According to the Company's Form 10-K for the fiscal year ended December 31, 2000, on January 5, 2001, a final settlement in the class action lawsuit filed against Box Hill Systems Corp., certain of its officers and directors, and the underwriters of the Company's September 16, 1997 initial public offering was approved by the United States District Court for the Southern District of New York, and the action was dismissed with prejudice. No plaintiffs objected to the settlement, no plaintiffs opted-out of the settlement, and no appeal was taken from the judgment. Therefore, the action has been finalized.

Four putative shareholder class action lawsuits were filed, and were consolidated into a single action, against Box Hill Systems Corp., certain Individuals, and the underwriters of the Company's September 16, 1997 initial public offering (the "Offering") in the United States District Court for the Southern District of New York. The putative class actions were filed on behalf of purchasers of the stock of the Company during the period September 16, 1997 and April 14, 1998. Plaintiffs alleged that, in violation of federal securities laws, defendants made misrepresentations of material fact and omitted material facts required to be disclosed in the Company's registration statement and prospectus issued in connection with the Offering and in statements allegedly made by the Company and certain of its officers and directors subsequent to the Offering.

The class action lawsuit was originally filed in the U.S. District Court for the Eastern District of New York, titled Spirgel, et al. v. Box Hill Systems Corporation, et al. This comlaint and another complaint also filed in the Eastern District of New York were voluntarily dismissed and the cases were closed.