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CoSine Deal Challenged in Court

Just when it looked as if the future of troubled CoSine Communications Inc. (Nasdaq: COSN) had finally been resolved, a legal wrench may be thrown into the works.

Just over three weeks ago Tut Systems Inc. (Nasdaq: TUTS) ended months of speculation over the fate of CoSine when it stumped up $24.1 million for the struggling switch vendor (see Tut Takes On CoSine and Will CoSine Get Carved Up?).

But in a recent filing with the Securities and Exchange Commission (SEC) CoSine revealed that, on January 18, a complaint entitled Senior v CoSine Communications Inc., et al., was filed in San Mateo County Superior Court in California. The complaint requested that the acquisition be enjoined” due to alleged self-dealing and breach of fiduciary duties by CoSine’s officers and directors.

CoSine did not return NDCF’s calls, but the company stated in the SEC filing that it would fight the claims and proceed with the Tut transaction.

A spokesman for the Lake Oswego, Ore.-based Tut Systems declined to comment on the complaint, although he said that Tut is “still on track” to complete the acquisition by the end of March.

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