According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2004, the Company filed a motion to dismiss the Northern District action, which was heard on November 29, 2001. The motion was re-argued on February 19, 2004. On April 2, 2004, the Northern District dismissed the securities litigation against the Company, its CEO and its former CFO. Portions of the complaint relating to financial projections and forward-looking statements were dismissed “with prejudice” based on the “safe harbor” warnings given by the Company. The Court also dismissed all of the remaining allegations in the complaint based on deficiencies in those allegations. On June 23, 2004, all of the remaining allegations that were dismissed without prejudice in the Northern District action were dismissed with prejudice at the plaintiff’s request. Plaintiffs informed the Court that, after additional investigation, they were unable to identify facts necessary to support their allegations.

As summarized by the same SEC filing, on October 20, 2000, a Copper Mountain stockholder, Ariel Hernandez, on behalf of himself and purportedly on behalf of a class of Company stockholders, filed a complaint in the United States District Court for the Northern District of California (the “Northern District”) against the Company and two officers of the Company, alleging violations of the federal securities laws arising out of recent declines in the Company’s stock price. Thereafter, approximately twenty-three similar complaints were filed in the Northern District, along with related derivative actions against certain of the Company’s current and former officers and directors in California Superior Court (Aaron v. Gilbert, et. al. ) and Delaware (collectively, the “Complaints”). The Complaints allege claims in connection with various alleged statements and omissions to the public and to the securities markets. The twenty-three Northern District Complaints have been consolidated into a single action identified as In re Copper Mountain Networks Securities Litigation, case number C-00-3894-VRW.

The original complaint charges Copper Mountain and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants disseminated false and misleading statements concerning Copper Mountain's business with Lucent Technologies, Inc. ("Lucent") and its prospects for FY 2000 and beyond. Copper Mountain's relationship with one of its largest customers, Lucent, was faltering and because the "appearance" of future growth was so critical to defendants' plan to inflate the price of Copper Mountain shares, defendants continued to maintain throughout the Class Period that Copper Mountain would post FY 2000 revenue and EPS of at least $325 million and $1.00, respectively, when, in reality, defendants knew that Copper Mountain could not possibly achieve such performance. In addition, defendants sold $15 million worth of their own Copper Mountain shares at prices as high as $90 per share or 900% higher than the price to which Copper Mountain shares dropped at the end of the Class Period, as Copper Mountain's true prospects began to reach the market.

On October 17, 2000, Copper Mountain revealed that, it would post revenue and EPS declines, despite defendants' repeated assurances of Copper Mountain's continuing "strong" revenue and EPS growth, including defendant Gilbert's assurances just five days earlier that the market for Copper Mountain's products remained strong. This disclosure shocked the market, causing Copper Mountain's stock to decline to less than $10 per share on record volume of more than 23 million shares.