UNITED STATES
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
Date of Report (Date of earliest event reported):
August 11, 2006
NUANCE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation)
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000-27038
(Commission
File Number)
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94-3156479
(IRS Employer
Identification No.) |
1 Wayside Road
Burlington, Massachusetts 01803
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including area code: (781) 565-5000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c)) |
ITEM 1.01 Entry into a Material Definitive Agreement
On August 11, 2006, the Compensation Committee of the Board of Directors of Nuance
Communications, Inc. (the “Company”) approved the terms of a new three-year employment agreement with Paul
Ricci, the Company’s Chairman and Chief Executive Officer. Pursuant to the approved terms,
effective October 1, 2006, Mr. Ricci will receive an annual base salary of $575,000 with an annual
bonus opportunity of up to 100% of his base salary. Mr. Ricci will also receive the following
equity-based compensation awards: (i) a grant of 750,000 shares of restricted stock which shall
vest on August 11, 2009 (735,445 of the shares of restricted stock were issued on August 11, 2006
and 14,555 of the shares of restricted stock shall be issued on October 1, 2006), provided that the
vesting of 50% of such shares shall accelerate upon the achievement of certain performance
objectives established by the Board of Directors for the Company’s 2007 fiscal year and the vesting
of the remaining 50% of such shares shall accelerate upon the achievement of certain performance
objectives established by the Board of Directors for the Company’s 2008 fiscal year and (ii) a
grant of 1,000,000 stock options which shall be scheduled to vest in three equal annual
installments on each anniversary of the grant date. In addition, Mr. Ricci shall receive an
additional grant of 250,000 shares of restricted stock if (x) the vesting of the shares of
restricted stock described above is accelerated based upon the achievement of the fiscal 2007 and
fiscal 2008 performance objectives or (y) the closing price of the Company’s common stock on the
Nasdaq Global Market exceeds $18 per share for a period of ninety consecutive days. If
issued, the additional grant of shares of restricted stock shall be scheduled to vest on August 11,
2009. The grants of equity-based compensation pursuant to the terms of the employment agreement are
intended to serve as Mr. Ricci’s equity-based compensation for the three-year term of the
agreement, provided, however the compensation committee reserves the right to make additional
grants of equity-based compensation to Mr. Ricci if deemed appropriate by the committee.
Upon any termination of Mr. Ricci’s employment by the Company, other than for cause, death or
disability, or by Mr. Ricci for good reason, Mr. Ricci shall be entitled to continued payment of
1.5 times his base salary as then in effect and payment of 100% of his target bonus as then in
effect for a period of eighteen months following termination; provided, however, if such
termination occurs within 12 months of a change in control of the Company, Mr. Ricci shall be
entitled to continued payment of 2.0 times his base salary as then in effect and payment of 100% of
his target bonus as then in effect for a period of twenty-four months following termination. In
addition, upon any termination of Mr. Ricci’s employment by the Company, other than for cause,
death or disability, or by Mr. Ricci for good reason, (i) the vesting of all equity-based
compensation awards issued to Mr. Ricci prior to August 11, 2006 shall accelerate and be fully
vested as of the termination date and (ii) equity-based compensation awards issued on or after
August 11, 2006 shall continue to vest during the severance period and any unvested options or
awards at the termination of the severance period will be forfeited, provided, however, if such
termination occurs within 12 months of a change in control of the Company, the vesting of 100% of
Mr. Ricci’s stock options and restricted stock shall accelerate upon the termination event.
Following termination of Mr. Ricci’s employment, Mr. Ricci shall be entitled to exercise all stock
options granted prior to August 11, 2006 for the life of the stock option, and all stock options
granted on or after August 11, 2006 for the lesser of (i) the life of the stock option or (ii) two
years following the termination date. If Mr. Ricci’s employment is terminated due to his death or
disability, Mr. Ricci (or his legal heirs or designees) shall be entitled to receive his base
salary through the termination date and all equity-based compensation awards issued to Mr. Ricci
shall accelerate and be fully vested as of the termination date. Mr. Ricci is also entitled to
continuation of certain Company benefits following termination of employment, depending on the
circumstances surrounding such termination. Mr. Ricci has agreed not to compete with the Company
or solicit the Company’s employees or customers during the period in which he is receiving
severance payments from the Company.
The Company has also agreed to reimburse Mr. Ricci for excise tax payments which may be due
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), if payments
to Mr. Ricci are deemed “parachute payments” within the meaning of Section 280G of the Code,
subject to a maximum amount of $4,000,000.
The Company has also agreed to provide an enhanced executive medical program and will reimburse up
to $15,000 of services provided under the program annually. The Company has also agreed to
reimburse Mr. Ricci up to $15,000 per year for post-retirement medical coverage for a 10 year
period. Mr. Ricci will only receive this benefit in the event that (i) Mr. Ricci’s employment is
terminated within twelve months following a change in control of the Company or (ii) Mr. Ricci
retires from active employment with the Company after the age of fifty-five.
The Company has also agreed to reimburse Mr. Ricci for up to $10,000 of tax and financial planning
services and to provide a $15,000 car allowance to Mr. Ricci.