Classmates.com 2010 Annual Report Download - page 39

Table of Contents
products could adversely affect our ability to deliver our services or a user's ability to access our services and could also adversely impact the
distribution channels for our services. Our services are dependent on dial-up modems and an increasing number of computer manufacturers,
including certain manufacturers with whom we have distribution relationships, do not pre-load their new computers with dial-up modems,
requiring the user to separately acquire a modem to access our services. There can be no assurance that, as the dial-up Internet access market
declines and new technologies emerge, we will be able to continue to effectively distribute and deliver our services.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our corporate headquarters are located in Woodland Hills, California and consist of leased space of approximately 110,000 square feet. We
also lease office space in Fort Lee, New Jersey and Hyderabad, India, which is generally used by our Communications segment. Additionally,
we lease office space in Seattle, Washington; San Francisco, California; Schaumburg, Illinois; Erlangen, Germany; and Berlin, Germany, which
is generally used by our Content & Media segment. Our FTD segment also leases space for call center facilities in Centerbrook, Connecticut and
Medford, Oregon. We also lease warehouse space in a distribution center in Aurora, Illinois, which is used by our FTD segment.
We own office space in Downers Grove, Illinois and Sleaford, England, which is occupied by our FTD segment. We entered into a credit
agreement in conjunction with the acquisition of FTD, which includes a security interest in substantially all of its assets, including a mortgage on
the owned real property at the Downers Grove, Illinois location.
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. For additional information regarding our
obligations under leases, see Note 14—"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 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. The parties in the
approximately 300 coordinated class actions, including NetZero, the underwriter defendants in the NetZero class action, and the plaintiff
37