NETLIST,INC. (NASDAQ:NLST) Files An 8-K Entry into a Material Definitive Agreement
Item1.01. Entry into a Material Definitive
Agreement.
As previously disclosed, in September2016, Netlist,Inc.
(theCompany) filed legal proceedings for patent infringement
against SK hynix Inc., a South Korean memory semiconductor
supplier, and two of its subsidiaries in the U.S. International
Trade Commission and in district court (collectively, theSK hynix
Proceedings).
On May3, 2017, the Company and TR Global Funding V, LLC, an
affiliate of TRGP Capital Management, LLC (TRGP), entered into an
investment agreement (theTRGP Agreement), to which TRGP has
agreed to directly fund the costs incurred by or on behalf of the
Company in connection with the SK hynix Proceedings and certain
inter partes patent review proceedings relating to the
Companys patents that are the subject of the SK hynix
Proceedings, in each case including costs incurred since
January1, 2017 and as more fully described in the TRGP Agreement
(all such funded costs, collectively, theFunded Costs). In
exchange for such funding, the Company has agreed that, if the
Company recovers any proceeds in connection with the SK hynix
Proceedings, it will pay to TRGP the amount of the Funded Costs
paid by TRGP plus an escalating premium based on when any such
proceeds are recovered, such that the premium will equal a
specified low-to-mid double-digit percentage of the amount of the
Funded Costs and such percentage will increase by a specified low
double-digit amount each quarter after a specified date until any
such proceeds are recovered. In addition, to the terms of a
separate security agreement between the Company and TRGP dated
May3, 2017 (theSecurity Agreement), the Company has granted to
TRGP (i)a first-priority lien on, and security in, the claims
underlying the SK hynix Proceedings and any proceeds that may be
received by the Company in connection with such proceedings, and
(ii)a second-priority lien on, and security in, the Companys
patents that are the subject of the SK hynix Proceedings.
The TRGP Agreement does not impose financial covenants on the
Company. Termination events under the TRGP Agreement include,
among others, any failure by the Company to make payments to TRGP
thereunder upon receipt of recoveries in the SK hynix
Proceedings; the occurrence of certain bankruptcy events; certain
breaches by the Company of its covenants under the TRGP Agreement
or the Security Agreement; and the occurrence of a change of
control of the Company. If any such termination event occurs,
subject to certain cure periods for certain termination events,
TRGP would have the right to terminate its obligations under the
TRGP Agreement, including its obligation to make any further
payments of Funded Costs after the termination date. In the event
of any such termination by TRGP, the Company would continue to be
obligated to pay TRGP the portion of any proceeds the Company may
recover in connection with the SK hynix Proceedings that TRGP
would have been entitled to receive absent such termination, as
described above, and TRGP may also be entitled to seek additional
remedies to the dispute resolution provisions of the TRGP
Agreement.
In connection with the TRGP Agreement, TRGP entered into
intercreditor agreements with SVIC No.28 New Technology Business
Investment L.L.P. (SVIC) and Silicon Valley Bank (SVB), each of
which holds a security interest in certain of the Companys assets
in connection with outstanding loans made to the Company, and
SVIC and SVB entered into an intercreditor agreement with each
other (such intercreditor agreements, collectively,
theIntercreditor Agreements). to the terms of the Intercreditor
Agreements, TRGP, SVB and SVIC have agreed to their relative
security interest priorities in the Companys assets. The Company
consented and agreed to the terms of each of the Intercreditor
Agreements.
The foregoing descriptions of the TRGP Agreement, the Security
Agreement and the Intercreditor Agreements are intended to be
summaries and do not purport to be complete. As a result, such
descriptions are subject to, and qualified in their entirety by
reference to, the full text of each such document, which will be
filed as exhibits to the Companys Quarterly Report on Form10-Q
for the quarter ending June30, 2017.
Item 2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The information set forth above in Item1.01 of this Current
Report on Form8-K is incorporated in this Item2.03 by reference.
Item 8.01 Other Events.
On May4, 2017, the Company issued a press release announcing
the TRGP Agreement. The press release is attached as
Exhibit99.1 to this Current Report on Form8-K and is
incorporated in this Item8.01 by reference.
Item9.01. Financial Statements and
Exhibits.
(d) Exhibits.
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Exhibit |
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Number |
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Description |
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99.1 |
Press Release, dated May4, 2017. |
About NETLIST, INC. (NASDAQ:NLST)
Netlist, Inc. designs, manufactures and sells a range of memory subsystems for datacenter, data storage and computing markets. The Company operates in the segment of design and manufacture of memory subsystems for the server, computing and communications markets. The Company’s memory subsystems consist of combinations of dynamic random access memory integrated circuits (DRAM ICs or DRAM), NAND flash memory (NAND flash), application-specific integrated circuits (ASICs) and other components assembled on printed circuit boards (PCBs). The Company primarily markets and sells its products to original equipment manufacturer (OEM) customers, hyper scale datacenter operators and data storage vendors. The Company’s products include NVvault, HyperCloud, and specialty memory modules and flash-based products. NVvault is a memory subsystem that incorporates both DRAM and NAND flash in a single persistent dual-in line memory module (DIMM) solution. NETLIST, INC. (NASDAQ:NLST) Recent Trading Information
NETLIST, INC. (NASDAQ:NLST) closed its last trading session down -0.01 at 1.27 with 322,193 shares trading hands.