Riverstone Settles Class Action Litigation

SANTA CLARA, Calif. -- Riverstone Networks (OTC:RSTN.PK) today announced that it has reached an agreement in principle to settle all securities class action lawsuits pending against the company in the U.S. District Court in San Francisco.

Under the terms of the agreement, the plaintiff class will receive a total cash payment of $18.5 million. Riverstone's primary directors and officers' liability insurer committed to pay approximately $11 million of such amount, subject to a reservation of rights by the insurer to seek repayment of that amount. The insurer subsequently has raised questions as to whether it will honor in full this commitment. The settlement payment (net of the amounts, if any, received from its insurers) will be paid by Riverstone, which intends to take all necessary steps to seek reimbursement from its insurers. Riverstone is seeking a prompt determination that the company and its officers and directors are unconditionally entitled to use all of its remaining insurance. The Company currently has $26 million of directors and officers' liability insurance, comprised of approximately $11 million already committed to the settlement by the primary insurer and $15 million of excess liability insurance coverage, which the Company intends to use to offset remaining settlement and defense costs.

The settlement is subject to court approval, and does not reflect any admission of wrongdoing by Riverstone or any of the former officers or directors named as defendants in the litigation.

Riverstone Networks Inc.