Classmates.com 2005 Annual Report Download - page 97

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4. STOCKHOLDERS
’
EQUITY
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, 2005 and 2004, the Company had no shares issued or outstanding.
Common Stock Subject to Repurchase
At December 31, 2005 and 2004, there were 475,000 shares of common stock that were subject to repurchase related to unvested shares
under restricted stock agreements.
Common Stock Repurchase Program
The Company’s Board of Directors authorized a common stock repurchase program that allows the Company to repurchase shares of its
common stock through open market or privately negotiated transactions based on prevailing market conditions and other factors. From time to
time, the Board of Directors has increased the amount authorized for repurchase under this program. On April 22, 2004, the Board of Directors
authorized the Company to purchase up to an additional $100 million of its common stock through May 31, 2005 under the program, bringing
the total amount authorized under the program to $200 million. On April 29, 2005, the Board of Directors extended the program through
December 31, 2006. At December 31, 2005, the Company had repurchased $139.2 million of its common stock under the program.
Under the term loan agreement, repurchases of common stock and the payment of cash dividends were limited, in aggregate, to an
additional $97.3 million at December 31, 2005, subject to further annual limitations. In January 2006, we the Company paid, in full, the
outstanding balance of the term loan of approximately $54.2 million. Effective upon payment of the outstanding balance, the Credit Agreement
terminated and is of no further force or effect.
F- 28