The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between December 11, 2000 and January 16, 2002, thereby artificially inflating the price of Sonus securities. The complaint alleges that defendants issued numerous statements which highlighted the Company’s financial performance and described the Company’s success in acquiring and/or developing new products which it was then able to offer to current and prospective customers. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (1) that certain products that Sonus claimed it had sold to Qwest Communications International, Inc. (“Qwest”) would not be ready for deployment in time to meet Qwest’s needs and would result in Qwest having to purchase competing products from Nortel; (2) that the Company’s highly-touted transaction with Qwest, which contributed more than 10% of Sonus’ first quarter 2001 revenues, was actually a quid pro quo deal wherein Sonus had to agree to buy a $20 million Irrevocable Right of Use (“IRUs”) from Qwest in exchange for a $20 million order from Qwest; (3) that contrary to defendants’ representations, Sonus’ products were not carrier class as they did not have 99.999% availability, did not have voice quality as good as circuit-switched networks and did not have sophisticated network management and configuration capabilities; and (4) as a result, Sonus was not on track to report revenues of $195 million in 2001. On January 16, 2002, the last day of the Class Period, Sonus announced its disappointing fourth quarter and year-end 2001 results and revealed that revenues for the year were just $173 million compared to Class Period estimates exceeding $200 million. Following this announcement, shares of Sonus stock fell below $5 per share.

As summarized by the Company’s Form 10-K for the fiscal year ended December 31, 2008, beginning in July 2002, several purchasers of our common stock filed complaints in the United States 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 Exchange Act (the "Class Action Complaints"). The purchasers sought to represent a class of persons who purchased our common stock between December 11, 2000 and January 16, 2002, and sought 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. On May 11, 2004, the Court held oral argument on the motion, at the conclusion of which the Court denied our motion to dismiss. The plaintiffs filed a motion for class certification on July 30, 2004. On February 16, 2005, the Court certified the class and appointed a class representative. On March 9, 2005, the Court appointed the law firm of Moulton & Gans as lead counsel. After the Court requested additional briefing on the adequacy of the class representative, the class representative withdrew. Lead counsel then filed a motion to substitute a new plaintiff as the class representative. On May 19, 2005, the court held a hearing on the motion and took the matter under advisement. On August 15, 2005, the Court issued an order decertifying the class and requiring the parties to submit a joint report informing the Court whether the cases have been settled and whether defendants would be seeking to recover attorney's fees from the plaintiffs. On September 30, 2005, the plaintiffs filed motions to voluntarily dismiss their complaints with prejudice. On October 5, 2005, the Court entered an order dismissing the cases. On June 26, 2006, the Court issued an order denying our motion for recovery of attorneys' fees. We do not have any directors and officers insurance available for this claim.

On January 6, 2006, a purchaser of our common stock filed a complaint in the United States District Court for the District of Massachusetts that is essentially identical to the Class Action Complaints that were dismissed on October 5, 2005. The Court appointed the Public Employees' Retirement System of Mississippi as lead plaintiff. The lead plaintiff filed an Amended Consolidated Class Action Complaint on March 5, 2007 ("Amended Complaint"). On April 19, 2007, the defendants filed a motion to dismiss the Amended Complaint. In September 2008 we agreed to settle the litigation and, on October 3, 2008, entered into a Memorandum of Understanding with the plaintiff setting forth the terms of the settlement. Pursuant to the settlement, subject to confirmatory discovery and final court approval, we agreed to pay $9.5 million to the shareholder class in the case, as well as $0.1 million toward the cost of the class notice process. In addition, we expect to incur $0.4 million in incremental legal fees in connection with the confirmatory discovery and settlement approval process. On February 4, 2009, the Court issued an order in which it certified a settlement class, preliminarily approved the settlement, and ordered that notice be sent to the settlement class. The hearing on final court approval of the settlement is on June 16, 2009.

On June 16, 2009, the final settlement hearing was held before Chief Judge Mark L. Wolf. At the hearing, the judge approved the plan of allocation; granted the petition for an award of attorney's fees, a case contribution to lead plaintiff, and reimbursement of expenses; and signed the Final Judgment and Order Of Dismissal With Prejudice. The case is now closed.