On September 21, 2004, SGM filed aclass action law suit in the Ontario Superior Court of Justice on behalf of Ontario purchasers of Kryptonite U-Locks with cylindrical lock mechanisms. The lawsuit alleged that Kryptonite Corp. negligently manufactured and distributed U-shaped bicycle locks that were capable of being easily picked with the hollow plastic casing of a ballpoint pen. The law suit sought damages for the cost of replacing the defective locks with new locks.

On June 16, 2005, the Circuit Court of Cook County, Illinois entered an order approving a settlement agreement pertaining to all class action litigation thathad been filed against Kryptonite Corp. in the U.S.and in Canada. After reviewing the terms of the settlement and considering arguments onthe issue, the Honourable Julia Nowicki approved the settlement as fair, adequate and reasonable. Heidi Rubin attended the settlement approval hearing in support of the settlement agreement.

Kryptonite has signalled its intention to move forward with fulfillment of the terms of the settlement. The terms of the settlement and a copy of the Court’s order can be found at www.kryptonitesettlement.com.