SC TO-I

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

(Rule 13e-4)

Tender Offer Statement under Section 14(d)(1) or 13(e)(1)

of the Securities Exchange Act of 1934

Critical Path, Inc.

(Name of Subject Company (Issuer) and Filing Person (Offeror))

Options to Purchase Common Stock, $0.001 Par Value Per Share

(Title of Class of Securities)

22674 V 50 6

(CUSIP Number of Class of Securities)

(Underlying Common Stock)

Mark J. Ferrer

Chief Executive Officer

2 Harrison Street, 2nd Floor

San Francisco, California 94105

(415) 541-2500

(Name, address and telephone number of person authorized to

receive notices and communications on behalf of filing person)

Copy to:

Michael J. Zukerman, Esq. General Counsel and EVP 2 Harrison Street, 2nd Floor San Francisco, California 94105 (415) 541-2500 Nathaniel M. Cartmell III Glenn J. Borromeo Pillsbury Winthrop Shaw Pittman LLP P.O. Box 7880 San Francisco, California 94120 (415) 983-1000

CALCULATION OF FILING FEE

Transaction Value*	Amount of Filing Fee**
$1,563,580	$168.00

* Estimated solely for purposes of calculating the amount of the filing fee. The calculation of the transaction valuation assumes that all options to purchase the issuer’s common stock that are eligible for exchange will be exchanged for new options and cancelled pursuant to this offer. These options have an aggregate value of $1,563,580 calculated using the Black-Scholes option pricing model based upon the closing sale price of the issuer’s common stock on the National Association of Securities Dealers’ Over-the-Counter Bulletin Board on May 26, 2006.

** The amount of the filing fee calculated in accordance with Rule 0-11(b) of the Securities Exchange Act of 1934, as amended, equals $107.00 for each $1,000,000 of the value of the transaction.

¨ Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

¨ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

¨ third-party tender offer subject to Rule 14d-1.

x issuer tender offer subject to Rule 13e-4.

¨ going-private transaction subject to Rule 13e-3.

¨ amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:  ¨

TABLE OF CONTENTS

	Page
Item 1. Summary Term Sheet	3
Item 2. Subject Company Information.	3
Item 3. Identity and Background of Filing Person.	3
Item 4. Terms of the Transaction.	3
Item 5. Past Contacts, Transactions, Negotiations and Agreements.	4
Item 6. Purposes of the Transaction and Plans or Proposals.	4
Item 7. Source and Amount of Funds or Other Consideration.	4
Item 8. Interest in Securities of the Subject Company.	4
Item 9. Persons/Assets, Retained, Employed, Compensated or Used.	4
Item 10. Financial Statements.	4
Item 11. Additional Information.	5
Item 12. Exhibits.	5
Item 13. Information Required by Schedule 13E-3.	5
Signature	6
Index to Exhibits	7

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Item 1. Summary Term Sheet.

The information set forth under “Summary Term Sheet — Questions and Answers” in the Exchange Offer, dated May 31, 2006 (the “Exchange Offer”), attached hereto as Exhibit (a)(1)(A), is incorporated herein by reference.

Item 2. Subject Company Information.

(a)    Name and Address.  The issuer is Critical Path, Inc., a California corporation (“Critical Path” or the “Company”). Critical Path’s principal executive offices are located at 2 Harrison Street, 2nd Floor, San Francisco, California 94105 and the telephone number of its principal executive offices is (415) 541-2500.

(b)    Securities.  This Tender Offer Statement on Schedule TO relates to an offer by Critical Path to Eligible Participants to exchange some or all of their outstanding options granted under the Critical Path, Inc. Amended and Restated 1998 Stock Plan (the “1998 Plan”) and the Critical Path, Inc. 1999 Nonstatutory Stock Option Plan (the “1999 Plan,” and together with the 1998 Plan, the “Option Plans”) to purchase shares of Critical Path common stock, par value of $0.001 (the “Eligible Options”) for new options to purchase shares of such common stock (in each case, the “New Options”) to be granted under the 1998 Plan. This offer is being made upon the terms and subject to the conditions set forth in the Exchange Offer and in the related accompanying Election Form, attached hereto as Exhibit (a)(1)(D).

The Exchange Offer is being made to Company employees, consultants and directors who, as of May 31, 2006, the date the Exchange Offer commenced, are actively employed by or providing services to the Company and have Eligible Options. These persons are collectively referred to as the “Eligible Participants.” To remain eligible to tender Eligible Options for exchange and cancellation, and receive New Options, an Eligible Participant must remain an Eligible Participant, and must not have received nor have given a notice of termination on or prior to the expiration time of the Exchange Offer.

The information set forth in the Exchange Offer under “Summary Term Sheet — Questions and Answers,” Section 1 (“Number of Eligible Options; Eligible Participants; Expiration of the Exchange Offer”), Section 5 (“Acceptance of Eligible Options for Exchange; Issuance of New Options”), Section 7 (“Price Range of Common Stock”) and Section 8 (“Source and Amount of Consideration; Terms of New Options”) is incorporated herein by reference.

(c)    Trading Market and Price.  The information set forth in the Exchange Offer under Section 7 (“Price Range of Common Stock”) is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

The information set forth under Item 2(a) above and in the Exchange Offer under Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”) is incorporated herein by reference. The Company is both the filing person and the subject company.

Item 4. Terms of the Transaction.

(a)    Material Terms.  The information set forth in the Exchange Offer under “Summary Term Sheet — Questions and Answers,” Section 1 (“Number of Eligible Options; Eligible Participants; Expiration of the Exchange Offer”), Section 3 (“Procedures for Tendering Eligible Options”), Section 4 (“Withdrawal Rights”), Section 5 (“Acceptance of Eligible Options for Exchange; Issuance of New Options”), Section 6 (“Conditions of this Exchange Offer”), Section 8 (“Source and Amount of Consideration; Terms of New Options”), Section 9 (“Information Concerning CPTH; Financial Information”); Section 11 (“Status of Eligible Options Acquired by Us in this Exchange Offer; Accounting Consequences of this Exchange Offer”), Section 12 (“Legal Matters; Regulatory Approvals”), Section 13 (“Material Tax Consequences”), and Section 14 (“Extension of Exchange Offer; Termination; Amendment”) is incorporated herein by reference.

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(b)    Purchases.  The information set forth in the Exchange Offer under Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”) is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

(e)    Agreements Involving the Subject Company’s Securities.  The information set forth in the Exchange Offer under Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”) is incorporated herein by reference. The Option Plans and related option agreements included with the Exchange Offer attached hereto as Exhibit (d)(1) and (d)(2) also contain information regarding the subject company’s securities.

Item 6. Purposes of the Transaction and Plans or Proposals.

(a)    Purposes.  The information set forth in the Exchange Offer under Section 2 (“Purpose of this Exchange Offer”) is incorporated herein by reference.

(b)    Use of Securities Acquired.  The information set forth in the Exchange Offer under Section 5 (“Acceptance of Eligible Options for Exchange; Issuance of New Options”) and Section 11 (“Status of Eligible Options Acquired by Us in this Exchange Offer; Accounting Consequences of this Exchange Offer”) is incorporated herein by reference.

(c)    Plans.  The information set forth in the Exchange Offer under Section 9 (“Information Concerning CPTH; Financial Information”) and Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”) is incorporated herein by reference.

Item 7. Source and Amount of Funds or Other Consideration.

(a)    Source of Funds.  The information set forth in the Exchange Offer under Section 8 (“Source and Amount of Consideration; Terms of New Options”) and Section 15 (“Fees and Expenses”) is incorporated herein by reference.

(b)    Conditions.  The information set forth in the Exchange Offer under Section 6 (“Conditions of this Exchange Offer”) is incorporated herein by reference.

(d)    Borrowed Funds.  Not applicable.

Item 8. Interest in Securities of the Subject Company.

(a)    Securities Ownership.  The information set forth in the Exchange Offer under Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”) is incorporated herein by reference.

(c)    Securities Transactions. The information set forth in the Exchange Offer under Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”) is incorporated herein by reference.

Item 9. Persons/Assets, Retained, Employed, Compensated or Used.

Not applicable.

Item 10. Financial Statements.

(a)    Financial Information.  The information set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and the financial information contained in the Exchange Offer under Section 9 (“Information Concerning CPTH; Financial Information”) and Section 16 (“Additional Information”) is incorporated herein by reference.

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(b)    Pro Forma Information.  Not applicable.

Item 11. Additional Information.

(a)    Agreements, Regulatory Requirements and Legal Proceedings.  The information set forth in the Exchange Offer under Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”), Section 12 (“Legal Matters; Regulatory Approvals”) and Risk Factors is incorporated herein by reference.

(b)    Other Material Information.  Not applicable.

Item 12. Exhibits.

Exhibit No.	Description
(a)(1)(A)	Exchange Offer for Certain Outstanding Options for New Stock Options, dated May 31, 2006.
(a)(1)(B)	Presentation to Eligible Participants of Critical Path, Inc., dated May 31, 2006.
(a)(1)(C)	Memo to Eligible Participants of Critical Path, Inc., dated May 31, 2006.
(a)(1)(D)	Election Form.
(a)(1)(E)	Notice of Withdrawal.
(a)(1)(F)	Form of Communication to Eligible Participants Participating in the Option Exchange Offer Confirming Receipt of Election Form.
(a)(1)(G)	Form of Communication to Eligible Participants Confirming Receipt of Notice of Withdrawal.
(a)(1)(H)	Form of Rights Letter to Eligible Participants Participating in the Option Exchange Offer.
(a)(1)(I)	Form of Communication to Eligible Participants Rejecting the Election Form under the Option Exchange Offer.
(a)(1)(J)	Form of Communication to Eligible Participants Rejecting the Notice of Withdrawal under the Option Exchange Offer.
(a)(1)(K)	Form of Reminder Email to Eligible Participants.
(a)(2)	Not applicable.
(a)(3)	Not applicable.
(a)(4)	Not applicable.
(a)(5)	Not applicable.
(b)	Not applicable.
(d)(1)	Critical Path, Inc.’s Amended and Restated 1998 Stock Plan and forms of Stock Option Agreements.
(d)(2)	Critical Path, Inc.’s 1999 Nonstatutory Stock Option Plan and form of Stock Option Agreement.
(d)(3)	Form of Replacement Stock Option Agreement.
(g)	Not applicable.
(h)	Not applicable.

Item 13. Information Required by Schedule 13E-3.

Not applicable.

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SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Critical Path, Inc.
By:	/S/    MARK J. FERRER
Name: Mark J. Ferrer
Title: Chief Executive Officer
Date: May 31, 2006

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INDEX TO EXHIBITS

Exhibit No.	Description
(a)(1)(A)	Exchange Offer for Certain Outstanding Options for New Stock Options, dated May 31, 2006.
(a)(1)(B)	Presentation to Eligible Participants of Critical Path, Inc., dated May 31, 2006.
(a)(1)(C)	Memo to Eligible Participants of Critical Path, Inc., dated May 31, 2006.
(a)(1)(D)	Election Form.
(a)(1)(E)	Notice of Withdrawal.
(a)(1)(F)	Form of Communication to Eligible Participants Participating in the Option Exchange Offer Confirming Receipt of Election Form.
(a)(1)(G)	Form of Communication to Eligible Participants Confirming Receipt of Notice of Withdrawal.
(a)(1)(H)	Form of Rights Letter to Eligible Participants Participating in the Option Exchange Offer.
(a)(1)(I)	Form of Communication to Eligible Participants Rejecting the Election Form under the Option Exchange Offer.
(a)(1)(J)	Form of Communication to Eligible Participants Rejecting the Notice of Withdrawal under the Option Exchange Offer.
(a)(1)(K)	Form of Reminder Email to Eligible Participants.
(a)(2)	Not applicable.
(a)(3)	Not applicable.
(a)(4)	Not applicable.
(a)(5)	Not applicable.
(b)	Not applicable.
(d)(1)	Critical Path, Inc.’s Amended and Restated 1998 Stock Plan and forms of Stock Option Agreements.
(d)(2)	Critical Path, Inc.’s 1999 Nonstatutory Stock Option Plan and form of Stock Option Agreement.
(d)(3)	Form of Replacement Stock Option Agreement.
(g)	Not applicable.
(h)	Not applicable.

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EX-99.(A)(1)(A)

EXHIBIT (a)(1)(A)

CRITICAL PATH, INC.

EXCHANGE OFFER

OUTSTANDING STOCK OPTIONS FOR

NEW STOCK OPTIONS

The exchange offer and withdrawal rights expire at

midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006,

unless the exchange offer is extended.

Critical Path, Inc. is offering to exchange “eligible options” held by each “eligible participant” for new stock options.

• “Eligible options” are all outstanding stock options granted under Critical Path’s Amended and Restated 1998 Stock Plan (the “1998 Plan”) and Critical Path’s 1999 Nonstatutory Stock Option Plan (the “1999 Plan”), which we refer to collectively as the “Option Plans.”

• “Eligible Participant” is each person who:

° holds eligible options;

° is an employee of, consultant to, or a director of Critical Path on the date this exchange offer is made; and

° continues to be an employee of, consultant to, or a director of Critical Path at, and has neither submitted or received a notice of termination, nor has otherwise terminated his or her employment or service provider contract or arrangement prior to, the time this exchange offer expires.

The commencement date of this exchange offer is Wednesday, May 31, 2006. We are making this exchange offer upon the terms and subject to the conditions described in this exchange offer and in the related Election Form included with this exchange offer. You are not required to accept this exchange offer. If you choose to tender an eligible option in exchange for a new option, you must tender the entire eligible option but need not tender other eligible options.

See “Risk Factors” beginning on page 9 for a discussion of risks and uncertainties that you should consider before tendering your eligible options.

Shares of our common stock are quoted on the NASDAQ Stock Market’s Over-the-Counter Bulletin Board (OTCBB) under the symbol “CPTH.OB.” On May 30, 2006, the closing price of our common stock as reported on the OTCBB was $0.205 per share. We recommend that you obtain current market quotations for our common stock before deciding whether to elect to participate in the exchange offer.

You should direct questions about the exchange offer or requests for assistance to Critical Path, Inc., 2 Harrison Street, 2nd Floor, San Francisco, California 94105, Attention: Michael Zukerman, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net. You should direct requests for additional copies of the exchange offer, the Election Form or other documents relating to this exchange offer to Critical Path, Inc., 2 Harrison Street, 2nd Floor, San Francisco, California 94105, Attention: Tom Quigley, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net.

IMPORTANT

If you wish to tender your eligible options for exchange, you must complete and sign the Election Form and deliver it to Critical Path so that it is received before 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006 (or such later date as may apply if this exchange offer is extended), by one of the following means:

Via Mail or Courier

Critical Path, Inc.

2 Harrison Street, 2nd Floor

San Francisco, California 94105

Attention: Tom Quigley

Phone: (415) 541-2500

Via Facsimile

Critical Path, Inc., Tom Quigley, Fax No. (415) 541-2307

By Hand To

Tom Quigley

Via Email

optionexchange@criticalpath.net

You do not need to return your stock option agreements for your eligible options to participate in this exchange offer.

Although our Board of Directors has approved the exchange offer, consummation of the exchange offer is subject to the satisfaction or waiver of the conditions described in Section 6 (“Conditions of this Exchange Offer”) of this exchange offer. Neither we nor our Board of Directors makes any recommendation as to whether you should tender, or refrain from tendering, any or all of your eligible options in the exchange offer. You must make your own decision whether to tender your eligible options. You should consult your personal tax, legal, accountant and financial advisor(s) if you have questions about your financial or tax situation as it relates to this exchange offer.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of this transaction or passed upon the fairness or merits of this transaction or the accuracy or adequacy of the information contained in this exchange offer. Any representation to the contrary is a criminal offense.

WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER OR NOT YOU SHOULD TENDER YOUR ELIGIBLE OPTIONS PURSUANT TO THIS OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN DOCUMENTS TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE RELATED ELECTION FORM. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU SHOULD NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.

TABLE OF CONTENTS

SUMMARY TERM SHEET — QUESTIONS AND ANSWERS		1
RISK FACTORS		9
THIS OFFER		11
Section 1.	Number of Shares Subject to Eligible Options; Eligible Participants; Expiration of the Exchange offer.	11
Section 2.	Purpose of this Exchange Offer.	12
Section 3.	Procedures For Tendering Eligible Options.	13
Section 4.	Withdrawal Rights.	14
Section 5.	Acceptance of Eligible Options For Exchange; Issuance of New Options.	15
Section 6.	Conditions of this Exchange Offer.	16
Section 7.	Price Range of Common Stock.	17
Section 8.	Source and Amount of Consideration; Terms of New Options.	17
Section 9.	Information Concerning CPTH; Financial Information.	21
Section 10.	Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH.	22
Section 11.	Status of Eligible Options Acquired by Us in this Exchange Offer; Accounting Consequences of this Exchange Offer.	25
Section 12.	Legal Matters; Regulatory Approvals.	26
Section 13.	Material Tax Consequences.	26
Section 14.	Extension of Exchange Offer; Termination; Amendment.	27
Section 15.	Fees and Expenses.	28
Section 16.	Additional Information.	28
Section 17.	Miscellaneous.	29

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SUMMARY TERM SHEET — QUESTIONS AND ANSWERS

The following are answers to some of the questions that you may have about this exchange offer. Critical Path, Inc., which we refer to in this document as “we,” “us,” the “Company” or “CPTH,” encourages you to carefully read the remainder of this exchange offer and the accompanying Election Form because the information in this summary is not complete and may not contain all of the information that is important to you. Where appropriate, we have included references to the relevant sections of this exchange offer where you can find a more complete description of the topics in this summary.

Q.1. Why are we making this exchange offer?

We believe the exchange offer is an effective means of recognizing contributions to our success by our employees, consultants and directors and aligning workforce and shareholder interests. Stock options have been, and continue to be, a key part of our workforce incentive compensation and retention programs. Stock options are designed to motivate and reward our workforce’s efforts toward CPTH’s growth and success. However, virtually all of our employees, consultants and directors hold stock options with exercise prices that exceed the current market price of our common stock. These options are commonly referred to as being “underwater.” Consequently, we believe that these options no longer provide the long-term incentive and retention objectives that they were intended to provide. The exchange offer is intended to address this situation. See Section 2 (“Purpose of this Exchange Offer”) for more information.

Q.2. What securities are we offering to exchange?

We are offering eligible participants a one-time opportunity to exchange some or all of their eligible options for new options with an exercise price per share equal to the closing sale price of our common stock on the OTCBB as reported by The NASDAQ Stock Market on the business day immediately prior to the grant date of the new options. We are making this offer upon the terms and subject to the conditions set forth in this exchange offer and in the accompanying Election Form. See Section 1 (“Number of Eligible Options; Eligible Participants; Expiration of the Exchange Offer”) for more information.

Q.3. Who is eligible to participate in the exchange offer?

Each person who:

° holds eligible options;

° is an employee of, consultant to, or a director of Critical Path on the date this exchange offer is made; and

° continues to be an employee of, consultant to, or a director of Critical Path at, and has neither submitted or received a notice of termination, nor has otherwise terminated his or her employment or service provider contract or arrangement prior to, the time this exchange offer expires

is eligible to participate in the exchange offer. See Section 1 (“Number of Eligible Options; Eligible Participants; Expiration of the Exchange Offer”) for more information.

Q.4. Are eligible participants located outside the United States eligible to exchange their options?

Yes. Eligible participants located outside of the United States who qualify to participate in the exchange offer and hold eligible options may participate in the exchange offer. Special considerations may apply to participants located outside of the United States. In some countries, the application of local rules may have important consequences to eligible participants resident in those countries including the possibility that the exchange of their options may be a taxable event. If you are an eligible participant located outside of the United States, you should consult your individual tax, legal, accountant and financial advisors before deciding whether to accept the exchange offer.

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Q.5. What are the conditions of this exchange offer?

This exchange offer is subject to a number of conditions with regard to events that could occur prior to the expiration of this exchange offer which are more fully described in Section 6 (“Conditions of this Exchange Offer.”). The exchange offer is not conditioned upon a minimum number of eligible options being tendered or a minimum number of eligible participants participating. If any of the events described in Section 6 (“Conditions of this Exchange Offer”) has occurred, we may terminate, extend or amend this exchange offer at any time prior to the expiration of the exchange offer.

Q.6. Are there any differences between the new options and the eligible options?

Each new option issued will have substantially the same terms and conditions as the eligible option cancelled in exchange for the new option, except as follows:

° all new options will expire seven years after the new option grant date;

° the exercise price per share for each new option will be equal to the closing sale price of our common stock on the OTCBB as reported by The NASDAQ Stock Market on the business day immediately prior to the grant date of the new options;

° the new options issued to eligible employees and consultants will have a four-year vesting period adjusted as follows: (1) 50% of the new options issued to eligible employees and consultants that have provided services to Critical Path as of May 31, 2006 for two or more years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 24-month period; and (2) 25% of the new options issued to eligible employees and consultants that have provided services to Critical Path as of May 31, 2006 for less than two years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 36-month period;

° the new options issued to eligible directors will retain the vesting schedule and vesting commencement date that would have been in effect for their tendered eligible options in the absence of the acceleration of vesting that occurred on December 27, 2005;

° for certain eligible participants in the exchange offer, the number of shares of common stock underlying their new options will be less than the number of shares of common stock underlying their eligible options; See Section 1 (“Number of Eligible Options; Eligible Participants; Expiration of the Exchange Offer”); and

° eligible participants that hold eligible options issued under the 1999 Plan will receive new options issued from the 1998 Plan (which, except as described herein, has substantially the same terms and conditions as the 1999 Plan).

See Section 8 (“Source and Amount of Consideration; Terms of New Options”) for more information.

Q.7. When will the new options vest?

On December 27, 2005, the Company accelerated the vesting of all then outstanding stock options. For further information regarding the acceleration of stock option vesting, please refer to our Current Report on Form 8-K filed on December 28, 2005.

The new options issued to eligible employees and consultants will have a four-year vesting period adjusted as follows: (1) 50% of the new options issued to eligible employees and consultants that have provided services to Critical Path as of May 31, 2006 for two or more years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 24-month period; and (2) 25% of the new options issued to eligible employees and consultants

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that have provided services to Critical Path as of May 31, 2006 for less than two years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 36-month period. Except as described in the following paragraph, vesting will cease upon termination of service for any reason. This means that for eligible employees and consultants who are continually employed by or provide services to us during the vesting period, the new options issued to participants who have provided services for two or more years as of May 31, 2006, will be fully vested and exercisable 24 months after they are granted, regardless of the vesting schedule that was applicable to the tendered eligible options. For eligible employees and consultants who are employed by or provide services to us during the vesting period, the new options issued to participants who have provided less than two years of service as of May 31, 2006 will be fully vested 36 months after they are granted, regardless of the vesting schedule that was applicable to the tendered eligible options.

The new options issued to eligible directors will retain the vesting schedule and vesting commencement date that would have been in effect for their tendered eligible options in the absence of the acceleration of vesting that occurred on December 27, 2005.

The vesting schedule of each new option described above will apply regardless of whether the tendered eligible options were fully or partially vested. Your vesting and exercise rights are contingent upon your continued employment or provision of services through the applicable vesting date.

If your option agreement or employment or any other agreement governing your eligible options contain provisions regarding the acceleration of vesting in certain circumstances, for example in connection with a change of control of the Company, the option agreement you receive governing your new options will be subject to the same acceleration provisions as in effect prior to the exchange offer.

Q.8. How many new options will I receive in exchange for my tendered eligible options?

The number of shares subject to the new option you will receive in exchange for a tendered eligible option will depend on the per share exercise price in effect under the tendered option. The ratios by which you can determine the actual number of shares that will be subject to the new options to be issued are set forth in the table below:

Option Exercise Price Per Share	Ratio of (i) the number of shares subject to one new option to (ii) the number of shares subject to the tendered eligible option
$0.19 to $4.00	1-for-1
$4.01 to $5.00	1-for-2
$5.01 or more	1-for-5

As set forth in the table above, the following exchange ratios will be in effect for the eligible options:

If the exercise price per share of an eligible option is at least $0.19 but not more than $4.00, the number of shares subject to the new option will be the same as the number of shares subject to the tendered eligible option. If the exercise price per share of an eligible option is at least $4.01 but not more than $5.00, the number of shares subject to the new option will be determined by dividing the number of shares subject to the tendered eligible option by two, rounded down to the nearest whole number. If the exercise price per share of an eligible option is more than $5.01, the number of shares subject to the new option will be determined by dividing the number of shares subject to the tendered eligible option by five, rounded down to the nearest whole number.

For example, if you tender for exchange an option grant to purchase 100 shares of common stock with an exercise price of $4.50 per share, you will receive in exchange new options to purchase 50 shares of common stock (1-for-2 ratio in effect for a tendered option with a $4.50 exercise price per share).

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Q.9. What will be the per share exercise price of the new options?

The per share exercise price of the new options will be equal to the closing sale price of our common stock on the OTCBB as reported by The NASDAQ Stock Market on the business day immediately prior to the grant date of the new options. We cannot predict the exercise price per share of the new options. We recommend that you obtain current market quotations for our common stock before deciding whether to tender your eligible options. See Section 7 (“Price Range of Common Stock”) for information concerning our historical common stock prices.

Q.10. When will my new options expire?

Your new options will expire seven years after the grant date of the new options, regardless of when the eligible options surrendered would have expired.

Q.11. What happens to my new options if my employment or service provider arrangement with CPTH is terminated?

Generally, if an eligible participant’s employment or service provider arrangement with CPTH is terminated, the new options will not continue to vest and any unvested portion of the new options will be cancelled as of the date of termination. Any vested, unexercised portion of the new options will generally be exercisable for 30 days after termination.

Q.12. What happens if I exchange my eligible options for new options and CPTH is later subject to a change of control, such as a merger?

A change of control of CPTH that occurs after the grant date of the new options will be subject to provisions in the new options. Options granted under the 1998 Plan do not contain any provisions for the acceleration of vesting in connection with a change of control. In the event of a merger or reorganization of the Company, the 1998 Plan provides that outstanding options shall be subject to the agreement of merger or reorganization. The 1999 Plan provides that in the event of a merger or the sale of substantially all of the assets of the Company each outstanding option shall be assumed or an equivalent option substituted by the successor corporation, and in the event the outstanding options are not assumed or substituted, the options shall fully vest and become exercisable for a limited period of time.

All new options will be subject to the 1998 Plan’s provisions regarding mergers and reorganizations. Accordingly, in the event of a merger or reorganization, all new options, including those granted in exchange for the surrender of outstanding options under the 1999 Plan, will be subject to the terms of the merger or reorganization agreement, notwithstanding any different provisions contained in the 1999 Plan or tendered eligible options issued under the 1999 Plan. In addition, if your eligible options, employment or other agreement contain special provisions relating to a change of control, your new options will be subject to the same provisions relating to a change of control as govern your tendered eligible options. See Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”).

Q.13. Will my new options be incentive stock options or non-qualified stock options?

If you tender an eligible option that was a non-qualified stock option and your eligible option is accepted and cancelled, the new option issued to you will be a non-qualified stock option. If you tender an eligible option that was an incentive stock option and your eligible option is accepted and cancelled, the new option issued to you will be an incentive stock option unless federal tax rules limit this characterization. In general, federal tax rules provide that if the fair market of an incentive stock option that is exercisable in a year exceeds $100,000, the excess will be treated as non-qualified stock option. See Section 13 (“Material Tax Consequences”) for more information about non-qualified stock options and incentive stock options.

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Q.14. Must I participate in this exchange offer?

No. Your participation is completely voluntary. If you choose not to participate, you will keep all of your eligible options, you will not receive any new options under the exchange offer and no changes would be made to the terms of your eligible options.

Q.15. How should I decide whether or not to exchange my eligible options for new options?

CPTH is providing information to assist you in making your own informed decision, but is not making any recommendation as to whether you should or should not participate in the exchange offer. You should seek your own outside tax, legal, accountant and financial advisors for advice. No one from CPTH is, or will be, authorized to provide you with additional information in this regard. Please also review the “Risk Factors” that appear after this Summary Term Sheet.

Q.16. Why can’t you just grant eligible participants more options?

We designed the exchange offer to avoid the dilution in ownership to our shareholders that would result if we granted eligible participants additional options to supplement their underwater options.

Q.17. What options are eligible for exchange in this exchange offer?

All outstanding stock options granted under the Amended and Restated 1998 Stock Option Plan and the 1999 Nonstatutory Stock Option Plan with an exercise price of not less than $0.19 per share.

Q.18. How do I find out how many eligible options I have and what their exercise prices are?

The Election Form enclosed with this exchange offer includes a list of your eligible options as of the date of this exchange offer. In addition, you can at any time confirm the number of option grants that you have, their grant dates, remaining term, shares subject thereto, exercise prices, vesting schedule and other information by logging onto your E*TRADE account. You may contact Tom Quigley at (415) 541-2500 if you have any questions regarding your eligible options or if you encounter difficulty logging onto your E*TRADE account.

Q.19. Can I exchange options that I have already fully exercised?

No. This exchange offer applies only to outstanding eligible options. An option grant that has been fully exercised is no longer outstanding.

Q.20. Can I exchange the remaining portion of an eligible option that I have already partially exercised?

Yes. If you previously exercised an eligible option grant in part, the remaining unexercised portion of the eligible option grant could be exchanged under the exchange offer provided the remaining portion is surrendered in whole.

Q.21. If I choose to participate in the exchange offer, can I exchange a portion of an eligible option?

No. Each new option issued through the exchange offer will only be granted if the eligible option is surrendered in whole. You will be able to elect to exchange as few or as many of your eligible options as you wish. However, if you elect to exchange an eligible option, you must exchange the eligible option in full. No partial exchanges will be permitted.

If you attempt to exchange some but not all outstanding options represented by a particular grant, we will reject your tender of that particular grant. Such rejection will not affect any other eligible options that are properly tendered.

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Q.22. Can I exchange both vested and unvested eligible options?

Yes. You can exchange eligible options whether they are vested or unvested. See Question 6 for information on the vesting schedule that will apply to new options and Section 8 (“Source and Amount of Consideration; Terms of New Options”).

Q.23. What if I am on an authorized leave of absence on the date of this exchange offer or on the grant date of the new options?

Any eligible participants who are on an authorized leave of absence will be able to participate in this exchange offer. If you tender your eligible options and you are on an authorized leave of absence on the grant date of the new option, you will be entitled to a grant of new options on the grant date as long as the other eligibility requirements are still met.

Q.24. What if my employment with CPTH ends or I am no longer providing services to CPTH before the expiration of the exchange offer?

If you have tendered eligible options under this exchange offer and your employment terminates or you cease providing services for any reason, or if you receive or submit a notice of termination, before the exchange offer expires, you will no longer be eligible to participate in the exchange offer, and we will not accept your eligible options for cancellation. In that case, generally you may exercise your existing options for a limited time after your termination date to the extent they are vested and in accordance with their terms.

Participation in this exchange offer does not confer upon you the right to remain an employee or service provider of CPTH. The terms of your employment with us remain unchanged. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain in the employ of CPTH until the expiration of the exchange offer.

Q.25. If I participate in this exchange offer, when will I be granted new options?

We will issue new stock option agreements promptly following the date that tendered options are accepted for exchange. The scheduled expiration of this exchange offer is Wednesday, June 28, 2006, and we will accept all properly tendered eligible options promptly thereafter, unless we terminate, extend or amend this exchange offer.

Q.26. Will I owe taxes if I exchange my eligible options in this exchange offer?

For U.S. residents, the exchange of eligible options for new options generally should be treated as a non-taxable exchange and no income should be recognized for U.S. federal income tax purposes upon grant of the new options. Tax consequences may vary depending on each individual participant’s circumstances. Eligible participants, including those subject to taxation in a foreign jurisdiction, whether by reason of their nationality, residence or otherwise, should consult with their own personal tax advisors as to the tax consequences of their participation in the exchange offer. See Section 13 (“Material Tax Consequences”) for more information.

Q.27. What happens if, after the grant date of the new options, my new options end up being underwater?

The exchange offer is a one-time opportunity and is not expected to be offered again in the future. We can provide no assurance as to the possible price of our common stock at any time in the future. As such, we do not anticipate offering participants another opportunity to exchange underwater options for replacement options.

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Q.28. What happens to options that I choose not to tender, or that are not accepted for exchange in this exchange offer?

This exchange offer will have no effect on eligible options that you choose not to tender, or on eligible options that are not accepted for exchange in this exchange offer.

Q.29. If I tender eligible options in this exchange offer, am I giving up my rights to them?

Yes. When you tender your eligible options and we accept them for exchange, those eligible options will be cancelled at the expiration of the exchange offer and you will no longer have any rights to them.

Q.30. How long do I have to decide whether to participate in this exchange offer?

This exchange offer expires at 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006. No exceptions will be made to this deadline, unless we extend it. Although we do not currently intend to do so, we may, in our sole discretion, extend the expiration of this exchange offer at any time. If we extend this exchange offer, we will publicly announce the extension and the new expiration no later than 9:00 a.m., U.S. Pacific (San Francisco) Time, on the next business day after the last previously scheduled or announced day of expiration. See Section 14 (“Extension of Exchange Offer; Termination; Amendment”) for more information.

Q.31. How do I tender my eligible options for exchange?

If you are an eligible participant when you choose to tender your eligible options, you may tender your eligible options at any time before this exchange offer closes at 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006.

To validly tender your eligible options, you must deliver a properly completed and signed Election Form and any other documents required by the Election Form to the attention of Tom Quigley, by hand, by facsimile (415) 541-2307, by regular or overnight mail (Critical Path, Inc., 2 Harrison Street, 2nd Floor, San Francisco, California 94105 Attention: Tom Quigley), or by email (optionexchange@criticalpath.net). Your eligible options will not be considered tendered until we receive a properly completed and signed Election Form. We must receive your properly completed and signed Election Form by 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006. If you miss this deadline, you will not be permitted to participate in this exchange offer.

You do not need to return your stock option agreements relating to any tendered eligible options, as they will be automatically cancelled if we accept your eligible options for exchange. We will only accept delivery of the signed Election Form by hand, by facsimile, by regular or overnight mail or by email. The method of delivery is at your own option and risk. You are responsible for making sure that the Election Form is delivered to the person indicated above. You must allow for delivery time based on the method of delivery that you choose to ensure that we receive your Election Form on time.

We reserve the right to reject any or all tenders of eligible options that we determine are not in appropriate form or that we determine would be unlawful to accept. See Section 3 (“Procedures for Tendering Eligible Options”) for more information. Subject to our rights to extend, terminate and amend this exchange offer, we will accept all properly tendered options promptly after the scheduled expiration time, which is currently 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006.

Q.32. When and how can I withdraw previously tendered eligible options?

You may withdraw your tendered eligible options at any time before the exchange offer expires at 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006. If we extend the

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exchange offer beyond that time, you may withdraw your tendered eligible options at any time until the extended expiration of the exchange offer. If we have not accepted your tendered eligible options on or before July 27, 2006, you will also have the right to withdraw your tendered eligible options after that date and until we accept your tendered eligible options.

To withdraw tendered eligible options, you must deliver to us a properly completed and signed Notice of Withdrawal with the required information while you still have the right to withdraw the tendered eligible options. If you miss this deadline but remain an employee or service provider of CPTH, any previously tendered eligible options will be cancelled and exchanged pursuant to this exchange offer. The Notice of Withdrawal may be delivered by any of the means indicated for a valid tender as indicated in Question 31 above. The method of delivery is at your own option and risk. You are responsible for making sure that the Notice of Withdrawal is delivered to the person indicated above. You must allow for delivery time based on the method of delivery that you choose to ensure that we receive your Notice of Withdrawal on time.

Once you have withdrawn eligible options, you may re-tender eligible options only by again following the procedures described for validly tendering options in this exchange offer as discussed in Question 31 above. See Section 4 (“Withdrawal Rights”) for more information.

Q.33. How will I know whether you have received my Election Form or my Notice of Withdrawal?

We will send you an email or other form of communication, as appropriate, to confirm receipt of your Election Form or Notice of Withdrawal shortly after we receive it. However, it is your responsibility to ensure that we receive your Election Form or Notice of Withdrawal, as applicable, prior to the expiration of the exchange offer.

Q.34. What will happen if I do not return my Election Form by the deadline, or if I elect not to tender my eligible options for exchange in this exchange offer?

If we do not receive your Election Form by the deadline, then all eligible options held by you will remain outstanding at their original exercise price and subject to their original terms. If you prefer not to tender any of your eligible options for exchange in this exchange offer, you do not need to do anything.

Q.35. What if I have any questions regarding this exchange offer, or if I need additional copies of this exchange offer or any documents attached hereto or referred to herein?

You should direct questions about this exchange offer to Michael Zukerman, our Executive Vice President and General Counsel, at:

Michael Zukerman

Executive Vice President and General Counsel

Critical Path, Inc.

2 Harrison Street, 2nd Floor

San Francisco, California 94105

(415) 541-2500

optionexchange@criticalpath.net

You should direct requests for additional copies of this exchange offer and other exchange offer documents to Tom Quigley at:

Tom Quigley

Critical Path, Inc.

2 Harrison Street, 2nd Floor

San Francisco, California 94105

(415) 541-2500

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RISK FACTORS

Participation in this exchange offer involves a number of potential risks and uncertainties, including those described below. You should carefully consider the risks and uncertainties described below. You should consider, among other things, these risks and uncertainties before deciding whether or not to request that we exchange your eligible options in the manner described in this exchange offer. In addition, we strongly urge you to read all of the materials relating to this exchange offer before deciding whether or not to tender your eligible options for exchange.

Business and Economic Risks

If the market price of our common stock increases after the date you tender your eligible options for exchange, the new options that you receive in exchange for them might be worth less than the eligible options.

The per share exercise price of any new options granted to you in return for your tendered eligible options will be equal to the closing sale price of our common stock on the OTCBB as reported by The NASDAQ Stock Market on the date immediately prior to the grant date of the new options. Before the grant date of the new options, our common stock could increase in value, and the exercise price of the new options could be higher than the exercise price of eligible options cancelled as part of this exchange offer. In this case, you may be better off economically keeping your eligible options.

Fluctuations in our operating results may lead to fluctuations, including increases, in our share price. Our operating results and our share price may fluctuate from period to period due to a variety of factors, including:

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

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

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

• 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 effect on our operations and the operations of our customers; and

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

In addition, the market for technology companies in particular has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

Your new options will be subject to a new vesting schedule.

Regardless of the vested status of the eligible options that you tender, your new options will be subject to a new vesting schedule. If your employment with us terminates, or you cease providing services to us, your new options may be forfeited unvested or may be vested for a lesser percentage than the eligible options that were cancelled. This will also be the case if we are acquired by or merge with another company. If you exchange

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eligible options that are fully vested or that were issued under the 1999 Plan, which provides for acceleration of vesting upon a change of control under certain circumstances, and we are acquired or merge with another company, your new options may not be fully vested and will be subject to the 1998 Plan, which does not provide for the acceleration of vesting. Accordingly, your new option may be vested for a lesser percentage than the eligible options that were cancelled.

If we are acquired by or merge with another company, your cancelled eligible options might be worth more than the new options that you receive in exchange for them.

From time to time, we evaluate and have evaluated strategic acquisitions, mergers, joint ventures and similar transactions and expect to continue to do so in the future. A transaction involving us, such as a merger or other acquisition, could have a substantial effect on our stock price, including increasing the price of our common stock. Depending on the amount of any such increase, holders of eligible options who elect to participate in the exchange offer might receive new options with an exercise price per share higher than the exercise price of eligible options cancelled as part of this exchange offer. In this case, the eligible options surrendered would be worth more than the new options, resulting in a greater financial benefit for those eligible option holders who did not elect to participate in this offer and instead retained their eligible options.

If, prior to the acceptance of your old options surrendered for exchange, you cease being an employee of or service provider of CPTH for any reason, including your death, or you submit or give notice of your termination, you will have no rights to any new options.

Once your eligible options are accepted for exchange, they will be cancelled, and they will no longer be exercisable and therefore you lose all rights to them. If your employment ends prior to the expiration of the exchange offer or you cease providing services for any reason, including your death, or you submit or receive a notice of termination, you will not be entitled to any new options or other consideration in exchange for your cancelled eligible options, though you will be able to reclaim your eligible options. In this event, you, or your estate or beneficiaries in the event of your death, will retain them on their current terms and conditions. See Section 1 (“Number of Eligible Options; Eligible Participants; Expiration of the Exchange Offer”) for more information.

Tax-Related Risks

Even if you elect not to participate in the exchange offer, your incentive stock options may be affected if you do not affirmatively decline the exchange offer.

For U.S. residents, we believe that you will not be subject to current U.S. federal income tax if you do not elect to participate in the exchange offer. We also believe that the exchange offer will not change the U.S. federal income tax treatment of subsequent grants and exercises of your incentive stock options (and sales of shares acquired upon exercise of such options) if you do not participate in the exchange offer. We currently anticipate that the exchange offer will not remain open for 30 days or more. However, the terms of the exchange offer allow us, at our discretion, to have the exchange offer remain open for 30 or more days and if you elect not to participate in the exchange offer in certain circumstances your existing options may be subject to unfavorable tax consequences unless you affirmatively decline the exchange offer.

Should the exchange offer remain open for 30 days or more and you choose not to participate in the exchange offer but do not affirmatively decline the exchange offer, you may be deemed to have a “modified option” pursuant to certain provisions of the Internal Revenue Code. Such modified option will contain all the prior terms of the existing option, except that the date of the grant of the option will be deemed to be the first day of the exchange offer. The exercise of an incentive stock option generally will not result in taxable income to you (with the possible exception of alternative minimum tax liability) if you do not dispose of the shares received upon exercise of the option less than one year after the date of exercise and two years after the date of grant, and

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you are continuously an employee of CPTH from the date of grant to three months before the date of exercise (or 12 months in the event of death or disability). The modification described above will mean that this holding period will begin again. Therefore, should (1) you choose not to participate in the exchange offer but do not affirmatively reject the exchange offer, (2) the exchange offer is held open 30 days or more, and (3) you dispose of the stock underlying an incentive stock option prior to the satisfaction of the new holding periods (two years from the first day of the exchange offer and one year from exercise of the option), you may be taxed as if you received compensation in the year of the disposition. You must treat gain realized in the premature disposition as ordinary income to the extent of the lesser of (1) the fair market value of the stock on the date of exercise minus the option price; or (2) the amount realized on disposition of the stock minus the option price. Any gain in excess of these amounts will be treated as either short-term or long-term capital gain. In such a case, we generally are entitled to deduct, as compensation paid, the amount of ordinary income realized by you. If you are a resident of the United States but subject to foreign tax laws, there may be tax and social insurance consequences for participating in this exchange offer.

We do not know and we have made no inquiry or investigation into the tax consequences of participation in the exchange offer in foreign jurisdictions. If you are subject to the tax laws of another country, whether by reason of your nationality, residence or otherwise, you should be aware that there may be other tax and social insurance consequences that may apply to you. Every participant should consult with their own personal tax advisors as to the tax consequences of their participation in the exchange offer.

THIS OFFER

Section 1.    Number of Shares Subject to Eligible Options; Eligible Participants; Expiration of the Exchange Offer.

The number of shares subject to new options you will receive in exchange for a tendered eligible option will be based on the per share exercise price in effect under the tendered option. The ratios by which you can determine the actual number of shares that will be subject to new options to be issued are set forth in the table below:

Option Exercise Price Per Share	Ratio of (i) the number of shares subject to the new option to (ii) the number of shares subject to the tendered eligible option
$0.19 to $4.00	1-for-1
$4.01 to $5.00	1-for-2
$5.01 or more	1-for-5

As set forth in the table above, the following exchange ratios will be in effect for the eligible options:

If the exercise price per share of an eligible option is at least $0.19 but not more than $4.00, the number of shares subject to the new option will be the same as the number of shares subject to the tendered eligible option. If the exercise price per share of an eligible option is at least $4.01 but not more than $5.00, the number of shares subject to the new option will be determined by dividing the number of shares subject to the tendered eligible option by two, rounded down to the nearest whole number. If the exercise price per share of an eligible option is more than $5.01, the number of shares subject to the new option will be determined by dividing the number of shares subject to the tendered eligible option by five, rounded down to the nearest whole number.

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The following table shows the number of eligible options outstanding, by applicable exchange ratio, as of May 5, 2006:

Applicable Exchange Ratio	Number of Shares Underlying Eligible Options (1)	Weighted Average Exercise Price Per Share		Weighted Average Remaining Life (Years)	Maximum Number of Shares Underlying New Options that May be Granted
1-for-1	7,935,212		1.69	7.8	7,935,212
1-for-2	388,776		4.41	5.4	194,388
1-for-5	509,798		167.05	4.4	101,959
Total	8,833,786	$	11.55	7.5	8,231,559

(1) 8,585,911 of the total number of shares underlying eligible options outstanding on May 5, 2006 were fully vested. However, under the terms of this exchange offer, all newly issued grants will be subject to a four year vesting schedule, adjusted to provide for partial acceleration and with vesting of the remaining portion of the option subject to continued employment through the applicable vesting date.

Each person who:

° holds eligible options;

° is an employee of, consultant to, or a director of Critical Path on the date this exchange offer is made; and

° continues to be an employee of, consultant to, or a director of Critical Path at, and has neither submitted or received a notice of termination, nor has otherwise terminated his or her employment or service provider contract or arrangement prior to, the time this exchange offer expires

is eligible to participate in the exchange offer.

You will not be eligible to tender eligible options or receive new options if your employment with CPTH is terminated, you cease being a service provider for any reason prior to the expiration of the exchange offer, including retirement, disability or death or you submit or receive a notice of termination. A participant who is on an authorized leave of absence and is otherwise an eligible participant on such date will be eligible to tender eligible options prior to the expiration of the exchange offer. If you tender your eligible options and they are accepted and cancelled in this exchange offer and you are on an authorized leave of absence at the expiration time, you will be entitled to a grant of new options as long as you are otherwise eligible to receive new options on such date. Leave is considered “authorized” if it was approved in accordance with policies or practices of CPTH.

This exchange offer is scheduled to expire at 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006, referred to as the expiration of the exchange offer, unless and until we, in our sole discretion, have extended the expiration of the exchange offer. See Section 14 (“Extension of Exchange Offer; Termination; Amendment”) for a description of our rights to extend, terminate and amend this exchange offer.

Section 2.    Purpose of this Exchange Offer.

We are making this exchange offer for incentive and compensatory purposes. Stock options have been, and continue to be, a key part of our workforce incentive compensation and retention programs. Stock options are designed to motivate and reward employees’ and service providers’ efforts toward the Company’s growth and success. By granting stock options to employees and other service providers, we intend to align their interests with our shareholders’ interests, provide incentives for them to grow long-term shareholder value and encourage their long-term employment.

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On December 27, 2005, the Company accelerated the vesting of all then outstanding stock options. For further information regarding the acceleration of stock option vesting, please refer to our Current Report on Form 8-K filed on December 28, 2005. However, virtually all of our optionees hold stock options with exercise prices that exceed the current market price of our common stock. Consequently, we believe that these options no longer provide the long-term incentive and retention objectives that they were intended to provide. The exchange offer is intended to address this situation by providing employees, consultants and directors with an opportunity to exchange eligible options for new options.

We believe the exchange offer will provide us with an opportunity to motivate our workforce to achieve future growth. By realigning the exercise prices of previously granted stock options with the current value of our common stock, we believe that the options outstanding under the Plans will again become important tools to help motivate and retain our existing employees and other service providers and continue to align their interests with those of our shareholders. While we hope that this exchange offer will ameliorate the current disparity between the market price of our common stock and the exercise price of eligible options, given the volatile and unpredictable nature of the economy and stock market, we cannot guarantee that the new options will have a lower exercise price than the eligible options you elect to tender.

We do not make any recommendation as to whether you should tender your eligible options, nor have we authorized any person to make any such recommendation. We recommend you evaluate carefully all of the information in this exchange offer and consult your own tax, legal, accountant and financial advisors. You must make your own decision whether to tender your eligible options for exchange.

Section 3.    Procedures For Tendering Eligible Options.

If you are an eligible participant on the date that you choose to tender eligible options, you may tender your eligible options at any time before the expiration of the exchange offer. If we extend this exchange offer beyond that time, you may tender your eligible options at any time until the extended expiration of the exchange offer, if you are an eligible participant on the date you tender.

If you want to tender any of your eligible options, you must tender one or more eligible options in their entirety. This means that you may not tender only a portion of an outstanding eligible option. However, if you have more than one outstanding eligible option grant, you may tender all of the eligible options under one or more grants and choose not to tender the eligible options subject to a different grant.

Proper Tender of Eligible Options.  To validly tender your eligible options pursuant to this exchange offer you must remain an eligible participant and must not have received nor have given a notice of termination or otherwise terminated your employment prior to the expiration of the exchange offer. You must, in accordance with the terms of the enclosed Election Form, deliver a properly completed and signed Election Form and any other documents required by the Election Form to the attention of Tom Quigley, by hand, by facsimile ((415) 541-2307), by regular or overnight mail (Critical Path, Inc., 2 Harrison Street, 2nd Floor, San Francisco, California 94105, Attention: Tom Quigley), or by email (optionexchange@criticalpath.net). Except as described in the following sentence, the Election Form must be signed by the eligible participant who tendered the eligible options exactly as the eligible participant’s name appears on the stock option agreement relating to the eligible option. If the signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on the Election Form. You do not need to return your stock option agreements relating to any tendered eligible options, as they will be automatically cancelled if we accept your eligible options for exchange.

Your eligible options will not be considered tendered until we receive the properly completed and signed Election Form. We must receive your properly completed and signed Election Form by 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006. If you miss this deadline, you will not be permitted to participate in this exchange offer. We will only accept delivery of the signed

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Election Form by hand, by facsimile, by regular or overnight mail or by email. The method of delivery is at your own option and risk. You are responsible for making sure that the Election Form is delivered to the person indicated above. You must allow for delivery time based on the method of delivery that you choose to ensure that we receive your Election Form on time.

Determination of Validity; Rejection of Eligible Options; Waiver of Defects; No Obligation to Give Notice of Defects.  We will determine, in our sole discretion, the number of shares subject to eligible options and all questions as to form of documents and the validity, form, eligibility, time of receipt and acceptance of any tender of eligible options. Our determination of these matters will be final and binding on all parties. We reserve the right to reject any or all tenders of eligible options. Subject to Rule 13e-4 under the Exchange Act, we also reserve the right to waive any of the conditions of this exchange offer or any defect or irregularity in any tender with respect to any particular eligible options or any particular eligible participant. No tender of eligible options will be deemed to have been properly made until all defects or irregularities have been cured by the tendering eligible participant or waived by us. Neither CPTH nor any other person is obligated to give notice of any defects or irregularities in tenders. This is a one-time offer, and we will strictly enforce this offer period, subject only to any extension of the expiration of the exchange offer that we may grant in our sole discretion.

Our Acceptance Constitutes an Agreement.  Your tender of eligible options pursuant to the procedures described above constitutes your acceptance of the terms and conditions of this exchange offer and will be controlling, absolute and final, subject to your withdrawal rights under Section 4 (“Withdrawal Rights”) and our acceptance of your tendered eligible options in accordance with Section 5 (“Acceptance of Eligible Options for Exchange; Issuance of New Options”). Our acceptance for exchange of eligible options tendered by you pursuant to this exchange offer will constitute a binding agreement between us and you upon the terms and subject to the conditions of this exchange offer.

Subject to our rights to terminate and amend this exchange offer in accordance with Section 6 (“Conditions of this Exchange Offer”), we will accept and cancel, as of the expiration of the exchange offer, all properly tendered eligible options that have not been validly withdrawn. You will be required to enter into a stock option agreement governing the terms of your new stock options.

Section 4.    Withdrawal Rights.

If you elect to accept this exchange offer as to some or all of your eligible options and later change your mind, you may withdraw your tendered options, and reject this offer, by following the procedure described in this Section 4. Please note that, just as you may not tender only part of an eligible option, you also may not withdraw your election with respect to only part of an eligible option. Accordingly, if you elect to withdraw previously tendered options relating to a particular grant, you must reject this exchange offer with respect to all of the eligible options relating to that particular option grant but need not reject other eligible options relating to different options.

You may withdraw your tendered options at any time before 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006. If we extend this exchange offer beyond that time, you may withdraw your tendered options at any time until the extended expiration of this exchange offer. In addition, if we have not accepted your tendered options on or before July 27, 2006, you will also have the right to withdraw your tendered options after that date and until your tendered options have been accepted. We currently intend to accept properly tendered options promptly after the scheduled expiration of the exchange offer, which is currently Wednesday, June 28, 2006.

To validly withdraw tendered options, you must deliver to us (using one of the same delivery forms set forth in Section 3) a properly completed and signed Notice of Withdrawal while you still have the right to withdraw the tendered options. Your tendered Eligible Options will not be considered withdrawn until we receive your Notice of Withdrawal. If you miss the deadline but remain an employee of or other service provider

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to CPTH, any previously tendered eligible options will be cancelled and exchanged pursuant to this exchange offer. The method of delivery is at your own option and risk. You are responsible for making sure that the Notice of Withdrawal is delivered to the person indicated in Section 3 above. You must allow for delivery time based on the method of delivery that you choose to ensure that we receive your Notice of Withdrawal on time.

The Notice of Withdrawal must specify the eligible options to be withdrawn. Except as described in the following sentence, the Notice of Withdrawal must be signed by the eligible participant who tendered the eligible options to be withdrawn exactly as such eligible participant’s name appears on the Election Form previously submitted. If the signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on the Notice of Withdrawal. We have filed a form of the Notice of Withdrawal as an exhibit to the Tender Offer Statement on Schedule TO that we filed with the Securities and Exchange Commission on May 31, 2006. We will deliver a copy of the Notice of Withdrawal to all option holders that validly elect to participate in this exchange offer.

You may not rescind any withdrawal, and any eligible options you withdraw will thereafter be deemed not properly tendered for purposes of this exchange offer unless you properly re-tender those eligible options before the expiration of the exchange offer by following the procedures described in Section 3 of this exchange offer.

Neither we nor any other person is obligated to give notice of any defects or irregularities in any Notice of Withdrawal, nor will anyone incur any liability for failing to give notice of any defects or irregularities. We will determine, in our sole discretion, all questions as to the form and validity, including time of receipt, of notices of withdrawal. Our determinations of these matters will be final and binding.

Section 5.    Acceptance of Eligible Options For Exchange; Issuance of New Options.

Upon the terms and subject to the conditions of this exchange offer, we will accept for exchange all eligible options properly tendered and not validly withdrawn promptly after the scheduled expiration of the exchange offer, which is currently 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006. Once we have accepted eligible options tendered by you, the eligible options you tendered will be cancelled and you will no longer have any rights under the tendered eligible options. We will issue stock option agreements for the new options promptly after we accept tendered eligible options. If this exchange offer is extended, then the date on which we will issue the new stock options will also be extended.

Promptly after we cancel eligible options tendered for exchange, we will send each tendering eligible option holder a “rights letter” indicating the number of shares underlying the options that we have accepted for exchange, the date of acceptance, as well as the number of shares underlying the new stock option that will be issued to each tendering option holder. We filed a form of this letter with the Securities and Exchange Commission on May 31, 2006 as an exhibit to the Tender Offer Statement on Schedule TO.

If you have tendered eligible options under this exchange offer and your employment terminates for any reason, or if you receive or submit a notice of termination, before the exchange offer expires, you will no longer be eligible to participate in the exchange offer, and we will not accept your eligible options for cancellation. In that case, generally you may exercise your existing options for a limited time after your termination date to the extent they are vested and in accordance with their terms.

If, for any reason, you are not an employee of or providing services to CPTH at the time of expiration of the exchange offer, you will not receive any new options or any other consideration in exchange for your tendered eligible options that we have accepted for exchange, though you will be entitled to reclaim the eligible options you tendered.

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Participation in this exchange offer does not confer upon you the right to remain an employee of or service provider to CPTH. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain in the employ of CPTH until the expiration of the exchange offer.

Section 6.    Conditions of this Exchange Offer.

Notwithstanding any other provision of this exchange offer, we will not be required to accept any eligible options tendered for exchange, and we may terminate or amend this exchange offer, in each case subject to Rule 13e-4(f)(5) under the Exchange Act, if at any time on or after the date hereof and prior to the expiration of the exchange offer, any of the following events has occurred:

(a) any threatened or instituted action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or other person, domestic or foreign, before any court, authority, agency or tribunal, that directly or indirectly challenges the making of the exchange offer, the cancellation of some or all of the eligible options tendered for exchange, the issuance of new options, or otherwise relates in any manner to the exchange offer or that, in our reasonable judgment, could (i) materially and adversely affect the business, condition (financial or other), income, operations or prospects of the Company, or (ii) materially impair the contemplated future conduct of our business;

(b) any action is threatened, instituted or taken, or any approval, exemption or consent is withheld, or any statute, rule, regulation, judgment, order or injunction is threatened, proposed, sought, promulgated, enacted, entered, amended, interpreted, enforced or deemed to be applicable to the exchange offer or us, by or from any court or any regulatory or administrative authority, agency or tribunal that, in our reasonable judgment, would directly or indirectly:

(i) make it illegal for us to accept some or all of the tendered eligible options for exchange, or to issue some or all of the new options, or otherwise restrict or prohibit consummation of this exchange offer or otherwise relate in any manner to this exchange offer;

(ii) require that we obtain shareholder approval of this exchange offer or the issuance of the new options; or

(iii) delay or restrict our ability, or render us unable, to accept the tendered eligible options for exchange or to grant new options for some or all of the tendered eligible options.

(c) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or automated quotation system or in the over-the-counter market;

(d) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States;

(e) the commencement of a war or other national or international calamity directly or indirectly involving the United States (other than the current situations in Iraq and Afghanistan), which could reasonably be expected to affect materially or adversely, or to delay materially, the completion of the exchange offer; or

(f) a tender or exchange offer (other than this exchange offer) with respect to some or all of our capital stock, or a merger or acquisition proposal for us, is proposed, announced or is publicly disclosed.

The conditions to this exchange offer are for our benefit. We may assert them in our sole discretion prior to the expiration of the exchange offer regardless of the circumstances giving rise to them (other than circumstances caused by our action or inaction). We may waive them, in whole or in part, at any time and from time to time prior to the expiration of the exchange offer, in our sole discretion, whether or not we waive any other condition to this exchange offer. Any determination we make concerning the events described in this Section 6 will be final and binding upon all persons.

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Section 7.    Price Range of Common Stock.

Our outstanding eligible options give eligible participants the right to acquire shares of our common stock. None of the eligible options are traded on any trading market. Our common stock trades on the NASDAQ Stock Market’s Over-the-Counter Bulletin Board (OTCBB) under the symbol “CPTH.OB.” The following table shows the highest and lowest closing sale prices of our common stock as reported by The NASDAQ Stock Market for the most recently completed fiscal quarter and the quarterly periods during the fiscal years ended December 31, 2005 and December 31, 2004.

	High		Low
Fiscal 2006
First Quarter	$	0.39	$	0.15
Fiscal 2005
Fourth Quarter	$	0.57	$	0.27
Third Quarter		0.65		0.30
Second Quarter		0.80		0.39
First Quarter		1.85		0.64
Fiscal 2004
Fourth Quarter	$	1.54	$	0.60
Third Quarter		1.44		0.59
Second Quarter		5.46		1.25
First Quarter		2.66		1.21

At the close of business on May 26, 2006, there were 37,613,915 shares of CPTH common stock outstanding. On May 30, 2006, the closing price for our common stock as reported on the OTCBB was $0.205 per share. We recommend that you obtain current market quotations for our common stock, among other information, before deciding whether or not to tender your eligible options.

Section 8.    Source and Amount of Consideration; Terms of New Options.

Consideration.  Subject to the terms of this exchange offer, we will issue new options to purchase our common stock under the 1998 Plan, whether or not the tendered eligible option was issued under the 1998 Plan or the 1999 Plan, to eligible participants on the grant date of the new options, in exchange for eligible options properly tendered, accepted by us and cancelled.

If we receive and accept tenders of all of the 8,833,786 shares underlying outstanding eligible options as of May 5, 2006, of which 8,585,911 shares are fully vested, we would issue new options exercisable for an aggregate of 8,231,559 shares of our common stock, resulting in a net decrease in shares underlying options outstanding of approximately 602,227 shares.

Terms of new options.  Each new option will have substantially the same terms and conditions as the eligible option cancelled in this exchange offer, except as follows:

° all new options will expire seven years after the new option grant date;

° the exercise price per share for each new option will be equal to the closing sale price of our common stock on the OTCBB as reported by The NASDAQ Stock Market on the business day immediately prior to the grant date of the new options;

° the new options issued to eligible employees and consultants will have a four-year vesting period adjusted as follows: (1) 50% of the new options issued to eligible employees and consultants that have provided services to Critical Path as of May 31, 2006 for two or more years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service

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over the subsequent 24-month period; and (2) 25% of the new options issued to eligible employees and consultants that have provided services to Critical Path as of May 31, 2006 for less than two years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 36-month period;

° the new options issued to eligible directors will retain the vesting schedule and vesting commencement date that would have been in effect for their tendered eligible options in the absence of the acceleration of vesting that occurred on December 27, 2005;

° all new options will be issued under the 1998 Plan. Options issued under the 1999 Plan contain different provisions than the 1998 Plan for the treatment of the option in the event of a merger or reorganization of the Company. The 1998 Plan provides that outstanding options will be subject to the agreement of merger or reorganization. The 1999 Plan provides that in the event of a merger or the sale of substantially all of the assets of Critical Path each outstanding option shall be assumed or an equivalent option substituted by the successor corporation, and in the event the outstanding options are not assumed or substituted, the options shall fully vest and become exercisable for a limited period of time. Because all new options will be subject to the 1998 Plan’s provisions regarding mergers and reorganizations, except as set forth in the next bullet, in the event of a merger or reorganization, all new options, including those granted in exchange for the surrender of outstanding options under the 1999 Plan, will be subject to the terms of the merger or reorganization agreement, notwithstanding any different provisions contained in the 1999 Plan under which tendered eligible options were issued; and

° if your option agreement or employment or other agreement governing your eligible options contains provisions regarding the acceleration of vesting in certain circumstances, for example in connection with a change of control of the Company (other than the standard provision in the 1999 Plan that will be replaced with the standard provision of the 1998 Plan described above), the option agreement you receive governing your new options will be subject to the same acceleration provisions as in effect prior to the exchange offer.

The other terms and conditions of the new options will be comparable to the other terms and conditions of your eligible options. The grant of new options pursuant to this exchange offer will not create any contractual or other right of the eligible participants to receive any future grants of stock options or benefits in lieu of stock options or any right of continued employment.

The terms and conditions of your eligible options are set forth in the option plans under which they are currently outstanding and your individual option agreements. The description of the new options set forth herein is only a summary of some of the material provisions of the 1998 Plan under which the new options will be issued and is not complete. These descriptions are subject to, and qualified in their entirety by reference to, the actual provisions of the 1998 Option Plan and a form of new option agreement for eligible participants, which is filed as an exhibit to the Tender Offer Statement on Schedule TO, of which this exchange offer is a part. See Section 16 (“Additional Information”) for a discussion of how to obtain copies of the option plans and the forms of new option agreements.

The terms of the 1998 Plan and the 1999 Plan are substantially similar and, unless otherwise noted, the description applies to each of these plans.

Eligible Participants Under the Option Plans.  Our employees and consultants, other than officers and directors, are eligible to receive awards under the 1999 Plan; provided however, that officers may be granted options under the 1999 Plan in connection with their initial employment with Critical Path. Our employees, directors and consultants are eligible to receive awards under the 1998 Plan.

Awards.  The 1998 Plan permits the granting of stock options that are incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), non-qualified stock options (stock options that do not qualify as incentive stock options) and stock purchase rights. The 1999 Plan permits the granting of incentive stock options and non-qualified stock options. New options granted in exchange

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for the surrender of outstanding incentive stock options will be incentive stock options and new options granted in exchange for the surrender of outstanding non-qualified stock options will be non-qualified stock options. All new options granted in exchange for the surrender of outstanding stock options, including those granted under the 1999 Plan, will be granted under and according to the terms of the 1998 Plan.

Administration.  The 1999 Plan is administered by our Board of Directors or, upon its delegation, by a committee of the Board (the “Administrator”). The 1998 Plan is administered by one or more committees appointed by the Board of Directors (the “Administrator”). Subject to the Plans’ terms, the respective Administrator has full authority in its discretion to take any action with respect to the Plans, including the authority to fashion the terms of grants as it deems appropriate and to select the participants to whom awards will be granted.

Term and Termination.  The term of each option is fixed by the respective Administrator, but may not exceed 10 years. The new options to be granted pursuant to this exchange offer will expire seven years after the new option grant date. Typically, options will remain exercisable upon the termination of employment or cessation of service, whether for retirement or otherwise, for a period of 30 days after the termination date, to the extent they were vested on the date of termination. In the case of termination due to death or disability, the number of shares that were vested on the date of such termination will generally remain exercisable for 6 months after such date. No part of an option can be exercised after its termination date.

Exercise Price.  The exercise price of each option is determined by the Administrator. The per share exercise price of the new options to be granted pursuant to this exchange offer will be equal to the closing sales price of our common stock on the OTCBB as reported by The NASDAQ Stock Market on the business day immediately prior to the new option grant date. We recommend that you obtain current market quotations for our common stock before deciding whether or not to tender your eligible options.

Vesting and Exercise.  The respective Administrator determines at what time or times each option may be exercised. The new options issued to eligible employees and consultants will have a four-year vesting period adjusted as follows: (1) 50% of the new options issued to eligible employees and consultants that have provided services to Critical Path as of May 31, 2006 for two or more years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 24-month period; and (2) 25% of the new options issued to eligible employees and consultants that have provided services to Critical Path as of May 31, 2006 for less than two years will immediately vest with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 36- month period. New options issued to employees or consultants will have either of the vesting schedules described in this paragraph, regardless of the vesting schedule that was applicable to the eligible options tendered for exchange and regardless of whether or not the eligible options were fully or partially vested. The new options issued to eligible directors will retain the vesting schedule and vesting commencement date that would have been in effect for their tendered eligible options in the absence of the acceleration of vesting that occurred on December 27, 2005. Continued vesting will be contingent upon continuous employment with or provision of services to Critical Path.

Method of Exercising New Options.  An eligible participant may exercise the new options as soon as they vest in accordance with the terms of the 1998 Plan and the eligible participant’s new option agreement by providing us with (i) a written notice identifying the new option and stating the number of whole shares of common stock that the eligible participant desires to purchase and the aggregate purchase price to be paid for such shares; (ii) such other documents as we may reasonably request; and (iii) payment in full in cash or in such other payment form as is acceptable to us and in accordance with the plan and the applicable new option agreement.

Prohibition Against Transfer, Pledge and Attachment.  Except as may be permitted by the administrator and as is set forth in the new option agreement, the new options are personal to the eligible participant and may not be transferred, sold, assigned, pledged, encumbered or hypothecated in any way, and during the eligible

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participant’s lifetime shall be exercisable only by the eligible participant. An eligible participant may transfer a new option, and the rights and privileges conferred by it, upon the eligible participant’s death, either by will or under the laws of intestate succession. All transferees shall be subject to all of the terms and conditions of the new options to the same extent as the eligible participant.

Adjustments Upon Certain Events.  If the outstanding shares of our common stock are changed by reason of any stock split, reverse stock split, stock dividend, reorganization, merger, consolidation, combination, exchange of shares, liquidation, reclassification of shares or other similar change in capitalization or event affecting the common stock, the respective Administrator will have the authority to appropriately adjust the relevant terms and conditions of outstanding awards.

Merger or Reorganization.  In the event of a merger or reorganization of the Company, the 1998 Plan provides that outstanding options shall be subject to the agreement of merger or reorganization. The 1999 Plan provides that in the event of a merger or the sale of substantially all of the assets of the Company each outstanding option shall be assumed or an equivalent option substituted by the successor corporation, and in the event the outstanding options are not assumed or substituted, the options shall fully vest and become exercisable for a limited period of time.

All new options will be subject to the 1998 Plan’s provisions regarding mergers and reorganizations. Accordingly, in the event of a merger or reorganization, all new options, including those granted in exchange for the surrender of outstanding options under the 1999 Plan, will be subject to the terms of the merger or reorganization agreement, notwithstanding any different provisions contained in the 1999 Plan under which tendered eligible options were issued.

Except as described above, the new options granted to eligible participants will be subject to any provisions relating to a change of control of the Company set forth in the eligible option, employment or other agreement that governs the tendered eligible options. For the change of control provisions currently applicable to the directors and executive officers, see Section 10 (“Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH”).

Amendment of the Plan.  Our Board of Directors may amend the Plans and any award granted under them at any time; provided, however, that (i) Critical Path shareholders must approve such amendment when required by applicable law, rule or regulation; and (ii) amendment or termination of an award shall not, without the consent of a recipient of an award, materially adversely affect the rights of the recipient with respect to an outstanding award.

Rights as Shareholders and Employees.  Option holders have no rights with respect to any of our common stock subject to outstanding options until such shares are issued in accordance with the provisions of the Plans and the applicable new option agreement. Nothing in the Plans confers upon any eligible participant any right to continued employment.

Tax Consequences.  Eligible participants should refer to Section 13 (“Material Tax Consequences”) for a discussion of some of the tax consequences of accepting or rejecting this exchange offer to tender eligible options for cancellation and of the grant of the new options under this exchange offer. You should consult with your own tax advisor to determine the specific tax consequences of this exchange offer to you.

Registration of Underlying Shares.  All of the shares of common stock issuable under the Plans have been registered under the Securities Act of 1933, as amended (the “Securities Act”), on registration statements on Form S-8 filed with the SEC. Accordingly, all the shares issuable upon exercise of all new options will have been registered under the Securities Act. Unless you are considered an “affiliate” of CPTH, you generally will be able to sell your shares underlying your new options free of any transfer restrictions under applicable U.S. securities laws.

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Section 9.    Information Concerning CPTH; Financial Information.

Information Concerning CPTH.  Critical Path, Inc. delivers software and services that enable the rapid deployment of highly scalable valued-added solutions for consumer messaging and identity management. CPTH’s messaging and identity management solutions help organizations expand the range of digital communications services they provide while helping to reduce overall costs. CPTH’s messaging solutions provide integrated access to a broad range of communication and collaboration applications from wireless devices, web browsers, desktop clients, and voice systems. CPTH’s identity management solutions are designed to reduce burdens on helpdesks, simplify the deployment of key security infrastructure, enable compliance with new regulatory mandates, and help reduce the cost and effort of deploying applications and services to distributed organizations, mobile users, suppliers, and customers.

Except as otherwise disclosed in this exchange offer or in our filings with the SEC, we presently have no plans or proposals that relate to or would result in:

(a) any extraordinary transaction, such as a merger, reorganization or liquidation, involving us or our subsidiaries;

(b) any purchase, sale or transfer of a material amount of our assets or the assets of our subsidiaries;

(c) any material change in our present dividend rate or policy, indebtedness or capitalization;

(d) any change in our present Board of Directors or management or management contracts, other than changes in the number or term of directors or to fill any existing board vacancies, or as may otherwise occur in the ordinary course of business;

(e) any other material change in our corporate structure or business;

(f) our common stock ceasing to be authorized to be quoted on the OTCBB;

(g) our common stock becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (which we refer to herein as the “Exchange Act”);

(h) the suspension of our obligation to file reports pursuant to Section 15(d) of the Exchange Act;

(i) the acquisition by any person of our securities or the disposition of any of our securities, other than our employees, directors, executive officers and consultants who may: (i) acquire or dispose of rights to our securities pursuant to existing or future restricted stock or stock option exercises or grants; or (ii) make purchases or sales pursuant to existing or future trading plans that have been structured to comply with Rule 10b5-1 under the Exchange Act; or

(j) any change in our Restated Articles of Incorporation or Bylaws, or any actions that may impede the acquisition of control of us by any person.

Financial Information

We have presented below selected consolidated financial data for Critical Path, Inc. The selected historical statement of operations data for the years ended December 31, 2005 and 2004 and for the three months ended March 31, 2006 and March 31, 2005 and the selected historical balance sheet data as of March 31, 2006 and December 31, 2005 and 2004 have been derived from and are qualified by reference to the consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2005 filed with the SEC on April 4, 2006 and our quarterly report on Form 10-Q for the quarter ended March 31, 2006 filed with the SEC on May 16, 2006. The information below should be read together with our consolidated financial statements and the notes related thereto as well as the section of Form 10-K and Form 10-Q and our other reports entitled “Management’s Discussion of Financial Condition and Results of Operations. Please see Section 16 (“Additional Information”) of this exchange offer for instructions on how you can obtain copies of our SEC filings. We have presented the following data in thousands, except per share data.

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Selected Consolidated Financial Data

	Year Ended December 31,						Three Months Ended March 31,
	2004			2005			2005			2006
	(in thousands, except per share amounts)
Consolidated statement of operations data:
Net revenues	$	71,072		$	66,832		$	17,440		$	11,014
Gross profit		22,520			31,503			7,090			5,661
Net loss		(51,997	)		(13,652	)		(7,369	)		(3,942	)
Net loss attributable to common shares	$	(66,562	)	$	(32,382	)	$	(12,646	)	$	(7,403	)
Basic and diluted net loss attributable per common share	$	(3.15	)	$	(1.01	)	$	(0.46	)	$	(0.20	)
Basic and diluted weighted average shares outstanding		21,123			31,933			27,256			36,133

	2004			2005			2006
	(in thousands)
Consolidated balance sheet data:
Current assets	$	47,473		$	33,996		$	36,790
Noncurrent Assets		21,726			11,428			11,157
Total assets		69,199			45,424			47,947
Current liabilities		44,790			29,352			34,083
Noncurrent liabilities		14,221			20,787			21,982
Total liabilities		59,011			50,139			56,065
Mandatorily redeemable preferred stock		122,377			120,293			123,754
Shareholders’ deficit		(112,189	)		(125,008	)		(131,872	)

Book Value Per Share and Ratio of Earnings to Fixed Charges

We had a book value per outstanding share of $(3.52) as of the close of business on March 31, 2006. Since we have no earnings, the ratio of earnings to fixed charges was not applicable for the years ended December 31, 2005 and December 31, 2004 or the three months ended March 31, 2006 and March 31, 2005.

Section 10.    Interests of Directors and Officers; Transactions and Arrangements Concerning any Securities of CPTH.

As of the close of business on May 5, 2006, our executive officers and directors (twelve persons) as a group held options unexercised and outstanding under the Option Plans to purchase a total of 4,142,905 of our shares of common stock, which represented approximately 47% of the shares of common stock subject to all eligible options unexercised and outstanding under the Option Plans as of that date.

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The following table below sets forth the beneficial ownership of each of our executive officers and directors of eligible options unexercised and outstanding as of the close of business on May 5, 2006 issued under the Option Plans. The percentages in the tables below are based on the total number of outstanding eligible options to purchase shares of our common stock under the Option Plans, which was 8,833,786 as of the close of business on May 5, 2006. The address of each executive officer and director is: c/o Critical Path, Inc., 2 Harrison Street, 2nd Floor, San Francisco, California 94105.

Name and Position	Number of Eligible Stock Options		Exercise Price		Percentage of Total Outstanding Stock Options
Mark Ferrer, Chairman of the Board of Directors and Chief Executive Officer (1)	1,021,234		$	0.60
	1,061,052			2.11
Total	2,082,286				23.6	%
James A. Clark, Executive Vice President and Chief Financial Officer (2)	20,000		$	0.65
	350,000			2.38
Total	370,000				4.2	%
Donald Dew, Chief Technology Officer and Executive Vice President, Product Management	5,000			0.65
	37,500			3.12
	18,750			3.52
	25,000			4.36
	6,250			4.52
	12,500			172.00
	7,500			202.00
Total	112,500				1.3	%
Mark Palomba, Executive Vice President, Worldwide Sales and Field Operations (2)	20,000			0.65
	350,000			1.87
Total	370,000				4.2	%
Barry Twohig, Executive Vice President, Engineering (3)	20,000			0.65
	112,500			3.12
	18,750			3.52
	12,500			4.00
	25,000			4.36
	9,375			4.52
	616			15.44
	1,352			51.52
	6,250			202.00
	3,750			300.00
Total	210,093				2.4	%
Michael Zukerman, Executive Vice President, General Counsel and Secretary (4)	20,000			0.65
	22,266			1.44
	75,000			1.56
	37,500			3.48
	12,500			3.52
	50,812			4.52
Total	218,078				2.5	%
Mario Bobba, Director	15,000	(5)		0.29
	75,000	(5)		0.44
	75,000			0.65
	25,000			3.12
	25,000			3.52
	10,532			4.00
	25,000			4.08
	8,883			4.52

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	1,533	15.44
	9,000	300.00
Total	269,948		3.1	%
Edmond Ip Tak Chuen, Director (5)	15,000	0.29
	75,000	1.23
Total	90,000		1.0	%
Ross M. Dove, Director (5)	15,000	0.29
	15,000	1.23
	75,000	3.12
Total	105,000		1.2	%
Frost R. R. Prioleau, Director (5)	15,000	0.29
	15,000	1.23
	75,000	2.23
Total	105,000		1.2	%
Michael J. Shannahan, Director (5)	15,000	0.29
	15,000	1.23
	75,000	1.81
Total	105,000		1.2	%
Tom Tinsley, Director (5)	15,000	0.29
	15,000	1.23
	75,000	1.81
Total	105,000		1.2	%
Grand Total	4,142,905		47.1	%

⁽¹⁾ In March 2004, Mr. Ferrer was elected as the Chief Executive Officer and Chairman of the Board of CPTH. In March 2004, Mr. Ferrer received two options to purchase an aggregate of 1,061,052 shares of CPTH’s common stock. In July 2004, upon completion of CPTH’s rights offering, Mr. Ferrer received additional options to purchase 1,021,234 shares of common stock. Prior to our determination in December 2005 to accelerate the vesting of all outstanding options, Mr. Ferrer’s options provide that if CPTH were acquired and Mr. Ferrer’s options were not assumed in the acquisition, his options would become immediately vested in full. If we were to terminate Mr. Ferrer without cause (as that term is defined in his employment agreement) or due to his disability or if Mr. Ferrer were to resign as a result of an uncured constructive termination (as that term is defined in his employment agreement) within 12 months following a change of control or within 3 months prior to a change of control, Mr. Ferrer would be entitled to accelerated vesting of the greater of (i) 75% or twelve months of unvested restricted shares or (ii) twelve months of accelerated vesting of Mr. Ferrer’s unvested stock options. Pursuant to the exchange offer, new options issued in exchange for these eligible options held by Mr. Ferrer will again be subject to the provisions described in this footnote.

⁽²⁾ Prior to our determination in December 2005 to accelerate the vesting of all outstanding options, if terminated by the Company without “cause” or by the officer for “good reason” within 6 months following a “change of control” (each term as defined in the applicable employment or option agreement), all of the then unvested options would have automatically vested. Pursuant to the exchange offer, any new option issued in exchange for these eligible options will again be subject to the provisions described in this footnote.

⁽³⁾ Prior to our determination in December 2005 to accelerate the vesting of all outstanding options, if involuntarily terminated (as defined in the memorandum to Mr. Twohig dated March 1, 2003 (the “Memorandum”)) by the Company within 12 months following a “change of control” (as defined in the Memorandum), all of Mr. Twohig’s then unvested options would automatically become vested. Pursuant to the exchange offer, any new option issued to Mr. Twohig in exchange for these eligible options will again be subject to the provisions described in this footnote.

⁽⁴⁾ Prior to our determination in December 2005 to accelerate the vesting of all outstanding options, if terminated by the Company without “cause” or by the officer for “good reason” following a “change of control” (each term as defined in Mr. Zukerman’s employment agreement), all of the then unvested options held by Mr. Zukerman would automatically become vested. Pursuant to the exchange offer, any new option issued in exchange for these eligible options will again be subject to the provisions described in this footnote.

⁽⁵⁾ Prior to our determination in December 2005 to accelerate the vesting of all outstanding options, options granted to outside directors of Critical Path would become fully vested in the event of a change of control of the Company. Pursuant to the exchange offer, any new option issued in exchange for these eligible options will again be subject to the provisions described in this footnote.

24

On April 25, 2006, each outside director was granted an option to purchase 15,000 shares of Critical Path common stock. On May 5, 2006, the following transactions occurred:

• Mr. Clark sold 11,530 shares of common stock at $0.25 per share pursuant to a Rule 12b5-1 trading plan to cover withholding taxes upon the vesting of 20,000 restricted stock units previously granted to Mr. Clark under the 1998 Plan;

• Mr. Twohig sold 10,488 shares at $0.241 per share and 1,021 at $0.24 per share pursuant to a Rule 12b5-1 trading plan to cover withholding taxes upon the vesting of 25,000 restricted stock units previously granted to Mr. Twohig under the 1998 Plan;

• Mr. Zukerman sold 25,000 shares at $0.25 per share pursuant to a Rule 12b5-1 trading plan upon the vesting of 25,000 restricted stock units previously granted to Mr. Zukerman under the 1998 Plan;

• Mr. Palomba sold 6,720 shares at $0.241 per share pursuant to a Rule 12b5-1 trading plan to cover withholding taxes upon the vesting of 17,500 restricted stock units previously granted to Mr. Palomba under the 1998 Plan; and

• 2,117 shares vested in connection with restricted stock units previously granted to Mr. Dew and the Company withheld 954 shares to cover the taxes due upon vesting.

On May 16, 2006, 42,551 shares vested in connection with restricted stock units previously granted to Mr. Ferrer and the Company withheld 13,701 shares to cover the taxes due upon vesting. Also on May 16, 2006, Mr. Ferrer gifted 28,850 shares of the Company’s common stock to his wife.

Except for the transactions described above, neither we, nor, to the best of our knowledge, any of our executive officers or directors, nor any affiliates of ours, were engaged in transactions involving options to purchase our common stock or in transactions involving our common stock during the past 60 days before and including May 31, 2006.

Section 11.  Status of Eligible Options Acquired by Us in this Exchange Offer; Accounting Consequences of this Exchange Offer.

Eligible options that we accept for exchange and acquire pursuant to this exchange offer will be cancelled as of the expiration of the exchange offer and the shares of common stock subject to them will be returned to the pool of common stock available for future option grants under the 1998 Plan or the 1999 Plan, as applicable. To the extent such shares are not in turn reserved in connection with this exchange offer, they will be available for future grants under the 1998 Plan or the 1999 Plan, as applicable, without further shareholder action, except as may be required by applicable law or any stock exchange or automated quotation system on which our common stock is then quoted or listed.

As a result, the Company’s adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123(R)), stock compensation is calculated based upon the fair value of the awards in accordance with the new standard and the variable accounting treatment will cease. The Company adopted SFAS 123(R) on January 1, 2006. In accordance with SFAS 123R, cancellation of an award accompanied by the concurrent grant of (or offer to grant) a replacement award shall be accounted for as a modification of the terms of the cancelled award. Therefore, the incremental compensation cost will be measured as the excess of the fair value of the replacement award over the fair value of the cancelled award at the cancellation date. The amount of these charges will depend on the Company’s common stock price as reported on the NASDAQ Stock Market’s Over-the-Counter Bulletin Board and the number of new options to be issued in exchange for the cancelled options, neither of which can be predicted with certainty.

The Company used the Black-Scholes valuation model to estimate the value of new options to be granted and the value of existing options to be surrendered under this exchange offer. The Black-Scholes valuation model

25

is intended for use in estimating the fair value of publicly traded options that have no vesting restrictions and are fully transferable, which differs significantly from the terms of both the new options to be granted and the currently existing options to be surrendered under this exchange offer. In addition, option valuation models, such as Black-Scholes, require the input of subjective assumptions, including the expected stock price volatility and the expected life of the options before exercise, which greatly affect the calculated grant date fair value. Based on preliminary estimates, the impact of this exchange offer is not expected to be material.

Section 12.  Legal Matters; Regulatory Approvals.

We are not aware of any material pending or threatened legal actions or proceedings relating to the exchange offer. We are not aware of any margin requirements or anti-trust laws applicable to this exchange offer. We are not aware of any license or regulatory permit that appears to be material to our business that might be adversely affected by our exchange of eligible options and issuance of new options as contemplated by this exchange offer, or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of our new options as contemplated herein. Should any such approval or other action be required, we presently contemplate that we will use commercially reasonable efforts to seek such approval or take such other action. We cannot assure you that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to our business. Our obligation under this exchange offer to accept tendered eligible options for exchange and to issue new options for tendered eligible options would be subject to obtaining any such governmental approval.

Section 13.  Material Tax Consequences.

The following is a discussion of the material U.S. federal income tax consequences of the acceptance and cancellation of eligible options and the grant of new options pursuant to the exchange offer. This discussion is based on the Code, its legislative history, Treasury Regulations and administrative and judicial interpretations as of the date of this exchange offer, all of which may change, possibly on a retroactive basis. This discussion does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to be applicable in all respects to all eligible participants. If you are a citizen or resident of a country other than the country in which you work, or are subject to the tax laws of more than one country, or change your residence or citizenship during the term, the information contained in this discussion may not be applicable to you.

WE ADVISE ALL ELIGIBLE PARTICIPANTS WHO MAY CONSIDER EXCHANGING THEIR ELIGIBLE OPTIONS TO MEET WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER.

We believe that if you exchange your eligible options for new options, you will not be required under current law to recognize income for U.S. federal income tax purposes at the time of the exchange or when the new options are granted. Please review the discussion above under “Risk Factors — Tax-Related Risks” for information concerning the possibility that, even if you elect not to participate in the exchange, your incentive stock options may be affected.

If you tender an eligible option grant that was a non-qualified stock option and your eligible option is accepted and cancelled, the new option issued to you will be a non-qualified stock option. If you tender an eligible option grant that was an incentive stock option and your eligible option is accepted and cancelled, the new option issued to you will be an incentive stock option unless federal tax rules limit this characterization. In general, federal tax rules provide that if the fair market of an incentive stock option that is exercisable in a year exceeds $100,000, the excess will be treated as non-qualified stock option.

26

Non-qualified Stock Options.  Generally, an eligible participant will not recognize ordinary compensation income upon the grant of a non-qualified stock option. However, an eligible participant generally will recognize ordinary compensation income upon the exercise of a non-qualified stock option in an amount equal to the excess of the fair market value of the shares acquired through the exercise of the option on the exercise date over the exercise price. Your holding period for the shares acquired through exercise of the option will begin on the date of exercise.

An eligible participant will have a tax basis for any shares subject to a non-qualified option equal to the exercise price plus any income recognized upon the exercise of the option. Upon selling shares acquired upon exercise of a non-qualified option, an eligible participant generally will recognize capital gain or loss in an amount equal to the difference between the sale price of the shares acquired through exercise of the non-qualified option and the eligible participant’s tax basis in such shares. This capital gain or loss will be long-term capital gain or loss if the eligible participant has held the shares acquired through exercise of the non-qualified option for more than one year prior to the date of the sale and will be a short-term capital gain or loss if the eligible participant has held such shares for a shorter period.

Incentive Stock Options.  Generally, an eligible participant will not recognize ordinary compensation income upon the grant of an incentive stock option or upon the exercise of an incentive stock option. (For alternative minimum tax, or AMT, purposes, the amount equal to the excess of the fair market value of the shares acquired through the exercise of the option on the exercise date over the exercise price is considered income subject to the AMT.) Instead, the tax is generally deferred until the holder sells the stock, at which time the holder is taxed on the entire gain. As long the sale is at least two years after the incentive stock option was granted and at least one year after the incentive stock option was exercised, the gain will be taxed at the long-term capital gains rate. Otherwise, the sale is considered a “disqualifying disposition,” and the holder will be taxed as if the option was a non-qualified stock option.

Tax Consequences to the Company.  The grant of a stock option by us will have no tax consequences to us. However, subject to Code Section 162(m) and certain reporting requirements, we generally will be entitled to a business-expense deduction upon the exercise of a non-qualified stock option in an amount equal to the amount of ordinary income attributable to an eligible participant upon exercise.

Withholding Taxes.  We will withhold all required local, state, federal, foreign and other taxes and any other amount required to be withheld by any governmental authority or law with respect to ordinary compensation income recognized with respect to the exercise of a non-qualified stock option by an eligible participant who has been employed by us. We will require any such eligible participant to make arrangements to satisfy this withholding obligation prior to the delivery of any certificate for our common stock.

Section 14.  Extension of Exchange Offer; Termination; Amendment.

We may, from time to time, extend the period of time during which the exchange offer is open and delay accepting any eligible options tendered to us by disseminating notice of the extension to eligible participants by public announcement, oral or written notice or otherwise as permitted by Rule 13e-4(e)(3) under the Exchange Act, as amended. If the exchange offer is extended, we will provide appropriate notice of the extension and the new expiration time no later than 9:00 a.m. U.S. Pacific (San Francisco) Time on the next business day following the previously scheduled expiration of the exchange offer. For purposes of this exchange offer, a “business day” means any day other than a Saturday, Sunday or United States federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, U.S. Pacific (San Francisco) Time.

We also expressly reserve the right, in our reasonable judgment, prior to the expiration of the exchange offer, to terminate or amend the exchange offer upon the occurrence of any of the conditions specified in Section 6 (“Conditions of this Exchange Offer”), by disseminating notice of the termination to the eligible participants by public announcement, oral or written notice or otherwise as permitted by applicable law.

27

Subject to compliance with applicable law, we further reserve the right, in our discretion, and regardless of whether any event set forth in Section 6 (“Conditions of the Exchange Offer”), has occurred or is deemed by us to have occurred, to amend the exchange offer in any respect prior to the expiration. Any notice of such amendment required pursuant to the exchange offer or applicable law will be disseminated promptly to eligible participants in a manner reasonably designed to inform eligible participants of such change and filed with the SEC as an amendment to the Schedule TO.

If we materially change the terms of the exchange offer or the information concerning the exchange offer, or if we waive a material condition of the exchange offer, we will extend the exchange offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act. These rules dictate the minimum period during which a tender or exchange offer must remain open following material changes in the terms of the offer or information concerning the offer, and will depend on the facts and circumstances. For example, if we decide to take any of the following actions, we will publish notice or otherwise inform you in writing of such action and keep the exchange offer open for at least 10 business days after the date of such notification:

(a) we increase or decrease the amount of consideration offered for the eligible options;

(b) we decrease the number of options that may be tendered in the exchange offer; or

(c) we increase the number of eligible options that may be tendered in the exchange offer by an amount that exceeds 2% of the shares of common stock issuable upon exercise of the options that are subject to this offer immediately prior to the increase.

Section 15.  Fees and Expenses.

We will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of eligible options pursuant to this exchange offer. You will be responsible for any expenses incurred by you in connection with your election to participate in this exchange offer, including, but not limited to, mailing, faxing and telephone expenses, as well as any expenses associated with any tax, legal, accountant and financial advisors consulted or retained by you in connection with this exchange offer.

Section 16.  Additional Information.

With respect to this exchange offer, we have filed with the SEC a Tender Offer Statement on Schedule TO, as it may be amended, of which this exchange offer is a part. This exchange offer does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We recommend that you review the Schedule TO, including its exhibits, and the following materials which we have filed with the SEC, before making a decision on whether or not to tender your eligible options:

(a) our Annual Report on Form 10-K for the fiscal year ended December 31, 2005;

(b) our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2006;

(c) our definitive Proxy Statement for our 2005 annual meeting of shareholders, filed with the SEC on November 4, 2005;

(d) our Current Reports on Form 8-K, filed with the SEC on January 9, 2006, January 10, 2006 and April 3, 2006; and

(e) the description of our common stock contained in our Registration Statement on Form 8-A, including any subsequent amendment or report filed for the purpose of updating such information.

28

These filings may be examined, and copies may be obtained, at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.

You may obtain information on the operation of the public reference room by calling the SEC at (800) SEC-0330. Our SEC filings are also available to the public on the SEC’s internet site at http://www.sec.gov. Our common stock is listed for trading on the NASDAQ Stock Market’s Over-the-Counter Bulletin Board under the symbol “CPTH.OB.”

We will also provide without charge to each person to whom we deliver a copy of this exchange offer, upon their written or oral request, a copy of any or all of the documents to which we have referred you, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests should be directed, between the hours of 8:00 a.m. and 5:00 p.m. (Pacific Time) to:

Critical Path, Inc.

2 Harrison Street, 2nd Floor

San Francisco, California 94105

Attention: Tom Quigley

Telephone: (415) 541-2500

Email: optionexchange@criticalpath.net

The information about us contained in this exchange offer should be read together with the information contained in the documents to which we have referred you.

Section 17.  Miscellaneous.

We are not aware of any jurisdiction where the making of this exchange offer is not in compliance with applicable law. However, we have made no inquiry regarding nor investigation of applicable laws in any foreign jurisdictions. If we become aware of any jurisdiction where the making of this exchange offer is not in compliance with applicable law, we will make a good faith effort to comply with such law. If, after such good faith effort, we cannot comply with such law, this exchange offer will not be made to, nor will tenders be accepted from or on behalf of, eligible participants residing in such jurisdiction.

WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER OR NOT YOU SHOULD TENDER YOUR ELIGIBLE OPTIONS PURSUANT TO THIS OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN DOCUMENTS TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE RELATED DOCUMENTS. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU SHOULD NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.

Critical Path, Inc.

May 31, 2006

29

EX-99.(A)(1)(B)

1

| 31 May 2006

Critical Path

Stock Option Exchange Program

May 31, 2006

Exhibit (a)(1)(B)

2

| 31 May 2006

Stock Option Exchange Offer

Stock options are an important long-term compensation tool to:

•

Create

ownership

in

which

employees

think

like

owners

and

employees’

and

shareholders’

interests are better aligned.

•

Attract & retain the talent we need.

•

Motivate employees’

by sharing in financial success they’ve helped to create.

Why are we offering an option exchange program?

•

Over

the

past

several

years

stock

price

volatility

has

left

most

employees

holding

stock options with an exercise price that significantly exceeds our current trading

price.

•

These “underwater”

options no longer provide any motivational impact or retention

value.

•

We believe that offering you the opportunity to replace these options with new

options priced at the current fair market value will motivate higher levels of

performance, provide retention incentives and effectively recognize your

contributions to our current and future growth.

3

| 31 May 2006

Stock Option Exchange Offer

What is our stock option exchange program?

Our solution is to provide you with a choice

-

if

you

are an eligible option holder,

you may voluntarily elect to…

•

MAINTAIN  -

keep your current stock option grants with their current exercise price,  

vested status and other terms.

•

EXCHANGE -

surrender any or all eligible stock option grants and receive a new 

option:

1)

with

an

exercise

price

equal

to

the

fair

market

value

of

our

common

stock

as

reported

on

the

OTC

BB

immediately

prior

to

the

new

grant

date

2) which is subject to a new vesting schedule of 2 or 3 years

3) with a 7 year term.

4) which will be issued under the 1998 Plan (regardless of which plan your  

current options were issued under).

4

| 31 May 2006

Stock Option Exchange Offer

Tendered

Eligible

Options

Exchange

Rates

-

Three

Price

Ranges:

If your original price is:

•

$0.19 USD to $4.00 USD = 1 new option for 1 old option

•

$4.01 USD to $5.00 USD = 1 new option for 2 old options

•

$5.01 USD and higher =  1 new option for 5 old options

New

Options

Vesting

Schedule

-

from

2

to

3

years

to

fully

vest

•

Employee or Consultant with 2 years or more of service  -

50% immediately vested & equal vesting of balance over 24 months.

•

Employee or Consultant with less than 2 years of service -

25% immediately vested & equal vesting of balance over 36 months.

•

Continued vesting after the grant date will require your continued

service to Critical Path.

5

| 31 May 2006

Stock Option Exchange Offer

Sample Option Exchange

-

Gianni Renetti, a CP employee since January 2000, received four stock

grants over the past six years and is considering the company’s exchange

offer.  Gianni’s exchange of old options, all of which are fully vested, for

new options would result in the following conversion:

Gianni has immediate vesting of 50% of his new options, with the

balance vesting monthly over 24 months

$0.25

700

700 / 1 =

$0.65

700

11/5/2005

$0.25

3,000

3,000 / 1 =

$1.56

3,000

1/9/2004

$0.25

2,500

5,000 / 2=

$4.52

5,000

7/31/2002

$0.25

1,560

7,800 / 5 =

$174.00

7,800

1/26/2000

New

Option

Price

New Grant

Amount

Conversion

Rate

Old Option

Price

Options

Granted

Old Grant

Date

6

| 31 May 2006

Stock Option Exchange Offer

Election Decision is Your Choice

•

You should consult with your own advisors regarding the tax or other

consequences of participating or not participating in the exchange offer.

•

You may choose to change or withdraw your election any time before the

end of the offer period.

7

| 31 May 2006

Stock Option Exchange Offer

Election Steps:

1.

Review

“Eligible

Option

Information

Sheet”

and

verify

all

option

grants.

•

Important: Strike through/cross out grants you DO NOT wish to exchange.  

Exchanges are only permitted for entire grants.  You may not partially

exchange a specific grant

2.

Read “Instructions to Election Form”

and “Election Form”.

•

Sign

&

date

election

form,

list

social

security

number

(US

staff

only).

•

Obtain spousal consent, if applicable.

3.

Deliver Election Form to San Francisco HQ HR by Midnight on June

28, 2006.

•

Election (or withdrawal) form is effective only upon receipt by CP.

4.

HR will send receipt confirmation of election form or notice of withdrawal .

5.

New stock option agreements will be issued promptly following the close of the

tender offer

6.

You must be continually providing services through the new option grant date to

receive the new options.

8

| 31 May 2006

Stock Option Exchange Offer

Where can I find additional details about the exchange offer?

Document

Description

Exchange Offer

Legal document explaining the offer in

detail including a list of common questions

and answers regarding the exchange program.

Election Form

Form

that you must sign and deliver to CP HR to

participate in the offer.

Withdrawal Form

Form

used to rescind a previous election to

exchange prior to the end of the offer period.

Personalized Option

Document that serves as your option grant history

Statement

with

all of your outstanding option grants listed.

You have been or will be provided with copies of the above materials. If you need

additional copies please contact Tom Quigley.

9

| 31 May 2006

Stock Option Exchange Offer

Questions?

You may direct questions about this exchange offer to Mike Zukerman, Jim Clark or Tom

Quigley and direct questions regarding the exchange offer documents to Tom Quigley. 

Informational Conference Calls will be scheduled and you will

be

notified

of

the specific

times by email.  We encourage everyone to participate. 

PLEASE NOTE: This presentation does not cover all aspects of the exchange offer.  Please

read

the

package

of

documents

you

will

be

receiving

for

the

full

details.

A FINAL REMINDER…

Time Period for your decision is 12 Midnight PST on June 28, 2006

•

No exceptions can be made for late election form submission for any

reason!

•

You must read the election form and instructions carefully.

•

If you make no election, your options will continue in effect through their

original expiration date(s) at their original exercise price(s).

EX-99.(A)(1)(C)

Exhibit (a)(1)(C)

To: Critical Path, Inc. Optionees

From: Mark Ferrer, Chief Executive Officer

Date: May 31, 2006

Re: Stock Option Exchange Offer

I am pleased to announce a new Critical Path stock option program. We have granted stock options in the past to retain, motivate and reward you and to align your interests with those of our shareholders.

The decline in our stock price has put virtually all of the employee, consultant and director options underwater. Therefore, we are excited to announce an option exchange program that will give you the opportunity to exchange any options you hold for a new option with an exercise price that will be based on the closing sale price of our common stock on the day immediately prior to the new grant date.

The details of this exchange program are included in program documents that will be distributed to you separately. These formal documents, which have been filed with the SEC, contain important information about the program, including a set of questions and answers as well as the election forms required to participate. Please read these materials carefully. In addition, you will be provided with a personal statement summarizing your current option holdings that are eligible for this exchange.

We will be holding informational meetings to further explain this program and answer your questions. Tom Quigley or Mike Zukerman will be sending out information on these meetings shortly.

Finally, please note that participation in the option exchange program is voluntary. We make no recommendation as to whether you should elect to exchange your existing options. You must make your own decision regarding participation in the option exchange program.

EX-99.(A)(1)(D)

Exhibit (a)(1)(D)

CRITICAL PATH, INC.

ELECTION FORM

The exchange offer and withdrawal rights expire at

12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006

unless the offer is extended.

INSTRUCTIONS TO ELECTION FORM

1.                DEFINED TERMS. All terms used in this Election Form but not defined have the meaning given them in the option exchange offer, dated May 31, 2006. References in this Election Form to “Critical Path,” “we,” “us,” “our,” and “ours” mean Critical Path, Inc.

2.                EXPIRATION DATE. The exchange offer and any rights to tender or to withdraw a tender of eligible options expire at 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006, unless the exchange offer is extended.

3.                DELIVERY OF ELECTION FORM. If you intend to tender eligible options under the exchange offer, a signed copy of this Election Form, together with a properly completed Eligible Option Information Sheet, must be received by Critical Path before 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006 (or such later date as may apply if the exchange offer is extended) by one of the following means:

By Mail or Courier

Critical Path, Inc.

2 Harrison Street, 2^nd Floor

San Francisco, California 94105

Attention: Tom Quigley

Phone: (415) 541-2500

By Facsimile

Attention: Tom Quigley

Fax No: (415) 541-2307

By Hand To

Tom Quigley

By Email

optionexchange@criticalpath.net

Your Election Form will be effective only upon receipt by us. Critical Path will only accept delivery of the signed Election Form by one of the methods of delivery described above. The method of delivery is at your own option and risk. You are responsible for making sure that the Election Form is delivered to the person indicated above. You must allow for delivery time based on the method of delivery that you choose to ensure that we receive your Election Form on time.

You are not required to tender any of your eligible options. If you hold separately granted eligible options and choose to tender for exchange a particular eligible option grant, you must tender the entire option grant, but need not tender other eligible option grants held by you.

4.                SURRENDER OF OPTION AGREEMENT. You do not need to return your stock option agreements relating to any tendered eligible options, as they will be automatically cancelled if we accept your eligible options for exchange.

5.                WITHDRAWAL OF ELECTION. Tenders of eligible options made under the exchange offer may be withdrawn at any time before midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28,

2006, unless we extend the expiration date, in which case withdrawals must be received before 12:00 midnight, U.S. Pacific (San Francisco) Time, on such later expiration date. In addition, if Critical Path does not accept your tendered options on or before July 27, 2006, you will have the right to withdraw your tendered options after that date and until your tendered options have been accepted.

To withdraw tendered eligible options, you must deliver, mail, fax or email a properly completed and signed Notice of Withdrawal to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Tom Quigley, Fax No. (415) 541-2307, or Email: optionexchange@criticalpath.net. Withdrawals may not be rescinded. Any eligible options withdrawn will not be considered to be properly re-tendered unless the withdrawn eligible options are properly re-tendered before the expiration of the exchange offer by following the procedures described in Instruction 3 above.

6.                SIGNATURES. Please sign and date this Election Form, and provide your social security number or other tax identification number. Except as described in the following sentence, this Election Form must be signed by the eligible participant who holds the eligible options to be tendered exactly as such eligible participant’s name appears on the applicable option agreement. If the signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on this Election Form

7.                REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance regarding the exchange offer should be directed to Michael Zukerman at optionexchange@criticalpath.net or by telephone at (415) 541-2500. Any requests for additional copies of the exchange offer or this Election Form may be directed to Tom Quigley at optionexchange@criticalpath.net or by telephone at (415) 541-2500. Copies will be furnished promptly at Critical Path’s expense.

8.                IRREGULARITIES. We will determine, in our discretion, all questions as to the number of shares subject to eligible options tendered and the validity, form, eligibility (including time of receipt) and acceptance of any tender of eligible options or withdrawal of tendered eligible options. Our determination of these matters will be final and binding on all parties. We may reject any or all tenders of eligible options or withdrawals of tendered eligible options that we determine are not in appropriate form or that we determine are unlawful to accept. We may waive any defect or irregularity in any tender or withdrawal with respect to any particular eligible options or any particular eligible option holder before the expiration of the exchange offer. No eligible options will be accepted for exchange or withdrawal until the eligible option holder exchanging the eligible options has cured all defects or irregularities to our satisfaction, or they have been waived by us, prior to the expiration of the exchange offer. Neither we nor any other person is obligated to give notice of any defects or irregularities involved in the exchange of any eligible options.

9.                CONDITIONAL OR CONTINGENT OFFERS. Critical Path will not accept any alternative, conditional or contingent tenders.

10.                IMPORTANT TAX INFORMATION. You should refer to Section 13 of the exchange offer, which contains important tax information. We encourage all eligible participants to consult with your personal tax, legal, accountant and financial advisors if you have questions about your financial or tax situation.

2

ELECTION FORM

To: Critical Path, Inc. 2 Harrison Street, 2^nd Floor San Francisco, California 94105 Facsimile: (415) 541-2307 Attn: Tom Quigley Email: optionexchange@criticalpath.net

I acknowledge that:

(1) I hereby tender to Critical Path for exchange those eligible options specified on the attached Eligible Option Information Sheet and understand that, upon acceptance by Critical Path, this Election Form will constitute a binding agreement between Critical Path and me.

(2) I understand that if I validly tender an eligible option for exchange, and such eligible option is accepted and cancelled, the new option may not entitle me to acquire the same number of shares of common stock that were subject to my eligible option at the time of the exchange. I understand that the actual number of new options I will receive in exchange for a tendered eligible option will be determined on the basis of the per share exercise price in effect under my tendered options. More specifically, I understand that if the exercise price per share of any tendered eligible option is at least $0.19 but not more than $4.00, the number of shares subject to my new option will be the same as the number of shares subject to the tendered eligible option. Further, I understand that if the exercise price per share of my tendered eligible option is at least $4.01 but not more than $5.00, the number of shares subject to my new option will be determined by dividing the number of shares subject to the tendered eligible option by two, rounded down to the nearest whole number and, if the exercise price per share of an eligible option is more than $5.01, the number of shares subject to my new option will be determined by dividing the number of shares subject to my tendered eligible option by five, rounded down to the nearest whole number.

(3) I understand that the new options will have substantially the same terms and conditions as the eligible options cancelled in this exchange offer, except for the new term, exercise price, vesting schedule, the number of shares underlying the new options (discussed in paragraph (2) above) and, for eligible participants that tender options issued under the 1999 Plan, different provisions governing the vesting of the new options in the event of a change of control of Critical Path. I understand that each new option will have an exercise price equal to the closing sale price of Critical Path’s common stock on the Over-the-Counter Bulletin Board as reported by The NASDAQ Stock Market on the business day immediately prior to the grant date of the new options. I understand that all new options will be granted under Critical Path’s 1998 Plan, even if I am tendering one or more options issued under the 1999 Plan. I understand that even though my tendered options may be fully vested, if I am an employee or consultant my new options will vest over a four-year period adjusted as follows: (1) if I have provided services to Critical Path as of May 31, 2006 for two or more years, I will receive accelerated vesting of 50% of my new options with the remaining portion vesting in equal monthly installments for each full month of continuous service over the subsequent 24 month period; and (2) if I have provided services to Critical Path as of May 31, 2006 for less than two years, I will receive accelerated vesting of 25% of my new options with the remaining portion vesting in equal monthly installments for each full month of continuous services over the subsequent 36 month period. If I am a director, I understand that my options will retain the vesting schedule and vesting commencement date that governed my tendered options in the absence of any vesting acceleration that occurred on December 27, 2005. I acknowledge that I must continue to provide services to Critical Path through the required vesting periods to be entitled to exercise my new stock option in full.

(4) Critical Path has advised me to consult with my own advisors as to the consequences of participating or not participating in the exchange offer.

(5) To remain eligible to tender eligible options for exchange and cancellation pursuant to the exchange offer, I understand that I must remain an eligible participant and must not have received nor have given a notice of termination prior to the expiration of the exchange offer, which is scheduled to be 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006, unless the exchange offer is extended. I understand that if I die, my employment is terminated or I cease providing services prior to the expiration of the exchange offer, Critical Path will not accept my eligible options for cancellation and I or my estate or beneficiaries, as the case may be, will retain my eligible options with their current terms and conditions. I understand that my employment with or arrangement to provide services to Critical Path remains “at will” and can be terminated by me or Critical Path at any time, with or without cause or notice, and neither the ability to participate in the option exchange offer nor actual participation in the exchange offer shall be construed as a right to continued employment with Critical Path or any of its subsidiaries.

(6) I understand that in accordance with Section 6 of the exchange offer, Critical Path may terminate, modify or amend the exchange offer and postpone its acceptance and cancellation of any eligible options that I have tendered for exchange. In any such event, I understand that the eligible options tendered for exchange but not accepted will remain in effect with their current terms and conditions.

(7) I understand that this election is entirely voluntary, and I am aware that I may change or withdraw my decision to tender my eligible options at any time until the exchange offer expires as described in the Instructions to this Election Form. I understand that this decision to tender my eligible options will be irrevocable after 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006.

(8) I sell, assign and transfer to Critical Path all right, title and interest in and to all of the eligible options that I am tendering as specified in the attached Eligible Option Information Sheet, and I agree that I shall have no further right or entitlement to purchase any shares of Critical Path’s common stock under the tendered eligible options on the date Critical Path accepts those options for exchange and cancellation. I understand that my death or incapacity will not affect Critical Path’s authority to take the actions described in the exchange offer with respect to eligible options that I have tendered for exchange and that are accepted for cancellation, and such authority will survive my death or incapacity. All of my obligations under this election form will be binding upon my heirs, personal representatives, successors and assigns.

(9) I agree to all of the terms and conditions of the exchange offer AND HAVE ATTACHED A COMPLETED COPY OF THE ELIGIBLE OPTION INFORMATION SHEET.

	Date:
Signature of Eligible Participant
Print Name of Eligible Participant
Social Security Number or Tax Identification Number

2

NOTE TO MARRIED ELIGIBLE PARTICIPANTS IN CALIFORNIA AND OTHER U.S. “COMMUNITY PROPERTY” STATES:

If you are married and reside in a state the laws of which provide that a spouse has a community property interest in the eligible options, in order to elect to tender your eligible options your spouse must execute the Spousal Consent below, whereby such spouse agrees to be bound, and agrees that any such community property interest shall similarly be bound, by this Election Form. States with community property laws in addition to California are Alaska, Arizona, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin.

Your failure to provide your spouse’s signature constitutes your representation and warranty to Critical Path that either you are not married or your spouse has no community or other marital property rights in the eligible options or new options. You should consult your personal outside advisor(s) if you have questions about the Spousal Consent below.

Spousal Consent

The undersigned spouse of the eligible participant who has executed this Election Form above has read and hereby approves the submission of this Election Form. The undersigned agrees to be irrevocably bound by this Election Form and further agrees that any community property interest of such spouse shall similarly be bound by this Election Form. The undersigned appoints the eligible participant who has executed this Election Form above as his/her attorney-in-fact with respect to any amendment or exercise of any rights under this Election Form.

Spouse’s Signature Date

Spouse’s Name (please print or type)

3

ELIGIBLE OPTION INFORMATION SHEET

In connection with Critical Path’s exchange offer, attached is your Eligible Option Information Sheet describing your eligible options that are subject to the exchange offer.

If you elect to participate in the exchange offer, please attach this sheet to your Election Form. Please strike through any Eligible Option grants listed that you do not wish to exchange.

Eligible Options

[Participant Name and Address] [Participant ID]

Grant Date	Expiration Date		Grant Type		Exercise Price Per Share		Number of Shares Underlying Eligible Options
[                    ]	[	]	[	]	[	]	[	]

4

EX-99.(A)(1)(E)

Exhibit (a)(1)(E)

NOTICE OF WITHDRAWAL

Instructions

If you previously elected to accept the exchange offer by Critical Path, Inc. to exchange some or all of your outstanding eligible options for new options, subject to the terms and conditions set forth in the exchange offer, dated May 31, 2006 and you would like to change your election and withdraw the tender of any of your eligible options, you must complete and sign this Notice of Withdrawal and return it to Critical Path so that we receive it before 12:00 midnight, U.S. Pacific (San Francisco) Time on Wednesday, June 28, 2006, unless the exchange offer is extended.

Once the Notice of Withdrawal is signed and complete, please return it to Critical Path by one of the following means:

By Mail or Courier

     Critical Path, Inc.

     2 Harrison Street, 2^nd Floor

     San Francisco, California 94105

     Attention: Tom Quigley

     Phone: (415) 541-2500

By Facsimile

     Attention: Tom Quigley

     Fax No: (415) 541-2307

By Hand To

     Tom Quigley

By Email

     optionexchange@criticalpath.net

The method of delivery is at your own option and risk. You are responsible for making sure that the Notice of Withdrawal is delivered to the person indicated above. You must allow for delivery time based on the method of delivery that you choose to ensure that we receive your Notice of Withdrawal on time.

Your tendered eligible options will not be considered withdrawn until we receive your properly completed and signed Notice of Withdrawal. If you miss the deadline to submit the Notice of Withdrawal but remain an eligible participant of Critical Path, any previously tendered eligible options will be cancelled and exchanged pursuant to the exchange offer.

You must sign the Notice of Withdrawal exactly as your name appears on the Election Form you previously submitted. If your signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity for you, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on this Notice of Withdrawal.

If you do not receive a confirmation of receipt of your Notice of Withdrawal from us within five business days after the date your Notice of Withdrawal should have been received by us, or if you submit your Notice of Withdrawal less than five business days before 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006, please contact us by phone at (415) 541-2500 or by email at optionexchange@criticalpath.net to confirm that we have received your Notice of Withdrawal.

YOU DO NOT NEED TO COMPLETE AND RETURN THIS NOTICE OF WITHDRAWAL UNLESS YOU WISH TO WITHDRAW A PREVIOUS TENDER OF ELIGIBLE OPTIONS.

CRITICAL PATH, INC.

NOTICE OF WITHDRAWAL

To Critical Path, Inc.:

I previously received a copy of the exchange offer, dated May 31, 2006, and the Election Form. I signed and returned the Election Form, in which I elected to tender some or all of my eligible options. I understand that Critical Path will not accept any conditional or partial returns of individual eligible option grants and that for each eligible option grant previously tendered I must withdraw my election as to the entire eligible option grant. I wish to change that election and withdraw from the offer with respect to the eligible option grants listed below:

[Participant Name and Address] [Participant ID]

Grant Date	Expiration Date		Grant Type		Exercise Price Per Share		Number of Shares Underlying Eligible Options
[                    ]	[	]	[	]	[	]	[	]

I further understand that, by signing this Notice of Withdrawal and delivering it to Critical Path, I withdraw my acceptance of the exchange offer and reject the exchange offer with respect to the eligible option grants listed above. By rejecting the exchange offer with respect to the eligible option grants listed above, I understand that I will not receive any new options in exchange for those eligible option grants and I will retain those option grants with their existing term, exercise price, vesting schedule and other terms and conditions. I agree that Critical Path has made no representations or warranties to me regarding my rejection of the exchange offer. The withdrawal of the eligible option grants listed above is at my own discretion. I agree that Critical Path will not be liable for any costs, taxes, losses or damages I may incur as a result of my decision to withdraw the eligible option grants listed above.

I elect to withdraw the eligible option grants listed above that I previously chose to exchange pursuant to the exchange offer and, therefore, I have completed and signed this Notice of Withdrawal exactly as my name appears on the Election Form that I previously submitted.

Eligible Participant’s Signature Date

Eligible Participant’s Name (please print or type)

Social Security Number or Tax I.D. Number

2

NOTE TO MARRIED ELIGIBLE PARTICIPANTS IN CALIFORNIA AND OTHER U.S. “COMMUNITY PROPERTY” STATES:

If you are married and reside in a state the laws of which provide that a spouse has a community property interest in the eligible option grants listed in the foregoing table, in order to elect to withdraw those eligible options, your spouse must execute the Spousal Consent below, whereby such spouse agrees to be bound, and agrees that any such community property interest shall similarly be bound, by this Notice of Withdrawal. States with community property laws in addition to California are Alaska, Arizona, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin.

Your failure to provide your spouse’s signature constitutes your representation and warranty to Critical Path that either you are not married or your spouse has no community or other marital property rights in the eligible option grants listed in the foregoing table or the new options that would have been issued in exchange for those eligible option grants pursuant to the terms and conditions of the exchange offer. You should consult your personal outside advisor(s) if you have questions about the Spousal Consent below.

Spousal Consent

The undersigned spouse of the participant who has executed this Notice of Withdrawal above has read and hereby approves the submission of this Notice of Withdrawal. The undersigned agrees to be irrevocably bound by this Notice of Withdrawal and further agrees that any community property interest of such spouse shall similarly be bound by this Notice of Withdrawal. The undersigned appoints the participant who has executed this Notice of Withdrawal above as his/her attorney-in-fact with respect to any amendment or exercise of any rights under this Notice of Withdrawal.

Spouse’s Signature Date

Spouse’s Name (please print or type)

3

EX-99.(A)(1)(F)

Exhibit (a)(1)(F)

FORM OF COMMUNICATION TO ELIGIBLE PARTICIPANTS IN

THE EXCHANGE OFFER

CONFIRMING RECEIPT OF ELECTION FORM

Date:	[•], 2006
To:	[•]
From:	Critical Path, Inc.
Re:	Confirmation of Receipt of Election Form

This message confirms that we have received your Election Form. If your Election Form is properly completed and signed, and all eligibility requirements are met, we will accept your eligible options elected for exchange, subject to the terms and conditions set forth in the exchange offer, at 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006, unless this exchange offer is extended by us. If you did not strike through any grants on your Eligible Option Information Sheet, then all of the identified eligible options will be cancelled upon expiration of the exchange offer.

Unless you withdraw your tendered eligible options by providing us a properly completed and signed Notice of Withdrawal before 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006 (or, if the exchange offer is extended, before the new time of expiration), we will cancel all eligible options that you have properly tendered for exchange. If you do not withdraw your tendered eligible options and we accept your eligible options for exchange, promptly following the expiration of this exchange offer we will provide you with a “rights letter” confirming that your eligible options have been accepted for exchange and have been cancelled. Your Election Form may be changed or revoked at any time by delivering a new properly completed and signed Election Form bearing a later date so long as we receive it before the expiration of the exchange offer.

You should direct questions about the exchange offer or requests for assistance to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Michael Zukerman, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net. You should direct requests for additional copies of the exchange offer, the Election Form or other documents relating to this exchange offer to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Tom Quigley, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net.

EX-99.(A)(1)(G)

Exhibit (a)(1)(G)

FORM OF COMMUNICATION TO ELIGIBLE PARTICIPANTS IN

THE OPTION EXCHANGE PROGRAM

CONFIRMING RECEIPT OF NOTICE OF WITHDRAWAL

Date:	[•], 2006
To:	[•]
From:	Critical Path, Inc.
Re:	Confirmation of Receipt of Notice of Withdrawal

This message confirms that we have received your Notice of Withdrawal. If the Notice of Withdrawal is properly completed and signed, this means that you have withdrawn all of the eligible options listed on the Notice of Withdrawal and you have revoked your prior acceptance of our offer to exchange your eligible options. You will not receive any new options and you will retain your eligible options previously tendered for exchange with their existing term, exercise price, vesting schedule and other terms and conditions.

If your Notice of Withdrawal is properly completed and signed, we accept your rejection of our exchange offer. Your eligible options will remain outstanding after this exchange offer expires at 12:00 midnight, U.S. Pacific (San Francisco) Daylight Time, on Wednesday, June 28, 2006, or such later time of expiration as may be applicable in the event this exchange offer is extended by us.

You should direct questions about the exchange offer or requests for assistance to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Michael Zukerman, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net. You should direct requests for additional copies of the exchange offer, the Election Form or other documents relating to this exchange offer to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Tom Quigley, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net.

EX-99.(A)(1)(H)

Exhibit (a)(1)(H)

FORM OF RIGHTS LETTER TO ELIGIBLE PARTICIPANTS

IN THE OPTION EXCHANGE PROGRAM

Date:	[•], 2006
To:	[•]
From:	Critical Path, Inc.
Re:	Confirmation of Acceptance of Election Form

Thank you for your submission of the Election Form. We confirm with this letter that we have accepted your Election Form and have cancelled your eligible options that you tendered for exchange. Subject to your continued employment on the grant date and the other terms and conditions of the exchange offer, you now have the right to receive new options entitling you to purchase a number of shares of our common stock as listed below at an exercise price of $[•] per share:

Grant Date	Grant Type	Number of Shares Underlying New Option
[•], 2006	[ISO] [NSO]	[•]
[•], 2006	[ISO] [NSO]	[•]
[•], 2006	[ISO] [NSO]	[•]

Shortly, we will be sending you stock option agreements for your new options. In the meanwhile, if you have any questions, please send us an email at optionexchange@criticalpath.net.

Sincerely,

Michael J. Zukerman

Executive Vice President and General Counsel

EX-99.(A)(1)(I)

Exhibit (a)(1)(I)

FORM OF COMMUNICATION TO ELIGIBLE PARTICIPANTS

REJECTING THE ELECTION FORM

UNDER THE OPTION EXCHANGE PROGRAM

Date:	[•], 2006
To:	[•]
From:	Critical Path, Inc.
Re:	Rejected Election Form under Option Exchange Program

Unfortunately, your Election Form regarding our Option Exchange Program was either inaccurate, incomplete or improperly signed and was not accepted for the following reason(s): [•]. If you wish to participate in the Option Exchange Program, please complete and execute the attached Election Form and deliver it to Critical Path so that it is received before 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006 (or such later date as may apply if this exchange offer is extended), by one of the following means:

Via Mail or Courier

Critical Path, Inc.

2 Harrison Street, 2^nd Floor

San Francisco, California 94105

Attention: Tom Quigley

Phone: (415) 541-2500

Via Facsimile

Critical Path, Inc., Tom Quigley, Fax No. (415) 541-2307

By Hand To

Tom Quigley

Via Email

optionexchange@criticalpath.net

Please ensure that you receive a confirmation of receipt from us after you submit your Election Form. If we do not receive a properly completed and signed Election Form from you before the deadline for the Option Exchange Program, all eligible options currently held by you will remain outstanding according to their existing terms.

You should direct questions about the exchange offer or requests for assistance to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Michael Zukerman, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net. You should direct requests for additional copies of the exchange offer, the Election Form or other documents relating to this exchange offer to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Tom Quigley, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net.

EX-99.(A)(1)(J)

Exhibit (a)(1)(J)

FORM OF COMMUNICATION TO ELIGIBLE PARTICIPANTS

REJECTING THE NOTICE OF WITHDRAWAL

UNDER THE OPTION EXCHANGE PROGRAM

Date:	[•], 2006
To:	[•]
From:	Critical Path, Inc.
Re:	Rejected Notice of Withdrawal under Option Exchange Program

Unfortunately, your Notice of Withdrawal regarding our Option Exchange Program was either inaccurate, incomplete or improperly signed and was not accepted for the following reason(s): [•]. If you wish to withdraw your previously delivered Election Form, please complete and sign the attached Notice of Withdrawal and deliver it to Critical Path so that it is received before 12:00 midnight, U.S. Pacific (San Francisco) Time, on Wednesday, June 28, 2006 (or such later date as may apply if this exchange offer is extended), by one of the following means:

Via Mail or Courier

Critical Path, Inc.

2 Harrison Street, 2^nd Floor

San Francisco, California 94105

Attention: Tom Quigley

Phone: (415) 541-2500

Via Facsimile

Critical Path, Inc., Tom Quigley, Fax No. (415) 541-2307

By Hand To

Tom Quigley

Via Email

optionexchange@criticalpath.net

If we do not receive a properly completed and signed Notice of Withdrawal from you before the deadline for the Option Exchange Program, all eligible options currently tendered by you will be cancelled for exchange.

You should direct questions about the exchange offer or requests for assistance to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Michael Zukerman, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net. You should direct requests for additional copies of the exchange offer, the Election Form or other documents relating to this exchange offer to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Tom Quigley, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net.

EX-99.(A)(1)(K)

Exhibit (a)(1)(K)

FORM OF REMINDER EMAIL TO ELIGIBLE PARTICIPANTS

ABOUT THE OPTION EXCHANGE PROGRAM

Date:	[•], 2006
To:	Eligible Participants
From:	Critical Path, Inc.
Re:	Reminder About Option Exchange Program

The exchange offer for all eligible options is currently open and available to all eligible employees. As previously communicated, the exchange offer is scheduled to expire at 12:00 midnight (Pacific Time) on Wednesday, June 28, 2006. Remember, if you wish to participate and have not done so already, you must ensure that we receive your properly completed and signed Election Form prior to 12:00 midnight (Pacific Time) on Wednesday, June 28, 2006.

You should direct questions about the exchange offer or requests for assistance to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Michael Zukerman, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net. You should direct requests for additional copies of the exchange offer, the Election Form or other documents relating to this exchange offer to Critical Path, Inc., 2 Harrison Street, 2^nd Floor, San Francisco, California 94105, Attention: Tom Quigley, Phone: (415) 541-2500, Email: optionexchange@criticalpath.net.

EX-99.(D)(1)

Exhibit (d)(1)

CRITICAL PATH, INC.

AMENDED AND RESTATED 1998 STOCK PLAN

TABLE OF CONTENTS

SECTION 1.		Purpose	1
SECTION 2.		Definitions	1
	(a)	“Board of Directors”	1
	(b)	“Code”	1
	(c)	“Committee”	1
	(d)	“Company”	1
	(e)	“Disability”	1
	(f)	“Employee”	1
	(g)	“Exercise Price”	1
	(h)	“Fair Market Value”	1
	(i)	“ISO”	1
	(j)	“Nonstatutory Option”	1
	(l)	“Option”	1
	(m)	“Optionee”	2
	(n)	“Plan”	2
	(o)	“Purchase Price”	2
	(p)	“Service”	2
	(q)	“Share”	2
	(r)	“Stock”	2
	(s)	“Stock Option Agreement”	2
	(t)	“Stock Purchase Agreement”	2
	(u)	“Subsidiary”	2
SECTION 3.		Administration	2
	(a)	Committee Membership	2
	(b)	Committee Procedures	2
	(c)	Committee Responsibilities	2
SECTION 4.		Eligibility	3
	(a)	General Rule	3
	(b)	Ten-Percent Stockholders	3
	(c)	Attribution Rules	3
	(d)	Outstanding Stock	3
SECTION 5.		Stock Subject To Plan	4
	(a)	Basic Limitation	4
	(b)	Additional Shares	4
SECTION 6.		Terms And Conditions Of Awards Or Sales	4
	(a)	Stock Purchase Agreement	4
	(b)	Duration of Offers and Nontransferability of Rights	4

	(c)	Purchase Price	4
	(d)	Withholding Taxes	4
	(e)	Restrictions on Transfer of Shares	4
SECTION 7.		Terms And Conditions Of Options	5
	(a)	Stock Option Agreement	5
	(b)	Number of Shares	5
	(c)	Exercise Price	5
	(d)	Withholding Taxes	5
	(e)	Exercisability	5
	(f)	Term	5
	(g)	Limited Transferability	5
	(h)	Exercise of Options on Termination of Service	5
	(i)	No Rights as a Stockholder	6
	(j)	Modification, Extension and Assumption of Options	6
	(k)	Restrictions on Transfer of Shares	6
SECTION 8.		Payment For Shares	6
	(a)	General Rule	6
	(b)	Surrender of Stock	6
	(c)	Promissory Notes	6
	(d)	Cashless Exercise	6
SECTION 9.		Adjustment of Shares	6
	(a)	General	6
	(b)	Reorganizations	7
	(c)	Reservation of Rights	7
SECTION 10.		Legal Requirements	7
SECTION 11.		No Employment Rights	7
SECTION 12.		Duration And Amendments	7
	(a)	Term of the Plan	7
	(b)	Right to Amend or Terminate the Plan	7
	(c)	Effect of Amendment or Termination	8

CRITICAL PATH, INC.

AMENDED AND RESTATED 1998 STOCK PLAN

(EFFECTIVE AS OF MARCH 2001)

SECTION 1. Purpose.

The purpose of the Plan is to offer selected employees, directors and consultants an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, to encourage such selected persons to remain in the employ of the Company and to attract new employees with outstanding qualifications. The Plan provides for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may include Nonstatutory Options as well as incentive stock options intended to qualify under section 422 of the Internal Revenue Code.

SECTION 2. Definitions.

(a) “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

(b) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(c) “Committee” shall mean one or more committees consisting of one or more members of the Board of Directors that is appointed by the Board of Directors. If no Committee has been appointed, the entire Board of Directors shall constitute the Committee. The Committee shall have membership composition which enables the Plan to qualify under Rule 16b-3 with regard to the grant of Options or other rights to acquire Shares to persons who are subject to Section 16 of the Securities Exchange Act of 1934.

(d) “Company” shall mean Critical Path, Inc., a California corporation.

(e) “Disability” shall means that an Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

(f) “Employee” shall mean (i) any individual who is a common-law employee of the Company or of a Subsidiary, (ii) a member of the Board of Directors, or (iii) a consultant who performs services for the Company or a Subsidiary. Service as a member of the Board of Directors or as a consultant shall be considered employment for all purposes under the Plan except the second sentence of Section 4(a).

(g) “Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of an Option, as specified by the Committee in the applicable Stock Option Agreement.

(h) “Fair Market Value” shall mean the fair market value of a Share, as determined by the Committee in good faith. Such determination shall be conclusive and binding on all persons.

(i) “ISO” shall mean an employee incentive stock option described in Code section 422(b).

(j) “Nonstatutory Option” shall mean an employee stock option that is not an ISO.

(k) “Offeree” shall mean an individual to whom the Committee has offered the right to acquire Shares (other than upon exercise of an Option).

(l) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

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(m) “Optionee” shall mean an individual who holds an Option.

(n) “Plan” shall mean this Critical Path, Inc. 1998 Stock Plan.

(o) “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

(p) “Service” shall mean service as an Employee.

(q) “Share” shall mean one share of Stock, as adjusted in accordance with Section 9 (if applicable).

(r) “Stock” shall mean the common stock of the Company.

(s) “Stock Option Agreement” shall mean the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her Option.

(t) “Stock Purchase Agreement” shall mean the agreement between the Company and an Offeree who acquires Shares under the Plan which contains the terms, conditions and restrictions pertaining to the acquisition of such Shares.

(u) “Subsidiary” shall mean any corporation, of which the Company and/or one or more other Subsidiaries own not less than 50 percent of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

SECTION 3. Administration.

(a) Committee Membership. The Plan shall be administered by the Committee. The members of the Committee shall be appointed by the Board of Directors.

(b) Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairperson. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee.

(c) Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

(i) To interpret the Plan and to apply its provisions;

(ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan;

(iii) To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

(iv) To determine when Shares are to be awarded or offered for sale and when Options are to be granted under the Plan;

(v) To select Offerees and Optionees;

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(vi) To determine the number of Shares to be awarded or offered for sale or to be made subject to each Option;

(vii) To prescribe the terms and conditions of each award or sale of Shares, including (without limitation) the Purchase Price and vesting of the award, and to specify the provisions of the Stock Purchase Agreement relating to such award or sale;

(viii) To prescribe the terms and conditions of each Option, including (without limitation) the Exercise Price and vesting of the Option, to determine whether such Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the Stock Option Agreement relating to such Option;

(ix) To amend any outstanding Stock Purchase or Stock Option Agreement; provided, however, that the rights and obligations under any Stock Purchase or Stock Option Agreement shall not be materially altered or impaired adversely by any such amendment, except with the consent of the Optionee or Offeree;

(x) To determine the disposition of an Option or other right to acquire Shares in the event of an Optionee’s or Offeree’s divorce or dissolution of marriage;

(xi) To correct any defect, supply any omission, or reconcile any inconsistency in the Plan and any Stock Purchase or Stock Option Agreement; and

(xii) To take any actions deemed necessary or advisable for the administration of the Plan.

All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, Optionees, and all persons deriving their rights from an Offeree or Optionee. No member of the Committee shall be liable for any action that he or she has taken or has failed to take in good faith with respect to the Plan, any Option or any other right to acquire Shares under the Plan.

SECTION 4. Eligibility.

(a) General Rule. Only Employees shall be eligible for designation as Optionees or Offerees by the Committee. In addition, only individuals who are employed as common-law employees by the Company or a Subsidiary shall be eligible for the grant of ISOs.

(b) Ten-Percent Stockholders. An Employee who owns more than 10 percent of the total combined voting power of all classes of outstanding stock of the Company or any of its Subsidiaries shall not be eligible for the grant of an ISO designation as an Optionee or Offeree unless (i) the Exercise Price is at least 110 percent of Fair Market Value on the date of grant, and (ii) such ISO by its terms is not exercisable after the expiration of five years from the date of grant.

(c) Attribution Rules. For purposes of Subsection (b) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for his brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

(d) Outstanding Stock. For purposes of Subsection (b) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

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SECTION 5. Stock Subject To Plan.

(a) Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares, or issued Shares that have been reacquired by the Company. The aggregate number of Shares which may be issued under the Plan (upon exercise of Options or other rights to acquire Shares) shall not exceed 45,035,232 Shares, subject to adjustment pursuant to Section 9. The number of Shares which are subject to Options or other rights to acquire Shares outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. During the term of the Plan, the Company shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. On each January 1 for the remaining term of the Plan, the aggregate number of Shares which may be issued under the Plan shall be increased by a number of Shares equal to two percent (2%) of the total number of shares of the Common Stock of the Company that had previously been authorized for issuance at the end of the most recently concluded calendar year. Any Shares that have been reserved but not issued as Shares or Options during any calendar year shall remain available for grant during any subsequent calendar year. Notwithstanding the foregoing, no more than 75,000,000 Shares shall be issued under ISOs for the remaining term of the Plan, subject to adjustment pursuant to Section 9.

(b) Additional Shares. In the event that any outstanding Option or other right to acquire Shares for any reason expires or is canceled or otherwise terminated, the Shares allocable to the unexercised portion of such Option or other right shall again be available for the purposes of the Plan.

SECTION 6. Terms And Conditions Of Awards Or Sales.

(a) Stock Purchase Agreement. Each award or sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Offeree and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of the various Stock Purchase Agreements entered into under the Plan need not be identical.

(b) Duration of Offers and Nontransferability of Rights. Any right to acquire Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Offeree within the number of days specified by the Committee and communicated to the Offeree by the Committee. Such right shall not be transferable and shall be exercisable only by the Offeree to whom such right was granted.

(c) Purchase Price. The Purchase Price of Shares to be offered under the Plan shall be determined by the Committee at its sole discretion. The Purchase Price shall be payable in a form described in Section 8 or in the form of services previously rendered to the Company.

(d) Withholding Taxes. As a condition to the purchase of Shares, the Offeree shall make such arrangements as the Committee may require for the satisfaction of any federal, state or local withholding tax obligations that may arise in connection with such purchase.

(e) Restrictions on Transfer of Shares. No Shares awarded or sold under the Plan may be sold or otherwise transferred or disposed of by the Offeree during the one hundred eighty (180) day period following the effective date of a registration statement covering securities of the Company filed under the Securities Act of 1933. Subject to the preceding sentence, any Shares awarded or sold under the Plan shall be subject to such special conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Purchase Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

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SECTION 7. Terms And Conditions Of Options.

(a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 9. The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option.

(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(b). The Exercise Price of a Nonstatutory Option shall not be less than eighty-five percent (85%) of the Fair Market Value of a Share on the date of grant. Subject to the preceding two sentences, the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in a form described in Section 8.

(d) Withholding Taxes. As a condition to Option exercise, the Optionee shall make such arrangements as the Committee may require for the satisfaction of federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Committee may require for the satisfaction of federal, state, local or foreign withholding tax obligations arising in connection with a disposition of Shares acquired by exercise of an Option.

(e) Exercisability. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. Subject to the preceding sentence, the vesting of any Option shall be determined by the Committee in its sole discretion.

(f) Term. The Stock Option Agreement shall specify the term of the Option. The term shall not exceed ten (10) years from the date of grant, except as otherwise provided in Section 4(b). Subject to the preceding sentence, the Committee at its sole discretion shall determine when an Option is to expire.

(g) Limited Transferability of Options. Prior to your Death, the option shall be exercisable only by you and shall not be assignable or transferable other than by will or by the laws of descent and distribution following your Death. However, you may transfer the option to one or more members of your immediate family, to a trust established by you for the benefit of you and/or one or more members of your immediate family, or to a person or entity approved in writing by the Company; provided that in each case the transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. The terms applicable to the assigned option (or portion thereof) shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Company may deem appropriate. If you attempt to transfer the option in a manner not permitted by this paragraph, the option shall immediately be rendered invalid. You may, however, dispose of this option in a will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual’s interest in the option in any way.

(h) Exercise of Options on Termination of Service. Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s service with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment.

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(i) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by an Option until the date of the issuance of a stock certificate for such Shares.

(j) Modification, Extension and Assumption of Options. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price.

(k) Restrictions on Transfer of Shares. No Shares issued upon exercise of an Option may be sold or otherwise transferred or disposed of by the Optionee during the one hundred eighty (180) day period following the effective date of a registration statement covering securities of the Company filed under the Securities Act of 1933. Subject to the preceding sentence, any Shares issued upon exercise of an Option shall be subject to such rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

SECTION 8. Payment For Shares.

(a) General Rule. The entire Exercise Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Subsections (b), (c) and (d) below.

(b) Surrender of Stock. To the extent that a Stock Option Agreement so provides, payment may be made all or in part with Shares which have already been owned by the Optionee or the Optionee’s representative for any time period specified by the Committee and which are surrendered to the Company in good form for transfer. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan.

(c) Promissory Notes. To the extent that a Stock Option Agreement so provides, payment may be made all or in part with a full recourse promissory note executed by the Optionee. The interest rate and other terms and conditions of such note shall be determined by the Committee. The Committee may require that the Optionee pledge his or her Shares to the Company for the purpose of securing the payment of such note. In no event shall the stock certificate(s) representing such Shares be released to the Optionee until such note is paid in full.

(d) Cashless Exercise. To the extent that a Stock Option Agreement so provides and a public market for the Shares exists, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

SECTION 9. Adjustment of Shares.

(a) General. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the value of Shares, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a recapitalization, a reclassification or a similar occurrence, the Committee shall make appropriate adjustments in one or more of (i) the number of Shares available for future grants of Options or

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other rights to acquire Shares under Section 5, (ii) the number of Shares covered by each outstanding Option or other right to acquire Shares or (iii) the Exercise Price of each outstanding Option or the Purchase Price of each other right to acquire Shares.

(b) Reorganizations. In the event that the Company is a party to a merger or reorganization, outstanding Options or other rights to acquire Shares shall be subject to the agreement of merger or reorganization.

(c) Reservation of Rights. Except as provided in this Section 9, an Optionee or Offeree shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend, or (iii) any other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option, or the number or Purchase Price of shares subject to any other right to acquire Shares. The grant of an Option or other right to acquire Shares pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

SECTION 10. Legal Requirements.

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable.

SECTION 11. No Employment Rights.

No provision of the Plan, nor any Option granted or other right to acquire Shares awarded under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason.

SECTION 12. Duration And Amendments.

(a) Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company’s stockholders. In the event that the stockholders fail to approve the Plan within twelve (12) months after its adoption by the Board of Directors, any Option grants or other right to acquire Shares already made shall be null and void, and no additional Option grants or other right to acquire Shares shall be made after such date. The Plan shall terminate automatically ten (10) years after its adoption by the Board of Directors and may be terminated on any earlier date pursuant to Subsection (b) below.

(b) Right to Amend or Terminate the Plan. The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under any Option granted or other right to acquire Shares awarded before amendment of the Plan shall not be materially altered, or impaired adversely, by such amendment, except with consent of the Optionee or Offeree. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

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(c) Effect of Amendment or Termination. No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or Option previously granted under the Plan.

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Critical Path, Inc.

1998 STOCK OPTION PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

[Standard New Employee Grants: Six Month Vesting Cliff With

Monthly Vesting over Four Years]

[SEE NOTICE OF GRANT FOR VESTING SCHEDULE]

All capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the 1998 Stock Option Plan.

Nonstatutory Stock Option: This Option to purchase shares of common stock of Critical Path, Inc. is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code and will be interpreted accordingly.

Vesting: This Option becomes exercisable or vests in installments. Beginning on the Vesting Commencement Date, the Option will vest over a four (4) year period at a rate in accordance with the vesting schedule below:

	Portion of Shares Vested
[From the Vesting Commencement Date until the six month anniversary thereof:]	None
[On the six month anniversary of the Vesting Commencement Date:]	1/8th
For each additional month of employment with the Company thereafter:	1/48th
On the fourth anniversary of the Vesting Commencement Date	100%

Your vesting will cease in the event that your Service (as defined in the 1998 Stock Option Plan) terminates for any reason. Your Service shall cease when you cease to be actively employed by, or a consultant or advisor to, the Company. The Company determines when your Service terminates for this purpose.

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Term: Your Option will expire in any event at the close of business at Company headquarters on the date before the 10^th anniversary of the Date of Grant as shown on Notice of Grant hereto, unless varied by amendment to this Agreement. (It will expire earlier if your Service with the Company terminates, as described below.)

Regular Termination: If your Service terminates for any reason except Death or Disability, then your Option will expire at the close of business at Company headquarters on the 90^th day after your termination date. The Company determines when your Service terminates for this purpose.

Death: In the event of your Death during the period of your Service to the Company, your Option will expire at the close of business at Company headquarters on the date six months after the date of Death. During the six-month period, your estate or heirs may exercise your Option.

Disability: If your Service terminates because of your Disability, then your Option will expire at the close of business at Company headquarters on the date six months after your termination date.

Leaves of Absence: For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of such leave provide for continued service crediting, or when continued service crediting is required by applicable law. Your Service, and consequently the vesting of this Option, shall terminate if you fail to return to active employment as agreed. If you go on a leave of absence, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

Restrictions on Exercise: The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation.

Notice of Exercise: When you wish to exercise this Option, you must notify the Company by filing the proper “Notice of Exercise” found on the Company’s intranet and sending it to the address listed on the form. Your Notice must specify the number of Shares you wish to purchase and how your Shares should be registered (i.e., in your name only or as joint tenant with a spouse). This Notice will be effective when received by the Company. If someone else wants to exercise this Option after your Death, that person must provide credible evidence to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment: When you submit your Notice of Exercise, you must include payment of the option price of the Shares you are purchasing. Payment may be made in one (or a combination) of the following ways:

• Your personal check, cashier’s check or a money order.

• By the delivery of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the proceeds to Company in payment of the aggregate purchase price (e.g., cashless exercise). (Note: you must set up an account with the broker in order to accomplish these types of sales; consult your broker for details.)

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Withholding Taxes: You will not be allowed to exercise this Option unless you make acceptable arrangements for the payment of withholding and other taxes that may be due as a result of the option exercise and/or sale of the Shares.

Restrictions on Resale: By signing the Agreement, you agree not to sell any option Shares at a time when applicable laws, regulations or Company trading policies prohibit sales (including the Company Insider Trading Policy, a copy of which can be found on the Company intranet). You represent and agree that the Shares to be acquired upon exercise of the Option will be acquired for investment, and not with a view to the resale or distribution thereof.

Transfer of Option: Prior to your Death, only you may exercise this Option. You cannot transfer or assign this Option to any third party. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, the Option shall immediately be rendered invalid. You may, however, dispose of this Option in a will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual’s interest in the Option in any way.

No Retention Rights: Neither this Option nor this Agreement gives you the right to be retained in your employment by the Company in any capacity. The Company reserves the right to terminate your Service at any time and for any reason.

Shareholder Rights: You, or your estate or heirs, have no right as a shareholder of the Company until a certificate for your option Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs prior to the exercise of your Option and issuance of your Shares.

Adjustments: In the event of a stock split, a stock dividend or other similar change in the Company’s stock, the number of Shares covered by this Option and the exercise price per share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.

Legends: Your stock certificates representing the Shares may be endorsed with all applicable legends.

Applicable Law: This Agreement will be interpreted and enforced under the laws of the State of California.

The 1998 Stock Option Plan and Other Agreements: The text of the 1998 Stock Option Plan is incorporated by reference into this Agreement. This Agreement and the 1998 Stock Option Plan constitute the entire understanding of the parties between you and the Company regarding this Option. Any prior agreements, understanding, commitments, or negotiations, whether oral or written, regarding this Option are hereby superseded.

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You further agree that the Company may deliver by email all documents relating to the Plan or this Option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a web site maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a web site, it will notify you by email.

By signing this Agreement on the Notice of Grant, you agree to all of the terms and conditions contained herein and in the 1998 Stock Option Plan.

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Critical Path, Inc.

1998 STOCK OPTION PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

[Standard Promotional or Bonus Employee Grant: No Vesting Cliff and

Monthly Vesting over Four Years]

[SEE NOTICE OF GRANT FOR VESTING SCHEDULE

All capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the 1998 Stock Option Plan.

Nonstatutory Stock Option: This Option to purchase shares of common stock of Critical Path, Inc. is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code and will be interpreted accordingly.

Vesting: This Option becomes exercisable or vests in installments. Beginning on the Vesting Commencement Date, the Option will vest over a four (4) year period at a rate in accordance with the vesting schedule below:

	Portion of Shares Vested
For each month of employment with the Company after the Vesting Commencement Date:	1/48th
On the fourth anniversary of the Vesting Commencement Date	100%

Your vesting will cease in the event that your Service (as defined in the 1998 Stock Option Plan) terminates for any reason. Your Service shall cease when you cease to be actively employed by, or a consultant or advisor to, the Company. The Company determines when your Service terminates for this purpose.

Term: Your Option will expire in any event at the close of business at Company headquarters on the date before the 10^th anniversary of the Date of Grant as shown on Notice of Grant hereto, unless varied by amendment to this Agreement. (It will expire earlier if your Service with the Company terminates, as described below.)

Regular Termination: If your Service terminates for any reason except Death or Disability, then your Option will expire at the close of business at Company headquarters on the 90^th day after your termination date. The Company determines when your Service terminates for this purpose.

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Death: In the event of your Death during the period of your Service to the Company, your Option will expire at the close of business at Company headquarters on the date six months after the date of Death. During the six-month period, your estate or heirs may exercise your Option.

Disability: If your Service terminates because of your Disability, then your Option will expire at the close of business at Company headquarters on the date six months after your termination date.

Leaves of Absence: For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of such leave provide for continued service crediting, or when continued service crediting is required by applicable law. Your Service, and consequently the vesting of this Option, shall terminate if you fail to return to active employment as agreed. If you go on a leave of absence, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

Restrictions on Exercise: The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation.

Notice of Exercise: When you wish to exercise this Option, you must notify the Company by filing the proper “Notice of Exercise” found on the Company’s intranet and sending it to the address listed on the form. Your Notice must specify the number of Shares you wish to purchase and how your Shares should be registered (i.e., in your name only or as joint tenant with a spouse). This Notice will be effective when received by the Company. If someone else wants to exercise this Option after your Death, that person must provide credible evidence to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment: When you submit your Notice of Exercise, you must include payment of the option price of the Shares you are purchasing. Payment may be made in one (or a combination) of the following ways:

• Your personal check, cashier’s check or a money order.

• By the delivery of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the proceeds to Company in payment of the aggregate purchase price (e.g., cashless exercise). (Note: you must set up an account with the broker in order to accomplish these types of sales; consult your broker for details.)

Withholding Taxes: You will not be allowed to exercise this Option unless you make acceptable arrangements for the payment of withholding and other taxes that may be due as a result of the option exercise and/or sale of the Shares.

Restrictions on Resale: By signing the Agreement, you agree not to sell any option Shares at a time when applicable laws, regulations or Company trading policies prohibit sales (including the Company Insider Trading Policy, a copy of which can be found on the Company intranet). You represent and agree that the Shares to be acquired upon exercise of the Option will be acquired for investment, and not with a view to the resale or distribution thereof.

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Transfer of Option: Prior to your Death, only you may exercise this Option. You cannot transfer or assign this Option to any third party. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, the Option shall immediately be rendered invalid. You may, however, dispose of this Option in a will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual’s interest in the Option in any way.

No Retention Rights: Neither this Option nor this Agreement gives you the right to be retained in your employment by the Company in any capacity. The Company reserves the right to terminate your Service at any time and for any reason.

Shareholder Rights: You, or your estate or heirs, have no right as a shareholder of the Company until a certificate for your option Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs prior to the exercise of your Option and issuance of your Shares.

Adjustments: In the event of a stock split, a stock dividend or other similar change in the Company’s stock, the number of Shares covered by this Option and the exercise price per share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.

Legends: Your stock certificates representing the Shares may be endorsed with all applicable legends.

Applicable Law: This Agreement will be interpreted and enforced under the laws of the State of California.

The 1998 Stock Option Plan and Other Agreements: The text of the 1998 Stock Option Plan is incorporated by reference into this Agreement. This Agreement and the 1998 Stock Option Plan constitute the entire understanding of the parties between you and the Company regarding this Option. Any prior agreements, understanding, commitments, or negotiations, whether oral or written, regarding this Option are hereby superseded.

You further agree that the Company may deliver by email all documents relating to the Plan or this Option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a web site maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a web site, it will notify you by email.

By signing this Agreement on the Notice of Grant, you agree to all of the terms and conditions contained herein and in the 1998 Stock Option Plan.

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EX-99.(D)(2)

Exhibit (d)(2)

CRITICAL PATH, INC.

1999 NONSTATUTORY STOCK OPTION PLAN

1. Purposes of the Plan. The purposes of this Nonstatutory Stock Option Plan are:

• to attract and retain the best available personnel for positions of substantial responsibility,

• to provide additional incentive to Employees, Directors and Consultants, and

• to promote the success of the Company’s business.

Options granted under the Plan will be Nonstatutory Stock Options.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.

(b) “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options are, or will be, granted under the Plan.

(c) “Board” means the Board of Directors of the Company.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.

(f) “Common Stock” means the Common Stock of the Company.

(g) “Company” means Critical Path, Inc., a California corporation.

(h) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

(i) “Director” means a member of the Board.

(j) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(k) “Employee” means any person, including Officers, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(m) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.

(n) “Notice of Grant” means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement.

(o) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(p) “Option” means a nonstatutory stock option granted pursuant to the Plan, that is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

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(q) “Option Agreement” means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(r) “Option Exchange Program” means a program whereby outstanding options are surrendered in exchange for options with a lower exercise price.

(s) “Optioned Stock” means the Common Stock subject to an Option.

(t) “Optionee” means the holder of an outstanding Option granted under the Plan.

(u) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(v) “Plan” means this 1999 Nonstatutory Stock Option Plan.

(w) “Service Provider” means an Employee including an Officer, Consultant or Director.

(x) “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan.

(y) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 4,000,000 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated).

4. Administration of the Plan.

(a) Administration. The Plan shall be administered by (i) the Board or (ii) a Committee, which committee shall be constituted to satisfy Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:

(i) to determine the Fair Market Value of the Common Stock;

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(ii) to select the Service Providers to whom Options may be granted hereunder;

(iii) to determine whether and to what extent Options are granted hereunder;

(iv) to determine the number of shares of Common Stock to be covered by each Option granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the date the Option was granted;

(viii) to institute an Option Exchange Program;

(ix) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;

(x) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

(xi) to modify or amend each Option (subject to Section 14(b) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan;

(xii) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator;

(xiii) to determine the terms and restrictions applicable to Options; and

(xiv) to make all other determinations deemed necessary or advisable for administering the Plan.

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(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options.

5. Eligibility. Options may be granted to Service Providers except Officers and Directors; provided, however, that Options may be granted to Officers in connection with the Officer’s initial employment by the Company.

6. Limitation. Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee’s right or the Company’s right to terminate such relationship at any time, with or without cause.

7. Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for ten (10) years, unless sooner terminated under Section 14 of the Plan.

8. Term of Option. The term of each Option shall be stated in the Option Agreement.

9. Option Exercise Price and Consideration.

(a) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator.

(b) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised.

(c) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of:

(i) cash;

(ii) check;

(iii) promissory note;

(iv) other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

(v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;

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(vi) a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee’s participation in any Company-sponsored deferred compensation program or arrangement;

(vii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or

(viii) any combination of the foregoing methods of payment.

10. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon the Optionee’s death or Disability, the Optionee may exercise his or her Option, but only within such period of time as is specified in the Option Agreement, and only to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified

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by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Optionee’s estate or, if none, by the person(s) entitled to exercise the Option under the Optionee’s will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

11. Non-Transferability of Options. Unless determined otherwise by the Administrator, an Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate.

12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

(a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but

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as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock, immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the

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Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

13. Date of Grant. The date of grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant.

14. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to options granted under the Plan prior to the date of such termination.

15. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an Option the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

16. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

17. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

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Critical Path, Inc.

1999 NONSTATUTORY STOCK OPTION PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

[Standard New Employee Grants: Six Month Vesting Cliff With

Monthly Vesting over Four Years]

[SEE NOTICE OF GRANT FOR VESTING SCHEDULE]

All capitalized terms used herein and not otherwise defined, shall have the meanings assigned to them in the 1999 Nonstatutory Stock Option Plan.

Nonstatutory Stock Option: This Option to purchase shares of common stock of Critical Path, Inc. is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code and will be interpreted accordingly.

Vesting: This Option becomes exercisable or vests in installments. Beginning on the Vesting Commencement Date, this Option will vest over a four (4) year period at a rate in accordance with the vesting schedule below:

	Portion of Shares Vested
[From the Vesting Commencement Date until the six month anniversary thereof:]	None
[On the six month anniversary of the Vesting Commencement Date:]	1/8th
For each additional month of employment with the Company thereafter:	1/48th
On the fourth anniversary of the Vesting Commencement Date	100	%

Your vesting will cease in the event that your Service (as defined in the 1999 Nonstatutory Stock Option Plan) terminates for any reason. Your Service shall cease when you cease to be actively employed by, or a consultant or advisor to, the Company. The Company determines when your Service terminates for this purpose.

Term: Your Option will expire in any event at the close of business at Company headquarters on the date before the 10^th anniversary of the Date of Grant as shown on Notice of Grant hereto, unless varied by amendment to this Agreement. (It will expire earlier if your Service with the Company terminates, as described below.)

Regular Termination: If your Service terminates for any reason except Death or Disability, then your Option will expire at the close of business at Company headquarters on the 90^th day after your termination date. The Company determines when your Service terminates for this purpose.

Death: In the event of your Death during the period of your Service to the Company, your Option will expire at the close of business at Company headquarters on the date six months after the date of Death. During the six-month period, your estate or heirs may exercise your Option.

Disability: If your Service terminates because of your Disability, then your Option will expire at the close of business at Company headquarters on the date six months after your termination date.

Leaves of Absence: For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of such leave provide for continued service crediting, or when continued service crediting is required by applicable law. Your Service, and consequently the vesting of this Option, shall terminate if you fail to return to active employment as agreed. If you go on a leave of absence, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

Restrictions on Exercise: The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation.

Notice of Exercise: When you wish to exercise this Option, you must notify the Company by filing the proper “Notice of Exercise” found on the Company’s intranet and sending it to the address listed on the form. Your Notice must specify the number of Shares you wish to purchase and how your Shares should be registered (i.e., in your name only or as joint tenant with a spouse). This Notice will be effective when received by the Company. If someone else wants to exercise this Option after your Death, that person must provide credible evidence to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment: When you submit your Notice of Exercise, you must include payment of the option price of the Shares you are purchasing. Payment may be made in one (or a combination) of the following ways:

• Your personal check, cashier’s check or a money order.

• By the delivery of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the proceeds to Company in payment of the aggregate purchase price (e.g., cashless exercise). (Note: you must set up an account with the broker in order to accomplish these types of sales; consult your broker for details.)

Withholding Taxes: You will not be allowed to exercise this Option unless you make acceptable arrangements for the payment of withholding and other taxes that may be due as a result of the option exercise and/or sale of the Shares.

Restrictions on Resale: By signing the Agreement, you agree not to sell any option Shares at a time when applicable laws, regulations or Company trading policies prohibit sales (including the

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Company Insider Trading Policy, a copy of which can be found on the Company intranet). You represent and agree that the Shares to be acquired upon exercise of the Option will be acquired for investment, and not with a view to the resale or distribution thereof.

Transfer of Option: Prior to your Death, only you may exercise this Option. You cannot transfer or assign this Option to any third party. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, the Option shall immediately be rendered invalid. You may however, dispose of this Option in a will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual’s interest in the Option in any way.

No Retention Rights: Neither this Option nor this Agreement gives you the right to be retained in your employment by the Company in any capacity. The Company reserves the right to terminate your Service at any time and for any reason.

Shareholder Rights: You, or your estate or heirs, have no right as a shareholder of the Company until a certificate for your option Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs prior to the exercise of your Option and issuance of your Shares.

Adjustments: In the event of a stock split, a stock dividend or other similar change in the Company’s stock, the number of Shares covered by this Option and the exercise price per share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.

Legends: Your stock certificates representing the Shares may be endorsed with all applicable legends.

Applicable Law: This Agreement will be interpreted and enforced under the laws of the State of California.

The 1999 Nonstatutory Stock Option Plan and Other Agreements: The text of the 1999 Nonstatutory Stock Option Plan is incorporated by reference into this Agreement. This Agreement and the 1999 Nonstatutory Stock Option Plan constitute the entire understanding of the parties between you and the Company regarding this Option. Any prior agreements, understanding, commitments, or negotiations, whether oral or written, regarding this Option are hereby superseded.

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You further agree that the Company may deliver by email all documents relating to the Plan or this Option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a web site maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a web site, it will notify you by email.

By signing this Agreement on the Notice of Grant, you agree to all of the terms and conditions contained herein and in the 1999 Nonstatutory Stock Option Plan.

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EX-99.(D)(3)

Exhibit (d)(3)

Critical Path, Inc.

AMENDED AND RESTATED

1998 STOCK PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

[SEE NOTICE OF GRANT FOR VESTING SCHEDULE]

All capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Amended and Restated 1998 Stock Plan.

Nonstatutory Stock Option: This Option to purchase shares of common stock of Critical Path, Inc. is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code and will be interpreted accordingly.

Vesting: This Option becomes exercisable or vests in installments. Beginning on the Vesting Commencement Date, the Option will vest over a four (4) year period subject to acceleration in accordance with the vesting schedule below:

	Portion of Shares Vested
On the Vesting Commencement Date:	[1/2][1/4]
For each additional month of employment with the Company thereafter:	1/48th
On the [second][third] anniversary of the Vesting Commencement Date	100	%

Your vesting will cease in the event that your Service (as defined in the Amended and Restated 1998 Stock Plan) terminates for any reason. Your Service shall cease when you cease to be actively employed by, or a consultant or advisor to, the Company. The Company determines when your Service terminates for this purpose.

Term: Your Option will expire in any event at the close of business at Company headquarters on the date before the 7^th anniversary of the Date of Grant as shown on Notice of Grant hereto, unless varied by amendment to this Agreement. (It will expire earlier if your Service with the Company terminates, as described below.)

Regular Termination: If your Service terminates for any reason except Death or Disability, then your Option will expire at the close of business at Company headquarters on the 90^th day after your termination date. The Company determines when your Service terminates for this purpose.

Death: In the event of your Death during the period of your Service to the Company, your Option will expire at the close of business at Company headquarters on the date six months after the date of Death. During the six-month period, your estate or heirs may exercise your Option.

Disability: If your Service terminates because of your Disability, then your Option will expire at the close of business at Company headquarters on the date six months after your termination date.

Leaves of Absence: For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of such leave provide for continued service crediting, or when continued service crediting is required by applicable law. Your Service, and consequently the vesting of this Option, shall terminate if you fail to return to active employment as agreed. If you go on a leave of absence, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

Restrictions on Exercise: The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation.

Notice of Exercise: When you wish to exercise this Option, you must notify the Company by filing the proper “Notice of Exercise” found on the Company’s intranet and sending it to the address listed on the form. Your Notice must specify the number of Shares you wish to purchase and how your Shares should be registered (i.e., in your name only or as joint tenant with a spouse). This Notice will be effective when received by the Company. If someone else wants to exercise this Option after your Death, that person must provide credible evidence to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment: When you submit your Notice of Exercise, you must include payment of the option price of the Shares you are purchasing. Payment may be made in one (or a combination) of the following ways:

• Your personal check, cashier’s check or a money order.

• By the delivery of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the proceeds to Company in payment of the aggregate purchase price (e.g., cashless exercise). (Note: you must set up an account with the broker in order to accomplish these types of sales; consult your broker for details.)

Withholding Taxes: You will not be allowed to exercise this Option unless you make acceptable arrangements for the payment of withholding and other taxes that may be due as a result of the option exercise and/or sale of the Shares.

Restrictions on Resale: By signing the Agreement, you agree not to sell any option Shares at a time when applicable laws, regulations or Company trading policies prohibit sales (including the Company Insider Trading Policy, a copy of which can be found on the Company intranet). You represent and agree that the Shares to be acquired upon exercise of the Option will be acquired for investment, and not with a view to the resale or distribution thereof.

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Transfer of Option: Prior to your Death, only you may exercise this Option. You cannot transfer or assign this Option to any third party. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, the Option shall immediately be rendered invalid. You may, however, dispose of this Option in a will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual’s interest in the Option in any way.

No Retention Rights: Neither this Option nor this Agreement gives you the right to be retained in your employment by the Company in any capacity. The Company reserves the right to terminate your Service at any time and for any reason.

Shareholder Rights: You, or your estate or heirs, have no right as a shareholder of the Company until a certificate for your option Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs prior to the exercise of your Option and issuance of your Shares.

Adjustments: In the event of a stock split, a stock dividend or other similar change in the Company’s stock, the number of Shares covered by this Option and the exercise price per share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.

Legends: Your stock certificates representing the Shares may be endorsed with all applicable legends.

Applicable Law: This Agreement will be interpreted and enforced under the laws of the State of California.

The Amended and Restated 1998 Stock Plan and Other Agreements: The text of the Amended and Restated 1998 Stock Plan is incorporated by reference into this Agreement. This Agreement and the 1998 Amended and Restated Stock Plan constitute the entire understanding of the parties between you and the Company regarding this Option. Any prior agreements, understanding, commitments, or negotiations, whether oral or written, regarding this Option are hereby superseded.

You further agree that the Company may deliver by email all documents relating to the Plan or this Option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a web site maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a web site, it will notify you by email.

By signing this Agreement on the Notice of Grant, you agree to all of the terms and conditions contained herein and in the Amended and Restated 1998 Stock Plan.

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