San Jose, California - (The Hosting News) - October 25, 2007 - Web host and national provider of integrated voice and data communications firm, Covad Communications Group, Inc., has entered into a settlement agreement with regard to the derivative lawsuit, Khanna, et al. v. McMinn, et al.

If the settlement is approved by the court, Covad will receive approximately $5 million (consisting primarily of Covad stock), net of plaintiffs' counsel's fee and certain costs. The settlement, if approved, will also result in the dismissal of the lawsuit with prejudice. The settlement expressly states that each defendant, including Covad, denies liability.

The lawsuit was brought against a number of current and former Covad directors, as well as one Covad investor, by a former Covad officer for breach of fiduciary duty and related claims. Two private party shareholders later joined the lawsuit as plaintiffs. The lawsuit does not seek monetary damages from Covad. Subject to final approval by the Court, the settlement proceeds will be paid to Covad pursuant to the terms of the settlement.

The settlement was entered into for the sole purpose of resolving contested claims and disputes as well as avoiding the substantial costs, expenses and uncertainties associated with protracted and complex litigation. Covad has determined that the proposed settlement is in the best interests of Covad and its stockholders. The Stipulation of Settlement and related paperwork is on file with the Court of Chancery of the State of Delaware in and for New Castle County.

The settlement is subject to and conditioned upon the Court's final approval after public notice of the proposed settlement and expiration of the time for appeal from any orders approving the settlement.

Recently, Covad joined security firm, McAfee, to provide a broadband and security bundle designed for small businesses. The partnership is designed to allow Covad to bundle McAfeeTotal Protection for Small Business services with Covad's broadband products, to provide small business customers with a simple, affordable solution to meet their security needs. This announcement follows Covad's earlier introduction of enhanced Email and Web Hosting services that enable small businesses to quickly and easily establish a professional Internet presence with minimal cost.

A nationwide provider of integrated voice and data communications, Covad offers DSL, Voice Over IP, T1, web hosting, managed security, IP and dial-up, wireless broadband, and bundled voice and data services directly through Covad's network and through Internet Service Providers, value-added resellers, telecommunications carriers and affinity groups to small and medium-sized businesses and home users. According to the company, as the first company to commercially deploy DSL in the United States, Covad has spent hundreds of millions of dollars building a network that passes more than 57 million homes and businesses in 44 states - the largest nationwide footprint of any DSL company. Covad broadband services are currently available across the nation in 235 Metropolitan Statistical Areas (MSAs) which represent over 50 percent of all US homes and businesses. Corporate headquarters is located at 110 Rio Robles, San Jose, California 95134. Telephone: 1-888-GO-COVAD.

To learn more Covad, please visit: www.covad.com.