ServiceMagic 2009 Annual Report Download - page 24

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Table of Contents
(exclusive of interest and costs) not exceeding 10% of the current assets of the registrant and its subsidiaries on a consolidated basis. In the
judgment of management, none of the pending litigation matters which the Company and its subsidiaries are defending, including those
described below, involves or is likely to involve amounts of that magnitude. The litigation matters described below involve issues or claims that
may be of particular interest to the Company's shareholders, regardless of whether any of these matters may be material to the financial position
or operations of the Company based upon the standard set forth in the SEC's rules.
Securities Class Action Litigation against IAC
As previously disclosed in a number of the Company's filings on SEC Forms 10-K and 10-Q, beginning on September 20, 2004, twelve
purported shareholder class actions were commenced in the United States District Court for the Southern District of New York against IAC and
certain of its officers and directors, alleging violations of the federal securities laws. These cases arose out of the Company's August 4, 2004
announcement of its earnings for the second quarter of 2004 and generally alleged that the value of the Company's stock was artificially inflated
by pre-announcement statements about its financial results and forecasts that were false and misleading due to the defendants' alleged failure to
disclose various problems faced by the Company's travel businesses (which in 2005 were spun off into a separate public company,
Expedia, Inc.). On December 20, 2004, the district court consolidated the twelve lawsuits, appointed co-lead plaintiffs, and designated co-lead
plaintiffs' counsel. See In re IAC/InterActiveCorp Securities Litigation , No. 04-CV-7447 (S.D.N.Y.).
On October 18, 2004, a related shareholder derivative action, Stuart Garber, Derivatively on Behalf of IAC/InterActiveCorp v. Barry Diller
et al. , No. 04-
603416, was commenced in the Supreme Court of the State of New York (New York County) against certain of IAC's officers and
directors. On November 15, 2004, another related shareholder derivative action, Lisa Butler, Derivatively on Behalf of IAC/InterActiveCorp v.
Barry Diller et al.
, No. 04-CV-
9067, was filed in the United States District Court for the Southern District of New York against certain of IAC's
current and former directors. On January 24, 2005, the federal district court consolidated the Butler case with the securities class action for pre-
trial purposes only. On February 2, 2005, the defendants in the Garber case removed it from New York state court to the United States District
Court for the Southern District of New York. On April 11, 2005, the district court issued a similar consolidation order in respect of the Garber
case.
On May 20, 2005, the plaintiffs in the federal securities class action filed a consolidated amended complaint. Like its twelve predecessors,
the amended complaint generally alleged that the value of the Company's stock was artificially inflated by pre-announcement statements about
the Company's financial results and forecasts that were false and misleading due to the defendants' alleged failure to disclose various problems
faced by the Company's then travel businesses. The plaintiffs sought to represent a class of shareholders who purchased IAC common stock
between March 31, 2003 and August 3, 2004. The defendants were IAC and fourteen current or former officers or directors of the Company or
its former Expedia travel business. The complaint purported to assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, as well as Sections 11 and 15 of the Securities Act of 1933, and sought
damages in an unspecified amount.
On July 5, 2005, the plaintiffs in the related shareholder suits filed a consolidated shareholder derivative complaint. The defendants were
IAC (as a nominal defendant) and sixteen current or former officers or directors of the Company or its former Expedia travel business. The
complaint, which was based upon factual allegations similar to those in the securities class action, purported to assert claims for breach of
fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, unjust enrichment, violation of Section 14(a) of the Exchange
Act, and contribution and indemnification. The complaint sought an order voiding the election of the Company's then current Board of Directors,
as
20