ServiceMagic 2011 Annual Report Download - page 25

Table of Contents
In addition, downloadable toolbars through which we provide search services are also subject to attack by viruses, worms and other
malicious software programs, which could jeopardize the security of information stored in users' computer or in our systems and networks. No
assurances can be given that our efforts to combat these malicious applications will be successful and/or that our products and services will not
have (or will not be perceived to have) vulnerabilities in this regard.
If any of these events were to occur, it could damage our reputation and result in the loss of current and potential users and customers,
which could have an adverse effect on our business, financial condition and results of operations and otherwise be costly to remedy.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
IAC believes that the facilities for its management and operations are generally adequate for its current and near-term future needs. IAC's
facilities, most of which are leased by IAC's businesses in various cities and locations in the United States and jurisdictions abroad, generally
consist of executive and administrative offices, operations centers, data centers and sales offices.
All of IAC's leases are at prevailing market rates. IAC believes that the duration of each lease is adequate. IAC believes that its principal
properties, whether owned or leased, are currently adequate for the purposes for which they are used and are suitably maintained for these
purposes. IAC does not anticipate any future problems renewing or obtaining suitable leases for its principal properties. IAC's approximately
202,500 square foot corporate headquarters in New York, New York houses offices for IAC corporate and certain other IAC businesses.
Item 3. Legal Proceedings
In the ordinary course of business, the Company and its subsidiaries are parties to litigation involving property, personal injury, contract,
intellectual property and other claims. The amounts that may be recovered in such matters may be subject to insurance coverage.
Rules of the Securities and Exchange Commission require the description of material pending legal proceedings, other than ordinary,
routine litigation incident to the registrant's business, and advise that proceedings ordinarily need not be described if they primarily involve
damages claims for amounts (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.
Litigation Arising Out of the Company's Sale of PRC
In 2006, the Company sold its call-center business, PRC, after conducting an auction process managed by an investment bank. In August
2008, various affiliates of the private-equity firm that won the auction and bought PRC (collectively, "Diamond Castle") sued the Company for
breach of contract in New York state court. See Diamond Castle Partners IV PRC, L.P. et al. v. IAC/InterActiveCorp , No. 602427/08 (Supreme
Court, New York County). The complaint alleges that the Company breached certain representations, warranties, and covenants in the purchase
agreement through materially false, misleading, and incomplete statements to Diamond Castle concerning a PRC services contract that
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