According to the docket dated July 16, 2003, on July 25, 2003, the Court entered the Order by U.S. District Judge William H. Alsup granting the Lead Counsel’s application for approval of the final report of the claims administrator and authorizing distribution of the net settlement fund. Earlier, on June 25, 2002, the Court entered the Order granting the motion for final approval of the Class Action Settlement as well as the motion for attorney fees and reimbursement of expenses. The Court further entered the Final Judgment and Order of dismissal with prejudice. The case was terminated by the Judgment entered on August 7, 2002. On May 20, 2003, Judge William H. Alsup authorized the distribution of the net settlement fund.

Beginning on February 1, 2002, a number of securities class action complaints were filed against the Company, and certain of its former officers, in the U.S. District Court for the Northern District of California. The purported class action complaints allege that during a period from April 21, 2000 through September 25, 2000, Critical Path and certain of its officers and directors violated federal securities laws by issuing false and misleading statements concerning its business and financial condition. Critical Path provides e-mail hosting services to a variety of organizations, including Internet service providers, Web hosting companies, Web portals, and corporations. Many of these types of companies were new and were suffering from a downturn in Internet-related funding which began in the spring of 2000. The complaint alleges that the problems many of these companies were having raising money had reached crisis levels and were impacting Critical Path's ability to collect receivables. Defendants had also known for months that new accounting regulations would negate the Company's ability to continue to recognize up-front license fees in Q4 2000. Defendants knew this would severely impair Critical Path's future revenue growth and impair their ability to make future stock sales and extract future bonuses which were tied to the Company's performance. Thus, defendants continued to make positive but false statements about Critical Path's business and projections for Q3/Q4 2000 and beyond. On March 28, 2002 Plaintiff entered a Notice of Voluntary Dismissal, pursuant to Federal Rule P. 41(a)(1), to dismiss the action without prejudice. On April 03, 2002, the Court related all other similar 2003 filings and closed the case.

The original action charges that Critical Path and some of its top officers misled investors about the company's revenues and earnings and that the company did not prepare its financial statements in accordance with Generally Accepted Accounting Principles. On February 2, 2001, the company announced it had discovered "a number of transactions that put into question the company's financial results." In addition, the company stated that its 2000 4th quarter results may be "materially misleading" an two senior officers were placed "on leave. As a result of the announcement, Critical Path's shares fell 67% from its closing price of $10.06 on February 1 to $3.86 on February 2, before trading in the stock was halted on the Nasdaq Stock Market.

Specifically, the complaint allege that beginning on or about August 8, 2000, defendants embarked on a scheme to defraud investors in order to artificially boost Critical Path's stock price, as they realized that a high stock price was necessary to effect purchases of other Companies and dispose of their shares of the Company reaping millions of dollars in profits to themselves. By making a series of false and misleading statements throughout the Class Period and reassuring the public that Critical Path was not facing material difficulties in its business, defendants were able to artificially inflate the stock price of the Company.

The complaint alleges that this scheme began when defendants announced that Critical Path had entered into a definitive agreement to acquire Peer Logic, Inc., a private, San Francisco-based provider of eBusiness infrastructure software. Among other things, Critical Path stated in its press release that the "Company expects transaction to be accretive to 2001 consensus estimates for revenue and earnings per share. Acquisition does not impact commitment to fourth quarter 2000 profitability."

The complaint further alleges that defendants continued, right up to the very end of the Class Period on February 1, 2001 to make false and misleading statements or omissions and failed to correct those statements and omissions at any time until February 1, 2001. Throughout the Class Period, defendants gave consistently misleading guidance to the numerous investment firms which it admittedly knew were following the Company and basing their advice and analysis directly on defendants' false and misleading representations. The complaint alleges that as a result of the defendants' conduct, plaintiff and other members of the Class suffered damages.