Item 1.01 Entry into a Material Definitive Agreement.
As disclosed in a Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 1, 2009, Trident Microsystems, Inc. (the "Company")
and its wholly-owned subsidiary, Trident Microsystems (Far East) Ltd., a
corporation organized under the laws of the Cayman Islands ("TMFE"), entered
into a Purchase Agreement (the "Purchase Agreement") on March 31, 2009 with
Micronas Semiconductor Holding AG, a Swiss corporation ("Micronas") pursuant to
which TMFE agreed to acquire selected assets of the FRC line of frame rate
converters, the DRX line of demodulators and all of the audio processing product
lines of Micronas' Consumer Division (the "Acquisition"). On May 14, 2009, the
parties completed the Acquisition pursuant to which TMFE and the Company
delivered to Micronas consideration of 7 million newly issued shares of the
Company's common stock (the "Shares"), representing approximately 10% of the
Company's outstanding common stock, and warrants (the "Warrants") to acquire up
to 3.0 million additional shares of the Company's common stock. One million
warrants will vest on each of the second, third and fourth anniversaries of the
closing of the transaction, with exercise prices of $4.00 per share, $4.25 per
share and $4.50 per share, respectively. The Warrants provide for customary
anti-dilution adjustments, including for stock splits, dividends, distributions,
rights issuances and certain tender offers or exchange offers. If not yet
exercised, the Warrants will expire on May 14, 2012. The form of Warrant is
filed as Exhibit 10.34 hereto and is incorporated herein by reference.
In connection with the Acquisition, the parties identified below entered into
the following ancillary documents, each effective as of May 14, 2009:
• A Cross License Agreement (the "Cross License"), between TMFE and Micronas,
pursuant to which Micronas has granted to TMFE a royalty-free, perpetual,
irrevocable, fully assignable and transferable worldwide license, including
the right to sublicense, to patents that are relevant to, but not exclusive
to, the FRC line of frame rate converters, the DRX line of demodulators and
all of the audio processing product lines acquired in the Acquisition.
Ownership of these patents will remain with Micronas following completion of
the Acquisition. The license is exclusive for the first three years, subject
to certain exceptions, and is non-exclusive thereafter. TMFE has granted a
license to Micronas a royalty-free, perpetual, irrevocable, non-exclusive,
fully assignable and transferable worldwide license, including the right to
sublicense, to patents exclusively relevant to the FRC line of frame rate
converters, the DRX line of demodulators and all of the audio processing
product lines acquired in the Acquisition. During the first three years, the
license granted by TMFE to Micronas is limited to use for products that are
not a DRX, Audio or FRC Product. Following this three year period, Micronas
may use the licensed rights on any product.
• A Stockholder Agreement (the "Stockholder Agreement"), between the Company
and Micronas, setting forth specified registration rights associated with
the Shares, including demand and piggyback registration rights, restrictions
on transfer of the Shares and provides Micronas certain pre-emptive rights
to acquire additional shares of our Common Stock. Under the Stockholders
Agreement, Micronas has agreed to vote the Shares in support of acquisition
proposals approved by the disinterested members of our Board of Directors,
and together with the recommendation of the disinterested members of the
Board of Directors on other stockholder proposals, and Micronas' ability to
engage in certain solicitations and activities encouraging support for or
against proposals inconsistent with its voting agreements is restricted.
• A Services Agreement, between TMFE and Micronas, dated May 15, 2009,
pursuant to which Micronas agrees to provide to TMFE specified transition
services and support at agreed prices, including intellectual property
transitional services for a limited period of time to assist TMFE and its
affiliates in achieving a smooth transition of the acquired products and
product lines. The transition services include certain manufacturing design,
maintenance and support services, sales of inventory and newly-manufactured
products and certain finance and administration, IT, infrastructure,
warehousing and similar services, to be provided pursuant to specified
service level agreements.
In connection with the Acquisition, the Company entered into the First
Amendment to Amended and Restated Rights Agreement described under item 3.03
below, and such description is incorporated herein by reference.
The terms of the Acquisition are more fully described in the Purchase
Agreement, which was filed by the Company as Exhibit 2.1 to the Current Report
on Form 8-K filed on April 1, 2009. The foregoing descriptions of the Cross
License, the Stockholder Agreement and the Services Agreement, which are
attached hereto as Exhibits 10.35, 10.36 and 10.37, respectively, do not purport
to be complete and are qualified by the text thereof and are incorporated herein
by reference. The full text of the press release, dated May 14, 2009, announcing
the completion of the Acquisition, is attached as Exhibit 99.1 to this Current
Report on Form 8-K and is incorporated by reference herein.
Table of Contents
Item 2.01 Completion of Acquisition or Disposition of Assets
As set forth in Item 1.01 above, on May 14, 2009, the Acquisition was
consummated. The information set forth in Item 1.01 above is incorporated herein
by reference. The terms of the Acquisition are more fully described in the
Purchase Agreement, which was filed by the Company as Exhibit 2.1 to the Current
Report on Form 8-K filed on April 1, 2009.
Item 3.02 Unregistered Sale of Equity Securities
As set forth in Item 1.01 above, in connection with the Acquisition, TMFE and
the Company issued to Micronas 7 million newly issued shares of the Company's
common stock and the Warrants to purchase up to 3 million shares of the
Company's Common Stock. The Shares and Warrants were issued to a non-US person
(as that term is defined in Regulation S of the Securities Act of 1933) in an
offshore transaction relying on Regulation S of the Securities Act of 1933, as
amended. The Stockholders Agreement, among other things, sets forth the
Company's agreement to provide to Micronas certain registration rights relating
to the Shares, including piggy-back registration rights and rights to require
the filing of a resale registration statement beginning two years after the
completion of the Acquisition. The information set forth in Item 1.01 above is
incorporated herein by reference.
Item 3.03 Material Modification to Rights of Security Holders
Pursuant to the Stockholder Agreement described in Item 1.01 above, the
Company agreed to amend the Amended and Restated Rights Agreement, dated as of
July 23, 2008 (the "Rights Agreement"), between the Company and Mellon Investor
Services LLC ("Mellon"), to permit Micronas and its affiliates to acquire up to
a specified percentage (initially set at 13.72%) of the Company's voting equity
securities in connection with and following consummation of the Acquisition,
subject to the terms of the Stockholder Agreement, without triggering the
issuance of rights under the Rights Agreement. Accordingly, on May 14, 2009,
prior to completion of the Acquisition and issuance of the Shares and the
Warrants, the Company and Mellon entered into the First Amendment to Amended and
Restated Rights Agreement (the "First Amendment") in satisfaction of the
Company's obligations under the Stockholder Agreement.
The foregoing description of the terms of the First Amendment is qualified in
its entirety by reference to the provisions of the First Amendment, a copy of
which is attached hereto as Exhibit 4.4 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements for Businesses Acquired.
The financial information required to be filed with respect to the acquired
business described in Item 2.01 has not been filed on this initial Current
Report on Form 8-K. Instead, financial information will be filed by amendment
within 71 calendar days after the due date for the initial filing of this report
with the Commission, as permitted by Item 9.01(a)(4) of Form 8-K.
(b) Pro Forma Financial Information.
The pro forma financial information required to be filed with respect to the
acquired business described in Item 2.01 has not been filed on this initial
Current Report on Form 8-K. Instead, the pro forma financial information will be
filed by amendment within 71 calendar days after the due date for the initial
filing of this report with the Commission, as permitted by Item 9.01(b)(2) of
Form 8-K.
Table of Contents
(d) Exhibits
Exhibit No. Description
4.4 First Amendment to Amended and Restated Rights Agreement, dated
May 14, 2009.
10.34 Form of Warrant for the Purchase of Shares of Common Stock of Trident
Microsystems, Inc. to Micronas Semiconductor Holding AG.
10.35 Cross License Agreement dated May 14, 2009, between Trident
Microsystems (Far East) Ltd. and Micronas Semiconductor Holding AG.*
10.36 Stockholder Agreement dated May 14, 2009, between Trident
Microsystems, Inc. and Micronas Semiconductor Holding AG.
10.37 Services Agreement dated May 15, 2009, between Trident Microsystems
(Far East) Ltd. and Micronas Semiconductor Holding AG.
99.1 Press release dated May 14, 2009.
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* Confidential
treatment
has been
requested of
the
Securities
and Exchange
Commission
for portions
of this
exhibit.
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