Skip to main content

License Agreement - InFocus Systems Inc. and Pixelworks Inc.

                                LICENSE AGREEMENT
                              InFocus Systems, Inc.
                                Pixelworks, Inc.

                                February 22, 2000

         This License is entered into effective February 22, 2000 (the
"Effective Date") between InFocus Systems, Inc., 27700B SW Parkway Avenue,
Wilsonville, OR 97070-9215 (InFocus), and Pixelworks, Inc., 7700 Mohawk St.,
Tualatin, OR, 97056 (Pixelworks.) Pixelworks includes any majority-owned
subsidiary of Pixelworks, Inc.

         InFocus owns U.S. patents 5,805,233 and 5,767,916 (together the
"Patent"), and wishes to grant a license to the Patent to Pixelworks in exchange
for certain Pixelworks stock and cash. The "Patent" also includes any
extensions, continuations, continuations-in-part, divisions, reissues, and
foreign equivalents of U.S. Patents 5,805,233 and 5,767,916.

         Accordingly, the parties agree as follows:

1.       LICENSE.

         1.1 GRANT. InFocus grants to Pixelworks a worldwide, paid up (excepting
only the payments expressly contemplated under this Agreement), non-exclusive,
nontransferrable, perpetual, royalty free license to make, have made, use, sell,
offer for sale, and import products that would otherwise infringe the Patent
(the "Products"). InFocus understands that the Products execute software
instructions, and that the software instructions can be and are shipped,
installed, sold, licensed, updated, modified, and revised separately from, but
for execution in, the Products. The licensing and sublicensing to any tier of
distribution of such software for development, modification, and revision, and
for commercial exploitation solely on and with the Products, is expressly
licensed under this Grant. Except with respect to software as just stated and as
encompassed in the concept of "have made", this license does not include the
right to grant further licenses or sublicenses.

         1.2 TRADE SECRETS. InFocus also grants Pixelworks a worldwide, paid up,
non-exclusive, perpetual, non-transferrable, royalty free license to use trade
secrets related to the problem the Patent solves and financially or functionally
necessary to achieve what Pixelworks in good faith believes to be the optimal
solution to that problem, and that are remembered or in records held by
Pixelworks employees who were formerly employed by InFocus and who are employed
by Pixelworks on the Effective Date. Trade secrets encompassed in this paragraph
are called "Trade Secrets" herein.

to sue third parties who run non-Pixelworks software on Products, provided that
this test is met: if the same software were Pixelworks software distributed by
Pixelworks, it would fall within the license grant of paragraph 1.1.

Page 1 - License Agreement

2. DELIVERY. InFocus shall not be required to deliver any technology to
Pixelworks. InFocus shall, however, deliver to Pixelworks copies of the patent
prosecution history file for the Patent, and of all pending and all final issued
patents and patent claims contained therein in any jurisdiction.

3. CONSIDERATION. InFocus shall receive, in consideration for the license thus
granted, 156,863 shares of Pixelworks' Series D Preferred Stock, and four
quarterly payments of $600,000 each.

         3.1 TIMING AND TERMS OF CASH PAYMENTS. The first cash payment shall be
due March 31, 2000, and the next three on the last day of each calendar quarter
thereafter, ending December 31, 2000. Failure to make timely payment shall
constitute a material breach of this Agreement in accordance with Section 5
hereof. Interest shall accrue on late payments at the lesser of 18% per year or
the highest interest rate allowed under applicable law.

         3.2 TERMS OF STOCK GRANT. Pixelworks shall grant the shares of Series D
Preferred Stock pursuant to the terms and conditions of Pixelworks' Series D
Preferred Stock financing round. InFocus shall execute the same investment
documents as are executed by all other investors in that round generally, and
this Agreement shall be effective contemporaneous with the closing of that
financing round.


         4.1 INFRINGEMENTS. If Pixelworks learns of or suspects any infringement
of the Patent by a third party, Pixelworks shall promptly inform InFocus of such
infringement. If InFocus determines to take action to bar the infringement,
InFocus may do so. As of the Effective Date and within the horizon of InFocus'
reasonably foreseeable business planning process as applicable to such matters,
it is InFocus' intention to take action to prevent future infringement of the
Patent. InFocus makes no representations beyond a three year horizon from the
date hereof. InFocus reserves the privilege of not pursuing infringers when in
its good faith judgment the commercial impact of the suspected or actual
infringement is outweighed by the cost of the pursuit.

         4.2 OTHER LICENSES. As of the Effective Date and within the horizon of
InFocus' reasonably foreseeable business planning process as applicable to such
matters, InFocus does not plan or intend to license the Patent for commercial
use (other than for purposes of building products for sale or resale by InFocus)
to any third party for consideration with a total value less than the total
value of the consideration provided by Pixelworks under this Agreement, which
value InFocus regards as commercially reasonable. InFocus makes no
representations beyond a three year horizon from the date hereof. InFocus
reserves the privilege of licensing its technology on terms and for
consideration that in its good faith judgment are commercially reasonable for
the Patent under the circumstances then prevailing for the particular

         4.3 PATENT MAINTENANCE. InFocus shall maintain each of the constituent
patents in the Patent in all jurisdictions in which they or equivalents have
been filed, for the statutory life of patents in those jurisdictions. The
parties agree to cooperate in connection with the maintenance of the Patent and
to take any and all actions necessary to transfer the necessary documents and
rights required for, and to do such other things as are from time to time
necessary to comply with the requirements of, this Section

Page 2 - License Agreement

4.3. Payment of all fees and costs incurred during the term of this Agreement
relating to the maintenance of the Patent shall be the responsibility of

         4.4 COOPERATION. Pixelworks and InFocus shall keep each other promptly
and fully apprised of all material developments in the maintenance of the
Patent. Each party will cooperate as reasonably necessary to secure and maintain
protection applicable to the Patent.

         4.5 WARRANTY OF TITLE. InFocus warrants that it has good and marketable
title, and all rights necessary to grant the licenses and rights herein granted,
to the Patent and to the right to exercise the claims it contains.. InFocus'
liability for breach of this warranty shall be limited to return of the
consideration paid.

5.       COVENANT REGARDING FUTURE DISPUTES. The parties commit to meet and to 
discuss any disputes arising under this Agreement, including without limitation
any assertions of material breach. The discussions will take place among people
who from each party collectively have the authority to settle matters under
discussion, in a good faith effort to resolve such matters without formal

6.       CONFIDENTIALITY. Pixelworks acknowledges that any Trade Secrets are 
InFocus' valuable and confidential information. Pixelworks agrees to take all 
reasonable steps to protect the confidentiality of those Trade Secrets, 
including employing the practices and procedures it uses to protect its own 
trade secrets. Disclosure of the Trade Secrets will be limited to Pixelworks' 
agents or employees on a need-to-know basis, and only after such persons have 
been informed of, and are subject to obligations to maintain, the Trade Secrets'

7.       TERMINATION. Either party may terminate this Agreement by Notice, if
the other commits a material breach of this Agreement which is not cured within
thirty days' following Notice. Any such termination shall end the license rights
granted to Pixelworks under Section 1, provided Pixelworks shall be entitled to
exhaust existing inventories of Products (including as inventories Products
already in production).


         8.1 LEGALLY REQUIRED DISCLOSURE PERMITTED. Each party shall be
permitted to make such disclosure concerning this Agreement as may be required
for purposes of audit, financing or by any court or government agency, provided
that each party shall take such precautions to secure confidential treatment as
may be reasonably available in the particular forum. Otherwise, subject to the
right to issue press releases under Section 8.2, this Agreement, its terms, and
all matters leading up to it and giving rise to it are confidential, and may not
be disclosed by the Parties to any outside party except those under
nondisclosure obligations who have a need to know.

         8.2 PRESS RELEASES. If either party wishes to issue a press release
concerning this Agreement, it shall first provide the other with a copy of the
proposed release for approval. Neither party will issue a press release until
after Pixelworks has completed its "quiet period" following registration,
provided that InFocus may issue an internal release in the following language.
No release shall be issued that describes this agreement without the approval of
both parties. Each party approves a press release

Page 3 - License Agreement

that does no more than announces this agreement in the following terms, and
which may also characterize each party using that party's own usual and
customary press release language to describe itself:

         InFocus Systems, Inc. and Pixelworks, Inc. have entered into a license
         agreement covering certain InFocus patented technology that helps 
         digital display devices more clearly and sharply present video or 
         other analog-source images, (party) announced today.


         9.1 NOTICE. "Notice" means notice given as described here. Notice will
be given to Timothy M. Carlson for InFocus, and to Allen Alley for Pixelworks,
at the address designated at the beginning of this Agreement. Each party can
change its own Notice address and designated Notice recipient, by Notice. Notice
shall be effective when actually received by the designated person, in any form
that leaves a hard copy record of the notice in that person's possession. If
sent certified or registered mail, postage prepaid, return receipt requested,
notice is considered effective on the date on which effective delivery is first
proven, but in no event later than the date the return receipt shows the notice
was accepted, refused, or returned undeliverable.

         9.2 SEVERABILITY. Each clause of this agreement is severable. If any
clause is ruled void or unenforceable, the balance of the agreement shall
nonetheless remain in effect.

         9.3 NON-WAIVER. A waiver of one or more breaches of any clause of this
agreement shall not act to waive any other breach, whether of the same or
different clauses.

         9.4 ASSIGNMENT. This agreement may not be assigned by Pixelworks
without the express written consent of InFocus, which consent will not be
unreasonably withheld.

         9.5 GOVERNING LAW, JURISDICTION. This agreement is governed by the laws
of the state of Oregon. Any action brought between the parties may be brought
only in the state or federal courts located in Portland, Oregon, and in no other
place unless the parties expressly agree in writing to waive this requirement.
Each party consents to jurisdiction in that location. Each party consents to
service of process through the method prescribed for Notice in this agreement.

         9.6 ATTORNEYS' FEES. The prevailing party in any suit, action,
arbitration, or appeal filed or held concerning this agreement shall be entitled
to reasonable attorneys' fees.

         9.7 REPRESENTATION. This document is the result of negotiations between
parties, each of whom was represented or had the opportunity to be represented
in the transaction, and has had the opportunity to have had the transactional
documents reviewed by counsel of their own choice.

         9.8 INTEGRATION. This agreement is the complete agreement between the
parties as of the date hereof, and supersedes all prior agreements, written or
oral, excepting only the nondisclosure agreement in place between the parties,
and contracts and agreements anticipated under Section 3.2 hereof. This
Agreement resolves and satisfies all claims or disputes between the parties
concerning the Patent, Trade Secrets, or any InFocus patents, issued or pending,
as of the effective date that address the 

Page 4 - License Agreement

same set of problems solved by the Patent, arising at any point prior to the 
effective date hereof, and any dispute that could arise between InFocus and any
Pixelworks customer (direct or indirect) with respect to that Customer's own 
use of Pixelworks' Products to run Customer software in a combination that 
could infringe the Patent. Pixelworks' direct and indirect customers are 
intended third party beneficiaries of this integration and resolution. This 
Agreement may be modified only in writing signed by the original parties 
hereto, or by their successors or superiors in office.

INFOCUS SYSTEMS, INC.                       PIXELWORKS, INC.

By: /s/ Mark Pruitt                         By:  /s/ Allen H. Alley
   -------------------------------               ------------------------------

Print:  Mark Pruitt                         Print:   Allen H. Alley
   -------------------------------               ------------------------------

Title:  Vice President, R&D                 Title:   President & CEO
   -------------------------------               ------------------------------

Date:   2/24/2000                           Date:    2/24/2000
   -------------------------------               ------------------------------

Page 5 - License Agreement

 TYPE:  EX-23.2

                                                                    EXHIBIT 23.2
The Board of Directors
Pixelworks, Inc.:
We consent to the use of our Independent Auditors' Report dated January 26, 2000
relating to the balance sheets of Pixelworks, Inc. as of December 31, 1998 and
1999, and the related statements of operations, redeemable convertible preferred
stock and shareholders' equity (deficit) and cash flows for the period from
January 16, 1997 (date of inception) through December 31, 1997 and for each of
the years in the two-year period ended December 31, 1999 which report is
included in the Registration Statement and Prospectus, dated February 24, 2000,
of Pixelworks, Inc., and to the reference to our firm under the heading
"Experts" in the Prospectus.
                                          /s/ KPMG LLP
Portland, Oregon
February 24, 2000

Copied to clipboard