Table of Contents 
INFOSPACE, INC. 
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 
  
Years Ended December 31, 2001, 2000 and 1999 
Company and its chief executive officer made false and misleading statements about the Company's business and prospects during the period 
between January 26, 2000 and January 30, 2001. The complaint alleges violations of the federal securities laws and does not specify the 
amount of damages sought. Subsequently, other similar complaints were filed. The Horton matter and the subsequent complaints have been 
consolidated into one matter, captioned In re InfoSpace, Inc. Securities Litigation. The Court has appointed lead plaintiffs and counsel, and a 
consolidated complaint was filed on January 22, 2002, which among other things, added the Company's chief financial officer as a defendant. 
The Company's management believes the Company has meritorious defenses to these claims but litigation is inherently uncertain and the 
Company may not prevail in this matter.  
  
On March 19, 2001, a purported shareholder derivative complaint entitled Youtz v. Jain, et al. was filed in the Superior Court of 
Washington for King County. The complaint has been amended twice thus far and has been renamed Dreiling v. Jain, et al. The complaint 
names as defendants current and former officers and directors of the Company and entities related to a few of the individual defendants; the 
Company is named as a  nominal defendant.  The complaint alleges that certain defendants breached their fiduciary duties to the Company and 
were unjustly enriched by engaging in insider trading, and also alleges that certain defendants breached their fiduciary duties in connection 
with the Go2Net and Prio mergers and that one defendant converted the Company's assets to his personal use. Various equitable remedies are 
requested in the complaint, including disgorgement, restitution, accounting and imposition of a constructive trust, and the complaint also seeks 
monetary damages. As stated, the complaint is derivative in nature and does not seek monetary damages from, or the imposition of equitable 
remedies on, the Company. The Company has entered into indemnification agreements in the ordinary course of business with officers and 
directors and may be obligated throughout the pendency of this action to advance payment of legal fees and costs incurred by the defendant 
officers and directors pursuant to the Company's obligations under the indemnification agreements and applicable Delaware law. The special 
litigation committee of the Company's Board of Directors, with the assistance of independent legal counsel, has investigated the complaint, and 
filed on March 22, 2002 a motion to terminate this derivative action.  
  
On December 18, 2000, an employee filed a complaint against the Company in the United States District Court for the Western District of 
Washington alleging claims for breach of contract, breach of the covenant of good faith and fair dealing, and fraudulent and negligent 
misrepresentation. The suit also included a claim against Naveen Jain, the Company's Chief Executive Officer, for violations of the Racketeer 
Influenced Corrupt Organizations (RICO) Act. The employee contends that he agreed to work for the Company on the basis of an oral 
representation that he would be granted more stock options than any other employee (other than Mr. Jain) and that he would always have more 
stock options than any other such employee. The employee also contends that he was falsely promised certain levels of authority and support in 
his position. The employee seeks unspecified compensatory damages from the Company as well as equitable relief. On March 29, 2001, the 
court dismissed the plaintiff's claims for breach of the covenant of good faith and fair dealing. On March 1, 2002, the court dismissed the 
employee's claims for breach of contract, fraudulent and negligent misrepresentation with respect to the alleged promise that the employee 
would always have more stock options than any other InfoSpace employee, and violation of the RICO Act, and also denied certain other 
motions by the plaintiff. The only surviving claim is the plaintiff's allegation of fraudulent and negligent misrepresentation based on the 
alleged representation that the stock options received by the employee at the time he was hired were the most given to any employee of the 
Company (other than Mr. Jain). The parties are scheduled for trial on the surviving claim June 24, 2002. The Company's management believes 
the Company has meritorious defenses to this claim but litigation is inherently uncertain and the Company may not prevail in this matter.  
  
In September of 2000, Go2Net sued FreeYellow.com, Inc. a Florida corporation, and John Molino, FreeYellow's sole shareholder, in the 
Superior Court of Washington for King County seeking to rescind its  
88  
<





New Page 1








Home : About Us : Network : Services : Support : FAQ : Control Panel : Order Online : Sitemap : Contact : Terms Of Service

 

Our web partners:  Jsp Web Hosting  Unlimited Web Hosting  Cheapest Web Hosting  Java Web Hosting  Web Templates  Best Web Templates  Web Design Templates  Interland Web Hosting  Cheap Web Hosting  Filemaker Web Hosting  Tomcat Web Hosting  Quality Web Hosting  Best Web Hosting  Mac Web Hosting

 
 

Virtualwebstudio. Business web hosting division of Vision Web Hosting Inc. All rights reserved

Interland Web Hosting