On December 12, 2003, a status conference was held and a Motion for Preliminary Approval of Class Action Settlement along with the Stipulation of Settlement was filed. At the hearing Judge Samuel Conti ordered the hearing continued to February 6, 2004. At the February 6, 2004 hearing, the judge ordered the parties to submit a proposed order for Preliminary Approval of the proposed settlement. Preliminary Approval was granted on March 25, 2004. The terms of the proposed settlement create a Settlement Fund in the amount of $8,212,500 cash, plus interest that accrues on the fund prior to distribution. A hearing (the "Settlement Hearing") to determine, among other things, whether the proposed settlement is fair, reasonable and adequate was held on July 30, 2004 and, on August 6, 2004, Senior Judge Samuel Conti issued a Judgment granting Final Approval of the Settlement.

The original complaint charges that the company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading information in the company's financial statements, and as a result of these false and misleading statements, the company's stock traded at artificially inflated prices during the class period. Specifically, on 03/15/2001, Adaptive announced that it will restate its Q4 2000 financial statements because of accounting misstatements. The company currently expects that its revenue and cost of revenue for the quarter will be reduced by $4.0 million. In a press release dated 03/15/2001, the company said that its new management team is working with the company's Board of Directors, auditors and outside counsel to determine whether any other similar transactions exist in the same or other accounting periods, and if so, what actions, if any, may need to be taken with respect to them. The company hopes to be in a position to make this determination by 03/30/2001. Based on this review, the company will take whatever steps may be necessary so that its financial reporting practices for all past and future periods conform in all respects to applicable accounting standards. On this news, Adaptive's stock price dropped to as low as $1.47 per share, or more than 95% from its class period high of $33.125.