Juno 2014 Annual Report Download - page 126

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Table of Contents
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
second quarter of 2012, the Company received an offer of settlement from the Multistate Work Group consisting of certain injunctive relief
and the consideration of two areas of monetary relief: (1) restitution to consumers and (2) a $20 million payment by Classmates, Inc. and
FTD.COM for the violations alleged by the Multistate Work Group and to reimburse the Multistate Work Group for its investigation costs. The
Company rejected the Multistate Work Group's offer. The Company has since had ongoing discussions with the Multistate Work Group
regarding a negotiated resolution. In December 2013, Classmates, Inc. and FTD.COM, Inc. proposed to the Multistate Work Group to resolve
the matter without admitting liability by making a settlement payment of $2.2 million. In February 2014, the Multistate Work Group
responded to the Company's settlement offer of $2.2 million with a counter offer of (1) $17.5 million plus (2) restitution by Classmates, Inc. to
a group of purchasers of its subscription services. The Multistate Work Group did not provide an explanation as to how the $17.5 million was
determined or the proposed allocation of such counter offer between Classmates, Inc. and FTD.COM Inc. In addition, the Multistate Work
Group did not propose a limit on the amount of such restitution. The parties continued settlement discussions and offers and in June 2014,
Classmates, Inc. and FTD.COM, Inc. proposed to the Multistate Work Group to resolve the matter without admitting liability by making a
settlement payment of $5 million plus an additional total $1 million payment for making restitution to a group of purchasers of
Classmates, Inc.'s subscription services. In July 2014 the Multistate Work Group sent Classmates, Inc. and FTD.COM a revised Consent Decree
containing a demand for a cash payment of $12.5 million plus restitution to a group of purchasers of Classmates, Inc.'s subscription services up
to a maximum of $5 million as part of the relief provided for. However, to the extent the restitution claims exceed $2 million, the $12.5 million
payment would be reduced dollar for dollar up to a maximum credit of $3 million. In September 2014 Classmates, Inc. and FTD.COM
provided the Multistate Work Group with a counter-proposal in the amount of $7 million plus a restitution payment to a group of purchasers
of Classmates, Inc.'s subscription services of up to $2 million, and to the extent restitution payments to consumers total less than $2 million,
then Classmates, Inc. shall remit the balance of the restitution account to the Attorneys General. In October 2014 the Multistate Work Group
sent Classmates, Inc. and FTD.COM a revised Consent Decree containing a demand for a cash payment of $9 million plus restitution to a
group of purchasers of Classmates, Inc.'s subscription services up to a maximum of $4 million as part of the relief provided for. The Consent
Decree further provides that if Classmates, Inc.'s payments to consumers total less than $4 million, then Classmates, Inc. shall, remit the
balance of the restitution account to the Attorneys General. In December 2014 Classmates, Inc. and FTD.COM, Inc. proposed to the Multistate
Work Group to resolve the matter without admitting liability by making a payment of $8 million and restitution up to a maximum of
$2.5 million. In January 2015 the Multistate Work Group responded to Classmates, Inc. and FTD.COM, Inc.'s December 2014 offer by seeking
a payment from Classmates, Inc. and FTD.COM, Inc. in the amount of $8 million and restitution up to a maximum of $3 million. The Consent
Decree further provides that if Classmates, Inc.'s payments to consumers total less than $3 million, then Classmates, Inc. shall, remit the
balance of the restitution account to the Attorneys General. While settlement discussions are ongoing, there can be no assurances as to the
terms on which the Multistate Work Group and Classmates, Inc. may agree to settle this matter (and how such settlement may affect
Classmates, Inc.'s ongoing business), or that any settlement of this matter may be reached. If no settlement is reached,
F-44