According to the Company’s Form 10-Q For the Quarter Ended July 31, 2003, beginning in August 2001, a number of securities class action complaints were filed in the Southern District of New York seeking an unspecified amount of damages on behalf of a class of persons who allegedly purchased shares of the Company’s common stock between the date of the Company’s initial public offering and December 6, 2000. The complaints name as defendants Firepond and certain of its directors and officers, FleetBoston Robertson Stephens, and other parties as underwriters of the Company’s initial public offering (the “Firepond Defendants”). The action against the Company is being coordinated with over three hundred other nearly identical actions filed against other companies. In July 2003, the Company decided to join in a settlement negotiated by representatives of a coalition of issuers named as defendants in this action and their insurers. Although the Company believes that the plaintiffs’ claims have no merit, the Company has decided to accept the settlement proposal to avoid the cost and distraction of continued litigation. Because the settlement will be funded entirely by Firepond’s insurers, the Company does not believe that the settlement will have a material effect on its financial condition, results of operation or cash flows. The proposed settlement agreement is subject to final approval by the court.

The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about February 3, 2000, Firepond commenced an initial public offering of 5,000,000 of its shares of common stock at an offering price of $22 per share (the "Firepond IPO"). In connection therewith, Firepond filed a registration statement, which incorporated a prospectus (the "Prospectus"), with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) Robertson Stephens had solicited and received excessive and undisclosed commissions from certain investors in exchange for which Robertson Stephens allocated to those investors material portions of the restricted number of Firepond shares issued in connection with the Firepond IPO; and (ii) Robertson Stephens had entered into agreements with
customers whereby Robertson Stephens agreed to allocate Firepond shares to those customers in the Firepond IPO in exchange for which the customers agreed to purchase additional Firepond shares in the aftermarket at pre-determined prices.

NOTE: In December 2003, the Company was acquired by Fire Transaction Sub, Inc., a wholly owned subsidiary of Jaguar Technology Holdings, LLC, a private company that seeks acquisitions and strategic relationships in the technology sector.