SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 2, 2001
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Date of Report (Date of earliest event reported)
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SONUS NETWORKS, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-30229 04-3387074
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
5 CARLISLE ROAD, WESTFORD, MASSACHUSETTS 01886
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(Address of Principal Executive Offices) (Zip Code)
(978) 692-8999
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On January 18, 2001, Sonus Networks, Inc., a Delaware corporation
("Sonus"), and Storm Merger Sub, Inc., a Texas corporation and a wholly-owned
subsidiary of Sonus ("Sub"), completed its acquisition of privately-held
telecom technologies, inc., a Texas corporation ("TTI"), pursuant to an
Agreement and Plan of Merger and Reorganization, dated as of November 2, 2000
(the "Merger Agreement"), in which Sub merged with and into TTI with TTI as the
surviving corporation (the "Merger").
Upon the closing of this acquisition, an aggregate of 10,800,000
shares of Sonus common stock (the "Merger Shares") were exchanged for all
outstanding shares of TTI Class A and Class B common stock. Of these
10,800,000 shares issued to the current TTI stockholders, 1,200,000 shares
were placed into escrow as security for TTI's indemnity obligations under the
Merger Agreement, and will be released to the TTI shareholders upon
expiration of those indemnity obligations, expected to be on the first
anniversary of the closing date.
In addition to the Merger Shares, the TTI shareholders will have the
right to receive up to an aggregate of 4,200,000 additional shares (the
"Milestone Shares") of Sonus common stock placed in escrow in the event that
TTI achieves certain specified technical and business-related milestones (the
"Milestone Conditions"), from time to time prior to December 31, 2002.
The Milestone Shares will be released as follows: (a) 1,800,000
shares will be released to the former TTI shareholders if TTI ships and
receives customer acceptance of certain customer-related deliverables prior
to December 31, 2001; (b) up to an aggregate of 900,000 shares will be
released to the former TTI shareholders if TTI is able to incorporate certain
specified features into its principal software product prior to certain dates
ranging from May 31, 2001 to December 31, 2001; and (c) up to 1,500,000
shares will be released to the former TTI shareholders if TTI meets certain
customer expansion goals in whole or in part on or prior to December 31,
2002. In the event that TTI does not meet any of these conditions in whole or
in part, all or some (in the event of certain specified partial satisfactions
of such conditions) of the Milestone Shares attributable to such conditions
will revert to Sonus and be canceled. Under the Merger Agreement, Ms.
Anousheh Ansari, the Chairman and Chief Executive Officer of TTI at the time
of the acquisition, or a designated successor, has been granted certain
specific management rights over the operations of TTI during the period
between the closing and the earlier of the release of all of the Milestone
Shares or December 31, 2002.
Under the terms of the Merger Agreement, Sonus has assumed all
outstanding options to purchase TTI common stock, which have converted into
the right to receive shares of Sonus common stock on the same terms as the
outstanding TTI common stock converts in the Merger, including that an
equivalent portion of these option shares will be subject to the indemnity
escrow conditions and the Milestone Conditions. In continuation of a
pre-existing agreement, Ms. Ansari shall transfer to Sonus shares of Sonus
common stock, received by her in the Merger, necessary to cover the exercise
of any TTI stock options assumed by Sonus. As a result, the number of shares
of Sonus common stock that will be issued upon the exercise of former TTI
stock options that are assumed by Sonus will not increase the aggregate
number of shares of Sonus common stock issuable upon or in connection with
the merger.
In addition, immediately prior to the closing of the Merger, Sonus
established the Sonus Networks, Inc. 2000 Retention Plan (the "Retention
Plan"). Pursuant to the Retention Plan, certain employees of TTI have
received contingent awards of shares of Sonus common stock that will vest in
equal portions on each of October 31, 2002, November 30, 2002, January 31,
2003 and February 28, 2003, subject to the conditions that (i) such employees
have maintained employment with the Company through the respective vesting
dates and (ii) the Milestone Conditions have been satisfied in whole or in
part, with the final number of shares of each award that will be deemed
vested on each particular vesting date not to exceed in percentage terms the
percent of the 4,200,000 Milestone Shares that have been actually released to
the former TTI stockholders on or prior to such date. The maximum number of
shares of Sonus common stock that may be subject to awards under the
Retention Plan will be 3,000,000 shares. Any awards forfeited by employees
who terminate employment with TTI prior to the aforementioned specified dates
may be reallocated to remaining TTI employees, awarded to replacement hires,
or returned to Sonus as provided by the terms of the Retention Plan.
Upon completion of the Merger, TTI became a division of Sonus and
its operations will remain in Richardson, Texas. Ms. Anousheh Ansari became
Vice President of Sonus and General Manager in charge of the division.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The information required by this Item was previously reported in the
Registration Statement on Form S-4 dated December 22, 2000, as amended.
(b) Pro Forma Financial Information.
The information required by this Item was previously reported in the
Registration Statement on Form S-4 dated December 22, 2000, as amended.
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
2.1* Agreement and Plan of Merger and Reorganization, dated as of November
2, 2000 (the "Merger Agreement").
23.1 Consent of Arthur Andersen LLP relating to the audited financial
statements of telecom technologies, inc.
99.1 Press release, dated January 18, 2001.
99.2 Consolidated Financial Statements of telecom technologies, inc.
99.3 Unaudited Pro Forma Condensed Combined Financial Information.
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* Incorporated by reference to same numbered exhibit to the Sonus'
Current Report on Form 8-K, filed November 17, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 2, 2001 SONUS NETWORKS, INC.
By: /s/ Stephen J. Nill
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Stephen J. Nill
Vice President of Finance and Administration
and Chief Financial Officer
(Principal Financial and Accounting Officer)
EXHIBIT INDEX
Exhibit No. Description
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2.1* Incorporated by reference Agreement and Plan of Merger and
Reorganization, dated November 2, 2000, by and among Sonus
Networks, Inc, telecom technologies, inc. and Storm Merger
Sub, Inc.
23.1 Consent of Arthur Andersen LLP relating to the audited
financial statements of telecom technologies, inc.
99.1 Press release, dated January 18, 2001.
99.2 Consolidated Financial Statements of telecom technologies, inc.
99.3 Unaudited Pro Forma Condensed Combined Financial Information.
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*Incorporated by reference to the same numbered exhibit to the Sonus' Current
Report on Form 8-K, filed November 17, 2000.