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)
January
8, 2008
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NEONODE
INC.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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0-8419
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94-1517641
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(State
or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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Biblioteksgatan
11
S111
46 Stockholm, Sweden
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant's
Telephone Number, Including Area Code
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+468
678 18 50 — Sweden
(925)
355-7700 — USA
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(Former
name or former address, if changed since last
report)
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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:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement
Formation
and Contribution Agreement
On
January 8, 2008 (the “Effective Date”), Neonode, Inc. (“Neonode”) entered into a
Formation and Contribution Agreement (the “JV Agreement”) with Distribution
Management Consolidators Worldwide, LLC, a Delaware limited liability company
(“DMCW”), to create a new Delaware limited liability company, Neonode USA, LLC
(“Neonode USA” or the “JV”). The JV intends to focus on developing,
manufacturing and distributing products that incorporate Neonode’s intellectual
property and proprietary technology. Neonode and DMCW will each own one half
of
Neonode USA.
Under
the
terms of the JV Agreement, Neonode USA will be operated as an independent
company to be governed by a Management Committee comprised of an equal number
of
managers appointed by each of Neonode and DMCW. Subject to further IP due
diligence and structural matters discussed below, Neonode and DMCW will each
contribute $250,000 and their relative expertise and experience to the JV.
DMCW
has expertise in the development, production, distribution and marketing of
consumer electronic products.
In
addition, subject to continuation of the JV, Neonode has agreed to grant Neonode
USA an exclusive worldwide, royalty free license to its intellectual property,
with exclusivity conditioned on meeting certain milestones, as described below
under the heading “License Agreement.”
The
JV
Agreement provides for the dissolution of Neonode USA upon the earlier of (A)
the required vote by the Management Committee , (B) the sale of all or
substantially all of the assets of Neonode USA, (C) any event not within the
control of Neonode and DMCW which makes it impossible, unlawful, or impractical
to carry on the business of the Neonode USA, or (D) the entry of a decree of
judicial dissolution of Neonode USA under applicable laws at the instance of
a
third-party other than Neonode or DMCW. In the event of dissolution, Neonode
USA’s assets generally will be distributed to Neonode and DMCW pro rata in
accordance with their percentage interests in Neonode USA after payment of
Neonode USA’s liabilities.
In
addition to the dissolution provisions described above, DMCW has the right
to
terminate the JV Agreement within 30 days after the Effective Date in the event
DMCW determines, in its discretion after conducting due diligence, that the
intellectual property of Neonode is not of sufficient value, validity and
enforceability to support the commercialization contemplated in the JV
Agreement. Furthermore, the transaction is subject to the transfer of the
intellectual property from Neonode’s wholly-owned subsidiary, Neonode AB, to
another wholly-owned entity of Neonode in the U.S. without incurring a tax
liability in excess of $200,000. To the extent the tax cost is equal to or
less
than $200,000, DMCW has the option to share such cost with Neonode. If DMCW
elects not to share such costs and no alternative in another jurisdiction
acceptable to DMCW exists without a tax liability, DMCW has the right to
terminate the JV Agreement and dissolve the JV if the parties have not otherwise
reached agreement within 60 days following the Effective Date.
In
the
event Neonode receives an offer by a third-party to acquire (x) all or
substantially all of the assets or business of Neonode by merger, sale of
assets, reorganization or otherwise or (y) 50% or more of Neonode’s voting
securities directly from Neonode or from Neonode’s stockholders, and the offeror
has included as a condition that Neonode own or the offeror acquire all of
Neonode USA, Neonode will have the right to acquire all of DMCW’s right, title
and interest in Neonode USA (“DMCW Interest”). The purchase price of the DMCW
Interest will be determined by an appraiser selected pursuant to the terms
of
the JV Agreement.
License
Agreement
On
January 8, 2008, in connection with the execution of the JV Agreement, Neonode
and Neonode AB, a Swedish corporation and wholly owned subsidiary of Neonode
(together, the “Neonode Parties”) and Neonode USA entered into a license
agreement (the “License Agreement”).
Pursuant
to the License Agreement, the Neonode Parties granted exclusive, royalty free,
perpetual licenses to Neonode USA to use Neonode intellectual property to (i)
design and develop products and develop improvements, (ii) manufacture, have
manufactured, and distribute products and the Neonode N2 GSM Phone (“Existing
Product”) in North America, Central America, Caribbean, South America and China
(the “Neonode USA Territory”), including the use of Neonode marks and Existing
Product marks, and (iii) grant licenses to use the Neonode intellectual property
to third parties. Such exclusivity is conditioned on Neonode USA meeting certain
performance milestones. If such milestones are not met, the license converts
to
a non-exclusive license. Neonode AB has the right to use the Neonode
intellectual property to (i) design, develop products and the Existing Product,
and (ii) distribute and sell products in all geographic territories throughout
the world other than the Neonode USA Territory.
In
addition, Neonode USA granted to the Neonode Parties a license to use future
Neonode USA developments to (i) design and develop Neonode USA products and
to
develop improvements, and (ii) manufacture, and have manufactured, Neonode
USA
products with such Neonode USA developments, and market and sell such Neonode
USA products in all territories throughout the world other than in the Neonode
USA Territory.
Pursuant
to the terms of the License Agreement, (i) the Neonode Parties have agreed
not
to directly or indirectly distribute, license or sell products incorporating
Neonode intellectual property or any improvements in the Neonode USA Territory
and (ii) Neonode USA has agreed not to directly or indirectly distribute,
license or sell products incorporating Neonode intellectual property or any
improvements in any territory in the world outside the Neonode USA Territory.
Notwithstanding such territorial restrictions with regard to products, Neonode
USA will have the exclusive right to sublicense the Neonode intellectual
property and improvements.
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.
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NEONODE
INC.
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Date:
January 14, 2008
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By:
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/s/
David W. Brunton
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Name:
David W. Brunton
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Title:
Chief Financial Officer, Vice President, Finance and
Secretary
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