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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
December 21, 2005
Date of Report (Date of earliest event reported)
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SONUS NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-30229 04-3387074
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
250 APOLLO DRIVE, CHELMSFORD, MASSACHUSETTS 01824
(Address of Principal Executive Offices) (Zip Code)
(978) 614-8100
(Registrant's telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On December 21, 2005, the Board of Directors (the "Board") of Sonus
Networks, Inc. (the "Company"), upon the recommendation of the Board's
Compensation Committee, approved the acceleration of vesting of unvested stock
options having an exercise price per share of $4.00 or higher, granted under the
Company's stock option plan that are held by the Company's current employees,
including executive officers. Options held by the Company's non-employee
directors are excluded from this vesting acceleration. As a result of such
acceleration, options granted with respect to approximately 19 million shares of
the Company's common stock are subject to this acceleration. The Board also
conditioned the acceleration of options held by each executive officer on the
executive officer's entering into a Resale Restriction Agreement with the
Company. The Resale Restriction Agreement would restrict the sale of any shares
obtained through the exercise of accelerated options before such time as vesting
would otherwise have taken place absent the acceleration or, if earlier, an
executive officer's last day of employment with the Company. In addition,
holders of incentive stock options, or ISOs, within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended, may elect to decline the
acceleration of certain of their ISOs if it would have the effect of changing
the status of such options for federal income tax purposes from ISOs to
non-qualified stock options.
The acceleration of the vesting of these unvested stock options
eliminates future compensation expense that the Company would otherwise have to
recognize in its consolidated statement of operations with respect to such
options when Statement of Financial Accounting Standards No. 123(R) "Share Based
Payment," becomes effective for the Company in the first quarter of 2006.
A copy of the form of Resale Restriction Agreement is attached to this
Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by
reference as though fully set forth herein. The foregoing summary of the Resale
Restriction Agreement is qualified in its entirety by the complete text of
Exhibit 10.1 filed herewith.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibit
10.1 Form of Resale Restriction Agreement.
SIGNATURE
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 hereunto duly authorized.
Date: December 28, 2005 SONUS NETWORKS, INC.
By:
/s/ Charles J. Gray
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Vice President and General Counsel
Exhibit Index
10.1 Form of Resale Restriction Agreement.
Exhibit 10.1
SONUS NETWORKS, INC.
RESALE RESTRICTION AGREEMENT
This RESALE RESTRICTION AGREEMENT (the "Agreement") with respect to
certain stock option award agreements (the "Option Agreements") issued under the
Sonus Networks, Inc. Amended and Restated 1997 Stock Incentive Plan (the "Plan")
is made by and between Sonus Networks, Inc., a Delaware corporation (the
"Company"), and (the "Holder").
WHEREAS, the Holder was granted options (the "Options") to acquire shares
of common stock of the Company (the "Shares") under the Plan pursuant to the
Option Agreements.
WHEREAS, the Options are fully vested and exercisable by reason of an
action of the Board of Directors of the Company effective December 21, 2005; and
WHEREAS, the Company and the Holder wish to impose certain resale
restrictions on the Shares subject to the Options as provided herein on the
terms and conditions contained herein.
NOW, THEREFORE, it is agreed as follows:
1. The Holder acknowledges that he or she has reviewed this Agreement in
full.
2. The Holder agrees not to sell, contract to sell, grant any option to
purchase, transfer the economic risk of ownership in, make any short sale of,
pledge or otherwise transfer or dispose of any Shares (or any interest in any
Shares) until the date on which the Shares would have vested pursuant to the
original terms of the Option Agreements (hereinafter referred to as the "Resale
Restrictions").
3. The Resale Restrictions shall lapse on the earlier of the date on which
the Shares would have vested pursuant to the original terms of the Option
Agreements or the last day of the Holder's employment with the Company.
4. This Agreement shall be effective as of December 30, 2005.
5. The Holder represents and warrants that he or she has full power to
enter into this Agreement.
6. This Agreement, the Option Agreements and the Plan constitute the
entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior understandings and agreements of the
Company and the Holder with respect to the subject matter hereof, and may not be
modified except by means of a writing signed by the Company and the Holder. This
Agreement is to be construed in accordance with and governed by the internal
laws of the Commonwealth of Massachusetts without giving effect to any choice of
law rule that would cause the application of the laws of any jurisdiction other
than the internal laws of the Commonwealth of Massachusetts to the rights and
duties of the parties. Nothing in this Agreement (except as expressly provided
herein) is intended to confer any rights or remedies on any persons other than
the parties. Should any provision of this Agreement be determined to be illegal
or unenforceable, such provision shall be enforced to the fullest extent allowed
by law and the other provisions shall nevertheless remain effective and shall
remain enforceable.
7. This Agreement shall be binding upon the Company and the Holder as well
as the successors and assigns (if any) of the Company and the Holder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date set forth beside such party's signature.
Dated: December,______, 2005 SONUS NETWORKS, INC.
By:____________________________________
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Dated: December,_____, 2005 Holder
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