According to the docket dated September 30, 2003, on September 25, 2003, the Court entered the Final Judgment and Order of Dismissal with Prejudice. U.S. District Judge William H. Alsup approved the settlement and further granted the motions for attorney fees and reimbursement expenses as well as the plan of allocation of settlement proceeds.

In a press release dated May 28, 2003, the Judge William H. Alsup of the United States District Court for the Northern District of California, presiding over the litigation, recently signed a preliminary order confirming the settlement terms, which call for the payment of $15 million to shareholders who are members of the class by virtue of their shareholdings in the company during the class period. The settlement terms do not include any admission or finding of wrongdoing on the part of the company or individual defendants, who maintained their denials of improper behavior throughout the proceedings. The settlement is being fully funded by Commtouch's Directors and Officers insurance policy.

The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10-b(5). Specifically, on February 14, 2001, Commtouch announced that it would restate its first three quarterly 2000 financial statements because of accounting misstatements. Subject to completion of the 2000 audit, Commtouch expects to restate its revenues and net loss for the first three quarters of 2000 and adjust revenues downwards by $4.4 million. On this news, Commtouch's shares fell roughly 45%, resulting in substantial damage to plaintiff and the Class