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potentially adverse tax consequences;
limitations on the repatriation of funds;
difficulties in staffing and managing foreign operations;
changing local or regional economic and political conditions;
exposure to different legal jurisdictions and standards; and
different accounting practices and payment cycles.
As the international markets for Internet software and application services for wireline, wireless and broadband continue to grow,
competition in these markets will likely intensify. Local companies may have a substantial competitive advantage because of their greater
understanding of and focus on the local markets. If we do not effectively manage risks related to our expansion internationally, our business is
likely to be harmed.
We are subject to legal proceedings that could result in liability and damage our business.
From time to time, we have been, and expect to continue to be, subject to legal proceedings and claims in the ordinary course of our
business, including claims to equity by alleged employees and claims of infringement of intellectual property rights by us, as well as a putative
securities class action lawsuit and other securities related litigation. Approximately fifteen lawsuits against us are currently pending in which
claims have been asserted against us or directors and executive officers, in addition to ordinary course collection matters and intellectual
property infringement claims that are not material to our business. We are unable to determine the amount for which we potentially could be
liable since a number of these lawsuits do not specify an amount for damages sought, and we maintain insurance which may cover some or all
of the claims, should they be successful. Such proceedings and claims, even if not meritorious, could require the expenditure of significant
financial and managerial resources, which could harm our business. We believe we have meritorious defenses to all the claims currently made
against InfoSpace. However, litigation is inherently uncertain, and we may not prevail in these suits. We cannot predict whether future claims
will be made or the ultimate resolution of any current or future claim. For an expanded discussion of our pending legal proceedings, see Item
3. Legal Proceedings.
Insiders own a large percentage of our stock, which could delay or prevent a change in control and may negatively affect your
As of February 28, 2002, our officers, directors and affiliated persons beneficially owned approximately 26.8% of our voting securities.
Naveen Jain, our Chairman and Chief Executive Officer, beneficially owned approximately 20.7% of our voting securities as of that date.
These stockholders will be able to exercise significant influence over all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions, which could have the effect of delaying or preventing a third party from acquiring
control over us and could affect the market price of our common stock. In addition, some of our executive officers have stock option grants that
provide for accelerated vesting if their employment is actually or constructively terminated after a change of control. The interests of those
holding this concentrated ownership may not always coincide with our interests or the interests of other stockholders, and, accordingly, they
could cause us to enter into transactions or agreements that we would not otherwise consider or could prevent us from entering into transactions
or agreements that we may consider beneficial to our business.
We have implemented anti takeover provisions that could make it more difficult to acquire us.
Our certificate of incorporation, our bylaws and Delaware law contain provisions that could make it more difficult for a third party to
acquire us without the consent of our board of directors, even if the transaction would be beneficial to our stockholders. These provisions
the classification of our board of directors into three groups so that directors serve staggered three year terms, which may make it
difficult for a potential acquirer to gain control of our board of directors;