Classmates.com 2007 Annual Report Download - page 32

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ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our corporate headquarters is located in Woodland Hills, California, and consists of leased space of approximately 0.1 million square feet.
Office space is also leased in New York, New York; Fort Lee, New Jersey; Orem, Utah; and Hyderabad, India, and is generally used by our
Communications segment. Additionally, office space is also leased in Renton, Washington; San Francisco, California; Schaumburg, Illinois;
Erlangen, Germany; and Berlin, Germany, and is generally used by our Classmates Media segment.
We believe that our existing facilities are adequate to meet our current requirements and that suitable additional or substitute space will be
available as needed to accommodate any physical expansion of our corporate and operations facilities, customer support and technology centers
or for any additional sales offices. For additional information regarding our obligations under leases, see Note 13—"Commitments and
Contingencies" to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
In April, 2001 and in May 2001, lawsuits were filed in the United States District Court for the Southern District of New York against
NetZero, Inc. ("NetZero"), certain officers and directors of NetZero and the underwriters of NetZero's initial public offering, Goldman Sachs
Group, Inc., BancBoston Robertson Stephens, Inc. and Salomon Smith Barney, Inc. A consolidated amended complaint, which is the operative
complaint, was filed in April 2002. The complaint alleges that the prospectus through which NetZero conducted its initial public offering in
September 1999 was materially false and misleading because it failed to disclose, among other things, that (i) the underwriters had solicited and
received excessive and undisclosed commissions from certain investors in exchange for which the underwriters allocated to those investors
material portions of the restricted number of NetZero shares issued in connection with the offering; and (ii) the underwriters had entered into
agreements with customers whereby the underwriters agreed to allocate NetZero shares to those customers in the offering in exchange for which
the customers agreed to purchase additional NetZero shares in the aftermarket at pre-determined prices. Plaintiffs are seeking injunctive relief
and damages. The case against NetZero was coordinated with approximately 300 other suits filed against more than 300 issuers that conducted
their initial public offerings between 1998 and 2000, their underwriters and an unspecified number of their individual corporate officers and
directors. On October 13, 2004, the district court certified a class in six of the other nearly identical actions (the "focus cases"). The underwriter
defendants appealed the decision and the United States Court of Appeals for the Second Circuit vacated the district court's decision granting
class certification on December 5, 2006. Plaintiffs filed a petition for rehearing. On April 6, 2007, the Second Circuit denied the petition, but
noted that the plaintiffs could ask the district court to certify a more narrow class than the one that was rejected. Prior to the Second Circuit's
decision, the majority of issuers, including NetZero, and their insurers had submitted a settlement agreement to the district court for approval. In
light of the Second Circuit opinion, the parties agreed that the settlement could no longer be approved, and on June 25, 2007, the court approved
a stipulation filed by the plaintiffs and the issuers which terminated the proposed settlement. On August 14, 2007, the plaintiffs filed Second
Amended class action complaints in the focus cases. The issuers' motion to dismiss the Second Amended class action complaints is pending.
On March 6, 2006, plaintiff Anthony Piercy filed a purported consumer class action lawsuit in the Superior Court of the State of California,
County of Los Angeles, against NetZero claiming that NetZero continues to charge consumers fees after they cancel their Internet access
account. On
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