Item
1.01
Entry into a Material Definitive Agreement.
On
January 16, 2017, Uni-Pixel Displays, Inc. (“Displays”), a subsidiary of Uni-Pixel, Inc. (“UniPixel” or
the “Company”) entered into a Memorandum of Understanding (“MOU”) with General Interface Solution Limited,
a Samoa corporation (“GIS”), to engage in a strategic project regarding the manufacture of XTouch metal mesh sensors
(the “Proposed Transaction”). The Proposed Transaction is contingent on the negotiation and execution of definitive
agreements by the parties and other customary conditions. The term of the MOU shall be for three months while the parties negotiate
the definitive agreements, but upon execution of the definitive agreements, the MOU shall terminate. The term of the Proposed
Transaction shall be for three years, during which time Displays shall sublicense to GIS technology for the design and manufacture
of XTouch sensors to be incorporated into touch module products and/or to be separately sold by GIS to third parties. Displays
will also provide training and technical support to GIS for such design and manufacture. GIS shall make a $6 million cash investment
within a month of execution of the definitive agreement. GIS shall also pay a royalty to Displays equal to 20% of sensor manufacturing
cost for the sensors to be incorporated into touch module products and 30% of sensor sales prices for the sensors separately sold
to third parties. However, there shall be no royalties applied to (a) the first 150,000 sensor units manufactured in 2017 and
sold to other parties and (b) the first 300,000 sensor units manufactured in 2018 and sold to other parties.
Displays
shall also lease to GIS a manufacturing pilot line / limited production line based in Display’s facility in Colorado Springs,
Colorado. This manufacturing line will be leased to GIS until the earlier of (x) the establishment of a separate GIS facility
and equipment or (y) expiration of the definitive agreement. After the term of the lease of the manufacturing line, GIS will have
the option to extend the lease agreement of the manufacturing line for the manufacture of sensors in Colorado Springs for an additional
payment determined at the time of lease extension with such payment not to exceed the average annual payment of the original lease.
Displays shall be obligated to purchase from GIS, at GIS manufacturing cost plus 20%, the following minimum quantities of XTouch
sensors:
1. 2017
– 1 million units
2. 2018
– 1.5 million units
3. 2019
– 2.0 million units
GIS
will have no royalty obligation to Displays for the sensors that GIS sells to Displays. Minimum quantities will be contingent
on Displays and GIS agreeing on manufacturing cost. Displays and GIS will meet on a quarterly basis to review manufacturing costs.
The
parties shall also work in good faith to enter into a separate advanced technology development agreement targeted primarily at
touch sensor modules for the flexible/foldable display market.
The
full text of the MOU is furnished as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the terms
of the MOU is only a summary of the material terms of the MOU, does not purport to be complete and is qualified in its entirety
by reference to such exhibit.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Current Report on Form 8-K contains forward-looking statements regarding the Company and Displays, including, but not limited
to, statements related to the expected terms of the definitive agreement pertaining to the Proposed Transaction, including with
regard to timing, payments and the contributions that the parties will make to the Proposed Transaction.
These
forward-looking statements are based on the Company’s and Displays’ current expectations and inherently involve significant
risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which include, without limitation,risks related to the Company’s
and Displays’ ability to successfully negotiate and enter into a definitive agreement pertaining to the Proposed Transaction
on the proposed terms and schedule, including risks and uncertainties related to such negotiation and closing conditions for the
definitive agreement, along with those other risks detailed under the caption “Risk Factors” and elsewhere in the
Company’s U.S. Securities and Exchange Commission filings and reports. The Company cautions investors not to place considerable
reliance on the forward-looking statements contained in this Current Report on Form 8-K or the accompanying MOU. The Company or
Displays undertakes no duty or obligation to update any forward-looking statements contained in this Form 8-K or the accompanying
MOU as a result of new information, future events or changes in its expectations.