Document:

Exhibit 10.31

 

Sonus Networks, Inc.

2007 Stock Incentive Plan, as Amended

 

Form of Restricted Stock Award Agreement

 

This RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) is made effective as of the        day of      , 20       (the “Grant Date”), between Sonus Networks, Inc., a Delaware corporation (the “Company”), and        (the “Participant”).

 

RECITALS

 

WHEREAS, the Company has adopted the Sonus Networks, Inc. 2007 Stock Incentive Plan, as Amended (the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement (capitalized terms not otherwise defined herein shall have the meanings as set forth in the Plan); and

 

WHEREAS, the Board has determined that it is in the best interests of the Company and its stockholders to grant to the Participant the restricted stock described herein pursuant to the Plan and the terms set forth below;

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

 

1.                                      Award of Restricted Stock.  Subject to the terms and condition of the Plan and this Agreement and in consideration of employment services rendered and to be rendered by the Participant to the Company, the Company hereby grants to the Participant        shares of Common Stock (the “Shares”).  The Company shall issue the Shares to the Participant either by electronic record or by stock certificate issued in the name of the Participant.  The Participant agrees that unvested Shares shall be subject to forfeiture as set forth in Section 2(c) of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.  The Shares shall be deposited in escrow in accordance with Section 5 of this Agreement.

 

2.                                      Vesting.

 

(a)                                 Vesting Schedule.  Subject to the Participant’s continued service through the vesting date, the Shares shall vest as follows:       .  Any fractional number of Shares resulting from the application of the foregoing percentages shall be rounded down to the nearest whole number of Shares.  The Company may in its discretion accelerate the vesting schedule at any time.

 

(b)                                 Acceleration of Vesting.  Notwithstanding Section 2(a) hereof, effective immediately prior to the consummation of an Acquisition (as defined in the Plan), an additional       % of the number of Shares covered by this Agreement shall become vested, with the remaining unvested Shares continuing to vest pursuant to the vesting schedule set forth above; provided that such vesting schedule shall be shortened by one year.

 

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(c)                                  Termination of Service.  If the Participant’s service with the Company is terminated for any reason, other than as described in Section 2(b) above, the Shares, to the extent not then-vested, shall be forfeited by the Participant without any consideration.

 

3.                                      Rights as a Stockholder.  The Participant shall have none of the rights of a stockholder of the Company until the Shares vest; provided, however, that the Participant shall have (a) the right to receive dividends on the Shares (the “Dividends”), subject to the remainder of this Section 3 and Section 7(c)(1) of the Plan and (b) voting rights with respect to such Shares.  The Dividends, if any, shall be held by the Company and shall be subject to forfeiture until such time that the Shares on which the Dividends were distributed vest in accordance with Section 2 above.

 

4.                                      Restrictions on Transfer.  Unless otherwise provided by the Board, the Participant shall not, during the term of this Agreement, sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “Transfer”), any of the Shares, or any interest therein, unless and until such Shares are no longer subject to risk of forfeiture.  Notwithstanding the foregoing, the Participant may transfer:

 

(a)                                 any or all of the Participant’s Shares (i) to his or her parents, spouse, children, stepchildren, grandchildren, or siblings, or spouse of any such person (collectively, “Immediate Family”); (ii) to a trust established for the benefit of his or her Immediate Family or himself/herself; or (iii) to a limited liability company or limited partnership, the members or partners of which are members of his or her Immediate Family or himself/herself; or

 

(b)                                 any or all of the Participant’s Shares under such Participant’s will; provided that all such Shares transferred under (a) or (b) shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in this Section 4 and the forfeiture provision in Section 2(c)) and such permitted transferee shall, as a condition to such transfer, deliver to the Company: (y) a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement and (z) a copy of any such evidence as the Company may deem necessary to establish the validity of the transfer and acceptance by the transferee or transferees of the terms and conditions hereof.  The Company shall not be required: (A) to transfer on its books any of the Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (B) to treat as owner of such Shares or to pay Dividends to any transferee to whom any such Shares shall have been so sold or transferred.

 

5.                                      Escrow.  The Shares shall be deposited by the Participant in escrow either by electronic record or by stock certificate upon (or as promptly as practicable following) the execution of this Agreement and shall be held in escrow by the Company or its designee, as escrow agent (the “Escrow Agent”).  Upon vesting of the Shares, the Escrow Agent shall release or electronically transfer to the Participant, upon request, those Shares, which have vested (other than any withheld by the Company pursuant to Section 9).  In the event the Shares are forfeited pursuant to Section 2(c) or withheld by the Company pursuant to Section 9, the Company shall give written notice to the Participant and to the Escrow Agent specifying the number of forfeited Shares or Shares to be withheld. The Participant and the Company authorize the Escrow Agent to take all necessary or appropriate actions consistent with the terms of this Agreement, including the delivery to the Company of those Shares and stock powers for the Shares being forfeited or withheld by the Company.  The escrow shall terminate upon the earliest of (a) the vesting and lapse of forfeiture of all Shares awarded under this Agreement, (b) the election by the Company to waive forfeiture on all of the unvested Shares, or (c) the election by the Company to terminate

 

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this escrow.  If at the time of such termination the Escrow Agent should have in its possession any Shares owed to the Participant, the Escrow Agent shall promptly deliver such Shares to the Participant and shall be discharged of all further obligations hereunder.  The Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by the Escrow Agent to be genuine and to have been signed or presented by the proper party or parties.  The Escrow Agent or the Company shall not be liable for any act or omission in good faith and in the exercise of reasonable judgment.  It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the Shares held by the Escrow Agent hereunder, the Escrow Agent is authorized to retain such Shares in its possession without liability to anyone all until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired.  All reasonable costs, fees and disbursements incurred by the Escrow Agent in connection with the performance of its duties hereunder shall be borne by the Company.

 

A certificate or certificates representing the Shares shall be issued by the Company and shall be registered in the name of the Participant on the stock transfer books of the Company promptly following the effective date of this Agreement, but shall remain in the physical custody of the Company or its designee at all times prior to the vesting of such Shares pursuant to Section 2 hereof.  As a condition to the receipt of this Agreement, the Participant shall deliver to the Company a Stock Power in the form attached hereto as Exhibit A, duly endorsed in blank, relating to the Shares.  Each certificate representing the Shares shall bear the following legend:

 

“The ownership and transferability of this certificate and these shares are subject to the terms and conditions (including forfeiture) of the Sonus Networks, Inc. 2007 Stock Incentive Plan, as Amended, and a Restricted Stock Award Agreement entered into between the registered owner and Sonus Networks, Inc.  Copies of such Plan and the Agreement are on file in the executive offices of Sonus Networks, Inc.”

 

If the Shares are issued to the Participant electronically rather than by a stock certificate, the electronic record reflecting the issuance of the Shares to the Participant shall bear such a legend or other notation.

 

As soon as administratively practicable, but not later than sixty (60) days, following the vesting of the Shares (as described in Section 2 hereof), and upon the satisfaction of all other applicable conditions, including, but not limited to, the payment by the Participant of all applicable withholding taxes, the Company shall deliver or cause to be delivered to the Participant, or in the case of the Participant’s death, the Participant’s beneficiary, a certificate or certificates for the applicable Shares, which shall not bear the legend described above, but may bear such other legends as the Company deems advisable pursuant to Section 6 below.  If the Shares are issued to the Participant electronically rather than by a stock certificate, the legend described above shall be removed, but may bear such other legends as the Company deems advisable pursuant to Section 6 below.

 

6.                                  Adjustments of Shares.  In the event of a Reorganization Event (as defined in the Plan) or other transaction described in Section 9 of the Plan, the Shares and the other terms of this Agreement shall be adjusted in the manner provided for in Section 10 of the Plan.

 

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7.                                  Compliance with Laws.  The obligations of the Company and the Participant under this Agreement are subject to all applicable laws, rules, and regulations, including all applicable federal and state securities laws and the obtaining of all such approvals by government agencies as may be deemed necessary or appropriate by the Board or the relevant committee of the Board.

 

8.                                      Tax Matters.

 

(a)                                 Section 83(b) Election.  The Participant may elect under Section 83(b) of the Internal Revenue Code of 1986, as amended, to be taxed at the time the Shares are acquired on the Grant Date (“Section 83(b) Election”).  A Section 83(b) Election must be filed with the Internal Revenue Service within thirty (30) days of the Grant Date and the Participant shall provide a copy of such form with the Company promptly following his or her filing.  If the Participant elects, in accordance with Section 83(b), to recognize ordinary income in the year of acquisition of the Shares, the Company will require at the time of such election an additional payment by the Participant in an amount equal to any federal, state, local or other taxes of any kind required by law to be withheld with respect to the issuance of the Shares to the Participant.  Moreover, the Participant acknowledges and he or she is solely responsible to file a timely election under Section 83(b) and the Company shall bear no responsibility for any consequence of the Participant making a Section 83(b) Election or failing to make a Section 83(b) Election.

 

(b)                                 Withholding Taxes.  The Participant may be required to pay the Company or any affiliate, and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Shares, their vesting or transfer and to take such other action as may be necessary in the opinion of the Board to satisfy all obligations for the payment of such withholding taxes.

 

(c)                                  Tax Advice.  The Participant acknowledges that he or she is responsible for reviewing with his or her own tax advisors the federal, state, local and other tax consequences of this investment and the transactions contemplated by this Agreement.  The Participant acknowledges that he or she is not relying on any statements or representations of the Company or any of its agents.  The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

 

9.                                      No Right to Continued Employment or Service.  The granting of the Shares evidenced hereby and this Agreement shall impose no obligation on the Company or any of its affiliates to continue the employment or service of the Participant and shall not lessen or affect any right that the Company or any of its affiliates may have to terminate the service of such Participant.  The Participant shall remain a Participant at will.

 

10.                               Securities Laws; Legends on Certificates.  The issuance and delivery of the Shares shall comply with (or be exempt from) all applicable requirements of law, including without limitation the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.  The Company shall not be obligated to file any registration statement under any applicable securities laws to permit the purchase or issuance of any Shares under the Plan or Awards and accordingly, any certificates for Shares or documents granting Awards may have an appropriate legend or statement of applicable

 

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restrictions endorsed thereon.  If the Company deems it necessary to ensure that the issuance of Shares under the Plan is not required to be registered under any applicable securities laws, each Participant to whom such Shares would be issued shall deliver to the Company an agreement or certificate containing such representations, warranties and covenants as the Company may reasonable request which satisfies such requirements.

 

11.                               Notices.  Any notification required by the terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery or within three (3) days of deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid.  A notice shall be addressed to the Company, Attention: General Counsel, at its principal executive office and to the Participant at the address that he or she most recently provided to the Company.

 

12.                               Shares Subject to Plan.  By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan; the Shares are subject to the Plan; and the terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference.  In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

13.                               Severability.  The provisions of this Agreement are severable and if any one or more provisions are deemed to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

14.                               Erroneously Awarded Compensation.  All Awards, if and to the extent subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act, shall be subject to any incentive compensation policy established from time to time by the Company to comply with such Act.

 

15.                               Choice of Law.  This Agreement will be governed by and interpreted and construed in accordance with the internal laws of the State of Delaware (without reference to principles of conflicts or choice of law) as to all matters, including, but not limited to, matters of validity, construction, effect, performance and metrics.

 

16.                               Captions.  The captions of the sections of this Agreement are for reference only and will not affect the interpretation or construction of this Agreement.

 

17.                               Successors.  This Agreement will bind and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, devisees, and legal representatives.

 

18.                               Entire Agreement.  Except as set forth herein, this Agreement and the Plan supersede all prior agreements, whether written or oral and whether express or implied, between the Participant and the Company relating to the subject matter of this Agreement.  Notwithstanding the foregoing, to the extent that the Participant has entered into an employment agreement with the Company and the terms noted in such employment agreement are inconsistent with or conflicts with this Agreement, then the terms of the employment agreement will supersede the inconsistent or conflicting terms set forth herein as determined by the Board in accordance with Section 3(a) of then Plan.  In all other respects, this Agreement shall remain in full force and effect.

 

19.                               Amendments.  This Agreement may be amended or modified only by a written agreement signed by the Company and the Participant; provided, however, that the Board may amend or

 

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alter this Agreement and the Shares granted hereunder at any time, subject to the terms of the Plan.

 

20.                               Signature in Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement will not be binding on either party unless and until signed by both parties.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

 

	
 
    	
 
    	
SONUS   NETWORKS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
Agreed   and acknowledged as
    	
 
    	
 
    
	
of   the date first above written:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
PARTICIPANT
    	
 
    	
 
    
	
Participant   Identification Number
    	
 
    	
 
    
	
Grant   Number
    	
 
    	
 
    

 

[Signature Page to Restricted Stock Award Agreement]

 

 

Exhibit A

 

Stock Power

 

B - 1

 

Stock Power(1)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Sonus Networks, Inc. (the “Company”),                                                            (                    ) shares of common stock, par value $0.001 per share, of the Company standing in his/her/their/its name on the books of the Company represented by Certificate No.                              herewith and does hereby irrevocably constitute and appoint                                            his/her/their/its attorney-in-fact, with full power of substitution, to transfer such shares on the books of the Company.

 

 

	
Dated:
    	
 
    	
 
    	
Signature:
    	
 
    
	
 
    	
 
    	
 
    
	
Print   Name and Mailing Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

Instructions:  Please do not fill any blanks other than the signature line and printed name and mailing address.  Please print your name exactly as you would like your name to appear on the issued stock certificate(s).  The purpose of this assignment is to enable the forfeiture of shares without requiring additional signatures on your part.

 

(1)    This stock power is not effective if executed in the State of New York.

 

B - 2Exhibit 10.33

 

Sonus Networks, Inc.

 

7 Technology Park Drive, Westford, MA 01886

 

October 2, 2008

 

Kathleen Harris

<Address>

 

Re:  Executive Severance and Arbitration Agreement

 

Dear Kathy:

 

I am pleased to provide you this letter (the “Agreement”) pertaining to your relationship with Sonus Networks, Inc. (the “Company”).

 

1.             Position.   You currently serve as the Company’s Vice President of Human Resources and report directly to the Chief Executive Officer.  As a full-time employee of the Company, you are expected to devote all of your business time and energies to the business and affairs of the Company.

 

2.             Nature of Relationship.   Your employment is not 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 upon written notice as described in Section 6 below.

 

3.             Restricted Stock Grant.   On November 15, 2008 (the “Grant Date”), the Company will grant you 33,333 shares of the Company’s common stock $0.001 par value per share (“Restricted Shares”), under the Company’s 2007 Stock Plan, subject to the terms of the Company’s 2007 Stock Plan and the Company’s restricted stock agreement which shall reflect the terms of this Agreement.   Provided that you continue in employment with the Company, the Restricted Shares shall vest as follows: (a) 25% of the Restricted Shares (8,333 Restricted Shares) shall vest on September 15, 2009, (b) an additional 25% of the Restricted Shares (8,333 Restricted Shares) shall vest on September 15, 2010, and the final 50% of the Restricted Shares (16,667 Restricted Shares) shall vest on September 15, 2011.

 

4.             Performance Stock Grant.   In addition to the grant of Restricted Shares, you will be entitled to a grant of 16,667 shares of common stock upon the Company’s achieving, during your employment, certain performance metrics for the three fiscal years ended December 31, 2010, 2011 and 2012, as determined by the Compensation Committee of the Board of Directors.  You shall be eligible to be granted 1/3 of such performance shares during each of such fiscal years.  Subject to the achievement of such performance metrics for each of such fiscal years, a specified number of shares would be granted to you within thirty (30) days of the Company’s reporting of its financial results for such years.  Any shares issued shall be fully vested on the date of grant.

 

5.             Change in Control.   In the event of a Change in Control (defined below), (i) 100% of all unvested options granted to you to purchase the Company’s common stock shall accelerate

 

 

and all such options shall immediately become vested and exercisable, and (ii) 100% of all Restricted Shares granted to you shall accelerate and become fully vested and any and all restrictions on such Restricted Shares shall be terminated and any and all legends shall be removed.

 

6.             Termination and Eligibility for Severance.   If your employment with the Company is terminated by the Company without Cause (as defined below) or you terminate your employment with the Company for Good Reason (as defined below), the Company will provide you the following severance and related post-termination benefits:

 

(a)                                 a lump sum payment equal to the sum of your then annual base salary and your then target annual bonus, less applicable state and federal withholdings;

 

(b)                                 continuation of payment of the Company’s share of medical, dental and vision insurance premiums for you and your dependents for the twelve (12) month period following the termination of your employment; provided, that if immediately prior to the termination of your employment you were required to contribute towards the cost of such premiums as a condition of receiving such insurance, you may be required to continue contributing towards the cost of such premiums under the same terms and conditions as applied to you and your dependents immediately prior to the termination of your employment in order to receive such continued insurance coverage;

 

(c)                                  any allowable unreimbursed expenses and any accrued but unused vacation pay owing to you at the time of termination;

 

(d)                                 any stock options granted to you by the Company to purchase the Company’s common stock that are unvested as of the termination date and would vest during the twelve (12) months following your termination will accelerate and immediately vest and become exercisable upon termination, and your stock options that are or become vested will remain outstanding and exercisable for the shorter of three (3) years following your termination date or the original remaining life of the options; and

 

(e)                                  any Restricted Shares granted to you by the Company that are unvested as of the termination date will accelerate and immediately vest upon termination, 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.

 

The Company’s provision of the benefits described in Section 6(a), (b), (d) and (e) above shall be contingent upon your execution of a release of all claims of any kind or nature in favor of the Company in a form to be provided by the Company (the “Release Agreement“).  The lump sum payment described in Section 6(a) above shall be made after the Company’s receipt of the executed Release Agreement and the expiration of any revocation period described in the Release Agreement.  The Company shall have no further obligation to you in the event your employment with the Company terminates at any time, other than those obligations specifically set forth in this Section 6.

 

The Company may terminate your employment at any time with or without Cause by written notice to you specifying the date of termination.  You may terminate your employment with or

 

 

without Good Reason by providing written notice to the Company at least thirty (30) days prior to the date of termination. If you seek to terminate your employment for Good Reason, the Company shall have ten (10) business days following its receipt of written notice of termination to cure the circumstance giving rise to Good Reason.

 

7.             Definitions.   As used in this Agreement, the following terms shall have the following meanings:

 

(a)                                 “Change in Control” as used in this Agreement shall have the meaning set forth on Annex A attached hereto.

 

(b)                                 “Good Reason” as used in this Agreement means the occurrence of any of the following without your consent: (A) a reduction in your annual base salary; (B) 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 (C) the relocation of the Company to a location that is more than fifty (50) miles from the Company’s current headquarters location in Westford, MA.

 

(c)                                  “Cause” as used in this Agreement means the occurrence of any of the following: (i) your indictment for, formal admission to (including a plea of guilty or nolo contendere to), or conviction of a felony, a crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Company, (ii) gross negligence or willful misconduct by you in the performance of your duties that is likely to have an adverse affect on the Company or its reputation; (iii) your commission of an act of fraud or dishonesty in the performance of your duties; (iv) repeated failure by you to perform your duties which are reasonably and in good faith requested in writing by the Chief Executive Officer of the Company or the Board of Directors of the Company; (v) material breach of this Agreement by you, which you do not cure within ten (10) days following receipt by you of such written notice notifying you of such breach, or material breach by you of any confidentiality agreement with the Company.

 

8.             Tax Implications of Termination Payments.  Subject to this Section 8, any payments or benefits under Section 6 shall begin only upon the date of a “separation from service” as defined under Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and the guidance issued thereunder (“Section 409A”), which occurs on or after the date of termination under Section 6. The following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided to you under Section 6:

 

(a)                                 It is intended that each installment of the payments and benefits provided under Section 6 shall be treated as a separate “payment” for purposes of Section 409A. Neither the Company nor you shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.

 

(b)                                 If, as of the date of your “separation from service” with the Company, you are not a “specified employee” (each within the meaning of Section 409A), then each installment of the payments and benefits shall be made on the dates and terms set forth in Section 6; and

 

 

(c)                                  If, as of the date of your “separation from service” with the Company, you are a “specified employee” (each, for purposes of this Agreement, within the meaning of Section 409A), then:

 

(i)                                     Each installment of the payments and benefits due under Section 6 that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the separation from service occurs, be paid within the Short-Term Deferral period (as hereinafter defined) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A. For purposes of this Agreement, the “Short-Term Deferral Period” means the period ending on the later of the 15th day of the third month following the end of the tax year in which your separation from service occurs and the 15th day of the third month following the end of the Company’s tax year in which your separation from service occurs; and

 

(ii)                                  Each installment of the payments and benefits due under Section 6 that is not paid within the Short-Term Deferral Period or otherwise cannot be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) and that would, absent this subsection, be paid within the six-month period following your “separation from service” with the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, your death), with any such installments that are required to be delayed being accumulated during the six-months period and paid in a lump sum on the date that is six months and one day following your separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of payments if and to the maximum extent that that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service). Any installments that qualify for the exception under Treasury Regulation Section 1.409A-(b)(9)(iii) must be paid no later than the last day of the second taxable year of following the taxable year of in which your separation from service occurs.

 

9.             Section 409A of the code.   This Agreement is intended to comply with the provisions of Section 409A and the Agreement shall, to the extent practicable, be construed in accordance therewith.  Terms defined in the Agreement shall have the meanings given such terms under Section 409A if and to the extent required in order to comply with Section 409A.  Notwithstanding the foregoing, to the extent that the Agreement or any payment of benefit hereunder shall be deemed not to comply with Section 409A, then neither the Company, the Board of Directors nor its or their designees or agents shall be liable to you or any other person for any actions, decisions or determinations made in good faith.

 

10.          Section 83(b) Election and Withholding Taxes.   You may elect under Section 83(b) of the Internal Revenue Code of 1986, as amended, to be taxed at the time the Restricted Shares are acquired on the Grant Date (“Section 83(b) Election”).  A Section 83(b) Election, if made, must

 

 

be filed with the Internal Revenue Service within thirty (30) days of the Grant Date. You are obligated to pay to the Company the amount of any federal, state, local or other taxes of any kind required by law to be withheld with respect to the granting (if a Section  83(b) Election is made) or vesting (if a Section 83(b) Election is not made) of the shares. If you do not make a Section 83(b) Election, you shall satisfy such tax withholding obligations by delivery to the Company, on each date on which shares vest, such number of shares that vest on such date as have a fair market value (calculated using the last reported sale price of the common stock of the Company on the NASDAQ Global Select Market on the trading date immediately prior to such vesting date) equal to the amount of the Company’s withholding obligation; provided, however, that the total tax withholding cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Such delivery of shares to the Company shall be deemed to happen automatically, without any action required on your part, and the Company is hereby authorized to take such actions as are necessary to effect such delivery of shares to the Company.

 

11.          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.

 

12.          General.

 

(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.

 

(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.

 

(d)                                 Arbitration.

 

(i)                                     Any controversy, dispute or claim arising out of or relating to this Agreement or the breach hereof which cannot be settled by mutual agreement will be finally settled by binding arbitration in Massachusetts under the jurisdiction of the American Arbitration Association, before a single arbitrator appointed in accordance with the arbitration rules of the American Arbitration Association, modified only as herein expressly

 

 

provided. The arbitrator may enter a default decision against any party who fails to participate in the arbitration proceedings.

 

(ii)                                  The decision of the arbitrator on the points in dispute will be final, non-appealable and binding, and judgment on the award may be entered in any court having jurisdiction thereof.

 

(iii)                               The fees and expenses of the arbitrator will be shared equally by the parties, and each party will bear the fees and expenses of its own attorney.

 

(iv)                              The parties agree that this Section 12(d) has been included to resolve any disputes between them with respect to this Agreement, and that this Section 12(d) will be grounds for dismissal of any court action commenced by either party with respect to this Agreement, other than post-arbitration actions seeking to enforce an arbitration award or actions seeking an injunction or temporary restraining order. In the event that any court determines that this arbitration procedure is not binding, or otherwise allows any litigation regarding a dispute, claim, or controversy covered by this Agreement to proceed, the parties hereto hereby waive any and all right to a trial by jury in or with respect to such litigation.

 

(v)                                 The parties will keep confidential, and will not disclose to any person, except as may be required by law, the existence of any controversy hereunder, the referral of any such controversy to arbitration or the status or resolution thereof.

 

(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: Chief Executive Officer, Sonus Networks, Inc., 7 Technology Park Drive, Westford, MA 01886, and to you at the following address:                                                                        .  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 must confirm your acceptance of this Agreement in writing. Please sign and return a copy of this letter to me at the Company’s address above, or via e-mail at rnottenburg@sonusnet.com to evidence your agreement with the terms and conditions set forth herein.

 

	
Very   truly yours,
    	
 
    
	
 
    	
 
    
	
/s/ Richard N.   Nottenburg
    	
 
    
	
Richard   N. Nottenburg
    	
 
    
	
President   and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Accepted   by:
    	
 
    
	
 
    	
 
    
	
/s/   Kathleen Harris
    	
 
    	
10/6/08
    	
 
    
	
Name:
    	
 
    	
Date
    	
 
    

 

 

Annex A

 

A “Change in Control” as used in the Agreement of which this Annex is a part shall mean the first to occur of 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 as of the date hereof 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 as of the date hereof 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; or

 

(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.

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