UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
February 15, 2017
Date of Report (Date of Earliest Event Reported)
UNI-PIXEL, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
| DELAWARE | 001-34998 | 75-2926437 | ||
| (State or Other Jurisdiction of | (Commission | (I.R.S. Employer | ||
| Incorporation or Organization) | File Number) | Identification No.) |
4699 Old Ironsides Drive, Suite 300 Santa Clara, California 95054 |
| (Address of Principal Executive Offices) |
| (281) 825-4500 |
| (Issuer’s Telephone Number, Including Area Code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| ITEM 1.01. | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On February 15, 2017 (the “Effective Date”) Uni-Pixel Displays, Inc. (“Displays”), a wholly owned subsidiary of Uni-Pixel, Inc. (“Uni-Pixel” or the “Company”), entered into the Letter Agreement Amendment (the “Amendment”) to the XSense Patent License Agreement (the “Patent License Agreement”) and the XSense Intellectual Property License Agreement (the “IP License Agreement”, and collectively with the Patent License Agreement, the “License Agreements”) by and between Displays and Atmel Corporation (“Atmel”). Displays originally entered into the License Agreements with Atmel, as previously disclosed by the Company, on April 16, 2015. The Amendment adds an affiliate of Atmel, Microchip Technology (Barbados) II Inc., as a party to the License Agreements.
The Amendment revises the respective License Agreements to provide that the licenses granted by Atmel to Displays for the Licensed XSense Patents (as defined in the Patent License Agreement) and the Licensed XSense IP (as defined in the IP License Agreement) allow for Displays to enter into a non-transferable, non-assignable, non-exclusive, royalty-bearing sublicense solely to General Interface Solution Limited, a Samoa corporation (“GIS”), to make, use offer for sale, sell and import Licensed XSense Products (as defined in the License Agreements), subject to certain terms provided for in the Amendment. Furthermore, the Amendment provides that if a sublicense agreement is in effect at the time that the License Agreements are terminated for any reason, then such sublicense will survive and remain in full force and effect with Atmel having assumed such sublicense agreement.
The Amendment increases the Royalty Rate (as such term is defined in the Patent License Agreement) for all sales of Licensed XSense Products by the Company under the Patent License Agreement, not including any sublicense arrangement, to 4%. The Amendment also provides that the definition of Sales Price (which is used to calculate the Royalty Rate) in the Patent License Agreement means the gross revenue recognized by the Company from the sale, use or other disposition of a Licensed XSense Product by the Company.
In addition, the Amendment adds that the Company shall pay Atmel a separate Royalty Rate of 5.7% for any GIS sublicenses, based on the manufacturing costs used by the Company to calculate the royalty payable under its sublicense agreement with GIS (the “Sublicense Price”), provided always that the Sublicense Price shall be reflect an arm’s length transaction between a willing licensor and a willing licensee and be no less than the manufacturing cost incurred by other manufacturers involving the most similar products sold in the same volume in an arms-length transaction, as reasonably determined by Displays and auditable by Atmel. A minimum of 4% of the 5.7% Royalty Rate owed to Atmel for a sublicense agreement with GIS must be paid in cash, in which case the remaining 1.7% will be paid to Atmel in the Company’s stock or other consideration as mutually agreed upon by the parties. Furthermore, the maximum cumulative annual royalties payable for the GIS sublicense is $13,250,000. Royalties from the GIS sublicense are separate from and do not count toward the minimum annual royalty amount paid for Display’s license under the Patent License Agreement during the Initial Term (as such term is defined in the Patent License Agreement), the maximum cumulative annual royalties during the Renewal Period (as such term is defined in the Patent License Agreement), nor the calculation of when the Non-Refundable Prepayment (as such term is defined in the Patent License Agreement) has been fully used and credited.
Other than as described above, the material terms of the License Agreements, as previously disclosed by the Company, have not been revised. Copies of these License Agreements are attached as exhibits to the Company’s Current Report on Form 8-K dated April 16, 2015 and are incorporated herein by reference. Copies of the Amendment is attached hereto as Exhibit 10.1, and is incorporated herein by reference. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.1.
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits
Exhibit No. |
Description | |
| 10.1 | Letter Agreement Amendment dated February 15, 2017 to XSense Patent License and XSense Intellectual Property License each between Uni-Pixel Displays, Inc. and Atmel Corporation. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: February 21, 2017 | By: | /s/ Christine Russell |
| Christine Russell, Chief Financial Officer |
EXHIBIT LIST
(d) Exhibits
|
Exhibit No. |
Description | |
| 10.1 | Letter Agreement Amendment dated February 15, 2017 to XSense Patent License and XSense Intellectual Property License each between Uni-Pixel Displays, Inc. and Atmel Corporation. |
Microchip Atmel
February 10, 2017
Mr. Jeff Hawthorne
Uni-Pixel Displays, Inc.
8708 Technology Forest Place, Suite 100
The Wood lands, TX 77381
| RE: | XSense License Agreements |
Dear Jeff:
This letter agreement amends and supplements the XSense Intellectual Property License Agreement and XSense Patent License Agreement, dated April 16, 201 5 (collectively, “XSense Licenses”) between Uni-Pixel Displays, Inc. and its Affiliates (collectively, “Licensee” or “Uni-Pixel”), and Atmel Corporation and its Affiliates. The terms of this letter agreement is effective on the date you sign below.
1. Assignment and Notices: The following Atmel Affiliate is hereby added as a Party to the XSense Licenses:
Microchip Technology (Barbados) II Inc., organized under the laws of the Caymen Islands, with a principal place of business at co/Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman KY l -9005, Cayman Island.
This entity along with Atmel Corporation and its Affiliates are collectively referred to as “Atmel” or “Licensor”. In light of integration activities, the XSense Licenses may be assigned from Atmel Corporation to Microchip Technology Inc. at a later date by providing Uni-Pixel written notice.
Licensor’s contact information in the Notices section of the XSense Licenses is updated as follows:
If to Licensor, to:
Atmel Corporation
c/o Microchip Technology Inc.
2355 W. Chandler Blvd.
Chandler, Arizona, 85224
Attn: Legal Department
Fax: 480-792-4112
2. GIS Sublicense: In addition to the Unipixel license rights described in Section 2. 1 of the XSense Patent License, and subject to the terms and conditions of the XSense Licenses and this letter agreement, Microchip grants Uni-Pixel a non-transferrable, non-assignable, non-exclusive, royalty-bearing sublicense, under the Licensed XSense IP and Licensed XSense Patents, solely to the following company to make, use, offer for sale, sell and import Licensed XSense Products:
General Interface Solution Limited, a Samoa corporation with a principal place of Offshore Chambers, P.O. BOX 217, Apia, Samoa. (http://www.gis-touch.com/html/index.php)
Uni-Pixel’s sublicense agreement with GIS: (a) is subject to Licensor’s review and prior approval; (b) will flow down the confidentiality terms of the XSense Licenses, and recordkeeping and auditing terms of the XSense Patent License; (c) provide for reporting and payment of royalties and/or fees due to Uni-Pixel; and (d) provide that, at Licensor’s discretion: (i) sublicesee’s books and records may be audited by Licensor, and (ii) Licensor will assume the sublicense agreement if either XSense License is terminated, in which case such sublicense will survive and remain in full force and effect under its terms. Uni-Pixel will be responsible for GIS’ compliance with the terms of the sublicense agreement.
3. Royalties from GIS Sales:
| a) | Under the XSense Patent License, the Royalty Rate for the GIS sublicense is 5.7%. Uni-Pixel will pay Licensor royalties for the GIS sublicense for each one year Royalty Period based on the Annual Royalty described below. A minimum of 4% of such Annual Royalty will be paid in cash, in which case the remaining 1.7% will be paid to Licensor in Uni-Pixel stock or other consideration as mutually agreed upon by the Parties. | |
| b) | The Annual Royalty is the product of: (i) the Sublicense Price during the applicable one-year Royalty Period, multiplied by (ii) the Royalty Rate of 5.7%. | |
| c) | The maximum amount of cumulative annual royalties payable by Uni-Pixel to Licensor for the GIS sublicense is thirteen million, two hundred and fifty thousand dollars ($13,250,000.00). | |
| d) | For purposes of calculating royalties for the GIS sublicense, the definition of “Sublicense Price” is as follows: | |
| “Sublicense Price” means the Licensed XSense Product manufacturing costs used by Uni-Pixel to calculate the royalty payable under its sublicense agreement with GIS, provided always that the Sublicense Price will reflect an arm’s length transaction between a willing licensor and a willing licensee and be no less than the manufacturing cost incurred by other manufacturers involving the most similar products sold in the same volume in an arms-length transaction, as reasonably determined by Uni-Pixel and auditable by Licensor. GIS’ sales of Licensed XSense Product to Uni-Pixel will not be subject to a royalty under this paragraph 3. |
4. Royalties from Unipixel Sales:
| a) | As of the effective date of this letter agreement, the Royalty Rate for Uni-Pixel’s license rights under the XSense Patent License increases to 4%. | ||
| b) | During the Initial Term, Uni-Pixel will pay Licensor a minimum royalty amount for each one-year Royalty Period equal to the greater of: | ||
| (i) | The Annual Royalty (described below), or | ||
| (ii) | Three Million, two hundred and fifty thousand dollars ($3,250,000.00). | ||
| c) | During the Renewal Term, Uni-Pixel will pay Licensor royalties for each one year Royalty Period based on the Annual Royalty, as described below. | ||
| d) | The Annual Royalty paid by Uni-Pixel to Licensor is the product of: (i) the total Net Sales for Licensed XSense Products sold by Unipixel during the one-year Royalty Period, multiplied by (ii) the applicable Royalty Rate (described in paragraph 4a of this letter agreement). | ||
| e) | For purposes of calculating royalties based on Uni-Pixel sales, the definitions of “Net Sales” and “Sales Price” are as follows: | ||
“Net Sales” means the Sales Price, less taxes and actual shipping charges included in those revenues.
“Sales Price” means Uni-Pixel’s gross revenue recognized from the sale, use or other disposition of a Licensed XSense Product by Licensee (including Affiliates). For sales by Uni-Pixel’s Affiliates to final customers, the revenues recognized from sales or dispositions to such final customers will be used. For sales that are not simple arms-length transactions (for example, when the Licensed XSense Product is (i) bartered, given away, leased, used internally, or incorporated into or sold in combination with other products or (ii) combined with other products), the Sales Price will be no less than the amount charged for the most similar products sold in the same volume in arms-length sales.
| f) | To be clear, royalties from the GIS sublicense are separate from and do not count toward the minimum annual royalty amount paid for Un i-Pixel’s license during the Initial Term (described in paragraph 4b of this letter agreement), the maximum cumulative annual royalties during the Renewal Period (described in Section 3.4 of the XSense Patent License), nor the calculation of when the Non-Refundable Prepayment has been fully used and credited (described in Section 3.6(b) of the XSense Patent License). |
5. General: All capitalized terms not defined in this letter agreement have the meaning assigned to them in the XSense Licenses. Except as expressly stated in this letter agreement, the terms and conditions of such XSense licenses remain in full force and effect. However, if there is a conflict between the terms of this letter agreement and the XSense Licenses, the terms of this letter agreement will govern.
Please indicate Uni-Pixel’s agreement to the terms of this letter agreement below.
Sincerely,
| /s/ Steve Sanghi | |
| Steve Sanghi | |
| Atmel Corporation, CEO | |
| Microchip Technology (Barbados) II Inc., President | |
| ACKNOWLEDGED AND AGREED TO BY: | |
| /s/ Jeff Hawthorne | |
| Jeff Hawthorne | |
| Uni-Pixel Displays, Inc., CEO | |
| Date: February 15, 2017 |