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
May 18,
2010
Date of
Report (Date of earliest event reported)
SONUS
NETWORKS, INC.
(Exact
Name of Registrant as Specified in its Charter)
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DELAWARE
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001-34115
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04-3387074
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(State
or Other Jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
Incorporation)
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Identification
No.)
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7
TECHNOLOGY PARK DRIVE, WESTFORD, MASSACHUSETTS 01886
(Address
of Principal Executive Offices) (Zip Code)
(978)
614-8100
(Registrant’s
telephone number, including area code)
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):
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¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On May 18, 2010, Dr. Richard N.
Nottenburg, President and Chief Executive Officer of Sonus Networks, Inc. (the
“Company”), and the Company entered into a letter agreement (the “Retention
Letter”) pursuant to which Dr. Nottenburg agreed to stay with the Company while
assisting the Company with an orderly transition of his duties and
responsibilities. Dr. Nottenburg agreed to remain in his current role
as President and Chief Executive Officer until the earlier of (i) the date the
Board of Directors of the Company (the “Board”) relieves him of such duties or
(ii) March 31, 2011 (such earlier date, the “Effective Termination
Date”).
The
Retention Letter includes the following material provisions relating to Dr.
Nottenburg’s compensation:
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Dr.
Nottenburg will continue to be entitled to his “Base Salary”, as defined
in his employment letter dated May 13, 2008 (the “Employment Letter”),
through March 31, 2011, with any unpaid balance payable in a lump sum if
his employment is terminated by the Board prior to March 31, 2011 other
than for “Cause” (as defined in the Employment Letter).
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If
the Board relieves Dr. Nottenburg of his duties as President or Chief
Executive Officer of the Company prior to December 31, 2010, other than
for Cause, Dr. Nottenburg will be entitled to his full “Target Bonus” (as
defined in the Employment Letter) for 2010, which equals 100% of his
current Base Salary. If, however, the Company subsequently
determines that Dr. Nottenburg’s actual bonus would have been greater than
his Target Bonus based on the Company’s financial results for 2010, the
Company will pay Dr. Nottenburg the difference.
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Dr.
Nottenburg will be granted 750,000 restricted shares (the “Retention
Shares”) under the Company’s 2007 Stock Incentive Plan, as amended, on
June 15, 2010, of which (i) 250,000 Retention Shares will vest on the
Effective Termination Date (unless his employment were terminated for
Cause prior to March 31, 2011), (ii) 125,000 Retention Shares will vest
upon the achievement of the financial metrics in the Company’s 2010
operating plan, as previously approved by the Board and (iii) 125,000
Retention Shares will vest upon the achievement of the target bookings
from new products, as reflected in the Company’s 2010 Incentive
Compensation Program Base Plan under the Senior Management Cash Incentive
Plan. The remaining 250,000 Retention Shares will vest on the
earlier of (i) sixty days after the first day of employment of Dr.
Nottenburg’s successor, provided that Dr. Nottenburg assists with the
transition during such period, (ii) the date the Board relieves Dr.
Nottenburg of his duties as President or Chief Executive Officer of the
Company other than for Cause, if no successor has been appointed by such
date, or (iii) March 31, 2011. If Dr. Nottenburg terminates his
employment with the Company for “Good Reason” (as such term is defined in
the Employment Letter) the Retention Shares will accelerate and become
fully vested.
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Dr.
Nottenburg agreed to relinquish his rights to two performance stock
grants, each in the amount of 250,000 restricted shares, which were to be
granted under the Employment Letter provided that certain performance
targets were met.
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Upon
the Effective Termination Date (unless his employment were terminated for
Cause prior to March 31, 2011), Dr. Nottenburg will be entitled to
terminate his employment with the Company for Good Reason, and will be
entitled to the amounts payable to him and the benefits that are provided
to him under the Employment Letter upon termination for Good Reason, in
addition to the amounts payable to him under the Retention
Letter.
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Dr.
Nottenburg will execute a general release in favor of the
Company.
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The
foregoing summary of the Retention Letter is qualified in its entirety by
reference to the full text of the Retention Letter, a copy of which is filed as
Exhibit 10.1 to this report and is incorporated herein by
reference. A copy of the Employment Letter was filed as an exhibit to
the Company’s Current Report on Form 8-K filed on May 20, 2008.
On May
20, 2010, the Company issued a press release announcing the entry into the
Retention Letter with Dr. Nottenburg. A copy of such press release is
filed herewith as Exhibit 99.1 and is incorporated by reference
herein.
Item
9.01. Exhibits.
(d) Exhibits
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10.1
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Retention
Letter between Sonus Networks, Inc. and Dr. Richard N. Nottenburg dated
May 18, 2010.
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99.1
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Press
Release dated May 20, 2010.
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2
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.
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Date:
May 20, 2010
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SONUS
NETWORKS, INC.
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By:
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/s/ Jeffrey
M. Snider
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Jeffrey
M. Snider
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Senior
Vice President and General Counsel
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3
Exhibit Index
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10.1
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Retention
Letter between Sonus Networks, Inc. and Dr. Richard N. Nottenburg dated
May 18, 2010.
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99.1
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Press
Release dated May 20, 2010.
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4
Exhibit
10.1
Dr.
Richard N. Nottenburg
c/o Sonus
Networks, Inc.
7
Technology Park Drive
Westford,
MA 01886
May 18,
2010
The Board
of Directors (the “Board”) of Sonus Networks, Inc. (the “Company”) greatly
appreciates the contributions you have made to the Company and offers you the
following in consideration for your agreement to stay with the Company while,
together, we provide for an orderly transition of your duties and
responsibilities. Reference is made to your employment letter dated
May 13, 2008 (the “Employment Letter”); capitalized terms not defined in this
letter (the “Retention Letter”) will have the meanings ascribed to them in the
Employment Letter.
1. Role and
Responsibilities. You will remain in your current role as
President and Chief Executive Officer of the Company until the earlier of (i)
the date the Board relieves you of such duties or (ii) March 31,
2011.
2. Base
Salary. You will receive your current Base Salary through
March 31, 2011. If the Board relieves you of your duties as President
or Chief Executive Officer of the Company other than for Cause prior to March
31, 2011, your employment will terminate and the Company will pay the balance of
your Base Salary through March 31, 2011 in a single lump sum.
3. 2010 Target
Bonus. As previously confirmed to you, your Target Bonus will
be 100% of your current base salary. If the Board relieves you of
your duties as President or Chief Executive Officer of the Company other than
for Cause prior to December 31, 2010, (i) you will receive your full Target
Bonus in a lump sum upon termination of your employment and (ii) if, after the
Company’s financial results for 2010 are announced, it is determined that your
actual bonus would have been greater than your Target Bonus, the Company will
pay you the difference; such subsequent payment will be made when bonus payments
are made to other executives of the Company.
4. Restricted
Stock. You will be granted 750,000 Restricted Shares (the
“Retention Shares”) under the Company’s 2007 Stock Incentive Plan (the “Plan”),
subject to the terms of the Plan and the Company’s restricted stock agreement,
which will reflect the terms of this letter. The grant date will be on the first
15th day
of the month following your acceptance of the terms of this letter, or the first
business day thereafter if that day is not a business day. The
Retention Shares will vest as follows:
(A) 250,000
Retention Shares will vest on the earlier of (i) the date the Board relieves you
of your duties as President or Chief Executive Officer of the Company other than
for Cause or (ii) March 31, 2011;
(B) 125,000
Retention Shares will vest upon achievement of the financial metrics in the
Company’s 2010 operating plan, as previously approved by the Board;
(C)
125,000 Retention Shares will vest upon achievement of the target for bookings
from new products, as reflected in the Company’s 2010 Incentive Compensation
Program Base Plan; and
(D) 250,000
Retention Shares will vest on the earlier of (i) sixty (60) days after the first
day of employment of your successor as President or Chief Executive Officer of
the Company (unless your employment has been terminated by the Board for Cause
prior to such date), provided that you assist with the transition as reasonably
requested during such sixty-day period, (ii) the date the Board relieves you of
your duties as President or Chief Executive Officer of the Company other than
for Cause, if no successor has been appointed by such date, or (iii) March 31,
2011.
This
confirms that, (i) in the event of an Acquisition, all of the Retention Shares
will be treated as described in Section 3(f) of the Employment Letter and (ii)
in the event of your death or disability, all of the Retention Shares will be
treated as described in Section 8(a)(vi) of the Employment Letter.
You may
elect a Section 83(b) Election in connection with the Retention
Shares. A Section 83(b) Election must be filed with the
Internal Revenue Service within thirty (30) days of the grant
date. If you do not make a Section 83(b) Election, then you
will be obligated to pay to the Company the amount of any Federal, state, local
or other taxes of any kind required by law to be withheld with respect to the
vesting of the Restricted Shares. You will satisfy such tax
withholding obligations by delivery to the Company, on each date on which
Restricted Shares vest, such number of shares that vest on such date as have a
fair market value (calculated using the last reported sale price of the common
stock of the Company on the NASDAQ Global Select Market on the trading date
immediately prior to such vesting date) equal to the amount of the Company’s
withholding obligation; provided, however, that the total tax withholding cannot
exceed the Company’s minimum statutory withholding obligations (based on minimum
statutory withholding rates for Federal and state tax purposes, including
payroll taxes, that are applicable to such supplemental taxable
income). Such delivery of shares to the Company will be deemed to
happen automatically, without any action required on your part, and the Company
is hereby authorized to take such actions as are necessary to effect such
delivery of shares to the Company.
You will
relinquish all rights you have or may have in the future to the two performance
stock grants referenced in Section 3(e) of the Employment Letter, each in the
amount of 250,000 Restricted Shares, which are tied to the Company’s achievement
of certain performance metrics and certain incremental performance metrics
between January 1, 2010 and December 31, 2012.
5. Good
Reason.
(A) Upon
the earlier of (i) the day the Board relieves you of your duties as President or
Chief Executive Officer of the Company other than for Cause or (ii) March 31,
2011, you will be entitled to terminate your employment with the Company for
Good Reason pursuant to Section 8 of the Employment Letter. Amounts
paid pursuant to Section 8 of the Employment Letter will be in addition to the
amount(s) described in Sections 2, 3 and 4 of this Retention
Letter.
(B) If
you terminate your employment with the Company for Good Reason as defined in
Section 8(b)(ii)(A) or 8(b)(ii)(C) of the Employment Letter, the Retention
Shares will accelerate, become fully vested, and any and all restrictions will
be terminated and any and all legends will be removed.
6. Miscellaneous.
Upon
termination of employment, you will receive a standard form separation
letter. If such termination has occurred other than for Cause, you
will be eligible to receive the benefits described in this Retention Letter and
in the Employment Letter. In order to accept such benefits, you will
be required to execute and deliver to the Company a standard general release, in
the form attached hereto as Attachment A and incorporated herein by reference
(the “General Release”), no later than the expiration of the period set forth in
such general release. All payments or benefits provided pursuant to
Section 8 of the Employment Letter and Sections 2, 3, 4 and 5 of this Retention
Letter will be subject to Sections 8(c) and 9 of the Employment
Letter. All lump sum payments will be made within seven (7) days
after the effective date of the General Release.
Except as
expressly modified by this Retention Letter, the terms of the Employment Letter
remain in full force and effect. In the event of a conflict between
the terms of this Retention Letter and the Employment Letter, the terms of this
Retention Letter will govern.
If you agree to the terms of this Retention
Letter, please sign and date below and return a copy
of this letter to me.
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Sincerely,
Sonus Networks, Inc.
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By:
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/s/ Howard E. Janzen | |||
| Duly Authorized | |||||
| Accepted and agreed: | |||||
| /s/ Richard N. Nottenburg | 05/18/10 | ||||
| Richard N. Nottenburg | Date | ||||
Attachment
A
General Release of
Claims
1. In
consideration of the benefits offered to you in your employment letter dated May
13, 2008 (the “Employment Letter”) and in your letter agreement dated May 18,
2010 (the “Retention Letter”), the receipt and sufficiency of which are hereby
acknowledged, you hereby agree to remise, release and forever discharge the
Company and its subsidiaries, and their respective officers, directors,
shareholders and employees (collectively, the “Releasees”) from any and all
claims, losses, liabilities, obligations and causes of action, known or unknown,
arising out of, in any way connected with or relating to your employment or
termination of employment with the Company, including, but not limited to, (a)
claims for compensation, wages, bonuses and benefits, breach of contract,
impairment of economic opportunity, negligent and intentional infliction of
emotional distress, wrongful discharge, defamation, or any other tort or
personal injury, and (b) claims arising under any municipal, state or federal
statute, regulation or ordinance relating to employment or the foregoing,
including, without limitation, Title VII of the Civil Rights Act, the Equal Pay
Act, 42 U.S.C. § 1981, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, Mass. G.L. c. 151B, the Family and Medical
Leave Act, the Employee Retirement Income Security Act, and the Worker
Adjustment and Retraining Notification Act (all as amended).
2. Except
as provided in Section 8 of the Employment Letter, Sections 2, 3, 4 and 5 of the
Retention Letter, and Section 6 of this General Release, you acknowledge and
agree that the Releasees have fully satisfied any and all obligations owed to
you arising out of your employment with and termination from the Company, and no
further sums or benefits are owed to you by the Releasees at any
time.
3. You
represent that you have made no assignment, and will make no assignment, of any
claim, right of action or any right of any kind whatsoever, embodied in any of
the claims released by you herein, and that no other person or entity of any
kind had or has any interest in any of the respective claims, demands,
obligations, actions, causes of action, debts, liabilities, rights, contracts,
damages, attorneys' fees, costs, expenses or losses released by you
herein.
4. You
acknowledge that you desire the foregoing release to be a full and complete
resolution of any and all claims, complaints or grievances you have, may have or
ever had against the Releasees, whether known or unknown, relating to your
employment with and termination from the Company.
5. Nothing
in this General Release is to be construed as an admission by you or the
Releasees of any liability or unlawful conduct whatsoever.
6. You
agree not to take any action or make any statement, written or oral, which
disparages or criticizes the Company, its management, directors, or
investors. Members of the Board will not take any action or make any
statement, written or oral, which disparages or criticizes you.
7. If
one or more of the provisions contained in this General Release is held to be
excessively broad as to scope, activity, subject or otherwise so as to be
unenforceable at law, such provision or provisions will be construed by the
appropriate judicial body by limiting or reducing it or them, so as to be
enforceable to the maximum extent compatible with applicable law.
8. You
agree that you have entered into this General Release voluntarily and that you
have had the opportunity to review this General Release with an independent
lawyer of your choosing.
You have
twenty-one (21) days after your last day of employment by the Company within
which to accept the terms of the offer made to you in the Employment Letter and
the Retention Letter by signing this General Release. You also will
have a period of seven (7) days from the date that you sign this General Release
within which to revoke your signature, and this General Release will not become
effective or enforceable until the expiration of that seven (7) day revocation
period. If you intend to revoke this General Release within such
seven day period, you must send a written letter of revocation to General
Counsel, Sonus Networks, Inc., 7 Technology Park Drive, Westford,
MA 01886.
YOU
REPRESENT THAT YOU HAVE READ THE FOREGOING GENERAL RELEASE, THAT YOU FULLY
UNDERSTAND THE TERMS AND CONDITIONS CONTAINED HEREIN, AND THAT YOU ARE
VOLUNTARILY EXECUTING THE SAME. IN ENTERING INTO THIS GENERAL
RELEASE, YOU DO NOT RELY ON ANY REPRESENTATION, PROMISE OR INDUCEMENT MADE BY
THE RELEASEES WITH THE EXCEPTION OF THE CONSIDERATION DESCRIBED IN THIS
DOCUMENT.
| Richard N. Nottenburg | Date |
Exhibit
99.1
SONUS
NETWORKS ANNOUNCES CEO SUCCESSION PLAN
Richard Nottenburg
to Remain with Sonus through March 2011
Westford, MA, May 20, 2010 –
Sonus Networks, Inc. (Nasdaq: SONS), a market leader in next generation IP-based
network solutions, today announced that Richard Nottenburg plans to step down as
President and Chief Executive Officer and a director of the Company by the end
of March 2011.
Sonus’ Board will
commence a search process to identify a new CEO. To ensure a smooth
transition, Nottenburg will continue to serve as President, CEO and a director
through March 31, 2011, and will assist the Board in its search
process.
“When I arrived at
Sonus in June 2008, I set forth a clear plan to re-establish the Company's
growth, profitability and market leadership,” said Nottenburg. “Since
then, we have developed and articulated a clear market and product strategy,
re-focused on innovation and new product development, right-sized and realigned
the business, established strong financial footing and strengthened our
management team with key appointments. I am proud of the significant
progress Sonus has made, as demonstrated by our solid financial results and the
recent launch of the NBS-5200, our first product on our next generation
ConnexIP™ platform.
“I
am eager to explore my next challenge, and I believe that with the strong
foundation we have put in place at Sonus, now is the right time to begin
transitioning to new leadership,” continued Nottenburg. “Sonus has a
valuable portfolio of innovative products and solutions, strong customer
relationships and some of the best employees in the business and I am confident
that the Company is solidly positioned for its next phase of growth and
development. I look forward to continuing to lead Sonus until my
successor is named and I am committed to working closely with the Board to help
identify a new CEO and ensure a smooth transition.”
“Sonus’ Board is
unanimous in its belief that Sonus is in the strong and dramatically improved
position it is today as a result of Rich’s leadership,” said Howard Janzen,
Chairman of the Board of Sonus. “Over the last two years, Rich has
implemented a focused strategy, accelerated product introduction, improved
profitability and set the Company on a path to increased shareholder
value. Sonus today has the right plan and an outstanding team of hard
working and dedicated employees in place to help drive the
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Company’s continued
growth and profitability. The Board is committed to conducting a
comprehensive search to identify the right candidate to serve as Sonus’ next
CEO.”
Outlook
Affirmed
The Company today
reconfirmed its full year 2010 outlook, as provided on February 25, 2010 and
reaffirmed on May 4, 2010. Sonus continues to expect to achieve flat
to low single digit percent revenue growth for the year and continues to see the
opportunity to grow NBS product revenues faster than the market. For
2010, gross margin is expected to be within the Company’s longer term target
range of 58% to 62%, and total operating expenses are expected to be in the
range of $142 to $146 million.
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About
Sonus Networks
Sonus Networks Inc.
is a leader in IP networking with proven expertise in delivering secure,
reliable and scalable next generation infrastructure and subscriber
solutions. With customers in over 50 countries across the globe and
over a decade of experience in transforming networks to IP, Sonus has enabled
service providers and enterprises to capture and retain users and generate
significant ROI. Sonus products include media and signaling gateways,
policy/routing servers, session border controllers and subscriber feature
servers. Sonus products are supported by a global services team with
experience in design, deployment and maintenance of some of the world's largest
and most complex IP networks. For more information visit http://www.sonusnet.com/.
This release may
contain forward-looking statements regarding future events that involve risks
and uncertainties. Readers are cautioned that these forward-looking
statements are only predictions and may differ materially from actual future
events or results. Readers are referred to Item 1A “Risk Factors” of
Sonus’ Annual Report on Form 10-K for the year ended December 31, 2009 and
Quarterly Report filed on Form 10-Q for the quarter ended March 31, 2010, which
identify important risk factors that could cause actual results to differ from
those contained in the forward-looking statements. Any
forward-looking statements represent Sonus’ views only as of today and should
not be relied upon as representing Sonus’ views as of any subsequent
date. While Sonus may elect to update forward-looking statements at
some point, Sonus specifically disclaims any obligation to do so, except as
required by law.
Sonus is a
registered trademark of Sonus Networks, Inc. All other company and
product names may be trademarks of the respective companies with which they are
associated.
For
more information, please contact:
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Wayne
Pastore
978-614-8291
wpastore@sonusnet.com
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Fran
Murphy
978-614-8148
fmurphy@sonusnet.com
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