SEC Filing | Ribbon Communications, Inc.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2003

Commission File Number 000-30229

SONUS NETWORKS, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE		04-3387074
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

250 Apollo Drive, Chelmsford, Massachusetts 01824
(Address of principal executive offices, including zip code)

(978) 614-8100
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common stock, $0.001 par value

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy statement or information proxy statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o

The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $869,240,000 based on the closing price for the Common Stock on the NASDAQ National Market on June 30, 2003. As of January 31, 2004, there were 245,520,956 shares of $0.001 par value per share, common stock, outstanding.

Pursuant to Rule 12b-25, this Form 10-K does not include disclosures for Items 6, 7, 8 and 9A. These items and the complete certifications by the chief executive officer and chief financial officer pursuant to Rule 13a-14 will be filed by amendment.

DOCUMENTS INCORPORATED BY REFERENCE

Information required in Items 10-14 is incorporated by reference to specified portions of the Registrant's definitive Proxy Statement to be issued in conjunction with the Registrant's 2004 Annual Meeting of Shareholders, which is expected to be filed not later than 120 days after the Registrant's fiscal year ended December 31, 2003.

TABLE OF CONTENTS

Item		Page
Part I
1.	Business	3
2.	Properties	14
3.	Legal Proceedings	15
4.	Submission of Matters to a Vote of Security Holders	16
Part II
5.	Market for Registrant's Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
7A.	Quantitative and Qualitative Disclosures about Market Risk	17
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	18
Part III
10.	Directors and Executive Officers of the Registrant	19
11.	Executive Compensation	22
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	22
13.	Certain Relationships and Related Transactions	22
14.	Principal Accountant Fees and Services	22
Part IV
15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	23
	Signatures	24
	Index to Exhibits	25

PART I

ITEM 1. BUSINESS.

This Form 10-K, as well as all other reports filed with or furnished to the Securities and Exchange Commission (SEC), are available free of charge through our Internet site (http://www.sonusnet.com) as soon as practicable after we electronically file such material with, or furnish it to, the SEC. The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Overview

We are a leading provider of voice infrastructure solutions for the new public network. Our products are a new generation of carrier-class switching equipment and software that enable voice services to be delivered over packet-based networks. Our target customers include new and established communications service providers, including long distance carriers, local exchange carriers, Internet service providers, wireless operators, cable operators, international telephone companies and carriers that provide services to other carriers. Many of these carriers have been building packet-based networks to support the dramatic growth in data traffic resulting from Internet use. Packet-based networks, which transport traffic in small bundles, or "packets," offer a significantly more flexible, cost-effective and efficient means for providing communications services than existing circuit-based networks, designed years ago to primarily deliver telephone calls. By enabling voice traffic to be carried over these packet-based networks, our products will accelerate the convergence of voice and data into the new public network.

Our suite of voice infrastructure solutions includes the GSX9000™ Open Services Switch, the Insignus™ Softswitch and the Sonus Insight™ Management System. Our products, designed for deployment as the foundation of a service provider's network, can significantly reduce the cost to build and operate voice services compared to traditional alternatives. Moreover, our products offer a powerful and open platform for service providers to increase their revenues through the creation and delivery of new and innovative voice and data services. Our switching equipment and software can be rapidly and easily deployed, and readily expanded to accommodate growth in traffic volumes. Our products also interoperate with service providers' existing telephone infrastructure, allowing them to preserve the investment in their current networks. Designed for the largest telephone networks in the world, our products offer the reliability and voice quality that have been hallmarks of the public telephone network for decades.

We have been recognized by three market research firms as the worldwide market share leader in several key segments of the carrier-class packet voice infrastructure equipment market. Our announced customers include many of the world's major service providers: Alestra (Mexico), America Online, AT&T, BellSouth Corporation, China Netcom, Fusion Communications (Japan), Global Crossing, IDT Corp., Level 3 Communications, NTT Communications, Qwest Communications, SOFTBANK BB, Time Warner Telecom, T-Systems International (a division of Deutsche Telekom Group) and Verizon Communications. We sell our products principally through a direct sales force and, in some markets, through distributors and resellers. We also collaborate with our customers to identify and develop new advanced services and applications that they can offer to their customers.

In 2003, the challenging business environment in the telecommunications industry continued to affect the spending by service providers for products such as those we offer. While it remains uncertain as to the speed and extent of the adoption of carrier packet voice infrastructure products by large carriers, we believe that over time the market opportunity for packet voice solutions is substantial.

Synergy Research Group projects that the market for service provider voice over Internet protocol equipment and software will grow to approximately $2.7 billion in 2006. Our objective is to capitalize on our early technology and market lead and build the premier franchise in voice infrastructure solutions for the new public network. The following are key elements of our strategy:

•: leverage our technology leadership to achieve key service provider design wins;
•: continue to extend our technology platform from the core of the network to the access edge;
•: expand and broaden our customer base by targeting specific market segments;
•: expand our global sales, marketing, support and distribution capabilities;
•: grow our base of software applications and development partners;
•: actively contribute to the standards definition and adoption process; and
•: pursue strategic acquisitions and alliances.

Industry Background

The public telephone network is an integral part of our everyday lives. For most of its 100-year history, the telephone industry has been heavily regulated, which has slowed the evolution of its underlying circuit-switching technologies and limited innovation in service offerings and the pricing of telephone services. Two global forces—deregulation and the expansion of the Internet—are revolutionizing the public telephone network worldwide.

Deregulation of the telephone industry accelerated with the passage of the Telecommunications Act of 1996. The barriers that once restricted service providers to a specific geography or service offering, such as local or long distance, are disappearing. The opportunity created by opening up the telephone services market has encouraged new participants to enter the market and incumbent service providers to expand into new markets, both domestically as well as internationally. For example, certain incumbent regional service providers are receiving regulatory approval from the Federal Communications Commission allowing them to offer long-distance telephone service to in-region consumers and businesses. Some of these carriers may build-out their own long distance networks creating an opportunity for next generation, packet-voice solutions.

Competition between new players and incumbents is driving down service prices. With limited ability to reduce the cost structure of the public telephone network, profit margins for traditional telephone services are eroding. In response, service providers are seeking new, creative and differentiated services as a means to increase revenues and as an opportunity to reduce costs.

Simultaneously, the rapid adoption of the Internet is driving dramatic growth of data traffic. Today, a significant portion of this data traffic is carried over the traditional circuit-switched telephone network. However, the circuit-switched network, designed for voice traffic and built long before the advent of the Internet, is not suited to efficiently transport data traffic. In a circuit-switched network, a dedicated path, or circuit, is established for each call, reserving a fixed amount of capacity or bandwidth in each direction. The dedicated circuit is maintained for the duration of the call across all of the circuit switches spanning the path from origination to the destination of the call, even when no traffic is being sent. As a result, a circuit-switched architecture is highly inefficient for Internet applications, which tend to create large bursts of data traffic followed by long periods of silence.

In contrast, a packet network divides traffic into distinct units called packets and routes each packet independently. By combining traffic from users with differing capacity demands at different times, packet networks more efficiently fill available network bandwidth with packets of data from many users, thereby reducing the bandwidth wasted due to silence from any single user. The volume of

data traffic continues to increase as use of the Internet and the number of connected users grow, driving service providers to build large-scale, more efficient packet networks.

With voice traffic carried over the vast installed base of traditional circuit-switched networks and data traffic carried over rapidly expanding packet networks, service providers are faced with the expense and complexity of building and maintaining parallel networks.

The following diagrams depict these parallel voice and data networks.

The need for, and benefits of, combining voice and data networks

We believe significant opportunities exist in uniting these separate, parallel networks into a new integrated public network capable of transporting both voice and data traffic. Enormous potential savings can be realized by eliminating redundant or overlapping equipment purchases and reducing network operating costs. Also, combining traditional voice services with Internet or Web-based services in a single network is expected to enable new and powerful high-margin, revenue-generating service offerings such as voice virtual private networks (voice VPNs), one-number/follow-me services, unified messaging, conferencing, prepaid and postpaid card services and sophisticated call centers and other services.

The packet network is the platform for the new public network. The volume of data traffic has already eclipsed voice traffic and is growing much faster than voice. Packet architectures are more efficient at moving data, are more flexible and reduce equipment and operating costs. The key to realizing the full potential of a converged, packet-based network is to enable the world's voice traffic to run over those networks.

Early attempts to develop new technologies to carry voice traffic over packet networks have included voice over Internet protocol, or VoIP, systems using a personal computer platform and devices that added VoIP capability to existing data devices such as remote access servers. While demonstrating the viability of transmitting voice over packet technology, these approaches fell far short of the quality, reliability and scalability required by the public telephone network.

The early VoIP systems also lacked the ability to interoperate with the signaling infrastructure of the circuit-switched network. Without this signaling capability, VoIP applications cannot provide the consistent "look, sound and feel" of traditional telephone calls and are not well-suited to more complex applications such as voicemail, unified messaging and other value-added services.

The public telephone network is large, highly complex and generates significant revenues, a substantial majority of which are derived from voice services. Given service providers' substantial investment in, and dependence upon, traditional circuit-switched technology, their transition to the new public network will be gradual.

Requirements for voice infrastructure products for the new public network

Users demand high levels of quality and reliability from the public telephone network and service providers require a cost-efficient network that enables new revenue-generating services. As a result, carrier packet voice infrastructure products must satisfy the following requirements:

Carrier-class performance. Because they operate complex, mission-critical networks, service providers have clear infrastructure requirements. These include extremely high reliability, quality and interoperability. For example, service providers typically require equipment that complies with their 99.999% availability standard.

Compatibility with standards and existing infrastructure. New infrastructure equipment and software must support the full range of telephone network standards, including signaling protocols such as SS7 or ISDN and international signaling variants, and various physical interfaces such as T1 and E1. It must also support data networking protocols such as Internet protocol, or IP, and asynchronous transfer mode, or ATM, as well as telphony protocols such as SIP, SIP-T, MGCP, Megaco (H.248) and H.323. Infrastructure solutions must also seamlessly integrate with service providers' existing operations support systems.

Scalability and density. Carrier voice infrastructure solutions face challenging scalability requirements. Service providers' central offices typically support tens or even hundreds of thousands of simultaneous calls. In order to be economically attractive, the new infrastructure must compare favorably with existing networks in terms of cost per port, space occupied, power consumption and cooling requirements.

Intelligent software in an open and flexible platform. The architecture of packet voice infrastructure solutions decouples the capabilities of traditional circuit-switching equipment into robust hardware elements and highly intelligent software platforms that provide control, signaling and service creation capabilities. This approach will transform the closed, proprietary circuit-switched public telephone network into a flexible, open environment accessible to a wide range of software developers. Service providers and third-party vendors will be able to develop and implement new applications independent of switch vendors. Moreover, the proliferation of independent software providers promises to drive the creation of innovative voice and data services that could expand service provider revenues.

Simple and rapid installation, deployment and support. Infrastructure solutions must be easy to install, deploy, configure and manage. These attributes will enable rapid growth and effective management of dynamic and complex service provider networks.

The Sonus Solution

We develop, market and sell a comprehensive suite of voice infrastructure products purpose-built for the deployment and management of voice and data services over carrier packet networks. The Sonus solution consists of the following carrier-class products:

•: GSX9000 Open Services Switch;
•: Insignus Softswitch; and
•: Sonus Insight Management System.

These products are designed to offer high reliability, toll-quality voice, improved economics, interoperability, rapid deployment and an open architecture enabling the design and implementation of new services and applications. Our solution has been specifically designed to meet the requirements of the new public network. As shown in the following diagram, our products unite the voice and data networks.

Carrier-class performance. Our products are designed to offer the highest levels of quality, reliability and interoperability, including:

•: full redundancy, enabling 99.999% availability;
•: voice quality equal or superior to today's circuit-switched network;
•: system hardware designed for Network Equipment Building Standards, or NEBS Level 3, compliance;
•: network monitoring and provisioning designed for Operations System Modifications for the Integration of Network Elements, or OSMINE, compliance;
•: a complete set of service features, addressing those found in the existing voice network and extending them to offer greater flexibility; and
•: sophisticated network management and configuration capabilities.

Compatibility with industry standards and existing infrastructure. Our products are designed to be compatible with all applicable voice and data networking standards and interfaces, including:

•: SS7 and other telephone network signaling protocols, including international signaling variants, advanced services and simple call management and routing;
•: IP, ATM, Ethernet and optical data networking standards;
•: call management standards including SIP, SIP-T, MGCP, Megaco (H.248) and H.323 and others;
•: voice coding standards such as G.711 and echo cancellation standard G.168; and
•: all common interfaces, including T1, T3, E1 and optical interfaces.

The Sonus solution is designed to interface with legacy circuit-switching equipment, supporting the transparent flow of calls and other information between the circuit and packet networks. As a result, our products allow service providers to migrate to a new packet voice infrastructure, while preserving their significant legacy infrastructure investments.

Cost effectiveness and high scalability. The Sonus solution can be used to cost-effectively build packet-based switch configurations supporting a range from a few hundred calls to hundreds of thousands of simultaneous calls. In addition, the capital cost of our equipment is typically half that of traditional circuit-switched equipment. At the same time, our GSX9000 Open Services Switch offers unparalleled density, requires less than one-tenth of the space needed by typical circuit-switching implementations and requires significantly less power and cooling. This makes possible a significant reduction in expensive central office facilities cost and allows service providers to deploy our equipment in locations where traditional circuit switches are not even an option given the limited space and environmental services.

The GSX9000 Open Services Switch can create central office space savings as shown below.

Open software architecture and flexible platform. Our Open Services Architecture, or OSA, is based on a software-centric design and a flexible platform, allowing rapid development of new products and services. New services may be developed by us, by service providers or by any number of third parties including software developers and systems integrators. The OSA also facilitates the creation of services that were previously not possible on the circuit-switched network. In addition, we have partnered with a number of third-party application software developers in our Open Services Partner Alliance^SM, or OSPA, to stimulate the growth of new applications available for our platform.

Ease of installation and deployment. Our equipment and software can be installed and placed in service by our customers much more quickly than circuit-switching equipment. By offering comprehensive testing, configuration and management software, we expedite the deployment process as well as the ongoing management and operation of our products. We believe that typical installations of our solution require just weeks of time from product arrival to final testing, thereby reducing the cost of deployment and speeding the time to market for new services.

The Sonus Strategy

Our objective is to capitalize on our early technology and market lead and build the premier franchise in carrier voice infrastructure solutions for wireline and wireless carriers. The following are key elements of our strategy:

Leverage our technology leadership to achieve key service provider design wins. As the first company to provide voice infrastructure products for the new public network, we have achieved key design wins with market-leading service providers as they develop the architecture for their new voice networks. We expect service providers to select vendors that provide leading technology and the ability to maintain that technology leadership. Our equipment is an integral part of the network architecture and achieving design wins will enable us to expand our business as these networks are deployed. We have been awarded projects by major service providers, including Alestra (Mexico), America Online, AT&T,

BellSouth Corporation, China Netcom, Fusion Communications (Japan), Global Crossing, IDT Corp., Level 3 Communications, NTT Communications, SOFTBANK BB, Qwest Communications, Time Warner Telecom, T-Systems International (a division of Deutsche Telekom Group) and Verizon Communications. Furthermore, by working closely with our customers as they deploy these networks, we gain valuable knowledge regarding their requirements, positioning us to develop product enhancements and extensions that address evolving service provider needs.

Extend our technology platform from the core of the network to the access edge. Our robust and sophisticated technology platform has been designed to operate at the heart of the largest networks in the world. From this fundamental position in the trunking infrastructure, we are extending our reach by moving outward to the access segments of the network. We support multiple carrier applications in a single platform. These applications include long distance/international calling, tandem switching, network border switching, Internet call diversion, business PBX access, residential access, H.323 termination, direct voice over broadband and enhanced services. This approach will allow our customers to design and execute a coordinated migration and expansion strategy as they build entirely new networks or transition from their legacy circuit-switched infrastructure.

Expand and broaden our customer base by targeting specific market segments, such as wireless operators. We plan to leverage our early success to penetrate new customer segments. We believe new and incumbent service providers will build out their packet voice infrastructures at different rates. The next-generation service providers, who are relatively unencumbered by legacy equipment, have been among the initial purchasers of our equipment and software. Other newer entrants, including wireless operators, cable operators and Internet service providers, or ISPs, have also been early adopters of our products. Incumbents, including interexchange carriers, or IXCs, Regional Bell Operating Companies, or RBOCs, and international PTTs are also adopting packet voice technologies over time.

Expand our global sales, marketing, support and distribution capabilities. Becoming the primary supplier of carrier packet voice infrastructure solutions will require a strong worldwide presence. We are broadening our sales, marketing, support and distribution capabilities to address this need. We have established offices throughout the United States, in China, India, Japan, Malaysia, Singapore, Germany and France, and in the United Kingdom. In addition, we plan to augment our global direct sales effort with international distribution partners. As a carrier-class solution provider, we are making a significant investment in professional services and customer support.

Grow our base of software applications and development partners. We have established and promote a partner program, the Open Services Partner Alliance, or OSPA, which brings together a broad range of development partners to provide our customers with a variety of advanced services, application options and interoperability testing. Our OSPA partners include application developers such as Pactolus Communication Software, Sylantro Systems, Iperia, BayPackets, BroadSoft, and infrastructure suppliers such as Juniper Networks and Riverstone Networks.

Actively contribute to the standards definition and adoption process. To advance our technology and market leadership, we will continue to actively lead and contribute to standards bodies such as the International Packet Communications Consortium, the Internet Engineering Task Force and the International Telecommunications Union. The definition of standards for carrier packet voice infrastructure is in an early stage and we intend to drive these standards to meet the requirements for an open, accessible, scalable and powerful new public network infrastructure.

Pursue strategic acquisitions and alliances. We intend to expand our products and services through selected acquisitions and alliances. These may include acquisitions of complementary products, technologies and businesses that further enhance our technology leadership or product breadth. We also believe that teaming with companies providing complementary products or services will enable us to bring greater value to our customers and extend our lead over potential competitors.

Sonus Products

GSX9000 Open Services Switch

The Sonus GSX9000 Open Services Switch enables voice traffic to be transported over packet networks. Its carrier-class hardware, which is NEBS Level 3 compliant and designed to provide 99.999% availability with no single point of failure, offers optional full redundancy and full hot-swap capability. It is powered from -48VDC sources standard in central offices and attaches to the central office timing network. The basic building block of a GSX9000 is a shelf. Each shelf is 28" high, mounts in a standard 19" or 23" rack and provides 16 slots for server and adapter modules. The first two slots are reserved for management modules, while the other 14 slots may be used for any mix of other module types. It supports the following interfaces:

• T1;
• T3;
• E1;
• OC3;
• 100BaseT;
• 1000BaseT; and
• OC12c/STM-4.

The GSX9000 is designed to deliver voice quality equal, or superior, to that of the legacy circuit-switched public network. It is designed to support the multiple encoding schemes used in circuit switches such as G.711 and delivers a number of other voice compression algorithms. It also is designed to provide world-class echo cancellation, conforming to the latest G.168 standard, on every circuit port. It automatically disables echo cancellation when it detects a modem signal. The GSX9000 is also designed to minimize delay, further enhancing perceived voice quality. The GSX9000 scales to the very large configurations required by major service providers. A single GSX9000 shelf can support up to 22,000 simultaneous calls. A single GSX9000, consisting of multiple shelves, can support 100,000 or more simultaneous calls. The GSX9000 is designed to operate with our Insignus Softswitch and with softswitches and network products offered by other vendors.

Insignus Softswitch

Softswitches provide the network intelligence in next-generation networks, including call control, signaling, core network routing and a management foundation. Our Insignus Softswitch is based on a modular architecture that is designed for high performance and scalability, as well as interoperability with third-party gateways, devices and services. The Insignus Softswitch includes the following functionality:

•: call control and signaling;
•: service selection and routing;
•: line-side endpoint control and services for both residential and enterprise markets;
•: local calling features and regulatory requirements such as emergency services routing;
•: a gateway between existing SS7/C7 signaling networks and the packet network; and
•: network border switching.

The Insignus Softswitch functions can be deployed on the same or separate platforms, and can be configured in either a centralized or distributed manner, based on a service provider's network requirements. This high level of flexibility allows service providers to precisely allocate functionality and processing performance, avoiding the cost of unused resources. Service providers can also deploy additional Insignus modules as their requirements change. For instance, a service provider deploying the functions for a long distance application might require only service selection routing and SS7 connectivity. As the service provider moves into the local market, it can add line-side endpoint control to deliver access services on the same platform. The Insignus Softswitch can scale from the smallest single point of presence to the largest global networks.

The Insignus Softswitch supports industry-standard protocols such as SIP, H.323 and MGCP, using them for interaction with third-party products, for communication among components of the Open Services Architecture and for communications between carrier networks. The Insignus Softswitch supports a large number of international SS7/C7 variants, for both call signaling and interaction with legacy intelligent network, or IN, and advanced intelligent network, or AIN, services.

The Insignus Softswitch is deployed on industry-standard, NEBS-compliant computing platforms. The Insignus Softswitch supports redundancy, providing carrier-class reliability. In fully redundant configurations, there is no loss of active calls during switchover for any hardware and software component.

We believe that in addition to traditional voice services, our Insignus Softswitch will enable service providers to offer differentiated, value-added features and services developed by us, by application software developers, system integrators or service providers themselves, including:

•: one-number/follow-me services, which route a subscriber's phone services to any location;
•: unified messaging that integrates telephone services, email and Web applications, and allows subscribers to have a unified mailbox for email, voicemail and message filtering;
•: conference calling across the Internet and multimedia conferencing;
•: Prepaid and postpaid calling cards;
•: Internet-enabled call centers;
•: Voice VPNs; and
•: Internet content delivered with voice.

Sonus Insight Management System

Sonus Insight is a complete, web-based management system designed to simplify the operation of carrier-class packet voice networks. Sonus Insight includes the Element Management System, or EMS, and the DataStream Integrator, or DSI, the Subscriber Management System, or SMS, the Network Traffic Manager, or NTM, and the Sonus Insight Developer's Kit, that together provide comprehensive configuration, provisioning, security, alarm reporting, performance data and billing mediation capabilities. Sonus Insight seamlessly integrates with service providers' existing back-office systems, and offers many tools that enhance and consolidate key management functions, allowing service providers to streamline many of today's labor-intensive processes. Sonus Insight scales to support hundreds of switches and concurrent users, and is based on industry standards and protocols to facilitate management from any location worldwide.

Customer Support and Professional Services

We believe our comprehensive SonusCARE technical customer support and professional services capabilities are an important element of our solution for customers. SonusCARE covers the full

network lifecycle: planning; design; installation; and operations. We help our customers create or revise their business plans and design their networks and also provide the following:

•: turnkey network installation services;
•: system integration and testing;
•: 24-hour technical support; and
•: educational services to customer personnel on the installation, operation and maintenance of our equipment.

We have established technical assistance centers in Chelmsford, Massachusetts and in the United Kingdom. The technical assistance centers provide customers with around-the-clock technical support, as well as periodic updates to our software and product documentation. We offer our customers a variety of service plans.

A key differentiator of our support activities is our professional services group, many members of which hold advanced technical degrees in electrical engineering or related disciplines. We offer a broad range of professional services, including sophisticated network deployment, assistance with logistics and project management support. We also maintain a customer support laboratory in which customers can test the utility of our products for their specific applications and in which they can gain an understanding of the applications enabled by the converged network. Our approach to professional services is designed to ensure that our products are integrated into our customers' networks to meet their specific needs and that these customers realize the maximum value from their networking technology investments. As of December 31, 2003, our customer support and professional services organization consisted of 99 employees.

Customers

Our target customer base includes long distance carriers, local exchange carriers, ISPs, wireless operators, cable operators, international telephone companies and carriers that provide services to other carriers. We have shipped products to customers including: Alestra (Mexico), America Online, AT&T, BellSouth Corporation, China Netcom, Fusion Communications (Japan), Global Crossing, IDT Corp., Level 3 Communications, NTT Communications, Qwest Communications, SOFTBANK BB, Time Warner Telecom, T-Systems International (a division of Deutsche Telekom Group) and Verizon Communications. As a result of the current challenging business environment in the telecommunications industry, many service providers, including some of our customers, have experienced financial difficulties, and some are in the process of restructuring their businesses or have filed or recently emerged from bankruptcy.

Sales and Marketing

We sell our products principally through a direct sales force and, in some markets, through distributors and resellers, such as AsiaInfo Holdings, Inc. (China), Commuture (Japan), Compta (Portugal), IBIL (Malaysia), Nissho Electronics Corporation (Japan), PT Abhimata Citra Abadi (Indonesia), Samsung Corporation (Korea), Sumitomo Corporation (Japan), UpTechnology (China) and Welltech Computer Corporation (Taiwan). In February 2004, we established an original equipment manufacturer relationship with Motorola, Inc., whereby the GSX 9000 has been integrated with the Motorola SoftSwitch, creating a next generation switching platform for wireless carriers around the world. We intend to establish additional relationships with selected original equipment manufacturers and other marketing partners in order to serve particular markets or geographies and provide our customers with opportunities to purchase our products in combination with related services and products.

As of December 31, 2003, our sales and marketing organization consisted of 72 employees, of whom 17 were located in our corporate headquarters and 55 were located in sales and support offices in the United States and around the world.

Research and Development

We believe that strong product development capabilities are essential to our strategy of enhancing our core technology, developing additional applications, incorporating that technology into new products and maintaining comprehensive product and service offerings. Our research and development process is driven by the availability of new technology, market data and customer feedback. We have invested significant time and resources in creating a structured process for undertaking all product development projects.

We have assembled a team of highly skilled engineers with significant telecommunications and networking industry experience. Our engineers have experience in, and have been drawn from, leading computer data networking, telecommunications and multimedia companies. As of December 31, 2003, we had 189 employees responsible for research and development, of which 173 were software and quality assurance engineers and 16 were hardware engineers. Our engineering effort is focused on new applications and network access features, new network interfaces, improved scalability, interoperability, quality, reliability and next generation technologies. We currently maintain United States research and development offices in Massachusetts, New Jersey, Texas and Virginia and have an office in the United Kingdom. We have made, and intend to continue to make, a substantial investment in research and development.

Competition

The market for carrier packet voice infrastructure solutions is intensely competitive, subject to rapid technological change and significantly affected by new product introductions and other market activities of industry participants. We expect competition to persist and intensify in the future. Our primary sources of competition include vendors of networking and telecommunications equipment, such as Cisco Systems, Lucent Technologies, Nortel Networks and Siemens. Some of our competitors have significantly greater financial resources than we do and are able to devote greater resources to the development, promotion, sale and support of their products. In addition, these competitors have more extensive customer bases and broader customer relationships than we do, including relationships with our potential customers. Other smaller and mostly private companies are also focusing on similar market opportunities.

In order to compete effectively, we must deliver innovative products that:

•: provide extremely high network reliability and voice quality;
•: scale easily and efficiently;
•: interoperate with existing network designs and other vendors' equipment;
•: provide effective network management;
•: are accompanied by comprehensive customer support and professional services; and
•: provide a cost-effective and space-efficient solution for service providers.

Intellectual Property

Our success and ability to compete are dependent on our ability to develop and maintain our technology and operate without infringing on the proprietary rights of others. We rely on a combination of patent, trademark, trade secret and copyright law and contractual restrictions to protect the

proprietary aspects of our technology. These legal protections afford only limited protection for our technology. We presently hold four U.S. patents, and have nine patent applications pending in the United States. In addition, we have sixteen patent applications pending abroad. We cannot be certain that additional patents will be granted based on these pending applications. We seek to protect our intellectual property by:

•: protecting our source code for our software, documentation and other written materials under trade secret and copyright laws;
•: licensing our software pursuant to signed license agreements, which impose restrictions on others' ability to use our software; and
•: seeking to limit disclosure of our intellectual property by requiring employees and consultants with access to our proprietary information to execute confidentiality agreements.

Due to rapid technological change, we believe that factors such as the technological and creative skills of our personnel, new product developments and enhancements to existing products are more important than the various legal protections of our technology to establishing and maintaining technology leadership.

We have incorporated third-party licensed technology into our current products. From time to time, we may be required to license additional technology from third parties to develop new products or product enhancements. Third-party licenses may not be available or continue to be available to us on commercially reasonable terms. The inability to maintain or re-license any third-party licenses required in our current products, or to obtain any new third-party licenses to develop new products and product enhancements, could require us to obtain substitute technology of lower quality or performance standards or at greater cost, and delay or prevent us from making these products or enhancements, any of which could seriously harm the competitiveness of our products.

Manufacturing

Currently, we outsource the manufacturing of our products. Our contract manufacturers provide comprehensive manufacturing services, including assembly of our products and procurement of materials on our behalf. We perform final test and assembly at our facility to ensure that we meet our internal and external quality standards. We believe that outsourcing our manufacturing will enable us to conserve working capital, better adjust manufacturing volumes to meet changes in demand and more quickly deliver products. At present, we purchase products from our outside contract manufacturers on a purchase order basis. We may not be able to enter into long-term contracts with outside manufacturers on terms acceptable to us, if at all. If we do enter into long-term contracts without outside manufacturers and our purchase requirements change, we may have excess inventory, which would increase our costs. As of December 31, 2003, we had 17 employees responsible for manufacturing, purchasing, final testing and assembly.

Employees

As of December 31, 2003, we had a total of 401 employees, including 189 in research and development, 72 in sales and marketing, 99 in customer support and professional services, 17 in manufacturing and 24 in finance and administration. Our employees are not represented by any collective bargaining unit. We believe our relations with our employees are good.

ITEM 2. PROPERTIES.

In February 2004 we relocated our headquarters to a leased facility in Chelmsford, Massachusetts, consisting of 144,000 square feet under a sublease that expires in January 2007. We have additional facilities in Westford, Massachusetts, consisting of 87,000 square feet under a sublease that expires in

March 2004, in Littleton, Massachusetts, consisting of 33,000 square feet under a sublease that expires in May 2004 and 9,000 square feet under a sublease that expires in December 2008, and in Richardson, Texas, consisting of 16,000 square feet under a lease expiring in October 2005. We also lease short-term office space in Colorado, New Jersey, Virginia, China, France, India, Japan, Malaysia, Singapore and the United Kingdom. We believe our existing facilities are adequate for our current needs and that suitable additional space will be available as needed.

ITEM 3. LEGAL PROCEEDINGS.

In November 2001, a purchaser of our common stock filed a complaint in the federal district court for the Southern District of New York against us, two of our officers and the lead underwriters alleging violations of the federal securities laws in connection with our initial public offering (IPO) and seeking unspecified monetary damages. The purchaser seeks to represent a class of persons who purchased our common stock between the IPO on May 24, 2000 and December 6, 2000. An amended complaint was filed in April 2002. The amended complaint alleges that our registration statement contained false or misleading information or omitted to state material facts concerning the alleged receipt of undisclosed compensation by the underwriters and the existence of undisclosed arrangements between underwriters and certain purchasers to make additional purchases in the after market. The claims against us are asserted under Section 10(b) of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933 and against the individual defendants under Sections 11 and 15 of the Securities Act. Other plaintiffs have filed substantially similar class action cases against approximately 300 other publicly traded companies and their IPO underwriters which, along with the actions against us, have been transferred to a single federal judge for purposes of coordinated case management. On July 15, 2002, we, together with the other issuers named as defendants in these coordinated proceedings, filed a collective motion to dismiss the consolidated amended complaints on various legal grounds common to all or most of the issuer defendants. The plaintiffs voluntarily dismissed the claims against the individual defendants, including those Sonus officers named in the complaint. On February 19, 2003, the court granted a portion of the motion to dismiss by dismissing the Section 10(b) claims against certain defendants including us, but denied the remainder of the motion as to the defendants. Accordingly, the case proceeded against us on the Section 11 claims. In June 2003, a special committee of our Board of Directors authorized us to enter into a proposed settlement with the plaintiffs on terms substantially consistent with the terms of a Memorandum of Understanding negotiated among representatives of the plaintiffs, the issuer defendants and the insurers for the issuer defendants. The settlement contemplated by the Memorandum of Understanding is subject to a number of conditions including approval by the court. It remains uncertain whether and when the conditions will be met and the settlement will become final. We do not expect that the settlement contemplated by the Memorandum of Understanding would have a material impact on our business or financial results.

Beginning in July 2002, several purchasers of our common stock filed complaints in federal district court for the District of Massachusetts against us, certain officers and directors and a former officer under Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 (Class Action Complaints). The purchasers seek to represent a class of persons who purchased our common stock between December 11, 2000 and January 16, 2002, and seek unspecified monetary damages. The Class Action Complaints were essentially identical and alleged that we made false and misleading statements about our products and business. On March 3, 2003, the plaintiffs filed a Consolidated Amended Complaint. On April 22, 2003, we filed a motion to dismiss the Consolidated Amended Complaint on various grounds. The plaintiffs filed an opposition to the motion on June 6, 2003. We filed our reply on July 8, 2003. The parties requested oral argument on the motion, which has been scheduled for March 17, 2004. We believe the claims in the Consolidated Amended Complaint are without merit and that we have substantial legal and factual defenses, which we intend to pursue vigorously.

2004 Class Action Litigation and Derivative Litigation

Beginning in February 2004, a number of purported shareholder class action complaints were filed in the United States District Court for the District of Massachusetts against us and certain of our current officers and directors. The complaints bring claims under the federal securities laws, specifically Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, relating to our announcement that we had identified issues, practices and actions of certain employees relating to both the timing of revenue recognized from certain customer transactions and other financial statement accounts, which could affect our 2003 financial statement accounts and possibly financial statements for prior periods. Specifically, these actions allege that we issued a series of false or misleading statements to the market during the class period that failed to disclose that (i) we had materially overstated our

revenue by improperly recognizing revenue on certain customer contracts; (ii) we lacked adequate internal controls and were therefore unable to ascertain our true financial condition; and (iii) as a result of the foregoing, our financial statements issued during the class period were materially false and misleading. Plaintiffs contend that such statements caused our stock price to be artificially inflated. The complaints seek unspecified damages on behalf of a purported class of purchasers of our common stock during the period from April 9, 2003, June 3, 2003 or June 5, 2003 through February 11, 2004. We believe that we have substantial legal and factual defenses to the claims, which we intend to pursue vigorously.

In February 2004, two purported shareholder derivative lawsuits were filed in the United States District Court for the District of Massachusetts against us and certain of our officers and directors, naming the company as a nominal defendant. Also in February 2004, two purported shareholder derivative lawsuits were filed in the business litigation session of the superior court of Suffolk County of Massachusetts against us and certain of our directors and officers, also naming the company as a nominal defendant. The suits claim that certain of our officers and directors breached their fiduciary duties to our stockholders and us. As stated, the complaints are derivative in nature and do not seek relief from us. However, we have entered into indemnification agreements in the ordinary course of business with certain of the defendant officers and directors and may be obligated throughout the pendency of these actions to advance payment of legal fees and costs incurred by the defendants pursuant to our obligations under the indemnification agreements and/or applicable Delaware law. We believe that we have substantial legal and factual defenses to the claims, which we intend to pursue vigorously.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock has been quoted on the Nasdaq National Market under the symbol "SONS" since May 25, 2000. Prior to that time, there was no public market for the common stock. All companies listed on Nasdaq are required to comply with certain continued listing standards.

The following table sets forth, for the time periods indicated, the high and low sales prices of our common stock as reported on the Nasdaq National Market.

		High		Low
Fiscal 2003:
	First quarter	$	2.37	$	1.00
	Second quarter		5.53		2.10
	Third quarter		8.57		4.85
	Fourth quarter		9.80		6.82
Fiscal 2002:
	First quarter		6.25		2.18
	Second quarter		3.10		1.29
	Third quarter		1.99		0.19
	Fourth quarter		1.57		0.18

We have never declared or paid cash dividends and have no present intention to pay cash dividends in the foreseeable future. Further, our bank agreement, which expires in March 2004, prohibits us from declaring any cash dividends. At January 31, 2004, there were approximately 800 holders of record of our common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. You should read statements that contain these words carefully because they discuss future expectations, contain projections of future results of operations or of financial position or state other "forward-looking" information. You are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results as a result of various important factors including those referred to in the "Cautionary Statements" section of our Quarterly Report on Form 10-Q, dated November 10, 2003 and filed with the SEC, as well as unforeseen issues encountered in the completion of our independent investigation and of the year-end audit and pending securities litigation matters that could result in substantial cost and divert the attention of key personnel. You should be aware that the occurrence of any of these events could have a material adverse effect on our business, results of operations and financial position.

Any forward-looking statements in this report are not guarantees of future performances, and actual results, developments and business decisions may differ from those anticipated by such forward-looking statements, possibly materially. We disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We do not currently use derivative financial instruments. We generally place our marketable security investments in high-quality credit instruments, primarily U.S. Government obligations and

corporate obligations with contractual maturities of less than one year. We do not expect any material loss from our marketable security investments and, therefore, believe that our potential interest rate exposure is not material. We have no current material exposure to foreign currency rate fluctuations, though we will continue to evaluate the impact of foreign currency exchange risk on our results of operations as we expand internationally.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table sets forth our executive officers and directors, their respective ages and positions as of December 31, 2003:

Name	Age	Position
Rubin Gruber	59	Chairman of the Board of Directors
Hassan M. Ahmed	46	President, Chief Executive Officer and Director
Edward N. Harris	42	Vice President of Manufacturing
Michael G. Hluchyj	49	Chief Technology Officer, Vice President and Secretary
Paul R. Jones	54	Vice President of Engineering
Jeffrey Mayersohn	52	Vice President of Customer Support and Professional Services
Stephen J. Nill	52	Chief Financial Officer, Vice President of Finance and Administration and Treasurer
John Michael O'Hara	37	Vice President of Marketing
Gary A. Rogers	48	Vice President of Worldwide Sales
Edward T. Anderson (1)	54	Director
Paul J. Ferri (2)(3)	65	Director
Albert A. Notini (1)	47	Director
Paul J. Severino (1)(2)	57	Director
H. Brian Thompson (3)	64	Director

(1): Member of audit committee. The Board of Directors has determined that Mr. Notini is an "audit committee financial expert" as defined in Item 401(h) of Regulation S-K and that each of the members of this committee is an "independent director" as defined in Rule 4200(a)(15) of the listing standards of the Nasdaq National Market.
(2): Member of compensation committee.
(3): Member of nominating committee.

Rubin Gruber is one of our founders and has been a Director since November 1997 and Chairman of our Board of Directors since November 1998. From November 1997 until November 1998, Mr. Gruber was our President. Before founding Sonus, Mr. Gruber was a founder of VideoServer, Inc., now Ezenia!, Inc., a manufacturer of videoconference network equipment, and from February 1992 until September 1996 served as Vice President of Business Development. Previously, Mr. Gruber was a founder and served as President of both Cambridge Telecommunications, Inc., a manufacturer of networking equipment, and Davox Corporation, a developer of terminals supporting voice and data applications, and served as a Senior Vice President of Bolt, Beranek and Newman Communications Corporation, a subsidiary of Bolt, Beranek and Newman, Inc., a manufacturer of data communications equipment. Mr. Gruber also serves on the Board of Directors of the IP Communications Consortium. Mr. Gruber holds a B.Sc. in mathematics from McGill University and an M.A. in mathematics from Wayne State University.

Hassan M. Ahmed has been our President and Chief Executive Officer and a member of our Board of Directors since November 1998. From July 1998 to November 1998, Mr. Ahmed was Executive Vice President and General Manager of the Core Switching Division of Ascend Communications, Inc., a provider of wide area network switches and access data networking equipment, and from July 1997 until July 1998 was a Vice President and General Manager of the Core Switching Division. From June 1995 to July 1997, Mr. Ahmed was Chief Technology Officer and Vice President of Engineering

for Cascade Communications Corp., a provider of wide area network switches. From 1993 until June 1995, Mr. Ahmed was a founder and President of WaveAccess, Inc., a supplier of wireless communications. Prior to that, he was an Associate Professor at Boston University, Engineering Manager at Analog Devices, a chip manufacturer, and director of VSLI Systems at Motorola Codex, a supplier of communications equipment. Mr. Ahmed holds a B.S. and an M.S. in engineering from Carleton University and a Ph.D. in engineering from Stanford University.

Edward N. Harris has been our Vice President of Manufacturing since October 2002. From September 2000 to October 2002, Mr. Harris was our Director of Materials and Planning. From July 1999 to September 2000, Mr. Harris was Senior Supply Chain Manager for Lucent Technologies, Integrated Network Solutions, a provider of core switching products. He was previously employed by Ascend Communications prior to its acquisition by Lucent, as Supply Chain Manager from January 1998 to June 1999 and as Senior Buyer/Planner from June 1997 to December 1997, and with Cascade Communications prior to its acquisition by Ascend, as Senior Buyer/Planner from 1994 to June 1997. Prior to that, he worked in materials management at American Science & Engineering, a manufacturer of x-ray inspection equipment and at Analog Devices. Mr. Harris holds a B.S. from the University of New Hampshire.

Michael G. Hluchyj is one of our founders and has been our Chief Technology Officer and Vice President since November 1997. He also has been our Secretary since our inception, and was our President from August 1997 to November 1997, our Treasurer from inception until March 2000 and a Director from our inception until November 1998. From July 1994 until July 1997, he was Vice President and Chief Technology Officer at Summa Four, Inc., a supplier of switches for carrier networks. Previously, he was Director of Networking Research at Motorola Codex and on the technical staff at AT&T Bell Laboratories. Mr. Hluchyj holds a B.S. in engineering from the University of Massachusetts and an M.S. and a Ph.D. in engineering from the Massachusetts Institute of Technology.

Paul R. Jones has been our Vice President of Engineering since June 2000. From February 1997 until May 2000, he was Vice President of Engineering for Indus River Networks, Inc., a developer of virtual private network solutions. From December 1994 until February 1996, he was Chief Operating Officer at Isis Distribution Systems, a wholly owned subsidiary of Stratus Computers. From March 1990 until November 1994, he was Vice President of Engineering at Stratus Computers, Inc., a provider of fault tolerant computer systems and services. Previously, Mr. Jones held senior engineering management positions at Stellar Computers, Inc. and Prime Computer, Inc. Mr. Jones holds an A.B. from Brown University and an M.S. in engineering from the University of Massachusetts.

Jeffrey Mayersohn has been our Vice President of Customer Support and Professional Services since July 1999. From March 1998 until July 1999, he was our Vice President of Carrier Relations. From June 1997 to March 1998, Mr. Mayersohn was a Senior Vice President at GTE Internetworking, an Internet service provider. From January 1995 to June 1997, he was with BBN Corporation, formerly Bolt, Beranek and Newman, Inc., and was a Vice President at the BBN Planet division, an Internet service provider. From 1978 to January 1995, he held a number of positions at Bolt, Beranek and Newman Communications Corporation, including Senior Vice President of Engineering, Senior Vice President responsible for U.S. Government Networks and Vice President of Professional Services. Mr. Mayersohn holds an A.B. in physics from Harvard College and an M.Phil. in physics from Yale University.

Stephen J. Nill has been our Chief Financial Officer and Vice President of Finance and Administration since September 1999 and our Treasurer since March 2000. From June 1994 until August 1999, he was Vice President of Finance and Chief Financial Officer of VideoServer, Inc., now Ezenia!, Inc. Previously, he served as Corporate Controller and Chief Accounting Officer at Lotus Development Corporation, a software supplier. Prior to that, Mr. Nill held various financial positions with Computervision, Inc., a supplier of workstation-based software, International Business Machines

Corporation and Arthur Andersen LLP. Mr. Nill has a B.A. in accounting from New Mexico State University and an M.B.A. from Harvard University.

John Michael O'Hara has been our Vice President of Marketing since July 2002. From 1987 to March 2002, Mr. O'Hara held a number of positions at Nortel Networks Corporation, a communications technology provider. From March 2001 to March 2002, he served as Vice President of Marketing in Europe, the Middle East and Africa, from April 1999 to March 2001 was Vice President of Business Operations, from April 1997 to March 1999 was Executive Assistant to the President and, from January 1996 to March 1997 was Senior Manager of Order Management. Prior to that, he held a number of management positions including sales, operations and customer service with Nortel in the European region. He holds a degree in engineering from the Queens University of Belfast.

Gary A. Rogers has been our Vice President of Worldwide Sales since March 1999. From March 1999 to December 2000, Mr. Rogers was also our Vice President of Marketing. From February 1997 to March 1999, Mr. Rogers was Senior Vice President of Worldwide Sales and Operations at Security Dynamics, Inc., now RSA Security, Inc., a supplier of network security products. Previously, he served at Bay Networks, Inc., as Vice President of International Sales from July 1996 to February 1997 and as Vice President of Europe, Middle East and Africa from 1994 until July 1996. Prior to that, he held sales and marketing positions with International Business Machines Corporation. Mr. Rogers holds a B.A. in mathematics from Dartmouth College and an M.B.A. from the University of Chicago.

Edward T. Anderson has been a Director since November 1997. Mr. Anderson has been managing general partner of North Bridge Venture Partners, a venture capital firm, since 1994. Previously, he was a general partner of ABS Ventures, the venture capital affiliate of Alex Brown & Sons. He has an M.F.A. from the University of Denver and an M.S. from Columbia University.

Paul J. Ferri has been a Director since November 1997. Mr. Ferri has been a general partner of Matrix Partners, a venture capital firm, since 1982. He also serves on the Board of Directors of Sycamore Networks, Inc. Mr. Ferri has a B.S. in engineering from Cornell University, an M.S. in engineering from Polytechnic Institute of New York and an M.B.A. from Columbia University.

Albert A. Notini has been a Director since March 2003. Mr. Notini has served as Executive Vice President and Chief Financial Officer of Manufacturers' Services Limited, a global electronics and supply chain services company, since October 2000. He joined Manufacturers' Services Limited in May 2000 as Executive Vice President, Business Development and General Counsel and served in that capacity until October 2000. From January 1999 to June 1999, Mr. Notini was the Executive Vice President, Corporate Development and Administration and General Counsel of Wang Global, a worldwide provider of network services. Wang Global was acquired by Getronics NV in June 1999 and Mr. Notini served as Executive Vice President of Getronics until February 2000. He joined Wang Global in February 1994 as Senior Vice President and General Counsel. Mr. Notini has a B.A. from Boston College and a J.D. from Boston College Law School. Mr. Notini also serves on the Board of Directors of Manufacturers' Services Limited and ePresence, Inc.

Paul J. Severino has been a Director since March 1999. Mr. Severino is a private investor. From 1994 to October 1996, he was Chairman of Bay Networks, Inc. after its formation from the merger of Wellfleet Communications, Inc. and Synoptics Communications, Inc. Prior to that, he was a founder, President and Chief Executive Officer of Wellfleet Communications, Inc. He also serves on the Board of Directors of MCK Communications, Inc. and Media 100, Inc. Mr. Severino has a B.S. in engineering from Rensselaer Polytechnic Institute.

H. Brian Thompson has been a Director since October 2003. Mr. Thompson currently serves as Chairman of the Board of Directors for Comsat International, an independent telecommunications operator with operations throughout Latin America. He also heads his own private equity investment

and advisory firm, Universal Telecommunications, Inc. Mr. Thompson currently serves on the Board of Directors of Bell Canada International, ArrayComm, Inc., Axcelis Technologies, Inc. and United Auto Group. He has a B.S. in chemical engineering from the University of Massachusetts and a MBA from Harvard University.

The information required by this Item 10 relating to compliance with Section 16(a) of the Securities Act of 1934 is included under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive Proxy Statement with respect to our 2004 Annual Meeting of Shareholders to be filed with the SEC not later than 120 days after the end of the fiscal year and is incorporated herein by reference.

We have a adopted a Code of Business Conduct and Ethics that applies to all executive officers, directors and employees of the company. The Code of Business Conduct and Ethics is attached as an exhibit to this Annual Report on Form 10-K and also can be found under the "Investor Relations" section of our website at www.sonusnet.com. We intend to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of this Code of Business Conduct and Ethics with respect to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website, unless a Form 8-K is otherwise required by applicable rules of the Nasdaq National Market.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item 11 is included under the captions "Proposal One—Election of Directors—Director Compensation" and "Summary of Executive Compensation" in our definitive Proxy Statement with respect to our 2004 Annual Meeting of Shareholders to be filed with the SEC not later than 120 days after the end of the fiscal year and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this Item 12 relating to security ownership of certain beneficial owners and management and securities authorized for issuance under equity compensation plans is included under the captions "Beneficial Ownership of Securities" and "Equity Compensation Plan Information" in our definitive Proxy Statement with respect to our 2004 Annual Meeting of Shareholders to be filed with the SEC not later than 120 days after the end of the fiscal year and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item 13 is included, as applicable, under the caption "Executive Compensation and Related Information" in our definitive Proxy Statement with respect to our 2004 Annual Meeting of Shareholders to be filed with the SEC not later than 120 days after the end of the fiscal year and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item 14 is included under the captions "Proposal Two—Ratification of Independent Auditors—Fees for Independent Auditors during Fiscal Year Ended December 31, 2003" and "Proposal Two—Ratification of Independent Auditors—Policy on Audit Committee Pre-approval of Audit and Non-audit Services" in our definitive Proxy Statement with respect to our 2004 Annual Meeting of Shareholders to be filed with the SEC not later than 120 days after the end of the fiscal year and is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Listing of Exhibits.

The Exhibits filed as part of this Annual Report on Form 10-K are listed in the Exhibit Index immediately preceding such Exhibits, which Exhibit Index is incorporated herein by reference.

(b) Reports on Form 8-K filed during the fourth quarter of fiscal 2002.

Sonus furnished a Current Report on Form 8-K dated October 8, 2003 reporting under Item 12 (Results of Operations and Financial Condition) its actual financial results for the quarter ended September 30, 2003.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Chelmsford, Commonwealth of Massachusetts, on this 15 day of March, 2004.

		SONUS NETWORKS, INC.
		By:	/s/ HASSAN M. AHMED Hassan M. Ahmed President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date

/s/ HASSAN M. AHMED Hassan M. Ahmed	President, Chief Executive Officer and Director (Principal Executive Officer)	March 15, 2004
/s/ STEPHEN J. NILL Stephen J. Nill	Chief Financial Officer, Vice President of Finance and Administration and Treasurer (Principal Financial and Accounting Officer)	March 15, 2004
/s/ RUBIN GRUBER Rubin Gruber	Chairman of the Board of Directors	March 15, 2004
/s/ EDWARD T. ANDERSON Edward T. Anderson	Director	March 15, 2004
/s/ PAUL J. FERRI Paul J. Ferri	Director	March 15, 2004
/s/ ALBERT A. NOTINI Albert A. Notini	Director	March 15, 2004
/s/ PAUL J. SEVERINO Paul J. Severino	Director	March 15, 2004
/s/ H. BRIAN THOMPSON H. Brian Thompson	Director	March 15, 2004

EXHIBIT INDEX

Exhibit Number		Description
3.1*		Fourth Amended and Restated Certificate of Incorporation of Sonus Networks, Inc., as amended.
3.2(b)		Amended and Restated By-Laws of Sonus Networks, Inc.
4.1(b)		Form of Stock Certificate representing shares of Sonus Networks, Inc. Common Stock.
10.1(a)		Registration Rights Agreement, dated as of November 2, 2000, by and among Sonus Networks, Inc. and the Stockholder parties thereto.
10.2(a)+		Sonus 2000 Retention Plan.
10.3(a)+		Telecom technologies, inc. 1998 Amended Equity Incentive Plan.
10.4(b)+		Amended and Restated 1997 Stock Incentive Plan of the Registrant.
10.5(b)+		2000 Employee Stock Purchase Plan of the Registrant.
10.6(b)		Lease, dated January 21, 1999, as amended, between the Registrant and Glenborough Fund V, Limited Partnership with respect to property located at 5 Carlisle Road, Westford, Massachusetts.
10.7(a)		Sub-lease, dated October 20, 2000, between the Registrant and Unisphere Networks, Inc. with respect to property located at 5 Carlisle Road, Massachusetts.
10.8(a)		Sub-Lease, dated October 20, 2000, between the Registrant and Unisphere Networks, Inc. with respect to property located at 235 Littleton Road, Westford, Massachusetts.
10.9(a)		Lease, dated September 30, 2000, between the Registrant and BCIA New England Holdings LLC with respect to property located at 25 Porter Road, Littleton, Massachusetts.
10.10(b)		Agreement of Sublease, dated April 14, 2000, between the Registrant and Unisphere Solutions, Inc. with respect to property located at 25 Porter Road, Littleton, Massachusetts.
10.11(a)		Office Lease Agreement, dated as of November 14, 2000, between telecom technologies, inc. and TR Lookout Partners, Ltd. with respect to property located at 1301 East Lookout Drive, Suite 3000, Richardson, Texas.
10.12(a)		First Amendment to Office Lease Agreement, dated as of January 8, 2001, between telecom technologies, inc. and TR Lookout Partners, Ltd. with respect to property located at 1300 East Lookout Drive, Suite 3000, Richardson, Texas.
10.13(c)		Office Lease Agreement dated April 4, 1997, between telecom technologies, inc. and Collins Campbell Joint Venture with respect to property located at 1701 North Collins Blvd., Suite 3000, Richardson, Texas.
10.14(c)		First Amendment to Office Lease Agreement, dated November 1, 1997, between telecom technologies, inc. and Collins Campbell Joint Venture with respect to property located at 1701 North Collins Blvd., Suite 3000, Richardson, Texas.
10.15(c)		Second Amendment to Office Lease Agreement, dated July 1, 1998, between telecom technologies, inc. and Collins Campbell Joint Venture with respect to property located at 1701 North Collins Blvd., Suite 3000, Richardson, Texas.
10.16(c)		Third Amendment to Office Lease Agreement, dated July 1, 1998, between telecom technologies, inc. and Collins Campbell Joint Venture with respect to property located at 1701 North Collins Blvd., Suite 3000, Richardson, Texas.
10.17(c)		Fourth Amendment to Office Lease Agreement, dated February 1, 1999, between telecom technologies, inc. and Collins Campbell Joint Venture with respect to property located at 1701 North Collins Blvd., Suite 3000, Richardson, Texas.

10.18(c)		Global Agreement, dated March 5, 2002, by and between TR Lookout Partners, Ltd., Collins Campbell Joint Venture, telecom technologies, inc. and Registrant related to property lease agreements.
10.19(e)		Fifth Amendment to Office Lease Agreement, dated February 28, 2002, between telecom technologies, inc. and Collins Campbell Joint Venture with respect to property located at 1701 North Collins Blvd., Suite 3000, Richardson, Texas.
10.20(e)		Sixth Amendment to Office Lease Agreement, dated February 1, 2003, between telecom technologies, inc. and Collins Campbell Joint Venture with respect to property located at 1701 North Collins Blvd., Suite 3000, Richardson, Texas.
10.21*		Sublease Agreement, dated October 16, 2003, by and between Cisco Systems, Inc. and Sonus Networks, Inc. with respect to property located at 250 Apollo Drive, Chelmsford, Massachusetts
10.22(c)		Loan and Security Agreement, dated as of January 16, 2002, by and between the Registrant and Silicon Valley Bank.
10.23(f)		Amendment to Loan and Security Agreement, dated as of March 14, 2003, by and between the Registrant and Silicon Valley Bank.
10.24(d)		Offer to Exchange Outstanding Stock Options dated October 16, 2002, as amended.
14.1*		Code of Business Conduct and Ethics.
21.1*		Subsidiaries of the Registrant.
23.1***		Consent of Ernst & Young LLP.
23.2***		Information regarding Consent of Arthur Andersen LLP.
31.1**		Certificate of Sonus Networks, Inc. Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**		Certificate of Sonus Networks, Inc. Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1***		Certificate of Sonus Networks, Inc. Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2***		Certificate of Sonus Networks, Inc. Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(a): Incorporated by reference to the Registrant's Registration Statement on Form S-4 (file No. 333-52682).
(b): Incorporated by reference to the Registrant's Registration Statement on Form S-1 (file No. 333-32206).
(c): Incorporated by reference from the Registrant's Form 10-K, filed March 28, 2002 with the SEC.
(d): Attached as Exhibit (a)(1) to Tender Offer Statement on Schedule TO, filed October 16, 2002 with the SEC, and subsequently amended by Amendment No. 1, filed on October 17, 2002, Amendment No. 2, filed on November 12, 2002, and Amendment No. 3, filed on November 26, 2002.
(e): Incorporated by reference from the Registrant's Form 10-K, filed March 19, 2003 with the SEC.
(f): Incorporated by reference from the Registrant's Form 10-Q, filed May 9, 2003 with the SEC.
*: Filed herewith.
**: To be supplemented by amendment.
***: To be filed by amendment.
+: Management contract or compensatory plan or arrangement filed herewith in response to Item 15(a)(3) of the Instructions to the Annual Report on Form 10-K.

QuickLinks

DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
PART I
PART II
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
PART III
PART IV
SIGNATURES
EXHIBIT INDEX



                                                                     Exhibit 3.1


                              SONUS NETWORKS, INC.

         CERTIFICATE OF INCORPORATION (AS AMENDED THROUGH MAY 30, 2001)


                                TABLE OF CONTENTS



                                                                       PAGE
                                                                     
ARTICLE I: Name......................................................   1
ARTICLE II: Registered Agent.........................................   1
ARTICLE III: Purpose.................................................   1
ARTICLE IV: Capital Stock............................................   1
ARTICLE V: Board of Directors........................................   3
ARTICLE VI: Limitation of Liability..................................   4
ARTICLE VII: Indemnification.........................................   4
ARTICLE VIII: Compromises and Arrangements...........................   5
ARTICLE IX: Certain Transactions.....................................   5
ARTICLE X: Stockholder Action........................................   5
ARTICLE XI: Amendments...............................................   5



- ----------
*    Text of Certificate of Incorporation as set forth in the Fourth Amended and
     Restated Certificate of Incorporation filed with the Secretary of State of
     the State of Delaware on May 30, 2000. Article IV was subsequently amended
     on May 30, 2001, to change the authorized number of shares of common stock
     from 300,000,000 to 600,000,000 and make a corresponding increase in the
     total number of shares of capital stock from 305,000,000 to 605,000,000.



                                    ARTICLE I
                                      NAME

     The name of the corporation (the "CORPORATION") is Sonus Networks, Inc.

                                   ARTICLE II
                                REGISTERED AGENT

          The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle;
and the name of its registered agent is Corporation Service Company.

                                   ARTICLE III
                                     PURPOSE

     The nature of the business or purposes to be conducted or promoted by the
Corporation is as follows:

     To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.

                                   ARTICLE IV
                                  CAPITAL STOCK

     The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 605,000,000 shares, consisting solely of:

     600,000,000    shares of common stock, par value $0.001 per share ("COMMON
                    STOCK"); and

     5,000,000      shares of preferred stock, par value $0.01 per share
                    ("PREFERRED STOCK").

     The following is a statement of the powers, designations, preferences,
privileges, and relative rights in respect of each class of capital stock of the
Corporation.

     A.   COMMON STOCK.

     1.   GENERAL. The voting, dividend and liquidation rights of the holders of
Common Stock are subject to and qualified by the rights of the holders of
Preferred Stock.

     2.   VOTING. The holders of Common Stock are entitled to one vote for each
share held at all meetings of stockholders. There shall be no cumulative voting.

     3.   DIVIDENDS. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor if, as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding shares of Preferred Stock.

                                        1


     4.   LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding shares
of Preferred Stock.

     B.   PREFERRED STOCK.

     Shares of Preferred Stock may be issued from time to time in one or more
series, each of such series to have such powers, designations, preferences, and
relative, participating, optional, or other special rights, if any, and such
qualifications and restrictions, if any, of such preferences and rights, as are
stated or expressed in the resolution or resolutions of the Board of Directors
providing for such series of Preferred Stock. Different series of Preferred
Stock shall not be construed to constitute different classes of shares for the
purposes of voting by classes unless expressly so provided in such resolution or
resolutions.

     Authority is hereby granted to the Board of Directors from time to time to
issue the Preferred Stock in one or more series, and in connection with the
creation of any such series, by resolution or resolutions to determine and fix
the powers, designations, preferences, and relative, participating, optional, or
other special rights, if any, and the qualifications and restrictions, if any,
of such preferences and rights, including without limitation dividend rights,
conversion rights, voting rights (if any), redemption privileges, and
liquidation preferences, of such series of Preferred Stock (which need not be
uniform among series), all to the fullest extent now or hereafter permitted by
the General Corporation Law of Delaware. Without limiting the generality of the
foregoing, the resolution or resolutions providing for the creation or issuance
of any series of Preferred Stock may provide that such series shall be superior
to, rank equally with, or be junior to the Preferred Stock of any other series,
all to the fullest extent permitted by law. No resolution, vote, or consent of
the holders of the capital stock of the Corporation shall be required in
connection with the creation or issuance of any shares of any series of
Preferred Stock authorized by and complying with the conditions of this Amended
and Restated Certificate of Incorporation, the right to any such resolution,
vote, or consent being expressly waived by all present and future holders of the
capital stock of the Corporation.

     Any resolution or resolutions adopted by the Board of Directors pursuant to
the authority vested in them by this Article IV shall be set forth in a
certificate of designation along with the number of shares of stock of such
series as to which the resolution or resolutions shall apply and such
certificate shall be executed, acknowledged, filed, recorded, and shall become
effective, in accordance with Section 103 of the General Corporation Law of the
State of Delaware. Unless otherwise provided in any such resolution or
resolutions, the number of shares of stock of any such series to which such
resolution or resolutions apply may be increased (but not above the total number
of authorized shares of the class) or decreased (but not below the number of
shares thereof then outstanding) by a certificate likewise executed,
acknowledged, filed and recorded, setting forth a statement that a specified
increase or decrease therein has been authorized and directed by a resolution or
resolutions likewise adopted by the Board of Directors. In case the number of
such shares shall be decreased, the number of shares so specified in the
certificate shall resume the status which they had prior to the adoption of the
first resolution or resolutions. When no shares of any such class or series are
outstanding, either because none were issued or because none remain outstanding,
a certificate setting forth a resolution or resolutions adopted by the Board of
Directors that none of the authorized shares of such class or series are
outstanding,

                                        2


and that none will be issued subject to the certificate of designations
previously filed with respect to such class or series, may be executed,
acknowledged, filed and recorded in the same manner as previously described and
it shall have the effect of eliminating from this Amended and Restated
Certificate of Incorporation all matters set forth in the certificate of
designations with respect to such class or series of stock. If no shares of any
such class or series established by a resolution or resolutions adopted by the
Board of Directors have been issued, the voting powers, designations,
preferences and relative, participating, optional or other rights, if any, with
the qualifications, limitations or restrictions thereof, may be amended by a
resolution or resolutions adopted by the Board of Directors. In the event of any
such amendment, a certificate which (i) states that no shares of such class or
series have been issued, (ii) sets forth the copy of the amending resolution or
resolutions and (iii) if the designation of such class or series is being
changed, indicates the original designation and the new designation, shall be
executed, acknowledged, filed, recorded, and shall become effective, in
accordance with Section 103 of the General Corporation Law of the State of
Delaware.

                                    ARTICLE V
                               BOARD OF DIRECTORS

     The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation and for defining and
regulating the powers of the Corporation and its directors and stockholders and
are in furtherance and not in limitation of the powers conferred upon the
Corporation by statute:

          (a)  The Board of Directors shall be divided into three classes of
     directors, such classes to be as nearly equal in number of directors as
     possible, having staggered three-year terms of office, the term of office
     of the directors of the first such class to expire as of the first annual
     meeting of the Corporation's stockholders following the closing of the
     Corporation's first public offering of shares of Common Stock registered
     pursuant to the Securities Act of 1933, as amended, those of the second
     class to expire as of the second annual meeting of the Corporation's
     stockholders following such closing, and those of the third class as of the
     third annual meeting of the Corporation's stockholders following such
     closing, such that at each annual meeting of stockholders after such
     closing, nominees will stand for election to succeed those directors whose
     terms are to expire as of such meeting. Any director serving as such
     pursuant to this paragraph (b) of Article V may be removed only for cause
     and only by the vote of the holders of 66 2/3% of the shares of the
     Corporation's stock entitled to vote for the election of directors.

          (b)  The Board of Directors shall have the power and authority: (i) to
     adopt, amend or repeal By-Laws of the Corporation, subject only to such
     limitations, if any, as may be from time to time imposed by other
     provisions of this Certificate, by law, or by the By-Laws; and (ii) to the
     full extent permitted or not prohibited by law, and without the consent of
     or other action by the stockholders, to authorize or create mortgage,
     pledges or other liens or encumbrances upon any or all of the assets, real,
     personal or mixed, and franchises of the Corporation, including
     after-acquired property, and to exercise all of the powers of the
     Corporation in connection therewith.


                                        3



                                   ARTICLE VI
                             LIMITATION OF LIABILITY

     No director of the Corporation shall be personally liable to the
Corporation or to any of its stockholders for monetary damages for breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability; PROVIDED, HOWEVER, that to the extent required from time to time by
applicable law, this Article VI shall not eliminate or limit the liability of a
director, to the extent such liability is provided by applicable law, (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
Title 8 of the Delaware Code, or (iv) for any transactions from which the
director derived an improper personal benefit. No amendment to or repeal of this
Article VI shall apply to or have any effect on the liability or alleged
liability of any director for or with respect to any acts or omissions of such
director occurring prior to the effective date of such amendment or repeal.

                                   ARTICLE VII
                                 INDEMNIFICATION

     The Corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of Delaware, as amended from time to time, indemnify
each person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was, or has agreed to become, a director or officer of the Corporation, or is or
was serving, or has agreed to serve, at the request of the Corporation, as a
director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise (including
any employee benefit plan), or by reason of any action alleged to have been
taken or omitted in such capacity, against all expenses (including attorneys'
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom.

     Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article VII, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayment.

     The Corporation shall not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the Board of Directors.

     The indemnification rights provided in this Article VII (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this Article VII.


                                        4



                                  ARTICLE VIII
                          COMPROMISES AND ARRANGEMENTS

     Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any Class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 391 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such a
manner as the said court directs. If a majority of the number representing
three-fourths (3/4ths) in value of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of the Corporation, as the case may
be, agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the compromise
or arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all creditors or class
of creditors, and/or stockholders or class of stockholders of the Corporation,
as the case may be, and also on the Corporation.

                                   ARTICLE IX
                              CERTAIN TRANSACTIONS

     The Board of Directors, when considering a tender offer or merger or
acquisition proposal, may take into account factors in addition to potential
economic benefits to stockholders, including without limitation (i) comparison
of the proposed consideration to be received by stockholders in relation to the
then current market price of the Corporation's capital stock, the estimated
current value of the Corporation in a freely negotiated transaction, and the
estimated future value of the Corporation as an independent entity, (ii) the
impact of such a transaction on the employees, suppliers, and customers of the
Corporation and its effect on the communities in which the Corporation operates,
and (iii) the impact of such a transaction on the unique corporate culture and
atmosphere of the Corporation.

                                    ARTICLE X
                               STOCKHOLDER ACTION

     Any action required or permitted to be taken by the stockholders of the
Corporation may be taken only at a duly called annual or special meeting of the
stockholders, and not by written consent in lieu of such a meeting, and special
meetings of stockholders may be called only by the Chairman of the Board of
Directors, the President, or a majority of the Board of Directors.

                                   ARTICLE XI
                                   AMENDMENTS

     The affirmative vote of the holders of at least 66 2/3% of the outstanding
voting stock of the Corporation (in addition to any separate class vote that may
in the future be required pursuant to the terms of any outstanding Preferred
Stock) shall be required to amend or repeal the provisions of Articles IV (to
the extent it relates to the authority of the Board of Directors to issue shares
of Preferred Stock in one or more series, the terms of which may be determined
by

                                        5


the Board of Directors), V, VII, IX, X, or XI of this Certificate of
Incorporation* or to reduce the numbers of authorized shares of Common Stock or
Preferred Stock.

                                      * * *


- ----------
*    Text of Certificate of Incorporation as set forth in the Fourth Amended and
     Restated Certificate of Incorporation filed with the Secretary of State of
     the State of Delaware on May 30, 2000. Article IV was subsequently amended
     on May 30, 2001, to change the authorized number of shares of common stock
     from 300,000,000 to 600,000,000 and make a corresponding increase in the
     total number of shares of capital stock from 305,000,000 to 605,000,000.

                                        6



                               SUBLEASE AGREEMENT
                                 BY AND BETWEEN

                               CISCO SYSTEMS, INC.
                            A CALIFORNIA CORPORATION
                                 AS SUBLANDLORD


                                       AND


                              SONUS NETWORKS, INC.
                             A DELAWARE CORPORATION
                                  AS SUBTENANT


                                250 APOLLO DRIVE
                         CHELMSFORD, MASSACHUSETTS 01824


                           DATED AS OF OCTOBER__, 2003



                               SUBLEASE AGREEMENT

DEFINED TERMS


                           
BASE RENT:                    RENT

                                (a) In order to achieve the lower monthly rent set forth
                                    in paragraph (b) below for the period of the Sublease
                                    Term commencing on the Rent Commencement Date and
                                    continuing through the Expiration Date, Subtenant
                                    shall make a one-time rent payment of $1,250,000.00
                                    due and payable on the Commencement Date ("Advanced
                                    Rent Payment").

                                (b) Six Hundred and Eighty Thousand Six Hundred
                                    Eighty-Eight Dollars ($680,688.00) per annum, payable
                                    in monthly payments of Fifty Six Thousand, Seven
                                    Hundred Twenty-Four and 00/100 Dollars ($56,724.00)
                                    commencing on the Rent Commencement Date and
                                    continuing through the Expiration Date.

BROKER:                       The Staubach Company

BUILDING:                     An approximately 144,375 rentable square foot building
                              situated upon approximately 10.99 acres of land located at
                              250 Apollo Drive, Chelmsford, Massachusetts.

COMMENCEMENT DATE:            The date of receipt by Sublandlord of an executed original
                              of the Master Landlord's Consent to Sublease with respect to
                              this fully executed Sublease and substantially in the form
                              attached hereto and incorporated herein as EXHIBIT X
                              ("MASTER LANDLORD'S CONSENT").

EXPIRATION DATE:              January 31, 2007

OCCUPANCY DATE:               The earlier of (a) April 1, 2004, or (b) the date Subtenant
                              first occupies any part of the Sublease Premises for any of
                              the Permitted Uses.

MASTER LANDLORD:              CSDV, Limited Partnership, as successor to 250 Apollo
                              Investors LLC

MASTER LEASE:                 That certain Lease Agreement dated March 2, 1999 between
                              Master Landlord and Sublandlord, attached hereto as EXHIBIT
                              A.


                                        i



                           
PERMITTED USES:               General administrative office, industrial, assembly, light
                              manufacturing and distribution of computer products and
                              related uses as and to the extent permitted by Section 8 of
                              the Master Lease and in compliance with all Laws.

MASTER PREMISES:              Improved real property, including the Building containing
                              approximately 144,375 rentable square feet, located on
                              approximately 10.99 acres of land, as more particularly
                              described in the Master Lease.

RENT COMMENCEMENT DATE:       April 1, 2004.

SUBLEASE PREMISES:            A portion of the Master Premises, consisting of
                              approximately 133,621 total rentable square feet consisting
                              of approximately 60,547 rentable square feet located on the
                              first floor and 73,074 rentable square feet located on the
                              second floor of the Building as depicted in EXHIBIT B.

SECURITY DEPOSIT:             Seven Hundred and Fifty Thousand Dollars ($750,000.00) plus
                              Restoration Costs as defined in Section 3(g) due and payable
                              on or before January 15, 2004 and in the form of cash or a
                              Letter of Credit as provided in Section 3(g), subject to
                              reduction as provided in Section 3(g).

SUBTENANT:                    Sonus Networks, a Delaware corporation

SUBTENANT'S ADDRESS:          Prior to the Occupancy Date:

                              5 Carlisle Road

                              Westford, MA 01886

                              Attn:Adam Wasylyshyn

                              From and after the Occupancy Date:

                              250 APOLLO DRIVE
                              CHELMSFORD, MA 01824

                              Attn:Adam Wasylyshyn

SUBTENANT'S SHARE:            92.5%

SUBLANDLORD:                  Cisco Systems, Inc., a California corporation.

SUBLANDLORD'S ADDRESS FOR     170 West Tasman Drive
NOTICES:                      San Jose, California  95134-1706
                              Attn: Director, Worldwide Real Estate


                                       ii



                           
SUBLANDLORD'S ADDRESS FOR     Cisco Systems, Inc.
PAYMENT:
                              File #74172
                              P.O. Box 60000
                              San Francisco, California 94160

SUBLEASE TERM:                Approximately forty (40) months, commencing on the
                              Commencement Date and expiring on the Expiration Date.

EXHIBITS:                     EXHIBIT A - Master Lease
                              EXHIBIT B - Sublease Premises
                              EXHIBIT C - Form of Letter of Credit
                              EXHIBIT D - Preliminary Plans for Tenant Improvements
                              EXHIBIT E - Schedule of Sublandlord Property
                              EXHIBIT E-1 - Form of Bill of Sale
                              EXHIBIT X - Form of Master Landlord Consent


                                       iii


     THIS SUBLEASE AGREEMENT (this "SUBLEASE") is entered as of the Commencement
Date by and between Sublandlord and Subtenant.

     THE PARTIES ENTER this Sublease on the basis of the following facts,
understandings and intentions:

     A.   Sublandlord presently leases the Sublease Premises pursuant to the
Master Lease.

     B.   Sublandlord desires to sublease the Sublease Premises to Subtenant and
Subtenant desires to sublease the Sublease Premises from Sublandlord on all of
the terms, covenants and conditions hereinafter set forth.

     C.   All of the terms and definitions in the Defined Terms section are
incorporated herein by this reference, and any capitalized terms not defined in
the Defined Terms or elsewhere in this Sublease shall have the meanings given to
such terms in the Master Lease.

     NOW, THEREFORE, IN CONSIDERATION of the Sublease Premises subleased herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby covenant and agree as follows:

     1. SUBLEASE PREMISES AND TERM.

     (a)   DEMISE. Sublandlord hereby subleases to Subtenant, and Subtenant
hereby subleases from Sublandlord, the Sublease Premises, for the Sublease Term
subject to the terms, covenants and conditions set forth herein. The Sublease
Term shall commence on the Commencement Date. Sublandlord and Subtenant shall
execute a Commencement Date notice promptly following the Commencement Date. The
Sublease Term shall end on January 31, 2007 (the "EXPIRATION DATE") or on such
earlier date upon which said term may expire or be cancelled or terminated
pursuant to any of the provisions of this Sublease. As used herein, "Sublease
Premises" shall include the appurtenances, the existing interior improvements,
equipment and systems of the Sublease Premises as of the Commencement Date,
together with the appurtenant right to use in common with others entitled
thereto the following areas (collectively the "COMMON AREAS"): (i) the common
lobbies, loading docks, hallways and stairways of the Building serving the
Sublease Premises, (ii) common walkways and driveways necessary for access to
the Building and delivery of products to the Subleased Premises, and (iii) the
common toilets and other common facilites of the floors on which the Subleased
Premises is located. If Sublandlord fails to deliver possession of the Sublease
Premises to Subtenant on or before the Commencement Date this Sublease shall not
be void or voidable nor shall Sublandlord be liable to Subtenant for any
resulting loss or damage; provided, however, Subtenant shall not be liable for
Subtenant's Electricity or janitorial services costs for the Sublease Premises
until the later to occur of delivery of the Sublease Premises to Subtenant or
the Occupancy Date. Subtenant covenants that, as a material part of the
consideration for this Sublease, it shall keep and perform each and all of such
terms, covenants and conditions by it to be kept and performed, and that this
Sublease is made upon the condition of such performance. Subtenant assumes and
agrees to perform Sublandlord's obligations under the Master Lease during the
Sublease Term to the extent such obligations are applicable to the Sublease
Premises and are not either excluded from incorporation herein or specifically
contradicted or modified herein. Subtenant shall not commit or suffer any act or
omission that will violate any of the provisions of the Master Lease
incorporated herein.

                                        1


     (b)   MEASUREMENT OF THE SUBLEASE PREMISES. Subtenant understands that the
Sublease Premises is to contain approximately 133,621 "rentable square feet" as
determined pursuant to the standard method for measuring floor area in office
buildings published by the Building Owners and Managers Association
International ("BOMA") as revised and readopted June 7, 1996 (the "STANDARD
MEASURE").

     (c)   CONDITION PRECEDENT. The parties' obligations hereunder are expressly
conditioned upon, within ten (10) days after execution of this Sublease,
delivery to Sublandlord of certified copies of corporate resolutions of
Subtenant, authorizing or ratifying the execution of this Sublease.

     The foregoing condition precedent runs to the benefit of Sublandlord and if
Subtenant does not timely satisfy same, this Sublease may be terminated by
Sublandlord in its sole and absolute discretion by notice to Subtenant,
whereupon Sublandlord shall refund to Subtenant the Security Deposit and any
Base Rent or Advanced Rent Payment paid to Sublandlord.

     (d)   INSTALLATION OF SUBTENANT'S FURNITURE, EQUIPMENT AND FIXTURES. As of
the Commencement Date, Subtenant and its agents, employees, invitees,
consultants and contractors (collectively "AGENTS") shall have the right to
enter the Sublease Premises for space planning, construction of tenant
improvements and installation of furniture, equipment and furnishings in the
Sublease Premises, at Subtenant's sole cost (provided that Subtenant shall
obtain the consent of Sublandlord and Master Landlord to any Alterations as
required by Section 6 of this Sublease).

     (e)   PARKING. Subtenant shall be entitled to a Subtenant's Share of
Sublandlord's parking rights under the Master Lease (i.e., 92% of the parking
spaces depicted in a plan of the Master Premises, prepared by Vannesse Hangen
and Brustlin, Inc. (VHB), and attached as Exhibit B to the Master Lease) which
spaces shall be unreserved and otherwise subject to the terms and conditions of
the Master Lease.

     (f)   ACCEPTANCE OF SUBLEASE PREMISES. Subtenant agrees to accept the
Sublease Premises in its current "as is" condition. Without limiting the
foregoing, Subtenant's rights in the Sublease Premises are subject to all local,
state and federal laws, regulations, codes and ordinances (collectively, "LAWS")
governing and regulating the use and occupancy of the Sublease Premises, the
terms and conditions of the Master Lease, and all matters now or hereafter of
record. Sublandlord has not received notice of any violations of any Laws by or
at the Sublease Premises, including with respect to the use thereof. Subtenant
acknowledges that, neither Sublandlord nor Sublandlord's agent has made any
representation or warranty as to: (i) the present or future suitability of the
Sublease Premises for the conduct of Subtenant's business; (ii) the physical
condition of the Sublease Premises; (iii) the expenses of operation of the
Sublease Premises; (iv) the safety of the Sublease Premises, whether for the use
of Subtenant or any other person, including Subtenant's Agents; (v) the
compliance of the Sublease Premises with applicable Laws; or (vi) any other
matter or thing affecting or related to the Sublease Premises.

     Subtenant acknowledges that no rights, easements or licenses are acquired
by Subtenant by implication or otherwise except as expressly set forth herein.
Subtenant has inspected or will

                                        2


inspect, prior to delivery of possession of the Sublease Premises, the Sublease
Premises and become thoroughly acquainted with their condition. Subtenant
acknowledges that the taking of possession of the Sublease Premises by Subtenant
will be conclusive evidence that the Sublease Premises were in good and
satisfactory condition at the time such possession was taken. Subtenant
specifically agrees that, except as specifically provided by Laws in force as of
the date hereof, Sublandlord has no duty to make any disclosures concerning the
condition of the Building and the Sublease Premises and/or the fitness of the
Building and the Sublease Premises for Subtenant's intended use and Subtenant
expressly waives any duty which Sublandlord might have to make any such
disclosures. Subtenant further agrees that, in the event Subtenant is permitted
to and in fact assigns this Sublease or sub-subleases all or any portion of the
Sublease Premises, Subtenant will indemnify and defend Sublandlord (in
accordance with Section 8(a) hereof) for, from and against any matters which
arise as a result of Subtenant's failure to disclose any relevant information
about the Building or the Sublease Premises to any sub-sublessee or assignee of
Subtenant. Subtenant will comply with all Laws relating to the use or occupancy
of the Sublease Premises and the Common Areas (other than those requiring
structural alterations, except as required as a result of Subtenant's
Alterations). Subtenant shall have no obligation to make non-structural
alterations or provide auxiliary aids and services to the Sublease Premises and
to the Common Areas of the Premises as required by the Americans with
Disabilities Act of 1990, 42 U.S.C. Section 12101 et seq. (the "ADA") except to
the extent such alterations, aids or services (x) are required by Subtenant's
particular use or occupancy of the Sublease Premises, or (y) are due to any
alterations or improvements installed by Subtenant in the Sublease Premises
(including any resulting ADA compliance requirements in the Common Areas).
Subtenant further agrees that all telephone and other communication installation
and use requirements will be compatible with the Building and that Subtenant
will be solely responsible for all of its telephone and communication
installation and usage costs.

     (g)   REMOVAL OF PERSONAL PROPERTY. All articles of personal property, and
all business and trade fixtures, machinery and equipment, cabinet work,
furniture and movable partitions, if any, owned or installed by Subtenant at its
expense in the Sublease Premises will be and remain the property of Subtenant
and may be removed by Subtenant at any time, provided that Subtenant, at its
expense, shall repair any damage to the Sublease Premises caused by such removal
or by the original installation. Sublandlord may elect to require Subtenant to
remove all or any part of Subtenant's personal property at the expiration of the
Sublease Term or sooner termination of this Sublease, in which event the removal
will be done at Subtenant's expense and Subtenant, prior to the end of the
Sublease Term or upon sooner termination of this Sublease, will repair any
damage to the Sublease Premises caused by its removal.

     (h)   HOLDING OVER. If Subtenant holds over after the expiration of the
Sublease Term or earlier termination of this Sublease, with or without the
express or implied consent of Sublandlord, then Subtenant will become and be
only a tenant at sufferance at a per diem Base Rent equal to (i) one hundred and
twenty five percent (125%) of the Base Rent payable by Sublandlord under the
Master Lease, or (ii) if Sublandlord is then subleasing the remaining space in
the Building, one hundred and twenty five percent (125%) of the Base Rent
allocable to the Sublease Premises payable by Sublandlord under the Master
Lease, immediately prior to such expiration or termination, and otherwise upon
the terms, covenants and conditions herein specified. Notwithstanding any
provision to the contrary contained herein, (a) Sublandlord expressly reserves
the right to require Subtenant to surrender possession of the Sublease

                                        3


Premises upon the expiration of Sublease Term or upon the earlier termination of
this Sublease and the right to assert any remedy at law or in equity to evict
Subtenant and/or collect damages in connection with any holding over, and (b)
Subtenant will indemnify, defend and hold Sublandlord harmless from and against
any and all liabilities, claims, demands, actions, losses, damages, obligations,
costs and expenses, including, without limitation, attorneys' fees incurred or
suffered by Sublandlord by reason of Subtenant's failure to surrender the
Sublease Premises on the expiration of the Sublease Term or earlier termination
of this Sublease.

     (i)   PURCHASE OF SUBLANDLORD PROPERTY. Subtenant agrees to purchase and
Sublandlord agrees to sell certain personal property, equipment, and furniture
presently located within the Sublease Premises (the "SUBLANDLORD PROPERTY") as
described generally on EXHIBIT E attached hereto and incorporated herein.
Subtenant agrees to pay Sublandlord the sum of One Dollar ($1.00) ("SUBLANDLORD
PROPERTY PURCHASE PRICE") for the Sublandlord Property upon execution of this
Sublease. Sublandlord shall, upon the full execution of this Sublease and
Sublandlord's receipt of a fully executed copy of the Master Landlord's Consent
to Sublease, execute and deliver to Subtenant a bill of sale for the Sublandlord
Property in the form of EXHIBIT E-1 attached hereto and incorporated herein.
Subtenant acknowledges that Sublandlord shall have the option, prior to the
Commencement Date, of removing certain items of its personal property from the
Sublease Premises, including networking equipment and certain business and trade
fixtures, provided however Sublandlord shall not remove any office furniture or
installed wiring not connected to any networking equipment which is set forth in
Exhibit E and which is currently located within the Sublease Premises. The
Sublandlord Property shall be conveyed to Subtenant in its "AS IS, WHERE IS,
WITH ALL FAULTS, IF ANY" condition as of the Commencement Date, without any
warranties, express or implied regarding the number of such items, their
physical condition, existence, capacity, quality, value, workmanship, operating
capability or performance, compliance with applicable laws, or their fitness or
suitability for Subtenant's purposes (but with a warranty by Sublandlord that as
of the date of such conveyance, Sublandlord has good title to and the right and
authority to convey the Sublandlord Property; and that the Sublandlord Property
is free and clear of all security interests, liens and encumbrances).
Notwithstanding the foregoing, if this Sublease is terminated due to the failure
of any of the conditions set forth in Section 1(c) of this Sublease, the
Sublandlord Property shall be deemed not conveyed to Subtenant and the
Sublandlord Property Purchase Price, if received by Sublandlord, shall be
promptly refunded to Subtenant.

     (j)   RIGHT OF FIRST OFFER. Sublandlord hereby grants Subtenant a
continuing right of first offer to lease any unoccupied space within the first
floor of the Building which is currently available or later becomes available
during the Sublease Term (the "RIGHT OF FIRST OFFER"). Subtenant shall have
three (3) business days after receipt of Sublandlord's written notice that
Sublandlord is marketing such space in which to exercise the Right of First
Offer upon any such vacant space. In the event Subtenant chooses not to exercise
its Right of First Offer, then if Sublandlord has not entered into a letter of
intent with a subtenant for the unoccupied space within one hundred and eighty
(180) days following Sublandlord's notice to Subtenant, Subtenant's right of
First Offer shall be restored and Sublandlord must send a new notice to
Subtenant pursuant to the previous sentence prior to subleasing such vacant
space to a subtenant. Upon the exercise of the Right of First Offer and the
execution of an amendment to this Sublease, the space subject to the Right of
First Offer shall become part of the Sublease Premises and the Rent shall
increase based upon a rental rate of $6.68 per square foot effective as of the

                                        4


date of such amendment and the Subtenant's Share shall increase accordingly.
Subtenant shall be responsible for the construction and cost of demising such
excess space, if any.

     2. SUBLEASE SUBJECT TO MASTER LEASE.

     (a)   INCLUSIONS. All of the terms, conditions and covenants of the Master
Lease are hereby incorporated into this Sublease by reference, except as
excluded in Section 2(b) herein. Subtenant shall be subject to, bound by,
benefit from and comply with all of said included terms, conditions, rights and
covenants of the Master Lease with respect to the Sublease Premises herein for
the benefit of both Sublandlord and Master Landlord, it being understood and
agreed that wherever in the Master Lease the word "Tenant" appears, for the
purposes of this Sublease, the word "Subtenant" shall be substituted, and
wherever the word "Landlord" appears, for the purposes of this Sublease, the
word "Sublandlord" shall be substituted; and that upon the breach of any of said
terms, conditions or covenants of the Master Lease by Subtenant or upon the
occurrence of an event of default by Subtenant, Sublandlord may exercise any and
all rights and remedies granted to Master Landlord by the Master Lease and
Subtenant shall have all of the rights of the Tenant under the Master Lease. In
the event of any conflict between this Sublease and the Master Lease, the terms
of this Sublease shall control between Sublandlord and Subtenant. It is further
understood and agreed that Sublandlord has no duty or obligation to Subtenant
under the aforesaid Sections of the Master Lease other than to perform the
obligations of Sublandlord as tenant under the Master Lease during the Sublease
Term. Whenever the provisions of the Master Lease incorporated as provisions of
this Sublease require the written consent of Master Landlord, said provisions
shall be construed to require the written consent of both Master Landlord and
Sublandlord. Subtenant hereby acknowledges that it has read and is familiar with
all the terms of the Master Lease, and agrees that this Sublease is subordinate
and subject to the Master Lease. With respect to the following incorporated
provisions, the references therein to Landlord shall be deemed to be references
to Sublandlord and Master Landlord: Sections 8.1 (Compliance with Laws), 8.2
(Prohibition on Use), 9.1 (Alterations), 10.4 (Tenant's Failure to Perform
Repairs and Maintenance Obligations), 11.3 (Additional Insured's), 11.4 (Failure
of Tenant to Purchase Insurance), 12 (Waiver of Subrogation), 17 (Right of
Entry), 18 (Estoppel Certificate), 26 (Environmental Matters), 27 (Financial
Statements), 29 (Signs), and 31 (Quitclaim).

     (b)   EXCLUSIONS. The terms and provisions of the following Sections and
Exhibits of the Master Lease are not incorporated into this Sublease: The last
Sentence of Section 1 (Premises), Sections 2 (Term), 3 (Rent), 4 (Security
Deposit), 5 (Additional Rent), the first four sentences and the seventh sentence
of Section 6 (Utilities), Sections 7 (Late Charges), 10.1 (Tenant's Repairs and
Maintenance Obligations), 11.5 (Self Insurance), the second full paragraph of
Section 14.1 (Assignment), the sentences in the first paragraph of Section 24
beginning with "Notwithstanding anything to the contrary . . ." and "In the
event the holder of any indebtedness . . .", and Addendum 1 to the Master Lease.
Section 28.10 of the Master Lease shall apply to notices to Master Landlord and
not payment hereunder.

     (c)   TIME FOR NOTICE. Except for the time limits for notice, demands,
performance or exercise of rights specified in this Sublease which shall not be
altered by this Section 2(c), including without limitation the time frames set
forth in Sections 11 and 12 hereof, the time limits provided for in the Master
Lease for the giving of notice, making of demands,

                                        5


performance of any act, condition or covenant, or the exercise of any right,
remedy or option, are amended for the purposes of this Sublease by lengthening
or shortening the same in each instance by five (5) days, as appropriate, so
that notices may be given, demands made, or any act, condition or covenant
performed, or any right, remedy or option hereunder exercised, by Sublandlord or
Subtenant, as the case may be, within the time limit relating thereto contained
in the Master Lease. If the Master Lease allows only five (5) days or less for
Sublandlord to perform any act, or to undertake to perform such act, or to
correct any failure relating to the Sublease Premises or this Sublease, then
Subtenant shall nevertheless be allowed three (3) days to perform such act,
undertake such act and/or correct such failure. In the event of a conflict
between the time frame set forth elsewhere in this Sublease and the time frame
specified in the Master Lease as modified by this Section 2(c), the time frame
set forth elsewhere in this Sublease shall control.

     (d)   MASTER LANDLORD'S OBLIGATIONS. It shall be the obligation of Master
Landlord to provide all services to be provided by Master Landlord under the
terms of the Master Lease and to satisfy all obligations and covenants of Master
Landlord made in the Master Lease. Subtenant acknowledges that Sublandlord shall
be under no obligation to provide any such services or satisfy any such
obligations or covenants; provided, however, Sublandlord, upon written notice by
Subtenant, shall use reasonable and diligent efforts to enforce all obligations
of Master Landlord under the Master Lease, without any obligation of Sublandlord
to incur any costs or bring any legal action against Master Landlord.

     (e)   RULES AND PROCEDURES. Subtenant hereby acknowledges and agrees that
other subtenants of Sublandlord are occupying or may in the future occupy other
portions of the Master Premises. In addition to the rules and regulations of the
Master Lease, Subtenant's use of the Sublease Premises and access to and use of
the Common Areas of the Building and Lot and any other services in connection
with the Sublease Premises or this Sublease shall be subject to such additional
rules and procedures reasonably promulgated by Sublandlord and delivered to
Subtenant from time to time. Subtenant's compliance with such rules and
procedures constitutes a material inducement to Sublandlord's willingness to
enter into this Sublease; any material violation thereof shall constitute a
material breach of this Sublease.

     (f)   TERMINATION OF MASTER LEASE. If the Master Lease terminates with
respect to the Sublease Premises, prior to the expiration or earlier termination
of this Sublease, this Sublease shall concurrently terminate, unless this
Sublease becomes a direct lease of the Building between Master Landlord and
Subtenant as provided in the Master Landlord's Consent or unless Master Landlord
and Subtenant agree to deem this Sublease to be a direct lease of the Sublease
Premises between Master Landlord and Subtenant; provided that as a condition to
such direct lease, Sublandlord shall be released from all liabilities and
obligations under this Sublease, and the Master Lease with respect to the
Sublease Premises arising from and after the date that the Master Lease
terminated with respect to the Sublease Premises.

     (g)   CONSENT OR APPROVAL OF MASTER LANDLORD. All references in this
Sublease (whether in the text itself or by incorporation from the Master Lease)
to the consent or approval of Master Landlord or Sublandlord shall mean the
written consent or approval of Master Landlord or Sublandlord, as the case may
be. If any request or demand is made by Master Landlord (whether requiring an
act, restraint or payment) directly to Subtenant pursuant to the

                                        6


Master Lease in respect of a corresponding obligation under the Master Lease,
then such request or demand shall be honored and performed or adhered to as if
the request or demand was made directly by Sublandlord. In all provisions of
this Sublease requiring the satisfactory approval or consent of Sublandlord,
Subtenant first shall be required to obtain the approval or consent of
Sublandlord and then, if Sublandlord under similar circumstances would be
required under the terms of the Master Lease, to obtain the like approval or
consent of Master Landlord, Sublandlord shall forward to Master Landlord such
requests as Subtenant may submit for approval or consent from Master Landlord.
In the case of a time sensitive matter, Subtenant may submit the request for
approval or consent simultaneously to Master Landlord and Sublandlord. Whenever,
pursuant to this Sublease, Master Landlord or Sublandlord's consent or approval,
or the review or consideration by Master Landlord or Sublandlord of any matter,
is permitted, solicited or required prior to or in connection with any activity
planned or undertaken on behalf of Subtenant, Subtenant shall reimburse Master
Landlord and Sublandlord for all reasonable expenses (including, without
limitation, the reasonable fees and disbursements of attorneys and other
professional consultants) incurred by Master Landlord and Sublandlord, as the
case may be, in connection with such consideration, review, consent or approval.
Such reimbursement shall be made by Subtenant within twenty (20) days after
written demand. Expenses incurred by Sublandlord shall be deemed to include any
expenses or fees payable to Master Landlord under the Master Lease.

     (h)   REPRESENTATIONS OF SUBLANDLORD. Sublandlord represents to Subtenant
that a true and correct copy of the Master Lease, redacted to expunge certain
confidential economic information, is attached hereto as EXHIBIT A, that the
Master Lease is in full force and effect and has not been amended, and that, to
Sublandlord's knowledge, no default nor any matter or event which with the
passage of time or the giving of notice would constitute a default exists on the
part of Sublandlord or Master Landlord under the Master Lease. As long as no
Event of Default by Subtenant exists hereunder, Sublandlord (i) shall continue
to perform the obligations of tenant under the Master Lease which are not
incorporated herein, including the obligation of Sublandlord to pay rent to
Master Landlord in accordance with the provisions of the Master Lease and (ii)
agrees not to voluntarily amend, terminate, cancel or surrender the Master Lease
with respect to the Sublease Premises during the Sublease Term.

     (i)   RESPONSIBILITY FOR REPAIRS AND MAINTENANCE. Except as otherwise
provided in this Sublease, Subtenant shall have no responsibility for repairs
and maintenance that are the responsibility of Sublandlord as Tenant under
Section 10.1 of the Master Lease except that Subtenant shall be responsible, at
Subtenant's sole cost and expense, for the completion of (i) any repairs or
replacements necessitated by damage caused by Subtenant or Subtenant's Agents,
(ii) any repairs to Alterations installed by Subtenant, or (iii) repairs to
mechanical systems, heating, ventilation and air conditioning systems installed
by Subtenant to serve its manufacturing areas within the Subleased Premises.

     3. RENT.

     (a)   BASE RENT. Base rent ("BASE RENT") shall be as set forth in the
Defined Terms. Subtenant shall pay Base Rent in monthly installments in advance
on or before the first day of each and every calendar month during the Sublease
Term commencing as of April 1, 2004, without being invoiced; provided however
that Subtenant shall pay to Sublandlord upon the

                                        7


Commencement Date, the Advanced Rent Payment of One Million, Two Hundred and
Fifty Thousand Dollars ($1,250,000) in cash, which amount shall be
non-refundable except with regard to any termination of this Sublease pursuant
to Sections 1(c), 2(f), 13 or 16(o) of this Sublease, in which event a pro-rated
portion of the Advanced Rent Payment may be refundable for the period of time
between the date the Subtenant enters the Sublease Premises for space planning,
construction of tenant improvements or installation of furniture, equipment and
furnishings pursuant to Section 1(d) of this Sublease and the Expiration Date
which has not expired as of the date of termination of the Master Lease,
provided however, in the event of any such termination of the Sublease pursuant
to Sections 1(c), 2(f), 13 or 16(o) of this Sublease prior to Subtenant's
payment of the Security Deposit pursuant to Section 3(g) of this Sublease, Seven
Hundred and Fifty Thousand Dollars ($750,000) of such Advanced Rent Payment
shall constitute the Security Deposit securing the performance of Subtenant's
obligations under this Sublease.

     (b)   SUBLANDLORD'S PAYMENT OF OPERATING EXPENSES AND TAX EXPENSES.
Subtenant shall have no obligation to pay to Sublandlord or Master Landlord
Operating Expenses, Tax Expenses or Utility Expenses (except as set forth below
in 3(c)), as those terms are defined within Section 5 of the Master Lease.

     (c)   SUBTENANT'S ELECTRICITY. From and after the Occupancy Date, Subtenant
agrees to pay to Sublandlord the cost and expense of electricity for Subtenant's
light, HVAC and outlet consumption ("Subtenant's Electricity") use in the
Subleased Premises on a monthly basis based upon Sublandlord's estimate thereof.
If actual Subtenant's Electricity is greater than Sublandlord's estimate
thereof, a lump sum payment (which payment shall be deemed a payment of rent
hereunder for all purposes) will be made from Subtenant to Sublandlord within
thirty (30) days of the delivery of such statement equal to the amount by which
actual Subtenant's Electricity exceeded Sublandlord's estimate thereof. If
actual Subtenant's Electricity is less than Sublandlord's estimate thereof,
Sublandlord shall promptly after delivery of such statement (but in no event
within more than thirty (30) days) make a lump sum payment to Subtenant (or at
Sublandlord's option, Sublandlord may credit such lump sum amount against the
rent installment due in the immediately succeeding month) equal to the amount by
which estimated Subtenant's Electricity exceeded the actual amount thereof.
Notwithstanding the foregoing, Sublandlord reserves the right to assess
Subtenant's Electricity based on an engineer's survey of Subtenant's electrical
usage conducted from time to time or on the sub-metering of all or part of the
Sublease Premises. Subtenant's Electricity shall be paid by Subtenant as
additional rent at the same time and in the same manner as payments of Base
Rent.

     (d)   PERSONAL PROPERTY AND JANITORIAL SERVICE. From and after the
Occupancy Date, Subtenant shall be responsible to pay directly (i) all personal
property taxes assessed upon the Sublease Premises including without limitation
any entitlement fees related to Subtenant's particular use of the Sublease
Premises and any penalties related thereto to the extent any such penalties
result from Subtenant's failure to so timely make such payments, and (ii) for
the cost of all janitorial services provided to the Sublease Premises. Subtenant
shall be responsible for contracting directly with a third party vendor for
janitorial services for the Sublease Premises from and after the Occupancy Date.

                                        8


     (e)   PAYMENT OF RENT. As used herein, "RENT" shall include Base Rent,
Subtenant's Electricity and any other additional rent, costs, charges and
expenses to be paid by Subtenant to Sublandlord pursuant to this Sublease. Rent
herein reserved or payable shall be paid at Sublandlord's election, (i) to
Sublandlord's address for payment of Rent set forth in the Defined Terms, or
(ii) to such other payee and/or at such other place as Sublandlord may designate
from time to time in writing, in lawful money of the United States of America,
as and when the same become due and payable, without demand therefor and without
any deduction, set-off or abatement whatsoever, except as expressly provided
otherwise in this Sublease or the Master Lease. In the event the first day of
the Sublease Term shall not be the first day of a calendar month or the last day
of the Sublease Term is not the last day of the calendar month, Base Rent and
other costs an expenses shall be appropriately prorated based on a thirty (30)
day month. Additionally, Subtenant shall pay to Sublandlord, as additional rent
hereunder, within twenty (20) days after written request therefor, any other
payments for which Sublandlord shall become responsible to Master Landlord and
which are otherwise the responsibility of Subtenant pursuant to the terms of
this Sublease, including, but not limited to, additional rent arising (i) by
reason of Subtenant's request for extraordinary services or utilities (such as
replacement lighting or other utilities not otherwise provided to Sublandlord
under the Master Lease) from Master Landlord or Sublandlord, or (ii) as a result
of Subtenant's Event of Default hereunder.

     (f)   LATE PAYMENT CHARGES. Any payment of Rent or other amount from
Subtenant to Sublandlord or Master Landlord under this Sublease which is not
paid on the date due shall accrue interest from the date due until the date paid
at a rate equal to the lesser of ten percent (10%) per year or the maximum rate
then permitted by law (the "INTEREST RATE"). If any installment of Rent is not
paid promptly on the first of the month, or otherwise when due, Subtenant shall
pay to Sublandlord a late payment charge equal to five percent (5%) of the
amount of such delinquent payment of Rent, in addition to the installment of
Rent then owing. Notwithstanding the foregoing two sentences, no late charge
shall be imposed on the first late payment of Rent in any single calendar year
of the Sublease Term unless Subtenant fails to make such payment within five (5)
days after written notice from Sublandlord of such delinquency. This Section
shall not relieve Subtenant of Subtenant's obligation to pay any amount owing
hereunder at the time and in the manner provided.

     (g)   SECURITY DEPOSIT. On or before January 15, 2004, Subtenant shall pay
to Sublandlord the amount of (i) Seven Hundred and Fifty Thousand Dollars
($750,000.00), plus (ii) an amount equal to the total projected cost of the
work, as estimated by Sublandlord in its reasonable discretion on or before
January 15, 2004, to remove, repair and perform restoration work caused by such
removal, of any Subtenant Improvements (herein defined in Section 6) required to
be removed pursuant to Section 6 of this Sublease or Section 9.2 of the Master
Lease ("RESTORATION COSTS"). Such cumulative security deposit shall be in the
form of either cash or a letter of credit to be held by Sublandlord as a
security deposit ("SECURITY DEPOSIT") for the performance of Subtenant's
obligations under this Sublease. The Security Deposit shall be held by
Sublandlord as security for the faithful performance by Subtenant of all of its
obligations under this Sublease. Sublandlord shall not be required to keep the
Security Deposit separate from its other accounts, provided that if Subtenant
deposits the Security Deposit with the Sublandlord in the form of cash, such
deposit shall be deemed to earn an interest at an annual rate of two percent
(2%), which interest shall be payable to Subtenant upon the return of Security
Deposit pursuant to this Section 3. Sublandlord may apply all or a part of the
Security Deposit to

                                        9


any unpaid Rent due from Subtenant or to cure any other default of Subtenant
hereunder and to compensate Sublandlord for all damage and expense sustained as
a result of such default. If all or any portion of the Security Deposit is so
applied, Subtenant shall deposit cash sufficient to restore the Security Deposit
to its original amount within five (5) days after receipt of Sublandlord's
written demand. Provided that Subtenant complies with all of its obligations
hereunder and promptly pays Rent when due, Sublandlord shall refund the Security
Deposit, plus interest to Subtenant within thirty (30) days after the later of
the expiration or earlier termination of the Sublease or Subtenant's vacating of
the Sublease Premises. No trust relationship is created herein between
Sublandlord and Subtenant with respect to the Security Deposit. Any deposit
under the Master Lease which may be returned by the Master Landlord will be the
property of Sublandlord.

     In lieu of a cash Security Deposit, Subtenant may deliver to Sublandlord a
clean, irrevocable, non-documentary and unconditional letter of credit (the
"LETTER OF CREDIT") issued by and drawn upon Silicon Valley Bank or another
financial institution acceptable to Sublandlord (the "ISSUER"), which Letter of
Credit shall have a term of not less than one year, be in form and content
satisfactory to Sublandlord (and substantially as shown on EXHIBIT C to this
Sublease), be for the account of Sublandlord, be in the amount of the Security
Deposit then required to be deposited hereunder, and be fully transferable by
Sublandlord to its successors and/or assigns without the payment of any fees or
charges, it being agreed that if any such fees or charges shall be so imposed,
then such fees or charges, shall be paid by Subtenant. The Letter of Credit
shall provide that it shall be deemed automatically renewed, without amendment,
for consecutive periods of one (1) year each thereafter during the Sublease
Term, unless the Issuer sends notice (the "NON-RENEWAL NOTICE") to Sublandlord
by certified mail, return receipt requested, not less than thirty (30) days next
preceding the then expiration date of the Letter of Credit that it elects not to
have such Letter of Credit renewed. Additionally, the Letter of Credit shall
provide that Sublandlord shall have the right, exercisable upon its receipt of
the Non-Renewal Notice, by sight draft on the Issuer, to receive the monies
represented by the existing Letter of Credit and in such event, Sublandlord
shall hold such proceeds pursuant to the terms of this Section as a cash
security pending the replacement of such Letter of Credit. If an Event of
Default shall have occurred and be continuing with respect to any provision of
this Sublease, including but not limited to the provisions relating to the
payment of Rent, Sublandlord may apply or retain the whole or any part of the
cash security so deposited or may notify the Issuer and thereupon receive all
the monies represented by the Letter of Credit and use, apply, or retain the
whole or any part of such proceeds, as provided in this Section. Any portion of
the cash proceeds of the Letter of Credit not so used or applied by Sublandlord
in satisfaction of the obligations of Subtenant as to which such an Event of
Default shall have occurred shall be retained by Sublandlord as a cash Security
Deposit as provided herein. If Sublandlord applies or retains any part of the
cash security or proceeds of the Letter of Credit, as the case may be, Subtenant
shall, within five (5) days after written demand therefor, deposit with
Sublandlord the amount so applied or retained so that Sublandlord shall have the
full Security Deposit required pursuant to this Section on hand at all times
during the Term.

     If the credit rating of the Issuer is downgraded, at any time during the
Term of this Sublease, below the level of "A-" (long term) as issued by Standard
and Poor's, or below the level of "A3" (long term) as issued by Moody's,
Sublandlord may, in Sublandlord's sole discretion, require Subtenant to provide
Sublandlord with a replacement Letter of Credit from a

                                       10


new Issuer with a credit rating of at least "A-" (long term) as issued by
Standard and Poor's and at least "A3" (long term) as issued by Moody's (provided
that if such Issuer is only rated by one of such rating bureaus, it satisfies
the aforesaid rating requirement for such rating bureau), and otherwise
acceptable to Sublandlord. Such replacement Letter of Credit shall be in the
form called for by this Section 3(f) and shall be provided by Subtenant within
thirty (30) days following Sublandlord's notice to Subtenant, and Subtenant's
failure to provide such replacement Letter of Credit shall constitute an Event
of Default. Upon Sublandlord's receipt of such replacement Letter of Credit,
Sublandlord shall return the Letter of Credit originally issued by the
downgraded Issuer to Subtenant.

     If Subtenant shall fully and faithfully comply with all of the terms,
provisions, covenants and conditions of this Sublease, the Letter of Credit
shall be returned to Subtenant within thirty (30) days after the Expiration Date
and after delivery of possession of the Sublease Premises to Sublandlord. In the
event of a transfer of Sublandlord's interest in the Premises, within thirty
(30) days of notice of such transfer, Subtenant, at Subtenant's sole cost and
expense, shall arrange for the transfer of the Letter of Credit to the new
Sublandlord, as designated by Sublandlord, or have the Letter of Credit reissued
in the name of the new Sublandlord and Sublandlord shall thereupon be released
by Subtenant from all liability for the return of the reissued Letter of Credit,
provided that Sublandlord shall return the original Letter of Credit issued in
Sublandlord's name to Subtenant.

     Notwithstanding the foregoing, provided Subtenant is not then otherwise in
default Sublandlord shall return to Subtenant the following portions of a cash
Security Deposit, or so much thereof as shall not have theretofore been applied
in accordance with the terms of this Section 3, on the dates specified below:

           February 1, 2005   $250,000.00

           February 1, 2006   $250,000.00

           March 1, 2007      $250,000.00

     If the Security Deposit is in the form of a Letter of Credit, Subtenant
shall furnish Sublandlord with a replacement Letter of Credit in the form called
for by this Section 3, on the dates specified above and reduced by the amounts
set forth above.

     4. USE. The Sublease Premises shall be used for the Permitted Uses only and
for no other purpose or business without the prior written consent of Master
Landlord and Sublandlord, as provided for in the Master Lease. At its own
expense, Subtenant will procure, maintain in effect and comply with all
conditions of any and all permits, licenses and other governmental approvals
required for Subtenant's use of the Sublease Premises.

     5. ASSIGNMENT AND SUBLETTING.

     (a)   TRANSFER OF SUBLEASEHOLD ESTATE. Subtenant shall not permit occupancy
of the Sublease Premises by any person or persons other than Subtenant or sell,
assign, encumber, sublease or otherwise transfer by operation of law or
otherwise (collectively, "TRANSFER") the Sublease Premises or this Sublease
without Master Landlord's and Sublandlord's prior written

                                       11


consent, which consent of Sublandlord shall not be unreasonably withheld or
conditioned or delayed subject to the provisions of Section 14 of the Master
Lease as incorporated herein; provided, however, that, except with respect to an
assignment or sublet to a Related Entity, prior to making the Sublease Premises
available for subletting or assignment, Subtenant shall first offer to
Sublandlord, by written notice, the right to recapture the portion of the
Sublease Premises which Subtenant intends to sublet or assign. Sublandlord shall
give its approval or reasons for disapproval, or election to recapture, within
ten (10) business days after Subtenant has requested Sublandlord's consent to
such sublease or assignment. If Sublandlord so elects to recapture, Sublandlord
and Subtenant shall enter into an agreement partially terminating this Sublease
with respect to the portion of the Sublease Premises so recaptured by
Sublandlord. Subtenant shall reimburse Sublandlord, as additional rent, for (i)
all of Sublandlord's reasonable attorneys fees and other costs, charges and
expenses in connection with the review, processing, negotiation and
documentation of any request for Sublandlord's and Master Landlord's consents to
a proposed Transfer of the Sublease Premises (including, but not limited to,
amounts payable by Sublandlord to Master Landlord for its consent) and (ii)
fifty percent (50%) of the excess of any subrent and other consideration
received by Subtenant by reason of such Transfer, over the sum of the Rent
payable hereunder plus all of any bonus or excess rent payable by Sublandlord to
Master Landlord under the Master Lease by reason of such Transfer. Any Transfer
in violation of the terms of this Sublease shall be void and shall be of no
force or effect. Any consent by Sublandlord or Master Landlord to any Transfer
shall apply only to the specific Transfer thereby approved. Such consent shall
not be construed as a waiver of Subtenant's obligations to obtain Sublandlord's
and Master Landlord's consent to any subsequent Transfer or as a modification or
limitation of Sublandlord's rights hereunder.

     (b)   ASSUMPTION BY TRANSFEREES. Each and every assignee, transferee or
successor in interest of Subtenant, and their respective assignees, transferees
or successors in interest, shall immediately be and remain liable jointly and
severally with Subtenant and with each other for the payment of the Rent payable
under this Sublease and for the performance of all covenants, agreements, terms
and provisions of this Sublease on the part of Subtenant to be performed to the
end of the Sublease Term.

     (c)   ASSIGNMENT OF SUBRENTS. In the event of any Transfer, whether or not
in violation of the provisions of this Sublease, Sublandlord may, after an Event
of Default by Subtenant, collect Rent from the assignee of the Sublease, or the
subtenant or occupant or the Sublease Premises and apply the net amount
collected to the curing of any Event of Default hereunder in any order or
priority Sublandlord may elect, any unexpended balance to be applied by
Sublandlord against any Rent or other obligations subsequently becoming due, but
no such assignment, subletting, occupancy or collection of Rent shall be deemed
a waiver of the covenants in this Section 5, nor shall it be deemed acceptance
of the assignee, subtenant or occupant as a subtenant, or a release of Subtenant
from the full performance by Subtenant of all of the terms, conditions and
covenants of this Sublease.

     (d)   VOLUNTARY TERMINATION OF MASTER LEASE. In the event that Master
Landlord and Sublandlord negotiate a voluntary termination of the Master Lease,
then as long as the Master Landlord and Subtenant have entered into a direct
lease of the Sublease Premises, this Sublease shall terminate concurrently
therewith and Sublandlord shall be relieved of its obligations, and

                                       12


released of all liability, accruing under this Sublease from and after the
effective date of such direct lease, whereupon Subtenant shall attorn directly
to the Master Landlord.

     6.    ALTERATIONS. In limitation of the rights set forth in Section 9.1 of
the Master Lease, Subtenant shall not make or suffer to be made any alterations,
additions or improvements (collectively "ALTERATIONS") in, on, or to the
Sublease Premises without the prior written consent of Sublandlord, which
consent shall not be unreasonably withheld, conditioned or delayed and Master
Landlord, pursuant to Section 9 of the Master Lease. Subtenant shall notify
Sublandlord (and Master Landlord, if applicable) not less than five (5) business
days in advance of commencing construction of the Alterations so that
Sublandlord and Master Landlord may post appropriate notices of
non-responsibility. The term "Alterations" includes any alterations, additions
or improvements made by Subtenant to comply with the ADA as required by Section
1(f) above. All Alterations must be constructed (a) in a good and workman-like
manner using materials of a quality comparable to those on the Sublease
Premises, (b) in conformance with all Laws, (c) only after all necessary
permits, licenses and approvals have been obtained by Subtenant from appropriate
governmental agencies, and (d) shall be diligently prosecuted to completion. Any
contractor or other person making any Alterations must first be approved in
writing by Sublandlord (and Master Landlord, if required by the Master Lease)
and Sublandlord may require that all work be performed under Sublandlord's
supervision. Except where precluded by terms of the Master Lease and Master
Landlord's rights in and to any Alterations to any of the Sublease Premises,
within twenty-five (25) business days after Sublandlord's receipt of Subtenant's
written notice of any Alterations, Sublandlord shall notify Subtenant whether or
not Sublandlord will require Subtenant to remove such Alterations from the
Sublease Premises upon the expiration or earlier termination of this Sublease.
Subtenant shall where required pursuant to Sublandlord's previous notice, upon
the expiration or sooner termination of this Sublease, at Subtenant's sole cost
and expense, promptly remove any Alterations made or paid for by Subtenant and
repair and restore the Sublease Premises to their original condition, ordinary
wear and tear excepted.

     Subtenant will keep the Sublease Premises and the Building free from any
liens arising out of any work performed, materials furnished, or obligations
incurred by Subtenant. If a lien is filed, Subtenant will discharge the lien or
post a bond within ten (10) days after receiving notice thereof. Sublandlord has
the right to post and keep posted on the Sublease Premises any notices that may
be provided by law or which Sublandlord may deem to be proper for the protection
of Sublandlord, the Sublease Premises and the Building from such liens.
Subtenant shall promptly reimburse to Sublandlord as additional rent hereunder,
any fees or charges imposed on Sublandlord under the Master Lease by virtue of
Subtenant's proposal or performance of any Alterations.

     Subject to Master Landlord's approval thereof, Sublandlord hereby approves
the preliminary plans attached hereto as EXHIBIT D for certain Alterations to be
installed in the Sublease Premises by Subtenant (the "SUBTENANT IMPROVEMENTS").
Subtenant shall submit for Sublandlord's approval (which approval shall not be
unreasonably withheld) final plans and specifications for the Subtenant
Improvements. Sublandlord shall not unreasonably withhold its approval if such
final plans and specifications are natural derivations of EXHIBIT D. Sublandlord
shall give its approval or detailed reasons for disapproval within ten (10)
business days of receipt of the final plans and specifications for the Subtenant
Improvements. Subtenant's construction

                                       13


of the Tenant Improvements shall otherwise comply with the terms and conditions
of Section 14 of the Master Lease, including, but not limited to, Subtenant's
obligation to remove such Subtenant Improvements if required by Master Landlord
in accordance therewith. Notwithstanding anything in this Sublease or the Master
Lease to the contrary, and as long as Master Landlord does not require such
removal, Sublandlord shall not require Subtenant to remove the Subtenant
Improvements at the expiration of the Sublease Term, but Sublandlord reserves
the right to require such removal if this Sublease is terminated due to the
default of the Subtenant prior to the expiration of the Sublease Term. Subtenant
shall be solely responsible for the cost of all architectural, engineering,
permitting and any Master Landlord related fees arising from the planning,
review and completion of the Subtenant Improvements.

     7. INDEMNITY.

     (a)   SUBTENANT INDEMNITY. Subtenant shall indemnify, defend (by counsel
acceptable to Sublandlord and Master Landlord in their sole discretion), protect
and hold Sublandlord and Master Landlord and their respective directors,
officers, shareholders, partners, members, employees, contractors, assigns and
mortgagees harmless from and against, and release and waive the same from any
and all liabilities, claims, demands, losses, damages, costs and expenses
(including reasonable attorneys' fees) arising out of or relating to (i) the use
or occupancy of the Sublease Premises by Subtenant or its Agents or anyone
claiming by, through or under Subtenant; (ii) the failure by Subtenant or anyone
claiming by, through or under Subtenant to comply with any term, condition, or
covenant of this Sublease or the Master Lease incorporated herein, including,
without limitation, Subtenant's obligation to surrender the Sublease Premises in
the condition herein required; (iii) the negligence or willful misconduct of
Subtenant, its Agents or anyone claiming by, through or under Subtenant; (iv)
the existence of Hazardous Materials on, under or about the Sublease Premises to
the extent caused, stored, released, discharged or introduced by Subtenant or
its Agents; (v) the death of or injury to any person or damage to any property
in the Sublease Premises; or (vi) the death of or injury to any person or damage
to any property on or about the Master Premises to the extent caused by the
negligence or willful misconduct of Subtenant or its Agents. Notwithstanding
anything in this Sublease or the Master Lease to the contrary, Subtenant shall
not be responsible for, or indemnify Sublandlord or Master Landlord for, any
injury to or death of any person or damage to property to the extent caused by
the negligence or willful misconduct of Master Landlord, Sublandlord or their
respective Agents, employees, or contractors).

     (b)   SUBLANDLORD INDEMNITY. Sublandlord shall indemnify, defend (by
counsel acceptable to Subtenant), protect and hold Subtenant and its directors,
officers, shareholders, partners, members, employees, contractors and assigns
harmless from and against and release and waive the same from any and all
liabilities, claims, demands, losses, damages, costs and expenses (including
attorneys' fees) arising out of or relating to: (i) the existence of Hazardous
Materials on, under or about the Sublease Premises to the extent introduced upon
the Sublease Premises by Sublandlord, its agents, employees, contractors,
licensees, subtenants or invitees prior to the Commencement Date; or (ii) the
death of or injury to any person or damage to any property to the extent caused
by the negligence or willful misconduct of Sublandlord or its agents, employees,
contractors, licensees, subtenants or invitees (other than Subtenant).
Notwithstanding anything in this Sublease to the contrary, Sublandlord shall not
be responsible for, or indemnify Subtenant for, any injury to or death of any
person or damage to property to the

                                       14


extent caused by (i) the negligence or willful misconduct of Subtenant or its
Agents or (ii) the breach by Subtenant of its obligations under this Sublease.

     The indemnifications set forth in this Article 7 shall survive the
expiration or earlier termination of this Sublease.

     8. INSURANCE.

     (a)   SUBTENANT COMPLIANCE WITH INSURANCE REQUIREMENTS. Subtenant shall
not, directly or indirectly, make any use of the Sublease Premises which may be
dangerous to person or property or which may jeopardize any insurance coverage
or may increase the cost of insurance or require additional insurance coverage.
If, by reason of any activity allowed by Subtenant in the Sublease Premises, any
insurance coverage is jeopardized or insurance premiums are increased,
Sublandlord shall have the option, in its sole discretion, either to terminate
this Sublease or to require Subtenant to make immediate payment of such
increased insurance premium and upon payment of such premium Subtenant shall not
be deemed in default hereunder. Subtenant may not self-insure against any risks
required herein to be covered by insurance.

     (b)   SUBTENANT'S USE OF CONSULTANTS AND CONTRACTORS. In the event
Subtenant utilizes the services of consultants and/or contractors at the
Sublease Premises, Subtenant shall require from them (or provide in its
insurance policies) for insurance coverage for all such consultants and
contractors with the same minimum insurance requirements detailed below.
Sublandlord reserves the right to request from Subtenant copies of such
consultants' and contractors' certificates (to the extent such persons are not
covered under Subtenant's insurance policies) when deemed necessary.

     (c)   POLICY REQUIREMENTS. The policies carried by Subtenant as required
below (i) shall be written by companies licensed to do business in the state in
which the Sublease Premises are located and have a General Policyholder's rating
of at least B+13 as set forth in the most current issue of Best's Insurance
Guide, (ii) not be invalidated or reduced by the acts or omissions of other
insureds, or by any breach, violation or misrepresentation of any warranties,
declarations or conditions in such policy, (iii) name Master Landlord,
Sublandlord and any other additional insureds required to be named in
Sublandlord's insurance policies under the Master Lease, and their respective
officers, directors, employees, agents and invitees as additional insureds, and
(iv) endorsed to stipulate that Subtenant's insurance shall be primary to and
noncontributory with any and all other insurance maintained or otherwise
afforded to Sublandlord or Master Landlord, or their respective officers,
directors, employees and agents. The insurance policies required herein shall
also comply with the standards for insurance coverage set forth in the Master
Lease.

     (d)   CERTIFICATES OF INSURANCE. Certificates of insurance for all
insurance required hereby shall be furnished by Subtenant to Sublandlord and
Master Landlord before the Commencement Date and thereafter at least thirty (30)
days prior to each policy expiration. The insurance certificates required hereby
shall provide that the insurance carrier shall endeavor to provide the
certificate holders with at least ten (10) days notice prior to the
cancellation, non-renewal or adverse material change in any policy covered
thereby and shall otherwise be

                                       15


acceptable in form and substance to Sublandlord, but any acceptance of insurance
certificates by Sublandlord shall not limit or relieve Subtenant of its
obligations under this Section 8. NOTICE TO SUBTENANT: IN ACCORDANCE WITH THE
TERMS OF THIS SUBLEASE, SUBTENANT MUST PROVIDE EVIDENCE OF THE REQUIRED
INSURANCE TO SUBLANDLORD PRIOR TO OCCUPANCY OF THE SUBLEASE PREMISES.

     (e)   SUBTENANT'S INSURANCE POLICIES. Subtenant shall, at its own expense,
at all times during the Sublease Term provide and maintain in effect those
insurance policies and minimum limits of coverage as designated below, and any
other insurance required by Section 11 of the Master Lease or by law of the
State in which the Sublease Premises are located.

           (i)   WORKERS' COMPENSATION AND EMPLOYER'S LIABILITY INSURANCE.
     Subtenant shall carry Workers' Compensation insurance as required by any
     applicable law or regulation and, in accordance with the provisions of all
     applicable Laws. Subtenant shall carry Employer's Liability insurance in
     amounts not less than $1,000,000 per illness or injury.

           (ii)  "SPECIAL PURPOSE" INSURANCE. Subtenant shall carry "special
     purpose" insurance covering leasehold improvements paid for by Subtenant
     and Subtenant's personal property from time to time in, on, or at the
     Sublease Premises, in an amount not less than eighty percent (80%) of the
     full replacement cost to provide protection against events protected under
     "fire and extended coverage," as well as against sprinkler damage,
     vandalism, and malicious mischief.

           (iii) COMMERCIAL GENERAL LIABILITY INSURANCE. Subtenant shall carry
     Commercial General Liability insurance covering all operations by or on
     behalf of Subtenant at the Sublease Premises, and providing insurance for
     bodily injury, property damage, personal injury, blanket contractual,
     independent contractors, severability of interest and advertising injury,
     as those terms are defined by Commercial General Liability insurance
     policies, with limits of not less than $1,000,000 each occurrence or claim
     and $2,000,000 in the aggregate. If such policy of Commercial General
     Liability insurance is written on a claims-made basis, such policy shall
     provide "tail coverage" for claims made for a minimum of one (1) year
     following expiration or earlier termination of this Sublease (and such
     coverage shall be expressly set forth in the applicable certificate of
     insurance).

           (iv)  AUTOMOBILE LIABILITY INSURANCE. Subtenant shall carry Business
     Automobile Liability insurance, including bodily injury and property damage
     for all vehicles, including but not limited to all owned, hired (or rented)
     and non-owned vehicles. The limits of liability shall not be less than
     $1,000,000 combined single limit for each accident and in the aggregate.

           (v)   BUSINESS INTERRUPTION INSURANCE. Subtenant's "special purpose"
     insurance shall provide coverage for business interruption/loss of
     income/extra expense insurance in an amount not less than $20,000,000.

                                       16


           (vi)  EMPLOYMENT PRACTICES LIABILITY INSURANCE. Subtenant shall carry
     Employment Practices Liability insurance providing coverage for employment
     practices liability, including by way of example but not limitation,
     wrongful termination, sexual or other harassment, discrimination, invasion
     of privacy, employment-related defamation, and violation of the Family and
     Medical Leave Act, with limits of not less than $1,000,000 per occurrence
     or claim and in the annual aggregate.

           (vii) MASTER LANDLORD AND SUBLANDLORD PROPERTY. Subtenant shall
     obtain insurance to cover loss or damage to any Master Landlord-owned or
     Sublandlord-owned property in the care, custody, or control of Subtenant
     (including, but not limited, to any furniture, fixtures or equipment) for
     all losses including, but not limited to, theft, loss, misappropriation or
     destruction caused by Subtenant, its employees, agents, or other
     representative whether intentional or through negligence.

     9. SIGNS. Subtenant shall not place on any portion of the Sublease Premises
any sign, placard, lettering in or on windows, banners, displays or other
advertising or communicative material which is visible from the exterior of the
Sublease Premises without the prior written approval of Sublandlord, which shall
not be unreasonably withheld, conditioned or delayed, and, if required, from
Master Landlord in accordance with the Master Lease; provided, however, that
subject to compliance with the terms of this Sublease and the Master Lease,
Subtenant shall have the right, at its sole cost and expense, to install suite
identification signage in the main lobby of the Building and identification
signage on the Building and on the monument sign for the Building subject to
Master Landlord's sign criteria and Master Landlord's prior written approval.
All such approved signs shall strictly conform to all Laws. Subtenant shall
maintain such signs in good condition and repair. If Subtenant fails to remove
such signs upon the expiration or earlier termination of this Sublease, and
repair any damage caused by such removal, Sublandlord may do so at Subtenant's
expense, which expense, together with interest thereon at the rate for late
payments set forth in Section 3(g) above shall be paid by Subtenant to
Sublandlord upon demand.

     10. HAZARDOUS SUBSTANCES. Subtenant shall strictly comply with Section 26
of the Master Lease to the extent such provisions relate to the Sublease
Premises during the Sublease Term. Subtenant, at its sole cost and expense,
shall be fully responsible for the storage and disposal of all Hazardous
Materials used in, on or about the Building by the Subtenant or its Agents.
Notwithstanding anything in this Sublease to the contrary, Subtenant shall have
no liability to Sublandlord or Master Landlord or responsibility under this
Sublease for any Hazardous Materials in, on, under or about the Sublease
Premises which were not released, discharged, stored or introduced by Subtenant
or its Agents.

     11. ESTOPPEL CERTIFICATES. Subtenant will at any time upon not less than
ten (10) business days' prior written notice from Sublandlord execute,
acknowledge and deliver to Sublandlord a statement in writing (i) certifying
that this Sublease is unmodified (or, if modified, stating the nature of such
modification) and is in full force and effect, the amount of any Security
Deposit, and the date to which Rent are paid in advance, if any, (ii)
acknowledging that there are not, to Subtenant's knowledge, any uncured defaults
on the part of Sublandlord hereunder or of Master Landlord under the Master
Lease, or specifying such defaults if any are claimed, and (iii) any other
matters relating to the Sublease or the Sublease Premises as may be reasonably

                                       17


requested by Sublandlord. Any such statement may be conclusively relied upon by
any prospective purchaser, transferee or encumbrancer of the Sublease Premises
or of Sublandlord's interest in this Sublease.

     12. EVENTS OF DEFAULT. If one or more of the following events ("EVENT OF
DEFAULT") occurs, such occurrence constitutes a breach of this Sublease by
Subtenant (such events being in addition to, and superseding to the extent
inconsistent with, the Events of Default set forth in the Master Lease):

     (a)   Subtenant fails to pay when due any Rent due hereunder and such
failure shall continue for five (5) days after written notice thereof from
Sublandlord;

     (b)   Subtenant fails to comply with any other provision of this Sublease
in the manner and within the time required, and such failure continues for
twenty (20) days after written notice thereof from Sublandlord, provided that if
such failure cannot be cured within such twenty (20) day period, an Event of
Default shall not be deemed to have occurred so long as (i) Subtenant commences
such cure within such twenty (20) day period and diligently pursues such cure to
completion, provided so that an "event of default" (as defined in the Master
Lease) is not deemed to have occurred under the Master Lease;

     (c)   any other event occurs which involves Subtenant or the Sublease
Premises and which would constitute an event of default under the Master Lease
if it involved Sublandlord or the Master Premises, subject to any notice and/or
cure periods applicable thereto as set forth in the Master Lease;

     (d)   the occurrence of an event of default under the Master Lease which is
the result of any act or omission of Subtenant or any person claiming by,
through or under Subtenant or any of their respective employees, subtenants,
licensees, agents, contractors and invitees (each, a "SUBTENANT PARTY"); or

     (e)   any purported or attempted Transfer of this Sublease or the Sublease
Premises in contravention of this Sublease or the Master Lease; or

     (f)   Subtenant (i) files or consents by answer or otherwise to the filing
against it of a petition for relief or reorganization or arrangement or any
other petition in bankruptcy or liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction; (ii) makes an assignment for
the benefit of its creditors; (iii) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers of itself or of any
substantial part of its property; or (iv) takes action for the purpose of any of
the foregoing;

     (g)   A court or governmental authority of competent jurisdiction, without
consent by Subtenant, enters an order appointing a custodian, receiver, trustee
or other officer with similar powers with respect to it or with respect to any
substantial portion of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding up or liquidation of Subtenant, or if any such petition is filed against
Subtenant and such petition is not dismissed within sixty (60) days; or

                                       18


     (h)   This Sublease or any estate of Subtenant hereunder is levied upon
under any attachment or execution and such attachment or execution is not
vacated within sixty (60) days.

     Upon the occurrence of an Event of Default, Sublandlord shall have, in
addition to any other rights and remedies available to it under this Sublease
and/or at law and/or in equity, any and all rights and remedies of Master
Landlord set forth in the Master Lease as incorporated herein. All rights and
remedies of Sublandlord herein enumerated shall be cumulative and none shall
exclude any other right allowed by law or in equity and said rights and remedies
may be exercised and enforced concurrently and whenever and as often as occasion
therefor arises. If Subtenant shall have committed an Event of Default, then
Sublandlord shall have the right, but not the obligation, without waiving or
releasing Subtenant from any obligations hereunder, to cure such Event of
Default in such manner and to such extent as Sublandlord shall deem necessary,
and in exercising any such right, to pay or incur any reasonable costs and
expenses (including, without limitation, attorneys' fees and costs) required in
connection therewith which Subtenant shall pay to Sublandlord upon, together
with interest thereon at the Interest Rate.

     13. OTHER CASUALTY; EMINENT DOMAIN. In the event of a fire or other
casualty affecting the Building or the Sublease Premises, or of a taking of all
or a part of the Building or Sublease Premises under the power of eminent
domain: (i) Sublandlord shall be obligated to restore the Sublease Premises to
the condition it was in at the Effective Date to the extent that it is the
responsibility of Sublandlord as it is the Tenant under the Master Lease, except
as otherwise set forth herein, to do so but Sublandlord shall not have any
obligation to repair or restore the Sublease Premises to the extent of any
Alterations performed by or on behalf of the Subtenant or any personal property
of Subtenant; (ii) Subtenant shall be entitled only to a proportionate abatement
of Rent to the extent Sublandlord receives a corresponding abatement of rent
under the Master Lease during the time and to the extent the Sublease Premises
are unfit for occupancy for the purposes permitted under this Sublease and not
occupied by Subtenant as a result thereof; (iii) Subtenant shall not, by reason
thereof, have a right to terminate this Sublease unless the Master Lease shall
be terminated; and (iv) Sublandlord reserves the right to terminate the Master
Lease and this Sublease in connection with any right granted to it under the
Master Lease whether or not the Sublease Premises is damaged or the subject of a
taking. In the event Master Landlord or Sublandlord exercises the right to
terminate the Master Lease as the result of any such fire, casualty or taking,
Sublandlord shall provide Subtenant with a copy of the relevant termination
notice and this Sublease shall terminate on the date upon which the Master Lease
terminates.

     14. INTENTIONALLY OMITTED

     15. LIMIT OF SUBLANDLORD'S LIABILITY. Notwithstanding anything to the
contrary contained in this Sublease, Sublandlord, its partners, members,
officers, directors, employees, agents, servants and contractors (collectively,
the "SUBLANDLORD PARTIES"), shall not be liable for any damages or injury to
person or property or resulting from the loss of use thereof sustained by
Subtenant or any Subtenant Party, based on, arising out of, or resulting from,
any cause whatsoever, including any due to the Building becoming out of repair,
or due to the occurrence of any accident or event in or about the Building, or
due to any act or neglect of any tenant or occupant of the Building or any other
person, provided however Sublandlord shall not be released from liability to
Subtenant for any physical injury to any natural person caused by

                                       19


Sublandlord's negligence or willful misconduct to the extent such injury is not
covered by insurance either carried by Subtenant (or such person) or required by
this Sublease to be carried by Subtenant; provided that neither Sublandlord nor
any Sublandlord Party shall under any circumstances be liable for any exemplary,
punitive, consequential or indirect damages (or for any interruption of or loss
to business).

     16. MISCELLANEOUS.

     (a)   ATTORNEYS' FEES. In the event of any litigation or arbitration
between Sublandlord and Subtenant, whether based on contract, tort or other
cause of action or involving bankruptcy or similar proceedings, in any way
related to this Sublease, the non-prevailing party shall pay to the prevailing
party all reasonable attorneys' fees and costs and expenses of any type, without
restriction by statute, court rule or otherwise, incurred by the prevailing
party in connection with any action or proceeding (including arbitration
proceedings, any appeals and the enforcement of any judgment or award), whether
or not the dispute is litigated or prosecuted to final judgment. The "prevailing
party" shall be determined based upon an assessment of which party's major
arguments or positions taken in the action or proceeding could fairly be said to
have prevailed (whether by compromise, settlement, abandonment by other party of
its claim or defense, final decision after any appeals, or otherwise) over the
other party's major arguments or positions on major disputed issues. Any fees
and cost incurred in enforcing a judgment shall be recoverable separately from
any other amount included in the judgment and shall survive and not be merged in
the judgment.

     (b)   AUTHORITY. Each person executing this Sublease on behalf of a party
hereto represents and warrants that he or she is authorized and empowered to do
so and to thereby bind the party on whose behalf he or she is signing.

     (c)   BROKERAGE COMMISSIONS. Subtenant hereby acknowledges that
Sublandlord's Broker represents both the Subtenant and the Sublandlord.
Sublandlord shall pay a commission to each of Sublandlord's Broker and
Subtenant's Broker in connection with this Sublease transaction pursuant to
Sublandlord's separate agreement with such Brokers. Except for Sublandlord's
Broker and Subtenant's Broker, each of Subtenant and Sublandlord warrants and
represents to the other that it has dealt with no other broker or other person
in connection with this sublease transaction other than the other party and its
agents and employees. Each of Sublandlord and Subtenant agrees to indemnify,
defend and save harmless the other and Master Landlord from any and all costs,
expenses, attorneys' fees, charges or liability arising out of any claim by any
broker or agent, other than Sublandlord's Broker or Subtenant's Broker, as a
result of such party's conversations, correspondence, other dealings or actions
in connection with this Sublease.

     (d)   CAPTIONS. All captions and headings in this Sublease are for the
purposes of reference and convenience and shall not limit or expand the
provisions of this Sublease.

     (e)   COUNTERPARTS. This Sublease may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall comprise but a single instrument.

                                       20


     (f)   ENTIRE AGREEMENT. This Sublease and the applicable portions of the
Master Lease contained by reference herein, contain all of the covenants,
conditions and agreements between the parties concerning the Sublease Premises,
and shall supersede any and all prior correspondence, agreements and
understandings concerning the Sublease Premises, both oral and written. No
addition or modification of any term or provision of this Sublease shall be
effective unless set forth in writing and signed by both Sublandlord and
Subtenant.

     (g)   NOTICES. Any notice required or desired to be given regarding this
Sublease shall be in writing and may be given by personal delivery, reputable
next-day courier service, or by certified or registered mail. A notice shall be
deemed to have been given (i) on the third business day after mailing if mailed,
postage prepaid, return receipt requested addressed to the party to be served at
its address specified in the Defined Terms, and (ii) when delivered or refused
if given by personal delivery or courier service. Copies of notices of defaults
under this Sublease shall be concurrently provided to Master Landlord at the
address set forth in the Master Lease. Either party may change its address by
giving notice of the same in accordance with this Section (g).

     (h)   GOVERNING LAW. This Sublease shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts (the "STATE")
applicable to contracts entered into in the State between parties residing in
the State. Subtenant hereby consents to the personal jurisdiction and venue of
any State court located in the county in which the Building is located and
United States District Courts for the District of Massachusetts, and any
successor court, and the service or process by any means authorized by such
court.

     (i)   EXHIBITS. All exhibits and any schedules or riders attached to this
Sublease are incorporated herein by this reference and made a part hereof, and
any reference in the body of the Sublease or in the exhibits, schedules or
riders to the Sublease shall mean this Sublease, together with all exhibits,
schedules and riders.

     (j)   WAIVER OF TRIAL BY JURY. EACH PARTY HEREBY WAIVES ANY AND ALL RIGHTS
IT MAY HAVE UNDER APPLICABLE LAW TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE
WITH THE OTHER PARTY ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH THIS
SUBLEASE, THE MASTER LEASE, OR THE SUBLEASE PREMISES.

     (k)   NEGOTIATION AND MEDIATION OF DISPUTES. In the event that Sublandlord
and Subtenant become involved in any dispute, controversy or claim arising out
of or relating to the Sublease Premises, this Sublease or a breach hereof (a
"DISPUTE"), either party may initiate negotiation proceedings by sending written
notice to the other party setting forth the particulars of the Dispute, the
term(s) of this Sublease that are involved and a suggested resolution of the
problem. The recipient of the letter must respond in writing within ten (10)
business days with an explanation and response to the proposed solution. If an
exchange of correspondence does not resolve the Dispute, a representative of
each party shall meet on at least one (1) occasion within thirty (30) days of
the parties' exchange of correspondence to attempt to resolve the Dispute. The
meeting shall take place at a location mutually selected by the parties and,
should they not agree on a location, at the Boston, Massachusetts office of JAMS
at the parties' shared expense. In the event Sublandlord and Subtenant do not
resolve such Dispute within thirty (30) days (or any mutually agreed to
extension of time) after the first meeting of their representatives

                                       21


with regard to such Dispute, Sublandlord and Subtenant agree to participate in
good faith in an informal, non-binding mediation. Sublandlord and Subtenant
shall select a mutually acceptable panel member from the list of neutrals in the
Boston, Massachusetts office of JAMS or, if Sublandlord and Subtenant so agree,
any other mutually acceptable alternative dispute resolution provider. If
Sublandlord and Subtenant cannot agree to a mutually acceptable mediator, then
JAMS shall send a list of three (3) names and resumes of the available mediators
in the Boston, Massachusetts office of JAMS to Sublandlord and Subtenant, each
of whom may strike one (1) name, leaving the remaining name as the mediator. If
more than one (1) name remains, the JAMS administrator shall select the
designated mediator. The mediation shall take place in the Boston, Massachusetts
office of JAMS. The cost of such mediation shall be borne equally by Sublandlord
and Subtenant provided that each party shall be responsible for the costs and
fees of its own attorneys, experts and consultants engaged by it connection
therewith.

     (l)   SUCCESSORS AND ASSIGNS. Subject to the provisions of this Sublease
and the Master Lease relating to assignment and subletting, this Sublease shall
be binding upon, and shall insure to the benefit of the parties' respective
representatives, successors and assigns.

     (m)   ACCESS. Sublandlord reserves the right to enter the Sublease Premises
upon reasonable prior written or oral notice, giving 24 hour notice whenever
possible to Subtenant (except that in case of emergency no notice shall be
necessary) in order to inspect the Sublease Premises and/or the performance by
Subtenant of the terms of this Sublease or to exercise Sublandlord's rights or
perform Sublandlord's obligations hereunder.

     (n)   TIME. Time is of the essence of every provision of this Sublease.

     (o)   MASTER LANDLORD'S CONSENT. The effectiveness of this Sublease is
conditioned upon receipt of Master Landlord's Consent. Notwithstanding anything
in this Sublease to the contrary, in the event Master Landlord's Consent is not
received within thirty (30) days after the date of this Sublease, or such later
date Sublandlord and Subtenant may agree in writing, this Sublease shall
automatically become null and void, in which case Sublandlord shall return any
Security Deposit and prepaid Base Rent or Advanced Rent Payment to Subtenant.

     (p)   QUIET ENJOYMENT. Sublandlord covenants with Subtenant that, upon
paying the Rent and observing the covenants, agreements and conditions of this
Sublease on its part to be kept (i) Subtenant shall and may peaceably and
quietly have, hold and enjoy the Sublease Premises during the term of this
Sublease and (ii) neither Sublandlord nor anyone claiming by, through or under
Sublandlord shall disturb Subtenant's occupancy or enjoyment of the Sublease
Premises.

                                       22


     IN WITNESS WHEREOF, Sublandlord and Subtenant have duly executed this
Sublease as of the day and year first above written.

SUBLANDLORD:                            SUBTENANT:

CISCO SYSTEMS, INC., a California       SONUS NETWORKS, a Delaware
corporation                             corporation

By:    /s/ Spiro G. Kailas              By:     /s/ S.J. Nill
      -------------------------------         -------------------------------
Name:  Spiro G. Kailas                  Name:   S.J. Nill
      -------------------------------         -------------------------------
Title: Director, Americas Real Estate   Title:  VP & CFO
      -------------------------------         -------------------------------


By:                                     By:
      -------------------------------         -------------------------------
Name:                                   Name:
      -------------------------------         -------------------------------
Title:                                  Title:
      -------------------------------         -------------------------------

                                       23


                                    EXHIBIT A

                                  MASTER LEASE

                                       A-1


                                    EXHIBIT B

                                SUBLEASE PREMISES

                                       B-1


                                    EXHIBIT C

               STANDBY LETTER OF CREDIT DRAFT FOR REGIONAL OFFICES

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSFXXXXXX

DATE:

BENEFICIARY:
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE
SAN JOSE, CA 95134-1706
ATTN: DIRECTOR, AMERICAS REAL ESTATE

APPLICANT:
SONUS NETWORKS, INC.
5 CARLISLE ROAD
WESTFORD, MA 01886

AMOUNT: _______________________________________

EXPIRATION DATE: _____, 2004

LOCATION: AT OUR COUNTERS IN SANTA CLARA, CALIFORNIA

DEAR SIR/MADAM:

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSFXXXXXX IN
YOUR FAVOR AVAILABLE BY YOUR DRAFT DRAWN ON US AT SIGHT IN THE FORM OF EXHIBIT
"B" ATTACHED AND ACCOMPANIED BY THE FOLLOWING DOCUMENTS:

1. THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.
2. A DATED CERTIFICATION FROM THE BENEFICIARY SIGNED BY AN AUTHORIZED OFFICER,
   FOLLOWED BY ITS DESIGNATED TITLE, STATING THE FOLLOWING:

     "THE UNDERSIGNED IS ENTITLED TO DRAW UPON THIS CREDIT IN ACCORDANCE WITH
     THE TERMS OF THAT CERTAIN SUBLEASE DATED _______________, 2003 BY AND
     BETWEEN CISCO SYSTEMS, INC., AS SUBLANDLORD AND SONUS NETWORKS, INC., AS
     SUBTENANT (AS THE SAME MAY BE MODIFIED, AMENDED OR ASSIGNED) FOR THE
     SUBLEASE OF CERTAIN SPACE LOCATED AT 250 APOLLO DRIVE, CHELMSFORD,
     MASSACHUSETTS."

THE LEASE AGREEMENT MENTIONED ABOVE IS FOR IDENTIFICATION PURPOSES ONLY AND IT
IS NOT INTENDED THAT SAID LEASE AGREEMENT BE INCORPORATED HEREIN OR FORM PART OF
THIS LETTER OF CREDIT.

PARTIAL DRAWS ARE ALLOWED. THIS LETTER OF CREDIT MUST ACCOMPANY ANY DRAWINGS
HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE RETURNED TO THE
BENEFICIARY UNLESS IT IS FULLY UTILIZED.

DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER AND DATE OF THIS LETTER OF
CREDIT.

                                       C-1


                                   PAGE 1 OF 2

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSFXXXXXX
DATED

THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED FOR AN ADDITIONAL PERIOD
OF ONE YEAR, WITHOUT AMENDMENT, FROM THE PRESENT OR EACH FUTURE EXPIRATION DATE
UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE
NOTIFY YOU BY REGISTERED MAIL/OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESSES
THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE CURRENT EXPIRATION
DATE. IN NO EVENT SHALL THIS LETTER OF CREDIT BE AUTOMATICALLY EXTENDED BEYOND
MARCH 31, 2007.

THIS LETTER OF CREDIT IS TRANSFERABLE SUCCESSIVELY IN ITS ENTIRETY ONLY UP TO
THE THEN AVAILABLE AMOUNT IN FAVOR OF ANY NOMINATED TRANSFEE THAT IS THE
SUCCESSOR IN INTEREST TO BENEFICIARY OR IS THE NEW OWNER OF CERTAIN STATED
PROPERTY ("TRANSFEREE"), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE IN
COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATIONS, INCLUDING BUT OT LIMITED TO
THE REGULATIONS OF THE U.S. DEPARTMENT OF TREASURY AND U.S. DEPARTMENT OF
COMMERCE. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGIANL
AMENDMENT(S), IF ANY, MUST BE SURRENDERED TO US TOGETHER WITH OUR LETTER OF
TRANSFER DOCUMENTATION (IN THE FORM OF EXHIBIT "A" ATTACHED HERETO). OUR
TRANSFER FEE OF 1/4 OF 1% OF THE TRANSFER AMOUNT (MINIMUM $250.00) IS FOR THE
ACCOUNT OF THE APPLICANT.

ALL DEMANDS FOR PAYMENT SHALL BE MADE BY PRESENTATION OF THE ORIGINAL
APPROPRIATE DOCUMENTS PRIOR TO 10:00 A.M. CALIFORNIA TIME, ON A BUSINESS DAY AT
OUR OFFICE (THE "BANK'S OFFICE") AT: SILICON VALLEY BANK, 3003 TASMAN DRIVE
SANTA CLARA, CA 95054, ATTENTION: STANDBY LETTER OF CREDIT NEGOTIATION SECTION.

PAYMENT AGAINST CONFORMING PRESENTATIONS HEREUNDER SHALL BE MADE BY BANK DURING
NORMAL BUSINESS HOURS OF THE BANK'S OFFICE WITHIN TWO (2) BUSINESS DAYS AFTER
PRESENTATION.

WE HEREBY AGREE WITH THE DRAWERS, ENDORSERS AND BONAFIDE HOLDERS THAT THE DRAFTS
DRAWN UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF
CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO THE DRAWEE, IF NEGOTIATED ON
OR BEFORE THE EXPIRATION DATE OF THIS CREDIT.

THIS CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH AN
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED OR AMPLIFIED BY REFERENCE TO ANY
DOCUMENTS, INSTRUMENTS OR AGREEMENTS REFERRED TO HEREIN, OR IN WHICH THIS CREDIT
IS REFERRED TO OR TO WHICH THIS CREDIT RELATES AND ANY SUCH REFERENCE SHALL NOT
BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY SUCH DOCUMENTS, INSTRUMENTS OR
AGREEMENTS.

THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES 1998,
("ISP98"), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.


      -----------------------             ------------------------
       AUTHORIZED SIGNATURE                 AUTHORIZED SIGNATURE

                                   PAGE 2 OF 2

                                       C-2


                                   EXHIBIT "A"

DATE:

TO: SILICON VALLEY BANK
    3003 TASMAN DRIVE                   RE: STANDBY LETTER OF CREDIT
    SANTA CLARA, CA 95054                    NO.                  ISSUED BY
    ATTN:INTERNATIONAL DIVISION.             SILICON VALLEY BANK, SANTA CLARA
         STANDBY LETTERS OF CREDIT           L/C AMOUNT:

GENTLEMEN:

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:

(NAME OF TRANSFEREE)
(ADDRESS)


ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF
CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS
TRANSFER.

BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF
CREDIT ARE TRANSFERRED TO THE TRANSFEREE. TRANSFEREE SHALL HAVE THE SOLE RIGHTS
AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS,
WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR
HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE TRANSFEREE
WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.

THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO
ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE
TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.

SINCERELY,

- -----------------------------
     (BENEFICIARY'S NAME)

- -----------------------------
  SIGNATURE OF BENEFICIARY


SIGNATURE AUTHENTICATED

- ----------------------------
       (NAME OF BANK)

- ----------------------------
    AUTHORIZED SIGNATURE

                                       C-3


                                   EXHIBIT "B"


================================================================================

     DATE: _______________                          REF. NO. ___________________

     AT SIGHT OF THIS DRAFT

     PAY TO THE ORDER OF ___________________________________US$_________________

     USDOLLARS _________________________________________________________________
     ___________________________________________________________________________


     DRAWN UNDER SILICON VALLEY BANK, SANTA CLARA, CALIFORNIA, STANDBY
     LETTER OF CREDIT NUMBER NO. ______________________ DATED __________________


     TO: SILICON VALLEY BANK
         3003 TASMAN DRIVE                      _____________________________
         SANTA CLARA, CA 95054                       (BENEFICIARY'S NAME)


                                                -----------------------------
                                                     AUTHORIZED SIGNATURE

================================================================================

                         GUIDELINES TO PREPARE THE DRAFT

1.   DATE: ISSUANCE DATE OF DRAFT.
2.   REF. NO.: BENEFICIARY'S REFERENCE NUMBER, IF ANY.
3.   PAY TO THE ORDER OF: NAME OF BENEFICIARY AS INDICATED IN THE L/C (MAKE SURE
     BENEFICIARY ENDORSES IT ON THE REVERSE SIDE).
4.   US$: AMOUNT OF DRAWING IN FIGURES.
5.   USDOLLARS: AMOUNT OF DRAWING IN WORDS.
6.   LETTER OF CREDIT NUMBER: SILICON VALLEY BANK'S STANDBY L/C NUMBER THAT
     PERTAINS TO THE DRAWING.
7.   DATED: ISSUANCE DATE OF THE STANDBY L/C.
8.   BENEFICIARY'S NAME: NAME OF BENEFICIARY AS INDICATED IN THE L/C.
9.   AUTHORIZED SIGNATURE: SIGNED BY AN AUTHORIZED SIGNER OF BENEFICIARY.


IF YOU NEED FURTHER ASSISTANCE IN COMPLETING THIS DRAFT, PLEASE CALL OUR L/C
PAYMENT SECTION AND ASK FOR:

ALICA DA LUZ: 408-654-7120
CESAR AGONCILLO: 408-654-3052

                                       C-4


                                    EXHIBIT D

                    PRELIMINARY PLANS FOR TENANT IMPROVEMENTS

                                       D-1


                                    EXHIBIT E

                        SCHEDULE OF SUBLANDLORD PROPERTY

Sublandlord agrees to sell to Subtenant the following Sublandlord Property
located within the Sublease Premises as of the Commencement Date:

Workstations (singles & doubles)
Workspaces - Fax Copy Printer
Office Furniture Set Ups
Training Tables
Cafeteria Tables
Stackable Chairs
Small Conference Room Set Ups
Medium Conference Room Set Ups
Large Conference Room Set Ups
Lobby Furniture

The Sublandlord Property shall be conveyed to Subtenant in its "AS IS, WHERE IS,
WITH ALL FAULTS, IF ANY" condition as of the Commencement Date, without any
warranties, express or implied regarding the number of such items, their
physical condition, existence, capacity, quality, value, workmanship, operating
capability or performance, compliance with applicable laws, or their fitness or
suitability for Subtenant's purposes (but with a warranty by Sublandlord that as
of the date of such conveyance, Sublandlord has good title to and the right and
authority to convey the Sublandlord Property; and that the Sublandlord Property
is free and clear of all security interests, liens and encumbrances).

                                       E-1


                                   EXHIBIT E-1

                                  BILL OF SALE

     THIS BILL OF SALE, is executed by CISCO SYSTEMS, INC., a California
corporation ("SELLER"), and SONUS NETWORKS, INC., a Delaware corporation
("BUYER"), effective as of as of the Commencement Date of the Sublease Agreement
(the "SUBLEASE") dated __________________, 2003 by and between Seller as
Sublandlord and Buyer as Subtenant (the "EFFECTIVE DATE"),.

     IN CONSIDERATION of the payment of One Dollar ($1.00), and for other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller hereby sells, assigns and transfers to Buyer all of the
assets more particularly described on Schedule 1 attached hereto and made a part
hereof (the "SUBLANDLORD PROPERTY"), subject to the following terms and
conditions:

     1.    BUYER ACKNOWLEDGES THAT BUYER IS ACQUIRING THE SUBLANDLORD PROPERTY
"AS IS AND WHERE IS, WITH ALL FAULTS, IF ANY", IN THE CONDITION THEY ARE IN AS
OF THE EFFECTIVE DATE, AND NO WARRANTIES, EXPRESS OR IMPLIED, HAVE BEEN MADE BY
SELLER REGARDING THEIR PHYSICAL CONDITION, CAPACITY, QUALITY, VALUE,
WORKMANSHIP, OPERATING CAPABILITY OR PERFORMANCE, OR THEIR COMPLIANCE WITH
APPLICABLE LAWS, OR THEIR FITNESS OR SUITABILITY FOR BUYER'S PURPOSES. NO
WARRANTIES, EXPRESS OR IMPLIED, CONTAINED IN THE UNIFORM COMMERCIAL CODE OR
OTHERWISE (INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTY OF
MERCHANTABILITY AND THE IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE)
SHALL APPLY TO THE SALE OF THE SUBLANDLORD PROPERTY, AND BUYER HEREBY DISCLAIMS
AND NEGATES THE RIGHT TO ANY SUCH WARRANTIES.

     2.    As of the Effective Date, Seller represents and warrants that: (a)
Seller is lawfully possessed of good title to the Sublandlord Property; (b)
Seller has the right and authority to convey the Sublandlord Property; and (c)
the Sublandlord Property shall be conveyed to Buyer free and clear of all
security interests, liens and encumbrances.

     3.    Possession of the Sublandlord Property shall be delivered to Buyer on
the Effective Date set forth above.

     4.    All applicable sales, use, transfer and documentary taxes arising out
of the transfer of the Sublandlord Property (but excluding sales taxes
applicable to Seller's period of ownership and income taxes of Seller arising
out of the sale) shall be paid by Buyer.

     5.    Notwithstanding the foregoing, if the Sublease is terminated due to
the failure of any of the conditions set forth in Section 1(c) of the Sublease,
the Sublandlord Property shall be deemed not conveyed to Buyer.

                                        1


     6.    This Bill of Sale shall be governed, construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts.

     IN WITNESS WHEREOF, this Bill of Sale has been executed in the Commonwealth
of Massachusetts, to be effective on the Effective Date first set forth above.

BUYER:                                  SELLER:

SONUS NETWORKS, INC., a Delaware        CISCO SYSTEMS, INC., a California
corporation                             corporation


By:                                     By:
      -------------------------------         -------------------------------
Name:                                   Name:
      -------------------------------         -------------------------------
Title:                                  Title:
      -------------------------------         -------------------------------


By:                                     By:
      -------------------------------         -------------------------------
Name:                                   Name:
      -------------------------------         -------------------------------
Title:                                  Title:
      -------------------------------         -------------------------------

                                        2


COMMONWEALTH OF MASSACHUSETTS)
                      )SS

COUNTY OF MIDDLESEX)

I, _______________________________, a Notary Public, in and for the County and
State aforesaid, DO HEREBY CERTIFY that _____________________________ and
___________________________, personally known to me to be the
__________________________ and __________________________ of Sonus Networks,
Inc., a Delaware corporation, and the same person(s) whose name(s) are/is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged to me that he/she/they, being thereunto duly authorized, signed
and delivered said instrument as their own free and voluntary act, and the free
and voluntary act of said corporation, for the uses and purposes set forth
therein.

GIVEN under my hand and Notarial seal this __ day of _________, 2003.


- ------------------------------
Notary Public

My Commission expires:


_________________________


STATE OF CALIFORNIA      )
                         )SS
COUNTY OF SANTA CLARA    )

I, _______________________________, a Notary Public, in and for the County and
State aforesaid, DO HEREBY CERTIFY that _____________________________ and
___________________________, personally known to me to be the
__________________________ and __________________________ of CISCO SYSTEMS,
INC., a California corporation, and the same person(s) whose name(s) are/is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged to me that he/she/they, being thereunto duly authorized, signed
and delivered said instrument as their own free and voluntary act, and the free
and voluntary act of said corporation, for the uses and purposes set forth
therein.

GIVEN under my hand and Notarial seal this __ day of _________, 20___.


- ------------------------------
Notary Public

My Commission expires:


_________________________

                                        3


                                   SCHEDULE 1

                              SUBLANDLORD PROPERTY

The following Property located within the Sublease Premises as of the
Commencement Date set forth in the Sublease:

Workstations (singles & doubles)
Workspaces - Fax Copy Printer
Office Furniture Set Ups
Training Tables
Cafeteria Tables
Stackable Chairs
Small Conference Room Set Ups
Medium Conference Room Set Ups
Large Conference Room Set Ups
Lobby Furniture

                                        4


                                    EXHIBIT X

                               CONSENT TO SUBLEASE

     THIS CONSENT TO SUBLEASE dated as of September 23, 2003 (this "Consent"),
is entered into by and among CSDV, LIMITED PARTNERSHIP, a Delaware limited
partnership ("Landlord"), CISCO SYSTEMS, INC., a California corporation
("Tenant"), and SONUS NETWORKS INC., a Delaware corporation ("Subtenant"), with
reference to the following Recitals:

                                 R E C I T A L S

          WHEREAS, 250 Apollo Investors, LLC ("Original Landlord") and Tenant
have entered into that certain Lease Agreement (NNN) dated March 2, 1999 (the
"Lease"), a copy of which is attached hereto as EXHIBIT "A", wherein Landlord
leased to Tenant certain premises (the "Premises") consisting of a two-story
building consisting of approximately 144,375 rentable square feet, located at
250 Apollo Drive, Chelmsford, Massachusetts., and more particularly described in
the Lease. Landlord is the successor in interest to Original Landlord under the
Lease.

          WHEREAS, Tenant desires to sublease to Subtenant a portion of the
Premises consisting of approximately 133,621 rentable square feet (the
"Subleased Premises") more particularly described in and pursuant to the
provisions of that certain Sublease dated as of October__, 2003 (the
"Sublease"), a copy of which is attached hereto as EXHIBIT "B".

          WHEREAS, Tenant desires to obtain Landlord's consent to the Sublease.

          NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Landlord hereby consents to the Sublease, such
consent being subject to and upon the following terms and conditions to which
Tenant and Subtenant hereby agree:

          1.   All initial capitalized terms not otherwise defined in this
Consent shall have the meanings set forth in the Lease. In the event of any
conflict between the terms of the Sublease and the terms of this Consent, the
terms of this Consent shall control.

          2.   This Consent shall not be effective and the Sublease shall not be
valid nor shall Subtenant take possession of the Subleased Premises unless and
until (a) a fully executed original of this Consent is delivered to Landlord,
(b) a fully executed original of the Sublease in the form attached hereto as
EXHIBIT "B" is delivered to Landlord, and (c) a fully executed original Estoppel
Certificate in the form attached hereto as EXHIBIT "C" is delivered to Landlord.

          3.   The Sublease is and shall be at all times subject and subordinate
to (a) all

                                        5


of the covenants, agreements, terms, provisions and conditions contained in the
Lease, including, without limitation, any provisions regarding conflicts of laws
and/or the applicability or venue thereof, (b) any prior ground lease and any
prior mortgage or deed of trust, and (c) all matters of record affecting the
Premises and all laws, ordinances and regulations now or hereafter affecting the
Premises. The parties expressly acknowledge and agree that notwithstanding the
terms of the Sublease, Subtenant shall carry insurance in the amounts and
pursuant to the requirements contained in Article 11 of the Lease, naming
Sublandlord and Master Landlord as additional insureds.

               Notwithstanding anything to the contrary contained in the Lease,
the parties hereby acknowledge and agree that Subtenant shall have one (1)
option (the "Option") to extend the Term of the Lease as to the entire Premises
only. Subtenant shall exercise such option to extend by giving written notice to
Landlord of its desire to do so not later than twenty-four (24) months prior to
the expiration of the Term, provided, that at the time of the exercise,
Subtenant's net cash position after current liabilities is not less than
$50,000,000. Upon a timely exercise of the Option, Subtenant shall enter into a
direct lease with Landlord based upon the terms of the Lease as it pertains to
the Premises, as amended or modified by this Consent, for a period of three (3)
years (the "Extension Period"), provided that at the time of Subtenant's
exercise, there is not then an Event of Default (as defined in Section 19 of the
Lease) on the part of Tenant or Subtenant. The Extension Period shall commence
on the day immediately following the last day of the original Term and shall end
on the last day of the thirty-sixth month thereafter. In the event that
Subtenant fails to give notice to Landlord within the time period provided
herein, the Lease shall automatically terminate at the end of the original Term,
and Subtenant shall have no further option to extend the Term. The Extension
Period shall be on all the terms and conditions of the Lease, as hereby amended,
except that: (i) Subtenant shall have no further option to extend the Term, and
(ii) the Base Rent for the Extension Period shall be the Fair Market Rental
Value (as defined below) of the Premises for the Extension Period, determined
pursuant to this Section 3.

               If Subtenant subleases any portion of the Premises or assigns or
otherwise transfers any interest under the Lease to any person or entity prior
to the exercise of the Option, the Option shall lapse. If Subtenant subleases
any portion of the Premises or assigns or otherwise transfers any interest of
Subtenant under the Lease to any person or entity after the exercise of the
Option but prior to the commencement of the Extension Period (whether with or
without Landlord's consent), the Option shall lapse and the term of the Lease
shall expire as if such Option were not exercised.

               Basic Rental for the Premises shall be increased on the first day
of the Extension Period to an amount equal to the "Fair Rental Value" of the
Premises (which Fair Rental Value determination may include increases in rent
during the Extension Period) as of the first day of the Extension Period, which
Fair Rental Value shall be determined by Landlord in its sole but reasonable
discretion, after evaluating, among other things, the rents for comparable space
in comparable buildings in the greater Boston area, but in no event shall the
Base Rent be less than $14.00 per rentable square foot. Landlord shall notify
Subtenant in writing of such determination of Fair Rental Value within thirty
(30) days after Landlord's receipt of Subtenant's notice exercising the Option.
If Subtenant shall dispute Landlord's determination of Fair Market

                                        6


Rental Value for the Premises, then Subtenant shall have the right to submit the
issue of Landlord's reasonableness (but not the Fair Market Rental Value) for
neutral binding arbitration (and not by court action) to the American
Arbitration Association in accordance with the rules of such Association then in
effect. Subtenant shall exercise such right of arbitration by delivering written
notice of such election within thirty (30) days after receipt of Landlord's
notice of Fair Market Rental Value. If the arbitrators shall decide that
Landlord's determination of Fair Market Rental Value was reasonable, then Fair
Market Rental Value shall be the amount previously determined by Landlord. If
the arbitrators shall determine that Landlord acted unreasonably, then Landlord
shall redetermine the Fair Market Rental Value in its sole but reasonable
discretion, provided that Subtenant shall again have the right to challenge
Landlord's reasonableness in the manner set forth above. In the event that the
arbitrators determine that Landlord acted unreasonably in redetermining the Fair
Market Rental Value, Subtenant may revoke its exercise of the Option by giving
Landlord written notice of such revocation within ten (10) days of the second
determination by the arbitrators that Landlord acted unreasonably and the Lease
shall terminate on the Expiration Date. In no event shall the arbitrators be
permitted to determine rental value under the Lease. The decision of the
arbitrators shall be binding upon both parties. Each party shall share equally
the cost of the arbitration process.

               In view of the foregoing Option in favor of Subtenant, the
parties hereby acknowledge and agree that Tenant shall have no further right to
extend the Lease, and Addendum 1 of the Lease is hereby deleted and of no
further force and effect.

          4.   Subtenant does hereby expressly assume and agree to be bound by
and to perform and comply with, for the benefit of Landlord, each and every
obligation of Tenant under the Lease applicable to the Subleased Premises.
Notwithstanding the Sublease or Landlord's consent thereto, Tenant shall remain
fully and primarily liable for the payment of Rents and all other amounts
required to be paid by Tenant under the Lease and for the performance of all
other obligations of Tenant under the Lease.

          5.   The acceptance of Rents or other amounts by Landlord from
Subtenant or anyone else liable under the Lease shall not be deemed a waiver by
Landlord of any provisions of the Lease.

          6.   The execution of this Consent by Landlord shall in no way
constitute any representation or warranty whatsoever by Landlord, express or
implied, relating to the Lease, the Premises, the Subleased Premises or any
other matter relating to Tenant's or Subtenant's tenancy, including without
limitation, the physical condition or square footage of the Premises or the
Subleased Premises, and Tenant and Subtenant acknowledge and agree that they are
not relying on any such representation or warranty in entering into the Sublease
or consummating the transactions contemplated by the Sublease and each of them
hereby waives any claim against Landlord with respect to any such matters.

          7.   This Consent shall not constitute a consent to any subsequent
subletting or assignment and shall not relieve Tenant or any person claiming
under or through Tenant of the obligation to obtain the consent of Landlord,
pursuant to Section 14 of the Lease, to any future assignment or sublease
(including, without limitation any future assignment or sublease of the

                                        7


Sublease).

          8.   Landlord may consent to subsequent subletting and assignments of
the Lease or the Sublease or any amendments or modifications thereto and shall
use its best efforts to notify Tenant and anyone else liable under the Lease,
but with no liability for failing to do so, and Landlord's failure to obtain any
such consent shall not relieve such persons from liability.

          9.   Any act or omission of Subtenant or anyone claiming under or
through Subtenant that violates any of the provisions of the Lease shall be
deemed a violation of the Lease by Tenant.

          10.  In the event of any default of Tenant under the Lease, Landlord
may proceed directly against Tenant, any guarantors or anyone else liable under
the Lease or the Sublease without first exhausting Landlord's remedies against
any other person or entity liable thereon to Landlord.

          11.  The Subleased Premises shall (subject to all of the covenants and
agreements of the Lease) be used solely for the purposes as described in the
Lease and for no other use or purpose.

          12.  In the event of any default of Tenant in the performance of its
obligations under the Lease and termination of the Lease or re-entry or
repossession of the Premises by Landlord, then Landlord may, at its option and
without being obligated to do so, require Subtenant to attorn to Landlord;
provided, that the exercise of such option shall in no way waive any rights
Landlord may have against Tenant or any other party with respect to such default
or release Tenant or any such other party from its obligations under the Lease
or otherwise. In the event Landlord exercises such option, Landlord and
Subtenant shall be bound by the terms of the Sublease from the time of the
exercise of such option to the date of termination of the Sublease, but Landlord
shall not (a) be bound by any prepayment of more than one month's rent or liable
for any security deposit paid by Subtenant unless actually delivered to
Landlord, (b) be liable for any previous act or omission of Tenant under the
Lease or for any other defaults of Tenant under the Sublease, (c) be subject to
any defenses or offsets accrued previous to the date Landlord exercises such
option which Subtenant may have against Tenant or (d) be bound by any changes or
modification made to the Sublease without the written consent of Landlord. In
the event Landlord does not exercise such option, then upon the termination of
the Lease and the delivery of written notice to Subtenant, the Sublease shall
terminate and be of no further force or effect, except with respect to
obligations relating to Subtenant's occupancy of the Subleased Premises that
survive the termination of the Lease or the Sublease, including without
limitation, indemnity obligations under the Lease or the Sublease and
obligations relating to removal of Subtenant's property from and restoration of
the Subleased Premises.

          13.  Tenant hereby assigns and transfers to Landlord all of Tenant's
right, title and interest in the rentals and income arising from the Sublease,
subject however to the following terms of this Section 13:

          (a)  Landlord, by executing this Consent, agrees that until a default
     shall occur

                                        8


     in the performance of Tenant's obligations under the Lease, Tenant may
     receive, collect and enjoy the rents accruing under the Sublease; provided,
     that if, under the Lease, Landlord is entitled to any portion of such rent
     that constitutes profit or excess rent due under the Lease, such portion
     shall be promptly paid over to Landlord upon receipt by Tenant. However, if
     Tenant shall default in the performance of any of its obligations under the
     Lease, then Landlord may, at its option, subject to the provisions of
     Section 12 above, receive and collect, directly from Subtenant, all rent
     then owing and thereafter becoming due and payable under the Sublease as
     such rent shall become due and payable under the Sublease; provided, that
     the exercise of such option shall in no way waive any rights Landlord may
     have against Tenant or any other party with respect to such default or
     release Tenant or any such other party from its obligations under the Lease
     or otherwise. All such rent payable under the Sublease so collected by
     Landlord shall be applied against any Rents and Additional Charges payable
     by Tenant to Landlord under the Lease. Landlord shall not, by reason of
     this assignment of the Sublease nor by reason of the collection of rents
     from Subtenant, be deemed liable to Subtenant for any failure of Tenant to
     perform and comply with Tenant's obligations under the Lease or the
     Sublease. Nothing contained herein shall be deemed to create any right of
     Tenant to the refund of any rents or other amounts paid or payable to
     Landlord by Subtenant arising or accruing after the expiration or earlier
     termination for any reason of the Lease.

          (b)  Tenant hereby irrevocably authorizes and directs Subtenant,
     subject to the provisions of Section 13(a) hereof, upon receipt of any
     written notice from Landlord stating that a default exists in the
     performance of Tenant's obligations under the Lease, to pay to Landlord the
     rents and other amounts due and to become due and payable under the
     Sublease as such rents and other amounts shall become due and payable under
     the Sublease. Tenant agrees that Subtenant shall have the right to rely
     upon any such statement and request from Landlord, and that Subtenant shall
     pay such rents and other amounts to Landlord without any obligation or
     right to inquire as to whether such default exists and notwithstanding any
     notice from or claim from Tenant to the contrary and Tenant shall have no
     right or claim hereunder against Subtenant for any such rents or other
     amounts so paid by Subtenant. Subject to Landlord's rights under Section 12
     above, such payments to Landlord shall satisfy and discharge Subtenant's
     obligation for the payment of rent and other amounts under the Sublease to
     the full extent of such payments made to Landlord.

          14.  It is expressly understood and agreed that notwithstanding
anything in the Sublease or the Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord hereunder (including
any successor landlord) and any recourse by Subtenant or Tenant against Landlord
shall be limited solely and exclusively to the interest of Landlord in and to
the Building, and neither Landlord, nor any of its constituent partners, shall
have any personal liability therefor, and Tenant and Subtenant hereby expressly
waive and release such personal liability on behalf of itself and all persons
claiming by, through or under Tenant or Subtenant. Under no circumstances shall
Landlord be liable for injury to Tenant's or Subtenant's business or for any
loss of income or profit therefrom.

          This Consent to Sublease is being executed by CB Richard Ellis
Investors, LLC, a

                                        9


Delaware limited liability company ("CB Richard Ellis"), on behalf of Landlord.
No present or future officer, director, employee, trustee, partner, member,
manager, retirant, beneficiary, internal investment contractor, investment
manager or agent of Landlord shall have any personal liability, directly or
indirectly, and recourse shall not be had against any such officer, director,
employee, trustee, partner, member, manager, retirant, beneficiary, internal
investment contractor, investment manager or agent under or in connection with
the Sublease or any other document or instrument heretofore or hereafter
executed in connection with the Sublease. Tenant and Subtenant hereby waive and
release any and all such personal liability and recourse. The limitations of
liability provided herein are in addition to, and not in limitation of, any
limitation on liability applicable to Landlord provided by law or in any other
contract, agreement or instrument. Tenant and Subtenant further acknowledge that
CB Richard Ellis has consented to this Sublease as investment manager to
Landlord and Tenant and Subtenant agree that all persons dealing with CB Richard
Ellis must look solely to Landlord (for which CB Richard Ellis is acting as
investment manager) for the enforcement of any claims arising under the Lease or
the Sublease (subject to the limitations upon Landlord's liability set forth
above), as neither CB Richard Ellis nor any of its affiliated entities
(including, but not limited to CB Richard Ellis, Inc. and CB Richard Ellis
Services, Inc.) nor any of their respective officers, directors, agents,
managers, trustees, employees, members, investment managers, partners or
shareholders assume any personal, corporate, partnership, limited liability
company, or other liability for any of the obligations entered into by CB
Richard Ellis as investment manager for Landlord.

          15.  Tenant hereby acknowledges that Landlord or its affiliate is a
unit of the California State and Consumer Services Agency established pursuant
to Title I, Division 1, Part 13 of the California Education Code, Sections 22000
et seq., as amended (the "Ed Code"). As a result, Tenant acknowledges that
Landlord is prohibited from engaging in certain transactions with a "school
district or other employing agency" or a "member, retirant or beneficiary" (as
those terms are defined in the Ed Code). In addition, Landlord may be subject to
certain restrictions and requirements under the Internal Revenue Code, 26 U.S.C.
Section 1 et seq. (the "Code"). Accordingly, Tenant represents and warrants to
Landlord that Tenant is neither a school district or other employing agency nor
a member, retirant or beneficiary; and, to Tenant's knowledge (a) Tenant has not
made any contribution or contributions to Landlord (other than the consideration
set forth in the Lease); (b) neither a school district or other employing
agency, member, retirant, participant nor beneficiary, nor any person who has
made any contribution to Landlord, nor any combination thereof, is related to
Tenant by any relationship described in Section 267(b) of the Code; (c) neither
Landlord, CB Richard Ellis, their affiliates, related entities, agents,
officers, directors or employees, nor any Landlord board member, trustee, agent,
related entity, affiliate, employee or internal investment contractor (both
groups collectively, "Landlord Affiliates") has received or will receive,
directly or indirectly, any payment, consideration or other benefit from Tenant
or any affiliate of Tenant in connection with the transaction contemplated by
this Consent (excluding any benefit derived from the ownership, if any, of
publicly traded stock in Tenant or any affiliate of Tenant or consideration set
forth in the Lease or this Consent), nor does any Landlord Affiliate have any
agreement or arrangement with Tenant or any person or entity affiliated with
Tenant relating to the transactions contemplated by this Consent, except as
disclosed to and expressly approved by Landlord; and (d) no Landlord's
Affiliates have any direct or indirect ownership interest in Tenant or any
person or entity affiliated with Tenant (other than the ownership, if any, of
publicly traded stock in Tenant or any

                                       10


entity affiliated with Tenant), except as disclosed to and expressly approved by
Landlord. Landlord acknowledges that Tenant is a publicly held company, and its
affiliates may be publicly held companies, and that Landlord may own shares in
such companies, and such publicly held companies may employ former teachers who
may have made contributions to Landlord.

          16.  Subtenant hereby acknowledges that Landlord or its affiliate is a
unit of the California State and Consumer Services Agency established pursuant
to Title I, Division 1, Part 13 of the California Education Code, Sections 22000
et seq., as amended (the "Ed Code"). As a result, Subtenant acknowledges that
Landlord is prohibited from engaging in certain transactions with a "school
district or other employing agency" or a "member, retirant or beneficiary" (as
those terms are defined in the Ed Code). In addition, Landlord may be subject to
certain restrictions and requirements under the Internal Revenue Code, 26 U.S.C.
Section 1 et seq. (the "Code"). Accordingly, Subtenant represents and warrants
to Landlord that Subtenant is neither a school district or other employing
agency nor a member, retirant or beneficiary; and, to Subtenant's knowledge (a)
Subtenant has not made any contribution or contributions to Landlord (other than
the consideration set forth in the Lease); (b) neither a school district or
other employing agency, member, retirant, participant nor beneficiary, nor any
person who has made any contribution to Landlord, nor any combination thereof,
is related to Subtenant by any relationship described in Section 267(b) of the
Code; (c) neither Landlord, CB Richard Ellis, their affiliates, related
entities, agents, officers, directors or employees, nor any Landlord board
member, trustee, agent, related entity, affiliate, employee or internal
investment contractor (both groups collectively, "Landlord Affiliates") has
received or will receive, directly or indirectly, any payment, consideration or
other benefit from Subtenant or any affiliate of Subtenant in connection with
the transaction contemplated by this Consent (excluding any benefit derived from
the ownership, if any, of publicly traded stock in Subtenant or any affiliate of
Subtenant or consideration set forth in the Lease, Sublease or this Consent),
nor does any Landlord Affiliate have any agreement or arrangement with Subtenant
or any person or entity affiliated with Subtenant relating to the transactions
contemplated by this Consent, except as disclosed to and expressly approved by
Landlord; and (d) no Landlord's Affiliates have any direct or indirect ownership
interest in Subtenant or any person or entity affiliated with Subtenant (other
than the ownership, if any, of publicly traded stock in Subtenant or any entity
affiliated with Subtenant), except as disclosed to and expressly approved by
Landlord. Landlord acknowledges that Subtenant is a publicly held company, and
its affiliates may be publicly held companies, and that Landlord may own shares
in such companies, and such publicly held companies may employ former teachers
who may have made contributions to Landlord.

          17.  Nothing contained herein shall be deemed or construed to modify,
waive, impair or affect any of the covenants, agreements, terms, provisions or
conditions contained in the Lease or to waive any breach or default by Tenant in
the due keeping, performance or observance thereof.

          18.  This Consent may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which when taken together shall
constitute but one and the same instrument.

                       [SIGNATURES TO FOLLOW ON NEXT PAGE]

                                       11


     IN WITNESS WHEREOF, Landlord, Tenant and Subtenant have caused their duly
authorized representatives to execute this Consent as of the date first above
written.

LANDLORD:   CSDV, LIMITED PARTNERSHIP,
            a Delaware limited partnership

            By:   CB Richard Ellis Investors, LLC,
                  solely in its capacity as agent for
                  CSDV, LIMITED PARTNERSHIP


                  By:
                      --------------------------------
                  Name:
                  Title:  Authorized Signatory


TENANT:     CISCO SYSTEMS, INC.,
            a California corporation

            By:
               ---------------------------------------

            Its:
                --------------------------------------


SUBTENANT:  SONUS NETWORKS, INC.,
            a Delaware corporation


            By:
               ---------------------------------------
            Its:
               ---------------------------------------

                                       12


                                   EXHIBIT "A"

                                      LEASE

                                     16-A-1


                                   EXHIBIT "B"

                                    SUBLEASE

                                        F


                                   EXHIBIT "C"

                              ESTOPPEL CERTIFICATE

TO:  CSDV, LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord").

CISCO SYTEMS, INC., a California corporation ("Tenant"), hereby certifies as
follows:

     1.   The undersigned is the Tenant under that certain Lease Agreement (NNN)
dated March 2, 1999 (the "Lease"), executed by Landlord, as Landlord, and
Tenant, as Tenant, covering certain premises (the "Premises"), consisting of a
two-story building consisting of an approximately 144,375 rentable square foot
building located at 250 Apollo Drive, Chelmsford, Massachusetts 01824, and more
particularly described in the Lease.

     2.   The term of the Lease commenced on February 1, 2000 and the expiration
date of the Lease is January 31, 2007. Tenant has paid rent through September
30, 2003. The next monthly payment of Base Rent in the amount of $162,421.87 is
due on October 1, 2003.

     3.   Notwithstanding anything to the contrary contained in the Lease,
Tenant shall have no right to extend the term of the Lease. Tenant does not have
any preferential right to purchase all or any part of the Premises.

     4.   True, correct and complete copies of the Lease and all amendments,
modifications and supplements thereto are attached to the Consent with which
this Estoppel Certificate is being delivered, and the Lease, as so amended,
modified and supplemented, is in full force and effect, and represents the
entire agreement between Tenant and Landlord with respect to the Premises. There
are no amendments, modifications or supplements to the Lease, whether oral or
written, except as follows (if none, write "none"): None.

     5.   All space and improvements leased by Tenant have been completed and
furnished in accordance with the provisions of the Lease and Tenant has accepted
and taken possession of the Premises.

     6.   Landlord is not in any respect in default in the performance of the
terms and provisions of the Lease. Tenant has not assigned, transferred or
hypothecated the Lease or any interest therein or subleased all or any portion
of the Premises.

     7.   There are no offsets or credits against rentals payable under the
          Lease and no free period or rental concessions have been granted to
          Tenant, except as follows (if none, write "none"): NONE.
          Notwithstanding the foregoing, although Tenant currently has no
          knowledge of offsets, credits, refunds due or set offs against
          Landlord arising from the Lease, Tenant does not waive the right to
          conduct audits of the Lease pursuant to Section 5.5 therein. Should an
          audit conducted by the Tenant of the Lease reveal a claim for credits,
          refunds due, set offs against Landlord, concessions, rebates,
          allowances or free rent, Tenant reserves the right to make claim for
          such credits, refunds due, set offs against

                                        F


          Landlord, concessions, rebates, allowances or free rent pursuant to
          Section 5.5.

     8.   For informational purposes only, Tenant has no knowledge of any
processing, use, storage, disposal or treatment of any hazardous or toxic
material or substance on the Premises except as follows (if none, write "none"):
None.

     This Certificate is given to Landlord with the understanding that Landlord
will rely hereon in connection with the sublease to Sonus Networks, Inc.
Following such sublease, Tenant agrees that the Lease shall remain in full force
and effect and shall bind Tenant and such assignee and inure to the benefit of
the Landlord and its successors in interest.


     DATED: October ___, 2003


               "TENANT"


               CISCO SYSTEMS, INC.,
               a California corporation


               By:
                  ----------------------------------

               Its:
                   ---------------------------------

                                        F



SONUS NETWORKS                                                  CORPORATE POLICY

CODE OF BUSINESS CONDUCT AND ETHICS                         POLICY NO. LEGAL-2.0

INTRODUCTION

A most valued asset of Sonus Networks, Inc. ("Sonus" or the "Company") is its
reputation for integrity and ethical standards. To preserve Sonus' reputation
and to reaffirm its existing policy for integrity to its employees, officers and
directors and to persons who deal with Sonus, the Board of Directors of Sonus
has adopted this policy.

SCOPE

This Code of Business Conduct and Ethics ("Code") applies in the United States
and in every other country in which Sonus and its subsidiaries do business.
Compliance with this Code is required of every employee, officer and director.
If you have any questions regarding this Code or its application to you in any
situation, you should contact your supervisor or Sonus' General Counsel.

CODE

This Code outlines the broad principles of legal and ethical business conduct
embraced by Sonus. It is not a complete list of legal or ethical issues you
might face in the course of business, and, therefore, you must apply this Code
using common sense and good judgment. Employees, officers and directors should
report promptly to their supervisor or Sonus' General Counsel any possible
violations of this Code. No form of reprisal will be taken against you for
reporting in good faith actual or suspected violations.

COMPLIANCE WITH LAWS, RULES AND REGULATIONS. All employees, officers and
directors shall comply with all laws, rules and regulations applicable to the
Company wherever it does business. You are expected to use good judgment and
common sense in seeking to comply with all applicable laws, rules and
regulations and to ask for advice when you are uncertain about them.

COMPETITIVE BUSINESS. Each employee, officer and director must act in the best
interests of Sonus. You must refrain from engaging in any activity that
interferes with your exercise of independent judgment or materially impairs the
performance of your responsibilities, including engaging in any business venture
or owning an interest in any enterprise which places you in direct competition
with Sonus. You should not, as an employee, officer or director, take action or
have an interest that prevents you from performing your Company responsibilities
honestly and objectively. You may invest in stock (or other securities) in
publicly or privately owned companies, whether or not they are competitors of,
or do business with, Sonus so long as that holding is not so great as to
interfere with your exercise of independent judgment or materially impair the
performance of your responsibilities.



CODE OF BUSINESS CONDUCT AND ETHICS                         POLICY NO. LEGAL-2.0

It is your responsibility to disclose any transaction or relationship that
reasonably could be expected to interfere with your exercise of independent
judgment or materially impair the performance of your responsibilities to Sonus'
General Counsel or, if you are an executive officer or director, to the Board of
Directors, which shall be responsible for reviewing such transaction or
relationship and determining whether any action needs to be taken.

INSIDER TRADING. Employees, officers and directors who have material non-public
information about Sonus or other companies, including Sonus' suppliers and
customers, as a result of their relationship with the Company are prohibited by
law and Company policy from trading in securities of the Company or such other
companies, as well as from communicating such information to others who might
trade on the basis of that information. To help ensure that you do not engage in
prohibited insider trading and avoid even the appearance of an improper
transaction, Sonus has adopted an Insider Trading Policy, which is available on
the Intranet site or from Sonus' General Counsel.

POLITICAL CONTRIBUTIONS. Except as permitted by applicable law, no political
contributions of the funds of Sonus or any of its subsidiaries are to be made,
directly or indirectly, to candidates for political office or to political
parties or committees in the United States or any foreign country. Any
permissible exceptions to this general prohibition will require the prior
consent of the General Counsel of Sonus.

GIFTS AND GRATUITIES. The use of Sonus funds or assets for gifts, gratuities or
other favors to employees or government officials is prohibited, except to the
extent such gifts are in compliance with applicable law, nominal in amount and
not given in consideration or expectation of any action by the recipient.

Employees, officers and directors must not accept, or permit any member of their
immediate family to accept, any gifts, gratuities or other favors from any
customer, supplier or other person doing or seeking to do business with Sonus,
other than items of nominal value. Any gifts that are not of nominal value
should be returned immediately and reported to your supervisor.

Bribes and kickbacks are criminal acts, strictly prohibited by law. You must not
offer, give, solicit or receive any form of bribe or kickback anywhere in the
world.

ACCURACY OF BOOKS AND RECORDS. All transactions must be properly and accurately
recorded in the appropriate books and records of Sonus and its subsidiaries, and
all receipts and disbursements, and any asset or liability resulting from the
transactions, must be reflected in any financial statements based upon such
books and records. All receipts and disbursements must be properly supported and
documented. No payment on behalf of Sonus or any of its subsidiaries shall be
approved or made with the intention or understanding that any part of such
payment is to be used for any purpose other than that described by the documents
supporting the payments. No undisclosed or unrecorded fund, bank account or
asset of Sonus or any of its subsidiaries may be established at any time. No
employee, officer or director shall make a false or misleading statement to, nor
shall any employee, officer or director

                                        2


CODE OF BUSINESS CONDUCT AND ETHICS                         POLICY NO. LEGAL-2.0

conceal information from, outside or internal auditors or legal counsel of Sonus
or any of its subsidiaries.

PUBLIC REPORTING OF INFORMATION. It is the policy of the Company to provide
full, fair, accurate, timely and understandable disclosure in reports and
documents filed with, or submitted to, the Securities and Exchange Commission
and in other public communications. Every employee of the Company has the
responsibility to assist the Company in meeting these legal and regulatory
requirements. If an employee reasonably believes that the Company or any of its
employees or others, acting on behalf of the Company, have violated any
securities laws or regulations, including matters relating to accounting and
auditing, the employee should immediately report any such potential violation to
the Company's General Counsel pursuant to the "Policy on Reporting and
Investigating Complaints Relating to Corporate Reporting and Disclosure,
Accounting and Auditing Controls and Procedures, and Securities Law Compliance,"
which is available on the Intranet site or from Sonus' General Counsel.

CONFIDENTIALITY. Employees, officers and directors must maintain the
confidentiality of confidential information entrusted to them by Sonus or other
companies, including Sonus' suppliers and customers, except when disclosure is
authorized by a supervisor or legally mandated. Unauthorized disclosure of any
confidential information is prohibited. Additionally, you should take
appropriate precautions to ensure that confidential or sensitive business
information, whether it is proprietary to Sonus or another company, is not
communicated within the Company except to those who have a need to know such
information to perform their responsibilities.

Employees, officers and directors (other than Sonus' authorized spokespersons)
must not discuss internal Sonus matters with, or disseminate internal Sonus
information to, anyone outside the Company, except as required in the
performance of their Company duties and after an appropriate confidentiality
agreement is in place. This prohibition applies particularly to inquiries
concerning the Company from the media, stock market professionals (such as
securities analysts, institutional investors, investment advisers, brokers and
dealers) and security holders. All responses to inquiries on behalf of the
Company must be made only by the Company's authorized spokespersons. If you
receive any inquiries of this nature, you must decline to comment and refer the
inquirer to your supervisor or one of the Company's authorized spokespersons.

You also must abide by any lawful obligations that you have to your former
employer. These obligations may include restrictions on the use and disclosure
of confidential information, restrictions on the solicitation of former
colleagues to work at Sonus and non-competition obligations.

HONEST AND ETHICAL CONDUCT AND FAIR DEALING. Employees, officers and directors
should endeavor to deal honestly, ethically and fairly with the Company's
suppliers, customers, competitors and employees. Statements regarding the
Company's products and services must not be untrue, misleading, deceptive or
fraudulent. You must not take unfair advantage of

                                        3


CODE OF BUSINESS CONDUCT AND ETHICS                         POLICY NO. LEGAL-2.0

anyone through manipulation, concealment, abuse of privileged information,
misrepresentation of material facts or any other unfair-dealing practice.

PROTECTION AND PROPER USE OF CORPORATE ASSETS. Employees, officers and directors
should seek to protect the Company's assets. Theft, carelessness and waste have
a direct impact on the Company's financial performance. Employees, officers and
directors must use the Company's assets and services solely for legitimate
business purposes of the Company and not for any personal benefit or the
personal benefit of anyone else.

REPORTING AND COMPLIANCE

RESPONSIBILITIES. Every employee, officer and director has the responsibility to
ask questions, seek guidance, report suspected violations and express concerns
regarding compliance with this Code. Any employee, officer or director who knows
or believes that any other employee or representative of the Company has engaged
or is engaging in Company-related conduct that violates applicable law or this
Code should report such information to his or her supervisor or to the General
Counsel. You may report such conduct openly or anonymously without fear of
retaliation. The Company will not discipline, discharge, demote, suspend,
threaten, harass or in any other manner discriminate or retaliate against any
employee who reports such conduct, unless it is determined that the report was
made with knowledge that it was false. This Code should not be construed to
prohibit you from testifying, participating or otherwise assisting in any state
or federal administrative, judicial or legislative proceeding or investigation.
Questions regarding this policy should be referred to the General Counsel of
Sonus. Candor is expected from all employees, officers and directors at all
times and prompt communication of any problems or breaches seen or foreseen in
the areas described above should be made to the General Counsel of Sonus.

MANAGERS' COMPLIANCE CERTIFICATIONS. It shall be the responsibility of each
Sonus and subsidiary manager at the level of "vice-president" and above annually
(a) to review this policy or cause it to be reviewed with his or her
subordinates, offering each subordinate an opportunity to report privately to
such manager any problems or breaches seen or foreseen in the areas described
above and (b) to certify to the Audit Committee of the Board of Directors of
Sonus his or her knowledge with respect to such problems or breaches and that
such review has occurred.

DISCIPLINARY ACTIONS. The Company shall determine whether violations of this
Code have occurred and, if so, shall determine the disciplinary measures to be
taken against any employee or officer who has violated this Code. In the event
that the alleged violation involves an executive officer or a director, the
Chief Executive Officer and the Board of Directors, respectively, shall
determine whether a violation of this Code has occurred and, if so, shall
determine the disciplinary measures to be taken against such executive officer
or director.

Failure to comply with the standards outlined in this Code will result in
disciplinary action including, but not limited to, reprimands, warnings,
probation or suspension without pay,

                                        4


CODE OF BUSINESS CONDUCT AND ETHICS                         POLICY NO. LEGAL-2.0

demotions, reductions in salary, discharge and restitution. Certain violations
of this Code may require the Company to refer the matter to the appropriate
governmental or regulatory authorities for investigation or prosecution.
Moreover, any supervisor who directs or approves of any conduct in violation of
this Code, or who has knowledge of such conduct and does not immediately report
it, also will be subject to disciplinary action, up to and including discharge.

The Company reserves the right to amend, alter or terminate this Code at any
time for any reason. The most current version of this Code can be found on the
Company's Intranet site or from Sonus' General Counsel.

This document is not an employment contract between the Company and any of its
employees, officers or directors.

WAIVERS OF THIS CODE

     Any executive officer or director who seeks an exception to any of these
policies should contact Sonus' General Counsel. Any waiver of this Code for
executive officers or directors or any change of this Code that applies to
executive officers or directors may be made only by the Board of Directors of
the Company and will be disclosed as required by law or stock market regulation.

                                        5



                                                                    EXHIBIT 21.1

                         SUBSIDIARIES OF THE REGISTRANT



NAME                                                 JURISDICTION OF INCORPORATION
- ------                                               -----------------------------
                                                           
telecom technologies, inc.                                    Texas

Sonus International, Inc.                                     Delaware

Sonus Securities Corp.                                        Massachusetts

Sonus Networks Limited                                        United Kingdom

Sonus Networks Pte Ltd                                        Singapore

Nihon Sonus Networks K.K.                                     Japan

Westford Networks Mexico, S. de R.L. de C.V.                  Mexico

Sonus Networks Gmbh                                           Germany

Sonus Networks EURL                                           France

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EXHIBIT 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hassan M. Ahmed, President and Chief Executive Officer of Sonus Networks, Inc., certify that:

1.: I have reviewed this annual report on Form 10-K for the period ended December 31, 2003 ("Annual Report") of Sonus Networks, Inc. (the "Registrant");
2.: Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;
3.: Omitted;
4.: Omitted; and
5.: Omitted.

Date: March 15, 2004

/s/ HASSAN M. AHMED

Hassan M. Ahmed
President and Chief Executive Officer

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CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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EXHIBIT 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen J. Nill, Chief Financial Officer, Vice President of Finance and Administration and Treasurer of Sonus Networks, Inc., certify that:

1.: I have reviewed this annual report on Form 10-K for the period ended December 31, 2003 ("Annual Report") of Sonus Networks, Inc. (the "Registrant");
2.: Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;
3.: Omitted;
4.: Omitted; and
5.: Omitted.

Date: March 15, 2004

/s/ STEPHEN J. NILL

Stephen J. Nill
Chief Financial Officer, Vice President of Finance and Administration and Treasurer

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CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002