According to the Co-Lead Counsel's web site, on September 10, 2004, the parties entered into a Stipulation of Settlement (the "Stipulation") to settle the claims against the Defendants in both Actions. Pursuant to the terms of the proposed settlement, as described more fully in the Stipulation, which is subject to Court approval, a Settlement Fund in the amount of $6,300,000, to be paid by Defendants' insurers, plus interest that accrues on the Fund prior to distribution, will be created for the benefit of the classes described above.

On September 13, 2004, the parties filed the Stipulation along with a Motion for Preliminary Approval of the proposed settlement with the Court. On September 22, 2004, Judge Tauro signed an Order granting Preliminary Approval of the proposed settlement. A hearing (the "Settlement Fairness Hearing") to determine, among other things, whether the proposed settlement is fair, reasonable and adequate was held on November 22, 2004 and Judge Tauro granted Final Approval of the Settlement that same day.

According to the same web site, investors initially sued Nx Networks, Inc., formerly known as Netrix Corp., for stock fraud in a federal class action lawsuit, Rees v. Holley, filed on September 13, 2000 in the United States District Court for the District of Massachusetts. The lawsuit seeks damages on behalf of all persons and entities who purchased or otherwise acquired Nx Networks or Netrix Corp. common stock from December 8, 1999 through and including April 24, 2000 and names as Defendants the Company, the Company's Chairman and Chief Executive Officer, and the former Chief Operating Officer and President of Nx Networks.

The class action charges Defendants with violating Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges, among other things, that Defendants issued false and misleading press releases and other statements regarding the availability of the Company's products, and that the Company's reported financial results overstated revenues and profitability during the Class Period in a scheme to artificially inflate the value of Nx Networks' and Netrix's common stock. More specifically, the complaint alleges that Defendants stated that Nx Networks' new Series 3000 product-line would begin shipping during the first quarter of 2000, knowing and/or recklessly disregarding the misleading nature of the statement. This complaint also alleges that Defendants further misled investors by stating that Nx Networks had already booked $9.8 million by February 22, 2000; that the Company had booked only a small fraction of that amount as of that date; and ultimately booked $8.9 million in revenue for the entire quarter.

On November 27, 2000, a separate action but related action, Werbowski v. Nx Networks, Inc., C. A. No. 00-1967-A, was filed in the Eastern District of Virginia, and was transferred to United States District Court for the District of Massachusetts on February 16, 2001 under C. A. No. 01-10377-JLT. This complaint names as Defendants the Company, the Company's Chairman and Chief Executive Officer, and the Company's Vice President and Chief Financial Officer, and alleges that Defendants misled investors with respect to the Company's financial statements for the second quarter of 2000. This Complaint alleges violations of Generally Accepted Accounting Principles ("GAAP") claiming that Defendants had prematurely and improperly booked revenue for products that they had neither manufactured nor shipped before the close of the quarter. The complaint also points to Nx Networks' restatement of their financial results for that quarter, decreasing reported revenues from $10.4 to $8.4 million, in support of its claim that the Defendants made false statements. This action was filed on behalf of persons who purchased or acquired shares of Nx Networks or Netrix Corp. common stock from July 27, 2000 through and including November 2, 2000.

By an Order dated January 29, 2001, the Court consolidated cases related to the Rees Action into one class action lawsuit entitled In re Nx Networks, Inc. Securities Litigation (Rees Plaintiffs), C. A. No. 00-CV-11850-JLT (the "Rees Action"), and appointed Lead Plaintiffs and Berman DeValerio as one of two Co-Lead Counsel.

On May 4, 2001, Lead Plaintiffs in the Rees Action filed their Consolidated Amended Class Action Complaint (the "Rees Complaint"), which names as Defendants the Company and the Company's Chairman and CEO. Plaintiffs in the Werbowski Action filed their First Amended Class Action Complaint (the "Werbowski Complaint") the same day. On May 8, 2001, the Court appointed Lead Plaintiffs and Lead Counsel and Berman DeValerio as Liaison Counsel in the Werbowski Action.

On June 8, 2001, Defendants moved to dismiss in their entirety both the Rees and Werbowski Complaints. Defendants thereafter filed a motion to consolidate the Rees and Werbowski Actions. On October 11, 2001, after briefing and oral argument, the Court denied Defendants' Motions to Dismiss.

On or about November 5, 2001, Nx Networks filed for protection under Chapter 11 in the United States Bankruptcy Court for the Eastern District of Virginia. The Bankruptcy Court issued a final order approving Nx Networks' plan of liquidation on September 18, 2002. Accordingly, Lead Plaintiffs dismissed Nx Networks from the Rees and Werbowski Actions on May 6, 2003.

On November 13, 2003, the parties appeared before the Court for a status conference. On that same day, the Court granted Plaintiffs' motion to reopen and restore the Actions to the active docket, and ordered that the parties would be permitted to conduct discovery for six months, before a June 15, 2004 trial date.

Immediately following the Status Conference, the parties undertook discovery, serving subpoenas for third-party discovery beginning December 1, 2003. Defendants then deposed each of Lead Plaintiffs. Plaintiffs noticed depositions for the Defendants.

On December 29, 2003, Defendants filed answers in both cases denying liability and denying the Plaintiffs' allegations.

As a result of the discovery discussed above, Lead Plaintiffs' Counsel reviewed tens of thousands of pages of documents, including Nx Networks' public filings, press releases and other public statements and interviewed witnesses. On March 26, 2004, the parties participated in Mediation with the Honorable Nicholas Politan, which resulted in an agreement in principle to settle the Actions on May 25, 2004.