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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
NOVEMBER 2, 2000
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Date of Report (Date of earliest event reported)
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SONUS NETWORKS, INC.
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(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
DELAWARE 000-30229 04-3387074
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(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification No.)
Incorporation)
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5 CARLISLE ROAD, WESTFORD, MASSACHUSETTS 01886
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(Address of Principal Executive Offices) (Zip Code)
(978) 692-8999
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
Sonus Networks, Inc., a Delaware corporation ("Sonus"), Storm Merger
Sub, Inc., a Texas corporation and a wholly owned subsidiary of Sonus ("Sub"),
and telecom technologies, inc., a Texas corporation ("TTI"), have entered into
an Agreement and Plan of Merger and Reorganization, dated as of November 2, 2000
(the "Merger Agreement"), pursuant to which Sub will merge with and into TTI
with TTI as the surviving corporation (the "Merger").
Under the terms of the Merger Agreement, an aggregate of 10,800,000
shares of Sonus common stock (the "Merger Shares") will be exchanged for all
outstanding shares of TTI Class A and Class B common stock at the closing. Of
these 10,800,000 shares issued to the current TTI stockholders, 1,200,000
shares will be placed into escrow as security for TTI's indemnity obligations
under the Merger Agreement, and will be released to the TTI shareholders upon
expiration of those indemnity obligations, expected to be on the first
anniversary of the closing date.
In addition to the Merger Shares, the TTI shareholders will have the
right to receive up to an aggregate of 4,200,000 additional shares (the
"Earn-Out Shares") of Sonus common stock placed in escrow in the event that
TTI achieves certain specified technical and business-related milestones (the
"Earn-Out Conditions"), from time to time prior to December 31, 2002.
The Earn-Out Shares will be released as follows: (a) 1,800,000 shares
will be released to the former TTI shareholders if TTI ships and receives
customer acceptance of certain customer-related deliverables prior to December
31, 2001; (b) up to an aggregate of 900,000 shares will be released to the
former TTI shareholders if TTI is able to incorporate certain specified features
into its principal software product prior to certain dates ranging from May 31,
2001 to December 31, 2001; and (c) up to 1,500,000 shares will be released to
the former TTI shareholders if TTI meets certain customer expansion goals in
whole or in part on or prior to December 31, 2002. In the event that TTI does
not meet any of these conditions in whole or in part, all or some (in the event
of certain specified partial satisfactions of such conditions) of the Earn-Out
Shares attributable to such conditions will revert to Sonus and be canceled.
Under the Merger Agreement, Ms. Anousheh Ansari, currently the Chairman and
Chief Executive Officer of TTI, or a designated successor, will be granted
certain specific management rights over the operations of TTI during the period
between the closing and the earlier of the release of all of the Earn-Out Shares
or December 31, 2002.
Under the terms of the Merger Agreement, Sonus will assume all
outstanding options to purchase TTI common stock, which will convert into the
right to receive shares of Sonus common stock on the same terms as the
outstanding TTI common stock converts in the Merger, including that an
equivalent portion of these option shares will be subject to the indemnity
escrow conditions and the Earn-Out Conditions. Under an agreement entered
into by Ms. Anousheh Ansari and another of the stockholders of TTI prior to
the execution of the Merger Agreement, Ms. Ansari has agreed to transfer to
TTI from time to time a number of shares of TTI common stock held by her
equal to the number of shares of such stock issued upon the exercise of any
employee stock options. In continuation of this agreement after the closing,
Ms. Ansari shall transfer to Sonus shares of Sonus common stock, received by
her in the Merger, necessary to cover the exercise of any TTI stock options
assumed by Sonus. As a result, the number of shares of Sonus common stock
that will be issued upon the exercise of former TTI stock options that are
assumed by Sonus will not increase the aggregate number of shares of Sonus
common stock issuable upon or in connection with the merger.
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In addition, immediately prior to the closing of the Merger, Sonus will
establish the Sonus Networks, Inc. 2000 Retention Plan (the "Retention Plan").
Pursuant to the Retention Plan, certain employees of TTI will receive contingent
awards of shares of Sonus common stock that will vest on December 31, 2002,
subject to the conditions that (i) such employees have maintained employment
with the Company through such date and (ii) the Earn-Out Conditions have been
satisfied in whole or in part, with the final number of shares of each award
that vest being equal in percentage terms to the percent of the 4,200,000
Earn-Out Shares that have been actually released to the former TTI stockholders
on or prior to such date. The maximum number of shares of Sonus common stock
that may be subject to awards under the Retention Plan will be 3,000,000 shares.
Any awards forfeited by employees who terminate employment with TTI prior to
December 31, 2002 may be reallocated to remaining TTI employees, awarded to
replacement hires, or returned to Sonus as provided by the terms of the
Retention Plan.
The transactions contemplated by the Merger Agreement are expected to
occur in the first quarter of 2001. Upon completion of the Merger, TTI will
become a division of Sonus and its operations will remain in Richardson, Texas.
Ms. Anousheh Ansari will become General Manager and Vice President of Sonus in
charge of the division.
In connection with the execution of the Merger Agreement, certain
stockholders of TTI have entered into a Voting Agreement, dated as of November
2, 2000 (the "Voting Agreement"), pursuant to which they have agreed to vote
their shares of TTI stock in favor of the Merger at any meeting of the
stockholders of TTI, and have assumed certain related obligations. Copies of the
Merger Agreement and the Voting Agreement are attached hereto as Exhibits 2.1
and 2.2, respectively, and are incorporated herein by reference. A copy of the
press release issued by Sonus announcing the execution of the Merger Agreement
is attached hereto as Exhibit 99.1 and is also incorporated herein by reference.
ITEM 7. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement and Plan of Merger and Reorganization, dated November 2,
2000, by and among Sonus Networks, Inc, telecom technologies, inc. and
Storm Merger Sub, Inc.
2.2 Voting Agreement, dated as of November 2, 2000, by and among Sonus
Networks, Inc. and certain shareholders of telecom technologies, inc.
99.1 Press release, dated November 2, 2000.
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SIGNATURES
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: November 17, 2000 SONUS NETWORKS, INC.
By: /s/ Stephen J. Nill
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Stephen J. Nill
Authorized Officer,
Vice President of Finance and Administration
and Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement and Plan of Merger and Reorganization, dated November 2,
2000, by and among Sonus Networks, Inc, telecom technologies, inc. and
Storm Merger Sub, Inc.
2.2 Voting Agreement, dated as of November 2, 2000, by and among Sonus
Networks, Inc. and certain shareholders of telecom technologies, inc.
99.1 Press release, dated November 2, 2000.
