According to Novell, Inc.'s Form 10-Q for the quarterly period ended January 31, 2006, SilverStream, which Novell acquired in July 2002, and several of its former officers and directors, as well as the underwriters who handled SilverStream’s two public offerings, were named as defendants in several class action complaints that were filed on behalf of certain former stockholders of SilverStream who purchased shares of SilverStream common stock between August 16, 1999 and December 6, 2000. These complaints are closely related to several hundred other complaints that the same plaintiffs have brought against other issuers and underwriters. These complaints all allege violations of the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In particular, they allege, among other things, that there was undisclosed compensation received by the underwriters of the public offerings of all of the issuers, including SilverStream. A Consolidated Amended Complaint with respect to all of these companies was filed in the U.S. District Court, Southern District of New York, on April 19, 2002. The plaintiffs are seeking monetary damages, statutory compensation and other relief that may be deemed appropriate by the Court. While we believe that SilverStream and its former officers and directors have meritorious defenses to the claims, a tentative settlement has been reached between many of the defendants and the plaintiffs, which contemplates a settlement of the claims, including the ones against SilverStream and its former directors and officers. The settlement agreement, however, has not been finally approved by the Court.

The lawsuit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint alleges that Silverstream Software, Inc., et al., violated the federal securities laws by issuing and selling Silverstream Software common stock pursuant to the IPO and secondary offering without disclosing to investors that at least two of the lead underwriters in the IPO and secondary offering had solicited and received excessive and undisclosed commissions from certain investors. The complaint further alleges lead underwriters Morgan Stanley Dean Witter & Co., Inc. and FleetBoston Robertson Stephens, Inc. allocated Silverstream shares to customers at the IPO price of $16.00 per share. The complaint further alleges that this artificial price inflation enabled both the lead underwriters and their customers to reap enormous profits by buying Silverstream stock at the $16.00 IPO price and then selling it later for a profit at inflated aftermarket prices. The complaint further alleges that Silverstream was able to price the secondary offering of Silverstream stock at an artificially high $114.00 per share due to the continued effects of the foregoing violations, and required their customers to ``kick back'' some of their profits in the form of secret commissions. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectuses distributed to investors and the Registration Statements filed with the SEC contained material misstatements regarding the commissions that the underwriters would derive from the IPO and secondary offering and failed to disclose the additional commissions and ``laddering'' scheme.