U.S . DISTRICT COURTDISTRICT OF N .H .

UNITED STATES DISTRICT COURT FILED

DISTRICT OF NEW HAMPSHIRE 1001 (1I I 1 iD 1 : 3 3

IN RE ENTERASYS NETWORKS, INC. I No . C-02-071-MSECURITIES LITIGATION

THIS DOCUMENT RELATES TO :ALL ACTION S

STIPULATION OF SETTLEMENT BETWEEN LEAD PLAINTIF FLOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION AND

DEFENDANTS ENTERASYS NETWORKS, INC ., ENRIQUE ("HENRY") P . FIALLO,ROBERT J . GAGALIS, PIYUSH PATEL AND DAVID KIRKPATRIC K

This Stipulation of Settlement ("Stipulation"), dated as of October 14, 2003, is made an d

entered into by an among Lead Plaintiff Los Angeles County Employees Retirement

Association ("Lead Plaintiff' r "LACERA "), on behalf of itself and each of the Class Members,

and Defendants Enterasys Networks, Inc . ("Enterasys"), Enrique ("Henry") P . Fiallo, Robert J .

Gagalis, Piyush Patel and David Kirkpatrick (Enterasys and Messrs . Fiallo , Gagalis , Patel and

Kirkpatrick being known collectively as "Defendants"), by and through their respective counsel

of record . The Stipulation is intended by the Part ies to fully, finally and forever resolve and

discharge all of the Sett led Claims (as defined in paragraph 1 .32 below), upon and subject to the

terms and conditions hereof. The Stipulation resolves all Settled Claims and Unknown Claims

and shall not be deemed an admission by any Party as to the merits of any claim or defense .

WHEREAS :

1 . Wherever used in this Stipulation, the following terms have the meanings set fort h

below:

1 .1 "Action" means the above- captioned consolidated actions pending in th e

United Stales District Court for the District of New Hampshire and any related actions .

9269289 6.DOC

1 .2 "Authorized Claimant" means a Class Member who submits a timely an d

valid Proof of Claim to the Claims Administrator and whose claim for recovery has been allowe d

pursuant to the terms of the Stipulation and by Order of the Court .

1 .3 "Cabletron" means Cabletron Systems, Inc ., which was publicly traded o n

the New York Stock Exchange through August 3,2001 under the symbol "CS." On or about

August 6,2001, Cabletron merged with its wholly owned subsidiary, Enterasys Networks, Inc .

The surviving corporation changed its name to Enterasys Networks, Inc . Starting on or about

August 6,2001, Enterasys began trading on the New York Stock Exchange under the symbol

"ETS," replacing Cabletron, which was traded under the symbol "CS ." Cabletron and Enterasys

are used herein interchangeably .

1 .4 "Claimant" means a Class Member who files a Proof of Claim in such

form and manner, and within such time, as the Court shall prescribe .

1 .5 "Claims Administrator" means the firm designated by Plaintiffs Lead

Counsel to administer the Settlement .

1 .6 "Class" means, for purposes of this Stipulation and the propose d

Settlement only, a class certified pursuant to Rule 23 of the Federal Rules of Civil Procedure

comprising all Persons who purchased the common stock of Cabletron between June 28,2000

through and including August 3,2001, and all Persons who purchased the common stock of

Enterasys between August 6,2001 through and including February 1,2002, excluding : (1) the

Defendants and the current officers and/or directors of Enterasys ; (2) any individuals who were

officers and/or directors of Enterasys during the Class Period ; (3) any individuals who were

officers and/or directors of any entity in which Enterasys has or had a controlling interest or is or

was a parent or subsidiary of or is or was controlled by Enterasys during the Class Period ; (4) the

members of the immediate families of the individuals identified in the preceding three

subparagraphs; (5) any entity in which Enterasys has or had a controlling interest or is or was a

parent or subsidiary of or is or was controlled by Enterasys during the Class Period ; and, (6) the

legal affiliates, representatives, heirs, controlling persons, successors and predecessors in interes t

9269289-6 2

and/or assigns of any such excluded party . Also excluded from the Class are any Persons wh o

exclude themselves by filing a request for exclusion in accordance with the requirements se t

forth in the Notice.

1 .7 "Class Member" means any Person who is included in the definition of

Class, as defined above .

1 .8 "Class Period" means the time period beginning June 28,2000 throug h

and including August 3,2001, as well as the time period beginning August 6, 2001 through an d

including February 1,2002 .

1 .9 "Company" means Cabletron Systems, Inc . and Enterasys Networks, Inc . ,

collectively .

1 . 10 "Company's Counsel" means the law firms of Ropes & Gray LLP and

Hinckley, Allen & Snyder LLP .

1 .11 "Complaints" mean the class action complaints filed with this Cour t

beginning on or about February 7,2002, and consolidated under the caption set forth abov e

pursuant to the September 25,2002 Order of Consolidation of the Court .

1 .12 "Court" means the United States District Court for the District of Mew

Hampshire .

1 .13 "Defendants" means Enterasys and Enrique ("Henry") P . Fiallo, Robert J .

Gagalis, Piyush Patel and David Kirkpatrick .

1 .14 "Defendants' Counsel" means the counsel for Defendants who sign thi s

Settlement on behalf of the Defendants .

1 .15 "Effective Date" means the date upon which the Settlement contemplated

by this Stipulation shall become effective, as set forth in paragraph 19 below .

1 .16 "Enterasys" means Enterasys Networks, Inc ., the company that is traded

on the New York Stock Exchange under the symbol ETS and that was created by the merger o f

Cabletron and its subsidiary with the name Enterasys Networks, Inc . on or about August 6, 200 1

9269289 _6. DOC 3

1 .17 "Escrow Agent" means the branch of Citizens Bank of Massachusetts,

located at 53 State Street, Boston, Massachusetts 02 109 .

1 .18 "Final Approval Hearing" means the hearing held to determine whethe r

the proposed Settlement is fair, reasonable and adequate and whether the Court should enter a

Final Judgment approving the proposed Settlement .

1 .19 "Individual Defendants" means Enrique ("Henry") P . Fiallo, Robert J .

Gagalis, Piyush Patel and David Kirkpatrick .

1 .20 "Judgment" or "Order and Final Judgment" or "Final Judgment" mean s

the proposed order in the form attached hereto as Exhibit E.

1 .21 "Lead Plaintiff means the Los Angeles County Employees Retiremen t

Association, also known as LACERA.

1 .22 "Net Settlement Fund" means all amounts remaining in the settlement

Fund following payment of taxes, notice costs, administrative expenses and payment o f

Plaintiffs' Counsel's fees and related expenses .

1 .23 "Notice" means the Notice of Pendency of Class Action, Propose d

Settlement Thereof, Final Approval Hearing and Right to Share in Settlement Fund, which is to

be sent to Class Members substantially in the form attached hereto as Exhibit B .

1 .24 "Order of Preliminary Approval " means an Order of Preliminary Approva l

Pursuant to Rule 23 of the Federal Rules of Civil Procedure substantially in the form attache d

hereto as Exhibit A .

1 .25 "Parties" mean the signatories to this Stipulation .

1 .26 "Person" means an individual, corporation, general or limited partnership ,

association, joint stock company,joint venture, limited liability company, estate, legal

representative, trust, unincorporated association, government or any political subdivision or

agency thereof and any other business or legal entity and its heirs, predecessors, successors,

representatives or assigns .

9269289_6. DOC 4

1 .27 "Plaintiffs Counsel" means all law firms appearing in this action on

behalf of Plaintiffs .

1 .28 "Plaintiffs Lead Counsel" or "Lead Plaintiffs Counsel" means the la w

firm of Berman DeValerio Pease Tabacco Burt & Pucillo .

1 .29 "Plaintiffs Liaison Counsel" means the law firm of Sulloway & Hollis ,

P .L.L.C .

1 .30 "Proof of Claim" means a Proof of Claim and Release substantially in th e

form attached hereto as Exhibit C .

1 .31 "Releasees" means the Company and the Individual Defendants and thei r

current and former agents, employees, officers, directors, members, representatives, heirs,

subsidiaries, parents, affiliates, predecessors, successors and assigns, but does not include

KPMG, the current officers and directors of KPMG, and its predecessors, successors, parents,

owners, subsidiaries, divisions,joint ventures, related or affiliated entities and entities in which

KPMG has or had a controlling interest or is a parent or subsidiary of or is controlled by KPMG .

1 .32 "Settled Claims" means all claims, demands, rights, liabilities, causes o f

action, suits, matters and issues, known or unknown, including any Unknown Claims as defined

herein, that have, or could have, been asserted in the Action or any other action that has or could

have been brought in this or any other forum, including the Underlying Actions, by the Lead

Plaintiff or by any Class Member, as defined herein (except those who validly exclude

themselves from the Class), whether directly, representatively, derivatively, individually or in

any other capacity, against any Releasee, including but not limited to any claim for violation of

federal, state or other law, or of the common law and any claim seeking attorneys' fees, costs or

expenses, which said Class Members, or any of them, had, now have or may hereafter have as a

Class Member or as an individual except for claims relating to any Party's alleged failure to

comply with the terms and conditions of this Stipulation, shall be compromised, settled, released

and dismissed with prejudice and without costs to either Party . The term "Settled Claims" does

not include any claims, whether asserted, contemplated, known or Unknown, against KPMG, th e

9269289 G .DOC

current officers and directors of KPMG, and its predecessors, successors, parents, owners ,

subsidiaries , divisions , joint ventures , related or affiliated entities and entities in which KPMG

has or had a controlling interest or is a parent or subsidiary of or is controlled by KPMG .

1 .33 "Settled Defendants' Claims" means any and all claims against the Lead

Plaintiff or any Class Member, or their attorneys that have been or could have been asserted by

the Defendants relating to the institution, prosecution or Settlement of the Action, except for

claims relating to any Party's alleged failure to comply with the terms and conditions of this

Stipulation .

1 .34 "Settlement" means the terms and conditions set forth in this Stipulation.

I .35 "Settlement Fund" means : (a) the cash portion of the Sett lement consisting

of Seventeen Million Dollars ($17,000,000), together with all interest accrued and paid thereon

as set forth herein; (b) the stock portion of the Settlement consisting of the number of shares of

Enterasys common stock worth Thirty Three Million dollars ($33,000,000), to be calculated by

determining the average closing price on the New York Stock Exchange for Enterasys common

stock for the ten (10) trading days prior to the date of the Final Approval Hearing and dividing

$33,000,000 by said average closing price ; and (c) a corporate promissory note from Enterasys to

the Class, in the sum of $33,000,000, to secure distribution of the common stock to the Class,

which promissory note shall be substantially in the form attached hereto as Exhibit F .

1 .36 "Settling Parties" means the Defendants and Lead Plaintiff, on beha If of

itself and the Class Members .

1 .37 "Settlement Stock Number" means the number of shares of Enterasy s

common stock worth Thirty-Three Million dollars ($33,000 , 000), to be calculated by

determining the average closing price on the New York Stock Exchange for Enterasys convnon

stock for the ten ( I 0) trading days prior to the date of the Final Approval Hearing and dividing

$33,000 ,000 by said average closing price .

9269289_6.DOC 6

1 .38 "Summary Notice" means the Summary Notice of Pendency of Class

Action, Proposed Settlement and Final Approval Hearing substantially in the form attached

hereto as Exhibit D .

1 .39 "Stipulation" means this Stipulation of Settlement .

1 .40 "Underlying Actions" means the following cases, pending in the Unite d

States District Court for the District of New Hampshire, consolidated under the caption In re

Enterasys Networks, Inc . Securities Litigation, Civil No . C-02-071-M : Roth, et al. v. Enterasys

Networks, Inc., et al., Civil No . 02-71-M ; Leger, et al. v . Enterasys Networks, Inc., et al., Civil

No. 02-74M; Market Street Sec., et al. v. Enterasys Networks, Inc., et al ., Civil No. 02-82-M ;

Hawkins, et al. v . Enterasys Networks, Inc., et al ., Civil No . 02- 103-B ; LA County Employees, et

al . v . Enterasys Networks, Inc., et al., Civil No . 02- 162-M ; Maltin v. Enterasys Networks, Inc., et

al ., Civil No . 02-167-M.

1.41 "Unknown Claims" means any and all actions, suits, claims, demands ,

rights, liabilities and causes of action that the Lead Plaintiff, the Class, or any of the Class

Members do not know of or suspect to exist in their favor at the time of the release of the

Releasees, which, if known by the Lead Plaintiff, the Class, or any of the Class Members, migh t

have affected its agreement to the Settlement . With respect to Unknown Claims, the Lead

Plaintiff, the Class, and each of the Class Members hereby expressly waive and relinquish, to the

fullest extent permitted by law, any and all provisions, rights, and benefits conferred by any law

of any state or territory of the United States, or principle of common law, which is similar,

comparable, or equivalent to the benefits of Section 1542 of the California Civil Code, which

states :

A general release does not extend to claims which the creditor does not know orsuspect to exist in his favor at the time of executing the release, which if knownby him must have materially affected his settlement with the debtor ;

and any and all provisions, rights, and benefits of any similar state or federal law .

2. On or about February 7, 2002, a number of complaints were commenced in the

United States District Court for the District of New Hampshire alleging that the Company and

9269289_ 6.DOC 7

ce rtain of its officers had violated Sections 10(b) and 20(a) of the Securities Exchange Act of

1934 (the "Exchange Act") by making, or causing to be made , certain false and misleading

public statements . In addition to naming Enterasys as a defendant, these complaints also named

as defendants Enrique ("Henry") P. Fiallo , and Robe rt J . Gagalis . Additional class action

complaints filed later also named Piyush Patel and David Kirkpatrick as defendants .

On August 2, 2002, the United States District Court for the District of Ne w

Hampshire entered Orders : (i) consolidating for all purposes the Underlying Actions, under the

caption In re Enterasys Networks, Inc. Securities Litigation, Civil No. C-02-071-M; (ii)

appointing LACERA as Lead Plaintiff in the Action ; and (iii) approving Lead Plaintiffs choice

of Berman DeValerio Pease Tabacco Burt & Pucillo as Plaintiffs Lead Counsel and Sulloway &

Hollis as Plaintiffs Liaison Counsel .

4 . On November 26, 2002, Enterasys restated its financial results for the fiscal yea r

ended March 3, 2001 and for the first three fiscal quarters within the ten month period ended

December 29, 2001 in the Form 10-K Transition Report filed with the Securities and Exchange

Commission on November 26, 2002. Specifically, the Company's restatement revealed that it

had overstated the Company's reported net revenues by $153 million and understated the

Company's reported net losses by $145 million during the relevant period .

5. On December 9, 2002, Lead Plaintiff filed the First Consolidated Amended Clas s

Action Complaint for Violations of the Federal Securi ties Laws (the "Complaint") against the

Defendants, asserting violations of Sections 10(b) and 20(a) of the Exchange Act .

6. On February 10, 2003, Enterasys moved to have the Complaint dismissed . On

March 7, 2003, the Individual Defendants also moved to dismiss the Complaint, pursuant t o

Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure . As a result, extensive and

9269289_6. DOC 8

protracted briefing began. Plaintiffs Lead Counsel opposed Defendants' motions, and filed

motions to strike exhibits to two of the Individual Defendants' motions . Additionally, Phintiffs

Lead Counsel opposed a motion by Enterasys to strike an exhibit to Lead Plaintiffs opposition

to Enterasys' motion to dismiss .

7. Prior to the hearing on the motions to dismiss and related motions, Lead Plaintiff

and the Company began discussing settlement of the Action . During the course of these

discussions , the Court entered two Orders continuing the hearing on the motions , first to July 3 1 ,

2003, then to September 25,2003 .

8. The Lead Plaintiff and the Company conducted extensive , arms-length sett lement

negotiations . The settlement negotiations were challenging, spanning a matter of five months .

Lead Plaintiff and the Company ultimately reached an agreement to settle Lead Plaintiffs claims

against the Company, and potentially those against the Individual Defendants, the terms of which

are set forth in a Memorandum of Understanding dated August 18, 2003 (the "MOU") .

Following the execution of the MOU by Lead Plaintiff and the Company, the Company

produced confirmatory discovery to Lead Plaintiff consisting of 130+ boxes of documents along

with 350+ gigabytes of computer information . Lead Plaintiffs Counsel also conferred with the

Individual Defendants' counsel . Thereafter, Lead Plaintiff decided, based on its confirmatory

discovery, to include the Individual Defendants in the settlement .

9. The MOU provides , inter alia, that the Settlement is conditioned upon the

settlement of the Derivative Actions : Neines v. Fiallo, et al., No C.A.19558-NC (N .H. Sup . Ct .

2002) and Meisner v . Enterasys Networks, inc . N o 02-C- 170 (Del. Ch. 2002) within ninety (90)

days of the execution of the MOU . In the event no such settlement is reached in both derivativ e

9269289_6. DOC 9

actions upon expiration of the ninety (90) day period, then Enterasys may rescind this Settlement

at its election, within ten (10) days of the expiration of the ninety (90) days .

10 . The Defendants deny each and all of the claims and contentions alleged by Lea d

Plaintiff in the Action, as well as all charges of wrongdoing and liability against them arising out

of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in

the Action . The Defendants further deny Lead Plaintiffs allegations that they or others Lead

Plaintiff represents sustained (or are entitled to recover) damages in any amount . The

Defendants also believe that the arguments asserted in their motions to dismiss are meritorious .

Nonetheless, the Defendants have concluded that further litigation of the Action would be

protracted and expensive . The Defendants also considered the uncertainty and risks inherent in

any litigation, especially in a complex case such as this . The Defendants have, therefore,

determined that it is desirable and beneficial that the Action be settled in a manner and upon the

terms and conditions set forth in this Stipulation .

11 . Based on its extensive investigation of the Defendants' alleged wrongdoings ,

Lead Plaintiff believes that the claims asserted in the Action have considerable merit .

Nevertheless, Lead Plaintiff, aided by its counsel, have reviewed hundreds of thousands of pages

of documents ; have considered carefully the likelihood of success against the Defendants and the

likely total damages that could be recovered against the Defendants ; have considered the

uncertain outcome and the risk of any litigation, especially in complex actions such as this, as

well as the difficulties and delays inherent in such litigation ; have conducted extensive arms-

length settlement negotiations with counsel for the Company: and have determined, after taking

into account the substantial benefits conferred on the Class by a settlement in accordance with

the terms of this Stipulation, that this settlement would be fair, reasonable and adequate and i n

9269289_6.DOC 10

the best interests of the Class. Lead Plaintiff believes that a recovery now will provide an

immediate benefit to Class Members, which is superior to the risk of proceeding with the Action,

particularly in view of the fact that the Court has yet to hear oral argument and rule on the

multiple motions to dismiss presently pending .

NOW THEREFORE, it is hereby stipulated and agreed by Lead Plaintiff, acting on

behalf of all Class Members, and the Defendants, acting through their respective counsel, subject

to Court approval pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, that the Action

and the Underlying Actions be compromised and settled as against the Defendants, wit h

prejudice, upon and subject to the following terms and conditions :

The Terms Of The Settlemen t

12. (a) In full settlement of the claims against the Defendants, the Company, o n

behalf of all Defendants, shall pay consideration worth Fifty Million Dollars ($50,000,000) ,

consisting of Seventeen Million Dollars ($17,000,000) in cash , and Enterasys common stock

worth Thirty-Three Million Dollars ($33,000 ,000) according to the following terms :

(i) The Company shall deposit Seventeen Million Dollars

($17,000,000) into an interest-bearing escrow account (the "Account") at Citizens Bank of

Massachusetts within three (3) days after the Court's preliminary approval of the Settlement .

This sum, with the interest accruing thereon, shall constitute the cash portion of the Settlement

Fund .

(ii) The number of shares of Enterasys common stock worth Thirty-

Three Million dollars ($33,000,000) shall be calculated by taking the average closing price on

the New York Stock Exchange for Enterasys common stock for the ten trading days prior to the

date of the Final Approval Hearing, and dividing $33,000,000 by said average closing price .

Except as to that portion of Enterasys common stock, if any, awarded to Plaintiffs' Counsel as

compensation in this case, the remaining balance of Enterasys shares shall be distributed directly

by Enterasys to Authorized Claimants . To the extent an award of Enterasys common stock i s

92692 89_6.D)OC

made to Plaintiffs Counsel as part of a fee award in this case , Plaintiffs Lead Counsel shall,

within a reasonable time following entry of a Final Order authorizing an award of attorneys'

fees, provide to the Company's Counsel written instructions designating the specific Plaintiffs

Counsel receiving such shares and the number of shares to be received by such counsel .

(iii) Concurrently with execution of this Stipulation, the Company shal l

deliver to Lead Plaintiffs Counsel a corporate promissory note from Enterasys to the Class, in

the sum of $33,000,000, to secure distribution of the common stock to the Class . The corporate

promissory note shall be substantially in the form attached hereto as Exhibit F, and shall be fully

extinguished upon proof of delivery satisfactory to Lead Plaintiffs Counsel that the entire stock

portion of the Settlement Fund was distributed in accordance with the provisions of thi s

Stipulation.

(iv) In the event that Enterasys petitions for bankruptcy protection prior

to distribution of the common stock to the Class, payment on the note shall be accelerated and

shall become immediately due and payable . If the note becomes due and Enterasys makes

payment thereunder, Enterasys shall be relieved of any obligation to provide the balance of the

Settlement Stock Number of common stock not yet paid out on the date that the note becomes

due .

(b) Enterasys will adopt the changes and/or improvements in its corporat e

governance and management procedures, which adoption shall occur within thirty (30) days o f

the Order and Final Judgment of the Settlement, as set forth in Exhibit G hereto entitle d

"Corporate Governance Policies . "

(c) The Escrow Agent shall not disburse the Settlement Fund except a s

provided in this Stipulation, or by an order of the Court .

(d) The Escrow Agent shall invest the Settlement Fund in instruments backe d

by the full faith and credit of the United States Government or an agency thereof and shal l

9269289_6.DOC 12

reinvest the proceeds of such instruments as they mature in similar instruments, maturity dates of

which shall not exceed six months, at the current market rates . All funds held by the Escrow

Agent shall be subject to the Court's jurisdiction, until such time as such funds shall be

distributed pursuant to this Stipulation or further order(s) of the Court .

13 . Upon the Effective Date, any Settled Claims against the Releasees and any Settle d

Defendants' Claims shall be compromised, settled, released and dismissed with prejudice an d

without costs to any Party .

Court Approval Of The Settlement

14. The Parties to this Stipulation and their respective counsel shall use their best

efforts and cooperate fully with one another in : (a) preparing and executing all documents

necessary to effectuate the Settlement contemplated by this Stipulation ; (b) seeking first

preliminary and then final Court approval of the Settlement ; and (c) effecting the full

consummation of the Settlement in accordance with their respective responsibilities set forth

herein .

15. Promptly after execution of this Stipulation, the Parties shall submit thi s

Stipulation to the Court and shall jointly present to the Court a proposed Order, in a for m

substantially the same as the document attached hereto as Exhibit A, which, among other thin s :

a . Preliminarily approves the terms of the Settlement contemplated by thi s

Stipulation .

b . Preliminarily certifies the Class pursuant to Federal Rules of Civi l

Procedure 23(a), 23(b)(l), and (b)(3) solely for purposes of settlement.

Schedules the Final Approval Hearing to determine whether th e

Settlement proposed by this Stipulation is fair, reasonable, and adequate and whether the Cour t

9269289 _6. DOC 13

should enter final judgment finally approving such Settlement .

d. Provides for Notice of the proposed Settlement and the Final Approval

Hearing to be sent to all members of the Class that can be identified through a reasonable effort,

by mail, in a form substantially the same as the document attached hereto as Exhibit B, and

further directs for a Summary Notice substantially in the form annexed hereto as Exhibit D to be

published once in the national edition of The Wall Street Journal .

e . Provides that any requests for exclusion from the Class be filed with th e

Court and served in the manner and by the time specified by the Court, but in no event later tha n

ten (10) business days prior to the Final Approval Hearing ,

f Provides that any person who is legally entitled to object, and who desire s

to object to the approval of the proposed Settlement, plan of allocation described in the Notice

(the "Plan of Allocation"), or the application for attorneys' fees, reimbursement of expenses, and

entry of an Order and Final Judgment substantially in the form attached hereto as Exhibit E, must

appear at the Final Approval Hearing and show cause why the proposed settlement should not be

approved as fair, reasonable and adequate, and why said Order and Final Judgment should not be

entered approving the Settlement .

g. Provides that objections to the Settlement shall be heard at the Fina l

Approval Hearing; and that objectors must file with the Court written notice of their intention to

appear and must file, and serve Lead Plaintiffs Counsel and the Company's Counsel with copies

of all papers in support of their objections ten (10) business days prior to the Final Approval

Hearing as specified by the Court or else be deemed to have waived and be forever foreclosed

and barred from asserting such objections .

h . Provides that members of the Class must timely submit a qualifying Proof

9269289_6.DOC 14

of Claim or else be forever barred from receiving any payment from the Settlement Fun d

notwithstanding that they will be bound by all other aspects of any judgment finally approvin g

the Settlement .

Provides that pending final determination as to whether the Settlement a s

set forth in this Stipulation should be approved, no Class Member shall commence, prosecute,

pursue or litigate any Settled Claim against any Releasee, whether directly, representatively or in

any other capacity, and whether or not any such member of the Class has appeared in the Action

or Underlying Actions .

16. If the Court grants Final Approval of the Sett lement embodied in this Stipulation ,

the Parties to this Stipulation shall submit to the Court pursuant to Rule 23 of the Federal Rules

of Civil Procedure a proposed Order and Final Judgment in a form substantially the same as th e

document attached hereto as Exhibit E, which :

a. Certifies the Class pursuant to Federal Rules of Civil Procedure 23(a) ,

23(b)(l) and (b)(3) .

b. Approves this Settlement as fair, reasonable and adequate as to Clas s

Members, and directs the consummation and performance of the terms of this Stipulation .

Approves the Plan of Allocation .

d. Provides that all members of the Class who do not exclude themselve s

from the Class in the manner and by the time specified in the Order of Preliminary Approval

shall be Class Members and be deemed to have released the Settled Claims in accordance with

the terms of this Stipulation and the Order and Final Judgment and shall be forever barred from

commencing or prosecuting any action or proceeding against the Releasees asserting the Settled

Claims .

9269289_6.DOC 15

Dismisses the Action and the Underlying Actions with prejudice and

without costs (except as set forth herein) against the Defendants .

f. Awards counsel fees and expenses to Plaintiffs Counsel or reserve s

jurisdiction with respect thereto ; and

g_ Reserves jurisdiction over consummation, performance, enforcement an d

administration of the Settlement .

Attorneys' Fees And Expenses

17 . (a) On or before the date for the Final Approval Hearing, Lead Plaintiff s

Counsel shall serve and file a motion for an award of attorneys' fees and reimbursement of

expenses (including experts' fees and expenses) to be paid out of the Settlement Fund . The

Parties to this Stipulation have had no discussions concerning an award of attorneys' fees or the

reimbursement of expenses to Plaintiffs Counsel, except that the Parties have agreed that those

fees and expenses will be paid out of the Settlement Fund .

(b) Unless the Court orders otherwise, all fees and expenses (includin g

experts' fees and expenses) awarded by the Court to Plaintiffs Counsel shall immediately, upon

entry of the Final Judgment, be paid out of the Settlement Fund to Lead Plaintiffs Counsel fo r

distribution to Plaintiffs Counsel at the sole discretion of Lead Plaintiffs Counsel in accordanc e

with the work performed by Plaintiffs Counsel at the request of Lead Plaintiffs Counsel and th e

benefit provided to the Class .

(c) The procedure for, and the allowance or disallowance by the Court of, any

application for an award of attorneys' fees and reimbursement of expenses to be paid out of th e

Settlement Fund are not part of the Settlement , and are to be considered by the Court separately

from the Court's consideration of the fairness, reasonableness and adequacy of the Settlement .

9269289_6.DOC 16

(d) In the event that the Settlement does not become effective, or the Final

Judgment is reversed or modified, or the Settlement is cancelled or terminated for any othe r

reason, and in the event that the attorneys' fees and expenses have been paid to any extent, then, Y

subject to paragraphs 20 and 21, Lead Plaintiffs Counsel shall, within five (5) business day s

from receiving notice to that effect from the Company's Counsel or from a court of appropriate

jurisdiction, refund to the Settlement Fund any such fees, expenses, and costs and interest

previously paid to them from the Settlement .

18. In the event that the Settlement and/or any orders proposed jointly by the Parties

relating thereto (other than orders with respect to the award of attorneys' fees and costs) are not

approved by the Court substantially in the form submitted, or approval of the Settlement and/or

such orders are modified or reversed in any material respect by any appellate or other court, the

Parties shall each have the right to terminate the Settlement by providing written notice to all

Parties within ten (10) business days from the Court's denial, modification or reversal of its

approval of the Settlement, or from the modification or reversal of the approval of the settlement

in any material respect by any such appellate or other court . In that event, this Stipulation and all

orders entered in connection with it shall become null and void and of no further force and effec t

with respect to the Defendants and the Lead Plaintiff, except that the provisions of paragraphs 2 0

and 21 of this Stipulation shall take effect .

The Effective Date Of The Settlement

19. The "Effective Date" of the Settlement contemplated by this Stipulation shall b e

the later of the date, after entry of the Order and Final Judgment, when :

(a) the time to file a motion to alter or amend the Final Judgment ha s

expired without any such motion having been filed ,

9269289_6.DOC 17

(b) the time to seek review of or appeal from the Final Judgment ha s

expired without any such review or appeal having been sought or taken, o r

(c) if such motion to alter or amend is filed or if such review or appea l

is sought or taken, the last of such motion, review or appeal shall have been finally determined i n

such a manner as to permit the implementation of the Settlement according to the terms set out in

this Stipulation .

20. If the Effective Date does not occur, or the Settlement contemplated by this

Stipulation is voided or terminated, (a) the Settlement Fund (including all interest that has

accrued thereon), less costs of notice and related administrative costs, and any taxes which have

been paid and may be payable by the Settlement Fund shall be returned to the Company within

five (5) business days unless otherwise agreed to by the Parties in writing; and (b) the Parties

will be restored to their respective positions existing immediately prior to the execution of this

Stipulation.

App lication Of The Settlement Fun d

21 . The Parties agree, subject to approval by the Court, that Lead Plaintiffs Counsel

may withdraw from the Settlement Fund, prior to the Effective Date, up to One Hundred

Thousand Dollars ($100,000 .00) for reasonable notice costs and related out-of-pocket

administrative costs payable by the Settlement Fund, which amounts, once paid or payable by the

Settlement Fund, shall not be refundable to the Company in the event the Effective Date does not

occur, or the Settlement contemplated by this Stipulation is voided or terminated . No other

withdrawal or payment from the Settlement Fund shall be permitted prior to the Effective Date

without the prior consent of the Parties and the approval of the Court . Notwithstanding the

foregoing, all taxes that may be due on the interest earned by the Settlement Fund prior to th e

9269289_6.DOC 1$

Effective Date shall be paid from the Settlement Fund, and shall not be refundable to th e

Company in the event the Effective Date does not occur, or the Settlement contemplated by thi s

Stipulation is voided or terminated .

22 . If the Effective Date occurs, the Settlement Fund shall be distributed as follows :

a . to the extent not already paid pursuant to paragraphs 17 and 21 all taxes ,

notice costs, administrative expenses and payment of Plaintiffs Counsel fees and related

expenses (including experts' fees and expenses), shall be payable out of the Settlement Fund ; and

b. after the distributions contemplated by subparagraph (a), the remaining

Settlement Fund (the "Net Settlement Fund") shall be distributed as follows :

(i) Each Class Member who wishes to make a claim against the Ne t

Settlement Fund shall be required to submit to the Claims Administrator identified in the Notic e

a completed Proof of Claim, in the form incorporated in the Notice, postmarked by the date se t

by the Court .

(ii) Except as otherwise ordered by the Court, Class Members who fai l

to submit a qualifying Proof of Claim on a timely basis shall be forever barred from receiving

any payment from the Net Settlement Fund, but will in all other respects be subject to and bound

by the provisions of this Stipulation and any orders entered in connection therewith, including

the releases contained in said documents, and will be barred from commencing, prosecuting,

pursuing, or litigating any Settled Claim against any Releasee, whether directly or indirectly,

representatively, or in any other capacity .

(iii) Distributions from the Net Settlement Fund shall only be made to

Authorized Claimants, and shall be made in accordance with the Plan of Allocation .

d. The Plan of Allocation shall be considered by the Court separately from

9269289 _6.1)OC 19

the Court's consideration of the fairness, reasonableness and adequacy of the Settlement .

Notwithstanding the provisions of paragraph 18 of this Stipulation, any order or proceeding

relating to the Plan of Allocation, or any appeal from any order relating thereto or reversal or

modification thereof, shall not operate to allow the Parties hereto to terminate or cancel this

Stipulation, or be grounds for delaying the approval or the entry of, or for modifying or

otherwise affecting the Settlement, this Stipulation, the Final Judgment or any other order

entered pursuant to this Stipulation.

e . The Company shall not have any reversionary interest in the Settlemen t

Fund and any balance in the Net Settlement Fund remaining one (1) year after the initia l

distribution to Authorized Claimants shall be contributed to not- for-profit organization s

designated by Lead Plaintiffs Counsel, and approved by the Court .

23 . The Settlement Fund shall be treated as a Qualified or Designated Settlemen t

Fund under § 468B of the Internal Revenue Code and the regulations promulgated thereunder

(including, specifically, Treasury Regulation § 1 .468B-1). The Company shall execute all

documents necessary to satisfy the requirements for the "Relation Back Election" of the

settlement Fund . The Claims Administrator shall file all informational and other tax returns

necessary to report any income earned by the Settlement Fund, as and when legally required, and

shall make all tax payments (including interest and penalties) due on the income earned by the

Settlement Fund. All such taxes (including any interest and penalties) due with respect to the

income earned by the Settlement Fund shall be paid from the Settlement Fund .

24 . Except for Enterasys' obligations to pay the amounts set forth in paragraphs 1 2

and 21 and as described in paragraph 22 above, the Defendants shall have no responsibility for ,

interest in, or liability whatsoever with respect to the administration of the Settlement o r

92692896 .DOC 20

disbursement of the Settlement Fund, including without limitation the administration , investment

or distribution of the Settlement Fund or the Net Settlement Fund, the determination o r

implementation of the Plan of Allocation, the determination, administration, calculation o r

payment of claims, the payment or withholding of taxes in connection with any of the foregoing ,

or any losses incurred in connection with any of the foregoing .

25. The Defendants' Counsel shall cooperate in the administration of the Settlement

to the extent reasonably necessary to effectuate its terms ; provided, however, that such

cooperation shall under no circumstances be construed to give rise to any responsibility for,

interest in, or liability whatsoever on the part of the Defendants or any person acting on behalf of

the Defendants for any matter related to the administration of the Settlement (including without

limitation the matters set forth in paragraph 22 above) .

Miscellaneous P •ision s

26. At the signing of this Stipulation, the Company shall provide to Plaintiffs Lea d

Counsel, or cause to be provided to Plaintiffs Lead Counsel, the Company's shareholder lists a s

appropriate for providing Notice to the Class, in a format designed by Plaintiffs Lead Counse l

for mailing, without charge to the Class .

9269289_6.DOC 21

27, The Company may withdraw from the Settlement prior to the Final Approval

Hearing in the event that the beneficial owners of greater than a specified percentage of eligible

shares of common stock timely and validly request exclusion from the Class . Such number of

shares of common stock shall be specified in a letter among Lead Plaintiffs Counsel and the

Company's Counsel dated as of the date of this Stipulation (the "Supplemental Agreement") .

The Supplemental Agreement will not be filed with the Court unless and until a dispute amon g

the Parties concerning its interpretation or application arises, and in that event it shall be filed

and maintained with the Court under seal . Copies of all requests for exclusion from the Class

will be provided to Ropes & Gray LLP on behalf of the Company in advance of the Final

Approval Hearing .

28 . This Stipulation and the Settlement provided for herein, whether or not

consummated, and all related negotiations, mediations, statements, and proceedings constitute an

attempt to compromise disputed claims, are encompassed by Rule 408 of the Federal Rules of

Evidence and analogous state rules of evidence, and are not and shall not in any event be :

a. Construed as or deemed to be evidence of a presumption, concession or

admission by any Defendant of the truth of any fact alleged, or the validity of any claim which

has or could have been asserted in any litigation, or the deficiency of any defense which has or

could have been asserted in any litigation, or of any liability, fault, wrongdoing or otherwise of

any Defendant or as a presumption, concession or an admission of any infirmity of any defense

asserted by any Defendant ; cr

b. Offered or received as evidence of a presumption, concession or

admission of any fault, misrepresentation or omissian in any statement or written document

approved or made by any Defendant ; or

9269289 fi.DOC 22

c. Offered or received as evidence of a presumption , concession or

admission of any liability, fault or wrongdoing alleged or in any way referred to by any of th e

Pa rt ies in the Action or in any other civil, criminal or administrative action or proceeding other

than such proceedings as may be necessary to effectuate the provisions of this Stipulation ; or

d. Construed as an admission or concession by anyone that the consideratio n

to be given hereunder represents the amount that could be or would have been recovered afte r

trial .

29. All counsel executing this Stipulation and any of the Exhibits hereto warrant and

represent that they are fully authorized to enter into the terms and conditions of, and to execute ,

such documents on behalf of their respective clients .

30 . This Stipulation and its Exhibits may be executed in one or more counterparts, al l

of which together shall be considered one instrument, and all of which shall be considere d

duplicate originals .

31 . The Stipulation and the Exhibits attached hereto, together with the Supplementa l

Agreement, constitute the entire agreement between Lead Plaintiff and Defendants, an d

supersede all prior oral or written agreements, representations, and understandings between Lead

Plaintiff and Defendants concerning the subject matter hereof .

32 . This Stipulation may be amended or modified only by a written instrument signed

by all the signatories hereto , their principals or their principals ' respective successors-in-interest .

33. This Stipulation , and all Exhibits hereto , shall be governed by and construed in

accordance with the laws of the State of New Hampshire, without giving effect to the choice-of-

law rules thereof.

9269289-6 23

33. This Stipulation, and all Exhibits hereto, shall be governed by and construed i n

accordance with the laws of the State of New Hampshire, without giving effect to the choice-of-

law rules thereof.

34 . The part ies to this Stipulation intend the Settlement to be a final and complet e

resolution of all disputes asserted or that could have been asserted by Lead Plaintiff or the Class

Members against the Releasees with respect to the Settled Claims. Accordingly, all Parties to

this Stipulation agree that none of them will assert in any forum or in any public statement or

press release that the litigation was brought or defended in bad faith or without a reasonable basis

under Rule 11 of the Federal Rules of Civil Procedure . All Parties hereto and their Counsel hav e

complied with Rule 11 of the Federal Rules of Civil Procedure . Lead Plaintiff will not assist any

other person or entity in making any claims against the Company arising out of, or in any respect

having their origin in, or in any way related to, any of the facts, circumstances, and events giving

rise to the Settled Claims, except as required by law .

35. The headings herein are used for the purpose of convenience only, and are not

meant to have legal effect .

36. All recitals contained in this Stipulation are incorporated into and deemed to be

part of the substantive provisions hereof as if fully set forth therein .

37. The Court shall retain jurisdiction over the Action , including without limitation

over all matters arising from or related to the Stipulation and the Settlement, and all Partie s

hereto submit to the jurisdiction of the Court for such purposes .

38 . The waiver by one Party of any breach of this Stipulation by any other Party shal l

not be deemed a waiver of any other prior or subsegucnt breach of this Stipulation .

9269289 _6. DOC 24

39 . Whenever this Stipulation requires or contemplates that one Party give notice t o

another, or notice shall be otherwise required by law, notice should be provided by persona l

delivery, by fax, or by a national overn ight carrier to the Party' s counsel as listed at the end o f

this Stipulation .

LEAD COUNSEL FOR LEAD PLAINTIFF

Los ANGELES COUNTY EMPLOYEES

RETIREMENT ASSOCIATIO N

eV io, Esq .ey . Block, Esq .

Kathleen M . Donovan-Maher, Esq .N. Nancy Ghabai, Esq .Berman DeValerio Pease Tabacco Burt& Pucill oOne Liberty SquareBoston, Massachusetts 02 109Telephone: (617) 542-8300

COUNSEL FOR DEFENDANT ENRIQUE P .

FIALLO

Richard M. Gleb, Esq .Daniel C. Holher, Esq.Gelb & Gelb LLP20 Custom House StreetBoston, Massachusetts 021 10Telephone : 617-345-001 0

Dated: October , 2003

Dated : October /(/,2003

COUNSEL FOR ENTERASYS NETWORKS,

INC.

COUNSEL FOR DEFENDANT PIYUSH

PATEL

Harvey J . Wolkoff, Esq .R. Daniel O'Connor, Esq .Nikolas P . Kerest, Esq .Ropes & Gray LLPOne International PlaceBoston, Massachusetts 02110Telephone: (6a7) 95 1-700

Dated: October , 2003

Diana K. Llyod, Esq .John R. Baraniak, Jr., Esq.Choate Hall & StewartExchange Place53 State Stree tBoston, Massachusetts 02109-2891Telephone : (617) 248-5000

Dated: October-, 2003

9269289_6.DOC 25

LEAD COUNSEL FOR LEAD PLAINTIFF COUNSEL FOR DEFENDANT ENRIQUE P .

Los ANGELES COUNTY EMPLOYEES FIALLO

RETIREMENT ASSOCIATION

Glen DeValerio, Esq .Jeffrey C . Block, Esq .Kathleen M . Donovan-MaherN. Nancy GhabaiBerman DeValerio Pease Tabacco Burt &PucilloOne Liberty SquareBoston, MA 02109Telephone: (617) 542-8300

Richard M . Gelb, Esq .Daniel C . Holher, Esq .Gelb & Gelb LLP20 Custom House StreetBoston , Massachusetts 02110(617) 345-001 0

Dated: October-, 200 3

Dated: October __, 200 3

COUNSEL FOR ENTERASYS NETWORKS,

INC .

'-~ti rve c~'- ~o~F~ ~ ► PKHarvey Wolkoff, Esq.R. Daniel O'Connor, Esq .Nikolas P . Kerest, Esq .Ropes & Gray LLPOne International PlaceBoston, MA 02110Telephone: (617) 951-7000

COUNSEL FOR DEFENDANT PIYUSH PATE L

Diana K. Lloyd, Esq .John R. Baraniak, Jr., Esq .Choate, Hall & StewartExchange Place53 State Stree tBoston, Massachusetts 02109-2891(617) 248-500 0

Dated : October ,, 2003Dated: October_, 2003

COUNSEL FOR DEFENDANT ROBERT J .

GAGALIS

David H. Kistenbroker, Esq .

COUNSEL FOR DEFENDANT ROBERT J .GAGALIS

David H. ' enbroker Esq .Leah J . Vq(hitrovic, Esq .Katten uchin Zavis Rosenman525 West Monroe Street, Suite 1600Chicago, Illinois 60661-369 3(312) 902-5200

Dated : October /ji

2003

COUNSEL FOR DEFENDANT DAVIDKIRKPATRIC K

Andrew D. Dunn, Esq.Devine, Millimet & Branch, P .A.11 1 Amherst StreetManchester, NH 03105-0719(603) 669-100 0

and

Brian E. Pastuszenski, Esq .John J . Falvey, Esq .Testa, Hunvitz & Thibeault, LLP125 High StreetBoston, MA 02110

Dated: October-, 2003

9269289_6.DOC 26

COUNSEL FOR DEFENDANT ROBERT J .GAGALIS

David H. Kistenbroker, Esq .Leah J . Domitrovic, Esq .Katten Muchin Zavis Rosenman525 West Monroe Street, Suite 1600Chicago, Illinois 60661-369 3(312) 902-5200

Dated: October-, 2003

9269289_6.DOC 26

Andrew D. Dunn, Esq .Devine, Millimet & Branch, P .A .111 Amherst StreetManchester, NH 03 105-0719(603j 669- 1000

Brian E. Pastuszenski, Esq .John J. Falvey, Esq .Testa, Hurwitz & Thibeault, LLP125 High StreetBoston, MA 0211 0

October 13, 2 0 0 3

,b

UNITED STATES DISTRICT COUR T

DISTRICT OF NEW HAMPSHIR E

IN RE ENTERASYS NETWORKS, INC. I No . C-02-071-MSECURITIES LITIGATION

THIS DOCUMENT RELATES TO :ALL ACTIONS

NOTICE OF PENDENCY OF CLASS ACTION,PROPOSED SETTLEMENT THEREOF, FINAL APPROVAL HEARING

AND RIGHT TO SHARE IN SETTLEMENT FUN D

TO: ALL PERSONS AND ENTITIES WHO PURCHASED THE COMMONSTOCK OF CABLETRON SYSTEMS, INC . BETWEEN JUNE 28, 2000THROUGH AND INCLUDING AUGUST 3 , 2001 AND ALL PERSONS ANDENTITIES WHO PURCHASED THE COMMON STOCK OF ENTERASYSNETWORKS, INC . BETWEEN AUGUST 6,2001 THROUGH AND INCLUDINGFEBRUARY 1,2002 , AND WHO SUFFERED DAMAGES THEREBY .

PLEASE READ THIS NOTICE CAREFULL Y

THIS NOTICE RELATES TO A PENDING CLASS ACTION AND APROPOSED SETTLEMENT OF THIS ACTION AND CONTAINSIMPORTANT INFORMATION AS TO YOUR RIGHTS TO OBTAIN ASHARE OF THE SETTLEMENT AS FURTHER DESCRIBED BELOW .

YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of CivilProcedure, and an Order of the United States District Court for the District of New Hampshire(the "Court"), that there is pending in the Court a series of class actions that have beenconsolidated into one action (the "Action") against defendants Enterasys Networks, Inc .("Enterasys" or the "Company"), Enrique P . Fiallo, Robert J . Gagalis, Piyush Patel and DavidKirkpatrick (collectively, the "Defendants") on behalf of all persons and entities who purchasedthe common stock of Cabletron between June 28, 2000 through and including August 3, 2001,and all persons and entities who purchased the common stock of Enterasys between August 6,2001 and February 1, 2002, and who suffered damages thereby (the "Class") . Excluded from theClass are : (1) the Defendants and the current officers and/or directors of Enterasys ; (2) any

9270135 4 .DOC

individuals who were officers and/or directors of Enterasys during the Class Period ; (3) anyindividuals who were officers and/or directors of any entity in which Enterasys has or had a

controlling interest or is or was a parent or subsidiary of or is or was controlled by Enterasysduring the Class Period ; (4) the members of the immediate families of the individuals identifiedin the preceding two subparagraphs ; (5) any entity in which Enterasys has or had a controllinginterest or is or was a parent or subsidiary of or is or was controlled by Enterasys during the classperiod; and, (6) the legal affiliates, representatives, heirs, controlling persons, successors andpredecessors in interest and/or assigns of any such excluded party . Also excluded from the Classare any Persons who exclude themselves by filing a request for exclusion in accordance with therequirements set forth in the Notice .

The Action alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Actof 1934 and Securities and Exchange Commission ("SEC") Rule lob-5 . The Action alleges,inter-aim that Defendants engaged in an intentional and pervasive accounting fraud that spanned

nearly two fiscal years and overstated Cab]etron's and Enterasys' financial results in violation ofGenerally Accepted Accounting Principles . Defendants deny all allegations of wrongdoing inthe Action, and deny any liability for the claims asserted in the Action .

YOU ARE FURTHER NOTIFIED that, pursuant to the Federal Rules of CivilProcedure, the Court certified the Class (except those members thereof, if any, who file a valid,timely Request for Exclusion) for settlement purposes .

This Notice is not intended to be, and should not be construed as, an expression of anyopinion by the Court with respect to the truth of the allegations in the Action or the merits of theclaims or defenses asserted . This Notice is to advise you of the pendency of the Action, theproposed settlement thereof (the "Settlement"), and of your rights hereunder .

A. 1 of the :lass' d e t it ( the Case

The Lead Plaintiff, Los Angeles County Employees Retirement Association("LACERA"), has negotiated a Settlement that creates a fund in the amount of $50,000,000

consisting of $17,000,000 in cash together with all interest accrued and paid thereon, and

$33,000,000 worth of Enterasys common stock. The number of shares of Enterasys commonstock is to be calculated by determining the average closing price on the New York Stock

Exchange for Enterasys common stock for the ten (10) trading days prior to the date of the Final

Approval Hearing and dividing $33,000,000 by said average trading price (the "SettlementFund") . Enterasys also executed a promissory note to the Class in the sum of $33,000,000 tosecure distribution of the common stock to the Class .

Lead Plaintiff also negotiated extensive corporate governance provisions that Enterasysshall adopt within thirty (30) days of the Order and Final Judgment of the Settlement. SeeSection III below .

Based on Lead Plaintiffs estimate of the number of shares entitled to participate in theSettlement and the anticipated number of claims to be submitted by Class members, the averag e

9270135 _4.DOC -2-

distribution per share would be approximately $0 .44 per share before deduction cf Court-approved fees and expenses . However, your actual recovery from this fund will depend on a

number of variables, including the number of claimants, which company's shares you purchased,the number of shares you purchased, the timing of your purchases and sales, if any, and the

expense of the process of administering the claims .

B. Disagreement on Amount of Damage s

Lead Plaintiff and Defendants do not agree on the average amount of damages per sharethat would be recoverable if the Class were to have prevailed on each claim asserted . The issueson which the parties disagree include, among others : (1) whether the statements complained ofwere materially false and misleading under the Federal securities laws; and (2) the appropriateeconomic model for determining the amount of damages, if any, suffered by the Class .

C. Statement of Attorneys' Fees and Costs Sought

Lead Plaintiffs Counsel have not received any payment for their services in prosecutingthe Action on behalf of Lead Plaintiff and the members of the Class, nor have they beenreimbursed for their expenditures . Lead Plaintiff negotiated a fee agreement with Lead Counselat arms' length and, consistent with that agreement, agreed that if the Settlement is approved bythe Court, Lead Plaintiffs Counsel may apply to the Court for reimbursement of expenses in theapproximate amount of $200,000 and an award of attorneys' fees of up to fifteen percent (15%)of the Settlement Fund after the deduction of expenses . If the amount of attorneys' fees andreimbursement of expenses requested by counsel is approved by the Court, the average cost pershare would be approximately $0 .37. The average cost per share could vary, depending on thenumber of shares for which claims are filed.

D . Reasons for Settlement

Lead Plaintiff, through its counsel, has investigated the claims and the underlying eventsand transactions alleged in the Action, including inspecting and analyzing thousands of pages ofdocuments, analyzing news reports, other publicly available information and the financialcondition of the Defendants and their ability to satisfy a judgment, if the Class prevailed in thisAction. Lead Plaintiffs Counsel have also undertaken an extensive analysis of the legalprinciples applicable to Lead Plaintiffs claims against Defendants, and the potential defensesthereto, and have consulted with experts to analyze the damages alleged to have been suffered bythe Class . As a consequence of Lead Plaintiffs Counsel's investigation and analysis, the LeadPlaintiff and Lead Plaintiffs Counsel believe that the Settlement on the terms set forth in theStipulation is in the best interests of Lead Plaintiff and the Class after taking into account thesubstantial risks of continued litigation . Because of the risks associated with continuing tolitigate and proceeding to trial, there was a danger that Lead Plaintiff would not have prevailedon any of its claims, in which case the Class would receive nothing . Among other things, LeadPlaintiff faced the possibility that all or some of the claims in this case could have beendismissed in response to motions by Defendants . In addition to denying any and all liability tothe Class, the amount of damages recoverable by the Class was, and is, challenged b y

9270135_4.DOC -3-

Defendants . Recoverable damages in this case are limited to losses caused by conduct actionableunder applicable law and, had the Action gone to trial, Defendants intended to assert that none ofthe losses were caused by any materially false or misleading statements . While Defendants denyall charges of wrongdoing, they have agreed to settle the Action on the basis proposed in order toput to rest all further controversy and to avoid further costs of litigation and the furtherexpenditure of management's time and attention .

E. Identific ti, fl s' epi sen

Any questions regarding the Settlement can be directed in writing to the Lead PlaintiffsCounsel :

Glen DeValerio, Esq .Jeffrey C. Block, Esq .

Kathleen M. Donovan-Maher, Esq.Berman DeValerio Pease Tabacco Burt & Pucillo

One Liberty SquareBoston, MA 02109

THE SETTLEMEN T

1 . BACKGROUND OF THE SETTLEMENT

On or about February 7, 2002, a number of complaints were commenced in the UnitedStates District Court for the District of New Hampshire alleging that the Company and certain ofits officers had violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the"Exchange Act") and SEC Rule lob-5 by making, or causing to be made, certain false andmisleading public statements .

On August 2, 2002, the Court entered Orders : (i) consolidating for all purposes theUnderlying Actions, under the caption In re Enterasys Networks, Inc. Securities Litigation, CivilNo . G02-071-M; (ii) appointing Los Angeles County Employees Retirement Association asLead Plaintiff in the Action ; and (iii) approving Lead Plaintiffs choice of Berman DeValerioPease Tabacco Burt & Pucillo as Plaintiffs Lead Counsel .

On November 26, 2002, Enterasys restated its financial results for the fiscal year endedMarch 3,2001 and for the first three fiscal quarters within the ten month period ended December29, 2001 in the Form 10-K Transition Report filed with the SEC on November 26, 2002 .Specifically, the Company's restatement revealed that it had overstated the Company's reportednet revenues by $153 million and understated the Company's reported net losses by $145 millionduring the relevant period .

9270135_a.DOC -4-

On December 9, 2002, Lead Plaintiff filed the First Consolidated Amended Class ActionComplaint for Violations of the Federal Securities Laws (the "Complaint") against the Companyand the Individual Defendants .

On February 10, 2003, Enterasys moved to have the Complaint dismissed . On March 7,2003, the Individual Defendants also moved to dismiss the Complaint, pursuant to Rules 9(b)and I2(b)(6) of the Federal Rules of Civil Procedure . As a result, extensive and protractedbriefing began. Plaintiffs Lead Counsel opposed Defendants' motions, and filed motions tostrike exhibits to two of the Individual Defendants' motions . Additionally, Plaintiffs LeadCounsel opposed a motion by Enterasys to strike an exhibit to Lead Plaintiffs opposition toEnterasys' motion to dismiss . .

Prior to the hearing on the motions to dismiss and related motions, Lead Plaintiff and theCompany began discussing settlement of the Action. During the course of these discussions, the

Court entered two Orders continuing the hearing on the motions, first to July 31, 2003, then toSeptember 25,2003 .

The Lead Plaintiff and the Company conducted extensive, arms- length settlementnegotiations . The settlement negotiations were challenging, spanning a matter of five months .Lead Plaintiff and the Company ultimately reached an agreement to settle Lead Plaintiffs claimsagainst the Company, and potentially those against the Individual Defendants, the terms of whichare set forth in a Memorandum of Understanding dated August 18, 2003 (the "MOU") .

Following the execution of the MOU by Lead Plaintiff and the Company, the Companyproduced confirmatory discovery to Lead Plaintiff consisting of 130+ boxes of documents along

with 350+ gigabytes of computer information . Lead Plaintiffs Counsel also conferred with theIndividual Defendants' counsel . Thereafter, Lead Plaintiff decided, based on its confirmatorydiscovery, to include the Individual Defendants in the Settlement .

II . THE HEARING

A hearing (the "Final Approval Hearing") will be held before the Honorable Steven J .McAuliffe, United States District Judge, United States District Court, District of NewHampshire, 55 Pleasant Street, Concord, New Hampshire 03301 on , 2003 a t

m., for the purposes of determining whether the Settlement is fair, reasonable, andadequate and whether it should be approved by the Court; whether judgment should be entereddismissing the Action with prejudice ; whether an order should be entered barring Lead Plaintiffand the Class from commencing or continuing any, action or proceeding against Defendantsconcerning the subject matter of this Action ; whether the method of allocation for thedistribution of the Settlement Fund should be approved as fair and reasonable ; and to considerLead Plaintiffs Counsel's application for an award of attorneys' fees and reimbursement ofdisbursements . The Final Approval Hearing may be adjourned from time to time by the Court atthe Final Approval Hearing or any adjourned session thereof without further notice .

111. THE SETTLEMENT AND PLAN OF ALLOCATIO N

9270135 4.DOC -5-

The following description of the Settlement is only a summary, and reference ismade to the text of the Stipulation, on file with the Court, for a full statement of itsprovisions :

Lead Plaintiff negotiated significant changes and/or improvements in Enterasps'corporate governance and management procedures . Such provisions include, among otherthings :

1. Declassification Of The Board Of Directors

• Enterasys shall include in its next annual proxy statement a proposal submitted by LeadPlaintiff to declassify the Company's Board of Directors .

• Enterasys shall support such proposal .

• If the proposal is approved, the classified Board will be eliminated, the current term ofoffice of each Director will end at the 2005 Annual Meeting of Shareholders, andDirectors will thereafter be elected for one-year terms at each Annual Meeting .

• Declassification of the Board of Directors requires an amendment to the Company'sCertification of Incorporation, which requires an affirmative vote of 85% of the totalnumber of outstanding shares of common stock .

2. Alternative Director Nomination s

• Enterasys shall adopt a policy whereby shareholders may recommend to the Company'sCorporate Ethics, Governance and Nominating Committee (the "Committee") not morethan two (2) candidates for election to the Company's Board of Directors annually .

• Each nominating stockholder, or group of stockholders, may only recommend onedirector per year.

• A nominating stockholder is eligible to recommend a candidate to the committeeif they have owned at least 5% of the Company's common stock, eitherindividually or as a group, for at least two years .

• If the Committee determines to nominate such candidate, the candidate will be part of theCompany's slate of nominees. If the Committee determines not to nominate suchcandidate, it will include in the Company's proxy statement the reasons the Committeedetermined not to nominate the candidate .

3. Expanded Proxy Statement Disclosure s

92701354 .DOC -6-

+ Enterasys shall provide in its Compensation Committee report in the Company's proxystatement a mandatory textual discussion regarding the factors relied upon in determiningCEO compensation .

• The discussion will include the certain factors considered, the weight given to each factorand the reasons for the weighting assigned .

• These factors include: the cumulative total return to the Company's stockholders ; theCompany's diluted earnings per share and; the salary and equity based awards of CEOsof comparable companies .

Mandatory disclosures of termination of employment payments to the CEO including

death, disability, discharge for cause, discharge for other than cause and voluntaryresignation .

The Settlement Fund is valued at $50,000,000 and consists of $17,000,000 in cash,including interest accrued and paid thereon, plus Enterasys common stock valued at$33,000,000. The number of shares of Enterasys common stock worth $33,000,000 shall becalculated by taking the average closing price on the New York Stock Exchange for the ten (10)trading days prior to the date of the Final Approval Hearing, and dividing $33,000,000 by saidaverage closing price . Enterasys also executed a promissory note to the Class in the sum of$33,000,000 to secure distribution of the common stock to the Class . The Settlement Fund, after

certain payments described below, will be distributed to Authorized Claimants (as definedbelow) .

PLAN OF ALLOCATION

A claim will be paid a portion of the recognized loss, as described below. Therecognized loss will be calculated as follows :

A. For Cabletron shares purchased between June 28, 2000 through and includingAugust 3, 2001 and held through August 3, 2001, the recognized loss per shareshall be the lesser of 1) the price paid for the Cabletron shares times .6627 minus$4.20 or 2) $6.60.

B . For Cabletron shares purchased between June 28, 2000 through and includingAugust 3, 2001 but sold on or before August 3, 2001, the recognized loss pershare is $0 because both the purchase and sale occurred before any adverseinformation relating to the fraud was publicly disclosed .

9270135 4.DOC -7-

C. For Enterasys shares purchased between August 6, 2001 through and includingFebruary 1, 2002 and held through February 1, 2002, the recognized loss pershare shall be the lesser of 1) price paid per share minus $4 .20 or 2 ) $6.60.

D. For Enterasys shares purchased between August 6, 2001 through and includingFebruary 1,2002 but sold on or before February 1,2002, the recognized loss pershare is $0 because both the purchase and sale occurred before any adverseinformation relating to the fraud was publicly disclosed .

Payment under the Plan of Allocation shall be deemed conclusive as against allAuthorized Claimants . All Class members who fail to file complete, valid, and timely Proofs ofClaim, in the form accompanying this Notice, shall be barred from participating in distributions

from any portion of the Settlement Fund (unless otherwise ordered by the Court), but shallotherwise be bound by all of the terms of the Stipulation, including the terms of any judgmententered in the Action and Releases given to Defendants .

The Settlement Fund remaining after distributions therefrom for taxes, notice costs,administrative expenses, counsel fees and related expenses (the "Net Settlement Fund") shall bedistributed to Class members who submit valid, timely proofs of claim ("AuthorizedClaimants"), pro vatu, based on each Authorized Claimant's Recognized Claim (as defined insub-paragraph (b) below), as compared to the total Recognized Claim of all AuthorizedClaimants .

(a) Each person claiming to be an Authorized Claimant shall be required tosubmit the accompanying Proof of Claim that includes a release of Defendants and otherReleasees from all Settled Claims, signed under penalty of perjury and supported by suchdocuments as specified in the Proof of Claim as are reasonably available to the AuthorizedClaimant .

(b) All Proofs of Claim must be postmarked or received by ,2004("Recognized Claims") . Unless otherwise ordered by the Court, any Class member who fails tosubmit a Proof of Claim within such period, or such other period as may be ordered by the Court,shall be forever barred from receiving any payments from the Net Settlement Fund, but will, inall other respects, be subject to the provisions of the Stipulation and the final judgment enteredby the Court, including the release of all Settled Claims against the Defendants and otherReleasees .

(c) A "Claim" will be computed pursuant to the Plan of Allocation approvedby the Court .

(d) The date of purchase or sale of common stock is the "contract" or "trade"date as distinguished from the " settlement" date .

(e) For Class members who received and exchanged multiple shares, theFirst-In-First-Out "FIFO") accounting method shall be utilized for the purpose of matching

9270135_4.DOC -8-

purchases of stock with the sales . Transactions resulting in a gain shall not be included in thecomputation of Recognized Claims . The covering purchase of a short sale is not an eligiblepurchase .

(1) The purchase and sale price of stock does not include commissions orother charges for the purchase or sale of such stock .

g No payment will be made on any claim where the potential distribution is$10.00 or less ( but the Authorized Claimant will otherwise be bound by the Final Judgmententered by the Court .

(h) No person shall have any claim against Plaintiffs' Counsel, the Claims

Administrator or other agent designated by Lead Plaintiffs' counsel, any Defendant orDefendants' Counsel, based on the distribution made substantially in accordance with the

Stipulation and the Settlement, the Plan of Allocation, or further orders of the Court . All Classmembers who fail to complete and file a valid and timely Proof of Claim shall be barred fromparticipating in distributions from the Net Settlement Fund (unless otherwise ordered by the

Court), but otherwise shall be bound by all of the terms of the Stipulation, including the terms ofthe judgment entered and releases given .

If the Settlement is approved by the Court, the Court will enter a judgment which willdismiss the Action with prejudice against Defendants, and bar and permanently enjoin LeadPlaintiff and each Class member from prosecuting in any way the Settled Claims againstDefendants or the other Releasees defined in the Stipulation . The Court shall retain jurisdictionover implementation of the Settlement, disposition of the Settlement Fund, hearing anddetermining Lead Plaintiffs Counsel's application for attorneys' fees, costs, interest, expenses(including fees and costs of experts and/or consultants), and enforcing and administering theSettlement, including any releases executed in connection therewith .

IV . ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES

Lead Plaintiffs Counsel will apply to the Court at the Final Approval Hearing forreimbursement of litigation expenses and disbursements in the approximate amount of $200,000and for an award of attorneys' fees of up to fifteen percent (15%) of the Settlement Fund afterthe deduction of litigation expenses and disbursements . The amount of attorneys' fees wasnegotiated at arms' length between the Lead Plaintiff and Lead Plaintiffs Counsel . Such anaward as may be granted by the Court will be paid from the Settlement Fund .

V. NOTICE TO BANKS . BROKERS . AND OTHER NOMINEE S

Banks, brokerage firms, institutions, and other persons, who, during the Class Period,purchased or sold Cabletron common stock or Enterasys common stock, shall, within ten (10)days of receipt of this Notice, provide the Claims Administrator with the following : (1) thenames and addresses of each such beneficial owner, preferably on computer- generated mailinglabels or, if there are more than 2,000 names and addresses, on a 32" diskette, CD-ROM or

9270135_4.DOC -9-

ZIP/JAZ media, or (2) forward a copy of this Notice to each such beneficialthe Claims Administrator with written confirmation that lie Notice hasAdditional copies may be obtained from the Claims Administrator forbeneficial owners . All such requests should be in writing , as follows:

Claims AdministratorIn Re Enterasys Networks, Inc . Securities Litigation

c/o Strategic Claims Service s27 10 Concord Road, Suite 5

Aston, PA 1901 4

Fax: (610) 364-2698Website : www .strategicclaims .org

VI . THE RIGHTS OF CLASS MEMBERS

owner and providebeen so forwarded .forwarding to such

If you are a Class member, you may receive the benefit of, and you will be bound by, theterms of the Settlement described in Part III of this Notice, upon approval of the Settlement bythe Court .

You may request to be excluded from the Class if you file a written request for exclusionwith the Clerk of the United States District Court, 55 Pleasant Street, Concord, New Hampshire03301 and mail a copy of such exclusion to : Claims Administrator, In Re Enterasys Networks,Inc. Securities Litigation, c/o Strategic Claims Services, 2710 Concord Road, Suite 5, Aston, PA19014, in an aivelope postmarked not later than [ten (10) business days before the

Final Approval Hearing ] . Any requests for exclusion must indicate on the envelope "Requestfor Exclusion - In Re Enterasys Networks, Inc . Securities Litigation," must provide : (a) yourname, address, telephone number; (b) the number of shares of Cabletron common stockpurchased or otherwise acquired and sold between June 28, 2000 through and including August3, 2001 ; (c) the number of shares of Enterasys common stock purchased or otherwise acquiredand sold between August 6, 2001 through and including February 1, 2002 ; (d) the dates of andprices paid or received on all such purchases and sales ; and (e) the reason as to why you arerequesting exclusion . Persons who request exclusion must also include documentation, such asbrokerage statements, establishing trading in Cabletron common stock and/or Enterasys commonstock. Persons who request exclusion will not be entitled to share in the benefits of theSettlement and will not be bound by any judgment entered in the Action .

If you are a Class member, you may, but are not required to, enter an appearance throughcounsel of your own choosing at your own expense. If you do not do so, you will be representedby Lead Plaintiffs Counsel : Glen DeValerio, Esq ., Berman DeValerio Pease Tabacco Burt &Pucillo, One Liberty Square, Boston, MA 02109 .

Any Class member who has not requested exclusion may appear at the Final ApprovalHearing to show cause why the Settlement should not be approved, why the Action should not be

dismissed with prejudice as against Defendants, why an order should not be entered barring th e

9270135_4. DOC -10-

commencement or prosecution of certain actions or proceedings against Defendants, why theproposed method of allocation should not be approved, or to present any opposition to theapplication of Lead Plaintiffs Counsel for attorneys' fees, reimbursement of expenses, anddisbursements ; provided, however, that no such person shall be heard at the Final ApprovalHearing, unless his, her or its objection or opposition is made in writing and is filed, togetherwith copies of all other papers and briefs to be submitted by him, her or it, with the Court no laterthan 4 :00 p .m. on , 2003 [ten (10 ) business days before the Final Approval Hearing],and showing due proof of service by overnight mail or hand delivery on counsel of record asfollows :

Glen DeValerio, Esq.Jeffrey C. Block, Esq .

Kathleen M. Donovan- Maher, Esq .Berman DeValerio Pease Tabacco Burt & Pucillo

One Liberty SquareBoston, MA 02109

Lead Plaintiffs Counse l

Harvey J . Wolkoff, Esq.Ropes & Gray LLP

One International PlaceBoston , MA 0211 0

On Behalf of Attorneys for Defendants

Any Class member who does not make his, her or its objection or opposition in the

manner provided above shall be deemed to have waived all objections and opposition to thefairness, reasonableness, and adequacy of the Settlement and to the request of Lead PlaintiffsCounsel for an award of attorneys' fees and reimbursement of expenses .

VII . EXAMINATION OF PAPERS AND INQUIRIES

For a more detailed statement of the matters involved in this Action, reference is made to

the pleadings, to the Stipulation, and to other papers filed in this Action, which may be inspectedin the Office of the Clerk of the United States District Court, 55 Pleasant Street, Concord, NewHampshire 03301 , during business hours of each business day .

Other inquiries regarding the administration of the Settlement Fund or this Notice shouldbe addressed as follows :

Claims AdministratorIn Re Enterasys Networks, Inc . Securities Litigation

c/o Strategic Claims Service s2710 Concord Road, Suite 5

9270135_4.DOC

Aston, PA 1901 4

Telephone : 866-274-4004Fax: (610) 364-2698

Website : www.strategicclaims .org

PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE EXCEPT INPERSON TO REVIEW DOCUMENTS ON FILE OR AS SET FORTH ABOVE .

Dated: ,2003 BY ORDER OF THE COURTUNITED STATES DISTRICT COURTDISTRICT OF NEW HAMPSHIR E

9270135_4.DOC -12-

d

UNITED STATES DISTRICT COUR T

DISTRICT OF NEW HAMPSHIR E

IN RE ENTERASYS NETWORKS, INC . I No . C-02-071-MSECURITIES LITIGATIO N

THIS DOCUMENT RELATES TO :ALL ACTION S

ON OR BEFOREDISTRIBUTION OF THEACCOMPANYING NOTICE .

c/o Strategic Claims Services27 10 Concord Road, Suite 5

Aston, PA 19014Telephone: 866-274-4004

Fax: (610) 364-2698Website : www.strategicclairns .org

2004 IN ORDER TO PARTICIPATE IN THENET SETTLEMENT FUND DESCRIBED IN THE

1. You must be a person or entity who purchased Cabletron Systems, Inc .

("Cabletron") common stock between June 28 , 2000 through and including August 3,2001or purchased Enterasys Networks, Inc. C'Enterasys ") common stock between August 6,2001 through and including February 1, 2002, and must not have filed a request forexclusion in the above-captioned lawsuit (the "Action") .

PROOF OF CLAI M

)R1ANJ INSTRUCTIONS

MAIL YOUR COMPLETED PROOF OF CLAIM TO :

Claims Administrato rIn Re Enterasys Networks, Inc . Securities Litigation

9270137_5 . DOC

2. TO PARTICIPATE IN THE SETTLEMENT, YOU MUST FILE THISPROOF OF CLAIM AND EXECUTE IT UNDER THE PENALTIES OF PERJURY .

3. You must attach to your Proof of Claim, legible copies of brokers'confirmations, monthly statements, correspondence, relevant portions of tax returns, orother documents showing your purchase(s) of Cabletron and/or Enterasys common stockand sales of any or all of such common stock listed below .

4. YOUR PROOF OF CLAIM MUST BE POSTMARKED NO LATER THAN, 2004 if it is mailed to the Claims Administrator at the above address by

first-class, registered or certified mail, postage prepaid . If otherwise sent, it shall bedeemed received when it is actually received by the Claims Administrator .

STATEMENT OF CLAIM

5. PLEASE TYPE OR PRINT THE FOLLOWING INFORMATION :

Claimant's (Beneficial Owner's) Name as it appears on your brokerage statemen t

Joint Claimant's (Joint Beneficial Owner's) Name as it appears on your brokerage statement

Claimant's Street Address

City State Zip Code

Foreign Province Foreign Country

( ) (Work) ( ) (Home)Area Code Telephone Number Area Code Telephone Number

Type of Claimant:(Individual, Corporation, Claimant's Social Security or Tax IDTrust ,etc.) Number

Record Owner's Name if different from beneficial owner listed abov e

92701375 .DOC -2-

6. Number of shares of Cabletron common stock owned as of close of businesson June 27, 2000 (ntustbe documented) : .

7. PURCHASES : During the period June 28, 2000 through Augusta, 2001,inclusive, I (we) acquired Cabletron common stock as follows (must be documented) :

Purchase

(Trade) Dat e(List Chronologically)Month/Day/Year

Number of Purchases .Gross Purchas eShares Price Per (Excluding Commissions,Purchased Share Taxes and Fees)

x =

x =

x =

X =

8. With respect to the specific common stock listed in Nos . 67 above, I haveSOLD some or all of those shares during the period June 28, 2000 through August 3,2001,as follows (ntust be documented):

Sale(Trade) Date

(List Chronologically)Month/Day/Year

Number of Sales Gross Proceeds FromShares Price Per Sale (ExcludingConimis-Sold Share sions, Taxes and Fees )

X =

X =

X -

X =

92701375.DOC -3-

9. Number of shares of Cabletron common stock held as of the close of businesson August 3, 2001 ( must be documented) :

10. PURCHASES: During the period August 6, 2001 through February 1, 2002,inclusive, I (we) acquired Enterasys common stock as follows (must be docuimented) :

Purchase(Trade) Date Number of Purchases Gross Purchas e

(List Chronologically) Shares Price Per (Excluding Contnzissions ,Month/Day/Year Purchased Share Taxes and Fees )

x =

x =

x =

x =

x =

11. With respect to the specific common stock listed in No . 10 above, I haveSOLD some or all of those shares during the period August 6 , 2001 through February 1 ,2002, as follow (ntustbe documented) :

Sale(Trade) Date Number of Sales Gross Proceeds From

(List Chronologically) Shares Price Per Sale(Excluding Conunis -Month/Day/Year Sold Share sions, Taxes and Fees )

x =

x =

x

x

9270137_5.uoc -4-

12. Number of shares of Enterasys common stock held as of the close of businesson February 1, 2002 ( must be documented) :

(If you need more space to record your transactions, you may attach additional sheets ofpaper .)

13. Claimant affirms that :

(a) The Social Security or Employer Identification number shown above ismy correct taxpayer identification number (or I am waiting for a number to be issued to me); and

(b) I (We) certify that I am (we are) NOT subject to any backup withholdingunder the provisions of Section 3406(a)(1)(c) of the Internal Revenue Code .

NOTE: IF you have been notified by the Internal Revenue Service (IRS) that you aresubject to backup withholding, strike out the word NOT in paragraph 11(b) above .

Any change in your status with respect to backup withholding should be promptlyreported to the Claims Administrator at the above address .

14. (a) I am (We are) enclosing documentary proof of (i) the above Cabletronpurchases, (ii) sales, and (iii) shares held as of the close of business on June 27, 2000 andAugust 3,2001 .

(b) I am (We are) enclosing documentary proof of (i) the above Enterasyspurchases, (ii) sales, and (iii) shares held as of the close of business on February 1, 2002 .

(c) I was (We were) not one of the Defendants in the Action, nor a subsidiary,affiliate, member of the immediate family, successor or assign of a Defendant in the Actionduring the Class Period and am (are) not otherwise excluded from the Class .

9270137_S.DOC -5-

15. In consideration of the aforesaid, each of the undersigned, on behalf of

himself, herself or itself and his, her or its respective present and former officers, directors,controlling shareholders, general partners, limited partners, parent companies,subsidiaries, trusts, divisions and affiliates, their respective successors, predecessors,assigns, heirs, executors, administrators, attorneys, servants, agents and representatives,his, her or its respective related or affiliated entities, entities in which he, she or it directlyor indirectly has a controlling interest, and any and all persons natural or corporate inprivity with him, her or it or acting in concert with him, her or it or any of them, and for

anyone claiming through any of the foregoing entities, intending to be legally bound andsubject to the Settlement becoming effective does hereby RELEASE AND DISCHARGE allclaims, rights, causes of action, suits, matters and issues, known or Unknown (as definedherein), that have been or could have been asserted in the Action or any other action thathas or could have been brought in this or any other forum, including the UnderlyingActions, by the undersigned, the Lead Plaintiff or by any member of the Class, as definedherein (except those who validly exclude themselves from the Class), whether directly,representatively, derivatively, individually or in any other capacity, against any of the

Defendants, their respective present or former officers, directors, agents, employees,attorneys, stockholders, advisors, investment bankers, consultants, commercial bankers,insurers, representatives, trustees, parents, affiliates, subsidiaries, general and limitedpartners, heirs, executors, administrators, predecessors, successors and assigns, exceptKYMG LLP, the current officers and directors of KPMG LLP, and its predecessors,successors, parents, owners, subsidiaries, divisions, joint ventures, related or affiliatedentities and entities in which KPMG LLP has or had a controlling interest or is a parent or

subsidiary of or is controlled by KPMG LLP, including, but not limited to any claim forviolation of federal, state or other law, or of the common law, which the undersigned, orany Class member had, now have, or may hereafter have as a member of the Class or as anindividual, except for claims relating to any party's alleged failure to comply with the termsand conditions of the Stipulation, shall be compromised, settled, released and dismissedwith prejudice and without costs to either party .

"Unknown" as used herein shall mean any and all actions, suits, claims, demands,rights, liabilities and causes of action that the Lead Plaintiff, the Class, or any of the ClassMembers do not know of or suspect to exist in their favor at the time of the release of theReleasees, which, if known by the Lead Plaintiff, the Class, or any of the Class Members,

might have affected its agreement to the Settlement . With respect to Unknown claims, theLead Plaintiff, the Class, and each of the Class Members hereby expressly waive andrelinquish, to the fullest extent permitted by law, any and all provisions, rights, benefitsconferred by any law of any state or territory of the United States, or principle of commonlaw, which is similar, comparable, or equivalent to the benefits of Section 1542 of theCalifornia Civil Code, which states : "A general release does not extend to claims which thecreditor does not know or suspect to exist in his favor at the time of executing the release,which if known by him must have materially affected his settlement with the debtor ." and

any and all provisions, rights, and benefits of any similar state or federal law .

9270137_5.DOC -6-

16. By executing and submitting this Proof of Claim and Release, I (we)understand that I am (we are) subject to the jurisdiction of the United States District Courtfor the District of New Hampshire for the purpose of enforcing the Settlement and theRelease of Claims .

17. I (We) certify under penalty of perjury under the laws of the United States ofAmerica that, to the best of my (our) knowledge, information, and belief, the informationon this claim form (and any additional sheets) is true and correct, and that this is the onlyclaim being made with respect to these purchases, executed this day of200- in

(City) (State/Country)

Signature of Claimant

(Type or Print Your Name Here)

Capacity of person(s) signing, if other

than in an individual capacity, e .g.,Beneficial Owner, Executor, orAdministrato r

Signature of Joint Claimant, if any

(Type or Print Your Name Here)

Capacity of person (s) signing, if otherthan in an individual capacity, e .g .,Beneficial Owner, Executor, orAdministrator

9270137_S.DOC -7-

CHECKLIST

1 . Remember to sign the release and certification .

2. Remember to attach supporting documentation .

3. Do not send original stock certificates .

4. Keep a copy of the completed claim form for your records .

5. If you would like to obtain an acknowledgment of receipt of the claim form by theClaims Administrator, send it Certified Mail, Return Receipt Requested, or utilizethe website listed below .

6. If you move, please send the Claims Administrator your new address .

7. Please note that accurate claims processing takes time and you may not receiveany information for several months. If you have any questions or concernsregarding your claim, please contact :

Claims AdministratorIn Re Enterasys Networks, Inc . Securities Litigation

c/o Strategic Claims Services2710 Concord Road, Suite 5

Aston, PA 19014Telephone : (866) 274-400 4

Fax: (610) 364-2698Website : www .strategicclaiiins

9270137_5.DOC -8-