UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(Rule 13e-4)
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
Sorrento Networks Corporation
(Names of Filing Persons (identify status as offeror, issuer or other person))
Options to purchase common stock, par value $0.30 per share,
under certain Sorrento Networks Corporation option plans
(Title of Class of Securities)
83586Q 10 0
(CUSIP Number of Class of Securities)
RICHARD L. JACOBSEN
Vice President, General Counsel and Secretary
Sorrento Networks Corporation
9990 Mesa Rim Road
San Diego, California 92121
(408) 965-2600
Copy to:
W. RAYMOND FELTON, ESQ.
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP
Metro Corporate Campus I
Post Office Box 5600
Woodbridge, New Jersey 07095
(732) 549-5600
(Name, address, and telephone numbers of persons authorized to receive
notices and communications on behalf of filing persons)
Calculation of Filing Fee
Transaction valuation Amount of filing fee
Not Applicable Not Applicable
Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
X Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
third-party tender offer subject to Rule 14d-1.
x issuer tender offer subject to Rule 13e-4.
going-private transaction subject to Rule 13e-3.
amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer:
At the time Sorrento Networks Corporation commences its offer to
exchange options, it will file a Tender Offer Statement with the Securities and
Exchange Commission. THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO EXCHANGE,
A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) WILL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER. The Offer to Exchange, the related Letter of
Transmittal and certain other offer documents will be made available to all
holders of eligible Sorrento Networks Corporation options and to all holders of
Sorrento Networks Inc. options, at no expense to them. The Tender Offer
Statement (including the Offer to Exchange, the related Letter of Transmittal
and all other offer documents filed with the Commission will also be available
for free at the Commission's Web site at www.sec.gov.
TEXT OF POWER POINT PRESENTATION MADE TO EMPLOYEES ON
MARCH 7, 2002
Total Compensation at Sorrento Networks
Sorrento Networks recognizes the need to improve the administration and
components of our total compensation package. We want to ensure that our total
compensation package is administered effectively and that the program remains
competitive with industry standards. The first step in this process has been a
review of our Stock Option Program.
Current Status of the Stock Option Program
Stock option grants are an important component of total compensation for
Sorrento Networks employees. Due to economic trends and stock market volatility
in the telecommunications sector, the market value of our stock has declined in
recent months. The graph below illustrates Sorrento's stock performance relative
to the NASDAQ Telecom sector performance for the past 12 months.
[GRAPH]
As a result, most of our outstanding option grants have exercise prices that are
significantly higher than the current market price of our stock. When the
exercise price is higher than the trading price, the stock options are
considered to be "under water." Employees with a large number of underwater may
feel that their total compensation package is worth less than it should be.
The Stock Option Exchange Program
To address this situation, Sorrento Networks is offering eligible employees the
opportunity to participate in a Stock Option Exchange Program. Eligible
employees may exchange certain existing underwater options for new options to be
granted in the fiscal third quarter. If the stock price increases after the date
the new stock options are granted, employees who participate in this exchange
program potentially could increase the value of their total compensation
package.
Eligibility
To participate in the exchange program you must be an employee of Sorrento
Networks at the time of the exchange and at the time of the new grant date. You
also must have a
signed confidentiality and non-disclosure agreement on file with the Company. If
you were granted any options within the 6 months prior to the time of the
exchange, you are not eligible to participate in the exchange program.
Directors, officers and management personnel listed in the recently filed proxy
statement are excluded from participating in the program.
How the Exchange Program Works.
The exchange is a voluntary program to surrender (tender) eligible stock options
to Sorrento Networks in exchange for new stock options. The exchange period will
last for approximately 30 days. New options will be granted in the fiscal third
quarter, six months and one day from the end of the exchange period. The
exchange applies to all SNI options, regardless of the exercise price, and to
FIBR options with an exercise price greater than $7.50. In exchange for
surrendered FIBR options, employees will receive the same number of FIBR
options. In exchange for SNI options, employees will receive an equivalent
number of FIBR options. The surrendered SNI options will be converted to FIBR
options using a conversion ratio of 3.9 SNI options to 1 FIBR option. For
example, if you decide to tender a grant of 100 FIBR options and a grant of 390
SNI options, your new grant of options will be as follows:
Original Option Grants New Option Grant
100 FIBR Options .................................... 100 FIBR Options
390 SNI Options ..................................... 100 FIBR Options
Total New Option Grant .............................. 200 FIBR Options
The exercise price of the new grant will be the closing market price on the date
of the grant. Each option granted in exchange for a surrendered option will vest
as if the original option had not been surrendered. For example: If your
original option grant was scheduled to vest in June 2003, your new option grant
will vest in June 2003. Employees may elect to surrender all, some or none of
their current option grants. However, all options within an eligible grant must
be either surrendered or retained.
Note: Participation in the exchange program does not provide employees the right
to continued employment by Sorrento Networks.
If You Decide Not to Participate
If you choose to retain your existing options, then there will be no impact on
the treatment of your options. The current exercise price remains in effect. The
current vesting schedule remains in effect. The current option term continues.
In addition to your retained options, you will receive a supplemental option
grant equal to 10% of the equivalent number of FIBR options you currently hold.
To calculate the number of options you will receive in the supplemental option
grant, your current SNI options will
be converted to FIBR options using a conversion ratio of 3.9 SNI options to 1
FIBR option. For example, if you currently hold a grant of 100 FIBR options and
a grant of 390 SNI options, your supplemental grant will be as follows:
Original Option Grants New Option Grant
100 FIBR Options .................................... 100 FIBR Options
390 SNI Options ..................................... 100 FIBR Options
Total Equivalent FIBR Options........................ 200 FIBR Options
You will receive your supplemental grant one day after the close of the exchange
period. The exercise price of the supplemental options will be the closing
market price on the date of the grant. Vesting for the supplemental option grant
will occur on a quarterly basis over the period of one year. After one year, you
will be fully vested in the supplemental options.
Making Your Decision
The decision to participate in the Stock Option Exchange Program is entirely
voluntary. Here are some factors to consider:
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And the Stock Price And the Stock Price
Increases After the Date Decreases After the Date
that the New Stock Options that the New Stock Options
are Granted are Granted
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If you Participate in the * Your new stock option * The new options you
Exchange Program grant will be more valuable receive will be underwater.
than it was at the date of the
grant.
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If You Do Not Participate * You could realize value * The supplemental option
in the Exchange Program from the supplemental grant you receive will be
option grant you receive, underwater. Some of the
provided the stock price options you retained may be
increases above the stock underwater.
option exercise price.
* Depending on how much
the stock price increases,
you may realize value from
the stock options you retain.
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Making Your Decision . . . An Important Consideration
The decision to participate in this exchange is an individual one that should be
based on a variety of factors. We encourage you to consult with your personal
financial advisor regarding your participation in the exchange.
Program Timing
It is the Company's intent to file a tender offer with the Securities and
Exchange Commission during the week of March 11, 2002. Once the filing is
approved, employees will be given official notification, additional information
and forms to complete.
Overview of Communication Material
When the filing is approved, you will receive the following:
Letter from Joe Armstrong
Question and Answer document
Copy of this presentation
Individual summary of your outstanding option grants and the number of options
eligible for this exchange
Letter of transmittal (2 copies)