By the Memorandum and Order signed by U.S. District Judge William E. Smith on October 13, 2006, the motion to certify the class is approved, and the motion for final approval the settlement and plan of allocation is granted. The plaintiffs’ motion for attorneys’ fees in the amount of $2,257,500 and reimbursement of expenses in the amount of $915,414.01 is also granted. On October 20, 2006, the Court entered the Order and Final Judgment.

According to the latest docket posted, a Settlement Fairness Hearing to determine, among other things, whether the proposed settlement $10.5 million is fair, reasonable and adequate was held on August 30, 2005. The Court ordered Lead Plaintiff to file additional information by September 20, 2005. The parties currently wait for the Court to issue a Final Approval Order.

In a press release dated January 18, 2005, Enterasys Networks Inc. announced that it has entered into an agreement in principle to settle shareholder litigation filed in 1997 against its predecessor, Cabletron Systems, Inc., and certain Cabletron directors and officers. The settlement, which is subject to execution of a final settlement agreement and subsequent court approval, does not reflect any admission of wrongdoing by the defendants. Under the terms of the agreement, Enterasys has agreed to pay $10.5 million. The Company expects all but approximately $500,000 of this amount to be recovered from proceeds of certain Company insurance policies. As a result, Enterasys expects to recognize a one-time net charge of approximately $500,000 in the fourth quarter of fiscal 2004.

As summarized by the Notice of Pendency of Class Action and Proposed Settlement, by Memorandum and Order dated May 23, 2001, Judge Mary M. Lisi of the District of Rhode Island granted Defendants’ motion to dismiss with prejudice and Judgment was entered in favor of the Defendants. Lead Plaintiffs filed their notice of appeal of that decision to the United States Court of Appeals for the First Circuit on June 18, 2001. In August of 2001, an operating subsidiary of Cabletron merged with and into Cabletron in a spin-off transaction, and the name of the surviving corporation was changed to Enterasys Networks, Inc. On November 12, 2002, the First Circuit reversed the dismissal of the Second Amended Complaint, except for the dismissal of the Section 10(b) claim against and an Individual Defendant, which was affirmed, and remanded the case to the District of Rhode Island for further proceedings. On January 16, 2003, Defendants served an answer to the Second Amended Complaint. In January 2003, Lead Plaintiffs and Defendants began pretrial discovery.

By the Order dated March 3, 1998, the Court consolidated the actions and appointed Lead Plaintiffs and Lead Counsels. On April 20, 1998, Lead Plaintiffs filed a Consolidated Amended Class Action Complaint, and on July 6, 1998, the Defendants responded by filing a motion to dismiss the First Amended Complaint. By Order dated December 23, 1998, the Court ruled that the First Amended Complaint failed to satisfy the pleading standards under the PSLRA, but granted Lead Plaintiffs leave to amend. On January 22, 1999, Lead Plaintiffs filed a Second Consolidated Amended Class Action Complaint. On February 4, 1999, the Defendants moved to strike the Second Amended Complaint and requested that the Court grant their original motion to dismiss the First Amended Complaint. Also on February 4, 1999, the Court issued an Order stating that the Second Amended Complaint satisfied the PSLRA’s pleading requirements and invited Defendants to either renew their motion or file an answer. On April 13, 1999, the Defendants renewed their motion to dismiss. Lead Plaintiffs filed their opposition papers on June 1, 1999. On August 17, 1999, the case was transferred to the District of Rhode Island for consideration by a Rhode Island federal judicial officer, sitting by designation, due to the recusal of the judges in the District of New Hampshire. Jurisdiction over the Action remains with the New Hampshire District Court.

The original complaint alleges that throughout the class period, Cabletron Systems, Inc. and certain of its officers and directors, failed to disclose material information and made material misrepresentations regarding the company's recently introduced "SmartSwitch" product, its European operations and its market share and competitive position. These misrepresentations and omissions artificially inflated the price of Cabletron stock throughout the class period during which certain of the defendants sold more than 5,000,000 shares of Cabletron, reaping proceeds of more than $180 million.