According to the docket, on April 16, 2003, a Stipulation of Settlement was filed, and on October 14, 2003, the Court entered the Order and Final Judgment of U.S. District Judge Jeffrey S. White. Judge White later issued an Order granting the Ex Parte Application for Distribution of Settlement Funds. The case is closed.

As reported in the Company's FORM 10-Q for the quarterly period ended April 30, 2003, the Company (now Sware, Inc.) entered into a stipulation of settlement with the plaintiffs on April 9, 2003. The stipulation of settlement, which is subject to court approval, provides for the full and final settlement and dismissal and release of all litigation brought by the plaintiffs and an insignificant settlement payment. The settlement payment will be paid by the Company's directors' and officers' insurance policy and, therefore, will not impact its financial position or results of operations.

The original Complaint alleges that defendants violated Section 11 of the Securities Act of 1933 by issuing and selling Loudcloud common stock pursuant to the March 8, 2001 initial public offering (``IPO'') without disclosing to investors: 1) Loudcloud's plans to substantially reduce its workforce and to restructure itself shortly after the public offering; 2) that the public offering was not raising funds sufficient to enable the Company to reach profitability and accomplish the planned expansion described in the prospectus; 3) the imminent cancellation of a major contract to which one of the underwriters was a party; and 4) that in order to enable the public offering to go forward, undisclosed sales of shares were made to insiders and the selling price of the offering was artificially maintained by the undisclosed sale of part of the offering to insiders.