| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 22, 2020, our wholly-owned subsidiary, Sonim Technologies (India) Private Limited (“Sonim India”) outsourced the functions performed by it for Sonim Technologies Inc. (the “Company”) by transferring the assets associated with its business, including the license, access and right to use software embedded or installed in those assets, to a software business in India (the “Outsourcer”) (such transaction, the “Outsourcing Transaction”) pursuant to an Asset Purchase & Employee Transfer Agreement, dated as of December 22, 2020 (the “Agreement”), by and among Sonim India and the Outsourcer.
Pursuant to the Agreement, Sonim India has agreed to commit to the Outsourcer future business volume of $7.12 million in transaction value over the next three years, $3.1 million of which to be in the first year (the “Arrangement”), with such transactions to be separately negotiated and independently transacted, at rates agreed upon on an arm’s length basis. In the event that Sonim India terminates or cancels the Arrangement after six months but within one year after closing, Sonim India has agreed to pay the Outsourcer $1.5 million as a premature contract termination fee. Sonim India may terminate the Arrangement in year two or three by providing 90 days written notice. In connection with the Agreement, the Company also agreed to transfer certain assets liabilities arising from or relating to those assets to the Outsourcer’s United States affiliate.
The Agreement contains customary representations and warranties, including regarding organization, power and authority, enforceability and marketable title. To the extent that they have not been fully performed at or prior to the closing date, the representations and warranties of the parties in the Agreement will survive the closing of the Outsourcing Transaction for the maximum period allowable under any applicable law of any governmental authority.
The foregoing description of the terms of the Agreement and the transactions contemplated by the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.
| Item 7.01 | Regulation FD Disclosure |
On December 22, 2020, the Company issued a press release announcing the agreement to outsource most of software development on current products to the Outsourcer. A copy of the press release is provided as Exhibit 99.1 to this Current Report.
The information furnished in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 7.01 shall not be incorporated by reference into any filing with the Securities and Exchange Commission (the “SEC”) made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
