Exhibit 10.1


 


Sonus Networks, Inc.

7 Technology Park Drive

Westford, MA  01886


 


January 9,
2009


 


Legatum Capital Limited

Level 9, Convention Tower

P.O. Box 71082

Dubai U.A.E.


 


Gentlemen:


 


This letter constitutes the agreement (the “Agreement”)
between Sonus Networks, Inc. (the “Company”), on the one hand, and
Legatum Capital Limited and each of the entities set forth on Schedule A,
on the other hand (collectively, “Legatum”, and individually a “Member”),
with respect to the matters set forth below:


 


1.     Following
the execution of this Agreement, Legatum will identify to the Company in
writing two candidates (the “Legatum Designees”) to serve on the Board
of Directors of the Company (the “Board”).  The Company will appoint the Legatum
Designees to the Board and agrees, if necessary, to expand the Board by up to
two members to create vacancies for such purpose.  Each Legatum Designee will (i) be qualified to serve as a member of the Board under all
applicable corporate governance policies or guidelines of the Company
and the Board effective on the date of this Agreement (copies of which have
been made available or delivered to Legatum prior to the execution of this
Agreement) and applicable legal,
regulatory and stock market requirements, (ii) meet the independence
requirements with respect to the Company of Section 4200(a)(15) of the Rules of
The Nasdaq Global Select Market or any successor thereto, and (iii) be
reasonably acceptable to the Board (including the Nominating Committee of the
Board) in its good faith discretion. 
Subject to the foregoing standards, the Board will not unreasonably
oppose the appointment of the Legatum Designees.  Following receipt of the identification of
the Legatum Designees, the Board
(including the Nominating Committee of the Board) will review and evaluate the
Legatum Designees as soon as reasonably practicable.  Promptly following approval, the Board shall
take all corporate action necessary to appoint the Legatum Designees that have
been approved to the Board.  If the Board does not accept any
Legatum Designee, Legatum will have the right to identify replacements for such
Legatum Designee for appointment by the Board in accordance with the provisions
of this Paragraph 1 and Paragraph 2 below, provided that notwithstanding
the criteria set forth above, such person may be affiliated with Legatum and provided
further that Mark Stoleson shall be deemed acceptable to the Board in
such circumstance.  Notwithstanding
anything to the contrary contained herein, the Board may reject any Legatum
Designee in its sole and absolute discretion if such Legatum


 

















 


Nominee’s
appointment would require disclosure under item 401(f) of Regulation S-K
of the General Rules and Regulations under the Securities Act of 1933, as
amended.


 


2.     Legatum will use its reasonable efforts to
cause the Legatum Designees to cooperate fully with the Company in connection
with the Company’s process for selecting, evaluating and appointing directors
to serve on the Board, including to: (i) make themselves reasonably available
for interviews and other meetings as the Board or the Nominating Committee of
the Board, or both, may reasonably request, (ii) complete officers’ and
directors’ questionnaires provided to directors in connection with their
service on the Board, (iii) consent to and provide information to the
Company for customary reference and background checks, and (iv) provide
such other information (including information necessary to determine the
nominee’s independence status under the Rules of The Nasdaq Global Select
Market or any successor thereto as well as information necessary to determine
any disclosure obligations of the Company) as the Board or the Nominating
Committee of the Board, or both, may reasonably request.


 


3.     In
order to create classes of directors that are relatively equal in size as
required by Delaware law, one of the Legatum Designees (the “2009
Designee”) will have an initial term that expires at the 2009 Annual
Meeting of Stockholders (the “2009 Annual Meeting”), and the other
Legatum Designee will have a term that expires at the 2010 Annual Meeting of
Stockholders (the “2010 Annual Meeting”).  The 2009 Designee shall be included in the
Company’s slate of directors for election at the 2009 Annual Meeting and the
Company shall publicly support and recommend that the Company’s stockholders
vote for the election of the 2009 Designee at the 2009 Annual Meeting in
the same manner as all other designees on the Company’s slate of directors.


 


4.     Each
of the Legatum Designees will comply with all policies, procedures, processes,
codes, rules, standards and guidelines applicable to all members of the Board,
including, but not limited to, the Company’s Code of Business Conduct and
Ethics and Corporate Governance Policies, each as in effect on the date of this
Agreement (copies of which Legatum acknowledges have been made available or
delivered to Legatum prior to the execution of this Agreement), and as may be
modified by the Board from time to time in its sole and absolute discretion.  The Legatum Designees will enjoy the same
rights, privileges, powers and duties as all other directors, and receive the
same compensation and benefits (including expense reimbursement) as all other
directors, including indemnification rights, exculpation protections associated
with service on the Board, and directors’ and officers’ liability insurance to
the extent sent forth in existing or future policies for directors
generally.  Notwithstanding anything to
the contrary in this Agreement, the Legatum Designees, during the term of their
service as directors of the Company, will not be prohibited from acting as
directors and complying with their fiduciary duties as directors of the
Company.


 


5.     If
at any time during the Restricted Period (as defined below) a Legatum Designee
shall cease to be a member of the Board for any reason, Legatum shall be
entitled to 


 


2

















 


designate another
person (a “Legatum Successor Designee”), to serve as a director in place
of such Legatum Designee for the same term as the Legatum Designee whom is
being replaced.  Any Legatum Successor
Designee will be required in all cases to be approved by the Board (including
the Nominating Committee of the Board) in the manner set forth in and subject
to the provisions set forth in Paragraph 1 and Paragraph 2 of this
Agreement.  If the Board does not accept
any Legatum Successor Designee, Legatum will have the right to recommend
additional Legatum Successor Designees in accordance with this Paragraph
5.  The Board will appoint such Legatum
Successor Designee to the Board no later than three business days after the
Board’s approval of such Legatum Successor Designee.  Upon becoming a member of the Board, any
Legatum Successor Designee will become a Legatum Designee for all purposes
under this Agreement.


 


6.     In accordance with the
Company’s Restated Certificate of Incorporation, Amended and Restated Bylaws
and applicable state law, the Board will approve, submit and recommend, and
solicit proxies in favor of, a resolution for consideration by the Company’s
stockholders at the 2009 Annual Meeting to provide for the annual election of
all directors in accordance with the terms of this Paragraph 6 (the “Declassification
Proposal”).  In the Company’s
definitive proxy statement for the 2009 Annual Meeting, the Board will include
a recommendation that the Company’s stockholders vote in favor of the
Declassification Proposal.  Pursuant to
the Declassification Proposal, if adopted by the Company’s stockholders, each
director (other than the 2009 Designee, who shall only stand for election to a
one-year term expiring at the 2010 Annual Meeting) elected at the 2009 Annual
Meeting would be elected for a two-year term ending at the 2011 Annual Meeting,
and each director elected at the 2010 Annual Meeting would be elected for a
one-year term ending at the Company’s 2011 Annual Meeting of Stockholders (the “2011
Annual Meeting”).  At the 2011 Annual
Meeting and thereafter, all of the Company’s directors would be elected to
one-year terms.


 


7.     As
soon as reasonably practicable following the execution of this Agreement, the
Board shall take all action necessary to establish an ad hoc committee of the
Board (the “Corporate Development and Investment Committee”) with the
responsibility of working with management to focus on uses of the Company’s
cash and short-term investments, tax planning, strategic acquisitions, mergers
and joint ventures, with the objective of enhancing stockholder value.  The Corporate Development and Investment
Committee will be composed of three directors. 
As long as any Legatum Designee is serving on the Board, the Corporate
Development and Investment Committee will include at least one Legatum Designee
as selected by Legatum.


 


8.     Each Member will not, and
will cause each of its respective affiliated funds, persons and entities not
to, do any of the following for a period commencing on the date hereof and
ending on the  date that is 30 days prior
to the first day of the notice period specified in the Company’s advance notice
bylaw related to any action to be taken at the 2010 Annual Meeting (assuming,
for purposes of determining the date on which 


 


3

















 


the Restricted
Period shall end and regardless of the date on which the 2010 Annual Meeting is
actually held, that the 2010 Annual Meeting is held within such number of days
of the anniversary date of the 2009 Annual Meeting as shall not require a
change in the deadline under the Company’s advance notice bylaw) (such period,
the “Restricted Period”): (a) make, engage in, or in any way
participate in, directly or indirectly, any “solicitation” (as such term is
used in the proxy rules of the Securities and Exchange Commission (the “SEC”))
of proxies in support of (i) any nominee to the Board in opposition to the
Company’s slate of directors for election or (ii) the removal of any
director of the Company, or (b) initiate, propose or otherwise “solicit”
(as such term is used in the proxy rules of the SEC), directly or
indirectly, stockholders of the Company for the approval of stockholder
proposals, or conduct any other type of 
public referendum of the Company’s stockholders (binding or non-binding)
(subparagraphs (a) and (b) collectively referred to herein as the “Restricted
Activities”).   Notwithstanding the
foregoing restrictions in this Paragraph 8, no Member shall be prohibited from
submitting to the Company on a strictly confidential basis any shareholder
proposal pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as
amended, for inclusion in the Company’s definitive proxy statement in
connection with the 2010 Annual Meeting of Stockholders (“Rule 14a-8
Notice”); provided, however, that nothing in this sentence
shall be deemed to prevent or otherwise restrict Legatum from making such
filings as are required by law, including, without limitation, an amendment to
Legatum’s Schedule 13D (any such filing, a “Required Legatum Filing”).  If Legatum shall make a Required Legatum
Filings in connection with a Rule 14a-8 Notice or upon the termination of
the Restricted Period if any Member or any of its respective affiliated funds,
persons and entities shall engage in any Restricted Activity in connection with
the 2010 Annual Meeting, then Legatum shall immediately cause the Legatum
Designees to resign from the Board and the Company shall condition the
appointment of the Legatum Designees on agreeing to such possible resignation.
The Company and Legatum agree that, during the Restricted Period, neither party
will publicly publish or publicly disseminate any disparaging statements,
written or oral, regarding the Company, the Board, the management of the
Company, Legatum or the Legatum Designees. 
The Company shall
amend its advance notice bylaw relating to the nomination of directors and the
presentation of business by stockholders to, among other things, provide
that the advance notice period for such action shall not be later than the 90th
day nor earlier than the 120th day prior to the anniversary date of
the preceding year’s annual meeting, and such amendment shall be
applicable to the 2010 Annual Meeting.


 


9.     As
soon as reasonably practicable following the execution of this Agreement, the
Company will issue a press release in a form mutually and reasonably agreeable
to the Company and Legatum (the “Press Release”).  Neither the Company nor Legatum, during the
Restricted Period, will make any public statements (including in any filing
with the SEC or any other regulatory or governmental agency, including any
stock exchange) that are inconsistent with, or otherwise contrary to, the
statements in the Press Release; provided, however, that Legatum
and the Company may make such 


 


4

















 


filings as are
required by law, including, without limitation, an amendment to Legatum’s
Schedule 13D.


 


10.   The
Company and Legatum each acknowledge and agree that money damages would not be
a sufficient remedy for any breach (or threatened breach) of this Agreement by
the other party and that, in the event of any breach or threatened breach
hereof, the non-breaching party shall be entitled to seek injunctive and other
equitable relief, without proof of actual damages, that the breaching party
shall not plead in defense thereto that there would be an adequate remedy at
law, and that the breaching party agrees to waive any applicable right or
requirement that a bond be posted by the non-breaching party.  Such remedies shall not be the exclusive
remedies for a breach of this Agreement, but will be in addition to all other
remedies available at law or in equity.


 


11.   All
notices and other communications under this Agreement shall be in writing and
shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by facsimile, by Federal Express or by registered or
certified mail, postage pre-paid, return receipt requested, as follows:


 


If to the Company:


 


	
   

  	
  Sonus
  Networks, Inc.

  7 Technology Park Drive

  Westford, MA  01886

  	
   

  
	
   

  	
  Attn:

  	
  Rich
  Nottenburg, CEO

  	
   

  
	
   

  	
  Phone:

  	
  +1 978 614
  8100

  	
   

  
	
   

  	
  Fax:

  	
  +1 978 614
  8101

  	
   

  



 


With a copy (which shall not constitute notice) to:


 


	
   

  	
  Manatt,
  Phelps & Phillips, LLP

  11355 West Olympic Blvd.

  Los Angeles, CA  90064

  	
   

  
	
   

  	
  Attn:

  	
  Gordon Bava, Esq.

  	
   

  
	
   

  	
   

  	
  Mark Kelson, Esq.
  

  	
   

  
	
   

  	
   

  	
  David
  Grinberg, Esq.

  	
   

  
	
   

  	
  Phone:

  	
  +1 310 312
  4000

  	
   

  
	
   

  	
  Fax:

  	
  +1 310 312
  4224

  	
   

  



 


5

















 


If to Legatum:


 


	
   

  	
  Legatum
  Capital Limited

  Level 9, Convention Tower

  Dubai U.A.E.

  	
   

  
	
   

  	
  Attn:

  	
  Mark
  Stoleson

  	
   

  
	
   

  	
  Phone:

  	
  +971 4 317
  5800

  	
   

  
	
   

  	
  Fax:

  	
  +971 4 317
  5811

  	
   

  



 


With a copy (which shall not constitute notice) to:


 


	
   

  	
  Skadden,
  Arps, Slate, Meagher & Flom LLP

  Four Times Square

  New York, NY  10036

  	
   

  
	
   

  	
  Attn:

  	
  Paul T.
  Schnell

  	
   

  
	
   

  	
   

  	
  Richard J.
  Grossman

  	
   

  
	
   

  	
  Phone:

  	
  +1 212 735
  3000

  	
   

  
	
   

  	
  Fax:

  	
  +1 212 735
  2000

  	
   

  



 


12.   This
Agreement may be executed in any number of counterparts (including by facsimile
and .pdf file), each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.  The parties hereto need not execute the same
counterpart.


 


13.   This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to its conflict of laws principles.  The parties hereto consent to personal
jurisdiction and venue in any action to enforce this Agreement in the federal
or state courts located in Wilmington, Delaware.


 


14.   This
Agreement constitutes the only agreement between Legatum and the Company with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written.  This Agreement shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by Legatum without the prior written consent of
the Company.  No amendment, modification,
supplement or waiver of any provision of this Agreement may in any event be
effective unless in writing and signed by the party or parties affected
thereby, and then only in the specific instance and for the specific purpose
given.


 


15.   This
Agreement shall automatically terminate and be of no further force or effect,
without any action on the part of any of the parties hereto, in the event of
the sale of substantially all of the Company’s assets or a change of control of
the Company, which shall be deemed to include, among other things, (i) any
transaction or series of related transactions pursuant to which the
stockholders of the Company prior to such transaction or series of transactions
hold less than a majority of the voting power of the Company or any successor
in interest thereto or less than a majority in interest of all or substantially
all of the assets of the Company, and (ii) any transaction or series of
related transactions pursuant to which the members of the Board prior to such 


 


6

















 


transaction or
series of transactions constitute less than a majority of the members of the
Board or the board of directors of any successor in interest thereto.


 


16.   Each
Member, on behalf of itself, represents and warrants that (a) such Member
has the power and authority to execute, deliver and carry out the terms and
provisions of this Agreement and to consummate the transactions contemplated
hereby, and (b) this Agreement has been duly and validly authorized,
executed and delivered by such Member, constitutes a valid and binding
obligation and agreement of such Member and is enforceable against such Member
in accordance with its terms.


 


17.   The
Company represents and warrants that (a) the Company has the power and
authority to execute, deliver and carry out the terms and provisions of this
Agreement and to consummate the transactions contemplated hereby, and (b) this
Agreement has been duly and validly authorized, executed and delivered by the
Company, constitutes a valid and binding obligation and agreement of the
Company and is enforceable against the Company in accordance with its terms.


 


[Execution page follows.]


 


7

















 


	
   

  	
  SONUS
  NETWORKS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Richard N. Nottenburg

  
	
   

  	
   

  	
  Name:

  	
  Richard
  Nottenburg

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
					



 


	
  Accepted and Agreed:

  
	
   

  	
   

  	
   

  
	
  LEGATUM
  CAPITAL LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/
  Mark Stoleson

  	
   

  
	
   

  	
  Name:

  	
  Mark Stoleson

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
  GALAHAD
  SECURITIES LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/
  Mark Stoleson

  	
   

  
	
   

  	
  Name:

  	
  Mark Stoleson

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
  LEGATUM
  GLOBAL HOLDINGS LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/
  Mark Stoleson

  	
   

  
	
   

  	
  Name:

  	
  Mark Stoleson

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
  LEGATUM
  GLOBAL INVESTMENT LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/
  Mark Stoleson

  	
   

  
	
   

  	
  Name:

  	
  Mark Stoleson

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
  SENATE
  LIMITED, acting on behalf of that

  certain trust formed under the laws of the Cayman

  Islands as of 1 July 1996

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/
  Mark Stoleson

  	
   

  
	
   

  	
  Name:

  	
  Mark Stoleson

  
	
   

  	
  Title:

  	
  Director

  
						



 

















 


Schedule
A


 


Galahad Securities Limited


 


Legatum Global Holdings Limited


 


Legatum Global Investment Limited


 


Senate Limited, acting on behalf of that
certain trust formed under the laws of the Cayman Islands as of 1 July 1996


 


41353033.5


 


9