Form 8-K

TVIA INC - TVIA

Filed: December 19, 2007 (period: November 30, 2007)

Report of unscheduled material events or corporate changes.

Table of Contents

8-K - FORM 8-K
Item 1.01 Entry into a Material Definitive Agreement.
Item 9.01 Financial Statements and Exhibits.
SIGNATURES
Exhibit Index

EX-10.1 (EXHIBIT 10.1)

EX-10.2 (EXHIBIT 10.2)

Table of Contents

 
UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
CURRENT REPORT
 Pursuant to Section 13 or 15(d) of
 The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
November 30, 2007
 
TVIA, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
000-30539
 
94-3175152
 
 
 
 
 
(State or other jurisdiction of
 
(Commission File Number)
 
(IRS Employer
incorporation)
 
 
 
Identification No.)
4001 Burton Drive
 Santa Clara, CA 95054
 (Address of principal executive offices, including zip code)
(408) 327-8000
 (Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
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))
 
 

TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
Item 1.01 Entry into a Material Definitive Agreement
Item 9.01 Financial Statements and Exhibits
SIGNATURES
Exhibit Index
EXHIBIT 10.1
EXHIBIT 10.2

Table of Contents

Item 1.01 Entry into a Material Definitive Agreement.
     Tvia Inc. (the “Company”) has entered into a License Agreement, dated as of November 30, 2007 (the “ License Agreement ”), with MediaTek USA Inc. (“ MediaTek USA ”) pursuant to which the Company has granted to MediaTek USA an irrevocable, non-exclusive, perpetual license to use the Company’s “Mars” technology in MediaTek USA’s or its affiliates’ products in exchange for a $6.7 million license fee. The License Agreement provides that $1.0 million of this license fee will be deposited into an escrow fund that will be available to MediaTek USA for certain liabilities that it may incur during the six months following the effective date of the License Agreement.
     Concurrently with their entry into the License Agreement, Tvia Inc. (Hefei) Co., Ltd., a subsidiary of the Company (“Tvia China”) , and MediaTek Inc. China (“ MediaTek China ”) entered into an Asset Purchase Agreement, dated as of November 30, 2007 (the “ Asset Purchase Agreement ”), which provides for the transfer of certain of Tvia China’s physical assets relating to the development and maintenance of the “Mars” technology to MediaTek China in exchange for a cash payment of $300,000. The Asset Purchase Agreement provides that $45,000 of the purchase price will be deposited in an escrow fund that will be available to MediaTek China for certain liabilities that it may incur during the six months following the date that payment is made under the Asset Purchase Agreement.
     Each of the License Agreement and the Asset Purchase Agreement contains customary terms and conditions, including with respect to indemnification and limitations of liability. Copies of the License Agreement and the Asset Purchase Agreement are filed hereto as Exhibits 10.1 and 10.2, respectively.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits

10.1
 
License Agreement, dated as of November 30, 2007, by and between the Company and MediaTek USA.
 
 
 
 
 
10.2
 
Asset Purchase Agreement, dated as of November 30, 2007, by and between Tvia China and MediaTek China.

Table of Contents

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 hereunto duly authorized.
 
 
 
 
 
 
       Tvia, Inc.
  
 
 
By:  
/s/ Eli Porat 
 
 
 
Eli Porat 
 
 
 
Chief Executive Officer 
 
 
Date: December 19, 2007

Table of Contents

Exhibit Index  
 
 
 
Exhibit
 Number
 
Exhibit Title
10.1
 
License Agreement, dated as of November 30, 2007, by and between the Company and MediaTek USA.
 
 
 
10.2
 
Asset Purchase Agreement, dated as of November 30, 2007, by and between Tvia China and MediaTek China.

Exhibit 10.1
EXECUTION COPY
LICENSE AGREEMENT
     THIS LICENSE AGREEMENT (the “Agreement”) is entered into as of November 30, 2007 (the “ Signing Date ”), by and between  TVIA, INC.  (“ Tvia ”), a Delaware corporation having a place of business at 4001 Burton Drive, Santa Clara, CA 95054, and  MEDIATEK USA INC.  (“ Licensee ”), a Delaware corporation having a place of business at 2860 Junction Ave. San Jose, CA 95134.
     WHEREAS, Tvia has developed certain display processor technology known as the Mars technology which is described in Exhibit A;
     WHEREAS, Tvia desires to license such Mars technology and documentation to Licensee and Licensee’s Affiliates subject to the terms and the conditions set forth in this Agreement,
     WHEREAS, Licensee and its Affiliates desire to obtain a license to use the Mars technology for incorporation into their products;
     WHEREFORE, the parties agree as follows:
1. DEFINITIONS.
     Whenever used in this Agreement, the terms set forth in this Section 1 shall have the meanings ascribed to them below.
     1.1 “Licensed Technology” means Tvia’s Mars technology described in Exhibit A to this Agreement.
     1.2 “Affiliates” means any owner or subsidiary of Licensee or any person or entity, domestic or abroad, directly or indirectly controlling, controlled by, or under common control with Licensee or Licensee’s owner. For purposes of this agreement, “ control ” means the ownership of more than 50% of the voting stock of such entity or the ability to control the day-to-day operations and business of such entity.
     1.3 “Business Day” means a day, other than Saturday, Sunday, or other day on which commercial banks in San Francisco, California are authorized or required by applicable law to close.
     1.4 “Corporate Documents” means copies of resolutions duly adopted by the Board of Directors of Tvia approving this Agreement and the transactions contemplated thereby, in form and substance reasonably satisfactory to Licensee, and, as determined by Tvia as of the Signing Date, of any other necessary corporate action or approvals in connection with the entry and performance by Tvia of this Agreement.
     1.5 “Escrow Agent” means U.S. Bank National Association.

     1.6 “Escrow Agent Agreement” means the escrow agreement to be executed by and among the Escrow Agent, Licensee, and Tvia in the form to be agreed among the Escrow Agent, Licensee, and Tvia.
     1.7 “Escrow Release Date” means the date six (6) months immediately following the Effective Date.
     1.8 “Indemnitee” means Licensee, Licensee’s current and future Affiliates, and their respective successors and assigns.
     1.9 “In-House Counsel Opinion” means an opinion of the In-house Legal Counsel of Tvia dated on or after the date hereof and addressed to Licensee, in substantially the form of Exhibit D attached hereto, to the effect that Tvia has the necessary corporate power and authority to enter into this Agreement and the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action and approvals.
     1.10 “Products” means all products offered by Licensee or its Affiliates now or hereafter existing.
     1.11 “Territory” means the world.
     1.12 “Third Party” means any person or entity other than Tvia and its Affiliates.
     1.13 “Effective Date” means the earliest date at which all of the following shall have occurred:
          (i) Delivery to Licensee by Tvia of final and/or executed versions of (a) the Corporate Documents and (b) the In-House Counsel Opinion; and
          (ii) The closing of the transactions contemplated by that certain Assets Transfer Agreement by and between MediaTek Inc. China, a company established under the laws of the People’s Republic of China, and Tvia, Inc. China, a company established under the laws of the People’s Republic of China, dated contemporaneously herewith.
2. LICENSE GRANTS; OWNERSHIP.
     2.1 License Grant. Subject to the terms and conditions of this Agreement, as of the Effective Date, Tvia hereby grants to Licensee and its Affiliates an irrevocable, non-exclusive, perpetual license to make, have made, use, have used, import, offer to sell and sell (through multiple layers of distribution) Products which incorporate the Licensed Technology in the Territory (“ License ”). Licensee and its Affiliates shall have the right to reproduce, modify, and make derivative works of the Licensed Technology for incorporation into its Products. Prior to the Effective Date, Tvia grants to Licensee and its Affiliates a non-exclusive, non-transferable, royalty-free, perpetual license to make, have made, use, and have Products which incorporate the Licensed Technology solely for Licensee to evaluate the Licensed Technology (“ Interim License ”). As of the Effective Date, the Interim License will terminate and be replaced by the License.

     2.2 License Restrictions. Licensee acknowledges that any usage of the Licensed Technology not within the scope of the licenses granted in Section 2.1 is prohibited. Licensee specifically agrees that it will not, and will ensure that its Affiliates do not, market or sell the Licensed Technology as a stand alone product.
     2.3 Delivery. Tvia will deliver copies of the Licensed Technology in appropriate electronic formats, including without limitation, copies of any software in executable and source code form, schematics, drawings, sketches, diagrams, figures, instructions, specifications and related documentation to Licensee within five (5) Business Days after the Signing Date.
     2.4 Ownership of the Licensed Technology. Notwithstanding any other provision of this Agreement, Tvia retains all ownership, right, title and interest in and to the Licensed Technology and all associated intellectual property rights therein. Licensee acknowledges that the Licensed Technology is and shall remain the property of Tvia. This ownership provision does not apply to any new developments, in any form, added to the Licensed Technology, created by Licensee or Licensee’s Affiliates, that are separable from the Licensed Technology.
     2.5 Modifications/Improvements by Licensee. Notwithstanding any other provision of this Agreement, all right, title and interest in and to any new developments, in any form, added to the Licensed Technology, as intellectual property separate from and exclusive of the Licensed Technology, created by Licensee or Licensee’s Affiliates on or after the Signing Date, and all related intellectual property rights, shall be owned by Licensee.
3. PAYMENTS AND TAXES.
     3.1 License Fees. Within five (5) Business Days of the Effective Date, Licensee shall pay Tvia a royalty license fee of six million, seven hundred thousand U.S. dollars (U.S. $6,700,000),  less  the Escrow Fund which will be deposited with the Escrow Agent pursuant to Section 3.3.
     3.2 Payment. All payments shall be made in U.S. dollars by wire as specified by Tvia and reasonably acceptable to Licensee.
     3.3 Escrow Deposit. Within five (5) Business Days of the Effective Date, Licensee shall deliver to the Escrow Agent an amount in cash, denominated in U.S. dollars, equal to $1,000,000 (the “ Escrow Fund ”) to be held pursuant to the provisions of the Escrow Agent Agreement.
     3.4 Taxes. Each party shall be responsible for all taxes imposed on such party by operation of law.
4. WARRANTIES.
     4.1 Licensee represents and warrants that: (1) Licensee has the authority to enter into this Agreement, (2) Licensee has the financial ability and resources to make the payments to Tvia as required under this Agreement, and (3) Affiliates will pay the balance of any amounts due to Tvia should Licensee fail to make payment in accordance with the terms of this Agreement.

     4.2 Tvia represents and warrants that (1) Tvia is the owner of the Licensed Technology and that Tvia has the authority to grant the licenses granted hereunder, free and clear of all liens, claims and encumbrances, (2) there is no claim or proceeding pending or threatened with respect to the Licensed Technology, (3) the exercise of the rights granted under Section 2 do not infringe or violate the intellectual property rights of any third party.
     4.3 EXCEPT AS SET FORTH IN SECTION 4.2, THE LICENSED TECHNOLOGY AND DOCUMENTATION ARE PROVIDED “AS IS” AND WITHOUT WARRANTY. EXCEPT AS SET FORTH IN SECTION 4.2, TVIA EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES RELATING TO THE LICENSED TECHNOLOGY AND DOCUMENTATION, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, WHETHER ARISING IN LAW, CUSTOM, CONDUCT, OR OTHERWISE. EXCEPT AS SET FORTH IN SECTION 4.2, NO PERSON IS AUTHORIZED TO MAKE ANY WARRANTY OR REPRESENTATION CONCERNING THE PERFORMANCE OF THE LICENSED TECHNOLOGY.
5. LIMITATION OF LIABILITY.
     5.1 LICENSEE SHALL NOT BE LIABLE TO TVIA, TVIA’S AFFILIATES, OR ANY OTHER PARTY CLAIMING THROUGH OR UNDER TVIA, FOR ANY LOST PROFITS, OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER IN AN ACTION IN CONTRACT, TORT (INCLUDING STRICT LIABILITY), BASED ON A WARRANTY, OR OTHERWISE ARISING OUT OF OR CONNECTED WITH THIS AGREEMENT, EVEN IF LICENSEE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
     5.2 EXCEPT FOR THE INDEMNIFICATION PROVISIONS SET FORTH IN SECTION 8.1, TVIA SHALL NOT BE LIABLE TO LICENSEE, LICENSEE’S AFFILIATES OR ANY OTHER PARTY CLAIMING THROUGH OR UNDER LICENSEE, FOR ANY LOST PROFITS, OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER IN AN ACTION IN CONTRACT, TORT (INCLUDING STRICT LIABILITY), BASED ON A WARRANTY, OR OTHERWISE ARISING OUT OF OR CONNECTED WITH THIS AGREEMENT, EVEN IF TVIA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6. TERM AND TERMINATION.
     6.1 Term. This Agreement shall become effective on the Signing Date and continue in effect until terminated according to its terms.
     6.2 Termination. Each party shall be entitled to terminate this Agreement upon written notice to the other party if the other party materially breaches any obligation hereunder, which breach continues or remains uncured for a period of thirty (30) days after receipt of written notice from the non-defaulting party, unless such breach cannot by its nature be cured, in which event the defaulting party shall be deemed in default hereof upon the occurrence of such breach.

     6.3 Survival. The provisions of Sections 1, 2, 4, 5, 6.3, 7, 8, and 9 shall survive any expiration or termination of this Agreement.
7. EMPLOYEES
     Notwithstanding anything in the Confidentiality and Non-solicitation Agreement between Tvia and Licensee dated October 8, 2007 to the contrary, Tvia hereby expressly grants to Licensee or its Affiliates the right to offer to hire and to hire and to enter into employment contracts with those employees of Tvia who are specified in Exhibit B subject to the valid and lawful consent of each such employee to employment with Licensee or its Affiliates. Licensee shall have no obligation with respect to liabilities related to Tvia’s employment of such persons prior to the Signing Date (or the termination of employment with Tvia), including, without limitation, any obligations for accrued but unpaid wages, accrued vacation pay, severance, and other benefits.
8. INDEMNIFICATION PROCEDURES
     8.1 Indemnity. Notwithstanding anything to the contrary in this Agreement or elsewhere, Tvia shall indemnify and hold Licensee and its Affiliates harmless from and against any and all liabilities, losses, damages, costs, fees and expenses, including reasonable attorneys’ fees, (the “ Damages ”) arising out of or related to (i) any breaches of any representation or warranty set forth in Section 4.2 (“ Breaches ”) or (ii) any claims (“ IP Claims ” and, together with any Breaches, the “ Claims ”) brought against Licensee or its Affiliates that the manufacture, use or sale of Products infringes or misappropriates any intellectual property rights of any third party resulting from the use of the Licensed Technology by Licensee or its Affiliates;  provided , however, that with respect to Tvia’s indemnification obligations pursuant to this section, (i) Tvia shall not be liable unless the aggregate amount of the Damages with respect to all Claims exceeds USD $500,000, in which event, Tvia shall be liable for the first dollar thereof, and (ii) Tvia’s maximum liability shall not exceed USD $1,000,000. Notwithstanding the foregoing, Tvia shall not be obligated to indemnify Licensee to the extent that an infringement is based upon use of the Licensed Technology in combination with other products not supplied or recommended by Tvia or specified by Tvia as being compatible with the Licensed Technology, if such infringement or misappropriation would not have occurred but for such combined use.
     8.2 Escrow Fund. The Escrow Fund shall be available to hold harmless and indemnify each of the Indemnitees from and against, and to compensate and reimburse each of the Indemnitees for, any Damages which are suffered or incurred by any of the Indemnitees or to which any of the Indemnitees may otherwise become subject, in connection with a Claim. The aggregate recovery of Indemnitees for Damages in connection with Claims shall be limited only by the provisions set forth in Section 8.1, and not by the Escrow Fund.
     8.3 If at any time prior to the Escrow Release Date, Licensee or its Affiliate determines in good faith that any Indemnitee has a Claim, Licensee or its Affiliate may deliver to the Escrow Agent a notice (“ Claim Notice ”):
          (a) stating that the Indemnitee has a claim for indemnification pursuant to Section 8.1;

          (b) to the extent possible, contain a good faith non-binding, preliminary estimate of the amount to which such Indemnitee claims to be entitled to receive, which shall be the amount of Damages such Indemnitee claims to have so incurred or suffered or could reasonably be expected to incur or suffer; and
          (c) specifying in reasonable detail (based upon the information then possessed by Licensee) the material facts known to the Indemnitee giving rise to such Claim.
     8.4 At the time of delivery of any Claim Notice to the Escrow Agent, Licensee or its Affiliate shall deliver to Tvia a duplicate copy of such Claim Notice. No delay in providing such Claim Notice to Tvia (so long as it is delivered prior to the Escrow Release Date) shall affect an Indemnitee’s rights hereunder.
     8.5 If Tvia in good faith objects to any claim made by Licensee in any Claim Notice, then Tvia shall deliver a written notice (a “ Claim Dispute Notice ”) to Licensee during the 30-day period commencing upon receipt by Tvia of the Claim Notice. The Claim Dispute Notice shall set forth in reasonable detail the principal basis for the dispute of any claim made by Licensee or its Affiliate in the Claim Notice. If Tvia does not deliver a Claim Dispute Notice to Licensee or its Affiliate prior to the expiration of such 30-day period, then Licensee or its Affiliate may direct the Escrow Agent to deliver cash from the Escrow Fund to Licensee or its Affiliate in accordance with this Section 8.
     8.6 If Tvia delivers a Claim Dispute Notice, then Licensee or its Affiliate and Tvia shall attempt in good faith to resolve any objections raised by Tvia in such Claim Dispute Notice. If Licensee or its Affiliate and Tvia agree to a resolution of such objection, a memorandum setting forth such agreement shall be prepared and signed by both parties and promptly delivered to the Escrow Agent directing the Escrow Agent to distribute cash from the Escrow Fund in accordance with the terms of such memorandum.
     8.7 If no such resolution can be reached during the 30-day period following Licensee or its Affiliate’s receipt of a given Claim Dispute Notice, then upon the expiration of such 30-day period, either Licensee or its Affiliate or Tvia may bring suit to resolve the objection in accordance with Section 9.10. The decision of the trial court as to the validity and amount of any claim in such Claim Notice shall be nonappealable, binding and conclusive upon the Licensee, Tvia, and their respective Affiliates, and Licensee or its Affiliate and Tvia shall promptly direct the Escrow Agent to act in accordance with such decision and distribute cash from the Escrow Fund in accordance therewith. Judgment upon any award rendered by the trial court may be entered in any court having jurisdiction.
     8.8 Release of Escrow Fund. On or prior to the Escrow Release Date, Licensee or its Affiliate shall deliver written authorization instructing the Escrow Agent to pay to Tvia any remaining Escrow Fund, less (i) amounts subject to any outstanding Claim by Indemnitees and (ii) required payments pursuant to this Section 8. Following the Escrow Release Date, the indemnification obligations of Tvia set forth in Section 8.1 shall remain in full force and effect.
9. GENERAL

     9.1 Bankruptcy. In the event Tvia voluntarily or involuntarily becomes subject to the protection of the United States Bankruptcy Code 11 U.S.C. (the “ Bankruptcy Code ”), it is agreed that Licensee shall be entitled to all of the benefits of the Bankruptcy Code including the protections of Section 365(b) and the amendments to the Bankruptcy Code affected by the October 18, 1988 Intellectual Property Bankruptcy Protection Act. All rights and licenses, other than with respect to trademarks, granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101 of the Bankruptcy Code. The parties agre