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MEMORANDUM

To:        New York State Pension Fund General Counsel’s Office

From:    Lynda J. Grant

Re:        Shareholders Class Action Claims

We have been asked to review the potential class and derivative actions by GyneTech shareholders. There are three types of potential shareholder actions here: a class action, a derivative action, and an action under what is commonly known as a Unocal theory, concerning the scope of the defensive mechanisms that the GyneTech board institutes in response to the threat posed to the company by the two tender offers. (MedaStar and Kauffman launched competing proxy bids for control, but there is no indication that the company was in the middle of a proxy fight or that MedaStar and Kauffman had the votes to call a special shareholders meeting where they could call for a vote on the board. It seems more likely that they launched competing hostile tender offers to obtain sufficient shares so that they could remove management.)