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
 
Date of Report (Date of Earliest Event Reported):  April 16, 2018
 
NETLIST, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware	 	001-33170	 	95-4812784	
(State or Other Jurisdiction of
Incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification Number)	
 
175 Technology, Suite 150
Irvine, California 92618
(Address of Principal Executive Offices)
 
(949) 435-0025
(Registrant’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):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

 

 
Item 1.01.                                         Entry into a Material Definitive Agreement.
 
As previously reported, on April 17, 2017, Netlist, Inc. (the “Company”) entered into a rights agreement (the “Rights Agreement”) with Computershare Trust Company, N.A., as rights agent, pursuant to which the Company’s Board of Directors (the “Board”) authorized and declared a dividend of one right (each, a “Right”) for each outstanding share of the Company’s common stock, par value $0.001 per share (“Common Stock”), to stockholders of record at the close of business on May 18, 2017 (the “Record Date”), and authorized the issuance of one Right for each share of Common Stock issued by the Company (except as otherwise provided in the Rights Agreement) between the Record Date and the Expiration Date (as defined in the Rights Agreement). The Board approved the Rights Agreement as part of the Company’s strategy in connection with its legal proceedings for patent infringement against SK hynix, Inc. (“SK hynix”).
 
On April 16, 2018, the Company entered into an amendment (the “Amendment”) to the Rights Agreement. The Amendment amends the definition of “Expiration Date” in the Rights Agreement to incorporate all of the Company’s legal proceedings against SK hynix, and amends the definition of “Final Expiration Date” in the Rights Agreement to mean the close of business on April 17, 2019. Accordingly, the Amendment extends the final expiration of the Rights issued pursuant to the Rights Agreement from April 17, 2018 to April 17, 2019. As a result and pursuant to the Amendment, the Rights will expire and become unexercisable on or before, in accordance with the terms of the Rights Agreement, the close of business on April 17, 2019.
 
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text thereof, a copy of which has been filed as Exhibit 4.1 hereto and is incorporated herein by reference.
 
Item 3.03. Material Modification of Rights of Security Holders.
 
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 3.03 by reference.
 
Item 8.01.                                         Other Events.
 
On April 16, 2018, the Company issued a press release announcing the issuance of an Initial Determination (“ID”) related to the Company’s legal proceedings for patent infringement filed in the U.S. International Trade Commission (“ITC”) against SK hynix. The Company has filed two separate actions in the ITC against SK hynix, and the ID grants SK hynix’s motion for summary determination of non-infringement in the Company’s second ITC action and terminates the ITC’s investigation related to this action. The ID is now subject to review by the ITC Commission, and the ITC will issue a Final Determination for the Company’s second ITC action at the conclusion of such review. This press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 8.01 by reference.
 
In addition, on April 17, 2018, the Company issued a press release announcing the Amendment. This press release is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated into this Item 8.01 by reference.
 
Item 9.01. Financial Statements and Exhibits.
 
(d)                                  Exhibits

Exhibit	 	 	
Number	 	Description	
4.1	 	Amendment No. 1 to Rights Agreement, dated as of April 16, 2018, by and between Netlist, Inc. and Computershare Trust Company, N.A., as rights agent.	
99.1	 	Press Release, dated April 16, 2018, issued by Netlist, Inc.	
99.2	 	Press Release, dated April 17, 2018, issued by Netlist, Inc.	
 
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SIGNATURE
 
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.

 	NETLIST, INC.	

Date: April 17, 2018	By:	/s/ Gail M. Sasaki	
 	 	Gail M. Sasaki	
 	 	Vice President, Chief Financial Officer and Secretary	
 
3 

Exhibit 4.1 
 
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
 
This AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this “ Amendment ”), dated as of April 16, 2018, is entered into by and between Netlist, Inc., a Delaware corporation (the “ Company ”), and Computershare Trust Company, N.A., as rights agent (the “ Rights Agent ”), with reference to the following facts:
 
WHEREAS, the Company and the Rights Agent have entered into that certain Rights Agreement, dated as of April 17, 2017 (the “ Rights Agreement ”);
 
WHEREAS, the Company now desires to amend certain provisions of the Rights Agreement as set forth in this Amendment;
 
WHEREAS, Section 27 of the Rights Agreement provides that, prior to the Distribution Date, the Company may, in its sole and absolute discretion, supplement or amend any provision of the Rights Agreement in any respect without the approval of any holders of certificates representing Rights or shares of Company Common Stock, and the Rights Agent shall, if the Company so directs and upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of Section 27 of the Rights Agreement, duly execute and deliver such supplement or amendment requested by the Company; and
 
WHEREAS, capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings given to such terms in the Rights Agreement.
 
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto hereby agree as follows:
 
Section 1.                                            Amendments .
 
(a)                                  Section 7(a) of the Rights Agreement shall be amended by amending and restating the first sentence thereof to read in its entirety as follows:
 
“Prior to the earlier of (i) the Close of Business on April 17, 2019 (the “ Final Expiration Date ”), (ii) any settlement, adjudication, dismissal with prejudice, abandonment by the Company or other resolution that, in each case, is, in the sole discretion of the Board of Directors, determined to be conclusive and final, of the Company’s legal proceedings for patent infringement against SK hynix Inc. filed in the U.S. International Trade Commission on September 1, 2016 and October 31, 2017, in the U.S. District Court for the Central District of California on September 1, 2016, and in the courts of Germany and the People’s Republic of China on July 11, 2017 , (iii) the time at which the Rights are redeemed as provided in Section 23 hereof, and (iv) the time at which the Rights are exchanged as provided in Section 24 hereof, at which time the Rights are deemed terminated (the earlier of (i), (ii), (iii) and (iv) being the “ Expiration Date ”), the registered holder of any Rights Certificate may, subject to the other provisions hereof, including without limitation Sections 7(e), 7(f), 9(c), 11(a) and 23 hereof, exercise the Rights evidenced thereby, in whole or in part, at any time after the Distribution Date upon surrender of the Rights Certificate, with the form of election to

 
purchase and the certificate on the reverse side thereof properly completed and duly executed (with such signature duly guaranteed, if required), to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price for the number of Units of Preferred Stock (or, following a Triggering Event, other securities, cash or other assets, as the case may be) for which such surrendered Rights are then exercisable.”
 
(b)                                  Exhibit B of the Rights Agreement shall be amended by amending and restating the fifth full paragraph thereof to read in its entirety as follows:
 
“The Rights are not exercisable until the Distribution Date and, unless earlier redeemed or exchanged by the Company as described below, will expire on the earlier of (i) the close of business on April 17, 2019, and (ii) any settlement, adjudication, dismissal with prejudice, abandonment by the Company or other conclusive and final resolution of the Company’s legal proceedings for patent infringement against SK hynix Inc. filed in the U.S. International Trade Commission on September 1, 2016 and October 31, 2017, in the U.S. District Court for the Central District of California on September 1, 2016, and in the courts of Germany and the People’s Republic of China on July 11, 2017.  Under certain circumstances, as provided in the Rights Agreement, the exercisability of the Rights may be suspended.  In no event, however, will the Rights be exercisable prior to the expiration of the period in which the Rights may be redeemed, as described below.”
 
Section 2.                                            Officer’s Certificate .  Pursuant to Section 27 of the Rights Agreement, a certificate from an appropriate officer of the Company which states that this Amendment is in compliance with the terms of Section 27 of the Rights Agreement is attached hereto as Exhibit A .
 
Section 3.                                            Construction .  Except as specifically set forth herein, all terms and provisions of the Rights Agreement shall remain unchanged, unmodified and in full force and effect.  The Rights Agreement shall be read together with and construed with this Amendment in all respects, and references in the Rights Agreement (i) to “this Agreement” (and indirect references thereto) shall be deemed to be references to the Rights Agreement as amended by this Amendment, and (ii) to “the Rights” or “a Right” (and indirect references thereto) shall be deemed to include, subject to the terms and provisions of the Rights Agreement, Rights that may be issued after the Expiration Date, as such term was defined in the Rights Agreement before the effect of this Amendment.
 
Section 4.                                            Governing Law .  This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely in such State.
 
Section 5.                                            Counterparts .  This Amendment may be executed (including by facsimile) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.  A signature to this Amendment executed and/or transmitted electronically shall have the same authority, effect, and enforceability as an original signature.
 
2 

 
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as of the date first above written.

NETLIST, INC.	 	

By:	/s/ Gail M. Sasaki	 	
 	Name:	Gail M. Sasaki	 	
 	Title:	Vice President, Chief Financial Officer	 	

COMPUTERSHARE TRUST COMPANY, N.A.	 	

By:	/s/ Kathleen Heagerty	 	
 	Name:	Kathleen Heagerty	 	
 	Title:	Vice President & Manager	 	
 
(Signature Page to Amendment to Rights Agreement)

 
EXHIBIT A
 
OFFICER’S CERTIFICATE
 
April 16, 2018
 
Pursuant to Section 27 of that certain Rights Agreement, dated as of April 17, 2017 (the “ Rights Agreement ”), by and between Netlist, Inc., a Delaware corporation (the “ Company ”), and Computershare Trust Company, N.A., as rights agent (the “ Rights Agent ”), the undersigned officer of the Company does hereby certify that Amendment No. 1 to Rights Agreement, to be entered into as of the date hereof by and between the Company and the Rights Agent, is in compliance with the terms of Section 27 of the Rights Agreement.

 
IN WITNESS WHEREOF, the undersigned hereby executes this Officer’s Certificate as of the date first above written.

 	 	
Name:	 	 	
Title:	 	 	
 
(Signature Page to Officer’s Certificate)

Exhibit 99.1 

 
 
NETLIST RECEIVES INITIAL DETERMINATION IN INTERNATIONAL TRADE COMMISSION INVESTIGATION OF SK HYNIX
 
IRVINE, CALIFORNIA, April 16, 2018 - Netlist, Inc. (NASDAQ: NLST), today announced that Administrative Law Judge (ALJ) Pender of the United States International Trade Commission (ITC), issued an Initial Determination (ID) in Investigation No. 337-TA-1089 (the 1089 Investigation) of SK hynix RDIMM and LRDIMM enterprise memory products, Netlist’s second action in the ITC against SK hynix related to these products.
 
According to the ID, ALJ Pender granted SK hynix’s motion for summary determination of non-infringement and terminated the 1089 Investigation.  A public version of the ID will likely be available in the next two weeks, and the substance of the decision will remain confidential until then.  Netlist will determine at that time whether further comment on the ID is appropriate.
 
The ID is now subject to review by the ITC Commission.  Netlist intends to file a petition by the end of this month requesting that the Commissioners review the findings in the ID.  The ITC will issue a Final Determination (FD) at the conclusion of its review, likely in the next two to four months, which may affirm, set aside, or modify the findings in the ID.  Netlist will have the opportunity to appeal any adverse findings in the FD to the United States Court of Appeals for the Federal Circuit.
 
About Netlist, Inc.
 
Netlist provides high-performance modular memory subsystems to customers in diverse industries that require enterprise and storage class memory solutions to empower critical business decisions.  Flagship products NVvault® and EXPRESSvault® enable customers to accelerate data running through their servers and storage and reliably protect enterprise-level cache, metadata and log data by providing near instantaneous recovery in the event of a system failure or power outage.  HybriDIMM™, Netlist’s next-generation storage class memory product, addresses the growing need for real-time analytics in Big Data applications, in-memory databases, high-performance computing and advanced data storage solutions.  Netlist also resells component products to end-customers that are not reached in the distribution models of the component manufacturers, including storage customers, appliance customers, system builders and cloud and datacenter customers.  Netlist holds a portfolio of patents, many seminal, in the areas of hybrid memory, storage class memory, rank multiplication and load reduction. Netlist is part of the Russell Microcap® Index.  To learn more, visit www.netlist.com.

 
Safe Harbor Statement
 
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements other than historical facts and often address future events or Netlist’s future performance.  Forward-looking statements contained in this news release include express or implied statements about the outcome of the Final Determination, including the timing of its issuance, and statements regarding Netlist’s actions in response to the Initial Determination or the Final Determination, including issuing further comments and filing petitions or appeals.
 
All forward-looking statements reflect management’s present assumptions, expectations and beliefs regarding future events and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by any forward-looking statements.  Netlist can provide no assurance regarding the outcome of the final review by the Commissioners at the ITC, and if the Final Determination concludes that Netlist’s patents were not violated or that remedies will not be imposed, then Netlist’s prospects and financial condition may be materially adversely affected.   These and other risks and uncertainties are described in Netlist’s annual report on Form 10-K for its most recently completed fiscal year filed on March 30, 2018, and the other filings it makes with the U.S. Securities and Exchange Commission from time to time, including any subsequently filed quarterly and current reports.  In light of these risks, uncertainties and other factors, these forward-looking statements should not be relied on as predictions of future events.  These forward-looking statements represent Netlist’s assumptions, expectations and beliefs only as of the date they are made, and except as required by law, Netlist undertakes no obligation to revise or update any forward-looking statements for any reason.
 
For more information, please contact:
 
The Plunkett Group
Mike Smargiassi/ Sharon Oh
NLST@theplunkettgroup.com
(212) 739-6729

Exhibit 99.2 

 
 
NETLIST RENEWS STOCKHOLDER RIGHTS AGREEMENT
 
IRVINE, CALIFORNIA , April 17, 2018 - Netlist, Inc. (NASDAQ: NLST) (“Netlist” or the “Company”), today announced that its Board of Directors has renewed the stockholder rights agreement (the “Rights Agreement”) it entered in April 2017.  Other terms of the renewed Rights Agreement remain unchanged.  The Board of Directors renewed the Rights Agreement in connection with the Company’s ongoing patent infringement proceedings .   All rights issued under the Rights Agreement will expire twelve months after the date of renewal or, if earlier, upon the final resolution of Netlist’s patent infringement proceedings against SK hynix, Inc.
 
In general terms, the Rights restrict any person or group from acquiring beneficial ownership of 15% or more of the Company’s outstanding common stock (including, for these purposes, certain derivative securities), which may block or render more difficult a merger, tender offer or other business combination or takeover attempt of the Company without the support of the Netlist Board of Directors.
 
Pursuant to the Rights Agreement, one Right has been distributed for each outstanding share of Netlist’s common stock held by stockholders of record as of the close of business on May 18, 2017 and each share of Netlist’s common stock issued thereafter (subject to certain exceptions).  Each Right entitles the holder to purchase a unit (each, a “Unit”) consisting of a fraction of a share of the Company’s Series A preferred stock having economic and voting rights similar to one share of the Company’s common stock.  The Rights will become exercisable only if a person or group (subject to certain exceptions) acquires beneficial ownership of 15% or more of the Company’s common stock.  In that situation, each holder of a Right (other than the person or group triggering the exercise of the Rights) will be entitled to purchase, at the then-current exercise price, a number of Units (and, in certain circumstances, other consideration) having a value of twice the exercise price of the Right (a 50% discount).  Subject to adjustment as set forth in the Rights Agreement, the exercise price is $6.56 per Right, which equates to an aggregate market value of the Company’s outstanding securities, assuming full exercise or conversion of all outstanding derivative securities, of approximately $500 million.  Stockholders are not required to take any action to receive the distribution of their Rights.  Until the Rights become exercisable, they will not be evidenced by separate certificates and will trade automatically with shares of the Company’s common stock.
 
BRG Valuation Services, LLC served as financial advisor and Morrison & Foerster LLP served as legal advisor to the Company in connection with the Rights Agreement.
 
Further information about the Rights Agreement and the renewal of its term can be found in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 17, 2017 and April 17, 2018 and in the “Summary of Rights” contained in the “Investors” section of the Company’s website, www.netlist.com.

 
About Netlist, Inc.
 
Netlist provides high-performance modular memory subsystems to customers in diverse industries that require enterprise and storage class memory solutions to empower critical business decisions.  Flagship products NVvault® and EXPRESSvault® enable customers to accelerate data running through their servers and storage and reliably protect enterprise-level cache, metadata and log data by providing near instantaneous recovery in the event of a system failure or power outage.  HybriDIMM™, Netlist’s next-generation storage class memory product, addresses the growing need for real-time analytics in Big Data applications, in-memory databases, high-performance computing and advanced data storage solutions.  Netlist also resells component products to end-customers that are not reached in the distribution models of the component manufacturers, including storage customers, appliance customers, system builders and cloud and datacenter customers.  Netlist holds a portfolio of patents, many seminal, in the areas of hybrid memory, storage class memory, rank multiplication and load reduction.  Netlist is part of the Russell Microcap® Index.  To learn more, visit www.netlist.com.
 
Safe Harbor Statement
 
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements other than historical facts and often address future events or Netlist’s future performance.  Forward-looking statements contained in this news release include express or implied statements about, among other things, Netlist’s ongoing patent infringement proceedings, including its proceedings against SK hynix.
 
All forward-looking statements reflect management’s present assumptions, expectations and beliefs regarding future events and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by any forward-looking statements.  These risks, uncertainties and other factors include, among others: the status of the Company’s patent infringement proceedings and the timeliness in which they will progress; the Company’s and any counter-party’s strategy, plan or approach with respect to these proceedings or any potential settlement thereof; risks relating to Netlist’s business and general industry, economic, political and market conditions; uncertainties regarding the results of a settlement, adjudication or other resolution of any of these proceedings, if any, which may produce damages or settlement amounts that do not meet Netlist’s expectations or may not be resolved in Netlist’s favor at all; and other risks associated with litigation generally. These and other risks and uncertainties are described in Netlist’s annual report on Form 10-K for its most recently completed fiscal year filed on March 30, 2018, and the other filings it makes with the U.S. Securities and Exchange Commission from time to time, including any subsequently filed quarterly and current reports.  In light of these risks, uncertainties and other factors, these forward-looking statements should not be relied on as predictions of future events. These forward-looking statements reflect Netlist’s assumptions, expectations and beliefs only as of the date they are made, and except as required by law, Netlist undertakes no obligation to revise or update any forward-looking statements for any reason.
 
For more information, please contact:
 
Investors/Media:
The Plunkett Group
Mike Smargiassi/Sharon Oh
NLST@theplunkettgroup.com
(212) 739-6740