Enom 2014 Annual Report Download - page 32

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29
Item 2. Properties
We do not own any real estate. We currently occupy approximately 52,000 square feet in a Santa Monica, California facility that
serves as our corporate headquarters and houses nearly all of our personnel for both our Content & Media and Marketplaces service
offerings. The lease for our Santa Monica facility expires in July 2024, provided that we have a one-time early termination right
allowing us to terminate the lease effective as of August 2019. We also lease offices related to our Content & Media service offering
in Austin, Texas; New York, New York; and Burlington, Washington. Our primary data center is located in Las Vegas, Nevada. We
believe our current and planned data centers and offices will be adequate for the foreseeable future.
Item 3. Legal Proceedings
On November 5, 2014, Charles Saatchi filed a lawsuit against our wholly owned subsidiary, Saatchi Online, Inc. (“Saatchi
Art”), in the High Court of Justice, Chancery Division (United Kingdom) relating to an intellectual property licensing agreement (the
“IP Agreement”) between Charles Saatchi and Saatchi Art, dated February 18, 2010. Mr. Saatchi alleges that Saatchi Art committed a
repudiatory breach of the IP Agreement, effectively terminating it, and that Saatchi Art must cease using the “Saatchi” name. Mr.
Saatchi is seeking a permanent injunction restricting Saatchi Art from continuing to use the “Saatchi” name, a declaration that the IP
Agreement has been validly terminated, a disgorgement of any profits derived from Saatchi Art’s use of the name since the alleged
termination date and unspecified monetary damages. We do not believe that the conduct alleged by Mr. Saatchi constitutes a
repudiatory breach of the IP Agreement and intend to vigorously defend the lawsuit. The litigation is in its early stages.
On December 30, 2014, Charles Saatchi and Robert Norton, common stockholders of Saatchi Art prior to Demand Media’s
acquisition of it, filed a lawsuit in the Delaware Chancery Court against the former directors, certain former officers and certain
former preferred stockholders of Saatchi Art, and Saatchi Art itself. Messrs. Saatchi and Norton allege that, in connection with
Demand Media’s acquisition of Saatchi Art, (i) the former directors of Saatchi Art and the former officers named in the lawsuit
breached their fiduciary duties to the common stockholders; (ii) certain preferred stockholders of Saatchi Art breached their fiduciary
duties to the common stockholders, aided and abetted the former officers’ and directors’ breach of their fiduciary duties and violated a
Saatchi Art voting agreement by breaching the implied covenant of good faith and fair dealing; and (iii) Saatchi Art violated the
voting agreement by breaching the implied covenant of good faith and fair dealing. The complaint seeks rescissory damages, a
constructive trust over the acquisition proceeds, disgorgement of all profits related thereto, and unspecified compensatory damages,
costs and fees. The litigation is in its early stages and we believe that we are entitled to indemnification with respect to any losses
incurred by us related to these claims under the terms of the merger agreement, although there can be no assurance that we will be
successful in recovering such losses, if any.
In addition, from time to time we are a party to various legal matters incidental to the conduct of our business. Certain of our
outstanding legal matters include speculative claims for indeterminate amounts of damages. We record a liability when we believe that
it is probable that a loss has been incurred and the amount can be reasonably estimated. Based on our current knowledge, we do not
believe that there is a reasonable possibility that the final outcome of the pending or threatened legal proceedings to which we are a
party, either individually or in the aggregate, will have a material adverse effect on our future financial results. However, the outcome
of such legal matters is subject to significant uncertainties.
Item 4. Mine Safety Disclosures
Not applicable.