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): February 11, 1998
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fonix corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
0-23862 22-2994719
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(Commission file number) (I.R.S. Employer Identification No.)
1225 Eagle Gate Tower, 60 East South Temple Street
Salt Lake City, Utah 84111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 328-0161
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On November 17, 1997, fonix corporation (the "Company" or "fonix")
entered into a strategic collaborative agreement (the "Master Agreement")
with Siemens Semiconductor Group of Siemens Aktiengesellschaft ("Siemens")
pursuant to which fonix and Siemens will jointly pursue the development and
commercialization of products incorporating fonix technologies into Siemens
integrated circuits ("ICs") for use in telecommunications products. The
Master Agreement anticipates multiple product-specific collaborative
efforts between fonix and Siemens for a variety of telecommunications
applications as described in multiple to-be-negotiated sub-agreements
("Statements of Work").
On February 11, 1998, fonix and Siemens executed the first Statement
of Work pursuant to the Master Agreement. The Statement of Work pertains
to the development of ICs incorporating fonix technologies for use in
answering machines. Under the Statement of Work, fonix granted to Siemens a
world-wide, exclusive, non-transferable license respecting any Siemens ICs
incorporating fonix technologies for inclusion in answering machines. In
consideration of fonix's grant of such license to Siemens, Siemens agreed
to pay an annual royalty calculated from the net selling price received by
Siemens. For purposes of calculating such royalties, "net selling price"
means the price charged by Siemens for ICs, less deductions for value added
tax, packaging and transport costs and insurance. Royalty payments are to
be paid quarterly by Siemens. Siemens' exclusive rights under that license
terminate after 10 years, and, after the third year following completion of
the development work, Siemens is required to pay an annual minimum royalty
fee to preserve its exclusive license.
The first Statement of Work described herein is subject to
termination by either party in the event of (i) a material breach by the
other party, which breach is not cured after written notice thereof has
been delivered to the breaching party, (ii) the insolvency of the other
party or (iii) a material breach of the Master Agreement.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
In connection with the execution of the Statement of Work, and as
anticipated by the Master Agreement, on February, 13 1998, Siemens paid to
fonix a total of 5,000,000 deutsche marks ("DM"). Of that amount,
2,400,000 DM was paid to fonix as a non-refundable advance royalty payment
for the licensing to Siemens of certain fonix technologies, and 600,000 DM
was paid as the purchase price for warrants ("Warrants") to purchase up to
1,000,000 shares of fonix restricted common stock on or before the
following dates and at the following exercise prices:
No. of Shares Exercise PriceExpiration Date
200,000 U.S. $10.00 December 31, 1998
200,000 U.S. $15.00 March 31, 1999
200,000 U.S. $20.00 June 30, 1999
200,000 U.S. $25.00 September 30, 1999
200,000 U.S. $30.00 December 31, 1999
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Further, 2,000,000 DM was paid to fonix to acquire shares of fonix's
restricted common stock (the "Shares")at any time prior to March 12, 1998.
If Siemens elects not to acquire all or a part of the Shares on or prior to
March 12, 1998, the 2,000,000 DM (or any lesser portion thereof not used to
purchase all or a portion of the Shares) shall be accounted for as an
additional advance royalty payment. The purchase price of the Shares, if
Siemens elects to purchase them, shall be the closing price of fonix Common
Stock as quoted by the Nasdaq SmallCap Market on the day preceding the day
on which Siemens notifies fonix of its election to purchase the Shares.
The issuance of the Shares, if any, and Warrants as described above
was, and the issuance of the common stock underlying the Warrants will be,
accomplished without registration under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), pursuant to exemptions or exceptions from
the registration requirement of the Securities Act afforded by Section 4(2)
of the Securities Act and the rules and regulation promulgated thereunder
and/or Regulation S under the Securities Act. The Company has agreed to
register the Shares, if any are purchased, and the shares of restricted
common stock issuable upon exercise of the Warrants within 30 days of the
earlier of (i) the exercise by Siemens of Warrants to purchase the first
200,000 shares of stock underlying the Warrants, or (ii) April 23, 1998.
Siemens also has "piggyback" registration rights with respect to the Shares
and the common stock underlying the Warrants.
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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.
fonix corporation
By: /s/ Roger D. Dudley
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Roger D. Dudley
Executive Vice President
Date: February 17, 1998
