SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): July 9, 1998
NACT Telecommunications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-22017 87-0378662
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
191 West 5200 North, Provo, Utah 84604
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(Address of principal executive offices)
Registrant's telephone number, including area code: (801) 802-3000
N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
Reference is made to "Item 3-Legal Proceedings" of
the Annual Report on Form 10-K for the fiscal year ended September 30,
1997 of NACT Telecommunications, Inc. ("NACT"), and to the description
therein of an action for alleged patent infringement commenced by
Aerotel, Ltd. and Aerotel U.S.A., Inc. (collectively "Aerotel") against
NACT, GST Telecommunications, Inc. ("GST") and GST USA, Inc.
(collectively with GST, the "GST Parties"). The amended pleadings in
such action seek in excess of $18.7 million in damages. NACT's patent
counsel believes that NACT has valid defenses to the Aerotel action.
On July 9, 1998, NACT, the GST Parties, World Access,
Inc. ("WAI"), the parent corporation of NACT, and Aerotel entered into a
Memorandum of Understanding with respect to the settlement of this action, and
as of the date of this Report, the parties are negotiating the terms and
conditions of a final settlement agreement. Under the terms of the WAI stock
purchase agreement with GST, WAI and GST have agreed to share evenly the costs
of any judgments against NACT as a result of the Aerotel litigation, including
NACT's legal fees.
WAI currently estimates that its portion of the total settlement costs,
including legal fees, will be approximately $3.3 million. Any payment made to
Aerotel by WAI is expected to be paid through the issuance of WAI common stock.
If a settlement does not occur, NACT's patent counsel believes that
NACT has valid defenses to the Aerotel claim (which, if upheld, would be valid
for all defendants), and the defendants intend to vigorously defend. However, no
assurances can be given as to the outcome of this action. An unfavorable
decision in this action could have a material adverse affect on NACT's business,
financial condition and results of operations.
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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.
NACT TELECOMMUNICATIONS, INC.
By: /s/ Eric F. Gurr
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Eric F. Gurr
Chief Financial Officer
DATE: September 18, 1998
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