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                                                                 EXHIBIT 20.1


                   SUPERIOR COURT OF THE STATE OF CALIFORNIA
                                COUNTY OF ORANGE

HANNAH KOGUT, Derivatively on Behalf of PAIRGAIN      )
TECHNOLOGIES, INC.,                                   )    Case No. 758117
                                                      )
                                                      )    DERIVATIVE ACTION
         Plaintiff,                                   )    -----------------

      vs.                                             )
                                                      )
CHARLES S. STRAUCH, HOWARD S. FLAGG, CHARLES W.       )
McBRAYER, BENEDICT ITRI, DENNIS YOUNG, ROBERT C.      )
HAWK, ROBERT A. HOFF, BRIAN KOURI, B. ALLEN LAY,      )
CAPITAL INSIGHT BROKERAGE, S. JAY GOLDINGER, REFCO,   )
INC., and DOES 1 THROUGH 100, INCLUSIVE,              )
                                                      )
         Defendants,                                  )
                                                      )
      - and -                                         )
                                                      )
PAIRGAIN TECHNOLOGIES, INC.,                          )
                                                      )
         Nominal Defendant.                           )
______________________________________________________)



         NOTICE OF HEARING ON PROPOSED SETTLEMENT OF DERIVATIVE ACTION
         -------------------------------------------------------------

TO: ALL HOLDERS OF PAIRGAIN TECHNOLOGIES, INC. COMMON STOCK AS OF JULY 15, 1996:

                      PLEASE READ THIS NOTICE CAREFULLY --
                           IT MAY AFFECT YOUR RIGHTS

         THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF A SHAREHOLDERS'
DERIVATIVE ACTION AND CLAIMS ASSERTED THEREIN.

         HOLDERS OF PAIRGAIN TECHNOLOGIES, INC. ("PAIRGAIN") COMMON STOCK AS OF
JULY 15, 1996, ARE ENTITLED TO OBJECT, IF THEY DESIRE, TO THE SETTLEMENT OF THE
RELEASED CLAIMS AS DESCRIBED HEREIN.  IF THE COURT APPROVES THE DERIVATIVE
SETTLEMENT, THEY WILL BE BARRED FROM CONTESTING THE FAIRNESS, REASONABLENESS OR
ADEQUACY OF THE PROPOSED SETTLEMENT AND FROM PURSUING THE RELEASED CLAIMS
AGAINST THE RELEASED PERSONS.

         This Notice is given pursuant to an Order of the Superior Court for
the County of Orange, California (the "Court").  The purpose of the Notice is
to advise you that the above-entitled action (the "Litigation") is now pending
in the Court and that certain parties to the Litigation have reached a
settlement (the "Settlement") which would fully, finally and forever resolve
the Litigation as between plaintiff and the Settling Defendants, as defined
herein, on the terms and conditions summarized in this Notice.

         This Notice is not intended to be and should not be construed as an
expression of any opinion by the Court with respect to the truth of the
allegations of the claims in the Litigation or the merits of the claims or
defenses asserted.  This Notice is merely to advise you of the pendency and
proposed Settlement of the Litigation and of your rights thereunder.

I.       DESCRIPTION OF THE LITIGATION
         -----------------------------
         
         On January 10, 1996, the following derivative action was filed in the
Superior Court of the State of California for the County of Orange on behalf of
nominal defendant PairGain:  Kogut v. Strauch, et al., Case No. 758117 (the "D&O
case").  The D&O case alleged breach of fiduciary duty, abuse of control,
constructive fraud and gross mismanagement by the Individual Defendants.  On May
31, 1996, a separate derivative action was filed in the Court on behalf of
nominal defendant PairGain:  Kogut v. Refco, Inc., Case No. 764514 (the "Refco
case"). The Refco case alleged breach of fiduciary duty, conspiracy, fraud,
negligence and gross negligence by Refco.  The D&O case and the Refco case are
collectively referred to as the "Litigation."  For purposes of effectuating the
Settlement the D&O case and the Refco case will be consolidated into a single
action.


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         The D&O case was brought pursuant to Section 800 of the California
Corporations Code for the benefit of PairGain against its Board of Directors,
certain of its officers, the Company's outside investment advisor, S. Jay
Goldinger ("Goldinger"), and Capital Insight Brokerage, Inc., ("Capital"), the
money management firm owned and operated by Goldinger.  The complaint alleged
that in early December 1995 it was revealed that PairGain had suffered losses
of at least $16 million due to reckless and inappropriate investments of $28
million of its cash reserves by Goldinger and Capital.

         On February 24, 1996, defendants Capital and Goldinger filed their
answer to the complaint.  Defendant Goldinger generally invoked his privilege
against self-incrimination under both the federal and California Constitution,
neither admitting nor denying most of the allegations in the complaint.

         On April 1, 1996, defendant PairGain filed its general demurrer to the
complaint claiming that when it discovered the $15.8 million loss as a result
of unauthorized trading activity by Goldinger and Capital, PairGain
investigated and, on January 24, 1996, filed suit in federal court against
Goldinger and Capital alleging, inter alia, commodities fraud, unauthorized
trading, breach of fiduciary duty, and conversion.  However, the Company
claimed that two weeks before PairGain could file its suit against Goldinger
and Capital, plaintiff Kogut filed her own suit.  PairGain claimed that
plaintiff Kogut's filing ignored the requirement that, as a potential
derivative action plaintiff, she must first demand that PairGain bring an
action itself before initiating her own action.

         On April 1, 1996, the Individual Defendants in the D&O case filed
their demurrer to the complaint, charging that the plaintiff seeks to have the
Court second guess their proper business decision to invest a portion of
PairGain's surplus funds with Capital.  The Individual Defendants claimed
plaintiff's "Monday morning quarter-backing," was prohibited by the business
judgment rule under Delaware law.

         On March 8-9, 1996, plaintiff served her first request for production
of documents on PairGain, the D&O Defendants, Capital and Goldinger.  On April
2, 1996, PairGain and the D&O Defendants filed their objections and responses
to plaintiff's first request for production of documents.  On April 4, 1996,
Capital and Goldinger filed their responses to plaintiff's first request for
production of documents.

         On May 31, 1996, the related case, Kogut v. Refco, Inc., was filed in
Orange County Superior Court and assigned to Judge C. Robert Jameson.  The
action against Refco was brought pursuant to Section 800 of the California
Corporations Code for the benefit of PairGain against the Chicago-based
commodities trading house.  The complaint charged that Refco cleared
Goldinger's trades for PairGain, and that Refco was willing to facilitate
Goldinger's wrongdoing to generate commissions.

         On July 8, 1996, Refco filed a notice of removal to the United States
District Court for the Central District of California, based on original
jurisdiction under 28 U.S.C. Section 1332, and removal provisions of 28 U.S.C.
Section 1332, Section 1441(a) and (b), and Section 1446.  Refco, pursuant to
Local Rule 4.3 for the Central District of California, served notice that the
Kogut v. Refco action was related to (i) PairGain's federal action against
Goldinger and Capital; (ii) Refco v. PairGain, in the United States District
Court for the Northern District of Illinois; and (iii) the original D&O case.

II.      DEFINITIONS
         -----------
         
         As used in the Stipulation, the following terms have the meanings
specified below:

         o  "Defendants" means the Individual Defendants, Refco, Capital
Insight Brokerage, S. Jay Goldinger and nominal defendant PairGain.

         o  "Individual Defendants" means, as the context requires, the
defendants Charles S. Strauch, Howard S. Flagg, Charles W. McBrayer, Benedict
Itri, Dennis Young, Robert C. Hawk, Robert A. Hoff, Brian Kouri and B. Allen
Lay.

         o  "Non-Settling Defendants" means Capital Insight Brokerage and S.
Jay Goldinger.

         o  "Person" means an individual, corporation, partnership, limited
partnership, association, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political subdivision or
agency thereof, and any business or legal entity and their spouses, heirs,
predecessors, successors, representatives or assignees.

         o  "Plaintiff" means Hannah Kogut.

         o  "Plaintiff's Settlement Counsel" means one of the counsel for the
Plaintiff in the Litigation:  Milberg Weiss Bershad Hynes & Lerach LLP, William
S. Lerach, Keith F. Park, James A. Caputo, Joy Ann Bull, 600 W. Broadway, Suite
1800, San Diego, CA 92101-5050.



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         o  "Refco" means "Refco, Inc." an Illinois Corporation and, as the
context requires, all of its predecessors, successors, and all of its present
and former parents, subsidiaries, divisions and related or affiliated entities.

         o  "Related Parties" of a Person means each of such Person's past or
present directors, officers, employees, partners, principals, insurers,
co-insurers, reinsures, controlling shareholders, any entity in which the
Person has a controlling interest, attorneys, accountants, auditors, banks or
investment bankers, advisors, agents, employees, personal or legal
representatives, predecessors, successors, parents, subsidiaries, divisions,
joint venturers, assigns, spouses, heirs, associates, related or affiliated
entities, any members of their immediate families, or any trust of which any
Person is the settlor or which is for the benefit of any Person and/or
member(s) of his or her family.  Related Parties specifically do not include
the Non-Settling Defendants.

         o  "Released Persons" means each and all of the Settling Defendants
and their Related Parties and specifically does not include the Non-Settling
Defendants.

         o  "Settling Defendants" means the Individual Defendants, Refco and 
nominal defendant PairGain.

         o  "Settling Parties" means, collectively, each of the Settling
Defendants, PairGain and the Plaintiff on behalf of herself, the shareholders
of PairGain and derivatively on behalf of PairGain.

III.     THE PROPOSED SETTLEMENT
         -----------------------
         
         1.      Counsel for the plaintiff have investigated the facts and the
applicable law regarding the claims of the person on whose behalf they are
acting and the potential defenses thereto.  Based on this investigation, the
plaintiff has agreed that it is in the best interests of PairGain and its
shareholders to settle the Litigation.  The following description of the
proposed Settlement is only a summary, and reference is made to the text of the
Stipulation, on file with the Court, for a full statement of its provisions.
In sum, as a result of the Litigation and negotiations among counsel, the
Settling Parties have agreed to the following:

                 (a)      The D&O case and the Refco case shall be consolidated
for purposes of the Stipulation and settlement;

                 (b)      By separate agreement, (hereinafter "Refco Settlement
Agreement") Refco has agreed to pay to PairGain, subject to certain conditions
contained in the Refco Settlement Agreement, the sum of $2,500,000 Dollars
($2.5 million) in consideration of a settlement and release of all claims and
allegations raised or which could have been raised in the Refco case or
otherwise by PairGain relating to the subject matter of the Refco case;

                 (c)      The Board of Directors of PairGain has adopted
certain procedures and policies governing the investment and management of
PairGain's cash and excess capital.  Plaintiff's counsel have reviewed such
procedures and policies and agree they are acceptable and appropriate;

                 (d)      PairGain will continue to pursue and control the
prosecution of the action entitled PairGain Technologies, Inc. v. S.  Jay
Goldinger, et al., Case No. 96-0487 RAP(RMCx), pending in the U.S. District
Court for the Central District of California; and

                 (e)      For their efforts in filing and prosecuting the
Litigation, and their role in obtaining for PairGain the settlement with Refco
described in  (b) above, PairGain has agreed, subject to approval of the
settlement by the Court, to pay plaintiff's attorneys the sum of $450,000 as
fees and expenses.  This principal amount shall accrue interest from June 27,
1996, until the date paid to the Escrow Agent at the same rate as earned on
PairGain's corporate funds invested in U.S. Government Treasury Notes or Bills.

         2.      If the Proposed Settlement is approved by the Court, the Court
will enter a judgment which will dismiss the Litigation as against the Settling
Defendants (Individual Defendants, Refco, PairGain) with prejudice, and all
shareholders of PairGain and PairGain shall be barred and enjoined from
asserting any Released Claims against any of the Released Persons and each and
all shareholders of PairGain and PairGain shall conclusively be deemed to have
released any and all such Released Claims as against all of the Released
Persons.

         3.      As used above, the "Released Claims" shall mean and include
any and all claims, causes of action, demands, rights, or liabilities,
including, however described or denominated, but not limited to, claims for
negligence, gross negligence, professional negligence, breach of duty of care
and/or breach of duty of loyalty, fraud, breach of fiduciary duty, malpractice,
breach of contract, negligent misrepresentation, corporate waste,
mismanagement, violations of any state or federal statutes, rules or
regulations and any Unknown Claims as defined in V 1.18 herein, that have been
or that could have been asserted in this or any other forum by plaintiff, by or
on behalf of PairGain, or by any of its stockholders derivatively on its
behalf, regardless of the Released Claims' nature against the Released Persons
arising out of, relating to or in connection with



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                 (1)  any of the facts, circumstances, allegations, claims,
causes of action, representations, statements, reports, disclosures,
transactions, events, occurrences, acts, omissions or failures to act, of
whatever kind or character whatsoever, irrespective of the state of mind of the
actor performing or omitting to perform the same that have been or could have
been alleged in any pleading, amended pleading, argument, complaint, amended
complaint, brief, motion, report or filing in the Litigation; and/or

                 (2)  any claims for expenses, costs or fees incurred by
PairGain for or on behalf of itself or any of the Released Persons in
connection with the investigation, defense and/or settlement of the Litigation,
or proceedings related to the subject matters thereof including, but not
limited to, attorneys' fees, costs and any settlement or other expenses
(collectively "Defense Expenses");

                 (3)  Notwithstanding anything otherwise encompassed by
subparagraphs (1) and (2), above, this definition explicitly does not include,
and the parties to this Stipulation expressly reserve and do not release, any
obligations, claims or rights any of them may have under this Stipulation;

                 (4)  Notwithstanding anything otherwise encompassed by
subparagraphs (1), (2) and (3), above, this definition does not include, and
PairGain and each of the Released Persons expressly reserve and do not hereby
release, any rights of reimbursement under available insurance policies in
their respective names or on their behalf against other than the Released
Persons; and

                 (5)      Notwithstanding anything otherwise encompassed by
subparagraphs (1), (2), (3) and (4) above, or elsewhere in this Stipulation,
this definition does not include, and PairGain expressly reserves and does not
hereby release, any claims or rights to pursue any of the Released Claims in
its own name and on its own behalf against the Non-Settling Defendants or any
Person other than the Released Persons.


         4.      "Unknown Claims" as used in the above definition of Released
Claims means any Released Claims which PairGain or the plaintiff or any
shareholder of PairGain does not know or suspect to exist in his, her or its
favor at the time of the release of the Released Persons which, if known by
him, her or it, might have affected his, her or its settlement with and release
of the Released Persons, or might have affected his, her or its decision not to
object to this Settlement.  With respect to any and all Released Claims, upon
the Effective Date, PairGain, the plaintiff and the shareholders of PairGain
shall be deemed to have, and by operation of the Judgment shall have, expressly
waived and relinquished, to the fullest extent permitted by law, the
provisions, rights and benefits of Section 1542 of the California Civil Code,
which provides:

         A general release does not extend to claims which the creditor 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.

PairGain, the plaintiff and the shareholders of PairGain, upon the Effective
Date, shall be deemed to have, and by operation of the Judgment shall have,
waived 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 Section 1542 of the California Civil Code.
PairGain, the plaintiff and the shareholders of PairGain may hereafter discover
facts in addition to or different from those which he, she or it now knows or
believes to be true with respect to the subject matter of the Released Claims,
but each of PairGain, plaintiff and the shareholders of PairGain, upon the
Effective Date, shall be deemed to, and by operation of the Judgment shall have
fully, finally and forever settled and released any and all Released Claims,
known or unknown, suspected or unsuspected, contingent or non-contingent,
whether or not concealed or hidden, which now exist or heretofore have existed
upon any theory of law or equity now existing or coming into existence in the
future, including, but not limited to, conduct which is negligent, intentional,
with or without malice, or a breach of any duty, law or rule, without regard to
the subsequent discovery or existence of such different or additional facts.

IV.      NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES
         --------------------------------------------
         
         5.      Banks, brokerage firms, institutions, and other persons who
are nominees who currently hold the common stock of PairGain for the beneficial
interest of other persons who were PairGain shareholders on July 15, 1996, are
requested within ten (10) days of receipt of the Notice, to (1) provide
PairGain with the names and addresses of such beneficial purchasers or (2)
forward a copy of the Notice to each such beneficial purchaser and provide
PairGain with written confirmation that the notice has been so forwarded.  Your
reasonable costs and expenses of complying with this provision will be paid
upon submission of appropriate documentation to PairGain.  Additional postage
pre-paid copies of the Notice may be obtained from PairGain for forwarding to
such beneficial owners.  All such correspondence should be addressed as
follows:

                         PairGain Derivative Litigation
                                 P.O. Box 18644
                             Irvine, CA 92623-8644



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V.       THE HEARING
         -----------
         
         6.      A hearing (the "Settlement Hearing") will be held before the
Honorable Ronald C. Kline, Orange County Superior Court Judge, at 3:30 p.m. on
November 19, 1996, at the Orange County Superior Court, 700 Civic Center Drive
West, Santa Ana, California 92702, for the purpose of determining whether the
proposed Settlement is fair, reasonable and adequate and whether it should be
approved by the Court; and whether Judgment should be entered dismissing the
Litigation with prejudice as against the Settling Defendants.  The Settlement
Hearing may be continued or adjourned from time to time by the Court at the
Settlement Hearing or any continued or adjourned session thereof without
further notice.

         7.      Any shareholder of PairGain as of July 15, 1996 (the "Record
Date"), may appear at the Settlement Hearing to show cause why the proposed
Settlement should not be approved or why a judgment should or should not be
entered thereon; provided, however, that no such person shall be heard, unless
his or her objection or opposition including the basis therefor is made in
writing and is filed with the Court, together with copies of all other papers
and briefs to be submitted by him or her to the Court at the Settlement
Hearing, no later than November 4, 1996, and showing due proof of service on
Plaintiffs' Settlement Counsel:

                             MILBERG WEISS BERSHAD
                                 HYNES & LERACH
                                  JOY ANN BULL
                         600 West Broadway, Suite 1800
                              San Diego, CA 92101

and Counsel for Individual Defendants:

                              IRELL & MANELLA LLP
                                  DAVID SIEGEL
                               PATRICK O. HUNNIUS
                            1800 Avenue of the Stars
                                   Suite 900
                          Los Angeles, CA  90067-4276

Unless otherwise ordered by the Court, any shareholder of PairGain who does not
make his, her or its objection or opposition in the manner provided shall be
deemed to have waived all objections and opposition to the fairness,
reasonableness and adequacy of the proposed settlement.

VI.      EXAMINATION OF PAPERS AND INQUIRIES
         -----------------------------------
         
         This notice contains only a summary of the terms of the proposed
Settlement.  For a more detailed statement of the matters involved in this
action, reference is made to the pleadings, to the  Stipulation of Settlement
and to other papers filed in this action which may be inspected at the Office
of the Clerk of the Orange County Superior Court, 700 Civic Center Drive West,
Santa Ana, California during business hours of each business day.

         Inquiries regarding this action should be addressed to Plaintiff's
Settlement Counsel at the above address.

         DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE REGARDING THIS NOTICE.


DATED: September 30, 1996                    BY ORDER OF THE SUPERIOR COURT
                                             OF THE STATE OF CALIFORNIA,
                                             COUNTY OF ORANGE




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