Lexar Media, Inc. ("Lexar" or the Company) produces digital media products such as memory cards, USB flash drives, and card readers.

The original Complaint charges that Lexar and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b- 5 promulgated thereunder, by issuing a series of material misrepresentations to the market between July 17, 2003 and April 16, 2004. Specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to Defendants or recklessly disregarded by them: (1) that the Company underestimated the impact and the timing of competitive pricing moves in the flash memory market; (2) that the Company's preferential supply relationship with Samsung failed to insulate Lexar from fluctuations in pricing and availability of flash memory, which negatively affected the Company's product margins; and (3) the Company lacked sufficient royalty income to offset product gross margins pressure. On April 15, 2004, Lexar reported financial results for the first quarter ended March 31, 2004. After several quarters of relatively stable average selling prices, second quarter price declines were sizeable. These declines were occurring sooner than Lexar had previously anticipated. News of this shocked the market. Shares of Lexar fell $5.03 per share or 32.56 percent on April 16, 2004, to close at $10.42 per share.

On May 21, 2004, the Company, along with its Chief Executive Officer and Chief Financial Officer, were named as Defendants in a federal class action in the United States District Court for the Northern District of California. That action was brought allegedly on behalf of a class of Plaintiffs who purchased the Company’s common stock, and asserted claims under Sections 10(b) and 20(a) of the Exchange Act, as well as Rule 10b-5 promulgated thereunder, based principally on allegations that the Company made misrepresentations regarding its business. Six similar class actions have since been filed in the Northern District of California. The Court subsequently appointed a lead Plaintiff and ordered that those actions be consolidated. In October 2004, Plaintiffs filed a consolidated amended Complaint on behalf of those who purchased the Company’s stock between October 16, 2003 and April 16, 2004. On July 5, 2005, the Court granted the Company’s motion to dismiss the consolidated amended Complaint, but granted Plaintiffs leave to amend within thirty days.

According to the Company’s FORM 10-Q for the quarterly period ended September 30, 2005, on August 4, 2005, Plaintiffs determined that they would not file an amended Complaint. On September 6, 2005, the Court entered a stipulated dismissal with prejudice.