According to the Company’s FORM 10-Q for the quarterly period ended September 30, 2001, on July 12, 2001, the Company and five of its current and former executive officers were named as defendants in a purported class action lawsuit filed in the United States District Court for the Northern District of California. This lawsuit is captioned Paul Ruthfield v. Exodus Communications, Inc., et al., No. 01-CV-2661. Between July 16, 2001 and August 31, 2001 fourteen substantially identical lawsuits were filed in the same court, each naming the same group of defendants.

These complaints are all brought on behalf of purchasers of the Company’s common stock between March 30, 2001 and June 20, 2001 and allege essentially identical violations of the Securities Exchange Act of 1934, as amended. The complaints have been brought as purported stockholder class actions under Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act. In general, the complaints allege that Exodus and the individual defendants misrepresented Exodus' financial prospects for the second quarter of 2001 to inflate the value of the Company’s common stock. The complaints seek unspecified monetary damages for the alleged inflated price of the Company’s common stock purchased by all class members, attorneys' fees and costs of litigation. The Company anticipates that the complaints pending in federal court will be consolidated into a single proceeding. The Company has not yet responded to any of these lawsuits, and no discovery has been conducted. This action has been automatically stayed with the Company’s Chapter 11 filing.
As summarized by the latest docket posted, on October 9, 2001, Exodus Communications filed a notice of bankruptcy. On October 30, 2001, the Court entered the Order granting the plaintiffs’ motion to appoint Michael Klein, Teresi Trucking, Inc., and William H. Friedman as lead plaintiff and approve lead plaintiff's choice of counsel. On December 13, 2001, the plaintiffs filed a Consolidated Class Action Complaint, and on February 14, 2002, the defendants responded by filing a motion to dismiss the Consolidated Class Action Complaint. On April 17, 2002, the plaintiffs filed a Corrected Consolidated Class Action Complaint. On May 29, 2002, the Court entered the Order granting the motion to dismiss with leave to amend. On July 11, 2002, the plaintiffs filed a First Amended Consolidated Class Action Complaint, and on March 23, 2002, the underwriter defendants and the individual defendants responded by filing motions to dismiss the First Amended Consolidated Complaint. On August 20, 2003, the Court entered the Order granting both motions to dismiss with leave to amend. On October 20, 2003, the plaintiffs filed a Second Amended Complaint against the underwriter defendants and the individual defendants. The plaintiffs later filed a Third Amended Consolidated Class Action Complaint on January 15, 2004. On March 12, 2004, the underwriter defendants and the individual defendants both filed motions to dismiss the Third Amended Consolidated Class Action Complaint. On April 29, 2005, the plaintiffs filed a Corrected Third Amended Consolidated Class Action Complaint. On August 5, 2005, the Court entered the Order granting in part and denying in part the underwriter defendants' motion to dismiss, and granting the individual defendants' motion to dismiss. On August 19, 2005, the plaintiffs filed a motion for reconsideration of the August 5, 2005 Order. On September 12, 2005, the Court entered the Order granting the plaintiffs' motion for reconsideration of the Court's dismissal of the section 11 and section 15 claims, as asserted against defendant Ellen M. Hancock, and defendants' motion to dismiss said claims was denied. On March 23, 2006, the defendants filed a motion for lack of prosecution. Further, on March 30, 2006, an individual defendant filed a motion for summary judgment.

In a press release dated June 15, 2006, the U.S. District Court for the Northern District of California dismissed class members who did not have remaining claims in a securities fraud class action. Further, the district court ruled that the lead plaintiff could not decline to answer discovery until another plaintiff intervened to seek appointment as class representative…. The district court dismissed all of the claims except for the §11 claims against the underwriter defendants. The defendants moved to dismiss certain class members who originally filed § § 10(b) and 20(a) claims, but did not have claims under § 11. Lead plaintiff must answer discovery. The district court ruled that the lead plaintiff may not refuse to answer discovery while waiting for another plaintiff to intervene as class representative. The district court dismissed the class members' who did not have § 11 claims. The district court denied dismissal of the lead plaintiff, granting the plaintiff an opportunity to decide whether he would serve as class representative and to answer discovery.

On August 16, 2006, the Court entered the Judgment in a Civil Case. According to the Judgment, Brodsky’s motion to intervene is hereby denied, The Fund’s motion to intervene is hereby denied, Defendants’ motion to dismiss is hereby granted. On November 27, 2006, the plaintiffs filed a Notice of Appeal. On December 11, 2006, the defendants also filed Notices of Cross Appeals. The appeals are currently pending in the U.S. Court of Appeals for the Ninth Circuit.

According to a press release dated on July 16, 2008, a securities class action against former Web hosting firm Exodus Communications Inc. has been settled after seven years. Preliminary approval for the $5 million settlement was granted by Judge Maxine Chesney of the U.S. District Court for the Northern District of California in an order Wednesday. The parties drafted a stipulation of settlement on April 9, just days before the U.S. Court of Appeals for the Ninth Circuit issued its order partially remanding the dismissed lawsuit back to the federal court. The case had been pending in the circuit court on appeal by the shareholders and on cross-appeal by an Exodus defendant when the parties agreed to enter into mediation.

On October 31, 2008, the Settlement Hearing was held before U.S. District Judge Maxine M. Chesney. At the Hearing, Judge Chesney approved the Plan of Allocation of Settlement Proceeds, approved the motion for award of attorney fees and expenses and issued the Final Judgment and Order of Dismissal with Prejudice. The settlement is approved and the action dismissed with prejudice.