NetZero 2011 Annual Report Download - page 150

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. COMMITMENTS AND CONTINGENCIES (Continued)
Other Commitments
In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors,
sureties and insurance companies, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising
out of the Company's breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims
made by third parties. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers and
employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their
status or service as directors, officers or employees. The Company has also agreed to indemnify certain former officers, directors and employees
of acquired companies in connection with the acquisition of such companies. The Company maintains director and officer insurance, which may
cover certain liabilities, including those arising from its obligation to indemnify its directors and certain of its officers and employees, and former
officers, directors and employees of acquired companies, in certain circumstances.
It is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements
may not be subject to maximum loss clauses.
Legal Contingencies
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 alleged 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 sought 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 class in the NetZero action,
reached an agreement in principle under which the insurers for the issuer defendants in the coordinated cases will make a settlement payment on
behalf of the issuers, including NetZero. In October 2009, the district court granted final approval of the settlement. The order approving the
settlement was appealed to the United States Court of Appeals for the Second Circuit. One appeal was dismissed, and a second appeal was
remanded to the district court. The district court then determined that the appellant lacked standing to appeal, and the appellant appealed the
district court's decision to the Second Circuit. The appellant subsequently entered into an agreement with
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