FIRST AMENDMENT TO INVESTMENT AGREEMENT
This First Amendment to Investment Agreement, dated as of January 23, 2020 (the “Amendment”), is entered into by and among TR Global Funding V, LLC, a Delaware limited liability company managed by TR Global Associates V, LLC (together with its successors and assigns, “Investor”), and Netlist, Inc., a Delaware corporation (together with its successors and assigns, “Plaintiff”).
WHEREAS, Investor and Plaintiff entered into that certain Investment Agreement, dated as of May 3, 2017 (as the same may be further amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Original Agreement”);
WHEREAS, Plaintiff is the sole and exclusive owner U.S. Patent Nos. 8,756,364, 8,516,185, 8,001,434, 8,359,501, 8,689,064, and 8,489,837 (collectively, the “Original Patents”) and 9,535,623, and 9,606,907 (the “Continuation Patents” and, together with the Original Patents, the “Patents”);
WHEREAS, Plaintiff filed causes of action for infringement of Patents against SK hynix Inc. and its Affiliates (as defined below) (the “Defendant”), including in the International Trade Commission Inv. No. 337-TA-1023, alleging that Defendant’s products infringe the Original Patents, and in the U.S. District Court for Central District of California Case No. 8-16-cv-1605, alleging that Defendant’s products infringe the Patents; and
WHEREAS, Investor and Plaintiff desire to revise certain economic terms of the Original Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto hereby agree as follows:
1. Definitions. Any capitalized term used herein and not defined herein shall have the meaning assigned to it in the Original Agreement.
2. Amendments to the Original Agreement. Subject to the terms and conditions hereof, the Original Agreement is hereby amended as follows:
(a) Section 6.5.1 of the Original Agreement is amended by adding an additional Section 126.96.36.199 as follows:
“188.8.131.52Resolution with Defendant. Notwithstanding anything in Section 6.5.1. to the contrary, but subject to the last paragraph of this Section 184.108.40.206, upon (x) the occurrence of the events described in clause (c) of the definition of “Termination Date” and (y) receipt by Plaintiff of a Cash Recovery from a Reference Entity on or before [***], then such Cash Recovery shall be paid directly into the Proceeds Account and distributed as follows and not as set forth in Section 6.5.1:
(a)First, upon a Cash Recovery as received by or on behalf of Plaintiff, all such Cash Recoveries, net of up to [***] of any New Litigation costs, to Investor until Investor has received [***] (regardless of any tax payments that may be due to Korean tax authorities). For the purposes of this Section “New Litigation Costs” means all costs and expenses incurred following [***] in connection with litigating, licensing, enforcing or defending patents with respect to the Defendant including without limitation all costs and expenses related to the Claims, the Litigation and any related appeals (provided that if Investor would receive less than [***] of Cash Recoveries pursuant to this Section 220.127.116.11(a), the amount of New Litigation Costs shall be reduced, for purposes of this Section 18.104.22.168(a), to the amount that would result in Investor’s receipt of [***] pursuant to this Section 22.214.171.124(a));
(b)Second, after the payment to Investor in 126.96.36.199(a) and any required payments to Korean taxing authorities (it being agreed and understood that Plaintiff will use its commercially reasonable best efforts, consistent with all legal requirements, to minimize any payments to Korean taxing authorities), the next [***] of Cash Recoveries to Plaintiff; and
(c)Third, after the payments in 188.8.131.52(a) and (b), [***] of all remaining Cash Recoveries to Investor, and [***] of all remaining Cash Recoveries to Plaintiff.
Notwithstanding the foregoing, if at least one of the following three events has not occurred on or before [***], then all Cash Recoveries received thereafter shall be distributed as set forth in Section 6.5.1 and not as in this Section 184.108.40.206: (i) Plaintiff has received a Cash Recovery, (ii) (a) Plaintiff has filed a new patent infringement lawsuit in U.S. District Court against the Defendant and (b) following the effective date of this Amendment, Plaintiff has made good faith efforts, in consultation with Investor, to schedule licensing/settlement discussions with Defendant, or (iii) following the effective date of this Amendment, Plaintiff has held licensing/settlement discussions with Defendant in consultation with Investor; provided, however, that if any of the three events described in the immediately preceding clause has occurred on or before [***], then Plaintiff and Investor agree to meet and confer for a period of thirty (30) days following [***] to discuss the continued application of this Section 220.127.116.11 and to negotiate the terms of a second amendment to this Agreement (if necessary) and if the parties cannot reach mutually agreeable terms for such a second amendment by [***], then this Section 18.104.22.168 automatically will be deemed deleted and be of no further force and effect after [***], upon which all Cash Recoveries shall be distributed as set forth in Section 6.5.1 and not as in this Section 22.214.171.124.
3. Releases and Termination of Interests.
(i) Release by Plaintiff. Plaintiff acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages or liabilities of whatever kind or nature, in law or in equity, against Investor, in any case, arising from any action or failure of Investor to act under any Investment Facility Document on or prior to the date hereof, or of any offset right, counterclaim or defense of any kind against any of its respective obligations, indebtedness or liabilities to Investor under any Investment Facility Document. Automatically upon the first distribution of the Cash Recovery pursuant to Section 126.96.36.199 of the Amended Agreement (the date of such occurrence, the “Release Date”), Plaintiff unconditionally releases, waives and forever discharges (i) any and all liabilities, obligations, duties, promises or indebtedness of any kind of Investor to Plaintiff, except the obligations required to be performed by Investor under the Original Agreement, as amended hereby (the “Amended Agreement”) on or after the date hereof, and (ii) all claims, offsets, causes of action, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which Plaintiff might otherwise have against Investor in connection with the Investment Facility Documents or the transactions contemplated thereby, in the case of each of clauses (i) and (ii), on account of any past or presently existing condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind.
(ii) Release by Investor. Automatically upon the Release Date, Investor unconditionally releases, waives and forever discharges (i) any and all liabilities, obligations, duties, promises or indebtedness of any kind of Plaintiff to Investor, except the obligations required to be performed by Plaintiff under the Amended Agreement on or after the date hereof, and (ii) all claims, offsets, causes of action, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which Investor might otherwise have against Plaintiff in connection with the Investment Facility Documents or the transactions contemplated thereby; provided, however, that Investor does not release any claims against Plaintiff (1) arising as a result of a claim asserted against Investor by a Reference Entity or another third party arising from or relating to the subject matter of this Amended Agreement or any Investment Facility Document or (2) arising from or relating to fraud or willful misconduct on Plaintiff’s part at any time.
(iii) Unknown Claims. Each Party acknowledges that it may discover facts or law different from, or in addition to, the facts or law that it knows or believes to be true with respect to the claims released in this Section 3(a) and agrees, nonetheless, that this release shall be and remain effective in all respects