Form 8-K

 

 

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): January 3, 2012

 

 

ENTROPIC COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-33844   33-0947630

(State or Other Jurisdiction of

Incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

6290 Sequence Drive

San Diego, CA 92121

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (858) 768-3600

 

 

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:

 

¨ 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) On January 3, 2012, William Bradford resigned as the Senior Vice President, Worldwide Sales of Entropic Communications, Inc. (the “Company”), effective immediately, in order to pursue other interests. The Company intends to launch a search for his successor, and in the interim senior sales staff will report directly to the Company’s Chief Executive Officer.

 

Item 8.01 Other Events.

On January 4, 2012, the Company announced that it has agreed to become a “stalking horse bidder” to acquire the assets of Trident Microsystems, Inc. and certain of its subsidiaries (collectively referred to as “Trident”) used in or related to Trident’s set-top box business (the “STB Business”), for a purchase price of $55 million, subject to a working capital adjustment (the “Acquisition”) pursuant to an Asset Purchase Agreement (“Purchase Agreement”).

Trident has filed the Purchase Agreement with the United States Bankruptcy Court for the District of Delaware (“Court”) along with Trident’s motion seeking the establishment of bid procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. Trident and Entropic will not execute the Purchase Agreement until the Court approves the bid procedures. The closing of the Acquisition, which is expected to occur in the first quarter of 2012, remains subject to higher or otherwise better offers, approval by the United States Bankruptcy Court and customary closing conditions. If Trident accepts an offer other than the Company’s Purchase Agreement, the Company will be entitled to be paid a break-up fee and a reimbursement of its transaction expenses.

Pursuant to the Purchase Agreement, the Company will acquire all of Trident’s specific STB Business products, patents and other intellectual property owned by Trident, certain contracts and prepaid expenses, certain tangible assets, accounts receivable, inventory and equipment. Trident will retain its digital television, PC television, audio and terrestrial demod businesses. The Company will also acquire leased facilities in Austin, Texas, San Diego, California, Belfast, Northern Ireland and Hyderabad, India and the right to use other facilities of Trident under short term Facilities Use Agreements. The Company will assume certain specified liabilities of Trident.

The Purchase Agreement provides that Entropic would withhold $6 million of the purchase price at closing to secure Trident indemnification obligations, performance of certain covenants and the payment of certain obligations under the Purchase Agreement. Trident’s representations and warranties survive for a period of 90 days following the closing. At the end of the 90 day period post-closing, the withheld purchase price less amounts retained to satisfy claims would be distributed by the Company to Trident pursuant to the terms and conditions of the Purchase Agreement.

Pursuant to the terms of the Purchase Agreement, certain employees of Trident whose services are used in the STB Business and who accept employment offers from the Company will be transferred to the Company at closing. The Company and Trident will also enter into a transition services agreement with respect to Trident’s provision of certain transition support services to the Company following the closing.

The Purchase Agreement provides that at the closing, the Company and Trident will enter into a license agreement pursuant to which the Company will grant Trident a nonexclusive, worldwide, irrevocable, royalty free, fully paid license under the patents acquired from Trident in certain specified fields and an exclusive (except as to the Company), worldwide, irrevocable, royalty free, fully paid license to other intellectual property rights acquired from Trident to certain intellectual property that has been sold to the Company in certain specified fields. Trident may only grant specified sublicenses under the license agreement and the license rights are not transferable without the Company’s consent except in connection with the sale of all or substantially all of the assets of Trident’s digital television business. The Purchase Agreement also provides that the Company and Trident will enter into a non-competition agreement which restricts Trident from competing in the set-top box business for two years following the closing.

The foregoing description of the terms of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement, a copy of which is included as Exhibit 99.1 hereto and incorporated herein by reference in its entirety.

Forward Looking Statements

Statements in this Current Report on Form 8-K that are not strictly historical are “forward-looking” and involve a high degree of risk and uncertainty. These include, but are not limited to, the risk that the Acquisition will not be completed; risks associated with Trident’s Chapter 11 bankruptcy, including the risk that the United States Bankruptcy Court will not approve the Acquisition or the Purchase Agreement, and the risk that higher or otherwise better offers will be submitted to the United States Bankruptcy Court prior to the closing of the Acquisition; and risks associated with the Company’s ability to hire or retain Trident’s employees who work in the STB Business, all of which are prospective. Such statements are only predictions, and actual events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to the differences include, but are not limited to, the failure or inability of the Company to satisfy all closing conditions related to the Acquisition; the United States Bankruptcy Court’s rejection of the Acquisition or the Purchase Agreement; Trident’s receipt of higher or otherwise better offers; the risk that Trident’s STB Business will deteriorate before the Acquisition is closed; the risk that the Company will be required to invest substantially more in the STB Business, or in integrating the STB Business with the Company’s existing operations, than presently anticipated; risks associated with integrating a newly acquired business which is larger, more geographically dispersed and substantially more complex than the Company’s existing business; risks that the Company’s systems, infrastructure and personnel may not be adequate to effect a rapid and orderly integration of the STB Business; the risk that anticipated benefits of the Acquisition will not be realized; risks associated with the dependence of the STB Business on a limited number of suppliers and customers; risks associated with entering into a new business segment; risks associated with international operations; technology risks; competition; the risk that the market for HD video and multimedia content delivery solutions may not develop as the Company currently anticipates, and risks and other uncertainties more fully described in the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the Company’s annual report on Form 10-K for the

year ended December 31, 2010 and any updates contained in its subsequently filed quarterly reports on Form 10-Q. These forward-looking statements speak only as of the date hereof, and the Company expressly disclaims any intent or obligation to update these forward-looking statements.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Number

   

Description

99.1    Form of Asset Purchase Agreement by and between Entropic Communications, Inc. and Trident Microsystems, Inc. and certain of its subsidiaries filed with the United States Bankruptcy Court for the District of Delaware.

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, thereunto duly authorized.

 

    ENTROPIC COMMUNICATIONS, INC.
Dated: January 5, 2012     By:  

/s/ Lance W. Bridges

      Lance W. Bridges, Esq.
      Vice President and General Counsel

EXHIBIT INDEX

 

Number

   

Description

99.1    Form of Asset Purchase Agreement by and between Entropic Communications, Inc. and Trident Microsystems, Inc. and certain of its subsidiaries filed with the United States Bankruptcy Court for the District of Delaware.