agreement between the Company and Integral, Inc. ("Integral"), the Company issued to Integral one thousand (1,000) shares of the Company's Series D
convertible preferred stock in lieu of cash, as payment of the equity portion of Integral's consulting fees. 

        Integral
has requested that the shares be reissued to its affiliate, Analysis Group Fund I, L.P. ("Analysis"), and Analysis has requested to become a party to the Agreement. 

        The
Company also wishes to amend paragraph 4.2 of the Agreement as it relates to the make up of the Board of Directors and the Scientific Advisory Committee. 

        The
Company and the Investors therefore wish to amend the Agreement for the purposes of adding Analysis as a party, and to amend paragraph 4.2. 

AGREEMENT  

        This Amendment amends the Agreement as follows: 

        1.     Analysis
Group Fund I, L.P. is hereby added as a party to the Agreement, entitled to all rights granted, and subject to all obligations assumed by the parties under the
Agreement. 

        2.     Additionally,
paragraph 4.2.(a) shall be amended by deleting the second sentence of the Agreement, which now states: 

"The
Investors agree to vote their shares of Voting Stock for the election to the Company's Board of Directors of two (2) designees of the Kingdon Investors, two (2) designees of the
Century Investors, two (2) designees of DBCP, two (2) designees of the Fleming Investors, Haviland Wright and Bruce Spenner." 

and
inserting the following sentence in its place: 

"The
Investors agree to vote their shares of Voting Stock for the election to the Company's Board of Directors of two (2) designees of the Kingdon Investors, two (2) designees of the
Century Investors, two (2) designees of DBCP, two (2) designees of the Fleming Investors, and two (2) representatives from the Company's management. 

        3.     Further,
section 4.2. (a)(iii) shall be amended by deleting the section in its entirety, which now states: 

"(iii) a
Scientific Advisory Committee, chaired by Mark Handschy and also to include Haviland Wright, Noel Clark, David Walba and such other members to be determined in the future by the Board
of Directors." 

and
inserting the following in its place: 

"(iii) a
Scientific Advisory Committee, chaired by a representative from the Company's management, and also to include other members to be determined by the Board of Directors." 

        Except
as modified herein, all terms of the Agreement remain in full force and effect. 

 

        IN
WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered as of the day and year first written above. 

	 	 	COMPANY:
	

 	
 	

Displaytech, Inc.
	

 	
 	

By:	
 	

/s/  RICHARD BARTON          

	 	 	Name:	 	Richard Barton
	 	 	Title:	 	Chief Executive Officer
	

 	
 	

ANALYSIS GROUP FUND I, L.P.
	

 	
 	

By:	
 	

ANALYSIS GROUP FUND PARTNERS LLC (G.P.)
	

 	
 	

By:	
 	

Analysis Group Inc., Managing Member
	

 	
 	

By:	
 	

/s/  NORMAN W. GORIN      

	 	 	Name:	 	Norman W. Gorin
	 	 	Title:	 	Chief Financial Officer
	

 	
 	
INVESTORS:
	

 	
 	

KINGDON ASSOCIATES, L.P.
	 	 	By:	 	Kingdon Capital Management Corp., its General Partner
	

 	
 	

By:	
 	

    

	 	 	Name:	 	 
	 	 	Title:	 	 
	

 	
 	

KINGDON PARTNERS, L.P.
	 	 	By:	 	Kingdon Capital Management Corp., its General Partner
	

 	
 	

By:	
 	

    

	 	 	Name:	 	 
	 	 	Title:	 	 
	

 	
 	

M. KINGDON OFFSHORE NV
	 	 	By:	 	Kingdon Capital Management Corp., its investment advisor
	

 	
 	

By:	
 	

    

	 	 	Name:	 	 
	 	 	Title:	 	 
	 	 	 	 	 

2

 

	

 	
 	

J. KERMIT BIRCHFIELD, JR.
	

 	
 	

/s/  J. KERMIT BIRCHFIELD, JR.      

	 	 	 	 	J. Kermit Birchfield, Jr.
	

 	
 	

CENTURY PARTNERS, L.P.-DTECH, L.P.
	

 	
 	

By:	
 	

    
 Richard Hokin, its general partner
	

 	
 	

JKB—DISPLAYTECH, LLC
	

 	
 	

By:	
 	

/s/  J. KERMIT BIRCHFIELD, JR.      
 J. Kermit Birchfield, Jr.
	

 	
 	

INTERWEST CAPITAL, INC.
	

 	
 	

By:	
 	

/s/  WM. C. GLYNN      
 Wm. C. Glynn
 President
	

 	
 	

FLEMING US DISCOVERY FUND III, L.P.
	

 	
 	

By:	
 	

FLEMING US DISCOVERY PARTNERS, L.P., its general partner
	

 	
 	

By:	
 	

FLEMING US DISCOVERY, LLC, its general partner
	

 	
 	

By:	
 	

/s/  ROBERT L. BURR      
 Robert L. Burr, member
	

 	
 	

FLEMING US DISCOVERY OFFSHORE FUND III, L.P.
	

 	
 	

By:	
 	

FLEMING US DISCOVERY PARTNERS, L.P., its general partner
	

 	
 	

By:	
 	

FLEMING US DISCOVERY, LLC, its general partner
	

 	
 	

By:	
 	

/s/  ROBERT L. BURR      
 Robert L. Burr, member
	

 	
 	

D.A. DAVIDSON & CO. DISPLAYTECH INVESTMENT PARTNERSHIP
	

 	
 	

By:	
 	

    
 Mark J. Semmens, General Partner
	 	 	 	 	 

3

 

	

 	
 	

DADCO Incorporated
	

 	
 	

By:	
 	

    
 Authorized Officer
	

 	
 	

DB CAPITAL PARTNERS SBIC, L.P.
	

 	
 	

By:	
 	

/s/  ROBERT G. SHARP      
 Robert G. Sharp
	

 	
 	

HEWLETT-PACKARD COMPANY
	

 	
 	

By:	
 	

    

4

 
 

DISPLAYTECH, INC.    
    
    AMENDMENT NO. 2 TO THE
  SHAREHOLDERS' RIGHTS AGREEMENT    
    

        This Amendment No. 2 (the "Amendment") is made as of February 11, 2003, by and among Displaytech, Inc., a Colorado corporation (the
"Company"), and the persons and entities listed as Investors on the signature pages hereto (the "Investors"), all of whom are parties to the Amended and Restated Shareholders' Rights Agreement, dated
as of July 30, 2001, as amended by Amendment No. 1, dated as of April 9, 2002 (as so amended, the "Agreement"). 

        WHEREAS,
in connection with the Company's issuance of shares of Series E-1 Senior Preferred Stock and Series E-2 Senior Preferred Stock, the Company
and the Investors have determined that it is in their best interest, and in furtherance of their purposes, to amend the Agreement to modify certain rights and obligations with respect to corporate
governance. 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Company and the Investors, severally and not jointly, hereby
agrees as follows: 

        1.     Section 2.4
of the Agreement shall be deleted in its entirety and replaced by the following: 

        Stock Certificate Legend.    Each certificate representing shares of Common Stock now or hereafter owned by the Investors shall
be endorsed with the following legend until termination of the terms of this Section 2: 

"THE
RIGHT TO VOTE THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE AMENDED AND
RESTATED SHAREHOLDERS' RIGHTS AGREEMENT, DATED AS OF JULY 30, 2001 (AS AMENDED), BY AND AMONG THE HOLDER OF THESE SHARES, CERTAIN OTHER HOLDERS OF THE CAPITAL STOCK OF THE CORPORATION, AND THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION." 

        2.     Section 4.2(a)
of the Agreement shall be deleted in its entirety and replaced by the following: 

        (a)   The
Investors shall at all times vote their shares of Voting Stock so that the Bylaws of the Company provide that the Board of Directors shall consist of not less than
three (3) and no more than fourteen (14) directors, the exact number of which shall be fixed from time to time within such limits by resolution of the Board of Directors. The Investors
agree to vote their shares of Voting Stock for the election to the Company's Board of Directors of two (2) designees of the Kingdon Investors, four (4) designees of the Century
Investors, two (2) designees of DBCP, four (4) designees of the Fleming Investors, Richard Barton and Bruce Spenner. The obligations set forth herein in respect to the election of
directors apply each time the shareholders of the Company meet, or act by written consent in lieu of meeting, for the purpose of electing directors. In addition, the Investors agree to approve and
continue to support a resolution adopted by the Board of Directors authorizing the formation of (i) a Compensation Committee, consisting of one director designated by each of the Kingdon
Investors, the Century Investors, DBCP and the Fleming Investors and (ii) an Audit Committee, consisting of one director designated by each of the Kingdon Investors, the Century Investors, DBCP
and the Fleming Investors. The Company agrees that at all times (i) prior to a Qualified Public Offering and (ii) during which the Investors are required to vote their shares of Voting
Stock to elect the Investors' designees to the Board of Directors of the Company in accordance with the terms of this Agreement, the Company shall cause 

 

(i) the
appropriate Investor designees so elected to be appointed to such Compensation Committee, which committee shall have, among other powers, exclusive authority to grant stock
options/restricted stock to employees, officers and directors of, and consultants to, the Company at all times after the date of this Agreement and (ii) the appropriate Investor designees so
elected to be appointed to the Audit Committee. The Company and the Investors agree to cause the resolutions described herein to remain in effect, without modification, unless Investors holding a
majority of the shares of Common Stock held by Investors agree otherwise. 

        3.     Section 4.2
of the Agreement shall be amended to add subsection (c) as follows: 

        (c)   Notwithstanding
anything in this Agreement to the contrary, the provisions of this Section 4.2 shall terminate on June 30, 2003. 

        4.     Except
as amended herein, the Agreement shall remain in full force and effect. 

        5.     This
Amendment shall be governed in all respects by the laws of the State of Colorado as such laws are applied to agreements between Colorado residents entered into and
to be performed entirely within Colorado. 

        6.     This
Amendment may be executed in any number of counterparts (and by facsimile), each of which shall be an original, but all of which together shall constitute one
instrument. 

[remainder
of page intentionally left blank] 

2

 

        IN
WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered as of the day and year first written above. 

	 	 	COMPANY:
	
 	
 	

DISPLAYTECH, INC.
	

 	
 	

By:	

/s/  RICHARD BARTON      

	 	 	Name:	Richard Barton
	 	 	Title:	Chief Executive Officer
	 	 	Address:	2602 Clover Basin Drive

Longmont, CO 80503
	

 	
 	

 	

 
	 	 	INVESTORS:
	
 	
 	

KINGDON ASSOCIATES, L.P.
	

 	
 	

By:	

Kingdon Capital Management Corp.,

  its General Partner
	

 	
 	

 	

 
	 	 	By:	/s/  KEN HAHN      

	 	 	Name:	Ken Hahn
	 	 	Title:	Portfolio Manager
	

 	
 	

 	

 
	 	 	KINGDON PARTNERS, L.P.
	

 	
 	

By:	

Kingdon Capital Management Corp.,

  its General Partner
	

 	
 	

 	

 
	 	 	By:	/s/  KEN HAHN      

	 	 	Name:	Ken Hahn
	 	 	Title:	Portfolio Manager

3

 

	 	 	M. KINGDON OFFSHORE NV
	

 	
 	

By:	

Kingdon Capital Management Corp.,

  its General Partner
	

 	
 	

 	

 
	 	 	By:	/s/  KEN HAHN      

	 	 	Name:	Ken Hahn
	 	 	Title:	Portfolio Manager
	

 	
 	

 	

 
	 	 	/s/  J. KERMIT BIRCHFIELD, JR.      
 J. Kermit Birchfield, Jr.
	

 	
 	

 	

 
	 	 	CENTURY AMERICA LLC

(formerly known as Century Partners, L.P.-Dtech, L.P.)
	

 	
 	

 	

 
	 	 	By:	/s/  RICHARD HOKIN      
 Richard Hokin, its managing member
	

 	
 	

 	

 
	 	 	JKB- DISPLAYTECH, LLC
	

 	
 	

 	

 
	 	 	By:	/s/  J. KERMIT BIRCHFIELD, JR.      
 J. Kermit Birchfield, Jr.
	

 	
 	

 	

 
	 	 	INTERWEST CAPITAL, INC.
	

 	
 	

 	

 
	 	 	By:	/s/  WILLIAM C. GLYNN      

	 	 	Name:	William C. Glynn
	 	 	Title:	President

4

 

	 	 	FLEMING US DISCOVERY FUND III, L.P.
	

 	
 	

By:	

FLEMING US DISCOVERY PARTNERS, L.P.,

its general partner
	

 	
 	

By:	

FLEMING US DISCOVERY, LLC,

its general partner
	

 	
 	

 	

 
	 	 	By:	/s/  ROBERT L. BURR      
 Robert L. Burr, member
	

 	
 	

 	

 
	 	 	FLEMING US DISCOVERY OFFSHORE FUND III, L.P.
	

 	
 	

By:	

FLEMING US DISCOVERY PARTNERS, L.P.,

its general partner
	

 	
 	

By:	

FLEMING US DISCOVERY, LLC,

its general partner
	

 	
 	

 	

 
	 	 	By:	/s/  ROBERT L. BURR      
 Robert L. Burr, member
	

 	
 	

 	

 
	 	 	D.A. DAVIDSON & CO. DISPLAYTECH

  INVESTMENT PARTNERSHIP
	

 	
 	

 	

 
	 	 	By:	/s/  MARK J. SEMMENS      
 Mark J. Semmens, General Partner
	

 	
 	

 	

 
	 	 	DAVIDSON COMPANIES

(formerly known as DADCO Incorporated)
	

 	
 	

 	

 
	 	 	By:	/s/  ILLEGIBLE      
 Authorized Officer

5

 

	 	 	DB CAPITAL PARTNERS SBIC, L.P.
	

 	
 	

 	

 
	 	 	By:	/s/  ROBERT SHARP      
 Robert Sharp
	

 	
 	

 	

 
	 	 	HEWLETT-PACKARD COMPANY
	

 	
 	

 	

 
	 	 	By:	/s/  CHARLES N. CHARMAS      
 Charles N. Charmas
	

 	
 	

 	

 
	 	 	NISSHO ELECTRONICS CORPORATION
	

 	
 	

 	

 
	 	 	By:	    

	

 	
 	

 	

 
	 	 	ANALYSIS GROUP FUND I, L.P.
	

 	
 	

 	

 
	 	 	By:	/s/  NORMAN W. GORIN      
 Norman W. Gorin

Chief Financial Officer

6

  

March 25, 2003  

  
 

    JOINDER AGREEMENT    
    

        This Joinder Agreement (this "Agreement"), is entered into as of February 28, 2003, by and between
Displaytech, Inc., a Colorado corporation (the "Company"), and Nissho Electronics Corporation, a company organized under the laws of Japan (the
"Buyer"). 

BACKGROUND  

        A.    The
Company is a party to (i) the Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of
February 11, 2003, by and among the Company and the Purchasers (as defined in the Stock Purchase Agreement) set forth on Schedule 1 thereto; (ii) the Series E Shareholders'
Rights Agreement (the "Shareholders' Rights Agreement"), dated as of February 11, 2003, by and among the Company and the Investors (as defined in
the Shareholders' Rights Agreement) set forth therein; and (iii) the Confidentiality Agreement (the "Confidentiality Agreement"), dated as of
February 11, 2003, by and among the Company and the other parties set forth therein. The Stock Purchase Agreement, the Shareholders' Rights Agreement and the Confidentiality Agreement are
collectively referred to herein as the "Transaction Agreements." 

        B.    The
Buyer wishes to purchase from the Company, and the Company wishes to sell to the Buyer, shares of the Company's Series E-1 Senior Preferred Stock, par value
$.001 per share (the "Series E-1 Preferred Stock"). 

AGREEMENT  

        In consideration of the mutual promises, covenants and conditions hereinafter set forth, the parties hereto agree as follows: 

        1.    Agreement to Purchase and Sell Stock.    Subject to the terms and conditions hereof, the Company agrees to issue
and sell to the Buyer, and the Buyer agrees to purchase from the Company, 7,500 shares of Series E-1 Preferred Stock (the "Shares") at a price of
$100 per share (the "Investment") for an aggregate purchase price of $750,000 (the "Purchase Price"). The Purchase Price for the Shares shall be paid (in United States dollars) by wire transfer of
funds to an account designated by the Company. 

        2.    Delivery.    Upon receipt in full of the Purchase Price by the Company, the Company shall deliver to the Buyer a
certificate representing the Shares to be purchased by the Buyer hereunder against payment of the full purchase price therefor to the designated account of the Company. 

        3.    Joinder.    By the execution of its duly authorized representative of this Agreement, the Buyer hereby becomes
(a) with respect to the Stock Purchase Agreement, a "Purchaser" (as such term is defined in the Stock Purchase Agreement), (b) with respect to the Shareholders' Rights Agreement, an
"Investor" (as such term is defined in the Shareholders' Rights Agreement) and (c) a party to the Confidentiality Agreement, in each case, for all purposes, legally bound to all terms and
conditions contained in each such Transaction Agreement (and hereby expressly deemed to make all representations, warranties, covenants and agreements contained therein), as if it had been a named
party and original signatory to each of the preceding, as of the dates thereof (subject to Section 5 below). 

        4.    Representations and Warranties.    The Buyer hereby represents and warrants to the Company that (a) it
has all necessary corporate power and authority to enter into this Agreement and the transactions contemplated hereby (including, without limitation, the making of the Investment by the Buyer) and
(b) this Agreement represents the legally valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms. 

1

 

        5.    Schedules.    The Stock Purchase Agreement is hereby supplemented and amended by (a) adding to
Schedule 1 thereto the page attached hereto as Exhibit A and (b) solely with respect to the Buyer (and no other Purchasers (as defined in the Stock Purchase Agreement)), amending
the Schedule of Exceptions thereto in the manner set forth on Exhibit B attached hereto. 

        6.    Miscellaneous.    

        6.1    Governing Law.    This Agreement shall be governed by, and construed in accordance with, the laws of the State
of New York, without regard to the principles of conflict of laws. 

        6.2    Further Assurances.    The Buyer agrees to execute and deliver any and all related or ancillary documentation
and instruments as shall be necessary or desirable in order to give effect to the transactions contemplated by this Agreement and the Transaction Agreements. 

        6.3    Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. 

[Signature
page follows] 

2

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year herein above first written. 

	

 	
 	

DISPLAYTECH, INC.
	

 	
 	

By:	
 	

/s/  RICHARD D. BARTON      

	 	 	Name:	 	Richard D. Barton
	 	 	Title:	 	CEO
	 	 	Date:	 	April 10, 2003
	

 	
 	

NISSHO ELECTRONICS CORPORATION
	

 	
 	

By:	
 	

/s/  TAKASHI FUKUDA      

	 	 	Name:	 	Takashi Fukuda
	 	 	Title:	 	Managing Director
	 	 	Date:	 	April 7, 2003

3

 
EXHIBIT A  

        Schedule 1

to this Agreement (cont.) 

	Name of Purchasers
 
	 	Number of Shares
	 	Purchase Price

	Nissho Electronics Corporation	 	7,500	 	$	750,000
	TOTAL	 	7,500	 	$	750,000

	(a)
	address
for communications: 

Nissho
Electronics Corporation

3-1, Tsukiji 7-Chrome, Chuo-ku, Tokyo, 104-8444 Japan 

Attention:
Mr. Takashi Fukuda 

	(b)
	address
for payments by wire transfer: 

4

 
 

AMENDMENT NO. 3
  TO
  AMENDED AND RESTATED SHAREHOLDERS' RIGHTS AGREEMENT    
    

        This Amendment No. 3 to Amended and Restated Shareholders' Rights Agreement (this
"Amendment") is entered into effective as of the 25th day of May, 2004, by and among  Displaytech, Inc., a Delaware corporation (the "Company"), and the holders of capital stock of
the Company identified as "Investors" on the signature pages hereto (each, an "Investor" and together, the
"Investors"). 

RECITALS  

        Whereas, pursuant to Sections 2.7, 3.14 and 5.1 of that certain Amended and Restated Shareholders' Rights
Agreement by and among the Company and certain of its shareholders dated July 30, 2001, as amended (the "Shareholders Agreement"), the
Shareholders Agreement may only be amended with the written consent of the Company, the holders of at least a majority of the then-outstanding Common Stock (as defined in the Shareholders
Agreement) and/or the holders of at least a majority of the then-outstanding Registrable Securities (as defined in the Shareholders Agreement); 

        Whereas, effective as of May 11, 2004, Century Partners, L.P.-DTECH, L.P., JKB-Displaytech, LLC, InterWest
Capital, Inc. and certain of their affiliates contributed all of their Common Stock to DTech Investments, LLC, an affiliate of such stockholders
("DTech"), and DTech became a party to the Shareholders Agreement by execution of a Joinder Agreement; 

        Whereas, the Company intends to file its first registration statement for a public offering of securities of the Company on
Form S-1 under the Securities Act of 1933, as amended (the "IPO"); 

        Whereas, the Investors hold at least a majority of the Common Stock and the Registrable Securities; and 

        Whereas, as a condition to participating in the IPO, the underwriters have requested certain amendments to the registration rights set
forth in Section 3 of the Shareholders Agreement and the parties desire to amend Section 3 and certain other provisions of the Shareholders Agreement as set forth below. 

        Now, Therefore, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree hereto as follows: 

        1.     Definitions. The definition of "Qualified Public
Offering" set forth in Section 1 of the Shareholders Agreement is hereby deleted in its entirety and the following is inserted in lieu thereof: 

"Qualified Public Offering" means a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities
Act covering the offer and sale of shares of Common Stock in which (i) gross proceeds to the Company, before underwriting discounts, commissions and other expenses, are at least $20,000,000,
and (ii) the price per share of Common Stock sold in such offering reflects a pre-money valuation of the Company at the time of the consummation of such sale of at least
$75,000,000. 

        2.     Company Registration. The following sentence shall be inserted at the end
of Section 3.2 of the Shareholders Agreement: "No Holder shall have any registration rights under this Section 3.2 for the Company's first firm commitment underwritten public offering of
its Common Stock registered under the Securities Act." 

        4.     Reaffirmation. Except as otherwise specifically set forth herein, the
terms and provisions of the Shareholders Agreement, as amended hereby, are ratified, confirmed and approved. 

        5.     Defined Terms. Capitalized terms not defined herein shall have the meaning
assigned to them in the Shareholders Agreement. 

 

        6.     Governing Law. This Amendment shall be governed by and construed under the
laws of the State of Colorado in all respects as such laws are applied to agreements among Colorado residents entered into and to be performed entirely within Colorado. 

        7.     Counterparts. This Amendment may be executed in any number of
counterparts, or by facsimile signature, all of which shall constitute one and the same instrument. 

[Signature page to follow.] 

2

 

        IN WITNESS WHEREOF, this Amendment has been executed as of the day and year first above written. 

	
COMPANY:	
 	

 
	
DISPLAYTECH, INC.	
 	

 
	

By:	
 	

/s/  RICHARD D. BARTON      
	
 	

 
	

Name:	
 	

Richard D. Barton
	
 	

 
	

Title:	
 	

CEO
	
 	

 
	
INVESTORS:	
 	

 
	
DTECH INVESTMENTS LLC	
 	

 
	

By:	
 	

/s/  WILLIAM C. GLYNN      
	
 	

 
	

Name:	
 	

William C. Glynn
	
 	

 
	

Title:	
 	

Manager
	
 	

 
	
FLEMING US DISCOVERY FUND III, L.P.	
 	

 
	

By: Fleming US Discovery Partners, L.P., its General Partner	
 	

 
	

By: Fleming US Discovery, LLC, its General Partner	
 	

 
	

By:	
 	

/s/  ROBERT L. BURR      
	
 	

 
	

Name:	
 	

Robert L. Burr
	
 	

 
	 	 	 	 	 

3

 

	

Title:	
 	

Member
	
 	

 
	
FLEMING US DISCOVERY OFFSHORE FUND III, L.P.	
 	

 
	

By: Fleming US Discovery Partners, L.P., its General Partner	
 	

 
	

By: Fleming US Discovery, LLC, its General Partner	
 	

 
	

By:	
 	

/s/  ROBERT L. BURR      
	
 	

 
	

Name:	
 	

Robert L. Burr
	
 	

 
	

Title:	
 	

Member
	
 	

 

4

QuickLinks

DISPLAYTECH, INC. AMENDED AND RESTATED SHAREHOLDERS' RIGHTS AGREEMENT

DISPLAYTECH, INC. AMENDED AND RESTATED SHAREHOLDERS' RIGHTS AGREEMENT AMENDMENT NO. 1

DISPLAYTECH, INC. AMENDMENT NO. 2 TO THE SHAREHOLDERS' RIGHTS AGREEMENT

JOINDER AGREEMENT

AMENDMENT NO. 3 TO AMENDED AND RESTATED SHAREHOLDERS' RIGHTS AGREEMENT

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