Classmates.com 2004 Annual Report Download - page 96

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5. STOCKHOLDERS' EQUITY
NetZero and Juno Merger
On September 25, 2001, each share of NetZero common stock issued and outstanding was converted into 0.2000 of a share of United
Online common stock, and each share of Juno common stock issued and outstanding was converted into 0.3570 of a share of United Online
common stock. Additionally, each outstanding stock option of NetZero and Juno was converted into an option to purchase that number of United
Online shares of common stock equal to the product of 0.2000 and 0.3570, respectively, multiplied by the number of shares of common stock
underlying the option. Given that NetZero is the Company's predecessor for financial reporting purposes, all prior period NetZero numbers of
shares and per share price amounts herein have been restated to account for the NetZero conversion ratio.
Stock Split
On September 24, 2003, the Company announced that its Board of Directors had declared a 3-for-2 split of the Company's common stock.
The split was effected in the form of a stock dividend. The new shares were issued on October 31, 2003, and the shares began trading on
NASDAQ on a post
-split basis on November 3, 2003. All prior period share and per share amounts herein have been restated to account for the
stock dividend.
Stockholders' Rights Plan
On November 15, 2001, the Board of Directors declared a dividend of one preferred share purchase right for each outstanding share of its
common stock. The dividend was paid on November 26, 2001 to the stockholders of record at the close of business on that date. Each right
entitles the registered holder to purchase from the Company one unit consisting of one one-thousandth of a share of its Series A junior
participating preferred stock at a price of $25 per unit. On April 29, 2003, the Board of Directors voted to amend the purchase price per unit from
$25 to $140. The rights generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company's
common stock or announces a tender or exchange offer which results in a person owning 15% or more of the Company's common stock. The
Company generally will be entitled to redeem the rights at $0.0007 per right at any time until 10 days after a public announcement that a 15%
position in the Company's common stock has been acquired or that a tender or exchange offer which would result in a person owning 15% or
more of the Company's common stock has commenced. The rights expire on November 26, 2011.
Preferred Stock
The Company has 5.0 million shares of preferred stock authorized with a par value of $0.0001, of which 300,000 shares are designated as
Series A junior participating preferred stock. At December 31, 2004 and 2003, the Company had no shares issued or outstanding.
Common Stock Subject to Repurchase
At December 31, 2004, there were 475,000 shares of common stock that were subject to repurchase related to unvested shares under
restricted stock agreements. At December 31, 2003, there were 237,000 shares of common stock that were subject to repurchase related to
unvested stock option exercises.
F-27