Filed Pursuant to Rule 424(b)(5)
Registration No. 333-61940
Prospectus Supplement to Prospectus dated June 25, 2001.
20,000,000 Shares
[LOGO]
SONUS NETWORKS, INC.
Common Stock
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The common stock is quoted on the Nasdaq National Market under the symbol
"SONS". The last reported sale price of the common stock on April 21, 2003 was
$3.62 per share.
SEE "RISK FACTORS" ON BEGINNING ON PAGE 5 OF THE ACCOMPANYING PROSPECTUS TO
READ ABOUT FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Per Share Total
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Initial price to public..................................... $3.0500 $ 61,000,000
Underwriting discount (1)................................... $0.2035 $ 4,070,000
Proceeds, before expenses, to Sonus......................... $2.8465 $ 56,930,000
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(1) In addition, Goldman, Sachs & Co. may receive from purchasers of the shares
normal brokerage commissions in amounts agreed with such purchasers.
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Goldman, Sachs & Co. expects to deliver the shares against payment in New
York, New York on April 24, 2003.
GOLDMAN, SACHS & CO.
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Prospectus Supplement dated April 21, 2003.
PROSPECTUS SUPPLEMENT SUMMARY
We have entered into an underwriting agreement with Goldman, Sachs & Co.
relating to shares of our common stock, par value $0.001 per share, offered by
this prospectus supplement and the accompanying prospectus. In accordance with
the terms of the underwriting agreement, Goldman, Sachs & Co. has agreed to
purchase all of the 20,000,000 shares.
USE OF PROCEEDS
We intend to use the net proceeds from the sales of securities to provide
additional funds for our operations and for other general corporate purposes
which may include, among other things:
- the repayment of indebtedness;
- working capital;
- capital expenditures; and
- acquisitions of, or investments in, complementary technologies or
businesses.
The precise amount and timing of the application of proceeds will depend
upon our funding requirements in the future.
S-1
UNDERWRITING
We have entered into an underwriting agreement with Goldman, Sachs & Co.
with respect to the shares being offered. Subject to certain conditions,
Goldman, Sachs & Co. has agreed to purchase all of the 20,000,000 shares offered
hereby.
Shares sold by Goldman, Sachs & Co. to the public will initially be offered
at the initial public offering price set forth on the cover of this prospectus
supplement. In addition, Goldman, Sachs & Co. may receive from purchasers of the
shares normal brokerage commissions in amounts agreed with such purchasers. If
all the shares are not sold at the initial price to public, Goldman, Sachs & Co.
may change the offering price and the other selling terms.
We and our officers and directors have agreed with Goldman, Sachs & Co. not
to dispose of or hedge any of our common stock or securities convertible into or
exchangeable for shares of common stock during the period from the date of this
prospectus supplement continuing through the date 60 days after the date of this
prospectus supplement, except with the prior written consent of Goldman,
Sachs & Co. This agreement does not apply to any existing employee benefit
plans.
In connection with the offering, Goldman, Sachs & Co. may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by Goldman, Sachs & Co. of a greater
number of shares than it is required to purchase in the offering. Goldman,
Sachs & Co. will need to close out any short sale by purchasing shares in the
open market. Goldman, Sachs & Co. is likely to create a short position if it is
concerned that there may be downward pressure on the price of the common stock
in the open market after pricing that could adversely affect investors who
purchase in the offering. Stabilizing transactions consist of various bids for
or purchases of common stock made by Goldman, Sachs & Co. in the open market
prior to the completion of the offering.
Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of our
stock, and may stabilize, maintain or otherwise affect the market price of our
common stock. As a result, the price of the common stock may be higher than the
price that otherwise might exist in the open market. If these activities are
commenced, they may be discontinued at any time. These transactions may be
effected on NASDAQ NMS, in the over-the-counter market or otherwise.
We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $200,000.
We have agreed to indemnify Goldman, Sachs & Co. against certain
liabilities, including liabilities under the Securities Act of 1933.
S-2
LEGAL MATTERS
Bingham McCutchen LLP, our outside counsel, will pass upon the legality of
shares of our common stock offered hereby for us. Ropes & Gray, counsel to
Goldman, Sachs & Co., will pass upon the legality of the shares of our common
stock offered hereby for Goldman, Sachs & Co.
S-3
PROSPECTUS
$1,000,000,000
[LOGO]
Debt Securities
Warrants
Common Stock
We will provide the specific terms for each of these securities and their
offering prices in supplements to this prospectus. In the case of debt
securities, these terms will include, as applicable, the specific designation,
aggregate principal amount, maturity, rate or formula of interest, premium and
terms for redemption. In the case of warrants to purchase debt securities or
shares of common stock, the terms will include term, conversion and exercise
prices and other terms. In the case of common stock, these terms will include
the aggregate number of shares offered.
We may sell any combination of these securities in one or more offerings up
to a total dollar amount of $1,000,000,000. We may sell these securities to or
through underwriters and also to other purchasers or through agents. We will set
forth the names of any underwriters or agents in the accompanying prospectus
supplement.
Our common stock is listed on the Nasdaq National Market under the symbol
"SONS". None of the other securities are currently publicly traded.
You should read carefully this prospectus, the documents incorporated by
reference in the prospectus and any prospectus supplement before you invest. We
strongly recommend that you read carefully the risks we describe in the
accompanying prospectus supplement, as well as the risk factors in our most
current reports to the Securities and Exchange Commission, for a fuller
understanding of the risks and uncertainties that we face.
SEE "RISK FACTORS" ON PAGE 5 TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE BUYING THESE SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus may not be used to consummate sales of securities unless it
is accompanied by a prospectus supplement.
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GOLDMAN, SACHS & CO.
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Prospectus dated June 25, 2001.
TABLE OF CONTENTS
PAGE
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About this Prospectus....................................... 1
Where You Can Find More Information......................... 1
Incorporation by Reference.................................. 1
Summary..................................................... 3
About Sonus Networks........................................ 3
Summary of the Securities We Are Offering................... 3
Risk Factors................................................ 5
Special Note Regarding Forward-Looking Statements........... 5
Use of Proceeds............................................. 5
Description of Capital Stock................................ 6
Description of Debt Securities.............................. 10
Description of Warrants..................................... 17
Plan of Distribution........................................ 18
Legal Matters............................................... 20
Experts..................................................... 20
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or SEC, using a "shelf" registration
process. Under this shelf process we may offer, from time to time, in one or
more offerings:
- our debt securities;
- warrants to purchase our common stock or debt securities; or
- shares of our common stock.
The total aggregate offering price of these securities will not exceed
$1,000,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we offer securities, we will provide you with
a prospectus supplement that will describe the specific amounts, prices and
terms of the securities we offer. The prospectus supplement also may add, update
or change information contained in this prospectus.
We may sell the securities to or through underwriters, dealers or agents or
directly to purchasers. We and our agents reserve the sole right to accept and
to reject in whole or in part any proposed purchase of securities. A prospectus
supplement, which we will provide to you each time we offer securities, will
provide the names of any underwriters, dealers or agents involved in the sale of
the securities, and any applicable fee, commission or discount arrangements with
them.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC under the Securities Act of 1933 a registration
statement on Form S-3. This prospectus does not contain all of the information
contained in the registration statement since portions have been omitted under
the rules of the SEC. We also file annual, quarterly and special reports, proxy
statements and other information with the SEC under the Exchange Act. The
Exchange Act file number for our SEC filings is 000-30229. You may read and copy
the registration statement and any other document we file at the following SEC
public reference rooms:
Judiciary Plaza 500 West Madison Street 7 World Trade Center
450 Fifth Street, N.W. 14th Floor Suite 1300
Rm. 1024 Chicago, Illinois 60661 New York, New York 10048
Washington, D.C. 20549
You may obtain information on the operation of the public reference room in
Washington, D.C. by calling the SEC at 1-800-SEC-0330. We file information
electronically with the SEC. Our SEC filings are available from the SEC's
Internet site at HTTP://WWW.SEC.GOV, which contains reports, proxy and
information statements and other information regarding issuers that file
electronically. You may read and copy our SEC filings and other information at
the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the documents we file with
it, which means that we can disclose important information to you by referring
you to those documents instead of reproducing that information in this
prospectus. The information incorporated by reference is considered to be part
of this prospectus, and information in documents that we file later with the SEC
will automatically update and supersede information in this prospectus. We
incorporate by reference the following documents:
- Our Annual Report on Form 10-K for the fiscal year ended December 31, 2000
filed on March 28, 2001;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
filed on May 15, 2001;
- Our Current Report on Form 8-K filed on June 21, 2001; and
- The description of common stock contained in our registration statement on
Form 8-A filed on April 5, 2000, as amended.
In addition to the documents listed above, we also incorporate by reference
any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, including any filings after the date of
initial filing and prior to the effectiveness of the registration statement of
which this propectus is a part, until we have sold all of the offered securities
to which this prospectus relates or the offering is otherwise terminated.
We will provide a copy of the documents we incorporate by reference, at no
cost, to any person who receives this prospectus. To request a copy of any or
all of these documents, you should write or telephone us at: 5 Carlisle Road,
Westford, Massachusetts 01886, Attention: Investor Relations; telephone
(978) 692-8999.
2
SUMMARY
This summary highlights the more detailed information contained elsewhere in
this prospectus. It may not include all the information that is important to
you. You should read the entire prospectus, the prospectus supplement delivered
with the prospectus, and the documents incorporated by reference before making
an investment decision.
ABOUT SONUS NETWORKS
We are a leading provider of voice infrastructure products for the new
public network. Our products are a new generation of carrier-class switching
equipment and software that enable voice services to be delivered over
packet-based networks. Designed for deployment at the core of a service
provider's network, our products significantly reduce the cost to build and
operate voice services compared to traditional alternatives. Moreover, our
products offer a powerful and open platform for service providers to increase
their revenues through the creation and delivery of new and innovative voice and
data services. Our customers include world-leading service providers. Our
objective is to capitalize on our early technology and market lead and build the
premier franchise in voice infrastructure solutions for the new public network.
We were incorporated as a Delaware corporation in August 1997. Our principal
executive offices are located at 5 Carlisle Road, Westford, Massachusetts 01886,
and our telephone number is (978) 692-8999.
SUMMARY OF THE SECURITIES WE ARE OFFERING
We may offer any of the following securities from time to time:
- debt securities;
- warrants to purchase debt securities or common stock; or
- common stock.
When we use the term "securities" in this prospectus, we mean any of the
securities we may offer with this prospectus, unless we say otherwise. The total
aggregate dollar amount of all securities that we may issue will not exceed
$1,000,000,000. If we issue debt securities at a discount from their original
stated principal amount, then, for purposes of calculating the total dollar
amount of all securities issued under this prospectus, we will treat the initial
offering price of the debt securities as the total original principal amount of
the debt securities. This prospectus, including the following summary, describes
the general terms that may apply to the securities. The specific terms of any
particular securities that we may offer will be described in a separate
supplement to this prospectus.
DEBT SECURITIES
Our debt securities may be senior or subordinated in right of payment. For
any particular debt securities we offer, the applicable prospectus supplement
will describe the specific designation, the aggregate principal or face amount
and the purchase price; the ranking, whether senior or subordinated; the stated
maturity; the redemption terms, if any; the conversion terms, if any; the rate
or manner of calculating the rate and the payment dates for interest, if any;
the amount or manner of calculating the amount payable at maturity and whether
that amount may be paid by delivering cash, securities or other property; and
any other specific terms. We will issue the senior and subordinated debt
securities under separate indentures between us and a trustee that we will
identify in the applicable prospectus supplement.
3
WARRANTS
We may offer warrants to purchase our debt securities or common stock. For
any particular warrants we offer, the applicable prospectus supplement will
describe the underlying security; the expiration date; the exercise price or the
manner of determining the exercise price; the amount and kind, or the manner of
determining the amount and kind, of security to be delivered by us upon
exercise; and any other specific terms. We may issue the warrants under warrant
agreements between us and one or more warrant agents.
COMMON STOCK
We may offer shares of our common stock. Our common stock currently is
traded on the Nasdaq National Market under the symbol "SONS".
LISTING
If any securities are to be listed or quoted on a securities exchange or
quotation system, the applicable prospectus supplement will say so.
4
RISK FACTORS
Investing in our securities involves a high degree of risk. Before making an
investment decision, you should carefully consider the risk factors set forth in
the accompanying prospectus supplement, our Quarterly Report on Form 10-Q for
the quarter ended March 31, 2001, filed on May 15, 2001, as well as other
information we include or incorporate by reference in this prospectus and the
additional information in the other reports we file with the SEC. The risks and
uncertainties we have described are not the only ones facing our company.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also affect us.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus, any prospectus
supplement and the documents we incorporate by reference constitute
forward-looking statements that involve substantial risks and uncertainties. In
some cases, you can identify these statements by forward-looking words such as
"may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
or "continue" and variations of these words or comparable words. In addition,
any statements which refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking
statements. These forward-looking statements involve known and unknown risks,
uncertainties and situations that may cause our industry's actual results, level
of activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these statements. The risk factors set forth in any prospectus
supplement and in the reports we file with the SEC that are incorporated by
reference in this prospectus provide examples of risks, uncertainties and events
that may cause our actual results to differ from the expectations described or
implied in our forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this
prospectus. Except as required by law, we do not undertake to update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.
USE OF PROCEEDS
Unless we specify otherwise in a prospectus supplement, we intend to use the
net proceeds from the sales of securities to provide additional funds for our
operations and for other general corporate purposes which may include, among
other things:
- the repayment of indebtedness;
- working capital;
- capital expenditures; and
- acquisitions of, or investments in, complementary technologies or
businesses.
The precise amount and timing of the application of proceeds will depend
upon our funding requirements in the future. We may set forth additional
information on the use of net proceeds from the sale of securities we offer
under this prospectus in a prospectus supplement relating to the specific
offering.
5
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 600,000,000 shares of common stock,
$0.001 par value per share, and 5,000,000 shares of preferred stock, $0.01 par
value per share. As of April 30, 2001, there were approximately 1,000 holders of
record of our common stock.
The following description of our common stock, together with the additional
information we include in any applicable prospectus supplements, summarizes the
material terms and provisions of the common stock that we may offer under this
prospectus. For the complete terms of our common stock, please refer to our
certificate of incorporation and by-laws that are filed as exhibits to our
reports incorporated by reference into the registration statement that includes
this prospectus. Delaware's corporation law may also affect the terms of these
securities. While the terms we have summarized below will apply generally to any
future common stock that we may offer, we will describe the particular terms of
any series of these securities in more detail in the applicable prospectus
supplement, which may differ from the terms we describe below to the extent
indicated in the applicable prospectus supplement.
COMMON STOCK
Holders of our common stock are entitled to one vote for each share held on
all matters submitted to a vote of the stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares voted can elect
all of the directors then standing for election. Holders of common stock are
entitled to receive ratably any dividends that may be declared by the board of
directors out of legally available funds, subject to any preferential dividend
rights of any outstanding preferred stock. Upon our liquidation, dissolution or
winding up, the holders of common stock are entitled to receive ratably our net
assets available after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding preferred stock. Holders of
common stock have no preemptive, subscription, redemption or conversion rights.
The outstanding shares of common stock are, and the shares offered in connection
with this offering will be, when issued and paid for, fully paid and
non-assessable. The rights, preferences and privileges of holders of common
stock are subject to, and may be adversely affected by, the rights of holders of
shares of any series of preferred stock that we may designate and issue in the
future without further stockholder approval.
PREFERRED STOCK
Our board of directors is authorized without further stockholder approval to
issue from time to time up to an aggregate of 5,000,000 shares of preferred
stock in one or more series. The board of directors has discretion to fix or
alter the designations, preferences, rights, qualifications, limitations or
restrictions of the shares of each series, including the dividend rights,
dividend rates, conversion rights, voting rights, term of redemption including
sinking fund provisions, redemption price or prices, liquidation preferences and
the number of shares constituting any series or designations of any series
without further vote or action by our stockholders.
The purpose of authorizing the board of directors to issue preferred stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could make it more difficult for a third party to
acquire, or could discourage a third party from acquiring, a majority of our
outstanding voting stock. We have no current plans to issue any shares of
preferred stock.
6
REGISTRATION RIGHTS
Pursuant to the terms of an amended and restated Investors' Rights
Agreement, some holders of Sonus common stock are entitled to rights with
respect to the registration of their shares under the Securities Act. In
connection with our acquisition of telecom technologies, inc., or TTI, we have
granted additional registration rights to some former TTI stockholders. Set
forth below is a summary of the registration rights granted to these groups of
stockholders.
RIGHTS GRANTED UNDER OUR INVESTORS' RIGHTS AGREEMENT
DEMAND REGISTRATION RIGHTS. The holders of 35% or more of the shares having
registration rights may request that we register shares of common stock. We will
be obligated to effect only two registrations pursuant to a demand request by
holders of registrable shares.
We are not obligated to effect a registration 90 days prior to the
anticipated filing of, or for up to three months from the effective date of, a
company-initiated registration. We are also not required to effect a
stockholder-requested registration, if the requested registration of shares
would adversely affect, to our material harm, any other activity in which we are
then engaged. We may only delay stockholder-initiated registrations once every
twelve months.
PIGGYBACK REGISTRATION RIGHTS. Stockholders with registration rights have
unlimited rights to request that shares be included in any company-initiated
registration of common stock other than registrations of shares issued in
connection with employee benefit plans, shares issued in connection with
business combinations subject to Rule 145 under the Securities Act, convertible
debt or other specified registrations. If the registration that we initiate
involves an underwriting, however, we will not be obligated to register any
shares unless the holders agree to the terms of the underwriting agreement. It
may also be necessary, at the discretion of the lead underwriter, to limit the
number of selling stockholders in the offering, as a result of which
stockholders may only be able to register a pro rata number of registrable
shares, if any.
FORM S-3 REGISTRATION RIGHTS. We are eligible, under applicable securities
laws, to file registration statements on Form S-3. At this time, one or more
stockholders may request that we file a registration statement on Form S-3, so
long as the shares offered have an aggregate offering price of at least
$1,000,000 based on the public market price at the time of the request. We will
be obligated to effect no more than three registrations pursuant to an S-3
request by holders of registration rights.
FUTURE GRANTS OF REGISTRATION RIGHTS. Without the consent of current
stockholders owning at least 66 2/3% of the then-outstanding registrable shares,
we may not grant further registration rights that would be on more favorable
terms than the existing registration rights.
TRANSFERABILITY. The registration rights are transferable upon transfer of
registrable securities and notice by the holder to us of the transfer, provided
that, in most cases, a specified minimum number of shares, as adjusted for
splits, dividends, recapitalizations and similar events, are transferred and the
transferee or assignee assumes the rights and obligations of the transferor of
the shares.
TERMINATION. The registration rights will terminate as to any particular
registrable securities on the date on which the shares are sold pursuant to a
registration statement and are no longer subject to Rule 144 under the
Securities Act. The piggyback registration rights will expire on May 31, 2003,
the third anniversary of our initial public offering.
7
RIGHTS GRANTED TO OTHER STOCKHOLDERS
On January 18, 2001, we entered into a registration rights agreement with
some of the then-holders of TTI common stock. In this registration rights
agreement, we generally agree to use our reasonable best efforts to cause the
shares of our common stock held by those former holders of TTI Class A and
Class B common stock to be registered for sale under any registration statement
that we propose to file from time to time, whether on our behalf or on behalf of
our other stockholders.
DELAWARE LAW AND CHARTER AND BY-LAW PROVISIONS; ANTI-TAKEOVER EFFECTS
We are subject to the provisions of Section 203 of the General Corporation
Law of Delaware. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to some exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
Our amended and restated certificate of incorporation and amended and
restated by-laws provide:
- that the board of directors be divided into three classes, as nearly equal
in size as possible, with staggered three-year terms;
- that directors may be removed only for cause by the affirmative vote of
the holders of at least 66 2/3% of the shares of our capital stock
entitled to vote; and
- that any vacancy on the board of directors, however occurring, including a
vacancy resulting from an enlargement of the board, may only be filled by
vote of a majority of the directors then in office.
The classification of the board of directors and the limitations on the
removal of directors and filling of vacancies could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring, Sonus.
Our amended and restated certificate of incorporation and amended and
restated by-laws also provide that:
- any action required or permitted to be taken by our stockholders at an
annual meeting or special meeting of stockholders may only be taken if it
is properly brought before the meeting and may not be taken by written
action in lieu of a meeting; and
- special meetings of our stockholders may only be called by the chairman of
the board of directors, the president or by our board of directors.
Our amended and restated by-laws provide that, in order for any matter to be
considered "properly brought" before a meeting, a stockholder must comply with
requirements regarding advance notice to us. These provisions could delay until
the next stockholders' meeting stockholder actions that are favored by the
holders of a majority of our outstanding voting securities. These provisions may
also discourage another person or entity from making a tender offer for our
common stock, because the person or entity, even if it acquired a majority of
our outstanding voting securities, would be able to take action as a
stockholder, such as electing new directors or approving a merger, only at a
duly called stockholders meeting, and not by written consent.
8
Delaware's corporation law provides generally that the affirmative vote of a
majority of the shares entitled to vote on any matter is required to amend a
corporation's certificate of incorporation or by-laws, unless a corporation's
certificate of incorporation or by-laws, as the case may be, requires a greater
percentage. Our amended and restated certificate of incorporation requires the
affirmative vote of the holders of at least 66 2/3% of the shares of our capital
stock entitled to vote to amend or repeal any of the provisions of our amended
and restated certificate of incorporation described in the preceding paragraphs.
Generally, our amended and restated by-laws may be amended or repealed by a
majority vote of the board of directors or the holders of a majority of the
shares of our capital stock issued and outstanding and entitled to vote. To
amend our amended and restated by-laws regarding special meetings of
stockholders, written actions of stockholders in lieu of a meeting and the
election, removal and classification of members of the board of directors
requires the affirmative vote of the holders of at least 66 2/3% of the shares
of our capital stock entitled to vote. The stockholder vote would be in addition
to any separate class vote that might in the future be required pursuant to the
terms of any series of preferred stock that might be outstanding at the time any
of these amendments are submitted to stockholders.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our amended and restated certificate of incorporation provides that our
directors and officers will be indemnified by us to the fullest extent
authorized by Delaware law. This indemnification would cover all expenses and
liabilities reasonably incurred in connection with their services for or on
behalf of us. In addition, our amended and restated certificate of incorporation
provides that our directors will not be personally liable for monetary damages
to us for breaches of their fiduciary duty as directors, unless they violated
their duty of loyalty to us or our stockholders, acted in bad faith, knowingly
or intentionally violated the law, authorized illegal dividends or redemptions
or derived an improper personal benefit from their action as directors.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is American Stock
Transfer & Trust Company.
LISTING
Our common stock is quoted on the Nasdaq National Market under the trading
symbol "SONS".
9
DESCRIPTION OF DEBT SECURITIES
We may offer any combination of senior debt securities or subordinated debt
securities. Debt securities are unsecured obligations to repay advanced funds.
We may issue any of the senior debt securities and the subordinated debt
securities under separate indentures between us, as issuer, and the trustee or
trustees identified in a prospectus supplement. The initial forms of these
indentures are filed as exhibits to the registration statement of which this
prospectus is a part.
The prospectus supplement will describe the particular terms of any debt
securities we may offer and these terms may differ from the terms summarized
below. The following summaries of the debt securities and certain of the
indentures are not complete. We urge you to read the indentures filed as
exhibits to the registration statement which includes this prospectus and the
description of the debt securities included in the prospectus supplement.
GENERAL
We may issue debt securities in one or more series without limit as to
aggregate principal amount for the debt securities of any series. Unless the
prospectus supplement indicates otherwise, the debt securities will have terms
that are consistent with the indentures. Unless the prospectus supplement
indicates otherwise, senior debt securities will be unsecured and unsubordinated
obligations and will rank equal with all our other unsecured and unsubordinated
debt. Subordinated debt securities will be paid only if all payments due under
our senior indebtedness, including any outstanding senior debt securities, have
been made.
The indentures might not limit the amount of other debt that we may incur or
whether that debt is senior to the debt securities offered by this prospectus,
and might not contain financial or similar restrictive covenants. The indentures
might not contain any provision to protect holders of debt securities against a
sudden or dramatic decline in our ability to pay our debt.
The prospectus supplement will describe the debt securities and the price or
prices at which we will offer the debt securities. The description will include:
- the title and form of the debt securities;
- any limit on the aggregate principal amount of the debt securities or the
series of which they are a part;
- the person to whom any interest on a debt security of the series will be
paid;
- the date or dates on which we must repay the principal;
- the rate or rates at which the debt securities will bear interest, if any,
the date or dates from which interest will accrue, and the date or dates
on which we must pay interest;
- if applicable, the duration and terms of the right to extend interest
payment periods;
- the place or places where we must pay the principal and any premium or
interest on the debt securities;
- the terms and conditions on which we may redeem any debt security, if at
all;
- any obligation to redeem or purchase any debt securities, and the terms
and conditions on which we must do so;
- the denominations in which we may issue the debt securities;
- the manner in which we will determine the amount of principal or any
premium or interest on the debt securities;
10
- the currency in which we will pay the principal or any premium or interest
on the debt securities;
- the principal amount of the debt securities that we will pay upon
declaration of acceleration of their maturity;
- the amount that will be deemed to be the principal amount for any purpose,
including the principal amount that will be due and payable upon any
maturity or that will be deemed to be outstanding as of any date;
- if applicable, that the debt securities are defeasible and the terms of
such defeasance;
- if applicable, the terms of any right to convert debt securities into, or
exchange debt securities for, shares of common stock or other securities
or property;
- whether we will issue the debt securities in the form of one or more
global securities and, if so, the respective depositaries for the global
securities and the terms of the global securities;
- the subordination provisions that will apply to any subordinated debt
securities;
- any addition to or change in the events of default applicable to the debt
securities and any change in the right of the trustee or the holders to
declare the principal amount of any of the debt securities due and
payable; and
- any addition to or change in the covenants in the indentures.
We may sell the debt securities at a substantial discount below their stated
principal amount. We will describe U.S. federal income tax considerations, if
any, applicable to debt securities sold at an original issue discount in the
prospectus supplement. An "original issue discount security" is any debt
security sold for less than its face value, and which provides that the holder
cannot receive the full face value if maturity is accelerated. The prospectus
supplement relating to any original issue discount securities will describe the
particular provisions relating to acceleration of the maturity upon the
occurrence of any event of default. In addition, we will describe U.S. federal
income tax or other considerations applicable to any debt securities that are
denominated in a currency or unit other than U.S. dollars in the prospectus
supplement.
CONVERSION AND EXCHANGE RIGHTS
The prospectus supplement will describe, if applicable, the terms on which
the debt securities may be converted into or exchanged for common stock or other
securities or property. The conversion or exchange may be mandatory or may be at
your option. The prospectus supplement will describe how the number of shares of
common stock or other securities or property to be received upon conversion or
exchange would be calculated.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless the prospectus supplement indicates otherwise, the following
provisions will apply to the subordinated debt securities. The indebtedness
underlying the subordinated debt securities will be payable only if all payments
due under our senior indebtedness, including any outstanding senior debt
securities, have been made. If we distribute our assets to creditors upon any
dissolution, winding-up, liquidation or reorganization or in bankruptcy,
insolvency, receivership or similar proceedings, we must first pay all amounts
due or to become due on all senior indebtedness before we pay the principal of,
or any premium or interest on, the subordinated debt securities. In the event
the subordinated debt securities are accelerated because of an event of default,
we may not make any payment on the subordinated debt securities until we have
paid all senior indebtedness or the acceleration is rescinded. If the payment of
subordinated debt securities
11
accelerates because of an event of default, we must promptly notify holders of
senior indebtedness of the acceleration.
If we experience a bankruptcy, dissolution or reorganization, holders of
senior indebtedness may recover more ratably, and holders of subordinated debt
for subordinated debt securities may recover less ratably, than our other
creditors. The indenture for subordinated debt securities may not limit our
ability to incur additional senior indebtedness.
FORM, EXCHANGE AND TRANSFER
We will issue debt securities only in fully registered form, without
coupons, and, unless the prospectus supplement indicates otherwise, only in
denominations of $1,000 and integral multiples thereof. The holder of a debt
security may elect, subject to the terms of the indentures and the limitations
applicable to global securities, to exchange them for other debt securities of
the same series of any authorized denomination and of similar terms and
aggregate principal amount.
Holders of debt securities may present them for exchange as provided above
or for registration of transfer, duly endorsed or with the form of transfer duly
executed, at the office of the transfer agent we designate for that purpose. We
will not impose a service charge for any registration of transfer or exchange of
debt securities, but we may require a payment sufficient to cover any tax or
other governmental charge payable in connection with the transfer or exchange.
We will name the transfer agent in the prospectus supplement. We may designate
additional transfer agents or rescind the designation of any transfer agent or
approve a change in the office through which any transfer agent acts, but we
must maintain a transfer agent in each place of payment on debt securities.
If we redeem the debt securities, we will not be required to issue, register
the transfer of or exchange any debt security during a specified period prior to
mailing a notice of redemption. We are not required to register the transfer of
or exchange any debt securities selected for redemption, except the unredeemed
portion of the debt security being redeemed.
GLOBAL SECURITIES
The debt securities may be represented, in whole or in part, by one or more
global securities that will have an aggregate principal amount equal to that of
all debt securities of that series. Each global security will be registered in
the name of a depositary identified in the prospectus supplement. We will
deposit the global security with the depositary or a custodian, and the global
security will bear a legend regarding the restrictions on exchanges and
registration of transfer.
Unless the prospectus supplement indicates otherwise, no global security may
be exchanged in whole or in part for debt securities registered, and no transfer
of a global security in whole in part may be registered, in the name of any
person other than the depositary or any nominee or successor of the depositary
unless:
- the depositary is unwilling or unable to continue as depositary; or
- the depositary is no longer in good standing under the Securities Exchange
Act of 1934 or other applicable statute or regulation.
The depositary will determine how all securities issued in exchange for a
global security will be registered.
As long as the depositary or its nominee is the registered holder of a
global security, we will consider the depositary or the nominee to be the sole
owner and holder of the global security and the underlying debt securities.
Except as stated above, owners of beneficial interests in a global security will
not be entitled to have the global security or any debt security registered in
their
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names, will not receive physical delivery of certificated debt securities and
will not be considered to be the owners or holders of the global security or
underlying debt securities. We will make all payments of principal, premium and
interest on a global security to the depositary or its nominee. The laws of some
jurisdictions require that some purchasers of securities take physical delivery
of securities in definitive form. These laws may prevent you from transferring
your beneficial interests in a global security.
Only institutions that have accounts with the depositary or its nominee and
persons that hold beneficial interests through the depositary or its nominee may
own beneficial interests in a global security. The depositary will credit, on
its book-entry registration and transfer system, the respective principal amount
of debt securities represented by the global security to the accounts of its
participants. Ownership of beneficial interests in a global security will be
shown only on, and the transfer of those ownership interests will be effected
only through, records maintained by the depositary or any such participant.
The policies and procedures of the depositary may govern payment, transfers,
exchanges and other matters relating to beneficial interests in a global
security. We and the trustee will assume no responsibility or liability for any
aspect of the depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a global security.
PAYMENT AND PAYING AGENTS
Unless the prospectus supplement indicates otherwise, we will pay principal
and any premium or interest on a debt security to the person in whose name the
debt security is registered at the close of business on the regular record date
for the interest.
Unless the prospectus supplement indicates otherwise, we will pay principal
and any premium or interest on the debt securities at the office of our
designated paying agent. Unless the prospectus supplement indicates otherwise,
the corporate trust office of the trustee will be the paying agent for the debt
securities.
Any other paying agents we designate for the debt securities of a particular
series will be named in the prospectus supplement. We may designate additional
paying agents, rescind the designation of any paying agent or approve a change
in the office through which any paying agent acts, but we must maintain a paying
agent in each place of payment for the debt securities.
The paying agent will return to us all money we pay to it for the payment of
the principal, premium or interest on any debt security that remains unclaimed
for a specified period. Thereafter, the holder may look only to us for payment,
as an unsecured general creditor.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Under the terms of the indentures, so long as any securities remain
outstanding, we may not consolidate or enter into a share exchange with or merge
into any other person, in a transaction in which we are not the surviving
corporation, or sell, convey, transfer or lease our properties and assets
substantially as an entirety to any person, unless:
- the successor assumes our obligations under the debt securities and the
indentures; and
- we meet the other conditions described in the indentures.
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EVENTS OF DEFAULT
Each of the following will constitute an event of default under each
indenture:
- failure to pay the principal of or any premium on any debt security when
due;
- failure to pay any interest on any debt security when due, for more than a
specified number of days past the due date;
- failure to deposit any sinking fund payment when due;
- failure to perform any covenant or agreement in the indenture, which
failure continued for a specified number of days after written notice has
been given by the trustee or the requisite holders of the debt securities
of that series;
- specified events of bankruptcy, insolvency or reorganization; and
- any other event of default specified in the prospectus supplement.
If an event of default occurs and continues, both the trustee and holders of
a specified percentage in aggregate principal amount of the outstanding
securities of that series may declare the principal amount of the debt
securities of that series to be immediately due and payable. The holders of a
majority in aggregate principal amount of the outstanding securities of that
series may, under specified circumstances, rescind and annul the acceleration if
all events of default, other than the nonpayment of accelerated principal, have
been cured or waived.
Except for specified duties in case of an event of default, the trustee will
not be obligated to exercise any of its rights or powers at the request or
direction of any of the holders, unless the holders have offered the trustee
reasonable indemnity. If they provide this indemnification, the holders of a
majority in aggregate principal amount of the outstanding securities of any
series may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee or exercising any trust or power conferred
on the trustee with respect to the debt securities of that series.
Unless the prospectus supplement indicates otherwise, no holder of a debt
security of any series may institute any proceeding with respect to the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy, unless:
- the holder has previously given the trustee written notice of a continuing
event of default;
- the holders of a specified percentage in aggregate principal amount of the
outstanding securities of that series have made a written request upon the
trustee, and have offered reasonable indemnity to the trustee, to
institute the proceeding;
- the trustee has failed to institute the proceeding for a specified period
of time after its receipt of the notification; and
- the trustee has not received a direction inconsistent with the request
within a specified number of days.
MODIFICATION AND WAIVER
Unless the prospectus supplement indicates otherwise, we and the trustee may
change an indenture without the consent of any holders with respect to specific
matters, including:
- to fix any ambiguity, defect or inconsistency in the indenture; and
- to change anything that does not materially adversely affect the interests
of any holder of debt securities of any series.
14
In addition, under the indentures, the rights of holders of a series of debt
securities may be changed by us and the trustee, either (i) with the written
consent of the holders of not less than a majority in aggregate principal amount
of the outstanding debt securities of each class that is affected or (ii) by the
adoption of a resolution, at a meeting of holders of debt securities at which a
quorum is present, by the holders of 66 2/3% in aggregate principal amount of
the outstanding debt securities of each class that is affected represented at
such meeting. We and the trustee, however, may only make the following changes
with the consent of the holder of any outstanding debt securities affected:
- extending the fixed maturity of the series of notes;
- reducing the principal amount, reducing the rate of or extending the time
of payment of interest, or any premium payable upon the redemption, of any
debt securities; or
- reducing the percentage of debt securities the holders of which are
required to consent to any amendment.
The holders of a majority in aggregate principal amount of the outstanding
debt securities of any series, or holders of 66 2/3% in aggregate principal
amount of such series, acting at a meeting, may waive any past default under the
indenture with respect to debt securities of that series, except a default in
the payment of principal, premium or interest on any debt security of that
series or in respect of a covenant or provision of the indenture that cannot be
amended without each holder's consent.
Except in some limited circumstances, we may set any day as a record date
for the purpose of determining the holders of outstanding debt securities of any
series entitled to give or take any direction, notice, consent, waiver or other
action under the indentures, or be present at a meeting of holders of debt
securities. In some limited circumstances, the trustee may set a record date. To
be effective, the action must be taken by holders of the requisite principal
amount of such debt securities within a specified period following the record
date.
DEFEASANCE
To the extent stated in the prospectus supplement, we may elect to apply the
provisions in the indentures relating to defeasance and discharge of
indebtedness, or to defeasance of some restrictive covenants, to the debt
securities of any series. The indentures provide that, upon satisfaction of the
requirements described below, we may terminate all of our obligations under the
debt securities of any series and the applicable indenture, which is known as
legal defeasance, other than our obligation:
- to maintain a registrar and paying agents and hold moneys for payment in
trust;
- to register the transfer or exchange or the debt securities; and
- to replace mutilated, destroyed, lost or stolen debt securities.
In addition, we may terminate our obligation to comply with any restrictive
covenants under the debt securities of any series or the applicable indenture,
which is known as covenant defeasance.
We may exercise our legal defeasance option even if we have previously
exercised our covenant defeasance option. If we exercise either defeasance
option, payment of the debt securities may not be accelerated because of the
occurrence of events of default.
To exercise either defeasance option as to debt securities of any series, we
must irrevocably deposit in trust with the trustee money and/or obligations
backed by a full faith and credit of the United States that will provide money
in an amount sufficient in the written opinion of a national recognized firm of
independent public accountants to pay the principal of, premium, if any, and
15
each installment of interest on the debt securities. We may only establish this
trust if, among other things:
- no event of default shall have occurred or be continuing;
- in the case of legal defeasance, we have delivered to the trustee an
opinion of counsel to the effect that we have received from, or there has
been published by, the Internal Revenue Service a ruling or there has been
a change in law, which in the opinion of our counsel, provides that
holders of the debt securities will not recognize gain or loss for federal
income tax purposes as a result of such deposit, defeasance and discharge
and will be subject to federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred;
- in the case of covenant defeasance, we have delivered to the trustee an
opinion of counsel to the effect that the holders of the debt securities
will not recognize gain or loss for federal income tax purposes as a
result of the deposit, defeasance and discharge and will be subject to
federal income tax on the same amount, in the same manner and at the same
times as would have been the case if the deposit, defeasance and discharge
had not occurred; and
- we satisfy other customary conditions described in the applicable
indenture.
NOTICES
We will mail notices to holders of debt securities as indicated in the
prospectus supplement.
TITLE
We may treat the person in whose name a debt security is registered as the
absolute owner, whether or not such debt security may be overdue, for the
purpose of making payment and for all other purposes.
GOVERNING LAW
The indentures and the debt securities will be governed by and construed in
accordance with the laws of the state of New York.
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DESCRIPTION OF WARRANTS
GENERAL
The following description, together with the additional information we may
include in any applicable prospectus supplements, summarizes the material terms
and provisions of the warrants that we may offer under this prospectus and the
related warrant agreements and warrant certificates. While the terms summarized
below will apply generally to any warrants we may offer, we will describe the
particular terms of any series of warrants in more detail in the applicable
prospectus supplement and these terms may differ from the terms described below.
We may issue, together with other securities or separately, warrants to
purchase our debt securities or common stock. We will issue the warrants under
warrant agreements to be entered into between us and a bank or trust company, as
warrant agent, all as set forth in the applicable prospectus supplement. The
warrant agent will act solely as our agent in connection with the warrants of
the series being offered and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of warrants in respect of which this prospectus is being
delivered:
- the title of the warrants;
- the designation, amount and terms of the securities for which the warrants
are exercisable and the procedures and conditions relating to the exercise
of such warrants;
- the designation and terms of the other securities, if any, with which the
warrants are to be issued and the number of warrants issued with each such
security;
- the price or prices at which the warrants will be issued;
- the aggregate number of warrants;
- any provisions for adjustment of the number or amount of securities
receivable upon exercise of the warrants or the exercise price of the
warrants;
- the price or prices at which the securities purchasable upon exercise of
the warrants may be purchased;
- if applicable, the date on and after which the warrants and the securities
purchasable upon exercise of the warrants will be separately transferable;
- if applicable, a discussion of the material United States federal income
tax considerations applicable to the exercise of the warrants;
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants;
- the date on which the right to exercise the warrants shall commence, and
the date on which the right shall expire;
- the maximum or minimum number of warrants which may be exercised at any
time; and
- information with respect to book-entry procedures, if any.
Before exercising their warrants, holders of warrants will not have any of
the rights of holders of the securities purchasable upon such exercise,
including:
17
- in the case of warrants to purchase debt securities, the right to receive
payments of principal of, or premium, if any, or interest on, the debt
securities purchasable upon exercise or to enforce covenants in the
applicable indenture; or
- in the case of warrants to purchase common stock, the right to receive
dividends, if any, or payments upon our liquidation, dissolution or
winding up or to exercise voting rights, if any.
EXERCISE OF WARRANTS
Each warrant will entitle the holder thereof to purchase for cash the amount
of debt securities or shares of common stock at the exercise price as will in
each case be set forth in, or be determinable as set forth in, the applicable
prospectus supplement. Warrants may be exercised at any time up to the close of
business on the expiration date set forth in the applicable prospectus
supplement. After the close of business on the expiration date, unexercised
warrants will become void.
Warrants may be exercised as set forth in the applicable prospectus
supplement relating to the warrants offered thereby. Upon receipt of payment and
the warrant certificate properly completed and duly executed at the corporate
trust office of the warrant agent or any other office indicated in the
applicable prospectus supplement, we will, as soon as practicable, forward the
purchased securities. If less than all of the warrants represented by the
warrant certificate are exercised, a new warrant certificate will be issued for
the remaining warrants.
ENFORCEABILITY OF RIGHTS OF HOLDERS OF WARRANTS
Each warrant agent will act solely as our agent under the applicable warrant
agreement and will not assume any obligation or relationship of agency or trust
with any holder of any warrant. A single bank or trust company may act as
warrant agent for more than one issue of warrants. A warrant agent will have no
duty or responsibility in case of any default by us under the applicable warrant
agreement or warrant, including any duty or responsibility to initiate any
proceedings at law or otherwise, or to make any demand upon us. Any holder of a
warrant may, without the consent of the related warrant agent or the holder of
any other warrant, enforce by appropriate legal action its right to exercise,
and receive the securities purchasable upon exercise of, that holder's warrants.
PLAN OF DISTRIBUTION
We may sell the securities being offered hereby in one or more of the
following ways from time to time:
- through agents to the public or to investors;
- to underwriters for resale to the public or to investors; or
- directly to investors.
We will set forth in a prospectus supplement the terms of the offering of
securities, including:
- the name or names of any agents or underwriters;
- the purchase price of the securities being offered and the proceeds that
we will receive from the sale;
- any over-allotment options under which underwriters may purchase
additional securities from us;
- any agency fees or underwriting discounts and other items constituting
agents' or underwriters' compensation;
18
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchanges on which such securities may be listed.
AGENTS
We may designate agents who agree to use their reasonable or best efforts to
solicit purchases for the period of their appointment or to sell securities on a
continuing basis.
UNDERWRITERS
If we use underwriters for a sale of securities, the underwriters will
acquire the securities for their own account. The underwriters may resell the
securities in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The obligations of the underwriters to purchase the securities will be subject
to the conditions set forth in the applicable underwriting agreement. The
underwriters will be obligated to purchase all the securities of the series
offered if they purchase any of the securities of that series. The underwriters
may change from time to time any initial public offering price and any discounts
or concessions the underwriters allow or reallow or pay to dealers. We may use
underwriters with whom we have a material relationship. We will describe the
nature of any such relationship in the prospectus supplement naming the
underwriter.
DIRECT SALES
We may also sell securities directly to one or more purchasers without using
underwriters or agents.
Underwriters, dealers and agents that participate in the distribution of the
securities may be underwriters as defined in the Securities Act and any
discounts or commissions they receive from us and any profit on their resale of
the securities may be treated as underwriting discounts and commissions under
the Securities Act. We will identify in the applicable prospectus supplement any
underwriters, dealers or agents and will describe their compensation. We may
have agreements with the underwriters, dealers and agents to indemnify them
against specified civil liabilities, including liabilities under the Securities
Act. Underwriters, dealers and agents may engage in transactions with or perform
services for us or our subsidiaries in the ordinary course of their businesses.
TRADING MARKETS AND LISTING OF SECURITIES
Unless otherwise specified in the applicable prospectus supplement, each
class or series of securities will be a new issue with no established trading
market, other than our common stock, which is listed on the Nasdaq National
Market. We may elect to list any other class or series of securities on any
exchange, but we are not obligated to do so. It is possible that one or more
underwriters may make a market in a class or series of securities, but the
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot give any assurance as to the
liquidity of the trading market for any of the securities.
STABILIZATION ACTIVITIES
Any underwriter may engage in over-allotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Over-allotment involves sales in
excess of the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing
19
bids do not exceed a specified maximum. Short covering transactions involve
purchases of the securities in the open market after the distribution is
completed to cover short positions. Penalty bids permit the underwriters to
reclaim a selling concession from a dealer when the securities originally sold
by the dealer are purchased in a covering transaction to cover short positions.
Those activities may cause the price of the securities to be higher than it
would otherwise be. If commenced, the underwriters may discontinue any of the
activities at any time.
PASSIVE MARKET MAKING
Any underwriters who are qualified market makers on the Nasdaq National
Market may engage in passive market making transactions in the securities on the
Nasdaq National Market in accordance with Rule 103 of Regulation M, during the
business day prior to the pricing of the offering, before the commencement of
offer or sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid at a price not
in excess of the highest independent bid for such security; if all independent
bids are lowered below the passive market maker's bid, however, the passive
market maker's bid must then be lowered when certain purchase limits are
exceeded.
LEGAL MATTERS
Bingham Dana LLP, Boston, Massachusetts, will provide us with an opinion as
to legal matters in connection with the securities we are offering.
EXPERTS
The consolidated financial statements of Sonus Networks, Inc. as of
December 31, 1999 and 2000, and for the years ended December 31, 1998, 1999 and
2000, incorporated by reference in this prospectus from Sonus' Annual Report on
Form 10-K for the year ended December 31, 2000, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated in reliance upon the authority of said
firm as experts in giving said report.
The consolidated financial statements of telecom technologies, inc. as of
December 31, 1999 and 2000, and for the years ended December 31, 1998, 1999 and
2000, incorporated by reference in this prospectus from Sonus' Current Report on
Form 8-K filed on June 21, 2001, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated in reliance upon the authority of said firm as
experts in giving said report.
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
Page
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Prospectus Supplement Summary......... S-1
Use of Proceeds....................... S-1
Underwriting.......................... S-2
Legal Matters......................... S-3
Prospectus
About this Prospectus................. 1
Where You Can Find More Information... 1
Incorporation by Reference............ 1
Summary............................... 3
About Sonus Networks.................. 3
Summary of the Securities We Are
Offering............................ 3
Risk Factors.......................... 5
Special Note Regarding Forward Looking
Statements.......................... 5
Use of Proceeds....................... 5
Description of Capital Stock.......... 6
Description of Debt Securities........ 10
Description of Warrants............... 17
Plan of Distribution.................. 18
Legal Matters......................... 20
Experts............................... 20
20,000,000 Shares
SONUS NETWORKS, INC.
Common Stock
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GOLDMAN, SACHS & CO.
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