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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o


(1)	The rights are being issued without consideration to the holders of the Registrant’s common stock as of the record date.

(2)	Pursuant to Rule 457(g), no separate registration fee is payable with respect to the rights being offered hereby since the rights are being registered in the same registration statement as the securities to be offered pursuant thereto.

(3)	Associated with the Common Stock are rights to purchase Series C Participating Preferred Stock that are not exercisable or evidenced separately from the Common Stock prior to certain events.

(4)	Represents the maximum number of shares of common stock issuable upon conversion of the shares of Series E Redeemable Convertible Preferred Stock being registered hereby. In accordance with Rule 416, the number of shares registered hereby shall also be deemed to include an indeterminate number of additional shares of Common Stock that may be issued upon conversion of the Series E Redeemable Convertible Preferred Stock as a result of antidilution provisions thereof.

(5)	Since both the shares of convertible preferred stock and the common stock issuable upon conversion thereof are being registered under this registration statement, pursuant to Rule 457(i) there is no separate registration fee for the common stock.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

We are distributing at no charge to holders of our common stock transferable subscription rights to purchase shares of our Series E redeemable convertible preferred stock at a cash subscription price of $1.50 per share. You will not be entitled to receive any subscription rights unless you are a shareholder of record of shares of our common stock as of the close of business on [RECORD DATE].

You must exercise your rights before they expire at 5:00 p.m., New York City time, on , 2004, the expected expiration date of this rights offering. We have agreed to offer subscription rights that are not exercised by the expiration date of the rights offering to the General Atlantic Investors and the Cheung Kong Investors, which have the right, but not the obligation, to purchase the remaining shares of Series E preferred stock not purchased in this rights offering.

You should carefully consider whether to exercise your subscription rights before the expiration date. Our board of directors is making no recommendation regarding your exercise of subscription rights.

We will consummate the rights offering only if the proposals submitted to a vote of our shareholders at our special meeting to be held on , 2004 are approved and the transactions contemplated in our agreement with the General Atlantic Investors and the Cheung Kong Investors are consummated. For more information regarding the matters that have been submitted to our shareholders for approval, you should review a copy of our proxy statement relating to the special meeting of our shareholders, which is being sent to our shareholders and was filed with the SEC. If we do not obtain shareholder approval we will terminate the rights offering.

Shares of our common stock are traded on the Nasdaq National Market under the symbol “CPTH.” On December 23, 2003, the last reported sales price for our common stock was $1.65 per share.

Our principal executive offices are located at 350 The Embarcadero, San Francisco, California 94105 and our telephone number is (415) 541-2500.

An investment in our capital stock is very risky. You should carefully consider the risk factors beginning on page 1 of this prospectus before exercising your subscription rights.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus is part of a registration statement we filed with the Securities and Exchange Commission. You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with different information. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representation. This prospectus is an offer to sell only the securities offered by this prospectus, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information in this prospectus is accurate only as of the date of this prospectus, regardless of the date of delivery of this prospectus or of any sale of these securities. This prospectus may only be used where it is legal to sell these securities.

The following are summary highlights of selected information from this prospectus and may not contain all of the information that is important to you. This prospectus includes specific terms of the rights offering, as well as information regarding our business. We encourage you to read this prospectus in its entirety. You should pay special attention to the “Risk Factors” section of this prospectus beginning on page 1. All references to “we,” “our,” “ours,” “us,” and “the Company,” or “Critical Path” in this prospectus are to Critical Path, Inc. and its subsidiaries, unless otherwise indicated. However, in the descriptions of the transferable subscription rights and related matters, these terms refer solely to Critical Path, Inc. and not to any of our subsidiaries. We also encourage you to review the financial statements and other information provided in the reports and other documents we file under the Securities Exchange Act of 1934, as amended, as described in the “Where You Can Find More Information” section of the prospectus at page 42.


		in proportion to the amount of over-subscription price tendered by each person seeking to oversubscribe as of the expiration date of the rights offering.

Q:		How many shares may I purchase if I exercise my subscription rights?

A:		The number of shares of Series E preferred stock you can purchase will depend on the number of subscription rights you receive. Holders will receive two subscription rights for every three shares of our common stock held on the record date.

Q:		What if there is an insufficient number of shares to satisfy the Over-Subscription requests?

A:		If there is an insufficient number of shares of our Series E preferred stock available to satisfy fully the over-subscription requests of rights holders, subscription rights holders who exercised their over-subscription right will receive the available shares pro rata based on the amount of over-subscription price tendered by each person seeking to oversubscribe as of the expiration time of the offering. Any excess subscription payments will be returned, without interest or deduction, promptly after the expiration of this rights offering.

Q:		Am I required to participate in the rights offering?

A:		No.

Q:		Will Critical Path be issuing fractional rights?

A:		No. We will not be issuing fractional rights to purchase shares of the Series E preferred stock. We will aggregate the number of shares of common stock of each shareholder and issue only the number of subscription rights issuable upon aggregating all such shares of common stock rounded down to the nearest whole number. We will also not pay cash in lieu of any fractional rights. In addition, we will not issue fractional shares of Series E preferred stock in connection with a partial exercise of a right.

Q:		What are the terms of the Series E preferred stock?

A:		The terms of the Series E preferred stock are as follows:


		addition to purchase a percentage of the shares of Series E preferred stock not subscribed for in the rights offering, each of the General Atlantic Investors and the Cheung Kong Investors have the right, but not the obligation, to purchase shares of Series E preferred stock not purchased by the other.

		In a separate agreement, the Cheung Kong Investors have granted us the option, which we may exercise in our sole discretion, to repurchase up to approximately 10.9 million shares of their Series E preferred stock.

		In addition, our board of directors has approved the issuance of up to an additional 10 million shares of Series E preferred stock which may be issued prior to, concurrently with or following the rights offering or not at all. We have engaged a financial advisor to assist us in identifying qualified institutional investors for the placement of these additional securities. The issuance of these additional shares of Series E preferred stock, or any other capital stock, will result in further dilution to our security holders, even if a security holder participates in the rights offering.


(a)	These figures exclude 188,587 shares of Series D preferred stock and 553,914 shares of common stock issued to MBCP PeerLogic, LLC and its affiliates on November 21, 2003.

(b)	The percentage of voting power represented by the Series E preferred stock reflects the initial one-to-one conversion ratio of the Series E preferred stock into common stock. Pursuant to the terms of the Series E preferred stock and Series D preferred stock, the number of shares of common stock into which the Series E preferred stock and Series D preferred stock are convertible and the percentage of voting power represented by the shares of Series E preferred stock and Series D preferred stock will increase as dividends accrue on the Series E preferred stock and Series D preferred stock.


(a)	This table assumes the issuance of 553,914 shares of common stock and 188,587 shares of Series D preferred stock to MBCP PeerLogic, LLC and its affiliates on November 21, 2003 and the further conversion of 82,927 shares of Series D preferred stock into 733,333 shares of Series E preferred stock in accordance with our settlement agreement with them.

(b)	The percentage of voting power represented by the Series E preferred stock reflects the initial one-to-one conversion ratio of the Series E preferred stock into common stock. Pursuant to the terms of the Series E preferred stock and Series D preferred stock, the number of shares of common stock into which the Series E preferred stock and Series D preferred stock are convertible and the percentage of voting power represented by the shares of Series E preferred stock and Series D preferred stock will increase as dividends accrue on the Series E preferred stock and Series D preferred stock.


(a)	This table assumes the issuance of 553,914 shares of common stock and 188,587 shares of Series D preferred stock to MBCP PeerLogic, LLC and its affiliates on November 21, 2003 and the further conversion of 82,927 shares of Series D preferred stock into 733,333 shares of Series E preferred stock in accordance with our settlement agreement with them.

(b)	The percentage of voting power represented by the Series E preferred stock reflects the initial one-to-one conversion ratio of the Series E preferred stock into common stock. Pursuant to the terms of the Series E preferred stock and Series D preferred stock, the number of shares of common stock into which the Series E preferred stock and Series D preferred stock are convertible and the percentage of voting power represented by the shares of Series E preferred stock and Series D preferred stock will increase as dividends accrue on the Series E preferred stock and Series D preferred stock.

In addition to the ownership of our voting securities, holders of a majority of the shares of Series D preferred stock may designate one director and the Cheung Kong Investors will be entitled to designate one director. Because of their large percentage of ownership and board representation, the General Atlantic Investors and the Cheung Kong Investors, although unaffiliated, may have significant control over the formulation and implementation of our corporate strategies and policies. In addition, the significant level of General Atlantic Investors’ and the Cheung Kong Investors’ ownership of our securities, assuming conversion of their outstanding convertible notes into Series E preferred stock, could have the effect of discouraging or impeding an acquisition proposal. See “Risk Factors” beginning on page 1 and “The Rights Offering — Effects of Rights Offering on the Securities and Ownership of the General Atlantic Investors and the Cheung Kong Investors” on page 32.


Q:	After I exercise my subscription rights, can I change my mind and cancel my purchase?

A:	No. All exercises of subscription rights are irrevocable. See “The Rights Offering — No Revocation” on page 31.

Q:	What are the federal income tax consequences of exercising my subscription rights as a holder of common stock?

A:	A holder of common stock should not recognize income or loss for federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering. We urge you to consult your own tax advisor with respect to the particular tax consequences of the rights offering or the related share issuances to you. See “Material United States Federal Income Tax Consequences” on page 39.

Q:	If the rights offering is not completed, will my subscription payment be refunded to me?

A:	Yes. The subscription agent will hold all funds it receives in escrow until completion of the rights offering. If the rights offering is not completed, the subscription agent will return promptly, without interest or deduction, all subscription payments.

Q:	If I am a foreign shareholder or a shareholder with an APO or FPO address, how can I exercise my subscription rights?

A:	The subscription agent will mail rights certificates to you if you are a rights holder whose address is outside the United States or if you have an Army Post Office or a Fleet Post Office address. To exercise your subscription rights, you must notify the subscription agent on or prior to 5:00 p.m., New York City time, on , 2004, and take all other steps which are necessary to exercise your subscription rights, on or prior to that time. If you do not follow these procedures prior to the expiration of the rights offering, your subscription rights will expire.

Q:	What should I do if I have other questions?

A:	If you have questions or need assistance, please contact Georgeson Shareholder Communications Inc., the information agent, at (800) 843-1451 for shareholders toll free and at (212) 440-9000 for banks and brokerage firms from 9:00 a.m. to 11:00 p.m., New York City time, Monday through Friday, and from 10:00 a.m. to 4:00 p.m., New York City time, on Saturday.

On November 18, 2003, we entered into an agreement with the General Atlantic Investors and the Cheung Kong Investors pursuant to which, among other things, we issued $10 million in principal amount of 10% convertible secured notes to the General Atlantic Investors and, subject to and upon shareholder approval, we agreed to convert the $10 million notes issued to the General Atlantic Investors, plus $1 million in accrued interest, into approximately 7.3 million shares of Series E preferred stock. In this agreement we also agreed to exchange approximately $32.8 million in face value of our 5 3/4% convertible subordinated notes held by the Cheung Kong Investors for approximately 21.9 million shares of Series E preferred stock. Our primary purposes for the rights offering are to allow the holders of our common stock an opportunity to further invest in the Company and restore a portion, although not all, of their proportionate interest in our capital stock at the same price per share of Series E preferred stock as was established under the agreement and to raise capital necessary for us to continue our operations.

We have called a special meeting of our shareholders for , 2004. Our board of directors is soliciting proxies for the special meeting pursuant to a proxy statement that is being mailed to our shareholders. We are seeking to approve:


	•	the issuance of approximately 7.3 million shares of Series E preferred stock with a price per share of $1.50 to the General Atlantic Investors, issuable upon conversion of $11 million principal amount and interest of the convertible secured notes, and such additional shares of Series E preferred stock as they may purchase in connection with the proposed rights offering;

	•	the issuance of approximately 21.9 million shares of Series E preferred stock with a price per share of $1.50 to the Cheung Kong Investors, issuable upon exchange of approximately $32.8 million principal amount of 5 3/4% convertible subordinated notes, and such additional shares of Series E preferred stock as they may purchase in connection with the proposed rights offering;

	•	the amendment of warrants to purchase 625,000 shares of common stock held by members of the General Atlantic Investors that reduce the exercise price per share from $4.20 to $1.50;

	•	an amendment to our current amended and restated articles of incorporation to increase the authorized number of shares of common stock from 125 million to 200 million and the authorized number of shares of preferred stock from 5 million to 75 million; and

	•	an amended and restated certificate of determination of preferences of Series D preferred stock to, among other things, amend the Series D preferred stock liquidation preference upon a liquidation and change of control, to eliminate the participation feature, to reduce the conversion price from $4.20 to $1.50 and to reduce the amount of dividends to which the holders of Series D preferred stock are entitled.

This rights offering and an investment in our Series E preferred stock and common stock into which the Series E preferred stock is convertible involve a high degree of risk. You should carefully consider the following factors and other information presented or incorporated by reference into this prospectus before deciding to exercise your subscription rights and invest in our Series E preferred stock and common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us may also impair our operations and business if we do not successfully address any one or more of the risks described below, there could be a material adverse effect of our financial condition, operating results and business. We cannot assure you that we will successfully address these risks.

We believe that existing capital resources will not be sufficient to maintain current and planned operations. Accordingly, it is essential for us to complete a financing or other strategic transaction in the first quarter of 2004 in order to continue to operate. Such a financing would be dilutive to existing shareholders. If we are unable to consummate this rights offering or complete a financing or other strategic transaction on a timely basis, we will not be able to continue to operate beyond the first quarter of 2004 without the protection of applicable bankruptcy laws. If we are able to raise approximately $21 million from the rights offering, which is the maximum amount of proceeds available to us in this rights offering, we believe this will provide us with sufficient operating capital to continue our operations through the end of 2004. Even if we are able to obtain additional financing in the near term, we may be required to raise additional funds in the future, particularly if we are unable to generate positive cash flow as a result of our operations. Such financing may not be available in sufficient amounts or on terms acceptable to us. Additionally, we face a number of challenges in operating our business, including our ability to overcome viability concerns of our prospective customers given our current capital needs, the amount of resources necessary to maintain worldwide operations and continued sluggishness in technology spending.

In 2002, we hired J.P. Morgan Securities Inc. to help us identify and pursue possible financing or strategic transactions. If JPMorgan is able to identify one or more alternative financing, strategic or business combination transactions, we may determine to pursue one or more of these transactions in lieu of, or in addition to, the rights offering.

As of September 30, 2003, we had an accumulated deficit, including other comprehensive income, of approximately $2.2 billion. We have not achieved profitability in any period and may continue to incur net losses in accordance with generally accepted accounting principles for the foreseeable future. However, we intend to continue to spend resources on maintaining and strengthening our business, and this may, in the near term, have a negative effect on our operating results and our financial condition.

In past quarters, we have spent heavily on technology and infrastructure development. We may continue to spend substantial financial and other resources to further develop and introduce new messaging and directory infrastructure solutions, and to improve our sales and marketing organizations, strategic relationships and operating infrastructure. We expect that our cost of revenues, sales and marketing expenses, general and administrative expenses, operations, research and customer support expenses and depreciation and amortization expenses could continue to increase in absolute dollars and may increase as a percent of revenues. In addition, in future periods we may incur significant non-cash charges related to stock-based compensation. If revenues do not correspondingly increase, our operating results and financial condition could be harmed. If we continue to incur net losses in future periods, we may not be able to retain employees, or fund investments in capital equipment, sales and marketing programs, and research and development to successfully compete against our competitors. We also may never obtain sufficient revenues to exceed our cost structure and achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability in the future. This may also, in turn, cause the price of our common stock to demonstrate volatility and/or continue to decline.

We cannot accurately forecast our revenues as a result of our evolving business strategy and the emerging nature of the Internet messaging infrastructure market. Forecasting is further complicated by recent strategic and operational restructurings, as well as significant fluctuations in license revenues as a percentage of total revenues from 38% in 2000 to 30% in 2001, 40% in 2002 and 28% in the nine months ended September 30, 2003. Our revenues in some past quarters fell and could continue to fall short of expectations if we experience delays or cancellations of even a small number of orders. We often offer


	•	the demand for licensed solutions for messaging, and identity management products;

	•	the demand for outsourced messaging services generally and the use of messaging and identity management infrastructure products and services in particular;

	•	our ability to attract and retain customers and maintain customer satisfaction;

	•	our ability to attract and retain qualified personnel with industry expertise, particularly sales personnel;

	•	the ability to upgrade, develop and maintain our systems and infrastructure and to effectively respond to the rapid technology change of the messaging and identity management infrastructure market;

	•	the budgeting and payment cycles of our customers and potential customers;

	•	the amount and timing of operating costs and capital expenditures relating to expansion of business and infrastructure;

	•	our ability to quickly handle and alleviate technical difficulties or system outages;

	•	the announcement or introduction of new or enhanced services by competitors;

	•	general economic and market conditions and their affect on our operations and the operations of our customers; and

	•	the effect of war on terrorism and any related conflicts or similar events worldwide.

In addition to the factors set forth above, operating results have been and will continue to be impacted by the extent to which we incur non-cash charges associated with stock-based arrangements with employees and non-employees. In particular, we have incurred and expect to continue to incur non-cash charges associated with the grant of stock options to employees and non-employees and the grant of warrants to investors and other parties with whom we have business relationships. These grants of options and warrants also may be dilutive to existing shareholders.

Our operating results have been affected and could continue to be impacted by the elimination of product or service offerings through termination, sale or other disposition. Future decisions to eliminate, revise or limit any other offerings of a product or service would involve other factors affecting operational results including the expenditure of capital, the realization of losses, further reductions in our workforce, facility consolidation or the elimination of revenues along with the associated costs, any of which could harm our financial condition and operating results.

As a result of the foregoing, we do not believe that period-to-period comparisons of operating results are a good indication of future performance. It is likely that operating results in some quarters will be below market expectations. In this event, the price of our common stock is likely to prove volatile and/or subject to further declines.

Our ability to increase revenues will depend on our ability to continue to successfully recruit, train and retain experienced and effective sales and marketing personnel and for our personnel to achieve results once employed with us. Competition for experienced and effective personnel in certain markets is intense and we may not be able to hire and retain personnel with relevant experience. The complexity and implementation of our messaging and identity management infrastructure products and services require highly trained sales and marketing personnel to educate prospective customers regarding the use and benefits of our services. Current and prospective customers, in turn, must be able to educate their end-

users. Any delays or difficulties encountered in our staffing and training efforts would impair our ability to attract new customers and enhance our relationships with existing customers, and ultimately, grow revenues. This would also adversely impact the timing and extent of our revenues from quarter to quarter and overall or could jeopardize sales altogether. Because we have experienced turnover in our sales force and have fewer resources than many of our competitors, our sales and marketing organizations may not be able to compete successfully against the sales and marketing organizations of our competitors. Moreover, our competitors frequently have larger and more established sales forces calling upon potential enterprise customers with more frequency. In addition, certain of our competitors have longer and closer relationships with the senior management of enterprise customers who decide whose technologies and solutions to deploy. If we do not successfully operate and grow our sales and marketing activities, our business and results of operations could suffer and the price of our common stock could continue to decline.

In December 2001, we issued 4,000,000 shares of Series D preferred stock, and warrants to purchase up to an additional 625,000 shares of our common stock, in a private placement to certain of the General Atlantic Investors, affiliates of the Cheung Kong Investors and Vectis CP Holdings, LLC. The convertible note purchase and exchange agreement we executed on November 18, 2003 with the General Atlantic Investors and the Cheung Kong Investors provides that, subject to the approval of our shareholders and the conversion of the convertible notes into shares of our Series E preferred stock, the terms of the Series D preferred stock will be amended. As amended, the shares of Series D preferred stock accrue dividends at 5 3/4% per year, and are convertible into common stock at the option of the holder. As of November 18, 2003, the outstanding shares of Series D preferred stock were convertible into approximately 43.8 million shares of common stock. The convertible note purchase and exchange agreement also provides that, subject to the approval of our shareholders, $10 million in principal amount of outstanding convertible secured notes held by the General Atlantic Investors, plus $1 million in accrued interest, will be converted into approximately 7.3 million shares of Series E preferred stock and approximately $32.8 million in face value of our outstanding convertible notes held by the Cheung Kong Investors will be converted into approximately 21.9 million shares of Series E preferred stock. The shares of Series E preferred stock will accrue dividends at 5 3/4% per year and are convertible at the option of the holder. The shares of Series E preferred stock are initially convertible into approximately 29.2 million shares of common stock. In addition, if all the subscription rights being offered in the rights offering are exercised, the shares of Series E preferred stock issued in the rights offering will initially convert into up to approximately 14.0 million shares of common stock. Our board of directors has also approved the issuance of up to 10 million additional shares of Series E preferred stock which, if issued, would initially convert into up to 10 million shares of common stock. We have engaged a financial advisor to assist us in identifying qualified institutional investors for the placement of those additional shares. In addition, as dividends accrue on the shares of Series D preferred stock and Series E preferred stock, the number of shares of common stock issuable upon conversion will increase. To the extent the Series D preferred stock and Series E preferred stock are converted into common stock, a very significant number of additional shares of common stock may be sold into the market, which could decrease the price of our common stock.

In the event of liquidation, dissolution, winding up or change of control of Critical Path, the holders of Series E preferred stock would be entitled to receive $1.50 per share of Series E preferred stock plus all accrued dividends on such share before any proceeds from the liquidation, dissolution or winding up is paid with respect to any other series or class of our capital stock. Accordingly, the approximately 29.2 million shares of Series E preferred stock that will be issued pursuant to the convertible note purchase and exchange agreement upon shareholder approval will initially have an aggregate liquidation preference of approximately $44 million. If all of the shares of Series E preferred stock are purchased pursuant to the

rights offering, the initial aggregate liquidation preference will increase to approximately $65 million. In addition, our board of directors has approved the issuance of up to 10 million shares of Series E preferred stock which, if issued, would increase the initial aggregate liquidation preference to $80 million. We have engaged a financial advisor to assist us in identifying qualified institutional investors for the placement of these additional securities. The aggregate amount of the preference will increase as the shares of Series E preferred stock accrue dividends at a simple annual rate of 5 3/4%. After all of the then outstanding shares of Series E preferred stock have received payment of their liquidation preference, the holders of Series D preferred stock would be entitled to receive, at a minimum, $13.75 per share of Series D preferred stock plus all accrued dividends on such share before any proceeds from the liquidation, dissolution or winding up is paid to holders of our common stock. As of September 30, 2003, the shares of Series D preferred stock have an aggregate initial liquidation preference of approximately $63.2 million, which, as amended, will increase on a daily basis at an annual rate of 5 3/4%. As amended, the shares of Series D preferred stock have a maximum aggregate initial liquidation preference of approximately $88 million. If we are acquired before the fourth anniversary of the date the shares of Series E preferred stock are first issued, the holders of Series D preferred stock will be entitled to receive an initial preference payment equal to approximately $88 million, regardless of the amount of dividends accrued at the time of the acquisition. Holders of our common stock will not receive any proceeds from a liquidation, winding up or dissolution, including from a change of control, until after the liquidation preferences of the our Series E preferred stock and our Series D preferred stock are paid in full. Consequently, the sale of all or substantially all of the shares of Critical Path may result in substantially all of the proceeds of such transaction being distributed to the holders of our Series E preferred stock and Series D preferred stock.

From time to time we engage in discussions with or receive proposals from third parties relating to potential acquisitions or strategic transactions that could constitute a change of control. While we have not engaged in any transaction of this type in the past, we will in the future continue to evaluate potential business combinations or strategic transactions which, if consummated, may constitute a change of control and trigger the liquidation preferences described above.

As of November 18, 2003, assuming the conversion of approximately $11 million principal and interest amount of outstanding secured convertible notes held by the General Atlantic Investors and approximately $32.8 million in face value of our convertible notes held by the Cheung Kong Investors and the amendment of the terms of our Series D preferred stock, both of which are a condition to the consummation of the rights offering, the General Atlantic Investors own 37.7% of our outstanding voting securities and the Cheung Kong Investors own approximately 33.5% of our outstanding voting securities. The General Atlantic Investors have the right, but not the obligation, to purchase 55% of the shares of Series E preferred stock not subscribed for by the holders of our common stock and the Cheung Kong Investors have the right, but not the obligation, to purchase 45% of the shares of Series E preferred stock not subscribed for by the holders of our common stock. Further, the General Atlantic Investors and the Cheung Kong Investors have the right to purchase shares of Series E preferred stock, if any, not purchased by the other. Accordingly, the percentage ownership of the General Atlantic Investors and the Cheung Kong Investors may increase as a result of the rights offering. In addition, the holders of our Series D preferred stock, which is controlled by the General Atlantic Investors, are entitled to elect one director and, upon consummation of the transactions contemplated by the convertible note purchase and exchange agreement, the Cheung Kong Investors will have the right to elect one director. As a result, although the General Atlantic Investors and the Cheung Kong Investors are not affiliated, because of their large percentage ownership and board representation, the General Atlantic Investors and the Cheung Kong

Throughout 2002 and 2003, we announced a series of changes in our management that included the departure of many senior executives, and we have also made changes in our board of directors. A majority of the members of the current board of directors and senior executives of the Company joined us in 2002 and 2003, and we may continue to make additional changes to our senior management team. Our chief financial officer, William Smartt, joined us on November 21, 2003. Because of these changes our management team has not worked together as a group for a significant length of time and may not be able to work together effectively to successfully execute on revenue goals, implement our strategies and manage our operations. If our management team is unable to accomplish our business objectives, our ability to grow our business and successfully meet operational challenges could be severely impaired. We do not have long-term employment agreements with any of our executive officers. It is possible that this high turnover at our senior management levels may also continue for a variety of reasons. The loss of the services of one or more of our key senior executive officers could also harm our business and affect our ability to successfully implement our business objectives.

We depend on strategic relationships to expand distribution channels and opportunities and to undertake joint product development and marketing efforts. Our ability to increase revenues depends upon aggressively marketing our services through new and existing strategic relationships. In the third quarter of 2002, we entered into certain partnership agreements in our hosted messaging business with the Hewlett-Packard Company for the development and marketing of a complete managed messaging solution. In coming quarters we will continue to invest heavily in this relationship and make changes in our operations, including completion of the outsourcing of our data operations, to accommodate the integration of this partnership. To the extent this integration does not proceed as anticipated or the anticipated benefits of this partnership are not borne out, our business and results may be harmed. In addition, if service levels are not adequate in connection with the outsourcing of our data centers, our customers may terminate agreements and our business will suffer. We have also invested heavily and continue to invest in this model of hosted services operations. To the extent this strategic decision and the business relationships surrounding its execution do not prove profitable and productive, our business and results of operations could be harmed. We also depend on a broad acceptance of our software and outsourced messaging services on the part of potential resellers and partners and our acceptance as a supplier of outsourced messaging solutions. We also depend on joint marketing and product development through strategic relationships to achieve further market acceptance and brand recognition. Our agreements with strategic partners typically do not restrict them from introducing competing services. These agreements typically are for terms of one to three years, and automatically renew for additional one-year periods unless either party gives prior notice of its intention to terminate the agreement. In addition, these agreements are terminable by our partners without cause, and some agreements are terminable by us, upon a period of 30 to 120 days notice. Most of our hosted customer agreements also provide for the partial refund of fees paid or other monetary penalties in the event that our services fail to meet defined minimum performance standards. Distribution partners may choose not to renew existing arrangements on commercially acceptable terms, or at all. In addition to strategic relationships, we also depend on the ability of our customers to aggressively sell and market our services to their end-users. If we lose any strategic relationships, fail to renew these agreements or relationships, fail to fully exploit our relationships, or fail to develop new strategic relationships, our business and financial results will suffer, and could have an adverse impact on our current and future revenues.

We expect that sales of our products and services to a limited number of customers will continue to account for a high percentage of our revenue for the foreseeable future. Our future success depends on our ability to retain our current customers, and to attract new customers, in our target markets. The loss of one or several major customers, whether through termination of agreements, acquisitions or bankruptcy, could harm our business. Our agreements with our customers typically have terms of one to three years often with automatic one-year renewals and can be terminated without cause upon certain notice periods that vary among our agreements and range from a period of 30 to 120 days notice. In addition, a number of our customers, particularly for our hosted services business and in the technology industry, have also suffered from falling revenue. Especially in the telecommunications industry, which represents a sizeable portion of our customer base, the relative financial performance of our customers will continue to impact our sales cycles and our ability to attract new business. Worldwide technology spending has also decreased in recent quarters across all industries. If our customers terminate their agreements for any reason before the end of the contract term, the loss of the customer could have an adverse impact on our current and future revenues. Also, if we are unable to enter into agreements with new customers and develop business with our existing customers, our business will not grow and we will not generate additional revenues.

Because we have a variety of messaging and directory infrastructure products and services, we encounter different competitors at each level of our products and services. Our primary competitors for service providers seeking insourced or outsourced product-based solutions are Sun Microsystems’ iPlanet, OpenWave Systems, Inc., Mirapoint, Inc., Oracle Corporation, Microsoft Corporation and IBM Corporation’s Lotus Division. In the enterprise/ eBusiness directory category, we compete primarily with iPlanet, Microsoft Corporation and Novell Corporation, and our competitors in the meta-directory market are iPlanet, Microsoft, Novell and Siemens Corporation. Our competitors for corporate customers seeking outsourced hosted messaging solutions are email service providers, such as CommTouch, Easylink Services Corporation (formerly Mail.com), USA.Net and application service providers who offer hosted communications services and hosted Microsoft Exchange services.

We believe that some of the competitive factors affecting the market for messaging and identity management infrastructure solutions include:


	•	breadth of platform features and functionality of our offerings and the sophistication and innovation of competitors;

	•	total cost of ownership and operation;

	•	scalability, reliability, performance, and ease of expansion and upgrade;

	•	ease of integration to customers’ existing system; and

	•	flexibility to enable customers to manage certain aspects of their systems internally and leverage outsourced services in other cases when resources, costs and time to market reasons favor an outsourced offering.

We believe competition will continue to be fierce and further increase as current competitors aggressively pursue customers, increase the sophistication of their offerings and as new participants enter the market. Many of our current and potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we do and may enter into strategic or commercial relationships with larger, more established and better-financed companies. Any delay in our development and delivery of new services or enhancement of existing services would allow our competitors additional time to improve their service or product offerings, and provide time for new competitors to develop and market messaging and directory infrastructure

The messaging and identity management infrastructure industry is characterized by rapid technological change, changes in user and customer requirements and preferences, and the emergence of new industry standards and practices that could render our existing services, proprietary technology and systems obsolete. We must continually develop or introduce and improve the performance, features and reliability of our services, particularly in response to competitive offerings. Our success depends, in part, on our ability to enhance our existing email and messaging services and to develop new services, functionality and technology that address the increasingly sophisticated and varied needs of prospective customers. If we do not properly identify the feature preferences of prospective customers, or if we fail to deliver email features that meet the standards of these customers, our ability to market our service successfully and to increase revenues could be impaired. The development of proprietary technology and necessary service enhancements entails significant technical and business risks and requires substantial expenditures and lead-time. We may not be able to keep pace with the latest technological developments. We may also be unable to use new technologies effectively or adapt services to customer requirements or emerging industry standards.

Because we sell complex and sophisticated technology, our sales cycle, in particular with respect to our software solutions, can be long and unpredictable, often taking between four to eighteen months. Because of the nature of our product and service offerings it can take many months of customer education and product evaluation before a purchase decision is made. In addition, many factors can influence the decision to purchase our product and service offerings including budgetary restraints and decreases in capital expenditures, quarterly fluctuations in operating results of customers and potential customers, the emerging and evolving nature of the internet-based services and wireless services markets. Furthermore, general global economic conditions, and weakness in global securities markets, continuing recessionary spending levels, and a protracted slowdown in technology spending in particular, have further lengthened and affected our sales cycle. Such factors have led to and could continue to lead to delays and postponements in purchasing decisions and in many cases cancellations of anticipated orders. Any delay or cancellation in sales of our products or services could cause our operating results to differ from those projected and cause our stock price to decline.

In 2001, the SEC investigated the Company and certain of its former officers and directors related to non-specified accounting matters, financial reports, other public disclosures and trading activity in our stock. In February 2002, the SEC concluded the investigation as to the Company. Although the SEC did not impose any financial or criminal penalties against the Company, we consented, without admitting or denying liability, to a cease and desist order and an administrative order for violation of certain non-fraud provisions of the federal securities laws. In addition, since then the SEC and the Department of Justice charged five former employees of the Company with various violations of the securities laws. We believe that the investigation continues with respect to a number of other former executives and employees of the Company and expect that such investigation may result in further charges against former employees although we do not know the status of such investigation. Despite the conclusion of the investigation of the Company, lingering concerns about the actions leading up to the restatement of financials for the third quarter of 2000 have nevertheless cast doubt on the future of the Company in the eyes of customers and investors. In addition, a number of recent arrests, allegations and investigations in connection with

accounting improprieties, insider trading and fraud at other public companies have created investor uncertainty and scrutiny in general as to the stability and veracity of public companies’ financial statements. Such lingering doubts stemming from the Company’s past accounting restatements and such general market uncertainty could harm our business and cause the price of our common stock to continue to fluctuate and/or decline further.

In the past, our management of operational expenses, including the restructurings of our operations, and the growth of our business have placed significant strains on managerial, operational and financial resources and contributed to our history of losses. In addition, to manage any future growth and profitability, we may need to improve or replace our existing operational, customer service and financial systems, procedures and controls. Any failure to properly manage these systems and procedural transitions could impair our ability to attract and service customers, and could cause us to incur higher operating costs and delays in the execution of our business plan. If we cannot manage growth and expenses effectively, our business and operating results could suffer.

The Nasdaq Stock Market has quantitative maintenance criteria for the continued listing of common stock on the Nasdaq National Market. The current requirements affecting us include (i) having net tangible assets of at least $4 million and (ii) maintaining a minimum closing bid price per share of $1.00. On December 23, 2002, The Nasdaq Stock Market Inc. issued a letter to the Company that it was not in compliance with the minimum closing bid price requirement and, therefore, faced delisting proceedings. Since that time, we have worked with The Nasdaq Stock Market in an effort to maintain our listing on the Nasdaq National Market. On July 24, 2003, The Nasdaq Stock Market notified us that we had regained compliance with the requirements for continued listing. Nevertheless, there can be no assurance that we will be able to comply with the quantitative or quantitative maintenance criteria or any of the Nasdaq National Market’s listing requirements or other rules, or other markets listing requirements to the extent our stock is listed elsewhere, in the future. If we fail to maintain continued listing on the Nasdaq National Market and must move to a market with less liquidity, our financial condition could be harmed and our stock price would likely further decline. If we are delisted, it could have a material adverse effect on the market price of, and the liquidity of the trading market for, our common stock.

The trading price of our common stock has been and may continue to experience volatility, wide fluctuations and declines. For example, during the third quarter of 2003, the closing sale prices of our common stock, adjusted for the one-for-four reverse stock split, on the Nasdaq National Market ranged from $5.68 on July 15, 2003 and July 16, 2003 to $2.45 on September 29, 2003. The closing price of our common stock on December 23, 2003 was $1.65 per share. Our stock price may further decline or fluctuate in response to any number of factors and events, such as announcements related to technological innovations, intense regulatory scrutiny and new corporate and securities and other legislation, strategic and sales relationships, new product and service offerings by us or our competitors, litigation outcomes, changes in senior management, changes in financial estimates and recommendations of securities analysts, the operating and stock price performance of other companies that investors may deem comparable, news reports relating to trends in our markets and the market for our stock, media interest in accounting scandals and corporate governance questions, overall market conditions and domestic and international economic factors unrelated to our performance. In addition, the stock market in general, particularly with respect to technology stocks, has experienced extreme volatility and a significant cumulative decline in recent quarters. This volatility and decline has affected many companies, including our company, irrespective of the specific operating performance of such companies. These broad market influences and

Our liability insurance for actions taken by officers and directors during the period from March 1999 to March 2001, the period during which events related to securities class action lawsuits against us and certain of former executive officers are alleged to have occurred, provided only limited liability protection. While these policies covered the settlement amount paid in connection with the settlement of the primary securities class action, there can be no assurance that the policies will continue to cover other pending matters and related expenses from that period or future periods. If these policies do not adequately cover our expenses related to those lawsuits and the investigation, our business and financial condition could be seriously harmed. Our current director and officer liability insurance, which was put in place in March 2003, and continues through March 2004, contains similar provisions, and in the event circumstances arise requiring coverage by such policies there can be no assurance that they will be adequate for the liabilities and expenses potentially incurred. To the extent liabilities, expenses, or settlements thereof, exceed the limitations of coverage, our business and financial condition could be materially harmed.

Under California law, in connection with our charter documents and indemnification agreements we entered into with our executive officers and directors, we must indemnify our current and former officers and directors to the fullest extent permitted by law. The indemnification covers any expenses and liabilities reasonably incurred in connection with the investigation, defense, settlement or appeal of legal proceedings. The Company has made payments in connection with the indemnification of officers and directors in connection with currently pending lawsuits and has reserved for estimated future amounts to be paid in connection with legal expenses and others costs of defense of pending lawsuits.

The loss of the services of key personnel could harm our business results. Our success also depends on our ability to recruit, retain and motivate highly skilled sales and marketing, operational, technical and managerial personnel. Competition for these people is intense and we may not be able to successfully recruit, train or retain qualified personnel. If we fail to do so, we may be unable to develop new services or continue to provide a high level of customer service, which could result in the loss of customers and revenues. In addition, volatility and declines in our stock price may also affect our ability to retain key personnel, all of whom have been granted stock-based incentive compensation. In recent quarters we have also initiated reductions in our work force and job eliminations to balance the size of our employee base with anticipated revenue levels. Reductions in our workforce could make it difficult to motivate and retain remaining employees or attract needed new employees, and provide distractions affecting our ability to deliver products and solutions in a timely fashion and provide a high level of customer service and support.

We do not have long-term employment agreements with any of our key personnel. In addition, we do not maintain key person life insurance on our employees and have no plans to do so. The loss of the services of one or more of our current key personnel could harm our business and affect our ability to successfully implement our business objectives.

In 2002, we incurred a number of restructuring charges related to the right sizing of our business given market conditions and the current operating environment. These efforts included additional facilities and equipment lease terminations, continuing expense management and headcount reductions. In 2003, we continued to restructure our operations including consolidating some office locations and reducing our global workforce by approximately 175 positions, or approximately 30% of the workforce. We expect to

Economic growth has slowed significantly. In addition, the terrorist attacks in the United States and turmoil and war in the Middle East have increased the uncertainty in the United States economy and may further add to the decline in the United States business environment. The war on terrorism, along with the effects of the terrorist attack and other similar events, and the war in Iraq, could contribute further to the slowdown of the already slumping market demand for goods and services, including digital communications software and services. If the economy continues to decline as a result of the recent economic, political and social turmoil, or if there are further terrorist attacks in the United States or elsewhere, or as a result of the war in the Middle East and elsewhere, we may experience decreases in the demand for our products and services, which may harm our operating results.

Acquisitions involve risks related to the integration and management of acquired technology, operations and personnel. In addition, in connection with our strategic restructuring, the Company elected to divest or discontinue many of the acquired businesses. Both the integration and divestiture of acquired businesses have been and will continue to be complex, time consuming and expensive processes, which may disrupt and distract our management. With respect to integration, we must operate as a combined organization utilizing common information and communication systems, operating procedures, financial controls and human resources practices to be successful. With respect to the divestitures, the timing and transition of those businesses and their customers to other entities has required and will continue to require resources from our legal, finance and corporate development teams as well as expenses associated with the conclusion of those transactions, winding up of entities and businesses. In addition to the added costs of the divestitures, we may not ultimately achieve anticipated benefits and/or cost reductions from such divestitures.

In the past, due to the significant underperformance of some of our acquisitions relative to expectation, we eliminated certain acquired product or service offerings through termination, sale or other disposition. Such decisions to eliminate or limit our offering of an acquired product or service involved and could continue to include the expenditure of capital, the realization of losses, further reduction in workforce, facility consolidation, and the elimination of revenues along with the associated costs, any of which could harm our financial condition and operating results.

We intend to continue to license certain technologies from third parties and incorporate such technologies into our products and services, including web server technology, virus and anti-spam solutions, storage and encryption technology and billing and customer tracking solutions. The market is evolving and we may need to license additional technologies to remain competitive. We may not be able to license these technologies on commercially reasonable terms or at all. To the extent we cannot license needed technologies or solutions, we may have to devote our resources to the development of such technologies, which could materially harm our business and operations.

In addition, we may fail to successfully integrate any licensed or hosted technology into our services. These third-party in-licenses may expose us to increased risks, including risks related to the integration of new technology, potential patent and copyright infringement issues, the diversion of resources from the

Few laws currently apply directly to activity on the Internet and the messaging business, however new laws are proposed and other laws made applicable to Internet communications every year. In particular, the operations of the Company’s business faces risks associated with privacy, confidentiality of user data and communications, consumer protection, taxation, content, copyright, trade secrets, trademarks, antitrust, defamation and other legal issues. In particular, legal concerns with respect to communication of confidential data have affected our financial services and health care customers due to newly enacted federal legislation. The growth of the industry and the proliferation of Internet-based messaging devices and services may prompt further legislative attention to our industry and thus invite more regulatory control of our business. The imposition of more stringent protections or new regulations and application of laws to our business could burden our company and those with which we do business. Any decreased generalized demand for our services or the loss of, or decrease, in business by a key partner due to regulation or the expense of compliance with any regulation, could either increase the costs associated with our business or affect revenue, either of which could harm our financial condition or operating results. Certain of our service offerings include operations subject to the Digital Millennium Copyright Act of 1998 and the European Union’s recent privacy directives. The Company has expended resources and implemented processes and controls in order to remain in compliance with DMCA and the EU privacy directives, but there can be no assurance that our efforts will be sufficient or that new legislation and case law will not adversely affect the economic viability and the operation of certain services.

In addition, the applicability of laws and regulations directly applicable to the businesses of our customers, particularly customers in the fields of banking and health care, will continue to affect us. The security of information about our customers’ end-users continues to be an area where a variety of laws and regulations with respect to privacy and confidentiality are enacted. As our customers implement the protections and prohibitions with respect to the transmission of end user data, our customers will look to us to assist them in remaining in compliance with this evolving area of regulation. In particular the Gramm-Leach-Blilely Act contains restrictions with respect to the use and protection of banking records for end-users whose information may pass through our system and the Health Insurance Portability and Accountability Act contains provisions that require our customers to ensure the confidentiality of their customers’ health care information.

Finally, the Company faces increased regulatory scrutiny and potential criminal liability for its executives associated with various accounting and corporate governance rules promulgated under the Sarbanes-Oxley Act of 2002. The Company is currently reviewing all of its accounting policies and practices, legal disclosure and corporate governance policies under the new legislation, including those related to its relationships with its independent accountants, enhanced financial disclosures, internal controls, board and board committee practices, corporate responsibility and loan practices, and intends to fully comply with such laws. Nevertheless, such increased scrutiny and penalties involve risks to both the Company and its executive officers and directors in monitoring and insuring compliance. A failure to properly navigate the legal disclosure environment and implement and enforce appropriate policies and procedures, if needed, could harm the Company’s business and prospects.

As a provider of messaging and directory services, we face potential liability for defamation, negligence, copyright, patent or trademark infringement and other claims based on the nature and content of the materials transmitted via our services. We do not and cannot screen all of the content generated by

Although we carry general liability and umbrella liability insurance, our insurance may not cover claims of these types or may not be adequate to indemnify us for all liability that may be imposed. There is a risk that a single claim or multiple claims, if successfully asserted against us, could exceed the total of our coverage limits. There also is a risk that a single claim or multiple claims asserted against us may not qualify for coverage under our insurance policies as a result of coverage exclusions that are contained within these policies. Should either of these risks occur, capital contributed by our shareholders might need to be used to settle claims. Any imposition of liability, particularly liability that is not covered by insurance or is in excess of insurance coverage could harm our reputation and business and operating results, or could result in the imposition of criminal penalties.

Our software products are inherently complex. Additionally, our product and service offerings depend on complex software, both internally developed and licensed from third parties. Complex software often contains defects or errors in translation, particularly when first introduced or when new versions are released or localized for international markets. We may not discover software defects in our products or that affect new or current services or enhancements until after they are deployed. Although we have not experienced any material software defects to date, it is possible that, despite testing, defects may occur in the software. These defects could cause service interruptions, which could damage our reputation or increase service costs, cause us to lose revenue, delay market acceptance or divert development resources, any of which could cause our business to suffer.

Our customers have, in the past, experienced some interruptions in our hosted messaging service. We believe that these interruptions will continue to occur from time to time. These interruptions may be due to hardware failures, unsolicited bulk email, or “spam,” attacks and operating system failures or other causes beyond our control. Our business will suffer if we experience frequent or long system interruptions that result in the unavailability or reduced performance of systems or networks or reduce our ability to provide email services. We expect to experience occasional temporary capacity constraints due to unanticipated sharply increased traffic, which may cause unanticipated system disruptions, slower response times, impaired quality and degradation in levels of customer service. If this were to continue to happen, our business and reputation could suffer dramatically.

We have entered into hosted messaging agreements with some customers that require minimum performance standards, including standards regarding the availability and response time of messaging services. If we fail to meet these standards, our customers could terminate their relationships with us and we could be subject to contractual monetary penalties.

A fundamental requirement for online communications is the secure transmission of confidential information over public networks. Third parties may attempt to breach our security or that of our customers. If these attempts are successful, customers’ confidential information, including customers’ profiles, passwords, financial account information, credit card numbers or other personal information could be breached. We may be liable to our customers for any breach in security and a breach could harm our reputation. We rely on encryption technology licensed from third parties. Although we have implemented network security measures, our servers remain vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions, delays or loss of data. We may be required

We rely on a combination of trademark, copyright and trade secret laws, contractual restrictions, such as confidentiality agreements and licenses, and patents to establish and protect our proprietary rights, which we view as critical to our success. Our ability to compete and grow our business could suffer if these rights are not adequately protected. Despite the precautionary measures we take, unauthorized third parties may infringe or copy portions of our services or reverse engineer or obtain and use information that we regard as proprietary, which could harm our competitive position and market share. In addition, we have several patents pending in the United States and may seek additional patents in the future. However, the status of United States patent protection in the software industry is not well defined and will evolve as the U.S. Patent and Trademark Office grants additional patents. We do not know if our patent applications or any of our future patent applications will be issued with the scope of the claims sought, if at all, or whether any patents we have received or will receive will be challenged or invalidated.


	•	laws and contractual restrictions may not prevent misappropriation of our technologies or deter others from developing similar technologies;

	•	policing unauthorized use of our products and trademarks is difficult, expensive and time-consuming, and we may be unable to determine the extent of this unauthorized use; and

	•	end user license provisions in our contracts that protect us against unauthorized use, copying, transfer and disclosure of the licensed program may be unenforceable.

In addition, the laws of some foreign countries may not protect proprietary rights to the same extent as do the laws of the United States. Our means of protecting proprietary rights in the United States or abroad may not be adequate and competitors may independently develop similar technology. Additionally, although no claims of alleged patent infringement are currently pending, we cannot be certain that our products do not infringe issued patents that may relate to our products. In addition, because patent applications in the United States are not publicly disclosed until the patent is issued, applications may have been filed which relate to our software products.

We assume a certain level of credit risk with our customers in order to do business. Conditions affecting any of our customers could cause them to become unable or unwilling to pay us in a timely manner, or at all, for products or services we have already provided them. For example, if the economic conditions decline or if new or unanticipated government regulations are enacted which affect our customers, they may experience financial difficulties and be unable to pay their bills. In the past, we have experienced significant collection delays from certain customers, and we cannot predict whether we will continue to experience similar or more severe delays in the future. In particular, some of our customers are suffering from the general weakness in the economy and among technology companies in particular. Although we have established reserves to cover losses due to delays in or inability to pay, there can be no assurance that such reserves will be sufficient to cover our losses. If losses due to delays or inability to pay are greater than our reserves, it could harm our business, operating results and financial condition.

We derived 57% of our revenues from international sales in the first nine months of 2003 and 57% of our revenues from international sales in the first nine months of 2002. We intend to continue to operate in international markets and to spend significant financial and managerial resources to do so. In particular in 2002 we purchased the remaining interests of our joint venture partners for our operations in Japan. We hope to expend revenues and plan to increase resources to grow our operations in the Asian market. If revenues from international operations do not exceed the expense of establishing and maintaining these operations, our business, financial condition and operating results will suffer. We have limited experience in international operations and may not be able to compete or operate effectively in international markets. We face certain risks inherent in conducting business internationally, including:


	•	difficulties and costs of staffing and managing international operations;

	•	fluctuations in currency exchange rates and imposition of currency exchange controls;

	•	differing technology standards and language and translation issues;

	•	difficulties in collecting accounts receivable and longer collection periods;

	•	changes in regulatory requirements, including U.S. export restrictions on encryption technologies;

	•	political and economic instability;

	•	potential adverse tax consequences; and

	•	reduced protection for intellectual property rights in some countries.

Any of these factors could harm our international operations and, consequently, our business and consolidated operating results. Specifically, failure to successfully manage international growth could result in higher operating costs than anticipated or could delay or preclude altogether our ability to generate revenues in key international markets.

Our articles of incorporation and bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. Some of these provisions:


	•	authorize the issuance of preferred stock that can be created and issued by our board of directors without prior shareholder approval, commonly referred to as “blank check” preferred stock, with rights senior to those of our common stock;

	•	prohibit shareholder action by written consent; and

	•	establish advance notice requirements for submitting nominations for election to our board of directors and for proposing matters that can be acted upon by shareholders at a meeting.

In March 2001, we adopted a shareholder rights plan or “poison pill.” This plan could cause the acquisition of our company by a party not approved by our board of directors to be prohibitively expensive.

In addition, the significant level of the General Atlantic Investors’ and the Cheung Kong Investors’ ownership of our securities could have the effect of discouraging or impeding an acquisition proposal.

agreement and was approved by the independent members of our board of directors (which excluded William E. McGlashan, Jr., our chief executive officer and a related party of one of our holders of Series D preferred stock, and Raul J. Fernandez and William E. Ford, each of whom is affiliated with the General Atlantic Investors) based on the recommendation of the strategic alternatives committee of the board of directors. The subscription price does not necessarily bear any relationship to the book value of our assets, past operations, cash flows, losses, financial condition or any other established criteria for value. You should not consider the subscription price as an indication of the value of our Series E preferred stock. After the date of this prospectus, our common stock may trade at prices above or below the subscription price.

Issuance of our Series E preferred stock and the amendment to the terms of our Series D preferred stock will cause us to record charges that increase the net loss attributable to our common shareholders, which may be material to our results of operations for the period in which they are recorded.

Based on our current estimates, the application of generally accepted accounting principles to the rights offering and the consummation of the transactions to be presented to shareholders at the special meeting to be held on , 2004 will cause us to record charges that increase our net loss attributable to common shares. If we issue Series E preferred stock to the Cheung Kong Investors in exchange for the 5 3/4% notes that they hold, we expect to record in our income statement a one-time charge that increases the Company’s net loss equal to the difference between the fair value of the Series E preferred stock issued to the Cheung Kong Investors and the value at which we are carrying the notes they exchange. Based on an estimated fair value of $2.59 per share for the Series E preferred stock as of November 18, 2003, we would record a charge of approximately $24.2 million for the extinguishment of the Cheung Kong Investors’ 5 3/4% notes. The actual charge will differ depending upon the fair value of our Series E preferred stock on the date of its issuance. We expect that this charge will be material to our results of operations in the period in which it is recorded.

Additionally, if we issue shares of Series E preferred stock to the General Atlantic Investors in exchange for their convertible note and related interest, we will record a one-time charge to interest expense of $5.7 million to reflect the “beneficial conversion feature,” based on the difference between the fair value per share of $2.14 on November 26, 2003 of the common stock into which the Series E preferred stock converts and the conversion price of $1.36 per share we assume for accounting purposes.

Based on the difference between the fair value of the common stock, into which the Series E preferred stock converts, which was $1.73 per share on November 18, 2003, and the accounting conversion price of $1.50 per share of the Series E preferred stock, we would also be required to record a beneficial conversion feature of approximately $3.2 million for the rights offering described in this prospectus if it is fully subscribed. We would initially record the beneficial conversion feature as additional paid-in capital on our balance sheet and also reduce the carrying value of the Series E preferred stock. Over the four-year redemption period of the Series E preferred stock, we would then increase the carrying value of the Series E preferred stock to the extent of the beneficial conversion feature, which would result in a charge that increases net loss attributable to common shareholders for the corresponding period. In any period, this charge may be material to our results of operations.

If we were to sell additional shares of Series E preferred stock other than in the rights offering and the fair value of the common stock into which the Series E preferred stock converts on the date of issuance is greater than the accounting conversion price of the Series E preferred stock, then we would record a beneficial conversion feature in connection with any private sale we make. Assuming, as of November 18, 2003, we sold the maximum $15 million in Series E preferred stock that our board of directors has approved, and assuming the fair value on that date of the common stock into which the Series E preferred stock converts was $2.59 per share and the accounting conversion price of $1.50 per share, we would record an additional beneficial conversion feature of $2.3 million. This charge will change based upon the fair value of the common stock into which the Series E preferred stock converts on the date of the issuance of the Series E preferred stock.

If our shareholders approve the matters being presented at the special meeting to be held on , 2004, then we have agreed to modify the rights and preferences of our outstanding Series D preferred stock, some of which would be favorable to the holders of Series D preferred stock. The modification will require us to record a one-time charge to net loss attributable to common shareholders equal to the increase in fair value of the Series D preferred stock that is caused by the modifications. If the modifications had occurred on November 18, 2003, we would have recognized a charge of approximately $15 million. We have also agreed with some of the holders of shares of our Series D preferred stock to convert a portion of their shares of Series D preferred stock to Series E preferred stock. The conversion of Series D preferred stock to Series E preferred stock would result in an additional one-time charge that increases net loss attributable to common shareholders equal to the difference between the fair value of the Series E preferred stock and the carrying value of the Series D preferred stock. We anticipate this one-time charge to be approximately $250,000.

Because the beneficial conversion feature and charges to net loss and net loss attributable to common shareholders will be based in part on the fair value of common stock and Series E preferred stock on the date that they are issued, and on the fair value of Series D preferred stock on the date its rights and preferences are modified, we are only able to estimate the charges that will occur. Based on the assumptions provided above, we estimate that one-time charges would total approximately $45 million, to be recorded in the period that shareholders approve the transactions, and that additional charges totaling approximately $5.5 million would be recorded over the four-year redemption period of the Series E preferred stock. A change in the fair value of our common stock, or our Series E preferred stock, as of the date or dates we issue the Series E preferred stock, or our Series D preferred stock, as of the date we amend the terms of the Series D preferred stock, would cause these estimates to vary.

If the exercise of the subscription rights causes us to undergo an “ownership change” for federal income tax purposes (i.e., an increase by more than 50% of the amount of stock held by one or more of our 5% shareholders during the past 3 years), our use of our pre-change net operating losses will generally be limited annually to the product of the long-term tax-exempt rate (currently 4.58%) and the value of our stock immediately before the ownership change. This could increase our federal income tax liability if we generate taxable income in the future.

Once you exercise your subscription rights, you may not revoke the exercise and cancel the purchase of the shares in the rights offering. The public trading market price of our common stock may decline before the subscription rights expire. If you exercise your subscription rights and, afterwards, the public trading market price of our common stock decreases below the subscription price, you will have committed to buying shares of our Series E preferred stock at a price above the prevailing market value of our common stock into which the Series E preferred stock is convertible. Moreover, you may be unable to sell your shares of Series E preferred stock at a price equal to or greater than the subscription price you paid for such shares.

The Series E preferred stock issuable upon exercise of the rights will not be listed on any securities exchange or the Nasdaq National Market or included on any automated quotation system. We know of no party that currently intends to make a market in the Series E preferred stock. If an active trading market does not develop, the trading price and liquidity of the Series E preferred stock may be adversely affected. We cannot assure you that an active trading market for the Series E preferred stock will develop or as to the liquidity or sustainability of any such market, your ability to sell the Series E preferred stock or the

If we elect to withdraw or terminate this rights offering, we do not have any obligation with respect to the subscription rights except to return, without interest or deduction, any subscription payments we received from you.

Shareholders who desire to purchase shares in this rights offering must act promptly to ensure that all required forms and payments are actually received by the subscription agent prior to 5:00 p.m., New York City time, on , 2004, the expiration time of this rights offering. If you are a beneficial owner of shares, you must act promptly to ensure that your broker, custodian bank or other nominee acts for you and that all required forms and payments are actually received by the subscription agent prior to , 2004. We shall not be responsible if your broker, custodian or nominee fails to ensure that all required forms and payments are actually received by the subscription agent prior to 5:00 p.m. on , 2004, the expiration time of this rights offering. If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your exercise in this rights offering, we may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received. We do not undertake to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.

Any personal check used to pay for shares to be issued in this rights offering must clear prior to the expiration time of this rights offering, and the clearing process may require five or more business days. If you choose to exercise your subscription rights, in whole or in part, and to pay for shares by personal check and your check has not cleared prior to the expiration time of this rights offering, you will not have satisfied the conditions to exercise your subscription rights and will not receive the shares you attempted to purchase and you will lose the value of your subscription rights.

Even if you fully exercise your basis subscription right, and possibly your over-subscription right, we are not offering a sufficient amount of Series E preferred stock in the rights offering to allow you to restore your proportionate interest prior to the consummation of the transactions contemplated by the convertible note purchase and exchange agreement with the General Atlantic Investors and the Cheung Kong Investors. In addition, we may sell additional shares of our capital stock or instruments convertible into shares of our capital stock, including an additional 10 million shares of Series E preferred stock, which, if sold by us prior to, concurrently with or following your exercise of subscription rights, will further limit your ability to preserve your proportionate ownership interest prior to our entering into the convertible note purchase and exchange agreement.

Our position for U.S. federal income tax purposes is that holders of our common stock should not recognize taxable income upon the receipt of the subscription rights. However, there is no assurance that the Internal Revenue Service will agree with our position. See “Material United States Federal Income Tax Consequences,” beginning on page 39.

This prospectus and the documents we incorporate by reference contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended and in effect from time to time. The words “anticipates,” “expects,” “intends,” “plans,” “believes,” “seek,” and “estimate” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include statements regarding our ability to operate in the future, our ability to obtain funding, the adequacy of funds to meet anticipated operating needs, the extent to which holders of our common stock, the General Atlantic Investors and the Cheung Kong Investors will purchase of shares of Series E preferred stock offered in the rights offering, the amount of additional shares of Series E preferred stock that we undertake to and are able to sell, our future strategic, operational and financial plans, possible financing, strategic or business combination transactions, anticipated or projected revenues, expenses and operational growth, markets and potential customers for our products and services, plans related to sales strategies and global sales efforts, the anticipated benefits of our relationships with strategic partners, growth of our competition, our ability to compete, investments in product development, the adequacy of our current facilities and our ability to obtain additional space, our litigation strategy, use of future earnings, the feature, benefits and performance of our current and future products and services, plans to reduce operating costs through continued expense reduction, anticipated effects of restructuring and retirement of debt, and our belief as to our ability to successfully emerge from the restructuring and refocusing of our operations. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, difficulties of forecasting future results due to our limited operating history, failure to obtain additional financing on favorable terms or at all, failure to meet sales and revenue forecasts, evolving business strategy and the emerging nature of the market for our products and services, the settlement of litigation and the continuing SEC investigation against former executives and directors, turnover within and integration of senior management, board of directors members and other key personnel, difficulties in our strategic plans to exit certain products and services offerings, failure to expand our sales and marketing activities, potential difficulties associated with strategic relationships, investments and uncollected bills, general economic conditions in markets in which we do business, risks associated with our international operations, foreign currency fluctuations, unplanned system interruptions and capacity constraints, software defects, and failure to expand our sales and marketing activities, risks associated with an inability to maintain continued compliance with the Nasdaq National Market listing requirements, and those discussed elsewhere in this prospectus. You are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation to update these statements or to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus.

The following table sets forth the deficiency of earnings to combined fixed charges and preferred stock dividends for Critical Path on a historical basis for the periods indicated.

At or prior to the consummation of the rights offering, Critical Path will issue approximately 29.2 million shares of Series E preferred stock, par value $0.001 per share, which will carry a 5 3/4% simple annual dividend.

For purposes of calculating the deficiency of earnings to combined fixed charges and preferred stock dividends, deficiency of earnings is the sum of loss from operations before income taxes plus fixed charges. Fixed charges consist of interest expensed and capitalized, amortization of debt issue costs and preferred stock dividends.

If the shares of common stock offered in the rights offering are purchased by the holders of our common stock on the record date, or by the General Atlantic Investors or the Cheung Kong Investors, or some combination thereof, the aggregate net proceeds to Critical Path will be approximately $20.5 million after deducting fees and estimated expenses of approximately $450,000. The actual proceeds will depend on the numbers of shares subscribed for in the rights offering.

We currently anticipate using the net proceeds for general corporate purposes, including working capital, capital expenditures and general operations; provided, if we determine that we have raised adequate funds to meet anticipated operating needs through the rights offering and other capital raising transactions, we may use a portion of these proceeds up to approximately $16.4 million to repurchase shares of Series E preferred stock held by the Cheung Kong Investors.

The subscription price per share was the price proposed by the General Atlantic Investors and the Cheung Kong Investors in connection with our negotiation of the convertible note purchase and exchange agreement and was approved by the independent members of our board of directors (which excluded William E. McGlashan, Jr., our chief executive officer and a related party of one of our holders of Series D preferred stock, and Raul J. Fernandez and William E. Ford, each of whom is affiliated with the General Atlantic Investors) based on the recommendation of the strategic alternatives committee of the board of directors.

The following table sets forth our summary capitalization as of September 30, 2003:


	—	the issuance of the $10 million in principal amount of 10% convertible secured notes to the General Atlantic Investors;

	—	the repayment of the outstanding balance of the line of credit facility with Silicon Valley Bank; and

	—	the issuance of 553,914 shares of common stock and 188,587 shares of Series D preferred stock on November 21, 2003 in connection with a $5.1 million settlement with MBCP PeerLogic, LLC and its affiliates.


	—	the conversion of $43.8 million principal and interest amount of convertible notes held by the General Atlantic Investors and the Cheung Kong Investors into Series E preferred stock;

	—	the sale of an aggregate of approximately $21 million of our Series E preferred stock, consisting of all shares offered in the rights offering;

	—	the amendment of the terms of the Series D preferred stock; and

	—	the conversion of 82,927 shares of Series D preferred stock held by MBCP PeerLogic, LLC and its affiliates into 733,333 shares of Series E preferred stock.

Except for the pro forma, as adjusted, calculation for the issuance of Series E preferred stock upon conversion of the 10% convertible secured notes, which takes into account the fair market value of our common stock on November 26, 2003, the date the note was funded, the pro forma, as adjusted, calculations assume a fair market value of the Series D preferred stock and the Series E preferred stock based on a fair market value of our common stock of $1.73 per share which was the closing price of the common stock on the date the convertible note purchase and exchange agreement was executed. Except for the pro forma, as adjusted, calculation for the issuance of Series E preferred stock upon conversion of the 10% convertible secured notes, the actual amounts will depend on the fair market value of our common stock, Series D preferred stock, and our Series E preferred stock on the date each of the transactions contemplated by the convertible note purchase and exchange agreement and the rights offering are consummated. See the discussion under “Risk Factors — Risks Relating To The Rights Offering” beginning on page 15 of this prospectus. This table should be read in conjunction with our financial statements and related notes incorporated by reference into this prospectus.


(a)	Upon shareholder approval of the matters being presented at the special meeting to be held on , 2004, the $10 million in principal amount of convertible secured notes held by the General Atlantic Investors, plus interest, will convert into $11 million of Series E preferred stock at $1.50 per share. As a result, interest expense of approximately $5.7 million will be recognized as of the date of conversion resulting from the beneficial conversion feature included in the Series E preferred stock. Pro forma, as adjusted, assumes the Series E preferred stock was issued on November 18, 2003, the date of the execution of the convertible note purchase and exchange agreement.

(b)	Upon shareholder approval of the matters being presented at the special meeting to be held on , 2004, $32.8 million face value of 5 3/4% convertible subordinated notes held by the Cheung Kong Investors will be exchanged for approximately 21.9 million shares of Series E preferred stock. As a result, a charge equal to the fair value of the Series E preferred stock less the carrying value of the convertible subordinated notes, net of unamortized issuance costs, will be recorded to arrive at net loss and net loss attributable to common shareholders as of the date of the exchange. Pro forma, as adjusted, reflects a loss on exchange equal to approximately $24.2 million and assumes the Series E preferred stock was issued on November 18, 2003, the date of the execution of the convertible note purchase and exchange agreement.

(c)	Upon shareholder approval of the matters being presented at the special meeting to be held on , 2004, the issuance of Series E preferred stock pursuant to the proposed rights offering will result in a beneficial conversion feature if the fair value of the common stock into which the Series E preferred stock is convertible upon issuance is greater than $1.50 per share. The amount of the beneficial conversion feature is recorded in additional paid-in capital and reduces the carrying value of


	the Series E preferred stock. The Series E preferred stock carrying value will be increased for the beneficial conversion feature amount through a charge to arrive at net loss attributable to common shareholders over a four year period from the date of issuance using the effective interest method. Pro forma, as adjusted, assumes the issuance of Series E preferred stock in the rights offering on November 18, 2003, the date of the execution of the convertible note purchase and exchange agreement, which results in a beneficial conversion feature amount of approximately $3.2 million.

(d)	Upon shareholder approval of the matters being presented at the special meeting to be held on , 2004, we will amend the terms of our Series D preferred stock. As a result, we will record a charge, as of the date of the amendment, equal to the incremental fair value of the amended Series D preferred stock resulting from the modifications to the terms of the Series D preferred stock to arrive at net loss attributable to common shareholders with the offset to the Series D preferred stock carrying value. Pro forma, as adjusted, assumes the amendment occurred on November 18, 2003, the date of the execution of the convertible note purchase and exchange agreement, and results in a charge equal to $15.0 million.

(e)	Upon shareholder approval of the matters being presented at the special meeting to be held on , 2004, 82,927 of the Series D preferred stock issued to MBCP PeerLogic, LLC and its affiliates will be exchanged for Series E preferred stock, and a charge equal to the fair value of the Series E preferred stock less the carrying value of the Series D preferred stock will be recorded, as of the date of the exchange, to arrive at net loss attributable to common shareholders. Pro forma, as adjusted, assumes the exchange occurred on November 18, 2003, the date of the execution of the convertible note purchase and exchange agreement, and results in a charge equal to $248,000.

In addition, our board of directors has approved the issuance of an additional 10 million shares of Series E preferred stock to private investors which would raise proceeds of up to $15 million and has been excluded from the table above. If we issue these shares, it will result in a beneficial conversion feature if the fair value of the common stock into which the Series E preferred stock is convertible upon issuance is greater than $1.50 per share. The amount of the beneficial conversion feature is recorded in additional paid-in capital and reduces the carrying value of the Series E preferred stock. The Series E preferred stock carrying value will be increased for the beneficial conversion feature amount through a charge resulting in a net loss attributable to common shareholders over a four year period from the date of issuance using the effective interest method. Assuming issuance of Series E preferred stock on November 18, 2003, the date of the execution of the convertible note purchase and exchange agreement such issuance would result in a beneficial conversion feature amount of $2.3 million.

On November 18, 2003, we entered into an agreement with the General Atlantic Investors and the Cheung Kong Investors pursuant to which, among other things, we issued $10 million in convertible notes to the General Atlantic Investors and, subject to shareholder approval, we agreed to convert the $10 million note issued to the General Atlantic Investors, plus $1 million in accrued interest, into 7.3 million shares of Series E preferred stock. We also agreed to exchange $32.8 million in face value of our 5 3/4% convertible subordinated notes held by the Cheung Kong Investors for 21.9 million shares of Series E preferred stock. Our primary purposes for the rights offering are to allow the holders of our common stock an opportunity to further invest in the Company and restore a portion, although not all, of their proportionate interest in our capital stock at the same price per share of Series E preferred stock as was established under the agreement.

We will distribute to the holders of record of our common stock on [RECORD DATE], the record date, at no charge, subscription rights to purchase our Series E preferred stock, up to a total of 14,000,000 subscription rights. The subscription rights will be evidenced by transferable subscription rights certificates.

The subscription rights will be distributed to our holders of common stock based on their percentage ownership of our outstanding common stock on the record date. As the subscription certificates are transferable, any person who acquires subscription certificates before the expiration date may exercise the rights represented thereby. Accordingly, holders of common stock on the record date will receive two subscription rights for every three shares of common stock held. We will not be issuing fractional rights to purchase shares of the Series E preferred stock. We will aggregate the number of shares of common stock of each shareholder and issue only the number of subscription rights issuable upon aggregating all such shares of common stock rounded down to the nearest whole number. We will also not pay cash in lieu of any fractional rights. We will not issue fractional shares of Series E preferred stock in connection with a partial exercise of a right. You are not required to exercise any or all of your subscription rights. We will deliver to you certificates representing the shares which you purchased with your subscription rights as soon as practicable after the rights offering has expired. Each subscription right entitles you to a basic subscription right and an over-subscription right.

With each basic subscription right, you may purchase one share of our Series E preferred stock per subscription right, upon delivery of the required documents and payment of the subscription price of $1.50 per share. You are not required to exercise all of your subscription rights unless you wish to purchase shares under your over-subscription right. We will deliver to the record holders who purchase shares in this rights offering certificates representing the shares purchased with a holder’s basic subscription right as soon as practicable after this rights offering has expired.

In addition to your basic subscription right, you may subscribe for additional shares of our Series E preferred stock upon delivery of the required documents and payment of the subscription price of $1.50 per share, before the expiration of this rights offering. You may only exercise your over-subscription right if you exercised your basic subscription right in full and other holders of subscription rights do not exercise their basic subscription rights in full.

If there are not enough shares of our Series E preferred stock to satisfy all subscriptions made under the over-subscription right, we will allocate the remaining shares of our Series E preferred stock pro rata, after eliminating all fractional shares, among those over-subscribing rights holders. “Pro rata” means in proportion to the amount of subscription price tendered by each subscription rights holder who wishes to exercise his or her over-subscription rights prior to the expiration date. If there is a pro rata allocation of the remaining shares of our Series E preferred stock and you receive an allocation of a greater number of shares than you subscribed for under your over-subscription right, then we will allocate to you only the number of shares for which you subscribed. We will allocate the remaining shares among all other holders exercising their over-subscription rights.

You may exercise your over-subscription right only if you exercise your basic subscription right in full. To determine if you have fully exercised your basic subscription right, we will consider only the basic subscription rights held by you in the same capacity. For example, suppose that you were granted subscription rights for shares of our common stock that you own individually and shares of our common stock that you own collectively with your spouse. If you wish to exercise your over-subscription right with respect to the subscription rights you own individually, but not with respect to the subscription rights you own collectively with your spouse, you only need to fully exercise your basic subscription right with respect to your individually owned subscription rights. You do not have to subscribe for any shares under the basic subscription right owned collectively with your spouse to exercise your individual over-subscription right.

When you complete the portion of your subscription rights certificate to exercise your over-subscription right, you will be representing and certifying that you have fully exercised your basic subscription rights granted pursuant to this prospectus. You must exercise your over-subscription rights at the same time you exercise your basic subscription rights in full.

If you exercised your over-subscription right and are allocated less than all of the shares of our Series E preferred stock for which you wished to subscribe, your excess payment for shares that were not allocated to you will be returned to you by mail, without interest or deduction, as soon as practicable after the expiration date of this rights offering. We will deliver to the record holders who purchase shares in this rights offering certificates representing the shares of our Series E preferred stock that you purchased as soon as practicable after the expiration date of this rights offering and after all pro rata allocations and adjustments have been completed. However, we will not be able to begin calculations for any pro rata allocations and adjustments until three days after the expiration date, which is the latest date for our shareholders to deliver the subscription rights certificate pursuant to the guaranteed delivery procedures.

Dividends. The shares of Series E preferred stock rank senior to all capital stock of Critical Path with respect to the payment of dividends. Dividends on the shares of Series E preferred stock accrue at a simple annual rate of 5 3/4% whether or not declared by our board of directors. Dividends in respect of the Series E preferred stock will not be paid in cash but will be added to the value of the Series E preferred stock and will be taken into account for purposes of determining the liquidation preference, conversion rate, dividends and voting rights. We must declare or pay dividends on the Series E preferred stock when we declare or pay dividends to the holders of common stock. Except for dividends accruing to the Series D preferred stock, no dividends or distribution with respect to any shares of capital stock may be made unless all dividends accruing to the Series E preferred stock have been paid.

Liquidation or Change of Control. In the event of a liquidation or change of control, each share of Series E preferred stock will be paid, prior to the payment of any other equity securities, payments equal to the greater of the purchase price of the Series E preferred stock plus all accrued dividends or the value that would be paid to the holder of the number of shares of common stock into which such shares of Series E preferred stock are convertible immediately prior to the closing of such liquidation or change of control. A change of control includes, among others, any merger consolidation or other business combination transaction in which the shareholders owning a majority of our voting securities do not own a majority of our voting securities of the surviving entity, any tender, exchange or other offer whereby any person obtains a majority of the voting securities, any proxy contest in which a majority of the Board of Directors prior to such contest do not constitute a majority of the Board of Directors after such contest or any other transaction that triggers the issuance of rights pursuant to our Shareholder Rights Plan (which issuance is not waived by the Board of Directors).

Redemption. Shares of Series E preferred stock are redeemable, at the option of Critical Path, after the third anniversary of the date shares of Series E preferred stock are first issued under certain circumstances. The shares Series E preferred stock are mandatorily redeemable on the fourth anniversary of the date shares of the date shares of Series E preferred stock are first issued.

Voting. Each share of Series E preferred stock entitles its holder to vote at any shareholders’ meeting, on any matter entitled to be voted on by holders of our common stock, voting together as a single class with other shares entitled to vote on such matters. In that event, each share of Series E preferred stock entitles its holder to cast that number of votes per share as is equal to the number of votes that such holder would be entitled to cast had such holder converted its share of Series E preferred stock into shares


	•	Any amendment to the terms of the Series E preferred stock;

	•	Any amendment to the number of authorized shares of Series E preferred stock and any issuance of shares of equity securities ranking senior to the Series E preferred stock; or

	•	The redemption of any junior equity securities or the payment of dividends to junior equity holders.

Conversion. Each share of Series E preferred stock will be convertible at any time at the option of the holder into the number of shares of common stock derived by dividing the purchase price of the Series E preferred stock plus all accrued dividends by $1.50, subject to certain antidilution provisions. The terms of the Series E preferred stock contain protection against dilution if Critical Path effects a subdivision or combination of common stock or in the event of a reclassification, recapitalization, stock split, stock dividend or other distribution payable in securities of Critical Path or any other person.

You may exercise your subscription privilege at any time before 5:00 p.m., New York City time, on , 2004, the expiration date for the rights offering. If you do not exercise your subscription rights before the expiration date, your unexercised subscription rights will be null and void. We will not be obligated to honor your exercise of subscription rights if the subscription agent receives the documents relating to your exercise after the rights offering expires, regardless of when you transmitted the documents, except when you have timely transmitted the documents under the guaranteed delivery procedures described below. We, with the consent of the General Atlantic Investors and the Cheung Kong Investors, may extend the expiration date by giving oral or written notice to the subscription agent on or before the scheduled expiration date. If we elect to extend the expiration of the rights offering, we will issue a press release announcing the extension no later than 9:00 a.m., New York City time, on the next business day after the most recently announced expiration date.

In the event all or any portion of the subscription rights are not exercised by the holders of common stock prior to the expiration of the rights offering, including through the exercise of over-subscription rights, the General Atlantic Investors have the option, but not the obligation, to purchase up to 55% of the unexercised subscription rights and the Cheung Kong Investors have the option, but not the obligation, to purchase up to 45% of the unexercised subscription rights. In addition, the General Atlantic Investors and the Cheung Kong Investors have the option, but not the obligation, to purchase any or all of the subscription rights not exercised by the other group of investors, if any. Following the execution of the convertible note purchase and exchange agreement, the Cheung Kong Investors granted us the option, which we may exercise in our sole discretion, to repurchase up to approximately 10.9 million shares of their Series E preferred stock.

The rights evidenced by a single subscription certificate may be transferred in whole by endorsing the subscription certificate for transfer in accordance with the accompanying instructions. A portion of the rights evidenced by a single subscription certificate may be transferred by delivering to the subscription agent a subscription certificate properly endorsed for transfer, with instructions to register such portion of the rights evidenced thereby in the name of the transferee (and to issue a new subscription certificate to the transferee evidencing such transferred rights). In such event, a new subscription certificate evidencing the balance of the rights will be issued to the rights holder or, if the rights holder so instructs, to one or more additional transferees. To transfer rights to any person, signatures on the subscription certificate must be guaranteed by an eligible institution, as described below. You should allow a sufficient amount of time prior to the time the subscription rights expire for the subscription agent to process the transfer request

Holders wishing to transfer all or a portion of their rights should allow a sufficient amount of time prior to the expiration date for the transfer instructions to be received and processed by the subscription agent, a new subscription certificate to be issued and transmitted to the transferee or transferees with respect to transferred rights and to the transferor with respect to retained rights, if any, and the rights evidenced by such new subscription certificates to be exercised or sold by the recipients thereof. Neither we nor the subscription agent will have any liability to a transferee or transferor of rights if subscription certificates are not received in time for exercise or sale prior to the expiration date.

The rights offering is conditioned on obtaining the approval of our shareholders of the matters submitted to a vote of our shareholders at a special meeting to be held on , 2004. For a more complete description of the matters being submitted to a vote of our shareholders at the special meeting, see the discussion under “Recent Developments” beginning on page 1 of this prospectus.

We may elect to withdraw or terminate this rights offering at any time prior to consummation of the offering. We do not have any obligation with respect to the subscription rights except to return, without interest or deduction, any subscription payments we received from you.

You may exercise your subscription rights by delivering (or causing to be delivered) the following to the subscription agent, at or prior to 5:00 p.m., New York City time, on , 2004, the date on which the subscription rights expire:


	•	your properly completed and executed rights certificate with any required signature guarantees or other supplemental documentation; and

	•	your full subscription price payment for each share subscribed for.

Your payment of the subscription price must be made in U.S. dollars for the full number of shares of Series E preferred stock you are subscribing for by:


	•	check or bank draft drawn upon a U.S. bank or postal, telegraphic or express money order payable to the subscription agent; or

	•	wire transfer of immediately available funds, to subscription account maintained by the subscription agent.


	•	clearance of any uncertified check;

	•	receipt by the subscription agent of any certified check or bank draft drawn upon a U.S. bank or of any postal, telegraphic or express money order; or

	•	receipt of collected funds in the subscription account designated above.

If you are paying by uncertified personal check, please note that uncertified checks may take five business days or more to clear. If you wish to pay the subscription price by uncertified personal check, we urge you to make payment sufficiently in advance of the time this rights offering expires to ensure that your payment is received by the subscription agent and clears by the rights offering expiration time. We urge you to consider using a certified or cashier’s check, money order or wire transfer of funds to avoid missing the opportunity to invest in our Series E preferred stock should you decide to exercise your subscription rights.

You should deliver your rights certificate and payment of the subscription price or, if applicable, notices of guaranteed delivery, to the subscription agent by one of the methods described below:

Your delivery to an address other than the address set forth above will not constitute valid delivery. For assistance call the subscription agent at (303) 262-0600 ext. 4732.

If you do not indicate the number of subscription rights being exercised, or do not forward full payment of the total subscription price for the number of subscription rights that you indicate are being exercised, then you will be deemed to have exercised your subscription right with respect to the maximum number of subscription rights that may be exercised with the aggregate subscription price payment you delivered to the subscription agent. If we do not apply your full subscription price payment to your purchase of shares of our Series E preferred stock, we will return the excess amount to you by mail without interest or deduction as soon as practicable after the expiration date of the rights offering.

The subscription agent will hold your payment of the subscription price payment in a segregated account with other payments received from other rights holders until we issue your shares to you upon consummation of the rights offering.

Your signature on each subscription rights certificate must be guaranteed by an eligible institution, such as a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States, subject to standards and procedures adopted by the subscription agent, unless:


	•	your subscription rights certificate provides that shares are to be delivered to you as record holder of those subscription rights; or

	•	you are an eligible institution.

If you are a broker, a trustee or a depositary for securities who holds shares of our common stock for the account of others on [RECORD DATE], the record date for the rights offering, you should notify the respective beneficial owners of such shares of the rights offering as soon as possible to find out their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owner with respect to their subscription rights, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should complete the appropriate subscription rights certificates and submit them to the subscription agent with the proper payment. If you hold shares of our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all such beneficial owners in the aggregate otherwise would have been entitled had they been direct record holders of our common stock on the record date for the rights offering, provided that, you, as a nominee record holder, make a proper showing to the subscription agent by submitting the form entitled “Nominee Holder Certification” which we will provide to you with your rights offering materials. If you did not receive this form, you should contact us to request a copy.

If you are a beneficial owner of shares of our common stock or will receive your subscription rights through a broker, custodian bank or other nominee, we will ask your broker, custodian bank or other nominee to notify you of this rights offering. If you wish to exercise your subscription rights, you will need to have your broker, custodian bank or other nominee act for you. If you hold certificates of our common stock directly and would prefer to have your broker, custodian bank or other nominee exercise your subscription rights, you should contact your nominee and request it to effect the transaction for you. To indicate your decision with respect to your subscription rights, you should complete and return to your broker, custodian bank or other nominee the form entitled “Beneficial Owners Election Form.” You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials. If you wish to obtain a separate rights certificate, you should contact the nominee as soon as possible and request that a separate rights certificate be issued to you. You should contact your broker, custodian bank or other nominee if you do not receive this form, but believe that you are entitled to participate in the rights offering. We are not responsible if you do not receive the form from your broker, custodian bank or nominee or if you receive it without sufficient time to respond.

You should read and follow the instructions accompanying the rights certificate(s) carefully. If you want to exercise your subscription rights, you should send your rights certificate(s) with your subscription price payment to the subscription agent. Do not send your rights certificate(s) and subscription price payment to us.

You are responsible for the method of delivery of your rights certificate(s) with your subscription price payment to the subscription agent. If you send your rights certificate(s) and subscription price payment by mail, we recommend that you send them by registered mail, properly insured, with return receipt requested. You should allow a sufficient number of days to ensure delivery to the subscription agent prior to the time the rights offering expires. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of a certified or cashier’s check, money order or wire transfer of funds.

We will decide all questions concerning the timeliness, validity, form and eligibility of your exercise of your subscription rights and our determinations will be final and binding. We, in our sole discretion, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine. We may reject the exercise of any of your subscription rights because of any defect or

Neither we nor the subscription agent will be under any duty to notify you of any defect or irregularity in connection with your submission of subscription rights certificates and we will not be liable for failure to notify you of any defect or irregularity. We reserve the right to reject your exercise of subscription rights if your exercise is not in accordance with the terms of the rights offering or in proper form. We will also not accept your exercise of subscription rights if our issuance of shares of our Series E preferred stock to you could be deemed unlawful under applicable law.

If you wish to exercise your subscription rights, but you do not have sufficient time to deliver the rights certificate evidencing your subscription rights to the subscription agent on or before the time your subscription rights expire, you may exercise your subscription rights by the following guaranteed delivery procedures:


	•	deliver to the subscription agent on or prior to the expiration time your subscription price payment in full for each share you subscribed for under your subscription privileges in the manner set forth under “Method of Payment” on page 27;

	•	deliver to the subscription agent at or prior to the expiration time the form entitled “Notice of Guaranteed Delivery”, substantially in the form provided with the “Instructions as to Use of Critical Path Subscription Rights Certificates” distributed with your rights certificates; and

	•	deliver the properly completed rights certificate evidencing your rights being exercised and the related nominee holder certification, if applicable, with any required signatures guaranteed, to the subscription agent within three business days following the date of your Notice of Guaranteed Delivery.

Your Notice of Guaranteed Delivery must be delivered in substantially the same form provided with the Instructions as to Use of Critical Path Subscription Rights Certificates, which will be distributed to you with your subscription rights certificate. Your Notice of Guaranteed Delivery must come from an eligible institution, or other eligible guarantee institutions which are members of, or participants in, a signature guarantee program acceptable to the subscription agent.


	•	your name and address;

	•	the certificate number of the subscription rights certificate relating to the subscription rights you are exercising;

	•	the number of subscription rights represented by your subscription rights certificates and the number of shares of our Series E preferred stock you are subscribing for; and

	•	the institution’s guarantee that you will deliver to the subscription agent any subscription rights certificates evidencing the subscription rights you are exercising within three business days following the date the subscription agent receives your Notice of Guaranteed Delivery.

You may deliver your Notice of Guaranteed Delivery to the subscription agent in the same manner as your rights certificates at the address set forth above under “Delivery of Subscription Materials and Payment” on page 28. An eligible institution may alternatively transmit its Notice of Guaranteed Delivery to the subscription agent by facsimile transmission (Facsimile No.: (303) 262-0606). To confirm facsimile deliveries, eligible institutions may call (303) 262-0600 ext. 4732.

Georgeson Shareholder Communications Inc., the information agent, will send you additional copies of the form of Notice of Guaranteed Delivery if you need them. Shareholders please call (800) 843-1451

If you have any questions or require assistance regarding the method of exercising your subscription rights or requests for additional copies of this prospectus, the Instructions as to the Use of Critical Path Rights Certificates or the Notice of Guaranteed Delivery, you should contact the information agent at the foregoing telephone number.

We have appointed Computershare Trust Company to act as subscription agent for the rights offering. We will pay all fees and expenses of the subscription agent related to the rights offering and we have also agreed to indemnify the subscription agent from liabilities which it may incur in connection with the rights offering.

Once you have exercised your subscription privileges, you may not revoke your exercise. Subscription rights not exercised prior to the expiration date of the rights offering will expire.

We expect that your exercise of your subscription rights may be made through the facilities of The Depository Trust Company. If your subscription rights are held of record through DTC, you may exercise your basic subscription privilege and your over-subscription privilege by instructing DTC to transfer your subscription rights from your account to the account of the subscription agent, together with certification as to the aggregate number of subscription rights you are exercising and the number of shares of our Series E preferred stock you are subscribing for, and your subscription price payment for each share you subscribed for.

No change will be made to the cash subscription price by reason of changes in the trading price of our common stock prior to the closing of the rights offering.

Rights certificates will be mailed to rights holders whose addresses are outside the United States or who have an Army Post Office or Fleet Post Office address. To exercise such subscription rights, you must notify the subscription agent, and take all other steps which are necessary to exercise your subscription rights on or prior to the expiration date of the rights offering. If the procedures set forth in the preceding sentence are not followed prior to the expiration date your subscription rights will expire.

We may, with the consent of the General Atlantic Investors and the Cheung Kong Investors pursuant to our Convertible Note Purchase and Exchange Agreement, extend the rights offering and the period for exercising your rights. The rights will expire at 5:00 p.m., New York City time, on , 2004, unless we decide to extend the rights offering. If the commencement of the rights offering is delayed, the expiration date will be similarly extended. If you do not exercise your subscription rights prior to that time, your subscription rights will be null and void. We will not be required to issue shares of our Series E preferred stock to you if the subscription agent receives your subscription certificate or your payment after that time, regardless of when you sent the subscription certificate and payment, unless you send the documents in compliance with the guaranteed delivery procedures described above. See also “The Rights Offering — Conditions to the Rights Offering” on page 27. We may cancel the rights offering at any time

An investment in shares of our Series E preferred stock must be made according to each investor’s evaluation of its own best interests. Accordingly, our board of directors makes no recommendation to rights holders regarding whether they should exercise their rights.

The shares of Series E preferred stock will not be listed on any securities exchange or the Nasdaq National Market or included in any automated quotation system. We can give no assurance as to the liquidity of or the trading market for the Series E preferred stock.

Assuming the conversion of the $11 million in principal plus interest amount of convertible secured notes held by the General Atlantic Investors and the and the exchange of $32.8 million in face value of our 5 3/4% of our convertible notes held by the General Atlantic Investors and the Cheung Kong Investors into shares of Series E preferred stock and the exercise of all the subscription rights, either by holders of our common stock on the record date or by the General Atlantic Investors and the Cheung Kong Investors, or a combination thereof, approximately 43 million shares of our Series E preferred stock will be issued and outstanding after the rights offering. In addition, our board of directors has approved the issuance of an additional 10 million shares of Series E preferred stock which may be issued prior to, concurrently with or following the rights offering or not at all. We have engaged a financial advisor to assist us in identifying qualified institutional investors for the placement of these additional shares.

Set forth below, for illustrative purposes only, are two scenarios which indicate the effect the rights offering and related share issuance could have on the relative voting and economic interest of the General Atlantic Investors and the Cheung Kong Investors. As of November 18, 2003, assuming the conversion of $11 million in principal and interest amount of convertible secured notes into approximately 7.3 million shares of Series E preferred stock held by the General Atlantic Investors and approximately $32.8 million in face value of our 5 3/4% of our convertible notes for approximately 21.9 million shares of Series E preferred stock and the amendment of the rights, preferences and privileges of the Series D preferred stock as set forth in our , 2004 special meeting proxy statement, the General Atlantic Investors own approximately 37.7% of our outstanding voting securities and the Cheung Kong Investors own approximately 33.5% of our outstanding voting securities.

SCENARIO A — All shares of Series E preferred stock offered in the rights offering are fully subscribed by the holders of our common stock and the General Atlantic Investors and the Cheung Kong Investors do not acquire any shares of Series E preferred stock in the rights offering.

SCENARIO B — The General Atlantic Investors acquire 55% and the Cheung Kong Investors acquire 45% of all the shares of our Series E preferred stock offered pursuant to the rights offering.

We reserve the right to refuse the exercise of rights by any holder of rights who would, in our opinion, be required to obtain prior clearance or approval from any state, federal or foreign regulatory authorities for the exercise of rights or ownership of shares of preferred stock, if, at the expiration time, this clearance or approval has been obtained. We are not undertaking to obtain any clearance or approval or pay for any expenses incurred in seeking that clearance or approval.

We are not making this rights offering in any state or other jurisdiction in which it is unlawful to do so, nor are we selling or accepting any offers to purchase any shares of our common stock from rights holders who are residents of those states or other jurisdictions. We may delay the commencement of the rights offering in those states or other jurisdictions, or change the terms of the rights offering, in order to comply with the securities law requirements of those states or other jurisdictions. We may decline to make modifications to the terms of the rights offering requested by those states or other jurisdictions, in which case, if you are a resident in those states or jurisdictions or, if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the subscription rights you will not be eligible to participate in the rights offering.

As of November 18, 2003, our authorized capital stock consisted of 125,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share, of which 75,000 shares have been designated as Series C Participating preferred stock and of which 4,000,000 shares have been designated as Series D Cumulative Redeemable Convertible Participating preferred stock. As of that date, we had 20,538,794 shares of common stock outstanding and 4,000,000 shares Series D preferred stock outstanding. On November 20, 2003, we filed a certificate of increase in number of shares of Series D Cumulative Redeemable Convertible Participating preferred stock to increase the number of authorized shares of such series by 188,587 which shares were issued on November 21, 2003. As of this date, there was also one issued and outstanding share of Special Voting Stock, par value $0.001 per share. If the proposal to adopt amended and restated articles of incorporation is adopted by our shareholders and effected by us, then our authorized capital stock will consist of 200,000,000 shares of common stock and 75,000,000 shares of preferred stock.

The following is a summary of the material terms of our capital stock assuming our shareholders adopt the proposals to amend and restate our articles of incorporation and the certificate of determination for our Series D preferred stock. We must obtain shareholder approval of these proposals and file these documents with the appropriate governmental authorities prior to consummating the rights offering.

This summary does not purport to be complete or to contain all the information that may be important to you, and is qualified in its entirety by reference to the amended and restated articles of incorporation, our bylaws, the amended and restated certificate of determination for our Series D preferred stock and our certificate of determination for our Series E preferred stock (forms of which are filed as exhibits to the registration statement on Form S-3 of which this prospectus is a part), and to our certificate of determination for our Special Voting Stock and our certificate of determination for our Series C Participating preferred stock.

As of November 18, 2003, there were 20,538,794 shares of common stock outstanding (including 347,629 shares of A Non-Voting preference shares of our Nova Scotia subsidiary Critical Path Messaging Co. which be exchanged at any time for our common stock upon the election of the holder). The common stock has a par value of $0.001 per share.

Dividends. Subject to the prior rights of the holders of our preferred stock, holders of common stock are entitled to receive such dividends and other distributions in cash, stock or property of Critical Path as may be declared by our board of directors from time to time, out of assets or funds legally available for dividends, provided that in the case of cash dividends or dividends of assets, we are required to declare and pay to the holders of our preferred stock on an as-converted basis any dividends declared or paid on the common stock.

Voting Rights. Each share of common stock is entitled to one vote per share on all matters submitted to our shareholders, including the election of directors. The holders of common stock generally vote together with the holders of our preferred stock as a single class.

Liquidation Rights. In the event of any dissolution, liquidation or winding up of the affairs of Critical Path, after payment or provision for payment of our debts and other liabilities and any amounts to which the holders of our preferred stock are entitled, our remaining assets and funds will be divided among the holders of the Common Stock.

Listing and Transfer Agent. Our common stock is listed on The Nasdaq National Market under the symbol “CPTH.” Computershare Trust Company Inc. is the transfer agent and registrar for our Common Stock.

Our articles of incorporation authorize us to issue preferred in one or more series having designations, rights, and preferences determined from time to time by our board of directors. Accordingly, subject to applicable stock exchange rules and the terms of existing preferred stock, our board of directors is empowered, without the approval of the holders of common stock, to issue shares of preferred stock with dividend, liquidation, conversion, voting, or other rights that could adversely affect the voting power or other rights of the holders of common stock. that are outstanding or proposed to be issued: In some cases, the issuance of Preferred stock could delay a change of control of us or make it harder to remove present management. In addition, the voting and conversion rights of a series of preferred stock could adversely affect the voting power of our common shareholders. Preferred stock could also restrict dividend payments to holders of our common stock. Although we have no present intention to create any new series or issue any additional shares of preferred stock except as noted in this prospectus, we could do so at any time in the future, subject to the rights of holders of our existing preferred stock.

There are currently no shares of Series E preferred stock outstanding. Immediately prior to consummation of the rights offering there will be approximately 29.2 million shares of Series E preferred

Computershare Trust Company Inc. will be the transfer agent and registrar for our Series E preferred stock.

Dividends. Subject to the rights and preferences of the Series E preferred stock, the shares of Series D preferred stock rank senior to all capital stock of Critical Path with respect to the payment of dividends. Dividends on the shares of Series D preferred stock will accrue at a simple annual rate of 5 3/4% whether or not declared by our board of directors. Dividends in respect of the Series D preferred stock will not be paid in cash but will be added to the value of the Series D preferred stock and will be taken into account for purposes of determining the liquidation preference, conversion rate, dividends and voting rights. We must declare or pay dividends on the Series D preferred stock when we declare or pay dividends to the holders of common stock. Except for dividends accruing to the Series E preferred stock, no dividends or distribution with respect to any shares of capital stock may be made unless all dividends accruing to the Series D preferred stock have been paid.

Liquidation. In the event of a liquidation, each share of Series D preferred stock will be paid, prior to the payment of any other equity securities (except for the Series E preferred stock), payments equal to the greater of (a) the accreted value of the Series D preferred stock plus all accrued dividends, (b) 1.6 times the original purchase price of the Series D preferred stock ($22), or (c) the amount that would be paid to the holder of the number of shares of common stock into which such shares of Series D preferred stock are convertible immediately prior to the closing of such liquidation.

Change of Control. In the event of a change of control, each share of Series D preferred stock will be paid, prior to the payment of any other equity securities (except for the Series E preferred stock), payments equal to the greater of (a) the sum of (i) the accreted value per share of the Series D preferred stock, (ii) all accrued dividends, plus (iii) all dividends that would have accrued through the fourth anniversary of the date shares of Series E preferred stock are first issued, (b) 1.6 times the original purchase price of the Series D preferred stock ($22), or (c) the amount that would be paid to the holder of the number of shares of common stock into which such shares of Series D preferred stock are convertible immediately prior to the closing of such change in control. A change of control includes, among others, any merger consolidation or other business combination transaction in which the shareholders owning a majority of our voting securities do not own a majority of our voting securities of the surviving entity, any tender, exchange or other offer whereby any person obtains a majority of the voting securities, any proxy contest in which a majority of the Board of Directors prior to such contest do not constitute a majority of the Board of Directors after such contest or any other transaction that triggers the issuance of rights pursuant to our Shareholder Rights Plan (which issuance is not waived by the Board of Directors).

Redemption. If, on any date after the third anniversary of the date shares of Series E preferred stock are first issued, the average closing price per share of our common stock for any consecutive 60 trading days after the third anniversary date, equals or exceeds 400% of the sum of the purchase price per share of the Series D preferred stock plus all dividends that would have accrued through the fourth anniversary of the date shares of Series E preferred stock are first issued, we may redeem all, but not less than all, of the outstanding shares of Series D preferred stock. The shares Series D preferred stock are mandatorily redeemable on the fourth anniversary of the date shares of Series E preferred stock are first issued. The redemption of the Series D preferred stock is subject to the prior redemption of all the outstanding shares of Series E preferred stock and must be paid in cash at a price per share equal to the purchase price of the Series D preferred stock plus all dividends that have accrued or would have accrued through the fourth anniversary of the date shares of Series E preferred stock was first issued.

Voting. The holders of Series D preferred stock are entitled to elect one member to our board of directors. In addition, each share of Series D preferred stock entitles its holder to vote at any shareholders

meeting, on any matter entitled to be voted on by holders of our common stock, voting together as a single class with other shares entitled to vote on such matters. In that event, each share of Series D preferred stock entitles its holder to cast that number of votes per share as is equal to the number of votes that such holder would be entitled to cast had such holder converted its share of Series D preferred stock into shares of our common stock. In addition, holders of a majority of the outstanding shares of Series D preferred stock must approve:


	•	Any amendment to our amended and restated articles of incorporation or bylaws;

	•	Any issuance or authorization of shares of equity securities ranking senior to the Series E preferred stock or any amendment to the number of authorized shares of Series D preferred stock;

	•	The redemption of any junior equity securities or the payment of dividends to junior equity holders; or

	•	The incurrence of any indebtedness, subject to certain exceptions.

Conversion. Each share of Series D preferred stock will be convertible at any time at the option of the holder into the number of shares of common stock derived by dividing the accreted value of the Series D preferred stock plus all accrued dividends by $1.50, subject to certain antidilution provisions. The terms of the Series D preferred stock contain protection against dilution if Critical Path effects a subdivision or combination of common stock or in the event of a reclassification, recapitalization, stock split, stock dividend or other distribution payable in securities of Critical Path or any other person.

Listing and Transfer Agent. Critical Path is the transfer agent and registrar for our Series D preferred stock.

There is one share of Special Voting Stock, par value $0.001 per share, outstanding which represents, as of November 18, 2003, 347,629 outstanding shares of Class A non-voting preferred shares of Critical Path Messaging Co, an unlimited liability company formed under the laws of Nova Scotia, and our wholly-owned subsidiary. These “exchangeable shares” can be exchanged at any time for our common stock upon the election of the holder. The holders of these shares are entitled to vote by directing the holder of the share of our Special Voting Stock which has one vote for each share of Class A non-voting preference shares outstanding and held by non-affiliates. The Special Voting Stock is not entitled to any dividends. Upon any liquidation, winding-up or dissolution, the Special Voting Share is entitled to receive out of the assets available for distribution an amount equal to $0.001. The liquidation preference of the Special Voting Share ranks senior to our common stock and junior to all other outstanding classes and series of our preferred stock. The Special Voting Stock is not subject to redemption but will automatically be redeemed and cancelled for an amount equal to $0.001 when there are no Class A Non-Voting preference shares outstanding.

See the discussion of our Series C participating preferred stock under the heading “Anti-Takeover Provisions” below.

As of November 18, 2003, there were outstanding options to purchase 12,605,453 shares of our common stock at a weighted average exercise price of $17.99 per share.

As of November 18, 2003, there were outstanding warrants to purchase 2,024,350 shares of our common stock. These warrants are exercisable at prices that range between $360 and $4.20 per share.

Shareholder Rights Plan. On March 19, 2001, we adopted a shareholder rights plan pursuant to the terms of a Preferred Stock Rights Agreement entered into with Computershare Trust Company, Inc., acting as the rights agent.

To effect the rights plan, our board of directors declared a dividend of one right for each outstanding share of common stock and each exchangeable share (described above) held of record at the close of business on May 15, 2001. Each right, when exercisable, entitles the registered holder to purchase one one-thousandth of a share of a Series C participating preferred stock, at a purchase price of $25.00, subject to adjustment for, among other things, stock splits and combinations.

Initially, the rights are “attached” to the common stock and exchangeable shares and trade with the common stock and exchangeable shares. The rights separate from the common stock or exchangeable shares (i) the tenth day (or such later date as may be determined by our board of directors) after a person or affiliated or associated group of persons acquired, or obtained the right to acquire 15% or more of the outstanding shares of common stock (subject to exceptions contained in the rights agreement, as amended, for certain large investors who have acquired stock directly from the company) or (ii) the tenth business day (or such later date as may be determined by our board of directors), following the public announcement of a tender offer or exchange offer which would result in someone becoming the owner of 15% or more of the outstanding common stock. Following a separation, the rights become exercisable, are separately tradable and we will mail separate rights certificates to shareholders. Previous acquisitions of our securities directly from us by the General Atlantic Investors and the Cheung Kong Investors have been excluded from triggering the exercisability of the rights under the rights plan.

The rights expire on the earliest of May 15, 2011, or the redemption or exchange of the rights as described below.

The purchase price, the number of rights and the number of shares of Series C participating preferred stock (or other securities) issuable upon exercise of the rights are subject to adjustment upon a stock dividend, stock split, reverse split or combination.

Unless the rights are earlier redeemed, in the event that, after an acquiring person has acquired more than 15% of the common stock, we are acquired, proper provision must be made such that the rights (other than the rights held by the acquiring person) become exercisable for shares of common stock of the acquiring company with a market value equal to two times the purchase price of the rights. If there is merely an acquisition of at least 15% of our common stock without such approval, each rights (other than the rights held by the acquiring person) shall become exercisable for common stock with a market value of two times the such right’s purchase price.

Prior to a 15% acquisition or the expiration of the rights, we may redeem the rights in whole, but not in part, at a price of $0.001 per right.

In addition, our board of directors may, after a 15% acquisition (but less than a 50% acquisition), exchange the rights for shares of common stock on a one for one basis or for cash or other assets or securities of ours.

If issued, the Series C participating preferred stock will be nonredeemable and junior to any other series of preferred stock we may issue, but will have a preferential quarterly dividend equal to 1,000 times the cash dividend, if any, declared on each share of common stock and 1,000 times the non-cash dividend, if any, declared on each share of common stock and, in the event of our liquidation, a preferred liquidation preference equal to 1,000 times the payment per share of common stock, plus accrued and unpaid

Until a right is exercised, the holder will have no rights as a shareholder of ours. We and the rights agent have broad discretion to amend the rights plan; however, following a separation, no amendment may adversely affect the rights holders.

The rights approved by the Board are designed to protect and maximize the value of the outstanding equity interests in the Company in the event of an unsolicited attempt by an acquirer to take over the Company in a manner or on terms not approved by the board of directors.

Takeover attempts frequently include coercive tactics to deprive the company’s board of directors and its shareholders of any real opportunity to determine the destiny of the company. The rights have been declared by the board in order to deter such tactics, including a gradual accumulation of shares in the open market of 15% or greater position to be followed by a merger or a partial or two-tier tender offer that does not treat all shareholders equally. These tactics unfairly pressure shareholders, squeeze them out of their investment without giving them any real choice and deprive them of the full value of their shares.

The rights are not intended to prevent a takeover of the company and will not do so. Subject to the restrictions described above, the rights may be redeemed by the company at $0.001 per right at any time prior to the date the rights are separated from the common stock and exchangeable shares. Accordingly, the rights should not interfere with any merger or business combination approved by the board of directors.

However, the rights may have the effect of rendering more difficult or discouraging an acquisition of the company deemed undesirable by the board of directors. The rights may cause substantial dilution to a person or group that attempts to acquire the company on terms or in a manner not approved by the company’s board of directors, except pursuant to an offer conditioned upon the negation, purchase or redemption of the rights.

Issuance of the rights does not in any way weaken the financial strength of the company or interfere with its business plans. The issuance of the rights themselves has no dilutive effect, will not affect reported earnings per share, should not be taxable to the company or to its shareholders, and will not change the way in which the company’s shares are presently traded.

As of the date of this prospectus, no shares of Series C participating preferred stock have been issued.

Charter and Bylaw Provisions. Our articles of incorporation and bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. Our board of directors can authorize the issuance of preferred stock that can be created and issued by our board of directors without prior shareholder approval, commonly referred to as “blank check” preferred stock, with rights senior to those of our common stock. Further, our Articles of Incorporation requires that all shareholder action be taken at a shareholders’ meeting. Special meetings of the shareholders may be called only by the board of directors, the chairman of the board, the chief executive officer and president, or by shareholders holding at least 10% of the outstanding common stock. We also have advance notice requirements for submitting nominations for election to our board of directors and for proposing matters that can be acted upon by shareholders at a meeting. Shareholder amendments to our bylaws require a two-thirds vote.

The provisions described above, together with the rights, may have the effect of deterring a hostile takeover or delaying a change in our control or management. See “— Shareholder Rights Plan.”

We are offering shares of our Series E preferred stock directly to you pursuant to this rights offering. We have not employed any brokers, dealers or underwriters in connection with the solicitation for exercise of subscription rights in this rights offering and no commissions, fees or discounts will be paid in connection with it. We may contact holders of common stock by mail, telephone, facsimile and personal

interview and may request brokers, dealers and other nominee shareholders to forward material relating to the offers to beneficial owners of common stock. Our officers and other employees will not receive any commissions or compensation in connection with these activities other than their normal employment compensation. We will pay the fees and expenses of Computershare Trust Company Inc., as Subscription Agent, and Georgeson Shareholder Communications Inc., as Information Agent, and we have agreed to indemnify the Subscription Agent and the Information Agent from certain liabilities in connection with the offering. We will pay out-of pocket expenses, including payments to legal advisors, accountants and subscription agents, printing costs, mailing costs and filing fees estimated to total approximately $450,000.

The following discussion is a summary of the material federal income tax consequences of the rights offering to holders of common stock that hold such stock as a capital asset for federal income tax purposes. This discussion is based on laws, regulations, rulings and decisions in effect on the date of this prospectus, all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This discussion applies only to holders that are U.S. persons, which is defined as a citizen or resident of the United States, a domestic partnership, a domestic corporation, any estate (other than a foreign estate), and any trust so long as a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust. Generally, for federal income tax purposes an estate is classified as a “foreign estate” based on the location of the estate assets, the country of the estate’s domiciliary administration, and the nationality and residency of the domiciliary personal representative.

This discussion does not address all aspects of federal income taxation that may be relevant to holders in light of their particular circumstances or to holders who may be subject to special tax treatment under the Internal Revenue Code of 1986, as amended, including, but not limited to, holders who are dealers in securities or foreign currency, foreign persons (defined as all persons other than U.S. persons), insurance companies, tax-exempt organizations, banks, financial institutions, broker-dealers, holders who hold common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or who acquired common stock pursuant to the exercise of compensatory stock options or warrants or otherwise as compensation.

We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service regarding the federal income tax consequences of the rights offering or the related share issuances. The following summary does not address the tax consequences of the rights offering or the related share issuance under foreign, state, or local tax laws. Accordingly, each recipient of rights should consult its tax advisor with respect to the particular tax consequences of the rights offering or the related share issuances.

The federal income tax consequences for a U.S. person holding of common stock on receipt of subscription rights under the rights offering should be as follows:

Receipt. A holder should not recognize taxable income for federal income tax purposes in connection with the receipt of subscription rights in the rights offering.

Tax Basis and Holding Period. Except as provided in the following sentence, the tax basis of the subscription rights received by a holder in the rights offering should be zero. If either (a) the fair market value of the subscription rights on the date such subscription rights are distributed is equal to at least 15% of the fair market value on such date of the common stock with respect to which the subscription rights are received or (b) the holder elects, by attaching a statement to its federal income tax return for the taxable year in which the subscription rights are received, to allocate part of the tax basis of such common stock to the subscription rights, then upon exercise or transfer of the subscription rights, the holder’s tax basis in the common stock should be allocated between the common stock and the subscription rights in

Expiration. A holder that allows the subscription rights received in the rights offering to expire should not recognize any gain or loss, and the tax basis of the common stock owned by such holder with respect to which such subscription rights were distributed should be equal to the tax basis of such common stock immediately before the receipt of the subscription rights in the rights offering.

Transfer of Rights. A holder who sells or exchanges rights will recognize capital gain or loss equal to the difference between the amount realized and the basis, if any, of the rights sold or exchanged.

Exercise; Tax Basis in and Holding Period of Series E Preferred Stock. A holder should not recognize any gain or loss upon the exercise of the subscription rights received in the rights offering. The tax basis of the Series E preferred stock acquired through exercise of the subscription rights should equal the sum of the subscription price for the Series E preferred stock and the holder’s tax basis, if any, in the subscription rights as described above. The holding period for the Series E preferred stock acquired through exercise of the subscription rights should begin on the date the subscription rights are exercised.

Dividends. Accrued dividends distributions with respect to the Series E preferred stock generally will be taxed as dividend income to the extent of your ratable share of our current and accumulated earnings and profits. Cash distributions in excess of our earnings and profits will be applied to reduce, but not below zero, your tax basis in the Series E preferred stock, and any excess generally will be taxable as capital gain to you (long-term if you held your Series E preferred stock for more than one year at the time of the distribution). Under current law, so long as certain holding period requirements are satisfied, the maximum tax rate on most dividends received by individuals before January 1, 2009 is generally 15%.

Adjustments. In general, anti-dilution adjustments do not result in constructive distribution. However, in certain circumstances, an adjustment to the conversion ratio of the Series E preferred stock, or the failure to make such an adjustment, may result in constructive distributions taxable as dividends. In such event, your tax basis in the Series E preferred stock would be increased by the amount of any such dividend.

Conversion. You will not recognize gain or loss upon the conversion of shares of Series E preferred stock into shares of our common stock (except to the extent of cash, if any, received in lieu of fractional shares of common stock). Your tax basis in the shares of common stock will equal your tax basis in the shares of Series E preferred stock exchanged therefore, and your holding period with respect to the shares of common stock will include your holding period for the shares of Series E preferred stock exchanged therefore. The receipt of cash (if any) in lieu of a fractional interest in a share of common stock will be taxed as if the fractional share of common stock had been issued and then redeemed for cash. Accordingly, you should generally recognize gain or loss in an amount equal to the difference between the amount of cash received for the fractional interest and your tax basis in the fractional interest.

Disposition. The sale or other taxable disposition of shares of Series E preferred stock will result in capital gain or loss equal to the difference between the amount realized in the disposition and your tax basis in the Series E preferred stock immediately before the disposition of Series E preferred stock. Such capital gain or loss will be long-term if you held the Series E preferred stock for more than one year. The maximum tax rate on net long-term capital gain recognized by individuals before January 1, 2009 is 15% under current law, and the ability of individuals to offset losses is limited.

Redemption. Under Section 302 of the Code, a redemption of Series E preferred stock generally will be treated as a sale or exchange if such redemption completely terminates your entire actual and constructive stock interest in our equity or is either “substantially disproportionate” or is “not essentially equivalent to a dividend” with respect to you. In determining whether any either of these tests is met, you must take into account the shares of stock actually owned by you as well as the shares of stock

A redemption of shares of your Series E preferred stock will be treated as “substantially disproportionate” if (i) your percentage ownership of our outstanding voting stock (including all classes of stock that have voting rights) is reduced immediately after the redemption to less than 80% of your percentage interest in such stock immediately before the redemption, (ii) your percentage ownership of our outstanding common stock (both voting and non-voting) immediately after the redemption is reduced to less than 80% of such percentage ownership immediately before the redemption, and (iii) you own, immediately after the redemption, less than 50% of the total of combined voting power of all classes of our stock entitled to vote.

A redemption of shares of your Series E preferred stock will be treated as “not essentially equivalent to a dividend” if you experience a “meaningful reduction” in your percentage interest in our equity as a result of the redemption. Depending on your particular circumstances, taking into account redemption. Depending on your particular circumstances, taking into account whether you are part of management or the Board of Directors of the Company, even a small reduction in your stock ownership interest in us may satisfy this test.

If the redemption is treated as a sale or exchange, you will recognize capital gain or loss equal to the difference between the amount received in the redemption and your tax basis in the Series E preferred stock immediately before the redemption. Such capital gain or loss will be long-term if you have held the Series E preferred stock for more than one year. If the redemption does not constitute a sale or exchange, the receipt of cash Stock will be treated as a distribution with respect to the Series E preferred stock.

Selected legal matters with respect to the validity of the securities offered by this prospectus will be passed upon for us by Pillsbury Winthrop LLP, San Francisco, California.

The consolidated financial statements incorporated in this prospectus by reference to Critical Path Inc.’s Current Report on Form 8-K dated December 24, 2003 have been so incorporated in reliance on the report (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern as described in Note 22 to the consolidated financial statements) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission, or the SEC. The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference into this prospectus is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information as well as the information included in this prospectus. Specifically, we are incorporating by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (File No. 000-25331):


	•	Our Annual Report on Form 10-K for the year ended December 31, 2002, as amended by our Forms 10-K/ A dated April 30, 2003 and May 9, 2003, except for Item 8., including Report of Independent Accountants, Consolidated Financial Statements, Notes to Consolidated Financial


		Statements and Financial Statement Schedule which are listed in the Index of Consolidated Financial Statements and which appear beginning on page 70 of this the Form 10-K and are incorporated into Item 8.

	•	Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003, and September 30, 2003;

	•	Our Current Reports on Form 8-K filed with the SEC on January 2, 2003, February 7, 2003, February 19, 2003, April 25, 2003, July 24, 2003, November 20, 2003 and December 24, 2003; and

	•	The description of our Series C participating preferred stock, par value $0.001 per share, set forth in the registration statement on Form 8-A filed with the SEC on May 7, 2001.

We will provide a copy of any document incorporated by reference into this prospectus and any exhibit specifically incorporated by reference in those documents, without charge, by request directed to us at the following address and telephone number:

We file annual, quarterly and current reports, proxy statements other information with the Securities and Exchange Commission, or the SEC. You may read or copy any document we file at the public reference room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this information may also be obtained by mail from the SEC’s Public Reference Branch at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, our filings with the SEC are also available to the public on the SEC’s Internet Web site at www.sec.gov.

We have filed with the SEC a registration statement on Form S-3 under the Securities Act of 1933 with respect to this rights offering. This prospectus does not contain all of the information set forth in the registration statement and its exhibits. Statements made by us in this prospectus as to the contents of any contract, agreement or other document referred to in this prospectus are not necessarily complete. For a more complete description of these contracts, agreements or other documents, you should carefully read the exhibits to the registration statement and the documents which we reference under the caption “Incorporation of Certain Documents by Reference.”

The registration statement, together with its exhibits and schedules, which we filed with the SEC, may also be reviewed and copied at the public reference facilities of the SEC located at the addresses set forth above. Please call the SEC at 1-800-SEC-0330 for further information on its public reference facilities.

This prospectus is part of a registration statement we filed with the SEC. You should rely only on the information contained, or incorporated by reference in, this prospectus. We have not authorized anyone to provide information different from that contained in, or incorporated by reference in, this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy these securities in any state where the offer or sale is not permitted. This prospectus is not an offer to sell or a solicitation of an offer to buy these securities in any circumstance under which the offer or solicitation is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of these securities.

All fees and expenses other than the SEC registration fee are estimated. The expenses listed above will be paid by the Company.

Section 317 of the California Corporations Code provides for the indemnification of officers, directors and other corporate agents in terms sufficiently broad to indemnify such persons under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the “Act”). Article V, Section B of our articles of incorporation (Exhibit 3.1 hereto) provides for indemnification of our directors, officers, employees and other agents to the extent and under the circumstances permitted by the California Corporations Code. We have also entered into agreements with our directors and officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by law.

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:


	(a) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

	(b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

	(c) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (a) and (b) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(5) The undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, and, to the extent applicable, the transactions by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such offering.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to any charter provision, by-law or

otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on December 23, 2003.


	By:	/s/ WILLIAM E. MCGLASHAN, JR.



	William E. McGlashan, Jr.
	Chief Executive Officer

Each person whose signature appears below hereby constitutes and appoints William E. McGlashan, Jr. and Michael J. Zukerman, and each of them individually, as his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, with full powers to each of them, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement in connection with the registration under the Securities Act of 1933, of securities of the registrant, and to file or cause to be filed the same, with exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent, and each of them individually, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he or she might or could do in person, lawfully do or cause to be done by virtue thereof, and hereby ratifying and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated.


California		91-1788300
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)


Michael J. Zukerman		Gregg F. Vignos
Senior Vice President, General Counsel and Secretary		Pillsbury Winthrop LLP
Critical Path, Inc.		P.O. Box 7880
350 The Embarcadero		San Francisco, CA 94120-7880
San Francisco, CA 94105-1204		(415) 983-1000
(415) 541-2500





		Proposed Maximum		Proposed Maximum
Title of Each Class of	Amount to	Offering Price		Aggregate Offering		Amount of
Securities to be Registered	be Registered	Per Unit		Price		Registration Fee


Rights to purchase Series E Redeemable Convertible Preferred Stock(1)	14,000,000		—		—		—(2)

Series E Redeemable Convertible Preferred Stock, $0.001 par value per share, issuable upon exercise of transferable subscription rights	14,000,000		$1.50		$21,000,000		$1,700

Common Stock, $0.001 par value per share, issuable upon conversion of Series E Redeemable Convertible Preferred Stock(3)	17,220,000 shares(4)		—		—		—(5)

TOTAL							$1,700


RECENT DEVELOPMENTS
RISK FACTORS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
DEFICIENCY OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
DETERMINATION OF OFFERING PRICE
CAPITALIZATION
	The Rights Offering
DESCRIPTION OF CAPITAL STOCK
PLAN OF DISTRIBUTION
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
LEGAL MATTERS
EXPERTS
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
WHERE YOU CAN FIND MORE INFORMATION
Exhibit 3.1
Exhibit 4.1
Exhibit 4.2
Exhibit 4.3
Exhibit 4.4
Exhibit 12.1
Exhibit 23.1
Exhibit 99.1
Exhibit 99.2
Exhibit 99.3
Exhibit 99.4
Exhibit 99.5
Exhibit 99.6
Exhibit 99.7



Rank:		The Series E preferred stock will rank senior to all our other capital stock with respect to rights on liquidation, dissolution and winding up.

Dividends:		The Series E preferred stock will accrue dividends at a simple annual rate of 5 3/4% whether or not declared by the board of directors. Dividends in respect of the Series E preferred stock will not be paid in cash but will be added to the value of the Series E preferred stock and will be taken into account for purposes of determining the liquidation and change in control preference, conversion rate and voting rights. We must declare or pay dividends on the Series E preferred stock when we declare or pay dividends to the holders of common stock.

Voting Rights:		Holders of Series E preferred stock are entitled to notice of all shareholders’ meetings and are entitled to vote on all matters submitted to the shareholders for a vote, voting together with the holders of the common stock and all other classes of capital stock entitled to vote, voting as a single class (except where a separate vote is required by our amended and restated articles of incorporation, our bylaws or the California corporations code). Each holder of the Series E preferred stock is entitled to one vote for each share of common stock then issuable upon conversion of the Series E preferred stock. The holders of Series E preferred stock will be entitled to vote as a separate class on any amendment to the terms or authorized number of shares of Series E preferred stock, the issuance of any equity security ranking senior to the Series E preferred stock and the redemption of or the payment of a dividend in respect of any junior security.

Conversion:		At any time, holders of Series E preferred stock may elect to convert their Series E preferred stock into common stock.


	Page

Prospectus Summary		ii
Questions and Answers About The Rights Offering		ii
Recent Developments		1
Risk Factors		1
Special Note Regarding Forward-Looking Statements		19
Deficiency of Earnings to Combined Fixed Charges and Preferred Stock Dividends		20
Use of Proceeds		20
Determination of Offering Price		20
Capitalization		21
The Rights Offering		23
Description of Capital Stock		33
Plan of Distribution		38
Material United States Federal Income Tax Consequences		39
Legal Matters		41
Experts		41
Incorporation of Certain Documents By Reference		41
Where You Can Find More Information		42


Q:		Why are we engaging in a rights offering?

A:		We recently entered into an agreement to issue $10 million in principal amount of 10% convertible secured notes to General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStart, LLC and GAPCO GmbH & Co. K.G., (referred to collectively as the General Atlantic Investors), and agreed to convert the notes, plus $1 million in accrued interest, into approximately 7.3 million shares of our Series E preferred stock. In the same agreement, we agreed to exchange approximately $32.8 million in face value of our 5 3/4% convertible subordinated notes held by a group of investors led by Cheung Kong Group and its Whampoa Limited affiliates including Campina Enterprises Limited, Cenwell Limited, Great Affluent Limited, Dragonfield Limited and Lion Cosmos Limited (referred to collectively as the Cheung Kong Investors) for approximately 21.9 million shares of our Series E preferred stock. The Series E preferred stock will be issued to these investors only if we receive shareholder approval. Our primary purposes for the rights offering are to allow the holders of our common stock an opportunity to further invest in Critical Path and restore a portion, although not all, of their proportionate interest in our capital stock at the same price per share of Series E preferred stock as was established under the agreement with the General Atlantic Investors and the Cheung Kong Investors and to raise capital necessary for us to continue our operations.

Q:		What is the rights offering?

A:		The rights offering is a distribution to holders of our common stock as of [RECORD DATE], the record date, of up to 14,000,000 transferable subscription rights at the rate of two subscription rights for every three shares of common stock held on the record date.

Q:		What is a subscription right?

A:		The subscription rights are rights to purchase shares of our Series E preferred stock. Each subscription right carries with it a basic subscription right and an over-subscription right.

Q:		What is the basic subscription right?

A:		Each basic subscription right entitles you to purchase one share of our Series E preferred stock at the subscription price of $1.50 per share. Each share of Series E preferred stock is convertible into the number of shares of common stock obtained by dividing $1.50 plus the amount of dividends accreted to the Series E preferred stock from the date of issuance through the date of conversion by $1.50.

Q:		What is the over-subscription right?

A:		The over-subscription right associated with each subscription right entitles you, if you fully exercise your basic subscription right, to subscribe for additional shares of our Series E preferred stock at the same subscription price per share, on a pro rata basis, if any shares are not purchased by other holders of subscription rights under their basic subscription rights as of the expiration date. “Pro rata” means


Redemption:		After three years from the date the Series E preferred stock is first issued, we may redeem the Series E preferred stock under certain circumstances. On the fourth anniversary of the date the Series E preferred stock is first issued, we must redeem the Series E preferred stock.


		For a more complete description of the rights, preferences and privileges of the Series E preferred stock, see “The Rights Offering — Terms of the Series E Preferred Stock,” beginning on page 25.

Q:		What happens if I choose not to exercise my subscription rights?

A:		You will retain your current number of shares of our capital stock held directly by you even if you do not exercise your subscription rights. If you choose not to exercise your subscription rights, then the percentage of our capital stock held directly by you will decrease. However, even if you choose to exercise your subscription rights in full, your percentage ownership of our capital stock held directly by you will still decrease. The magnitude of the reduction will depend upon the extent to which rights holders subscribe in the rights offering and the extent to which the General Atlantic Investors and the Cheung Kong Investors exercise their rights to purchase any shares of Series E preferred stock not subscribed for by the holders of rights.

Q:		What should I do if I want to participate in the rights offering but my shares are held in the name of my broker, custodian bank or other nominee?

A:		If you hold shares of our common stock through a broker, custodian bank or other nominee, we will ask your broker, custodian bank or other nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need to have your broker, custodian bank or other nominee act for you. To indicate your decision, you should complete and return to your broker, custodian bank or other nominee the form entitled “Beneficial Owner Election Form.” You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials. You should contact your broker, custodian bank or other nominee if you believe you are entitled to participate in the rights offering but you have not received this form.

Q:		Will I be charged a sales commission or a fee by the company if I exercise my subscription rights?

A:		No. We will not charge a brokerage commission or a fee to rights holders for exercising their subscription rights. However, if you exercise your subscription rights through a broker or nominee, you will be responsible for any transaction fees charged by your broker or nominee.

Q:		Are there any conditions to my right to exercise my subscription rights?

A:		Yes. We may cancel the rights offering if, among other things, the matters submitted to a vote of our shareholders at a special meeting to be held on , 2004 are not approved. We cannot assure you that we will secure the necessary shareholder approval or that all conditions to closing will be satisfied under the convertible note purchase and exchange agreement. In addition, we reserve the right to terminate the rights offering for any reason prior to the expiration of the rights offering. For a more complete description of the matters being submitted to a vote of our shareholders at the special meeting, see the discussion under “Recent Developments” beginning on page 1 of this prospectus.

Q:		What will happen if the requisite percentage of our shareholders do not approve the proposals at the special meeting?

A:		If our shareholders do not approve the proposals at the special meeting, the rights offering will terminate and the convertible notes held by the General Atlantic Investors and the Cheung Kong Investors will not be converted into or exchanged for Series E preferred stock.


Q:		What is the board of directors’ recommendation regarding whether I should exercise my rights in the rights offering?

A:		Our board of directors is not making any recommendation as to whether you should exercise your subscription rights. You are urged to make your decision based on your own assessment of our business and the rights offering.

Q:		How was the subscription price established?

A:		The subscription price per share was the price proposed by the General Atlantic Investors and the Cheung Kong Investors in connection with our negotiation of the convertible note purchase and exchange agreement and was approved by the independent members of our board of directors (which excluded William E. McGlashan, Jr., our chief executive officer and a related party of one of our holders of Series D preferred stock, and Raul J. Fernandez and William E. Ford, each of whom is affiliated with the General Atlantic Investors) based on the recommendation of the strategic alternatives committee of the board of directors.

Q:		Is exercising my subscription rights risky?

A:		Yes. The exercise of your subscription rights involves risks. Exercising your subscription rights means buying additional shares of our capital stock and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the heading “Risk Factors,” beginning on page 1.

Q:		May I transfer my subscription rights if I do not want to purchase any shares?

A:		Yes. Should you choose not to exercise your subscription rights, you may transfer your subscription rights. However, the subscription rights must nevertheless be exercised prior to the expiration of the rights offering or they will terminate.

Q:		Is there an active trading market for the rights?

A.		No. The rights have not been listed on any securities exchange or the Nasdaq National Market or included on any automated quotation system. We can give you no assurance as to the liquidity of or trading market for the rights.

Q:		Is there an active trading market for the Series E preferred stock?

A.		No. The Series E preferred stock has not been listed on any securities exchange or the Nasdaq National Market or included on any automated quotation system. We can give you no assurance as to the liquidity of or trading market for the Series E preferred stock.

Q:		How many shares will be outstanding after the rights offering, including those owned by the General Atlantic Investors, the Cheung Kong Investors and our other securityholders?

A:		Table I summarizes information regarding the securities owned by the General Atlantic Investors, the Cheung Kong Investors and our other securityholders as of November 18, 2003 and the percentage of voting power represented by these securities, assuming our shareholders approve the conversion of the outstanding convertible notes held by the General Atlantic Investors and the Cheung Kong Investors into shares of our Series E preferred stock and the amendment of the certificate of designation of the Series D preferred stock.

		Tables II and III adjust the November 18, 2003 ownership and voting power information to give effect to the closing of the rights offering based on two different assumptions. Table II assumes that the holders of our common stock on [RECORD DATE] exercise their subscription rights to purchase all approximately $21 million of Series E preferred stock offered in the rights offering. Table III assumes that holders of our common stock on [RECORD DATE] do not participate in the rights offering and the General Atlantic Investors exercise their rights to purchase 55% of the unsubscribed portion of the rights offering and the Cheung Kong Investors exercise their rights to purchase 45% of the unsubscribed portion of the rights offering in accordance with our agreement with them. In



		Securities Owned as of November 18, 2003

						Number		Percentage of
				Actual		Outstanding on an		Our Voting Power
				Number		As Converted to		Represented by
Names of Security Holders		Class		Outstanding		Common Stock Basis		Securities Owned(b)

General Atlantic Investors			Series E Preferred Stock		7,333,333		7,333,333		7.9
			Series D Preferred Stock		2,545,455		27,101,134		29.2
		Warrants to Purchase Common Stock			625,000		625,000		0.7

	Total						35,059,467		37.7

Cheung Kong Investors			Series E Preferred Stock		21,863,333		21,863,333		23.5
			Series D Preferred Stock		872,727		9,291,813		10.0

	Total						31,155,146		33.5

Other Holders(a)			Series E Preferred Stock		—		—		—
			Series D Preferred Stock		581,818		6,194,542		6.7
			Common Stock		20,538,794		20,538,794		22.1
			Warrants and Options		14,004,803		14,004,803		—

	Total						40,738,139		28.8



		Securities Owned After Rights Offering — Assuming $21 Million Subscription
		by Holders of Common Stock

						Number		Percentage of
				Actual		Outstanding on an		Our Voting Power
				Number		As Converted to		Represented by
Names of Security Holders		Class		Outstanding		Common Stock Basis		Securities Owned(b)

General Atlantic Investors			Series E Preferred Stock		7,333,333		7,333,333		6.7
			Series D Preferred Stock		2,545,455		27,101,134		24.7
		Warrants to Purchase Common Stock			625,000		625,000		0.6

	Total						35,059,487		32.0

Cheung Kong Investors			Series E Preferred Stock		21,863,333		21,863,333		20.0
			Series D Preferred Stock		872,727		9,291,813		8.5

	Total						31,155,146		28.5

Other Holders(a)			Series E Preferred Stock		14,733,333		14,733,333		13.5
			Series D Preferred Stock		105,660		7,461,209		6.8
			Common Stock		21,092,708		21,092,708		19.3
			Warrants and Options		14,004,803		14,004,803		—

	Total						57,292,053		39.5



		Securities Owned After Rights Offering — Assuming $21 Million Subscription by
		General Atlantic Investors and Cheung Kong Investors

						Number		Percentage of
				Actual		Outstanding on an		Our Voting Power
				Number		As Converted to		Represented by
Names of Security Holders		Class		Outstanding		Common Stock Basis		Securities Owned(b)

General Atlantic Investors			Series E Preferred Stock		15,033,333		15,033,333		13.7
			Series D Preferred Stock		2,545,455		27,101,134		24.7
		Warrants to Purchase Common Stock			625,000		625,000		0.6

	Total						42,759,467		39.0

Cheung Kong Investors			Series E Preferred Stock		28,163,333		28,163,333		25.7
			Series D Preferred Stock		872,727		9,291,813		8.5

	Total						37,455,146		34.2

Other Holders(a)			Series E Preferred Stock		733,333		733,333		0.7
			Series D Preferred Stock		105,660		7,461,209		6.8
			Common Stock		21,092,708		21,092,708		19.3
			Warrants and Options		14,004,803		14,004,803		—

	Total						43,292,053		26.7


	*We will need to raise additional capital and may need to initiate other operational strategies to continue our operations.*


	*We have a history of losses, expect continuing losses and may never achieve profitability.*


	Due to our evolving business strategy and the nature of the messaging and directory infrastructure market, our future revenues are unpredictable and our quarterly operating results may fluctuate.


	*If we fail to improve our sales and marketing results, we may be unable to grow our business, which would negatively impact our operating results.*


	*The conversion of our preferred stock would result in a substantial number of additional shares of common stock outstanding, which could decrease the price of our common stock.*


	*Our preferred stock carries a substantial liquidation preference, which could significantly impact the return to common equity holders upon an acquisition.*


	*We have experienced significant turnover of senior management and our executive management team has been together for a limited time, which could harm our business and operations.*


	*We depend on strategic relationships and the loss of any key strategic relationships could harm our business and negatively affect our revenues.*


	*A limited number of customers account for a high percentage of our revenues and if we lose a major customer or are unable to attract new customers, revenues could decline.*


	*If we are unable to successfully compete in our product market, our operating results could be harmed.*


	*We may not be able to respond to the rapid technological change of the messaging and identity management infrastructure industry.*


	*Our sales cycle is lengthy, and our results could be harmed by delays or cancellations in orders.*


	*Although concluded without monetary penalties to the Company, lingering effects of the recent SEC investigation could harm our business.*


	*Our failure to carefully manage expenses and growth could cause our operating results to suffer.*


	*We may not be able to maintain our listing on the Nasdaq National Market, and if we fail to do so, the price and liquidity of our common stock may decline.*


	Our stock price has demonstrated volatility and overall declines during recent quarters and continued volatility in the stock market may cause further fluctuations and/or decline in our stock price.


	*If we have to pay amounts in excess of the limits of our director and officer liability insurance, our business and financial condition may be harmed.*


	*We may experience difficulty in attracting and retaining key personnel, which may negatively affect our ability to develop new services or retain and attract customers.*


	*If we are not successful in implementing strategic plans for our operations, our business could be negatively impacted.*


	We may experience a decrease in market demand due to the slowed economy in the United States, which has been further stymied by the concerns of terrorism, war and social and political instability.


	*We may face continued technical, operational and strategic challenges preventing us from successfully integrating or divesting acquired businesses.*


	*We currently license many third-party technologies and may need to license further technologies and we face risks in doing so that could cause our operating results to suffer.*