EX-10.1 2 a08-14767_1ex10d1.htm EX-10.1
May 13, 2008
Mr. Richard N. Nottenburg
I am pleased to provide you in this letter (the “Agreement”) with the terms and conditions of our offer of employment to you by Sonus Networks, Inc. (the “Company”).
1. Position. The Company agrees to employ you as its President and Chief Executive Officer, with the powers and duties consistent with such position. You shall report to the Board of Directors of the Company. You also will be appointed as a member of the Board of Directors, subject to re-election at the 2009 Annual Shareholders Meeting to a three-year term.
As a full-time employee of the Company, you will be expected to devote all of your business time and energies to the business and affairs of the Company, however, subject to board approval, you may (i) serve as the member of the Board of Directors of up to two other companies provided that neither competes with the Company and such service does not substantially interfere with your ability to serve as the Company’s President and Chief Executive Officer, and (ii) participate in charitable activities and serve as a member of the Board of Directors of any charitable entities.
2. Commencement Date/Nature of Relationship. Your employment shall commence no later than June 14, 2008 (the “Commencement Date”). Subject to the severance and other provisions of paragraph 8 below, your employment shall not be for any specified period of time. Employment at Sonus Networks, Inc. is “at will” and either you or the Company may terminate the employment relationship at any time and for any reason or no reason, subject to the provisions of paragraph 8 below.
3. Compensation. During your employment with the Company, you shall receive the following compensation:
(a) Base Compensation. Your initial base salary (“Base Salary”) will be at the annualized rate of $500,000 paid twice monthly in accordance with the Company’s normal payroll practices. The Company will review your Base Salary on an annual basis and such base salary may be adjusted at the discretion of the Compensation Committee of the Board of Directors; provided that you may elect to terminate your employment for Good Reason under Section 8(b)(ii)(C) below if the Compensation Committee reduces your Base Salary.
(b) Target Bonus. You will be eligible to participate in the Officer Bonus Program during each year you are employed by the Company with a target bonus of at least 80% of your then-current annual base salary (“Target Bonus”). For 2008, your Target Bonus will be pro-rated for the number of days in 2008 that you are employed with the Company and your pro rata Target Bonus for 2008 is guaranteed and payable by March 15, 2009. Specific objectives for your Target Bonus for 2008 will be agreed upon with the Compensation Committee of the Board of Directors within the first sixty (60) days of your employment for 2008 and on or about January 1 of each subsequent calendar year with respect to an award for such year. Your annual bonus shall be paid as soon as
practicable following the Company’s public disclosure of its financial results for the applicable bonus year.
4. Employment Eligibility. In compliance with the Immigration Reform and Control Act of 1986, you are required to establish your identity and employment eligibility. Therefore, on your first day of employment you will be required to fill out an Employment Verification Form and present documents in accordance with this form.
5. Benefits. During your employment with the Company, you shall be entitled to the following benefits:
6. Confidentiality. The Company considers the protection of its confidential information, proprietary materials and goodwill to be very important. Therefore, as a condition of your employment and the stock option and restricted stock grants described above, you and the Company will become parties to a Non-competition and Confidentiality Agreement. Two copies of this agreement are sent with this offer letter. Both copies must be signed and returned to the Company prior to the Commencement Date.
7. Indemnity. As an executive of the Company, you will enter into an Indemnity Agreement with the Company. Two copies of this agreement are sent with this offer letter. Both copies must be signed and returned to the Company upon your employment.
8. Termination and Eligibility for Severance. You shall be eligible to receive the termination and severance benefits as set forth in this paragraph 8. You shall not be eligible to receive the severance payments and benefits described in this Section in the event that your employment is terminated by the Company for Cause (as defined below) or you resign from employment other than for Good Reason (as defined below).
execution without revocation of a comprehensive severance agreement and release of claims against the Company in a form and scope acceptable to the Company, you (or your estate or your successors and assigns, as the case may be) will be eligible to receive the following severance and related post-termination benefits:
(i) a lump sum payment equal to one and one half (1.5) times your then annual base salary payable at the time of termination;
(ii) One and one half (1.5) times your then Target Bonus payable in a lump sum at the time of termination, unless the termination follows an Acquisition in which case you will receive two and a half (2.5) times your then Target Bonus;
(iii) health benefits continuation at the company’s expense for the 18 month period following the termination of your employment;
(iv) any allowable unreimbursed expenses and any accrued but unused vacation pay;
(v) any stock options granted to you by the Company that are unvested as of the termination date and would vest over the twenty four (24) months following your termination will accelerate and immediately vest upon termination in accordance with the terms of the applicable stock option agreements; provided that, if your termination under this Section 8(a) occurs prior to January 15, 2009, then any unvested options at that time will fully accelerate and immediately vest. Your stock options, upon vesting, will remain outstanding and exercisable for the shorter of five (5) years from your separation date or the original remaining life of the option(s); and
(vi) any Restricted Shares granted to you by the Company that are unvested as of the termination date will accelerate and immediately vest upon termination in accordance with the terms of the applicable Restricted Stock agreements, and any and all restrictions on such Restricted Shares shall be terminated and any and all legends shall be removed so that the shares be and are freely marketable.
(i) An “Acquisition” as used in this Agreement shall mean any of the following: (A) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company or its Affiliates), is or becomes the “beneficial owner” (as defined in Rule 1 3d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or you) representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities; or (B) in the event that the individuals who at the beginning of the Term constitute the Board of Directors, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the Board then still in office who either were members of the Board at the beginning of the Term or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or (C) the consummation of a merger or consolidation of the Company with or the sale of the Company to any other entity and, in connection with such merger, consolidation or sale; individuals who
constitute the Board immediately prior to the time any agreement to effect such merger or consolidation is entered into fail for any reason to constitute at least a majority of the board of directors of the surviving or acquiring corporation following the consummation of such merger, consolidation or sale; (D) the stockholders of the Company approve a plan of complete liquidation of the Company; (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets to an entity not controlled by the Company.
(ii) “Good Reason” means (A) a material breach of this Agreement by the Company, which breach is not cured by the Company within fifteen (15) days following written notice thereof from you; provided, however, that the Company may only utilize its cure right two times hereunder; (B) the relocation of the Company’s headquarters such that the distance from your residence to the Company’s headquarters is increased by more than forty (40) miles from the Company’s current headquarters in Westford, Massachusetts; (C) a reduction in your annual Base Salary set forth above; (D) the assignment to you of a lower position in the organization in terms of your title, responsibility, authority or status unless agreed to in writing by you; or (E) your ceasing to be a member of the Company’s Board of Directors for any reason other than your death, disability, termination for Cause hereunder, resignation as an employee or director, refusal to stand for re-election to the Board of Directors or the failure to be elected by the stockholders after being nominated and recommended by the Board of Directors.
(iii) “Cause” means (A) gross negligence or willful misconduct by you that has a material adverse effect on the Company and (1) continues after the Company has provided you with thirty (30) days prior written notice of the gross negligence or willful misconduct, or (2) cannot be remedied or cured, (B) your conviction of a non-vehicular misdemeanor or felony relating to your duties while employed at the Company, or (C) a willful and material violation of any written agreement between you and the Company, including, without limitation, this Agreement and the Noncompetition and Confidentiality Agreement that you fail to remedy within thirty (30) days following written notice from the Company.
(c) Tax Implications of Termination. Subject to this Section 8(d), any payments or benefits under Section 8 shall begin only upon the date of a “separation from service” as defined under Section 409A which occurs or after the date of termination under this Section 8. The following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided to you under Section 8:
11. Provision of Benefits. Should the continuation of any benefits to be provided to you following the termination of your employment hereunder be unavailable under the Company’s benefit plans for any reason, the Company shall pay for you to receive such benefits under substantially similar plans from similar third party providers.
12. Other Agreements. You represent and warrant to the Company that you are not bound by any agreement with a previous employer or other party which you would in any way violate by accepting employment with the Company or performing your duties as an employee of the Company. You further represent and warrant that, in the performance of your duties with the Company, you will not utilize or disclose any confidential information in breach of an agreement with a previous employer or any other party.
13. Assignment. This Agreement is personal in nature and neither of the parties hereto shall, without the written consent of the other, assign or otherwise transfer this Agreement or its obligations, duties and rights under this Agreement; provided, however, that in the event of the merger, consolidation, transfer or sale of all or substantially all of the assets of the Company, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all of the promises, covenants, duties and obligations of the Company hereunder.
(a) Entire Agreement; Modification. This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth otherwise herein. This Agreement supersedes any and all prior agreements, written or oral, between you and the Company. No modification of this Agreement shall be valid unless made in writing and signed by the parties hereto.
(b) Severable Provisions. This provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions of the Agreement shall nevertheless be binding and enforceable. Notwithstanding the foregoing, if there are any conflicts between the terms of this Agreement and the terms of any Plan document referred to in this Agreement, then the terms of this Agreement shall govern and control. Except as modified hereby, the Agreement shall remain unmodified and in full force and effect.
(c) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without regard to the conflict of laws provisions hereof.
(e) Notices. All notices shall be in writing and shall be delivered personally (including by courier), sent by facsimile transmission (with appropriate documented receipt thereof), by overnight receipted courier service (such as UPS or FedEx) or sent by certified, registered or express mail, postage prepaid, to the Company at the following address: General Counsel, Sonus Networks, Inc., 7 Technology Park Drive, Westford, MA 01886, and to you at the following address: 71 Ettl Circle, Princeton, NJ 08540 with a copy to Sack & Sack, 110 East 59th Street, 19th Floor, New York, NY 10022, Attn: Jonathan S. Sack, Esq. Any such notice shall be deemed given when so delivered personally, or if sent by facsimile transmission, when transmitted, or, if by certified, registered or express mail, postage prepaid mailed, forty-eight (48) hours after the date of deposit in the mail. Any party may, by notice given in accordance with this paragraph to the other party, designate another address or person for receipt of notices hereunder.
(f) Counterparts. This Agreement may be executed in more than one counterpart, each of which shall be deemed to be an original, and all such counterparts together shall constitute one and the same instrument.
You may accept this offer of employment and the terms and conditions thereof by confirming your acceptance in writing by May 16, 2008. Please send your letter to the company, or via e-mail to email@example.com which execution will evidence your agreement with the terms and conditions set forth herein and therein. We are enthusiastic about your joining us, and believe that our technical and business goals will provide every opportunity for you to achieve your personal and professional objectives.
I am looking forward to your joining the team to help us take Sonus to the next level.