<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT
Under Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE QUARTER ENDED JUNE 30, 1999
Commission File No. 0-30124
SONUS COMMUNICATION HOLDINGS, INC.
A Delaware corporation
IRS Employer Identification No. 54-1939577
1600 Wilson Blvd, Suite 1008, Arlington, VA 22209
Telephone - (703) 527- 8860
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, during the preceding 12 months and (2) has been subject to
such filing requirements for the past 90 days.
Yes No X
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Common stock $.001 par value,
3,592,385 shares outstanding
as of August 10, 1999
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
SONUS COMMUNICATION HOLDINGS INC AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1999 1998
----------- ------------
(unaudited) (audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 55,815 $ 1,002
Accounts receivable 23,286 41,244
Installment sales receivable, net of unearned
profit of $124,723 and $131,340 at 6/30/99
and 12/31/98, respectively 219,433 231,090
Other current assets 61,116 -
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TOTAL CURRENT ASSETS 359,650 273,336
PROPERTY AND EQUIPMENT, net 535,507 231,615
OTHER ASSETS 135,840 -
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TOTAL ASSETS $1,030,997 $504,951
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 226,686 $202,842
Vendor equipment payable 364,667 356,273
Other current liabilities 53,243 26,693
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TOTAL CURRENT LIABILITIES 644,596 585,808
Convertible debentures 575,000 -
Due to shareholders 197,000 99,969
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TOTAL LIABILITIES 1,416,596 685,777
SHAREHOLDERS' EQUITY
Common stock, $.001 par value 3,342 3,250
Additional paid-in capital 641,207 12,197
Accumulated deficit (1,030,148) (196,273)
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TOTAL SHAREHOLDERS' EQUITY (385,599) (180,826)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,030,997 $ 504,951
========== ==========
</TABLE>
See notes to condensed consolidated financial statements
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SONUS COMMUNICATION HOLDINGS INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
----------- ----------- --------- -------------
<S> <C> <C> <C> <C>
OPERATING INCOME
Telecommunications services $386,934 $ 4,000 $629,372 $ 4,000
Consulting services 0 15,500 0 28,950
--------- ---------- ---------- ---------
386,934 19,500 629,372 32,950
OPERATING EXPENSES
Direct Expenses 374,761 2,848 758,527 2,848
General & administrative 339,133 20,740 452,266 34,576
--------- ---------- --------- ---------
713,894 23,588 1,210,793 37,424
LOSS FROM OPERATIONS (326,960) (4,088) (581,421) (4,474)
OTHER INCOME (EXPENSE)
Interest, net 1,130 (1,749) 1,591 (3,499)
Merger related costs (81,554) - (254,045) -
----------- ---------- ---------- -----------
(80,424) (1,749) (252,454) (3,499)
LOSS BEFORE INCOME TAXES (407,384) (5,837) (833,875) (7,973)
Provision for income taxes - - - -
---------- ---------- --------- ------------
NET LOSS $(407,384) $ (5,837) $(833,875) $ (7,973)
========== =========== ========== ==========
Basic loss per common share $ 0.11 $ - $ 0.22 $ -
========= ========== ========= =========
Shares used in per share calculation 3,584,980 3,250,000 3,854,478 3,250,000
========= ========== ========= =========
</TABLE>
See notes to condensed consolidated financial statements
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SONUS COMMUNICATION HOLDINGS INC AND SUBIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1999 1998
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss $(833,875) $ (7,973)
Adjustments to reconcile net loss to net cash utilized
in operating activities:
Depreciation 42,907 2,848
Common shares issued for services rendered 127,500 -
Changes in assets and liabilities:
Decrease in net accounts receivable 17,958 -
(Increase) decrease in installment sales receivable 11,657 (231,090)
(Increase) decrease in prepaid expenses (61,116) 1,101
Increase (decrease) in accounts payable 14,647 (1,629)
Increase in vendor equipment payable 8,394 383,292
Increase in customer deposits - 50,100
Increase in accrued expenses 35,746 3,782
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (636,182) 200,431
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (346,799) (199,353)
Deposits for equipment and circuits (135,840) -
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NET CASH USED IN INVESTING ACTIVITIES (482,639) (199,353)
CASH FLOWS FROM FINANCING ACTIVITIES:
Private placement of common shares, net 626,634 -
Issuance of convertible debentures 575,000 -
Repurchase of founder shares (28,000) -
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NET CASH PROVIDED BY FINANCING ACTIVITIES 1,173,634 -
CASH AND CASH EQUIVALENTS, BEGINNING 1,002 235
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CASH AND CASH EQUIVALENTS, END $ 55,815 $ 1,313
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
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SONUS COMMUNICATION HOLDINGS INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months
Ended June 30, 1999 and 1998
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements apply to the
Company and its wholly-owned subsidiary and reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
Company's consolidated financial position as of June 30, 1999 and the
results of operations for the three and six months ended June 30, 1999 and
1998. The results of operations for such periods, however, are not
necessarily indicative of the results to be expected for a full fiscal
year. On May 14, 1999, the Company filed a Form 10SB with the Securities
and Exchange Commission to register the common stock of the Company under
the Securities Exchange Act of 1934, as amended. This Form 10-QSB should be
read in conjunction with the Form 10SB.
2. MERGER
In January 1999, Sonus Communications Inc ("Sonus"), entered into merger
discussions with The Park Group ("Park"). In anticipation of the merger,
Park formed Sonus Park Acquisition, Inc. as a wholly owned subsidiary of
Park. On March 4, 1999, Park Acquisition merged with and into Sonus leaving
Sonus as the surviving corporation and a wholly owned subsidiary of Park.
The former shareholders of Sonus received 92% of the capital stock of Park.
On April 7, 1999, Park organized Sonus Communication Holdings,
Inc.("Holdings") as a Delaware corporation and wholly owned subsidiary of
Park. On April 16, 1999, Holdings merged with and into Park, leaving
Holdings as the surviving corporation. As a consequence of the merger,
Sonus became a wholly owned subsidiary of Holdings. Shares of Park were
exchanged for shares of Holdings on a one-for-one basis in the merger. The
purpose of the merger was to re-incorporate in the state of Delaware.
L. Flomenhaft & Co., Inc., an investment banker, acted as a consultant to
Park on the merger. As a fee for services, L. Flomenhaft received 150,000
shares of the Company. Of the 150,000 shares, the Company issued 120,000
shares to L. Flomenhaft & Co and the remaining 30,000 shares to a nominee
of L. Flomenhaft & Co.
3. FINANCING
On January 21, 1999, Sonus completed the sale of 750,000 shares of common
stock at $1.00 per share in a private placement to accredited investors. L.
Flomenhaft & Co. acted as placement agent. The aggregate offering price
was $750,000 with Sonus netting cash proceeds of $626,634. L. Flomenhaft &
Co. received $75,000 in cash and a five year common stock purchase warrant
for 112,500 shares at an exercise price of $1.00 per share for its
services. Of the 112,500 warrants, Sonus issued a warrant for 90,000 shares
to L. Flomenhaft & Co and a warrant for the remaining 22,500 shares to a
nominee
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of L. Flomenhaft & Co. The investors in the private placement received
piggyback registration rights in connection with the sale.
In May 1999, the Company issued an aggregate principal amount of $575,000
of its 10% convertible debentures ("Debentures"). The principal amount plus
accrued interest are due on demand by the lender six months following the
date of issuance. Under the terms of the Debentures, all principal as well
as accrued interest shall, upon closing a minimum amount of $500,000 in the
next private placement following the issuance of the Debentures,
automatically be converted into shares of the Company's common stock.
Debenture holders are also entitled to an "equity kicker" equal to one-half
the number of shares of common stock into which the Debentures are
converted. The Company intends to offer to convert the Debentures into
common stock at $1.50 per share and, in accordance with the terms of the
Debentures, provide the additional shares as part of the equity kicker.
In August 1999, the Company sold $500,000 of its equity Units, consisting
of an aggregate of 250,000 shares of common stock and 250,000 common stock
purchase warrants. Each warrant is exercisable at $3.00 per share of common
stock. The sale resulted in net proceeds to the Company of $435,000.
4. WARRANTS
On January 14, 1999, Sonus Communications entered into a two year
consulting arrangement with L. Flomenhaft & Co. ("Consultant") whereby the
Consultant is to provide strategic financial, business planning and
business development services. The Agreement became effective January 21,
1999 when the first private placement was completed. To compensate
Consultant for his efforts, Sonus issued a five year warrant for 487,500
shares of common stock of the Company with an exercise price of $1.00 per
share.
Effective April 1, 1999, the Company entered into a consulting agreement
with Coffin & Sons, Inc., a consulting firm owned by Mr. W. Todd Coffin,
the Company's President and CEO. The agreement provides that Mr. Coffin
will serve as CEO for a term of six months and 15 days and that Mr. Coffin
will serve on the Board of Directors of the Company during the consulting
period. For the services of Mr. Coffin, Coffin & Sons will receive cash
compensation of $10,000 per month of which $2,000 per month is deferred
until after the successful completion of the next private placement
completed after the effective date of the agreement. In addition to the
cash compensation, Coffin & Sons, Inc was issued 50,000 shares of common
stock in May 1999 and is entitled to receive (i) 50,000 shares upon the
successful completion of the private placement with gross proceeds of at
least $1 million; (ii) 50,000 shares following the registration of shares
issued in the private placement and the shares trade at or above $3.00 per
share for 20 consecutive trading days; and (iii) 50,000 shares following
the installation of a new chief executive officer identified by Coffin &
Sons, Inc and acceptable to the Company.
On April 20, 1999 the Company entered into a three month consulting
agreement with Hudson Capital, a consulting firm owned by Mr. Raleigh
Coffin, a director of the Company and the father of Mr. W. Todd Coffin. The
agreement provides for Mr. R. Coffin to help the Company develop a
comprehensive business plan along with an institutional investor
presentation. Compensation to Hudson Capital consisted of $10,000 per month
of which $5,000 per month is deferred until after the successful completion
of the next private placement and a five year warrant for 100,000 shares
with
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an exercise price of $1.00 per share. The warrant vests as to: (i)
25,000 shares upon the signing of the agreement; (ii) 25,000 shares upon
the completion of the business plan; (iii) 25,000 shares upon successful
completion of the private placement noted above and (iv) 25,000 shares when
the stock publicly trades at $3.00 per share for at least 20 consecutive
days.
In April 1999, Mr. Charles Albo, Chairman, and Ms. Maraneli, Executive Vice
President each transferred 550,000 shares of common stock to the Company
for cancellation by the Company. In exchange for the shares, the Company
issued Mr. Albo and Ms Maraneli each a five year warrant to purchase
125,000 shares of the Company's common stock at an exercise price of $1.50
per share. Mr. Albo and Ms. Maraneli are the original founders of Sonus
Communications, Inc.
Additionally, the Company in May 1999 redeemed from each of Mr. Albo and Ms
Maraneli 75,000 shares at $1.50 per share (the "Redemption Price"). Mr.
Albo and Ms. Maraneli have agreed that payment of the Redemption Price will
be deferred until the closing of a private placement resulting in gross
proceeds to the Company of at least $1 million. In exchange for the
deferral of the Company's payment obligations, the Company agreed to
advance each of Mr. Albo and Ms. Maraneli up to $7,000 per month not to
exceed the total Redemption Price. All amounts advanced will be deducted
from the redemption price when paid. Repayment is required to be made to
the Company only from the Redemption Price when paid. As of June 30, 1999,
$28,000 had been advanced leaving a balance due for the redemption of
$197,000.
Pursuant to employment contracts, the Company has issued warrants to Mr.
Stephen Albo, the Company's Chief Technical Officer and to Mr. Richard
Rose, the Company's Chief Financial Officer. Initially, Mr. Albo received
in lieu of a salary, a five year warrant to acquire 75,000 shares of common
stock of the Company at $1.00 per share which is fully vested and at the
time Mr. Albo became a full time employee, a second five year warrant to
purchase 75,000 shares of common stock of the Company which vests over
three years. Mr. Rose received upon execution of an employment agreement, a
five year warrant to purchase 75,000 shares of common stock of the Company
at $1.00 per share which vests over three years.
5. OPTION PLANS
Employee Stock Option Plan: On June 10, 1999, the Company adopted the 1999
Stock Incentive Plan (the "1999 Plan") which was approved by a majority of
the stockholders on July 12, 1999. Under the terms of the 1999 Plan, which
expires on June 10, 2009, employees of the Company and its subsidiaries may
be granted incentive stock options, non-statutory stock options and
restricted stock awards. The option price of shares of common stock
generally will not be less than 100% of the fair market value on the date
of grant or 110% of fair market value in the case of a grant to a 10%
shareholder. No option will be exercisable more than ten years from the
date of grant. The Company has reserved 500,000 shares for issuance under
the 1999 Plan. At June 30, 1999, employees had been granted 206,000 shares.
Options typically vest quarterly over a three year period unless the Board
of Directors in its discretion provides otherwise. Options shall become
fully vested upon a "change of control" as defined in the 1999 Plan.
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Directors Option Plan: On June 10, 1999, the Company adopted the 1999
Director Stock Incentive Plan (the "Director Plan") which was approved by a
majority of the stockholders on July 12, 1999. Under the terms of the
Director Plan, which expires on June 10, 2009, non-employee directors of
the Company may be granted non-statutory stock options at an exercise price
equal to 100% of the fair market value on the date of grant. No option will
be exercisable more than ten years from the date of grant. The Company has
reserved 350,000 shares for issuance under the 1999 Plan. At June 30, 1999,
no shares had been granted under the Director Plan.
6. NOTE PAYABLE - SHAREHOLDER
At December 31, 1998, Sonus Communications had a note payable to a
shareholder for $99,969 plus accrued interest. In conjunction with an
agreement made with the shareholder effective April 16, 1999, the note was
converted into 44,431 shares of common stock of the Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act provides a "safe harbor" for
forward-looking statements. Certain statements included in this Form 10-QSB are
forward-looking and are based on the Company's current expectations and are
subject to a number of risks and uncertainties that could cause actual results
to differ materially from results expressed or implied in any forward-looking
statements made by, or on behalf of, the Company. The Company assumes no
obligation to update any forward-looking statements contained herein or that
may be made from time to time by, or on behalf of, the Company.
For the second quarter of 1999, Sonus had revenues of $387,000 compared to
$19,000 for the second quarter of 1998. For the first half of 1999, the Company
had revenues of $629,000 compared to $33,000 for the first half of 1998. During
1998, Sonus began installing its network with the first revenues generated from
telecommunications services occurring in the fourth quarter of 1998. Revenues
prior to the fourth quarter of 1998 were mostly from consulting services. As
the Company has focused on telecommunications services and expanding its
network, revenues from consulting have decreased with no consulting service
revenues during 1999. The first circuit installed was to the Republic of
Georgia which began generating revenues in the fourth quarter of 1998. During
the first quarter of 1999, the Company began installing the network to China.
This circuit began carrying traffic during the 1999 second quarter. As Sonus
proves the reliability of the system in China to its customers, Sonus expects
telephone traffic to China to increase if the Company can remain price
competitive. Since beginning service to China, the Company has experienced a
decline in prices due to competitive pressures. Sonus is also in the process of
installing a system in southwest Asia which the Company expects to begin
generating telephone traffic in the last part of the third quarter of 1999.
As the above locations prove reliable, Sonus expects it customers to send more
traffic over Sonus' network thereby increasing revenues. The Company is also
developing partnerships in other foreign markets which should allow Sonus to
enter these markets and install networks.
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The Company had direct operating expenses of $374,000 and $758,000 for the
quarter and six months ended June 30, 1999, respectively. These expenses relate
to the installation and operation of the network. Since the network was not
installed until the fourth quarter of 1998, there are no comparable expenses in
1998. These expenses include fixed costs that are incurred during the
installation and testing phases of the network, as well as the fixed costs and
the operating costs of carrying telephone traffic.
General and administrative expenses were $339,000 for the quarter ended June
30, 1999 compared to $21,000 for the comparable 1998 quarter. General and
administrative expenses were $452,000 for the first half of 1999 compared to
$35,000 for the first half of 1998. This increase is directly attributable to
the increase from wages since the two founders in 1998 did not take a salary in
the first quarter of 1998 and minimal salary in the second quarter of 1998 as
compared to staffing of nine at June 30, 1999 and all associated costs of
establishing and maintaining an office. Sonus will continue to make an
investment in staffing as 1999 progresses. The Company expects that in order to
increase capacity of the current installed locations and to expand into
additional locations, as well as to obtain the administrative support necessary
in connection with being a public company, a significant investment in both
equipment and personnel will be needed. The result will be to increase
operating expenses with no assurance of any return on investment.
On March 4, Sonus merged with and into Sonus Park Acquisitions, Inc, a newly
formed wholly owned subsidiary of the Park Group, Ltd. Sonus, which was the
surviving entity, became a wholly owned subsidiary of the Park Group and the
only asset of Park. On April 7, 1999, Park organized Sonus Communication
Holdings, Inc as a Delaware corporation and a wholly owned subsidiary of Park.
On April 16, 1999, Sonus Holdings merged with and into Park leaving Sonus
Holdings as the surviving corporation. Shares of Park were exchanged for shares
of Sonus Holdings on a one-for-one basis. The purpose of the merger was to
re-incorporate in Delaware. The costs incurred during the first half of 1999
under the caption Merger Related Costs amounting to $254,000 relate to these
transactions. Please see the Footnotes to Condensed Consolidated Financial
Statements for additional information on the mergers.
As a result of the limited revenue, the increased costs associated with the
expansion and the costs of the merger, the Company had a net loss of $407,000
for the second quarter of 1999 and of $834,000 for the first half of 1999. This
is compared to a net loss of $6,000 for the second quarter of 1998 and a net
loss of $8,000 for the first half of 1998 when operations were limited.
LIQUIDITY
At December 31, 1998, the Company had cash of $1,000, negative working capital
of $312,000 and negative shareholders equity of $181,000. In January 1999,
Sonus completed the sale of 750,000 shares of its common stock in a private
offering realizing net proceeds aggregating $627,000. In May 1999, the Company
raised $575,000 in a convertible debenture. During the third quarter, the
Company expects to raise additional funds through a private placement to fund
operations. The private placement is expected to raise a minimum of $500,000
and a maximum of $2,500,000. The Company closed the minimum amount on August 4,
1999. With the completion of the minimum offering, the convertible debentures
automatically convert into equity. See the Footnotes to Condensed Consolidated
Financial Statements included in this Form 10-QSB. There can be no assurance
that the Company will be able to complete the remainder of the offering.
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On May 14, 1999, the Company filed a Form 10SB with the Securities and Exchange
Commission to allow the Company's common stock to be traded publicly. The Form
10SB became effective July 14, 1999 and the Company currently has an
application pending with the NASD to allow the Company's stock to trade
publicly on the NASDAQ electronic bulletin board.
As noted above, the Company installed equipment in China during the first half
of 1999 and is installing equipment in another location in southwest Asia. The
equipment, which was purchased for $347,000 was all acquired during the first
half of 1999. This equipment was financed by the manufacturer. The additional
equipment financing has been offset by payments made to the manufacturer on
equipment acquired and financed in 1998 result in an increase of $8,000 in the
amount owed the manufacturer.
As part of the expenses associated with the mergers as noted above, the Company
hired L. Flomenhaft & Co. as a consultant. The relationship extends for two
years. As a fee for these services, L. Flomenhaft & Co. agreed to take shares
of the Company's common stock valued at $90,000 in lieu of cash.
As noted above, expansion of the current network as well as the addition of
more locations requires substantial investment of both equipment and personnel.
The Company expects that it will have to continue to raise funds in both the
private and public markets to have enough cash to pay for this expected
expansion and to continue the operations of the Company. The Company believes
that ability to raise money in the public sector will enhance these efforts
although there can be no assurances that this will be the case or that any
public offering of the Company's securities will be made.
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
On June 28, 1999, the Company commenced a private placement of equity units,
each unit consisting of one share of Common Stock and one Common Stock purchase
warrant (the "Units"), through L. Flomenhaft & Co., Inc., as placement agent,
in order to raise a minimum of $500,000 and a maximum of $2,500,000. On August
4, 1999, the Company sold $500,000 of its Units to accredited investors,
resulting in the issuance of 250,000 shares of Common Stock and 250,000 Common
Stock purchase warrants. As a result of such sales, L. Flomenhaft & Co., Inc.
and a nominee of L. Flomenhaft & Co. received a total of $50,000 and 37,500
Common Stock purchase warrants,. The sale of the Units in the Unit offering was
exempt from registration under the Securities Act pursuant to Section 4(2) of
the Securities Act and under Rule 506 of Regulation D promulgated under the
Securities Act. The Company relied upon representations and warranties made by
investors in the Unit offering in the Subscription Agreement attached as
Exhibit 4.1 and upon Statements of Accredited Investors signed by such
investors and delivered to the Company.
As part of the Unit offering, the Company has granted to the investors certain
registration rights as set forth in the Subscription Agreement attached to this
report as Exhibit 4.1. The registration rights provide that, within 45 days
after the later of the completion of the last closing in the offering or the
date the offering is terminated by the Company, the Company will: (i) file a
registration statement covering the resale of the shares, warrants and shares
underlying the warrants, (ii) undertake commercially reasonable
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efforts to cause such registration statement to be declared effective by the
SEC within 90 days after such filing, and (iii) undertake commercially
reasonable efforts to keep the registration statement continuously effective,
supplemented and amended for a period of one year. The registration rights also
provide, however, that the Company is not obligated to file or maintain the
effectiveness of any registration statement if the Company determines, in the
exercise of its reasonable good faith judgement that such registration would
have a material adverse effect on the business prospects, finances or
operations of the Company; or that such registration would interfere with any
material financing, disposition, corporate reorganization or other material
transaction involving the Company or any of its subsidiaries.
If the Company breaches its obligations as set forth above to file or to
maintain the effectiveness of the registration statement and, in the case of a
failure to maintain such effectiveness, and such effectiveness is not restored
within 90 days thereafter, the Company will pay liquidated damages to each
holder of registrable securities. The liquidated damages shall be equal to 5%
per month of the number of such investor's shares which were issued and
outstanding and entitled to be registered on the date of the registration
default. Such liquidated damages shall begin 30 days after the registration
default and continue until such time as the Company is current in its
obligations or until the shares are exempt from registration provisions
pursuant to Rule 144 of the Securities Act.
In May 1999, the Company issued $575,000 original principal amount of its 10%
convertible debentures (the "Debentures") to accredited corporate and
individual investors pursuant to Rule 506 of Regulation D promulgated under the
Exchange Act and Section 4(2) of the Exchange Act. Selling commissions of
approximately $57,500 payable to L. Flomenhaft & Co., Inc., as placement agent,
were deferred pending the closing of the private placement discussed above. The
Company relied on information provided and representations made by purchasers
of the Debentures in claiming exemption from the registration obligations of
the Securities Act.
The principal amount outstanding under the Debentures plus accrued interest are
due on demand by the holder any time after six months following the date of
issuance. Under the terms of the Debentures, all principal as well as accrued
interest shall, upon closing of the next private placement following the
issuance of the Debentures, automatically be converted into shares of the
Company's common stock. Debenture holders are also entitled to an "equity
kicker" equal to one-half the number of shares of common stock into which the
Debentures are converted. The Company intends to convert the Debentures into
common stock at $1.50 per share and, in accordance with the terms of the
Debentures, provide the additional shares as part of the equity kicker.
Alternatively, the Company intends to permit Debenture holders the option to
convert their Debentures into Units consisting of one common share and one
warrant convertible into one common share at an exercise price of $3.00 per
share, at a price per Unit of $2.00, plus an additional amount of Units equal
to one-half the amount of Units received upon conversion of the Debentures into
Units. The Units are equivalent to those being offered by the Company as
described above.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In April 1999, Park organized Holdings as a Delaware corporation and a wholly
owned subsidiary of Park. A special meeting of the shareholders of Park was
called, noticed and held on April 12, 1999 in order to approve the merger of
Park into Holdings, leaving Holdings as the surviving corporation. All of the
3,227,444 shares present at the meeting voted for the merger of Park into
Holdings in order to
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reincorporate in the State of Delaware. There were no votes against the merger
nor any abstentions or broker non-votes.
On July 12, 1999, the stockholders of the Company adopted the Company's 1999
Stock Incentive Plan and the 1999 Directors Stock Incentive Plan by written
consent in lieu of a special meeting of stockholders in accordance with
Delaware General Corporation Law. The written consent in lieu of a special
meeting was signed by holders of 2,094,431 shares of common stock, constituting
a majority of common stock issued and outstanding and being sufficient to
approve the adoption of the 1999 Stock Incentive Plan and the 1999 Directors
Stock Incentive Plan. Holders of 1,247,954 shares of common stock did not
participate in the stockholder action by written consent in lieu of special
meeting. There were no votes against the adoption of the plans nor any broker
non-votes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
4.1. Unit Subscription Agreement included within the Private
Placement Memorandum dated June 28, 1999.
4.2. Warrant included within the Private Placement Memorandum
dated June 28, 1999.
4.3. 10% Convertible Debentures dated May 5, 1999, previously
filed as Exhibit 3.1(d) of Form 10-SB, incorporated
herein by reference.
4.4. Debenture Purchase Agreement dated May 5, 1999,
previously filed as Exhibit 3.1(e) of Form 10-SB,
incorporated herein by reference.
10.1. Employment and Non-Compete Agreement between the Company
and Mr. Charles Albo effective as of April 15, 1999.
10.2. Employment and Non-Compete Agreement between the Company
and Ms Nana Maraneli effective as of April 15, 1999.
10.3. Exhibit 10.5 Employment Agreement with Richard D. Rose
dated April 15, 1999, previously filed as Exhibit 6.1(c)
of Form 10-SB, incorporated herein by reference.
10.4. Consulting Agreement with Raleigh Coffin dated as of
April 15, 1999, previously filed as Exhibit 6.1(d) of
Form 10-SB, incorporated herein by reference.
10.5. Consulting Agreement dated April 15, 1999 between the
Company and Coffin & Sons, Inc., previously filed as
Exhibit 6.1(f) of Form 10-SB, incorporated herein by
reference.
27. Financial Data Schedule
</TABLE>
REPORTS ON FORM 8-K
NONE
-11-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
<TABLE>
<S> <C>
SONUS COMMUNICATION HOLDINGS, INC
---------------------------------
(Registrant)
DATE: AUGUST 13, 1999 BY: /s/ W. Todd Coffin
-------------------------------------
W. Todd Coffin
President and Chief Executive Officer
DATE: AUGUST 13, 1999 BY: /s/ Richard D. Rose
------------------------------------
Richard D. Rose
Chief Financial Officer
</TABLE>
-12-
<PAGE> 1
EXHIBIT 4.1
SUBSCRIPTION AGREEMENT
PROPOSED INVESTOR'S NAME:
---------------------
AGREEMENT NUMBER:
-------------------
UNIT
SUBSCRIPTION AGREEMENT
DATED AS OF _______, 1999
BY AND BETWEEN
SONUS COMMUNICATION HOLDINGS, INC.
AND
EACH OF THE SUBSCRIBERS LISTED IN
SCHEDULE A ANNEXED HERETO
<PAGE> 2
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR THE
SECURITIES COMMISSION OF ANY STATE, NOR HAS ANY SUCH COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS UNIT SUBSCRIPTION AGREEMENT OR ITS EXHIBITS OR
SCHEDULES (THE "PURCHASE AGREEMENT"). ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE PURCHASE OF THE SECURITIES OFFERED HEREBY AND DESCRIBED IN THIS SUBSCRIPTION
AGREEMENT INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" SET FORTH IN THE
MEMORANDUM TO WHICH THIS SUBSCRIPTION AGREEMENT IS ATTACHED. PROSPECTIVE
INVESTORS SHOULD CAREFULLY READ THIS SUBSCRIPTION AGREEMENT AND THE MEMORANDUM
IN ORDER TO EVALUATE THE RISKS INVOLVED IN LIGHT OF THEIR INVESTMENT OBJECTIVES
AND FINANCIAL RESOURCES. IN MAKING AN INVESTMENT DECISION, PROSPECTIVE INVESTORS
MUST RELY ON THEIR OWN EVALUATION OF THE COMPANY, THE SECURUTIES OFFERED HEREBY
AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THIS
SUBSCRIPTION AGREEMENT AND MEMORANDUM AND ITS EXHIBITS AND SCHEDULES CONTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT") AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"),
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE COMPANY'S ACTUAL
RESULTS AND ACTIVITIES COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS DESCRIBED IN "RISK
FACTORS" SET FORTH IN THE MEMORANDUM AND OTHER FACTORS INCLUDED ELSEWHERE IN
THIS SUBSCRIPTION AGREEMENT AND THE MEMORANDUM.
NO REPRESENTATIONS, WARRANTIES, OR ASSURANCES OF ANY KIND ARE MADE OR SHOULD BE
INFERRED WITH RESPECT TO THE ECONOMIC RETURN OR THE TAX CONSEQUENCES WHICH MAY
BE REALIZED BY A PURCHASER OF THE UNITS OFFERED HEREBY. PROSPECTIVE INVESTORS
SHOULD NOT CONSTRUE THE CONTENTS OF THIS SUBSCRIPTION AGREEMENT OR MEMORANDUM OR
ANY COMMUNICATION, WHETHER WRITTEN OR ORAL, FROM THE COMPANY OR ITS OFFICERS,
DIRECTORS, EMPLOYEES OR AGENTS, AS LEGAL, TAX, ACCOUNTING OR OTHER EXPERT
ADVICE. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR COUNSEL, ACCOUNTANTS AND
OTHER PROFESSIONAL ADVISORS AS TO THE LEGAL, TAX, ACCOUNTING AND RELATED MATTERS
CONCERNING THEIR INVESTMENT IN THE SECURITIES OFFERED HEREBY.
THE UNITS ARE BEING OFFERED ONLY TO ACCREDITED INVESTORS WHO ARE CAPABLE OF
BEARING THE ECONOMIC RISKS OF THIS INVESTMENT, INCLUDING THE RISK OF LOSING
THEIR ENTIRE ORIGINAL INVESTMENT, AND WHO, INDIVIDUALLY OR THROUGH A PURCHASER
REPRESENTATIVE, HAVE SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS
MATTERS THAT THEY ARE CAPABLE OF EVALUATING THE MERITS AND RISKS OF AN
INVESTMENT IN THESE SECURITIES.
THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
AN EXEMPTION THEREFROM. PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
-1-
<PAGE> 3
EACH RECIPIENT OF THIS PURCHASE AGREEMENT IS ENCOURAGED TO AVAIL ITSELF OF THE
OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM, THE COMPANY
CONCERNING ITS BUSINESS OPERATIONS, THE TERMS AND CONDITIONS OF THIS OFFERING,
AND TO OBTAIN ADDITIONAL INFORMATION, TO THE EXTENT THAT IT IS POSSESSED OR
OBTAINABLE WITHOUT UNREASONABLE EFFORT OR EXPENSE, NECESSARY TO VERIFY THE
ACCURACY OF THE INFORMATION IN THIS PURCHASE AGREEMENT. ANY PROSPECTIVE
INVESTORS HAVING ANY QUESTIONS REGARDING THIS OFFERING OR DESIRING ANY
ADDITIONAL INFORMATION OR DOCUMENTS TO VERIFY OR SUPPLEMENT THE INFORMATION
CONTAINED HEREIN SHOULD CONTACT W. TODD COFFIN, CHIEF EXECUTIVE OFFICER AT SONUS
COMMUNICATION HOLDINGS, INC., 1600 WILSON BLVD., SUITE 1008, ARLINGTON, VIRGINIA
22209.
THERE IS NO PUBLIC OR OTHER MARKET FOR THE SECURITIES OF THE COMPANY OFFERED
HEREBY OR FOR ANY SECURITIES INTO WHICH THE SECURITIES OFFERED HEREBY ARE
CONVERTIBLE, NOR CAN THERE BE ANY ASSURANCE THAT SUCH MARKET WILL DEVELOP AFTER
THE COMPLETION OF THIS OFFERING OR AT ANY OTHER TIME.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS SUBSCRIPTION AGREEMENT AND ANY INFORMATION OR
REPRESENTATIONS NOT CONTAINED HEREIN OR IN THE DOCUMENTS FURNISHED BY THE
COMPANY AS CONTEMPLATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY OR ON BEHALF OF THE COMPANY. THE DELIVERY OF THIS SUBSCRIPTION AGREEMENT AT
ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
THE DISTRIBUTION OF THIS SUBSCRIPTION AGREEMENT AND MEMORANDUM AND THE OFFERING
OF THE SECURITIES OFFERED THEREBY IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY
LAW. PERSONS INTO WHOSE POSSESSION THIS SUBSCRIPTION AGREEMENT COMES ARE
REQUIRED BY THE COMPANY TO INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH
RESTRICTIONS. THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
LAWFUL, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO.
NO ACTION HAS BEEN OR WILL BE TAKEN BY THE COMPANY THAT WOULD PERMIT A PUBLIC
OFFERING OF THE SECURITIES OFFERED HEREBY OR THE CIRCULATION OR DISTRIBUTION OF
THIS SUBSCRIPTION AGREEMENT OR ANY OFFERING MATERIAL IN RELATION TO THE
SECURITIES OFFERED HEREBY IN ANY COUNTRY OR JURISDICTION WHERE ACTION FOR THAT
PURPOSE IS REQUIRED.
THIS SUBSCRIPTION AGREEMENT AND MEMORANDUM HAS BEEN PREPARED SOLELY FOR THE
BENEFIT OF PROSPECTIVE INVESTORS INTERESTED IN THE PROPOSED PRIVATE PLACEMENT OF
THE UNITS AND CONSTITUTES AN OFFER ONLY IF THE NAME OF THE PROSPECTIVE INVESTOR
APPEARS IN THE APPROPRIATE SPACE PROVIDED ON THE COVER HEREOF. DISTRIBUTION OF
THIS SUBSCRIPTION AGREEMENT OR MEMORANDUM TO ANY PERSON OTHER THAN SUCH
PROSPECTIVE INVESTOR AND THOSE PERSONS RETAINED TO ADVISE SUCH PROSPECTIVE
INVESTOR WITH RESPECT THERETO IS UNAUTHORIZED, AND ANY REPRODUCTION OF THIS
SUBSCRIPTION AGREEMENT OR MEMORANDUM, IN WHOLE OR IN PART, OR THE DIVULGENCE OF
ANY OF ITS CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF SONUS COMMUNICATION
HOLDINGS, INC. IS PROHIBITED.
-2-
<PAGE> 4
UNIT SUBSCRIPTION AGREEMENT
THIS UNIT SUBSCRIPTION AGREEMENT (the "Agreement") is made as of the
_____ day of June, 1999, by and among SONUS COMMUNICATION HOLDINGS, INC., a
Delaware corporation (the "Company"), and the investors listed on Schedule A
attached hereto and made a part hereof (the "Investors"). Capitalized terms used
but not defined in this Agreement shall have the respective meanings given such
terms in the Confidential Private Placement Memorandum dated June __, 1999 (the
"Memorandum").
W I T N E S S E T H
WHEREAS, the Company desires to sell to the Investors that number of Units
set forth opposite each such Investor's name on Schedule A attached hereto;
WHEREAS, each of the Investors has been furnished with a Memorandum; and
WHEREAS, the Investors, after carefully reviewing the Memorandum, desire
to purchase such Units on the terms and conditions contained in this Agreement.
NOW, THEREFORE, IN CONSIDERATION FOR THE MUTUAL COVENANTS AND AGREEMENTS
SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HERETO HEREBY AGREE AS
FOLLOWS:
1. Purchase and Sale of Units.
a. Sale of Units. Subject to the terms and conditions of this
Agreement, each Investor agrees, severally but not jointly, to purchase at the
Closing (as hereinafter defined), and the Company agrees to sell at the Closing
to each Investor that number of Units as is set forth opposite such Investor's
name on Schedule A attached hereto, for the aggregate purchase price set forth
on Schedule A (the "Purchase Price"), reflecting a per Unit purchase price of
$2.00. The Purchase Price is to be paid by wire transfer or check, and delivered
to the Excrow Agent upon execution and delivery hereof by Investor.
b. Description of Units. Each Unit shall consist of:
(i) one (1) share of common stock of the Company, par value
$.0001 per share ("Common Stock"); and
(ii) one (1) redeemable warrant to purchase one (1) share of
Common Stock, exercisable at $3.00 per share on the terms and conditions set
forth in the form of warrant attached hereto as Exhibit A (each a "Warrant" and
collectively, the "Warrants").
c. Delivery of Units. The Warrants subscribed for herein shall be
issued at Closing (hereinafter defined) in the form attached hereto as Exhibit A
and the Common Stock subscribed for herein (the "Shares") shall be evidenced by
one or more stock certificates in proper form. At Closing, the Company shall
issue instructions to its transfer agent to issue the number of shares of Common
Stock to which each Investor has subscribed, as shown on Schedule A hereto.
d. Termination; Minimum Amount. This Offering will continue through
July 30, 1999, subject to earlier termination or extension at the option of the
Company in consecutive periods not exceeding 30 days each, but in no event
beyond September 30, 1999 (the "Offering Termination Date"). The Company's
obligation to issue the Units hereunder is subject to the receipt of the Minimum
Amount prior to the Offering Termination Date. If by
-3-
<PAGE> 5
the Offering Termination Date, subscriptions for at least $500,000 are not
received by the Company, this Offering will terminate and subscriptions will be
refunded without deduction and without interest.
e. Closings. The consummation of the purchase and sale of the Units
contemplated by this Agreement shall take place at the Law Offices of David N.
Feldman, 36 West 44th Street, New York, New York 10036, upon receipt of
subscriptions acceptable by the Company in an amount equal to or greater than
the Minimum Amount and at such time as is mutually agreeable to L. Flomenhaft &
Co., Incorporated ("Placement Agent") and the Company, or at such other time and
place as the Company may designate (the "Closing" or "Closings"); provided that
all Closings shall take place no later than the Offering Termination Date. At
each Closing, the Company shall deliver to the Investors the Units in accordance
with paragraph (c) above, against delivery to the Company by each such Investor
of its Purchase Price, a fully completed Statement of Accredited Investor
attached hereto as Exhibit B and signature pages to this Agreement. Execution
and delivery of this Agreement and the other documents to be delivered at
Closing may be by facsimile transmission.
f. Payment and Escrow. All subscription funds will be held in an
escrow account maintained at Commercial Bank of New York, 120 Broadway, New
York, NY 10027. If paying by check, make check payable to "L. Flomenhaft & Co.,
Inc. Escrow Account For Sonus Communication Holdings, Inc." If wiring funds,
please wire transfer to:
ABA # 026011507
Commercial Bank of New York,
183 Broadway, New York, NY 10007
For Credit To: L. Flomenhaft & Co., Inc. Escrow For Sonus
Communication Holdings, Inc.
Account # 0129000352
The Escrow Agent will hold subscription payments received in escrow
in the aforementioned account until such time as the Placement Agent and the
Company agree to close the transactions contemplated by this Agreement which
shall be prior to the Offering Termination Date, unless such proceeds are
returned to the Investor by the Placement Agent. If this Offering is terminated
without a closing, all proceeds held in escrow shall be promptly returned to
investors without interest or deduction. Any subscription funds received after
the initial closing will be held in escrow until rejected or accepted by the
Company at a subsequent closing. If a subscription is rejected for any reason,
the subscription funds will be returned to the subscriber without deduction and
without interest. The Company reserves the right, in its sole discretion, to
reject any subscription in whole or in part.
g. Binding and Enforceable. This Subscription Agreement will be
binding upon and enforceable against the Company only when countersigned by an
authorized agent of the Company and delivered to Investors who have agreed to
purchase at least the Minimum Amount.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor as follows:
a. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite power and authority to carry on
its business as now conducted. The Company is duly qualified to transact
business, and is in good standing, in each U.S. jurisdiction in which the
failure to so qualify would have a material adverse effect on its business.
b. Capitalization. The authorized capital of the Company consists of
100,000,000 shares of common stock and, prior to the Offering, 3,342,385 shares
of Common Stock are issued and outstanding.
-4-
<PAGE> 6
c. Authorization. All action on the part of the Company necessary
for the authorization, execution and delivery of this Agreement, the performance
of all obligations of the Company hereunder and the authorization, issuance and
delivery of the Units being sold hereunder, to the extent that the foregoing
requires performance on or prior to the Closing, has been taken or will be taken
on or prior to the Closing, and the Company has all requisite power and
authority to enter into this Agreement.
3. Representations and Warranties of Investors. Each Investor hereby
represents and warrants to the Company as follows:
a. Organization; Good Standing; Power and Authority; Binding
Obligation. Investor has full power and authority to enter into this Agreement,
and, for those Investors which are corporations (i) such Investor is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite power and
authority to carry on its business as now conducted, and (ii) all action on the
part of the Investor necessary for the authorization, execution and delivery of
this Agreement, the performance of all obligations of the Investor hereunder,
including, without limitation, the payment of the purchase price for the Units
being sold such Investor hereunder has been taken, and the Investor has all
requisite power and authority to enter into this Agreement. This Agreement has
been duly executed and delivered by Investor and, assuming due authorization,
execution and delivery by the Company, constitutes Investor's valid and legally
binding obligation enforceable against the Investor in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), moratorium or similar laws affecting creditors' rights generally,
subject, as to enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and subject to the effect of applicable securities laws as to
rights of indemnification.
b. Purchase Entirely for Own Account, Etc.. The Units, Warrants,
Shares and shares of Common Stock underlying the Warrants (the "Warrant Shares")
to be purchased by Investor hereunder will be acquired for investment for
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof. Investor has no present intention of
selling, granting any participation in, or otherwise distributing the Units,
Shares, Warrants or the Warrant Shares. Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to any person with respect to the Units, Shares, Warrants or the
Warrant Shares. The Investor has not construed the contents of this Agreement,
or any additional agreement with respect to the proposed investment in the Units
or any prior or subsequent communications from the Company, or any of its
officers, employees or representatives, as investment, tax or legal advice or as
information necessarily applicable to such Investor's particular financial
situation. The Investor has consulted its own financial advisor, tax advisor,
legal counsel and accountant, as necessary or desirable, as to matters
concerning his investment in the Units, Shares, Warrants and Warrant Shares.
c. Disclosure. Investor has received or reviewed all the information
which such Investor has requested for the purposes of determining the merits of
the Units as an investment. Investor has read and understands the Risk Factors
and other information presented in the Memorandum and the Exchange Act
Registration Statement (the "Exchange Act Registration Statement") submitted to
the SEC on Form 10-SB. The Investor acknowledges that the Memorandum and
Exchange Act Registration Statement contain a discussion of certain financial
and other developments which have occurred since the date of the last audited
financial statements provided to the Investor (the "Audited Financials"), the
effects of which are not reflected in the Audited Financials and which may have
a material adverse effect on Sonus, the Company and their respective businesses,
financial conditions and results of operations.
Investor has had an opportunity to ask questions and receive answers
from the Company regarding Sonus, the Company and their respective business,
operations and financial condition and the terms and conditions
-5-
<PAGE> 7
of this Offering of Units, and answers have been provided to Investor's full
satisfaction. Investor has fully reviewed all corporate and governance documents
of the Company and such other documents, which Investor feels is necessary or
appropriate prior to purchase of the Units, understands all relevant terms and
has asked all questions and received answers thereto to Investor's full
satisfaction. If deemed necessary by Investor, Investor has consulted with a
professional advisor who has provided Investor with advice concerning terms.
INVESTOR ACKNOWLEDGES AND AGREES THAT THE PURCHASE OF THE UNITS INVOLVES A HIGH
DEGREE OF RISK, INCLUDING, WITHOUT LIMITATION, THOSE SET FORTH ON IN THE
MEMORANDUM, AND MAY RESULT IN A LOSS OF THE ENTIRE AMOUNT INVESTED. EACH
INVESTOR FURTHER ACKNOWLEDGES AND AGREES THAT THERE IS NO PUBLIC MARKET FOR THE
UNITS, WARRANTS OR THE WARRANT SHARES OR ANY OTHER SECURITIES OF THE COMPANY.
THERE IS NO ASSURANCE THAT THE COMPANY'S OPERATIONS WILL RESULT IN REVENUES OR
BE PROFITABLE OR THAT A PUBLIC MARKET FOR THE UNITS OR THE WARRANT SHARES WILL
DEVELOP AT ANY TIME.
d. Accredited Investor. Investor is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act. The
information provided by Investor on the Statement of Accredited Investor,
attached hereto as Exhibit B, is true, correct and complete in all respects.
Investor is capable of bearing the economic risk of an investment in the Units,
including the possible loss of Investor's entire investment. Investor has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of an investment in the Units offered hereby. If
other than an individual, Investor has not been organized solely for the purpose
of acquiring the Units.
e. Restricted Securities. Investor understands that the Units being
purchased hereunder, as well as the Shares, Warrants and Warrant Shares, are
"restricted securities" as defined in the Securities Act, and that under federal
and state securities laws the Units, Shares, Warrants or Warrant Shares may be
resold without registration under the Securities Act only in certain limited
circumstances. Investor is familiar with Rule 144 promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act, and
understands the resale limitations imposed thereby and by the Securities Act
generally. Investor also acknowledges that the Units, Shares, Warrants and
Warrant Shares are subject to significant restrictions on transfer, pledge or
hypothecation.
f. Legends. It is understood that certificates or other evidence of
the Units, Shares, Warrants and Warrant Shares may bear the following legend, as
well as any legend required by the laws of any state:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM UNDER THE
SECURITIES ACT OF 1933."
g. Consents and Approvals; No Conflict. (i) The execution and
delivery of this Agreement by the Investor does not, and the performance of this
Agreement by the Investor will not, require any consent, approval, authorization
or other action by, or filing with or notification to, any governmental or
regulatory authority.
(ii) The execution, delivery and performance of this Agreement
by the Investor does not (A) in the case of any Investor that is not an
individual, conflict with or violate the charter or by-laws, partnership or
other governing documents of such Investor, or (B) conflict with or violate any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award applicable to the Investor.
-6-
<PAGE> 8
4. Covenant of Investors. Each Investor hereby covenants with the
Company that, without in any way limiting the representations set forth in
Section 3 above, Investor shall not make any disposition of all or any portion
of the Units, Shares, Warrants or Warrant Shares unless and until:
i. there is then in effect a registration statement under the
Securities Act covering such proposed disposition, and such disposition is made
in accordance with such registration statement; or
ii. such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and, if
requested by the Company, such Investor shall have furnished the Company with an
opinion of counsel, in form and substance satisfactory to the Company, that such
disposition will not require registration of the Units, Shares, Warrants or
Warrant Shares, as the case may be, under the Securities Act.
5. Conditions of Investor's Obligations at Closing. The obligations of
each Investor hereunder are subject to, and contingent upon, the fulfillment, on
or before each Closing, of each of the following conditions, the waiver of which
shall not be effective against any Investor who does not consent in writing
thereto:
a. Representations and Warranties. The representations and
warranties of the Company contained in Section 2 hereof shall be true and
correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.
b. Performance. The Company shall have performed and complied with
all agreements, obligations and covenants contained in this Agreement that are
required to be performed or complied with by it on or before the Closing;
provided that the obligations of the Investors shall not be subject to or
contingent upon the issuance by the Company of the Units to the persons or
entities set forth on Schedule A attached hereto who have not performed or
tendered the performance of their obligations required to be performed under
this Agreement on or prior to the Closing.
6. Conditions of the Company's Obligations at Closing. The obligations
of the Company to each Investor hereunder are subject to and contingent upon the
fulfillment by such Investor, on or before the Closing, of each of the following
conditions:
a. Representations and Warranties. The representations and
warranties of each Investor contained herein shall be true and correct on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
b. Payment of Purchase Price by Investors. Each Investor shall have
delivered to the Company the Purchase Price specified in Schedule A attached
hereto, in the manner specified in this Agreement and, in the event Investor
pays by check, the Purchase Price shall have been credited to the Escrow
Account.
c. Statement of Accredited Investor. Each Investor shall have
delivered to the Company a Statement of Accredited Investor in the form set
forth in Exhibit B attached hereto, and the information provided therein shall
be true, correct and complete on and as of the Closing with the same effect as
though such information had been provided as of the date of such Closing.
7. Demand Registration Rights.
a. Grant of Demand Registration Rights. Subject to the terms and
conditions of this Agreement, (i) the Company agrees to file a registration
statement under the Securities Act covering the shares of Common Stock issued in
connection with the Offering and the Warrant Shares issuable upon exercise of
the Warrants (but not the Warrants), (the "Registrable Securities"), in
accordance with the intended method or methods of distribution
-7-
<PAGE> 9
thereof and shall include all financial statements required by the SEC to be
filed therewith (referred to herein, together with all amendments thereto and
the related prospectus, as amended, a "Registration Statement"); provided,
however, that the Company is not obligated to file any Registration Statement
until the later of the date which is forty five (45) days after the completion
of the last closing of the purchase and sale of Units in this Offering or the
termination of the Offering by the Company, unless such 45th day falls between
the end of any fiscal year or quarter and the date on which the Company is
required to file a report under the Exchange Act relating to such year or
quarter, in which case, within 15 business days after the date the Company is
required to file such periodic report; (ii) undertake commercially reasonable
efforts to cause such Registration Statement to be declared effective by the SEC
within 90 days after such filing; and (iii) if the Company is eligible to
incorporate periodic reports by reference into such Registration Statement, and
such Registration Statement is declared effective, undertake commercially
reasonable efforts to keep the Registration Statement continuously effective,
supplemented and amended for a period of one year. Any other provision of this
Agreement notwithstanding, the Company shall not be obligated to file or
maintain the effectiveness of any registration statement if the Company, in the
exercise of its reasonable good faith judgement, determines:
(i) that such registration would have a material adverse
effect on the business, prospects, finances or operations of the Company
(without regard to the costs directly related to preparing and filing the
registration statement); or
(ii) that such registration would interfere with any material
financing, acquisition, disposition, corporate reorganization or other material
transaction involving the Company or any of its subsidiaries or because public
disclosure thereof would be required prior to the time such disclosure might
otherwise be required, or when the Company is in possession of material
non-public information that it deems advisable not to disclose in a registration
statement.
b. Number of Demand Registrations. The Company shall be obligated to
prepare, file and cause to become effective pursuant to this Section no more
than one Registration Statement; provided, however, that the filing of a
Registration Statement shall not be deemed to satisfy the Company's obligations
hereunder unless it becomes effective and is maintained effective in accordance
with the requirements specified in this Section.
c. Required Thresholds. In addition to the other limitations
contained in this Agreement, the Company shall not be obligated to prepare, file
and cause to become effective any Registration Statement if such demand is made
less than 90 days after the effective date of the Company's most recent
registration statement, other than a registration statement filed under the
Exchange Act.
d. Underwriter's Cutback. If the registration of Registrable
Securities is to be underwritten and, in the good faith judgment of the managing
underwriter, the inclusion of all the Registrable Securities requested to be
registered hereunder would interfere with the successful marketing of a smaller
number of such shares of Registrable Securities, the number of shares of
Registrable Securities to be included shall be reduced to such smaller number
with the participation in such offering to be pro rata among the holders of
Registrable Securities requesting such registration, based upon the number of
shares of Registrable Securities owned by such Holders; provided, however, that
shares held by officers and directors of the Company shall be subject to reduced
prior to any reduction of Registrable Securities. Any shares that are thereby
excluded from the offering shall be withheld from the market by the Holders
thereof for a period (not to exceed 30 days prior to the effective date and 75
days thereafter) that the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering.
e. Managing Underwriter. The managing underwriter or underwriters of
any underwritten public offering covered by these demand registration rights
shall be selected by the Company.
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f. Black-Out Periods of Investor. The Company shall have the right
exercisable on one or more occasions, in addition to its rights set forth
in Section 7(a)(i) and (ii), to require upon written notice to the Holders that
the Holders not sell any Registrable Securities during the period specified in
the notice, provided that such periods do not exceed 120 days in any calendar
year, if (i) the Company determines, in its good faith judgment, that such
offering would interfere with any material financing, acquisition, disposition,
corporate reorganization or other material transaction involving the Company or
any of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company is in
possession of material non-public information that it deems advisable not to
disclose in a registration statement, or (ii) the Registration Statement ceases
to be current, provided, however, that the Company shall exercise reasonable
efforts to file an amendment to the Registration Statement in order to cause the
Registration Statement to become current as soon as practicable.
g. Expenses. The cost of the registration of the Registrable
Securities will be at the Company's expense, except for the Investor's attorneys
fees and underwriting discounts, which shall be borne by the Investor.
h. Underwriting Agreement Governs. In the event the terms of this
Agreement conflict with the terms of any underwriting agreement in connection
with any registration hereunder, the terms of such underwriting agreement shall
control but shall not materially impair or reduce Holder's rights as granted in
this Section 7.
i. Information. If Investor's Registrable Securities are to be
included in any Registration Statement, Investor shall furnish to the Company
such information as the Company may reasonably request in writing and as shall
be required in connection with any registration, qualification or compliance
referred to in this Agreement.
j. Non-Assignment. The registration rights granted under this
Agreement are non-assignable, and shall become null and void with respect to any
Registrable Securities transferred other than pursuant to a then-effective
Registration Statement, upon such transfer.
k. Indemnification.
(i) Indemnification by Investor. Investor agrees to indemnify
the Company, each of its directors and officers, each underwriter, if any, of
the Registrable Securities, each person or entity who controls the Company or
such underwriter within the meaning of Section 15 of the Securities Act, and
each other such holder, each of its officers and directors and each person or
entity controlling such holder within the meaning of Section 15 of the
Securities Act, against all claims, costs, fees (including reasonable attorney's
fees), losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, and its
directors, officers, representatives, underwriters and control persons for any
legal or any other expenses reasonably incurred, as such expenses are incurred,
in connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in reliance upon and in conformity with written information
furnished to the Company by Investor or Investor's representative or agent for
inclusion in such registration statement. Investor's indemnification obligations
hereunder are limited to the amount paid by Investor for the Units in this
Offering, except in cases of Investor's intentional or willful misconduct.
(ii) Indemnification by the Company. The Company agrees to
indemnify the Investor against all claims, costs, fees (including reasonable
attorney's fees), losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or
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alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, and its directors, officers, representatives, underwriters and
control persons for any legal or any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating or defending any such
claim, loss, damage, liability or action except to the extent that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in reliance upon and in conformity with written information furnished by
the Investor or Investor's representative or agent for inclusion in such
registration statement.
(iii) Indemnification Procedure. Each party entitled to
indemnification under this Section (for the purposes of this Section, the
"Indemnified Party") shall give notice to the party required to provide
indemnification (for the purposes of this Section, the "Indemnifying Party")
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action, and provided further that the Indemnifying Party shall
not assume the defense for matters as to which there is a conflict of interest
or separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
l. Contribution. If the indemnification provided for in this Section
7 is unavailable, then each Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and the Investor on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities, or
expenses (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Investor, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and whether a party breached a
representation or warranty or covenant or agreement contained in this Agreement.
The Company and Investor agree that it would not be just and equitable if
contribution were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
referred to above shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such claim. Notwithstanding the provisions of this paragraph,
(i) Investor shall not be required to contribute any amount in excess the amount
paid by Investor for Units in this Offering, except in cases of Investor's
willful or intentional misconduct, and (ii) the Company shall not be required to
contribute any amount in excess the total net proceeds actually received by the
Company in connection with the Offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
m. Termination. The Company may withdraw the registration statement
earlier than the periods prescribed herein (i) if all of the Registrable
Securities covered by the Registration Statement are sold, or (ii) such
Registrable Securities could be sold pursuant to an exemption from registration
including, without limitation, Rule 144 and Rule 144(k), promulgated under the
Securities Act, as Rule 144 may be subsequently amended, modified, or
supplemented.
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<PAGE> 12
n. Registration Penalty. If the Company breaches its obligations, as
set forth in this Section, to file or to maintain the effectiveness of the
Registration Statement and, in the case of a failure to maintain such
effectiveness, such effectiveness is not restored within 90 days thereafter
(each such event being referred to as a "Registration Default"), the Company
will pay liquidated damages to each Holder, provided, that (i) such shares of
Common Stock represent, in the reasonable discretion of the Company and its
legal counsel, "restricted securities" within the meaning of the Securities Act
on the date of such Registration Default and at the time of payment of the
liquidated damages, (ii) such shares of Common Stock were entitled to be
registered hereunder, and (iii) such Holder has complied with all such Holder's
obligations under this Agreement and is not in default hereunder. The liquidated
damages shall be paid as an issuance of Common Stock in an amount equal to 5%
per month of the number of such Holder's shares which were issued and
outstanding and entitled to be registered on the date of the Registration
Default, beginning 30 days after the date of such Registration Default. The
liquidated damages shall continue to be paid until such time as the Company is
current in its obligations under this Section 7 or until the Shares are exempt
from the registration provisions of the Securities Act including, without
limitation, pursuant to Rule 144 promulgated under the Securities Act. THE
AFOREMENTIONED LIQUIDATED DAMAGES ARE IN LIEU OF ANY AND ALL OF HOLDER'S RIGHTS
AND REMEDIES WITH RESPECT TO A FAILURE BY THE COMPANY TO REGISTER SUCH
INVESTOR'S SECURITIES, WHETHER AT LAW OR IN EQUITY.
8. Miscellaneous.
a. Survival of Warranties. The representations, warranties and
covenants of the Investors contained in this Agreement shall survive the
execution and delivery of this Agreement and the Closing.
b. Successors and Assigns. This Agreement may not be assigned by any
party hereto. The terms and conditions of this Agreement shall inure to the
benefit of, and be binding upon, the respective successors of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
c. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
principles of conflict of laws thereof.
d. Counterparts; Delivery by Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Delivery
of this Agreement may be effected by facsimile.
e. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
f. Notices. Unless otherwise provided, any notice required or
permitted hereunder shall be given by personal service upon the party to be
notified, by nationwide overnight delivery service or upon deposit with the
United States Post Office, by certified mail, return receipt requested and:
i. if to the Company, addressed to SONUS COMMUNICATION
HOLDINGS, INC., 1600 Wilson Blvd., Suite 1008, Arlington, Virginia 22209,
Attention: W. Todd Coffin, with a copy to Cecil E. Martin, III, Esquire,
McGuire, Woods Battle & Booth LLP, Seven Saint Paul Street, Suite 1000,
Baltimore, Maryland 21202-1626, or at such other address as the Company may
designate by notice to each of the Investors in accordance with the provisions
of this Section; and
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<PAGE> 13
ii. if to the Investors, at their respective addresses
indicated on the signature pages hereof, or at such other addresses as any one
or more Investors may designate by notice to the Company in accordance with the
provisions of this Section.
g. Expenses. Irrespective of whether a Closing is effected, the
Company and the Investors shall pay all of their own costs and expenses incurred
with respect to the negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
h. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either prospectively or retroactively), only
with the written consent of the Company and a majority in interest of the
Investors.
i. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded, and this Agreement shall be otherwise
enforceable in accordance with its terms.
j. Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SONUS COMMUNICATION HOLDINGS, INC.
By:
------------------------------
W. Todd Coffin
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 4.2
WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT
TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES AND
(3) IN ACCORDANCE WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.
WARRANT
WARRANT TO PURCHASE __________ SHARES OF COMMON STOCK
OF
SONUS COMMUNICATION HOLDINGS, INC.
DATE OF ISSUANCE: __________, 1999
NO.__________
THIS CERTIFIES that, for value received, ____________, or its assigns (in either
case, the "Holder") is entitled to purchase, subject to the provisions of this
Warrant, from SONUS COMMUNICATION HOLDINGS, INC., a Delaware corporation (the
"Company"), at the price per share set forth in Section 8 hereof, the number of
shares of the Company's common stock, $.0001 par value per share (the "Common
Stock"), set forth in Section 7 hereof. This Warrant is referred to herein as
the "Warrant" and the shares of Common Stock issuable pursuant to the terms
hereof are sometimes referred to herein as "Warrant Shares". Capitalized terms
used but not defined herein shall have the respective meanings accorded such
terms in the Confidential Private Placement Memorandum dated June 25, 1999.
Section 1. Exercise of Warrant. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company at its principal office, (a) a
written notice, in substantially the form of the exercise notice attached hereto
(the "Exercise Notice"), of the Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased,
(b) a check in the amount of the aggregate exercise price for the Warrant Shares
being purchased, and (c) this Warrant. The Company shall as promptly as
practicable, and in any event within twenty (20) days after delivery to the
Company of (i) the Exercise Notice, (ii) the check mentioned above, and (iii)
this Warrant, execute and deliver or cause to be executed and delivered, in
accordance with such notice, a certificate or certificates representing the
aggregate number of shares of Common Stock specified in such notice, provided
the Warrants specified in such notice have vested on or prior to the date such
notice is delivered. If the Holder elects to purchase, at any time, less than
the number of shares of Common Stock then purchasable under the terms of this
Warrant, the Company shall issue to the Holder a new Warrant exercisable into
the number of remaining shares of Common Stock purchasable under this Warrant.
Each certificate representing Warrant Shares shall bear the legend or legends
required by applicable securities laws as well as such other legend(s) the
Company requires to be included on certificates for its Common Stock. The
Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, issuance and delivery of such stock certificates except
that, in case such stock certificates shall be registered in a name or names
other than the name of the Holder, funds sufficient to pay all stock transfer
taxes that are payable upon the issuance of such stock certificate or
certificates shall be paid by the Holder at the time of delivering the Exercise
Notice. All shares of Common Stock issued upon the exercise of this Warrant
shall be validly issued, fully paid, and nonassessable. This Warrant may be
exercised on multiple occasions in amounts not less than 15% of the original
amount issued before the expiration of its term as described in this Section 1.
This Warrant will expire on July 30, 2004 (the "Expiration Date").
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Section 2. Reservation of Shares. The Company hereby covenants that at all
times during the term of this Warrant there shall be reserved for issuance such
number of shares of its Common Stock as shall be required to be issued upon
exercise of this Warrant.
Section 3. Fractional Shares. This Warrant may be exercised only for a
whole number of shares of Common Stock, and no fractional shares or scrip
representing fractional shares shall be issuable upon the exercise of this
Warrant.
Section 4. Transfer of Warrant and Warrant Shares. The holder may sell,
pledge, hypothecate, or otherwise transfer this Warrant, in whole or in part,
only in accordance with and subject to the terms and conditions set forth in the
subscription agreement and then only if such sale, pledge, hypothecation, or
transfer is made in compliance with the act or pursuant to an available
exemption from registration under the act relating to the disposition of
securities, and is made in accordance with applicable state securities laws.
Section 5. Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, or destruction of this Warrant, and of
indemnification satisfactory to it, or upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor.
Section 6. Rights of the Holder. No provision of this Warrant shall be
construed as conferring upon the holder the right to vote, consent, receive
dividends or receive notice other than as expressly provided herein. Prior to
exercise, no provision hereof, in the absence of affirmative action by the
holder to exercise this Warrant, and no enumeration herein of the rights or
privileges of the holder, shall give rise to any liability of the holder for the
purchase price of any warrant shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
Section 7. Number of Warrant Shares. This Warrant shall be exercisable
for up to _____________ shares of the Company's Common Stock, as adjusted in
accordance with this agreement.
Section 8. Exercise Price; Redemption; Adjustment of Warrants.
a. Determination of Exercise Price. The per share purchase
price (the "Exercise Price") for each of the Warrant shares
purchasable under this Warrant shall be equal to three dollars
($3.00).
(b) Redemption of Warrants. The Warrants are redeemable by the Company at
$0.05 per Warrant (the "Redemption Price"), upon 20 days notice, at the
discretion of the Company, when the following three conditions have been met:
(i) a registration statement has been filed under the Securities Act covering
the resale of the Shares, Warrants and the Warrant Shares, and such registration
statement is effective, (ii) a public market has developed for the Common Stock,
and (iii) the bid price of the Common Stock has closed at $4.50 or higher for
ten consecutive trading days. Redemption of the Warrants shall be automatically
effective and the Warrants shall be deemed cancelled upon the Company's delivery
of the Redemption Price to the Holder in accordance with this Agreement. Upon
receipt of the Redemption Price, Holder agrees to return any evidence of the
Warrants to the Company.
(c) Adjustments for Stock Dividends, Distributions and Subdivisions. If
the Company at any time or from time to time after the original issue date shall
declare or pay any dividend or distribution on the Common Stock payable in
Common Stock, or effect a subdivision of the outstanding shares of Common Stock
into a greater number of shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock), then the number of
shares of Common Stock into which this Warrant is exercisable shall be increased
to an amount which is equal to the product of (i) the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to the stock
dividend, distribution or subdivision, as the case may be, and (ii) a fraction,
the numerator of which is equal to the number of shares of Common Stock issued
and outstanding after giving effect to such stock dividend, distribution or
subdivision, and the denominator of which is the number of shares of Common
Stock issued and outstanding prior to such stock dividend, distribution or
subdivision. If the outstanding shares of Common Stock shall be divided or
increased because of a stock dividend or distribution, by stock split or
otherwise, into a greater number of shares of Common Stock, the Exercise Price
in effect immediately
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<PAGE> 3
prior to such dividend, distribution or division shall, concurrently with the
effectiveness of such division, dividend or distribution, be proportionately
decreased.
(d) Adjustments for Combinations or Consolidation of Common Stock. If the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification, reverse stock split or otherwise, into a lesser number of
shares of Common Stock, then the number of shares of Common Stock into which
this Warrant is exercisable shall be decreased to an amount which is equal to
the product of (i) the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to combination or consolidation, as the case
may be, and (ii) a fraction, the numerator of which is equal to the number of
shares of Common Stock issued and outstanding after giving effect to such
combination or consolidation, and the denominator of which is the number of
shares of Common Stock issued and outstanding prior to such combination or
consolidation. If the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification, reverse stock split or otherwise, into a
lesser number of shares of Common Stock, the Exercise Price in effect
immediately prior to such combination or consolidation shall, concurrently with
the effectiveness of such combination or consolidation, be proportionately
increased.
(e) Adjustment for Mergers or Reorganization, etc. In case of any
consolidation or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the Company to another
corporation, this Warrant shall be exercisable into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Company deliverable upon exercise of this Warrant would
have been entitled upon such consolidation, merger or conveyance; and, in any
such case, appropriate adjustment (as determined by the Board of Directors of
the Company) shall be made in the application of the provisions herein set forth
with respect to the rights and interest thereafter of the holder of this
Warrant, to the end that the provisions set forth herein shall thereafter be
applicable, as nearly as reasonable may be, in relation to any shares of stock
or other property thereafter deliverable upon the exercise of this Warrant.
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<PAGE> 4
(f) NO IMPAIRMENT. THE COMPANY WILL NOT, THROUGH ANY REORGANIZATION,
TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE OR SALE OF
SECURITIES OR ANY OTHER VOLUNTARY ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE
OR PERFORMANCE OF ANY OF THE TERMS TO BE OBSERVED OR PERFORMED HEREUNDER BY THE
COMPANY, BUT WILL AT ALL TIMES IN GOOD FAITH ASSIST IN THE CARRYING OUT OF ALL
THE PROVISIONS OF THIS SECTION 8 AND IN THE TAKING OF ALL SUCH ACTION AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO PROTECT THE EXERCISE RIGHTS OF THE HOLDER
OF THIS WARRANT AGAINST IMPAIRMENT.
(g) Issue Taxes. The Company shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on exercise of this Warrant, in whole or in part; provided, however, that
the Company shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such exercise.
(h) Reservation of Stock Issuable Upon Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the exercise of this
Warrant, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise of this Warrant; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of this Warrant, the Company will take all appropriate
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(i) Fractional Shares. No fractional share shall be issued upon the
exercise, in whole or in part, of this Warrant. If any exercise in whole or in
part of this Warrant would result in the issuance of a fraction of a share of
Common Stock, the Company shall, in lieu of issuing any fractional share, pay
the holder otherwise entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of exercise (as determined in good
faith by the Board of Directors of the Company).
Section 9. Certain Distributions. In case the Company shall, at any time,
prior to the Expiration Date set forth in Section 1 hereof, declare any
distribution of its assets to holders of its Common Stock as a partial
liquidation, distribution or by way of return of capital, other than as a
dividend payable out of earnings or any surplus legally available for dividends,
then the Holder shall be entitled, upon the proper exercise of this Warrant in
whole or in part prior to the effecting of such declaration, to receive, in
addition to the shares of Common Stock issuable on such exercise, the amount of
such assets (or at the option of the Company a sum equal to the value thereof at
the time of such distribution to holders of Common Stock as such value is
determined by the Board of Directors of the Company in good faith), which would
have been payable to the Holder had it been a holder of record of such shares of
Common Stock on the record date for the determination of those holders of Common
Stock entitled to such distribution.
Section 10. Dissolution or Liquidation. In case the Company shall, at any
time prior to the Expiration Date set forth in Section 1 hereof, dissolve,
liquidate or wind up its affairs, the Holder shall be entitled, upon the proper
exercise of this Warrant in whole or in part and prior to any distribution
associated with such dissolution, liquidation, or winding up, to receive on such
exercise, in lieu of the shares of Common Stock to which the Holder would have
been entitled, the same kind and amount of assets as would have been distributed
or paid to the Holder upon any such dissolution, liquidation or winding up, with
respect to such shares of Common Stock had the Holder been a holder of record of
such share of Common Stock on the record date for the determination of those
holders of Common Stock entitled to receive any such dissolution, liquidation,
or winding up distribution.
Section 11. Reclassification or Reorganization. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), the Company shall cause effective provision to be
made so that the Holder shall have the right thereafter by exercising this
Warrant, to purchase the kind and amount of shares of Stock and other securities
and
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<PAGE> 5
PROPERTY RECEIVABLE UPON SUCH RECLASSIFICATION, CAPITAL REORGANIZATION OR
OTHER CHANGE, BY A HOLDER OF THE NUMBER OF SHARES OF COMMON STOCK WHICH MIGHT
HAVE BEEN PURCHASED UPON EXERCISE OF THIS WARRANT IMMEDIATELY PRIOR TO SUCH
RECLASSIFICATION OR CHANGE. ANY SUCH PROVISION SHALL INCLUDE PROVISION FOR
ADJUSTMENTS WHICH SHALL BE AS NEARLY EQUIVALENT AS MAY BE PRACTICABLE TO THE
ADJUSTMENTS PROVIDED FOR IN THIS WARRANT. THE FOREGOING PROVISIONS OF THIS
SECTION 11 SHALL SIMILARLY APPLY TO SUCCESSIVE RECLASSIFICATIONS, CAPITAL
REORGANIZATIONS AND CHANGES OF SHARES OF COMMON STOCK. IN THE EVENT THAT IN ANY
SUCH CAPITAL REORGANIZATION, RECLASSIFICATION, OR OTHER CHANGE, ADDITIONAL
SHARES OF COMMON STOCK SHALL BE ISSUED IN EXCHANGE, CONVERSION, SUBSTITUTION OR
PAYMENT, IN WHOLE OR IN PART, FOR OR OF A SECURITY OF THE COMPANY OTHER THAN
COMMON STOCK, ANY AMOUNT OF THE CONSIDERATION RECEIVED UPON THE ISSUE THEREOF
BEING DETERMINED BY THE BOARD OF DIRECTORS OF THE COMPANY SHALL BE FINAL AND
BINDING ON THE HOLDER.
Section 12. Miscellaneous.
(a) Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of, and be binding upon, the respective
successors and assigns of the parties, except to the extent otherwise provided
herein. Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto or their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflict of laws thereof.
(c) Counterparts; Delivery by Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Delivery
of this Agreement may be effected by facsimile.
(d) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. Unless otherwise provided, any notice required or
permitted hereunder shall be given by personal service upon the party to be
notified, by nationwide overnight delivery service or upon deposit with the
United States Post Office, by certified mail, return receipt requested and:
i. if to the Company, addressed to SONUS COMMUNICATION
HOLDINGS, INC., 1600 Wilson Blvd., Suite 1008, Arlington, Virginia 22209,
Attention: W. Todd Coffin, with a copy to Cecil E. Martin, III, Esquire,
McGuire, Woods Battle & Booth LLP, Seven Saint Paul Street, Suite 1000,
Baltimore, Maryland 21202-1626, or at such other address as the Company may
designate by notice to each of the Investors in accordance with the provisions
of this Section; and
ii. if to the Warrant holder, at the address indicated on the
signature pages hereof, or at such other addresses as such Holder may designate
by notice to the Company in accordance with the provisions of this Section.
(f) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either prospectively or
retroactively), only with the written consent of the Company and a majority in
interest of the Holders.
(g) Entire Agreement. This Agreement and the Subscription
Agreement (including the exhibits and schedules hereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties hereto.
-17-
<PAGE> 6
IN WITNESS WHEREOF, the undersigned hereby sets is hand and seal this __
day of _____, 1999.
SONUS COMMUNICATION HOLDINGS, INC.
By:
------------------------------
Name:
Title:
Investor Name:
------------------------
Investor Address:
---------------------
---------------------
---------------------
-18-
<PAGE> 1
EMPLOYMENT AND NON-COMPETE AGREEMENT
THIS AGREEMENT entered into as of the 15th day of April 1999, by and
between SONUS COMMUNICATIONS, INC., a Virginia corporation ("Employer") and
CHARLES W. ALBO ("Employee").
WHEREAS, Employer desires the Employee's employment with Employer and the
Employee wishes to accept such employment; and
NOW, THEREFORE, in consideration of the above premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1.
Definitions
"Agreement" means this Employment Agreement, as amended from time to time.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Compensation" means Salary and Employee Benefits and other compensation
paid or to be paid hereunder.
"Board of Directors" means the board of directors of Employer.
"Confidential Information" means (i) any and all trade secrets and other
information concerning the business and affairs of Employer and its Affiliates
and including, without limitation, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current, and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs (including
object code and source code ), computer software and database technologies,
systems, structures, and architectures (and related formulae, compositions,
processes, improvements, devices, know-how, inventions, discoveries, concepts,
ideas, designs, methods and information, and any other information however
documented), that is a trade secret within the meaning of any applicable state
trade secret law; (ii) information concerning the business and affairs of
Employer and its Affiliates (which includes historical financial statements,
financial projections and budgets, historical and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials, however documented; and (iii)
notes, analysis, compilations, studies, summaries, and other material prepared
by or for Employer containing or based on, in whole or in part,
<PAGE> 2
any information included in the foregoing that was acquired by Employee during
the Employment Period.
"Disability" has the meaning set forth in Section 6.2.
"Employee Benefits" has the meaning set forth in Section 3.1(b).
"Employment Period" means the term of employee's employment under this
Agreement.
"For Cause" means (i) Employee's incompetence, negligence,
insubordination, misconduct in office, or breach of any representation,
warranty, covenant or other obligation or term of this Agreement including,
without limitation, the non-competition, confidentiality and non-solicitation
provisions contained herein; provided, however, that, prior to termination under
this clause (i), Employer shall specify in reasonable detail the incompetence,
gross negligence, misconduct or breach in a written notice to Employee and, in
the event of a breach by Employee of a representation, warranty, covenant or
other obligation or term of this Agreement, shall, before terminating Employee,
provide Employee with 5 business days to cure such breach to Employer's
satisfaction and, prior to termination, provide a written response to such
attempt to cure, including any reasons why such attempt was inadequate; (ii)
Employee's conviction of a crime involving a felony, fraud, embezzlement or the
like; habitual insobriety; use of a control-led substance; or misappropriation
of funds of Employer or the taking by Employee of any improper personal benefit;
(iii) Employee's continued failure (on two, or more occasions) to follow any
reasonable policy of Employer to which similarly situated Employees are subject,
after notice of such policy; (iv) upon Employer's reasonable determination that
Employee's continuation in his position may be expected to result in serious
harm or damage, or the material risk thereof, to the assets, business or worth
of Employer; or (v) the appropriation (or attempted appropriation) of a material
business opportunity of Employer.
"Person" means any individual, corporation {including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
"Post-Employment Period" means (i) the period beginning on the date on
which the Employment Period ends and ending on the three month anniversary of
such date; provided, however, that if the Employment Period ends For Good
Reason, then there shall be no Post-Employment Period.
ARTICLE 2.
Employment Terms and Duties
2.1 Term. Subject to the provisions of Article 6, the term of Employee's
employment under this Agreement will be three years, beginning on the date
hereof and ending on April 15, 2002 (the Term).
<PAGE> 3
2.2 Duties. Employee will have such duties as are assigned or delegated to
Employee by the Board of Directors which Employee acknowledges shall include all
activities incident to Employee's position as Executive Vice President of
Employer. Employee will serve as Executive Vice President and Chairman of the
Employer and of Sonus Communication Holdings, Inc., a Delaware corporation
("Holdings"), during the term. Employee will devote his entire business time,
attention, skill, and energy exclusively to the business of Employer, will use
his best efforts to promote the success of Employer's business, and will
cooperate fully with the Board of Directors in the advancement of the best
interests of Employer. Nothing in this Section 2.3, however, will prevent
Employee from engaging in additional activities in connection with personal
investments, business and community affairs that are not inconsistent with
Employee's duties under this Agreement.
2.3 Service on Board of Directors. Employee shall, subject to earlier removal
by the shareholders, serve on the Board of Directors of Employer and Sonus
Communication Holdings, Inc. until the third anniversary of this Agreement,
without additional compensation except for reimbursement of reasonable expenses
associated with such service. Removal from the Board of Directors by
shareholders prior to the third anniversary of this agreement shall not give
rise to any claim or other liability of or against Employer under this Agreement
provided, however, that salary and benefits shall continue for the full term.
ARTICLE 3.
Compensation
(a) Base Salary. Beginning on April 15, 2000, Employee will be paid an
annual salary commensurate with that paid to similarly situated members of
senior management of Employer, as mutually agreed upon by Employer and Employee
prior to April 15, 2000; provided, however, that such salary shall be not less
than $84,000 per annum, and shall be paid in accordance with Employer's usual
compensation schedule and practices, but not less frequently than monthly,
during the Term. Prior to April 15, 2000, Employee shall not receive a salary or
other compensation hereunder, except as expressly provided herein. The Salary
will be reviewed by the Board of Directors from time to time, and may be
adjusted upward or downward in the sole discretion of the Board of Directors,
but in no event will the Salary be less than $84,000 per year.
(b) Employee Benefits. During the Employment Period, Employee will be
permitted to participate in such pension, health, profit sharing, savings and
retirement and other employee benefit plans, practices, policies and programs
applicable generally to similarly situated senior management employees of
Employer, if any ( collectively, the Employee Benefits); provided, however, that
until April 15, 2000, Employer shall not be required to pay any portion thereof
or make any contributions thereto with respect to Employees participation in
such plans and programs.
<PAGE> 4
ARTICLE 4.
Facilities and Expenses
For the Employment Period, Employee shall be provided office and conference room
space, furniture, fixtures, miscellaneous office equipment (including phones,
faxes, computers, and copy machines). Employee shall be entitled to
reimbursement of reasonable expenses actually incurred by the Employee in
connection with Employee's pursuit of his duties under this Agreement, provided,
however, that Employee shall provide the Employer with all documentation thereof
reasonably requested by it.
ARTICLE 5.
Vacations and Holidays
Employee will be entitled to four (4) weeks paid vacation during each year
of the Term of this Agreement, in accordance with the vacation policies of
Employer in effect for its senior executive officers from time to time. Employee
will also be entitled to the paid holidays and other paid leave set forth in
Employer's policies Vacation days and holidays during any Fiscal Year that are
not used by Employee during such Fiscal Year may be carried forward for 3
subsequent Fiscal Years.
ARTICLE 6.
TERMINATION
6.1 Events of Termination. Except as otherwise provided in this Article 6,
the Employment Period, Employee's Compensation, and any and all other rights of
Employee under this Agreement or otherwise as an employee of Employer will
terminate:
(a) immediately upon the death of Employee;
(b) upon the Disability of Employee immediately upon notice from either
party to the other
(c) immediately upon a termination of the Employment Period by Employer,
For cause, or
(d) upon a termination of the Employment Period by Employee, upon not less
than thirty days prior notice from Employee to Employer .
6.2 Definition of Disability. For purposes of Section 6.1, Employee will
be deemed to have a "Disability" if, for physical or mental reasons, Employee is
unable to perform Employee's duties under this Agreement for one hundred twenty
(120) consecutive days, or one hundred eighty (180) days during any twelve (12)
month period, as determined in accordance with this Section 6.2. The Disability
of Employee will be determined by a medical doctor selected by written agreement
of Employer and Employee upon the request of either party by notice to the
other. If Employer and
<PAGE> 5
Employee cannot agree on the selection of a medical doctor, each of them will
select a medical doctor and the two medical doctors will select a third medical
doctor who will determine whether Employee has a Disability. The determination
of the medical doctor selected under this Section 6.2 will be binding on both
parties. Employee must submit to a reasonable number of examinations by the
medical doctor making the determination of Disability under this Section 6.2,
and Employee hereby authorizes the disclosure and release to Employer of such
determination and all supporting medical records. If Employee is not legally
competent, Employee's legal guardian or duly authorized attorney-in-fact will
act in Employee's stead, under this Section 6.2, for the purposes of submitting
Employee to the examinations, and providing authorization of disclosure,
required under this Section 6.2.
6.3 Definitions of For Good Reason. For purposes of this Agreement, the
phrase "For Good Reason" means Employer's material and continuing
breach of this Agreement.
6.4 Benefits. Except as otherwise provided in this Agreement, Employee's
accrual of, or participation in plans providing for, the Benefits
will cease at the effective date of the termination of the
Employment Period, and Employee will be entitled to accrued benefits
pursuant to such plans only as provided in such plans. Employee will
receive, as his termination pay, any payment or other compensation
for any vacation, holiday, sick leave, or other leave unused on the
date the notice of termination is given under this Agreement.
ARTICLE 7.
Agreements of Employee
In consideration of the compensation and benefits to be paid or provided
to Employee by Employer under this Agreement, Employee covenants as follows:
7.1 Confidentiality
(a) Subject to Section 7.1 (b), Employee shall not, at any time, divulge,
disseminate, disclose or communicate to any Person any Confidential Information,
which information Employee shall hold during such period in trust in a fiduciary
capacity for the sole benefit of Employer, its Affiliates, and their successors
and assigns.
(b) None of the foregoing obligations and restrictions applies to any part
of the Confidential Information that (i) was or became generally available to
the public other than as a result of a disclosure by Employee; (ii) is
information that has been explicitly approved for public release by Employer or
an Affiliate thereof; (iii) is disclosed pursuant to a valid and enforceable
subpoena of a court or governmental agency of competent jurisdiction, provided
that Employee shall first have given Employer reasonable opportunity to seek a
confidentiality order or other confidential treatment of such Confidential
Information; (iv) is disclosed to third parties by Employer without restrictions
<PAGE> 6
as to confidentiality; or (v) is received from a third party whose disclosure
would not violate any confidentiality obligation, direct or indirect, express or
implied.
(c) Employee will not remove from Employer's premises (except to the
extent such removal is for purposes of the performance of Employee's duties at
home or while traveling, or except as otherwise specifically authorized by
Employer) any document, record, notebook, plan, model, component, device, or
computer software or code, whether embodied in a disk or in any other form
(collectively, the "Proprietary Items").
7.2 Disputes or Controversies. Employee and Employer will use their best
efforts to cause all pleadings, documents, testimony, and records relating to
any such adjudication to be maintained in secrecy and to make the same available
for inspection by Employer, Employee, and their respective attorneys and
experts, who will agree, in advance and in writing, to receive and maintain all
such information in secrecy.
ARTICLE 8.
Restrictive Covenants
8.1 Covenants of Employee. In consideration of the compensation and
benefits to be paid or provided to Employee by Employer, Employee covenants that
he will not, directly or indirectly:
(a) during the Employment Period, except in the course of his employment
hereunder, and during the Post-Employment Period, engage or invest in, own,
manage, operate, finance, control, or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or in any
manner connected with, lend Employee's name or any similar name to, lend
Employee's credit to or render services or advice to, any business whose
products or activities compete in whole or in part with the products or
activities of Employer:
(i) anywhere within the United States
(ii) anywhere within 50 miles of any physical location owned, leased
or operated by Employer;
provided, however, that (A) Employee may purchase or otherwise acquire up to
(but not more than) 4.99 percent of any class of securities of any enterprise
(but without otherwise participating in the activities of such enterprise) if
such securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of 1934,
and (B) this provision shall not require Employee to sell, transfer, assign or
otherwise divest any interest owned by him prior to the date of this Agreement;
(b) whether for Employee's own account pr for the account of any other
Person, at any time during the Employment Period and the Post-Employment Period,
solicit business of the same or similar type being carried on by Employer, from
any
<PAGE> 7
Person known by Employee to be a customer of Employer, whether or not Employee
had personal contact with such person during and by reason of Employee's
employment with Employer;
(c) whether for Employee's own account or the account of any other Person
(i) at any time during the Employment Period and the Post-Employment Period,
solicit, employ, or otherwise engage as an employee, independent contractor, or
otherwise, any Person who is an employee of Employer or in any mariner induce or
attempt to induce any employee of Employer to terminate his employment with
Employer; or (ii) at any time during the Employment Period and during the
Post-Employment Period, interfere with Employer's relationship with any Person,
including any Person who at any time during the Employment Period was an
employee, contractor, supplier, or customer of Employer; or
(d) at any time during the Employment Period and during the
Post-Employment Period, disparage Employer or any of its shareholders,
directors, officers, employees, or agents
8.3 Return of Materials. When Employee ceases to be an employee of
Employer, Employee promptly shall deliver to Employer all documents, memoranda,
records, notes, and other materials in his possession, whether prepared by him
or others, and all copies thereof, that contain any Confidential Information,
and Employee shall have no further rights therein.
ARTICLE 9.
Miscellaneous
9.1 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
9.2 Binding Effect; Delegation of Duties Prohibited. This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and their
respective successors, assigns, heirs, and legal representatives, provided,
however, that this Agreement may be assigned by Employer only with the prior
written consent of
<PAGE> 8
Employee, which consent shall not be unreasonably withheld. The duties and
covenants of Employee under this Agreement, being personal, may not be
delegated.
9.3 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
Interpretation of this Agreement.
9.4 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be given by registered or
certified mail, return receipt requested, postage prepaid, by telecopier or by
national overnight delivery service, and addressed to the intended recipient as
set forth below.
IF TO EMPLOYEE:
Charles W. Albo
6005 Greeley Blvd.
Springfield, VA 22152
IF TO EMPLOYER: WITH A COPY TO:
Sonus Communications, Inc. Cecil E. Martin, III, Esquire
C/o Chief Executive Officer McGuire, Woods, Battle & Boothe LLP
1600 Wilson Blvd., Ste. 1008 Seven Saint Paul Street
Arlington, VA 22209 Baltimore, Maryland 21202-1626
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof (a) if sent by registered or
certified mail, on the earlier of the second day following the day on which it
is posted or the date of its receipt by the party to be notified, (b) if sent by
telecopier, the date actually received as evidenced by a written receipt of
transmission and (c) if sent by overnight delivery service, the day after such
notice has been delivered by the party to said service. Any Party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice In the manner
herein set forth.
9.5 Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally, but only by an agreement in writing signed by the parties
hereto.
9.6 Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and !regulations
promulgated thereunder, unless the context requires otherwise.
<PAGE> 9
9.7 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
9.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
9.9 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of Virginia
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Virginia or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
Commonwealth of Virginia. To the extent not resolved by binding arbitration
pursuant to Section 9.13 below, each of the parties submits to the jurisdiction
of any state or federal court sitting in Alexandria, Virginia or Arlington,
Virginia, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding
shall be heard and determined in any such court. Each party also agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other party with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and delivered as of the day and date first above written.
EMPLOYER:
SONUS COMMUNICATIONS, INC.
By: /s/ W. Todd Coffin
-------------------------
Name: W. Todd Coffin
-----------------------
Title: President
EMPLOYEE:
/s/ Charles W. Albo
- ----------------------------
Charles W. Albo
<PAGE> 1
EMPLOYMENT AND NON-COMPETE AGREEMENT
THIS AGREEMENT entered into as of the 15th day of April 1999, by and
between SONUS COMMUNICATIONS, INC., a Virginia corporation ("Employer") and NANA
MARANELI ("Employee").
WHEREAS, Employer desires the Employee's employment with Employer and the
Employee wishes to accept such employment; and
NOW, THEREFORE, in consideration of the above premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1.
Definitions
"Agreement" means this Employment Agreement, as amended from time to time.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Compensation" means Salary and Employee Benefits and other compensation
paid or to be paid hereunder.
"Board of Directors" means the board of directors of Employer.
"Confidential Information" means (i) any and all trade secrets and other
information concerning the business and affairs of Employer and its Affiliates
and including, without limitation, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current, and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs (including
object code and source code ), computer software and database technologies,
systems, structures, and architectures (and related formulae, compositions,
processes, improvements, devices, know-how, inventions, discoveries, concepts,
ideas, designs, methods and information, and any other information however
documented), that is a trade secret within the meaning of any applicable state
trade secret law; (ii) information concerning the business and affairs of
Employer and its Affiliates (which includes historical financial statements,
financial projections and budgets, historical and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials, however documented; and (iii)
notes, analysis, compilations, studies, summaries, and other material prepared
by or for Employer containing or based on, in whole or in part,
<PAGE> 2
any information included in the foregoing that was acquired by Employee during
the Employment Period.
"Disability" has the meaning set forth in Section 6.2.
"Employee Benefits" has the meaning set forth in Section 3.1(b).
"Employment Period" means the term of employee's employment under this
Agreement.
"For Cause" means (i) Employee's incompetence, negligence,
insubordination, misconduct in office, or breach of any representation,
warranty, covenant or other obligation or term of this Agreement including,
without limitation, the non-competition, confidentiality and non-solicitation
provisions contained herein; provided, however, that, prior to termination under
this clause (i), Employer shall specify in reasonable detail the incompetence,
gross negligence, misconduct or breach in a written notice to Employee and, in
the event of a breach by Employee of a representation, warranty, covenant or
other obligation or term of this Agreement, shall, before terminating Employee,
provide Employee with 5 business days to cure such breach to Employer's
satisfaction and, prior to termination, provide a written response to such
attempt to cure, including any reasons why such attempt was inadequate; (ii)
Employee's conviction of a crime involving a felony, fraud, embezzlement or the
like; habitual insobriety; use of a control-led substance; or misappropriation
of funds of Employer or the taking by Employee of any improper personal benefit;
(iii) Employee's continued failure (on two, or more occasions) to follow any
reasonable policy of Employer to which similarly situated Employees are subject,
after notice of such policy; (iv) upon Employer's reasonable determination that
Employee's continuation in his position may be expected to result in serious
harm or damage, or the material risk thereof, to the assets, business or worth
of Employer; or (v) the appropriation (or attempted appropriation) of a material
business opportunity of Employer.
"Person" means any individual, corporation {including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
"Post-Employment Period" means (i) the period beginning on the date on
which the Employment Period ends and ending on the three month anniversary of
such date; provided, however, that if the Employment Period ends For Good
Reason, then there shall be no Post-Employment Period.
ARTICLE 2.
Employment Terms and Duties
2.1 Term. Subject to the provisions of Article 6, the term of Employee's
employment under this Agreement will be three years, beginning on the date
hereof and ending on April 15, 2002 (the Term).
<PAGE> 3
2.2 Duties. Employee will have such duties as are assigned or delegated to
Employee by the Board of Directors which Employee acknowledges shall include all
activities incident to Employee's position as executive Vice President of
Employer. Employee will serve as Executive Vice President and Chairman of the
Employer and of Sonus Communication Holdings, Inc., a Delaware corporation
("Holdings"), during the term. Employee will devote his entire business time,
attention, skill, and energy exclusively to the business of Employer, will use
his best efforts to promote the success of Employer's business, and will
cooperate fully with the Board of Directors in the advancement of the best
interests of Employer. Nothing in this Section 2.3, however, will prevent
Employee from engaging in additional activities in connection with personal
investments, business and community affairs that are not inconsistent with
Employee's duties under this Agreement.
2.3 Service on Board of Directors. Employee shall, subject to earlier removal
by the shareholders, serve on the Board of Directors of Employer and Sonus
Communication Holdings, Inc. until the third anniversary of this Agreement,
without additional compensation except for reimbursement of reasonable expenses
associated with such service. Removal from the Board of Directors by
shareholders prior to the third anniversary of this agreement shall not give
rise to any claim or other liability of or against Employer under this Agreement
provided, however, that salary and benefits shall continue for the full term.
ARTICLE 3.
Compensation
(a) Base Salary. Beginning on April 15, 2000, Employee will be paid an
annual salary commensurate with that paid to similarly situated members of
senior management of Employer, as mutually agreed upon by Employer and Employee
prior to April 15, 2000; provided, however, that such salary shall be not less
than $84,000 per annum, and shall be paid in accordance with Employer's usual
compensation schedule and practices, but not less frequently than monthly,
during the Term. Prior to April 15, 2000, Employee shall not receive a salary or
other compensation hereunder, except as expressly provided herein. The Salary
will be reviewed by the Board of Directors from time to time, and may be
adjusted upward or downward in the sole discretion of the Board of Directors,
but in no event will the Salary be less than $84,000 per year.
(b) Employee Benefits. During the Employment Period, Employee will be
permitted to participate in such pension, health, profit sharing, savings and
retirement and other employee benefit plans, practices, policies and programs
applicable generally to similarly situated senior management employees of
Employer, if any ( collectively, the Employee Benefits); provided, however, that
until April 15, 2000, Employer shall not be required to pay any portion thereof
or make any contributions thereto with respect to Employees participation in
such plans and programs.
<PAGE> 4
ARTICLE 4.
Facilities and Expenses
For the Employment Period, Employee shall be provided office and conference room
space, furniture, fixtures, miscellaneous office equipment (including phones,
faxes, computers, and copy machines). Employee shall be entitled to
reimbursement of reasonable expenses actually incurred by the Employee in
connection with Employee's pursuit of his duties under this Agreement, provided,
however, that Employee shall provide the Employer with all documentation thereof
reasonably requested by it.
ARTICLE 5.
Vacations and Holidays
Employee will be entitled to four (4) weeks paid vacation during each year
of the Term of this Agreement, in accordance with the vacation policies of
Employer in effect for its senior executive officers from time to time. Employee
will also be entitled to the paid holidays and other paid leave set forth in
Employer's policies Vacation days and holidays during any Fiscal Year that are
not used by Employee during such Fiscal Year may be carried forward for 3
subsequent Fiscal Years.
ARTICLE 6.
TERMINATION
6.1 Events of Termination. Except as otherwise provided in this Article 6,
the Employment Period, Employee's Compensation, and any and all other rights of
Employee under this Agreement or otherwise as an employee of Employer will
terminate:
(a) immediately upon the death of Employee;
(b) upon the Disability of Employee immediately upon notice from either
party to the other
(c) immediately upon a termination of the Employment Period by Employer,
For cause, or
(d) upon a termination of the Employment Period by Employee, upon not less
than thirty days prior notice from Employee to Employer .
6.2 Definition of Disability. For purposes of Section 6.1, Employee will
be deemed to have a "Disability" if, for physical or mental reasons, Employee is
unable to perform Employee's duties under this Agreement for one hundred twenty
(120) consecutive days, or one hundred eighty (180) days during any twelve (12)
month period, as determined in accordance with this Section 6.2. The Disability
of Employee will be determined by a medical doctor selected by written agreement
of Employer and Employee upon the request of either party by notice to the
other. If Employer and
<PAGE> 5
Employee cannot agree on the selection of a medical doctor, each of them will
select a medical doctor and the two medical doctors will select a third medical
doctor who will determine whether Employee has a Disability. The determination
of the medical doctor selected under this Section 6.2 will be binding on both
parties. Employee must submit to a reasonable number of examinations by the
medical doctor making the determination of Disability under this Section 6.2,
and Employee hereby authorizes the disclosure and release to Employer of such
determination and all supporting medical records. If Employee is not legally
competent, Employee's legal guardian or duly authorized attorney-in-fact will
act in Employee's stead, under this Section 6.2, for the purposes of submitting
Employee to the examinations, and providing authorization of disclosure,
required under this Section 6.2.
6.3 Definitions of For Good Reason. For purposes of this Agreement, the
phrase "For Good Reason" means Employer's material and continuing
breach of this Agreement.
6.4 Benefits. Except as otherwise provided in this Agreement, Employee's
accrual of, or participation in plans providing for, the Benefits
will cease at the effective date of the termination of the
Employment Period, and Employee will be entitled to accrued benefits
pursuant to such plans only as provided in such plans. Employee will
receive, as his termination pay, any payment or other compensation
for any vacation, holiday, sick leave, or other leave unused on the
date the notice of termination is given under this Agreement.
ARTICLE 7.
Agreements of Employee
In consideration of the compensation and benefits to be paid or provided
to Employee by Employer under this Agreement, Employee covenants as follows:
7.1 Confidentiality
(a) Subject to Section 7.1 (b), Employee shall not, at any time, divulge,
disseminate, disclose or communicate to any Person any Confidential Information,
which information Employee shall hold during such period in trust in a fiduciary
capacity for the sole benefit of Employer, its Affiliates, and their successors
and assigns.
(b) None of the foregoing obligations and restrictions applies to any part
of the Confidential Information that (i) was or became generally available to
the public other than as a result of a disclosure by Employee; (ii) is
information that has been explicitly approved for public release by Employer or
an Affiliate thereof; (iii) is disclosed pursuant to a valid and enforceable
subpoena of a court or governmental agency of competent jurisdiction, provided
that Employee shall first have given Employer reasonable opportunity to seek a
confidentiality order or other confidential treatment of such Confidential
Information; (iv) is disclosed to third parties by Employer without restrictions
<PAGE> 6
as to confidentiality; or (v) is received from a third party whose disclosure
would not violate any confidentiality obligation, direct or indirect, express or
implied.
(c) Employee will not remove from Employer's premises (except to the
extent such removal is for purposes of the performance of Employee's duties at
home or while traveling, or except as otherwise specifically authorized by
Employer) any document, record, notebook, plan, model, component, device, or
computer software or code, whether embodied in a disk or in any other form
(collectively, the "Proprietary Items").
7.2 Disputes or Controversies. Employee and Employer will use their best
efforts to cause all pleadings, documents, testimony, and records relating to
any such adjudication to be maintained in secrecy and to make the same available
for inspection by Employer, Employee, and their respective attorneys and
experts, who will agree, in advance and in writing, to receive and maintain all
such information in secrecy.
ARTICLE 8.
Restrictive Covenants
8.1 Covenants of Employee. In consideration of the compensation and
benefits to be paid or provided to Employee by Employer, Employee covenants that
he will not, directly or indirectly:
(a) during the Employment Period, except in the course of his employment
hereunder, and during the Post-Employment Period, engage or invest in, own,
manage, operate, finance, control, or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or in any
manner connected with, lend Employee's name or any similar name to, lend
Employee's credit to or render services or advice to, any business whose
products or activities compete in whole or in part with the products or
activities of Employer:
(i) anywhere within the United States
(ii) anywhere within 50 miles of any physical location owned, leased
or operated by Employer;
provided, however, that (A) Employee may purchase or otherwise acquire up to
(but not more than) 4.99 percent of any class of securities of any enterprise
(but without otherwise participating in the activities of such enterprise) if
such securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of 1934,
and (B) this provision shall not require Employee to sell, transfer, assign or
otherwise divest any interest owned by him prior to the date of this Agreement;
(b) whether for Employee's own account pr for the account of any other
Person, at any time during the Employment Period and the Post-Employment Period,
solicit business of the same or similar type being carried on by Employer, from
any
<PAGE> 7
Person known by Employee to be a customer of Employer, whether or not Employee
had personal contact with such person during and by reason of Employee's
employment with Employer;
(c) whether for Employee's own account or the account of any other Person
(i) at any time during the Employment Period and the Post-Employment Period,
solicit, employ, or otherwise engage as an employee, independent contractor, or
otherwise, any Person who is an employee of Employer or in any mariner induce or
attempt to induce any employee of Employer to terminate his employment with
Employer; or (ii) at any time during the Employment Period and during the
Post-Employment Period, interfere with Employer's relationship with any Person,
including any Person who at any time during the Employment Period was an
employee, contractor, supplier, or customer of Employer; or
(d) at any time during the Employment Period and during the
Post-Employment Period, disparage Employer or any of its shareholders,
directors, officers, employees, or agents
8.3 Return of Materials. When Employee ceases to be an employee of
Employer, Employee promptly shall deliver to Employer all documents, memoranda,
records, notes, and other materials in his possession, whether prepared by him
or others, and all copies thereof, that contain any Confidential Information,
and Employee shall have no further rights therein.
ARTICLE 9.
Miscellaneous
9.1 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
9.2 Binding Effect; Delegation of Duties Prohibited. This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and their
respective successors, assigns, heirs, and legal representatives, provided,
however, that this Agreement may be assigned by Employer only with the prior
written consent of
<PAGE> 8
Employee, which consent shall not be unreasonably withheld. The duties and
covenants of Employee under this Agreement, being personal, may not be
delegated.
9.3 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
Interpretation of this Agreement.
9.4 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be given by registered or
certified mail, return receipt requested, postage prepaid, by telecopier or by
national overnight delivery service, and addressed to the intended recipient as
set forth below.
IF TO EMPLOYEE:
Nana Maraneli
111 Culpeper Road
Richmond, VA 23229
IF TO EMPLOYER: WITH A COPY TO:
Sonus Communications, Inc. Cecil E. Martin, III, Esquire
C/o Chief Executive Officer McGuire, Woods, Battle & Boothe LLP
1600 Wilson Blvd., Ste. 1008 Seven Saint Paul Street
Arlington, VA 22209 Baltimore, Maryland 21202-1626
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof (a) if sent by registered or
certified mail, on the earlier of the second day following the day on which it
is posted or the date of its receipt by the party to be notified, (b) if sent by
telecopier, the date actually received as evidenced by a written receipt of
transmission and (c) if sent by overnight delivery service, the day after such
notice has been delivered by the party to said service. Any Party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.
9.5 Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally, but only by an agreement in writing signed by the parties
hereto.
9.6 Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
<PAGE> 9
9.7 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
9.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
9.9 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of Virginia
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Virginia or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
Commonwealth of Virginia. To the extent not resolved by binding arbitration
pursuant to Section 9.13 below, each of the parties submits to the jurisdiction
of any state or federal court sitting in Alexandria, Virginia or Arlington,
Virginia, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding
shall be heard and determined in any such court. Each party also agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other party with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and delivered as of the day and date first above written.
EMPLOYER:
SONUS COMMUNICATIONS, INC.
By: /s/ W. Todd Coffin
------------------------
Name: W. Todd Coffin
----------------------
Title: President
EMPLOYEE:
/s/ Nana Maraneli
- ---------------------------
Nana Maraneli
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