According to the firm's 10-K dated 7/14/1999, the case and eight others were consolidated into one case, In re The Diana Corporation Securities Litigation, that was pending in the United States District Court for the Central District of California. On or about February 25, 1999, the parties executed and submitted to the court a formal Stipulation of Settlement, dated as of October 6, 1998. Under the terms of the settlement, all claims asserted or that could have been asserted by the class are to be dismissed and released in return for a cash payment of $8.0 million (of which $7.25 million was paid by the firm's D&O insurance carrier on behalf of the individual defendants and $750,000 was paid by Concentric Network Corporation, an unrelated defendant) and the issuance of three-year warrants to acquire 2,225,000 shares of our common stock at prices per share increasing each year from $9 in the first year, to $10 in the second year and $11 in the third year. The cash portion of the settlement was previously paid into an escrow fund pending final court approval. Charges relating to the warrants were fully reserved by the firm in fiscal 1998. On June 9, 1999, the Court rendered its Final Judgment and Order approving the settlement set forth in the Stipulation of Settlement. No objections to the approval of the settlement were filed.

On July 23, 1997, District Court Judge Manuel L. Real granted the motion to consolidate several actions and granted the motion to appoint as lead plaintiffs and approval of lead plaintiffs’ selection of lead counsel. On September 9, 1997, the lead plaintiffs filed a Consolidated Amended Complaint. The defendants responded by filing several motions to dismiss the Consolidated Amended Complaint on September 30, 1997. On December 30, 1997, Judge Real denied the various motions to dismiss.

The original Complaint charged Diana Corp. (OTC: DNAK), a number of affiliated entities, and a number of current and former officers and directors with conspiring to manipulate the price of Diana Corp. common stock through the device of a stream of material misrepresentations and omissions regarding: (I) the state of technological advancement, capabilities, features, marketability and usefulness of Sattel Communications’ principal products, a telecommunications "digital switching system" or "DSS", and a switching system for Internet access based on DSS, called "Datanet"; (ii) Sattel Communications’ ability to successfully develop, produce and deliver the products to end users; and (iii) Sattel Communications’ sales, the credit-worthiness of its customers, certain financial transactions connected to its sales and customers, and the financial resources of Sattel Communications and its joint venture partner. Diana was de-listed from the New York stock exchange effective March 7, 1997. During the Class Period, the price of Diana stock rose from approximately $5 per share, to an intra-day high of $120, and then fell below its original price level. The Complaint further alleges that, during the Class Period, individual defendants sold approximately 1.15 million shares of Diana common stock while in possession of material nonpublic information concerning adverse facts, at prices up to $46 per share, for gross proceeds of approximately $16.6 million.

NOTE: Diana Corporation is a subsidiary Sattel Communications Corporation ("Satcom") and/or Sattel Technologies, Inc. ("Sattech"), and/or jointly by Satcom, StreamLogic Corporation ("Streamlogic") and Concentric Network Corporation ("Concentric").