8x8 2002 Annual Report Download - page 72

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internet telephony applications including digital subscriber line, or DSL, modems and internet protocol telephones. In
May 2000 STM Inc. paid us $1.0 million associated with this project; $500,000 for engineering fees associated with the
development effort and $500,000 of prepaid royalties. We have substantially completed our obligations under this
project and STM Inc. is currently marketing and selling a product resulting from this joint development effort. STM
Inc. is required to pay us additional per-
unit royalties based upon shipments of this product only if cumulative royalties
owed eventually exceed the balance of prepaid royalties. Should STM Inc. elect to have us provide extended product
maintenance and support, they are required to pay us additional fees of which a portion will be considered prepaid
royalties.
In March 2002, 8x8 licensed certain STM Very Long Instruction Word, or VLIW, microprocessor cores, related tools
and MPEG4 video compression firmware from STM for use in the Company's Internet protocol, or IP, video
communication processor development initiatives. Additionally, 8x8 agreed to license STM certain of its existing and
future H.263 and H.26L video compression/decompression firmware implementations for use with STM's
semiconductor products. The licenses are non-exclusive, non-transferable and non-
assignable and provide for the
sharing of updates and enhancements to the licensed technology, subject to certain limitations. The agreement includes
provisions that allow the Company to manufacturing semiconductor devices that contain the ST200 core at STM or at
other third-party fabrication facilities. The Company is required to pay STM per-
unit royalties based upon shipments of
products that incorporate the VLIW technology. In addition, STM is required to pay the Company certain per-
unit
royalties based upon shipments of STM semiconductor products that contain the Company's video technology.
Additional information required by this Item is set forth in the 2002 Proxy Statement under the captions "Additional
Information --
Employment Contracts and Termination of Employment and Change in Control Arrangements,"
"Additional Information -- Compensation Committee Interlocks and Insider Participation," "Additional Information --
Report of the Compensation Committee of the Board of Directors" and "Additional Information --
Stock Performance
Graph" and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements. The information required by this item is included in Item 8.
(a)(2) Financial Statement Schedules. The information required by this item is included in Item 8.
(a)(3) Exhibits. The documents listed on the Exhibit Index appearing at pages 69-
71 of this Report are filed herewith.
Copies of the exhibits listed in the Exhibit Index will be furnished, upon request, to holders or beneficial owners of the
Company's common stock.
(b) Reports on Form 8-K. On January 30, 2002, we filed an amendment to our Current Report on Form 8-
K dated
December 17, 2001 reporting the redemption of our convertible subordinated debentures.
On February 14, 2002, we filed a Current Report on Form 8-
K also dated February 14, 2002 announcing that Bryan
Martin had been named Chief Executive Officer of 8x8, Inc. and that Joe Parkinson, our former Chief Executive
Officer, would continue as Chairman of 8x8's Board of Directors. We also announced a new Internet Protocol (IP)
video product development initiative.
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