California | 7389 | 77-0512121 | ||
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Jodie Bourdet
David Peinsipp Cooley Godward Kronish LLP 101 California Street, 5 th Floor San Francisco, CA 94111 (415) 693-2000 |
Alan Denenberg
Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, CA 94025 (650) 752-2000 |
Large accelerated
filer
o
|
Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and we are not soliciting offers to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
|
Underwriting
|
||||||
Discounts and
|
||||||
Price to
|
Other
|
Proceeds,
Before
|
||||
Public | Commissions(1) | Expenses, to us | ||||
Per Share
|
$ | $ | $ | |||
Total
|
$ | $ | $ |
(1) | Includes fees payable to Qatalyst Partners LP for services as our financial advisor. Qatalyst Partners LP is not acting as an underwriter of this offering. |
Credit Suisse | BofA Merrill Lynch | J.P. Morgan |
Page
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79
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99
103
107
109
112
116
116
116
117
EX-3.2
EX-3.4
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-10.9
EX-10.10
EX-23.2
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We own or access targeted media.
We run advertisements or other forms of marketing messages and
programs in that media to create visitor responses or clicks
through to client offerings.
We match these responses or clicks to client offerings or brands
that meet visitor interests or needs, converting visitors into
qualified leads or clicks.
We optimize client matches and media yield such that we achieve
desired results for clients and a sound financial outcome for us.
Vertical focus and expertise
Measurable marketing experience and expertise
Targeted media
Proprietary technology
Client relationships
Client-driven online marketing approach
Acquisition strategy and success
Scale
Focus on generating sustainable revenues by providing measurable
value to our clients.
Build QuinStreet and our industry sustainably by behaving
ethically in all we do and by providing quality content and
website experiences to Internet visitors.
Remain vertically focused, choosing to grow through depth,
expertise and coverage in our current industry verticals; enter
new verticals selectively over time, organically and through
acquisitions.
Build a world class organization, with
best-in-class
capabilities for delivering measurable marketing results to
clients and high yields or returns on media costs.
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Develop and evolve the best technologies and platform for
managing vertical marketing and media on the Internet; focus on
technologies that enhance media yield, improve client results
and achieve scale efficiencies.
Build, buy and partner with vertical content websites that
provide the most relevant and highest quality visitor
experiences in the client and media verticals we serve.
Be a client-driven organization; develop a broad set of media
sources and capabilities to reliably meet client needs.
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Common stock offered by QuinStreet
shares
Common stock to be outstanding after this offering
shares
Over-allotment option
shares
Use of proceeds
We expect the net proceeds to us from this offering, after
deduction of the estimated underwriting discounts and
commissions and estimated offering expenses, to be approximately
$ million at an assumed
initial public offering price of
$ per share. We intend to use
a portion of the net proceeds of this offering, or approximately
$26.3 million, to repay the outstanding balance of our
five-year term loan, and the remaining net proceeds from this
offering for working capital, capital expenditures and other
general corporate purposes. We may also use a portion of the net
proceeds to repay additional debt or to acquire other
businesses, products or technologies. See Use of
Proceeds.
Dividend policy
We do not intend to pay cash dividends on our common stock for
the foreseeable future.
Risk factors
See Risk Factors beginning on page 9 and the
other information included in this prospectus for a discussion
of factors you should carefully consider before deciding whether
to purchase shares of our common stock.
Proposed NASDAQ Global Market symbol
QNST
an aggregate of 10,654,296 shares of common stock issuable
upon the exercise of outstanding stock options as of
September 30, 2009 pursuant to our 2008 Equity Incentive
Plan and having a weighted-average exercise price of $8.1717 per
share;
an aggregate of 1,726,814 additional shares of common stock
reserved for future issuance under our 2008 Equity Incentive
Plan as of September 30, 2009; provided, however, that
immediately upon the signing of the underwriting agreement for
this offering, our 2008 Equity Incentive Plan will terminate so
that no further awards may be granted under our 2008 Equity
Incentive Plan and the shares then remaining and reserved for
future issuance under our 2008 Equity Incentive Plan shall
become reserved for issuance under our 2010 Equity Incentive
Plan; and
the shares reserved for future issuance under our 2010 Equity
Incentive Plan and up to 300,000 additional shares of common
stock reserved for future issuance under our 2010 Non-Employee
Directors Stock Award Plan, as well as any automatic
increases in the number of shares of common stock reserved for
future issuance under each of these benefit plans, which will
become effective immediately upon the signing of the
underwriting agreement for this offering.
that our reincorporation in Delaware has been completed;
the automatic conversion of all outstanding shares of our
convertible preferred stock into an aggregate of
21,176,533 shares of common stock effective immediately
prior to the closing of this offering;
that our amended and restated certificate of incorporation,
which we will file in connection with the completion of this
offering, is in effect; and
no exercise of the underwriters over-allotment option to
purchase up to an
additional shares
of common stock.
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6
7
Three Months
Fiscal Year Ended June 30,
Ended September 30,
2007
2008
2009
2008
2009
(In thousands, except per share data)
$
167,370
$
192,030
$
260,527
$
63,678
$
78,552
108,945
130,869
181,593
45,281
55,047
58,425
61,161
78,934
18,397
23,505
14,094
14,051
14,887
3,757
4,470
8,487
12,409
16,154
4,259
3,625
11,440
13,371
13,172
3,736
3,441
34,021
39,831
44,213
11,752
11,536
24,404
21,330
34,721
6,645
11,969
1,034
413
(3,538
)
(622
)
(619
)
25,438
21,743
31,183
6,023
11,350
(9,828
)
(8,876
)
(13,909
)
(2,719
)
(4,837
)
$
15,610
$
12,867
$
17,274
$
3,304
$
6,513
(3,276
)
(3,276
)
(3,276
)
(819
)
(819
)
(7,690
)
(5,925
)
(8,599
)
(1,527
)
(3,487
)
$
4,644
$
3,666
$
5,399
$
958
$
2,207
$
4,644
$
3,666
$
5,399
$
958
$
2,207
522
360
399
77
188
$
5,166
$
4,026
$
5,798
$
1,035
$
2,395
$
0.36
$
0.28
$
0.41
$
0.07
$
0.16
$
0.34
$
0.26
$
0.39
$
0.07
$
0.16
12,789
13,104
13,294
13,279
13,405
15,263
15,325
14,971
15,131
15,381
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Three Months
Fiscal Year Ended June 30,
Ended September 30,
2007
2008
2009
2008
2009
(In thousands, except per share data)
$
0.50
$
0.19
$
0.48
$
0.18
34,471
34,582
36,148
36,558
(1)
Includes stock-based compensation expense as follows:
$
416
$
1,112
$
1,916
$
470
$
728
75
443
669
161
253
226
581
1,761
416
507
1,354
1,086
1,827
351
741
September 30, 2009
Pro Forma as
Actual
Adjusted(1)
(In thousands)
$
28,095
$
19,942
235,410
110,284
66,177
81,723
(1)
The pro forma as adjusted consolidated balance sheet data gives
effect to the conversion of all outstanding shares of
convertible preferred stock into shares of common stock
effective immediately prior to the closing of this offering, the
repayment of the outstanding balance of our five-year term loan
using a portion of the net proceeds of this offering and to the
sale
of shares
of our common stock in this offering at an assumed initial
public offering price of $ per
share, the midpoint of the range reflected on the cover page of
this prospectus, and after deducting the estimated underwriting
discounts and commissions and estimated offering expenses
payable by us. Each $1.00 increase (decrease) in the assumed
initial public offering price of $
per share would increase (decrease) each of cash and cash
equivalents, working capital, total assets and total
shareholders equity by $ ,
assuming that the number of shares offered by us, as set forth
on the cover page of this prospectus, remains the same, and
after deducting estimated underwriting discounts and commissions
and estimated offering expenses payable by us. We may also
increase or decrease the number of shares we are offering. Each
increase (decrease) of 1,000,000 shares in the number of
shares offered by us would increase (decrease) each of cash and
cash equivalents, working capital, total assets and total
shareholders equity by $ ,
assuming that the assumed initial public offering price remains
the same, and after deducting the estimated underwriting
discounts and commissions and estimated offering expenses
payable by us. The pro forma as adjusted information discussed
above is illustrative only and will adjust based on the actual
initial public offering price and other terms of this offering
determined at pricing.
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Three Months
Fiscal Year Ended June 30,
Ended September 30,
2007
2008
2009
2008
2009
(In thousands)
$
25,197
$
24,751
$
32,570
$
(261
)
$
11,808
9,637
11,727
15,978
4,114
3,952
2,030
2,177
1,347
504
443
Three Months
Fiscal Year Ended June 30,
Ended September 30,
2007
2008
2009
2008
2009
(In thousands)
$
36,112
$
36,279
$
56,872
$
12,157
$
18,150
(1)
We define Adjusted EBITDA as net income less interest income
plus interest expense, provision for taxes, depreciation
expense, amortization expense, stock-based compensation expense
and foreign-exchange (loss) gain. Please see
Adjusted EBITDA for more information and
for a reconciliation of Adjusted EBITDA to our net income
calculated in accordance with U.S. generally accepted
accounting principles, or GAAP.
Adjusted EBITDA does not reflect our cash expenditures for
capital equipment or other contractual commitments;
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements;
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
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Adjusted EBITDA does not consider the potentially dilutive
impact of issuing equity-based compensation to our management
team and employees;
Adjusted EBITDA does not reflect the significant interest
expense or the cash requirements necessary to service interest
or principal payments on our indebtedness;
Adjusted EBITDA does not reflect certain tax payments that may
represent a reduction in cash available to us; and
other companies, including companies in our industry, may
calculate Adjusted EBITDA measures differently, which reduces
their usefulness as a comparative measure.
Three Months
Fiscal Year Ended June 30,
Ended September 30,
2007
2008
2009
2008
2009
(In thousands)
$
15,610
$
12,867
$
17,274
$
3,304
$
6,513
(1,034
)
(413
)
3,538
622
619
9,828
8,876
13,909
2,719
4,837
9,637
11,727
15,978
4,114
3,952
2,071
3,222
6,173
1,398
2,229
$
36,112
$
36,279
$
56,872
$
12,157
$
18,150
8
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maintain and expand client relationships;
sustain and increase the number of visitors to our websites;
sustain and grow relationships with third-party website
publishers and other sources of web visitors;
manage our expanding operations and implement and improve our
operational, financial and management controls;
raise capital at attractive costs, or at all;
acquire and integrate websites and other businesses;
successfully expand our footprint in our existing client
verticals and enter new client verticals;
respond effectively to competition and potential negative
effects of competition on profit margins;
attract and retain qualified management, employees and
independent service providers;
successfully introduce new processes and technologies and
upgrade our existing technologies and services;
protect our proprietary technology and intellectual property
rights; and
respond to government regulations relating to the Internet,
personal data protection, email, software technologies and other
aspects of our business.
successfully scale our technology to accommodate a larger
business and integrate acquisitions;
maintain our standing with key vendors, including Internet
search companies and third-party website publishers;
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maintain our client service standards; and
develop and improve our operational, financial and management
controls and maintain adequate reporting systems and procedures.
10
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diversion of management time and potential business disruptions;
expenses, distractions and potential claims resulting from
acquisitions, whether or not they are completed;
retaining and integrating employees from any businesses we may
acquire;
issuance of dilutive equity securities, incurrence of debt or
reduction in cash balances;
integrating various accounting, management, information, human
resource and other systems to permit effective management;
incurring possible impairment charges, contingent liabilities,
amortization expense or write-offs of goodwill;
difficulties integrating and supporting acquired products or
technologies;
unexpected capital expenditure requirements;
insufficient revenue to offset increased expenses associated
with acquisitions;
underperformance problems associated with acquisitions; and
becoming involved in acquisition-related litigation.
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we may not have sufficient liquidity to respond to business
opportunities, competitive developments and adverse economic
conditions;
we may not have sufficient liquidity to fund all of these costs
if our revenue declines or costs increase; and
we may not have sufficient funds to repay the principal balance
of our debt when due.
13
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changes in demand and pricing for our services;
changes in our pricing policies, the pricing policies of our
competitors, or the pricing of Internet advertising or media;
the addition of new clients or the loss of existing clients;
changes in our clients advertising agencies or the
marketing strategies our clients or their advertising agencies
employ;
changes in the economic prospects of our clients or the economy
generally, which could alter current or prospective
clients spending priorities, or could increase the time or
costs required to complete sales with clients;
changes in the availability of Internet advertising or the cost
to reach Internet visitors;
changes in the placement of our websites on search engines;
the introduction of new product or service offerings by our
competitors; and
costs related to acquisitions of businesses or technologies.
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online marketing or media services providers such as Monster
Worldwide in the education vertical and Bankrate in financial
services;
offline and online advertising agencies;
major Internet portals and search engine companies with
advertising networks such as Google, Yahoo!, MSN, and AOL;
other online marketing service providers, including online
affiliate advertising networks and industry-specific portals or
lead generation companies;
website publishers with their own sales forces that sell their
online marketing services directly to clients;
in-house marketing groups at current or potential clients;
offline direct marketing agencies; and
television, radio and print companies.
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the adaptation of technologies and services to foreign
clients preferences and customs;
application of foreign laws and regulations to us, including
marketing and privacy regulations;
changes in foreign political and economic conditions;
tariffs and other trade barriers, fluctuations in currency
exchange rates and potentially adverse tax consequences;
language barriers or cultural differences;
reduced or limited protection for intellectual property rights
in foreign jurisdictions;
difficulties and costs in staffing and managing or overseeing
foreign operations; and
education of potential clients who may not be familiar with
online marketing.
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changes in earnings estimates or recommendations by securities
analysts;
announcements by us or our competitors of new services,
significant contracts, commercial relationships, acquisitions or
capital commitments;
developments with respect to intellectual property rights;
our ability to develop and market new and enhanced products on a
timely basis;
our commencement of, or involvement in, litigation;
changes in governmental regulations or in the status of our
regulatory approvals; and
a slowdown in our industry or the general economy.
24
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delaying, deferring or preventing a change in corporate control;
impeding a merger, consolidation, takeover or other business
combination involving us; or
discouraging a potential acquirer from making a tender offer or
otherwise attempting to obtain control of us.
25
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a classified board of directors with three-year staggered terms,
which may delay the ability of stockholders to change the
membership of a majority of our board of directors;
no cumulative voting in the election of directors, which limits
the ability of minority stockholders to elect director
candidates;
the exclusive right of our board of directors to elect a
director to fill a vacancy created by the expansion of the board
of directors or the resignation, death or removal of a director,
which prevents stockholders from being able to fill vacancies on
our board of directors;
the ability of our board of directors to determine to issue
shares of preferred stock and to determine the price and other
terms of those shares, including preferences and voting rights,
without stockholder approval, which could be used to
significantly dilute the ownership of a hostile acquirer;
a prohibition on stockholder action by written consent, which
forces stockholder action to be taken at an annual or special
meeting of our stockholders;
the requirement that a special meeting of stockholders may be
called only by the chairman of the board of directors, the chief
executive officer or the board of directors, which may delay the
ability of our stockholders to force consideration of a proposal
or to take action, including the removal of directors; and
advance notice procedures that stockholders must comply with in
order to nominate candidates to our board of directors or to
propose matters to be acted upon at a stockholders
meeting, which may discourage or deter a potential acquiror from
conducting a solicitation of proxies to elect the
acquirors own slate of directors or otherwise attempting
to obtain control of us.
26
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our immature industry and relatively new business model;
our ability to manage our growth effectively;
our dependence on Internet search companies to attract Internet
visitors;
our ability to successfully manage any future acquisitions;
our dependence on a small number of large clients and our
dependence on a small number of client verticals for a majority
of our revenue;
our ability to attract and retain qualified employees and key
personnel;
our ability to accurately forecast our operating results and
appropriately plan our expenses;
our ability to compete in our industry;
our ability to enhance and maintain our client and vendor
relationships;
our ability to develop new services and enhancements and
features to meet new demands from our clients;
our ability to raise additional capital in the future, if needed;
general economic conditions in our domestic and potential future
international markets;
our ability to protect our intellectual property rights; and
our expectations regarding the use of proceeds from this
offering.
27
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| approximately $26.3 million of the net proceeds from this offering to repay the outstanding balance of our term loan. The interest rate under our term loan varies dependent upon the ratio of funded debt to adjusted EBITDA and ranges from LIBOR + 2.25% to 3.0% or Prime + 0.75% to 1.25%. The term loan expires in September 2013. | |
| the remaining net proceeds from this offering for working capital, capital expenditures and other general corporate purposes. |
28
on an actual basis;
on a pro forma basis after giving effect to the conversion of
all outstanding shares of our convertible preferred stock into
21,176,533 shares of common stock effective immediately
prior to the closing of this offering; and
on a pro forma as adjusted basis to reflect, in addition, the
application of the estimated net proceeds, as set forth in
Use of Proceeds, of
$ million from our sale
of shares
of common stock that we are offering at an assumed public
offering price of $ per share,
which is the midpoint of the range listed on the cover page of
this prospectus, after deducting estimated underwriting
discounts and commissions and estimated offering expenses
payable by us.
As of September 30, 2009
Pro Forma as
Actual
Pro Forma
Adjusted(1)
(In thousands, except share data)
$
28,095
$
28,095
$
$
13,182
$
10,182
$
52,995
$
28,245
43,403
15,627
59,030
3
3
66,093
66,093
81,723
125,126
$
178,121
$
153,371
$
(1)
Each $1.00 increase (decrease) in the assumed public offering
price of $ per share, the midpoint
of the range reflected on the cover page of this prospectus,
would increase (decrease) each of cash and cash equivalents,
additional paid-in capital, total stockholders equity and
total capitalization by approximately
29
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$ , assuming that the number of
shares offered by us, as set forth on the cover page of this
prospectus, remains the same, and after deducting estimated
underwriting discounts and commissions and estimated offering
expenses payable by us. We may also increase or decrease the
number of shares we are offering. Each increase (decrease) of
1,000,000 shares in the number of shares offered by us
would increase (decrease) each of cash and cash equivalents,
additional paid-in capital, total shareholders equity and
total capitalization by approximately
$ , assuming that the assumed
initial public offering price remains the same, and after
deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us. The as adjusted
information discussed above is illustrative only and will adjust
based on the actual initial public offering price and other
terms of this offering determined at pricing.
an aggregate of 10,654,296 shares of common stock issuable
upon the exercise of outstanding stock options as of
September 30, 2009 pursuant to our 2008 Equity Incentive
Plan and having a weighted-average exercise price of $8.1717 per
share;
an aggregate of 1,726,814 additional shares of common stock
reserved for future issuance under our 2008 Equity Incentive
Plan as of September 30, 2009; provided, however, that
immediately upon the signing of the underwriting agreement for
this offering, our 2008 Equity Incentive Plan will terminate so
that no further awards may be granted under our 2008 Equity
Incentive Plan, and the shares then remaining and reserved for
future issuance under our 2008 Equity Incentive Plan shall
become available for future issuance under our 2010 Non-Employee
Directors Stock Award Plan; and
the shares reserved for future issuance under our 2010 Equity
Incentive Plan and up to 300,000 additional shares of common
stock reserved for future issuance under our 2010 Non-Employee
Directors Stock Award Plan, as well as any automatic
increases in the number of shares of common stock reserved for
future issuance under each of these benefit plans, which will
become effective immediately upon the signing of the
underwriting agreement for this offering.
30
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$
$
$
the total number of shares of common stock purchased from us by
our existing stockholders and by new investors purchasing shares
in this offering;
31
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the total consideration paid to us by our existing stockholders
and by new investors purchasing shares in this offering,
assuming an initial public offering price of
$ per share (before deducting the
estimated underwriting discounts and commissions and estimated
offering expenses payable by us in connection with this
offering); and
the average price per share paid by existing stockholders and by
new investors purchasing shares in this offering.
Average
Shares Purchased
Total Consideration
Price per
Number
Percent
Amount
Percent
Share
34,631,876
%
$
59,030,000
%
$
1.70
100.0
%
$
100.0
%
an aggregate of 10,654,296 shares of common stock issuable
upon the exercise of outstanding stock options as of
September 30, 2009 pursuant to our 2008 Equity Incentive
Plan and having a weighted-average exercise price of $8.1717 per
share;
an aggregate of 1,726,814 additional shares of common stock
reserved for future issuance under our 2008 Equity Incentive
Plan as of September 30, 2009; provided, however, that
immediately upon the signing of the underwriting agreement for
this offering, our 2008 Equity Incentive Plan will terminate so
that no further awards may be granted under our 2008 Equity
Incentive Plan, and the shares then remaining and reserved for
future issuance under our 2008 Equity Incentive Plan shall
become available for future issuance under our 2010 Non-Employee
Directors Stock Award Plan; and
the shares reserved for future issuance under our 2010 Equity
Incentive Plan and up to 300,000 additional shares of common
stock reserved for future issuance under our 2010 Non-Employee
Directors Stock Award Plan, as well as any automatic
increases in the number of shares of common stock reserved for
future issuance under each of these benefit plans, which will
become effective immediately upon the signing of the
underwriting agreement for this offering.
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34
35
Three Months Ended
Fiscal Year Ended June 30,
September 30,
2005
2006
2007
2008
2009
2008
2009
(In thousands, except per share data)
$
109,556
$
142,408
$
167,370
$
192,030
$
260,527
$
63,678
$
78,552
65,653
85,820
108,945
130,869
181,593
45,281
55,047
43,903
56,588
58,425
61,161
78,934
18,397
23,505
12,644
17,265
14,094
14,051
14,887
3,757
4,470
5,734
7,166
8,487
12,409
16,154
4,259
3,625
4,842
6,835
11,440
13,371
13,172
3,736
3,441
23,220
31,266
34,021
39,831
44,213
11,752
11,536
20,683
25,322
24,404
21,330
34,721
6,645
11,969
553
1,341
1,905
1,482
245
90
9
(9
)
(427
)
(732
)
(1,214
)
(3,544
)
(763
)
(748
)
(31
)
(874
)
(139
)
145
(239
)
51
120
513
40
1,034
413
(3,538
)
(622
)
(619
)
21,196
25,362
25,438
21,743
31,183
6,023
11,350
(8,136
)
(9,773
)
(9,828
)
(8,876
)
(13,909
)
(2,719
)
(4,837
)
13,060
15,589
15,610
12,867
17,274
3,304
6,513
(1,820
)
$
13,060
$
13,769
$
15,610
$
12,867
$
17,274
$
3,304
$
6,513
(3,218
)
(3,276
)
(3,276
)
(3,276
)
(3,276
)
(819
)
(819
)
(6,240
)
(6,591
)
(7,690
)
(5,925
)
(8,599
)
(1,527
)
(3,487
)
$
3,602
$
3,902
$
4,644
$
3,666
$
5,399
$
958
$
2,207
33
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Three Months Ended
Fiscal Year Ended June 30,
September 30,
2005
2006
2007
2008
2009
2008
2009
(In thousands, except per share data)
$
3,602
$
3,902
$
4,644
$
3,666
$
5,399
$
958
$
2,207
436
525
522
360
399
77
188
$
4,038
$
4,427
$
5,166
$
4,026
$
5,798
$
1,035
$
2,395
$
0.30
$
0.31
$
0.36
$
0.28
$
0.41
$
0.07
$
0.16
$
0.28
$
0.29
$
0.34
$
0.26
$
0.39
$
0.07
$
0.16
12,069
12,411
12,789
13,104
13,294
13,279
13,405
14,543
15,295
15,263
15,325
14,971
15,131
15,381
$
0.50
$
0.19
$
0.48
$
0.18
34,471
34,582
36,148
36,558
(1)
Includes stock-based compensation expense as follows:
Three Months Ended
Fiscal Year Ended June 30,
September 30,
2005
2006
2007
2008
2009
2008
2009
(In thousands)
$
48
$
66
$
416
$
1,112
$
1,916
$
470
$
728
3
(7
)
75
443
669
161
253
43
10
226
581
1,761
416
507
47
20
1,354
1,086
1,827
351
741
(2)
See Note 4 to our consolidated financial statements
included in this prospectus for an explanation of the method
used to calculate basic and diluted net loss per share and pro
forma basic and diluted net loss per share of common stock.
Table of Contents
June 30,
September 30,
2005
2006
2007
2008
2009
2009
(In thousands)
$
19,418
$
30,593
$
26,765
$
24,953
$
25,182
$
28,095
39,859
36,294
42,769
17,022
16,426
19,942
71,350
101,203
118,536
179,746
212,878
235,410
26,657
39,567
37,831
86,032
96,289
110,284
9,216
10,250
51,654
57,240
66,177
4,246
18,350
37,312
50,311
73,186
81,723
Three Months Ended
Fiscal Year Ended June 30,
September 30,
2005
2006
2007
2008
2009
2008
2009
(In thousands)
$
23,200
$
21,659
$
25,197
$
24,751
$
32,570
$
(261
)
$
11,808
3,466
7,208
9,637
11,727
15,978
4,114
3,952
5,671
1,104
2,030
2,177
1,347
504
443
Three Months Ended
Fiscal Year Ended June 30,
September 30,
2005
2006
2007
2008
2009
2008
2009
(In thousands)
$
24,290
$
32,619
$
36,112
$
36,279
$
56,872
$
12,157
$
18,150
(1)
We define Adjusted EBITDA as net income less interest income
plus interest expense, provision for taxes, depreciation
expense, amortization expense, stock-based compensation expense
and foreign-exchange (loss) gain. Please see Summary
Consolidated Financial Data Adjusted EBITDA
for more information and for a reconciliation of Adjusted EBITDA
to our net income calculated in accordance with U.S. generally
accepted accounting principles.
Table of Contents
We own or access targeted media;
We run advertisements or other forms of marketing messages and
programs in that media to create visitor responses or clicks
through to client offerings;
We match these responses or clicks to client offerings or brands
that meet visitor interests or needs, converting visitors into
qualified leads or clicks; and
We optimize client matches and media yield such that we achieve
desired results for clients and a sound financial outcome for us.
36
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39
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40
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Fiscal Year Ended June 30,
Three Months Ended September 30,
2007
2008
2009
2008
2009
(In thousands)
$
416
$
1,112
$
1,916
$
470
$
728
75
443
669
161
253
226
581
1,761
416
507
1,354
1,086
1,827
351
741
$
2,071
$
3,222
$
6,173
$
1,398
$
2,229
Three Months Ended
Fiscal Year Ended June 30,
September 30,
2007
2008
2009
2008
2009
48%
52%
62%
61%
73%
4.6 - 6.1
4.6
4.6
4.6
4.6
4.6% - 4.9%
2.8% - 4.5%
1.8% - 3.1%
3.1%
2.5%
41
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Common Stock Fair
Value per Share
Number of Shares
for Financial
Underlying Options
Exercise Price
Reporting Purposes at
SFAS 123R
Granted
per Share
Grant Date
Fair Value
88,100
$
9.01
$
9.01
$
428,034
133,794
9.40
9.40
678,175
713,000
9.40
9.40
3,590,525
165,000
10.34
9.40
831,617
81,550
9.40
9.40
391,412
35,100
9.40
9.40
176,908
1,161,400
10.28
10.28
5,226,881
116,700
10.28
10.28
560,720
729,200
10.28
10.28
3,330,840
469,500
10.28
10.28
2,365,294
1,695,600
10.28
10.28
9,098,250
85,000
11.31
10.28
434,775
277,900
10.28
10.28
1,385,081
331,800
9.01
9.01
1,686,738
184,800
9.01
9.01
957,467
1,875,050
9.01
13.93
17,716,410
87,705
9.91
13.93
805,939
210,600
11.08
16.88
2,624,500
1,080,500
19.00
19.00
13,229,750
(1)
Options granted with an exercise price per share equal to 110%
of the fair market value of one share of our common stock, as
determined by our board of directors on the date of grant.
42
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company performance, our growth rate and financial condition at
the approximate time of the option grant;
the value of companies that we consider peers based on a number
of factors including, but not limited to, similarity to us with
respect to industry, business model, stage of growth, financial
risk or other factors;
changes in the company and our prospects since the last time the
board approved option grants and made a determination of fair
value;
amounts recently paid by investors for our common stock and
convertible preferred stock in
arms-length
transactions with stockholders;
the rights, preferences and privileges of preferred stock
relative to those of our common stock;
future financial projections; and
valuations completed in conjunction with, and at the time of,
each option grant.
initial public offering;
strategic merger or sale;
dissolution/no value to common stockholders; and
remaining a private company.
43
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45
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46
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Three Months
Fiscal Year Ended June 30,
Ended September 30,
2007
2008
2009
2008
2009
(In thousands)
$
167,370
100.0
%
$
192,030
100.0
%
$
260,527
100.0
%
$
63,678
100.0
%
$
78,552
100.0
%
108,945
65.1
130,869
68.2
181,593
69.7
45,281
71.1
55,047
70.1
58,425
34.9
61,161
31.8
78,934
30.3
18,397
28.9
23,505
29.9
14,094
8.4
14,051
7.3
14,887
5.7
3,757
5.9
4,470
5.7
8,487
5.1
12,409
6.5
16,154
6.2
4,259
6.7
3,625
4.6
11,440
6.8
13,371
7.0
13,172
5.1
3,736
5.9
3,441
4.4
24,404
14.6
21,330
11.1
34,721
13.3
6,645
10.4
11,969
15.2
1,905
1.1
1,482
0.8
245
0.1
90
0.1
9
(732
)
(0.4
)
(1,214
)
(0.6
)
(3,544
)
(1.4
)
(763
)
(1.2
)
(748
)
(1.0
)
(139
)
(0.1
)
145
0.1
(239
)
(0.1
)
51
0.1
120
0.2
25,438
15.2
21,743
11.3
31,183
12.0
6,023
9.5
11,350
14.4
(9,828
)
(5.9
)
(8,876
)
(4.6
)
(13,909
)
(5.3
)
(2,719
)
(4.3
)
(4,837
)
(6.2
)
$
15,610
9.3
%
$
12,867
6.7
%
$
17,274
6.6
%
$
3,304
5.2
%
$
6,513
8.3
%
47
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(1)
Includes stock-based compensation expense as follows:
$
416
0.2
%
$
1,112
0.6
%
$
1,916
0.7
%
$
470
0.7
%
$
728
0.9
%
75
0.0
443
0.2
669
0.3
161
0.3
253
0.3
226
0.1
581
0.3
1,761
0.7
416
0.7
507
0.6
1,354
0.8
1,086
0.6
1,827
0.7
351
0.6
741
0.9
Three Months Ended
September 30,
2008-2009
2008
2009
% Change
(In thousands)
$
63,678
$
78,552
23
%
45,281
55,047
22
%
Three Months Ended
September 30,
2008-2009%
2008
2009
Change
(In thousands)
$
3,757
$
4,470
19
%
4,259
3,625
(15
)%
3,736
3,441
(8
)%
$
11,752
$
11,536
(2
)%
48
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Three Months Ended
September 30,
2008-2009%
2008
2009
Change
(In thousands)
$
90
$
9
(90
)%
(763
)
(748
)
(2
)%
51
120
135
%
$
(622
)
$
(619
)
Three Months Ended
September 30,
2008
2009
(In thousands)
$
2,719
$
4,837
45.1
%
42.6
%
Fiscal Year Ended June 30,
2007-2008
2008-2009
2007
2008
2009
% Change
% Change
(In thousands)
$
167,370
$
192,030
$
260,527
15
%
36
%
108,945
130,869
181,593
20
%
39
%
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Fiscal Year Ended June 30,
2007-2008
2008-2009
2007
2008
2009
% Change
% Change
(In thousands)
$
14,094
$
14,051
$
14,887
6
%
8,487
12,409
16,154
46
%
30
%
11,440
13,371
13,172
17
%
(1
)%
$
34,021
$
39,831
$
44,213
17
%
11
%
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Fiscal Year Ended June 30,
2007-2008
2008-2009
2007
2008
2009
% Change
% Change
(In thousands)
$
1,905
$
1,482
$
245
(22
)%
(83
)%
(732
)
(1,214
)
(3,544
)
66
%
192
%
(139
)
145
(239
)
(204
)%
(265
)%
$
1,034
$
413
$
(3,538
)
(60
)%
(957
)%
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Fiscal Year Ended June 30,
2007
2008
2009
(In thousands)
$
9,828
$
8,876
$
13,909
38.6
%
40.8
%
44.6
%
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Three Months Ended
Dec. 31,
Mar. 31,
June 30,
Sept. 30,
Dec. 31,
Mar. 31,
June 30,
Sept. 30,
2007
2008
2008
2008
2008
2009
2009
2009
(In thousands)
$
40,806
$
49,739
$
57,102
$
63,678
$
59,235
$
69,813
$
67,801
$
78,552
28,623
32,840
38,855
45,281
42,969
46,780
46,563
55,047
12,183
16,899
18,247
18,397
16,266
23,033
21,238
23,505
3,524
3,355
3,476
3,757
3,723
3,512
3,896
4,470
4,122
2,948
3,387
4,259
4,164
3,594
4,137
3,625
3,217
3,242
3,370
3,736
3,171
2,865
3,400
3,441
1,321
7,355
8,014
6,645
5,208
13,062
9,806
11,969
489
282
165
90
87
44
24
9
(143
)
(242
)
(665
)
(763
)
(1,107
)
(879
)
(795
)
(748
)
10
74
74
51
(291
)
(16
)
17
120
1,677
7,469
7,588
6,023
3,897
12,211
9,052
11,350
(750
)
(2,799
)
(3,204
)
(2,719
)
(1,547
)
(5,818
)
(3,825
)
(4,837
)
$
926
$
4,670
$
4,384
$
3,304
$
2,350
$
6,393
$
5,227
$
6,513
$
4,425
$
10,336
$
13,099
$
12,157
$
10,957
$
18,571
$
15,188
$
18,150
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Adjusted EBITDA does not reflect our cash expenditures for
capital equipment or other contractual commitments;
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements;
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
Adjusted EBITDA does not consider the potentially dilutive
impact of issuing equity-based compensation to our management
team and employees;
Adjusted EBITDA does not reflect the significant interest
expense or the cash requirements necessary to service interest
or principal payments on our indebtedness;
Adjusted EBITDA does not reflect certain tax payments that may
represent a reduction in cash available to us; and
other companies, including companies in our industry, may
calculate Adjusted EBITDA measures differently, which reduces
their usefulness as a comparative measure.
Three Months Ended,
Dec. 31,
Mar. 31,
June 30,
Sept. 30,
Dec. 31,
Mar. 31,
June 30,
Sept. 30,
2007
2008
2008
2008
2008
2009
2009
2009
(In thousands)
$
926
$
4,670
$
4,384
$
3,304
$
2,350
$
6,393
$
5,227
$
6,513
(356
)
(114
)
426
622
1,311
851
754
619
750
2,799
3,204
2,720
1,547
5,818
3,825
4,837
2,501
2,500
4,149
4,114
4,237
4,035
3,592
3,952
603
481
937
1,398
1,512
1,474
1,790
2,229
$
4,425
$
10,336
$
13,099
$
12,157
$
10,957
$
18,571
$
15,188
$
18,150
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57
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Payments Due by Period
Total
Less Than 1 Year
1 to 3 Years
3 to 5 Years
More Than 5 Years
(In thousands)
$
34,757
$
3,000
$
11,250
$
20,507
$
25,069
10,214
12,005
2,850
1,368
1,104
264
$
61,194
$
14,318
$
23,519
$
23,357
$
58
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Quick ratio: ratio of (a) the sum of unrestricted cash and
cash equivalents and trade receivables less than 90 days
from invoice date to (b) current liabilities and face
amount of any letters of credit less the current portion of
deferred revenue.
Fixed charge coverage: ratio of (a) trailing 12 months
of adjusted EBITDA to (b) the sum of capital expenditures,
net cash interest expense, cash taxes, cash dividends and
trailing 12 months payments of indebtedness. Payment of
unsecured indebtedness is excluded to the degree that sufficient
unused revolving credit facility exists such that the relevant
debt payment could have been made from the credit facility.
Funded debt to adjusted EBITDA: ratio of (a) the sum of all
obligations owing to lending institutions, the face amount of
any letters of credit, indebtedness owing in connection with
seller notes and indebtedness owing in connection with capital
lease obligations to (b) trailing 12-month adjusted EBITDA.
59
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61
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We own or access targeted media.
We run advertisements or other forms of marketing messages and
programs in that media to create visitor responses or clicks
through to client offerings.
We match these responses or clicks to client offerings or brands
that meet visitor interests or needs, converting visitors into
qualified leads or clicks.
We optimize client matches and media yield such that we achieve
desired results for clients and a sound financial outcome for us.
websites owned and operated by us, with content and offerings
that are relevant to our clients target customers;
visitors acquired from PPC advertisements purchased on major
search engines and sent to our websites;
revenue sharing agreements with third-party websites with whom
we have a relationship and whose content is relevant to our
clients target customers;
email lists owned by third parties and warranted to us by their
owners to comply with the CAN-SPAM Act;
email lists owned by us, and generated on an
opt-in
basis
from Internet visitors to our websites; and
display ads run through online advertising networks or directly
with major websites or portals.
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65
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an ad server for tracking the placement and performance of
content, creative messaging, and offerings on our websites and
on those of publishers with whom we work;
database-driven applications for dynamically matching content,
offers or brands to Internet visitors expressed needs or
interests;
a platform for measuring and managing the performance of tens of
thousands of PPC search engine advertising campaigns;
dashboards or reporting tools for displaying operating and
financial metrics for thousands of ongoing marketing campaigns;
and,
a compliance tool capable of cataloging and filtering content
from the thousands of websites on which our marketing programs
appear to ensure adherence to client branding guidelines and to
regulatory requirements.
our close, often direct, relationships with most of our large
clients;
our ability to deliver measurable and attractive return on
investment, or ROI, on clients marketing spending;
our ownership of, or exclusive access to large amounts of,
targeted media inventory and associated Internet visitors in the
industry verticals on which we focus; and,
our ability to consistently and reliably deliver large
quantities of qualified leads or clicks.
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Our ability to monetize Internet media, coupled with client
demand for our services, provides us with a particular advantage
in acquiring targeted online media properties in the verticals
on which we focus.
Our capabilities in online media can allow us to generate a
greater volume of leads or clicks, and therefore create more
value, than other owners of marketing services companies that
have aggregated client budgets or relationships.
We can often apply technologies across our business volume to
create more value than previous owners of the technology.
Focus on generating sustainable revenues by providing
measurable value to our clients.
Build QuinStreet and our industry sustainably by behaving
ethically in all we do and by providing quality content and
website experiences to Internet visitors.
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Remain vertically focused, choosing to grow through depth,
expertise and coverage in our current industry verticals; enter
new verticals selectively over time, organically and through
acquisitions.
Build a world class organization, with
best-in-class
capabilities for delivering measurable marketing results to
clients and high yields or returns on media costs.
Develop and evolve the best technologies and platform for
managing vertical marketing and media on the Internet; focus on
technologies that enhance media yield, improve client results
and achieve scale efficiencies.
Build, buy and partner with vertical content websites that
provide the most relevant and highest quality visitor
experiences in the client and media verticals we serve.
Be a client-driven organization; develop a broad set of media
sources and capabilities to reliably meet client needs.
1.
Performance.
We understand our business
objectives and apply a whatever it takes approach to
meeting them. We are driven to achieve. We are committed to our
own personal and professional development and to that of our
colleagues.
2.
High Standards.
We hold each other and
ourselves to the highest standards of performance,
professionalism and personal behavior. We act with the highest
of ethical standards. We tolerate and forgive mistakes, but not
patterns.
3.
Teamwork.
We deal with one another
openly, honestly and non-hierarchically in an atmosphere of
mutual trust and respect and in pursuit of common stretch goals.
We have an obligation to dissent in an effort to reach the best
answers. We smooth the way for effective, dynamic team
discussions by demonstrating care and concern for each
individual in all of our interactions. We support decisions,
once made.
4.
Customer Empathy.
We strive every day
to better understand and anticipate the needs of our customers,
including our website visitors, clients and publishers. We
leverage our unique insights into higher customer loyalty and
competitive advantage.
5.
Prioritization.
We always work on what
is most important to achieving Company objectives first. If we
do not know, we ask or discuss competing demands.
6.
Urgency.
We know our goals and measure
our progress toward them daily.
7.
Progress.
We are pioneers. We make
decisions based on facts and analysis, as well as intuition, but
we expect to make mistakes in the pursuit of rapid progress. We
learn from mistakes on short cycle times and iterate our way to
success.
8.
Innovation and Flexibility.
We prize
creativity. We embrace new ideas and approaches as opportunities
to improve our performance or work environment. We resist pride
of authorship; it limits progress. We actively benchmark and
work to understand and employ best practices.
9.
Recognition.
We are a meritocracy.
Advancement and recognition are earned through contribution and
performance. We celebrate each others victories and
efforts.
10.
Fun.
We believe that work, done well,
can and should be fun. We strive to create an upbeat, supportive
environment and try not to take ourselves too seriously. We do
not tolerate negativism, pessimism or nay saying...we dont
have time.
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100
F-13
II-3
50
Chief Executive Officer and Chairman
45
President and Chief Operating Officer
43
Chief Financial Officer
38
Executive Vice President
36
Executive Vice President
36
Chief Technology Officer
43
General Counsel
37
Senior Vice President
34
Senior Vice President
43
Senior Vice President
66
Director
72
Director
43
Director
46
Director
40
Director
41
Director
(1)
Member of the nominating and corporate governance committee.
(2)
Member of the compensation committee.
(3)
Member of the audit committee.
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Class I directors will be Messrs. Simons and Stalder,
and their terms will expire at the annual general meeting of
stockholders to be held in 2011;
Class II directors will be Professor McDonald and
Mr. Sands, and their terms will expire at the annual
general meeting of stockholders to be held in 2012; and
Class III directors will be Former Senator Bradley and
Messrs. Solomon and Valenti, and their terms will expire at
the annual general meeting of stockholders to be held in 2013.
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reviewing and pre-approving the engagement of our independent
registered public accounting firm to perform audit services and
any permissible non-audit services;
evaluating the performance of our independent registered public
accounting firm and deciding whether to retain their services;
reviewing our annual and quarterly financial statements and
reports and discussing the statements and reports with our
independent registered public accounting firm and management,
including a review of disclosures under Management
Discussion and Analysis of Financial Condition and Results of
Operations;
providing oversight with respect to related party transactions;
reviewing, with our independent registered public accounting
firm and management, significant issues that may arise regarding
accounting principles and financial statement presentation, as
well as matters concerning the scope, adequacy and effectiveness
of our financial controls;
reviewing reports from management and auditors regarding our
procedures to monitor and ensure compliance with our legal and
regulatory responsibilities, our code of business conduct and
ethics and our compliance with legal and regulatory
requirements; and
establishing procedures for the receipt, retention and treatment
of complaints received by us regarding financial controls,
accounting or auditing matters.
determining the compensation and other terms of employment of
our chief executive officer and our other executive officers and
reviewing and approving corporate performance goals and
objectives relevant to such compensation;
reviewing and approving the compensation of our directors;
evaluating and recommending to our board of directors the equity
incentive plans, compensation plans and similar programs
advisable for us, as well as modification or termination of
existing plans and programs;
establishing policies with respect to equity compensation
arrangements; and
reviewing with management our disclosures under the caption
Compensation Discussion and Analysis and
recommending to the full board its inclusion in our periodic
reports to be filed with the SEC.
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reviewing periodically director performance on our board of
directors and its committees and performance of management, and
recommending to our board of directors and management areas of
improvement;
interviewing, evaluating, nominating and recommending
individuals for membership on our board of directors;
evaluating nominations by stockholders of candidates for
election to our board of directors and establishing policies and
procedures for such nominations;
reviewing with our chief executive officer plans for succession
to the offices of chief executive officer or any other executive
officer, as it sees fit; and
reviewing and recommending to our board of directors changes
with respect to corporate governance practices and policies.
$ per year for service as a board
member;
$ per year for service as a member
of the audit committee, compensation committee or nominating and
corporate governance committee;
$ per year for service as a
chairperson of the audit committee, compensation committee or
nominating or corporate governance committee;
$ for each in-person board meeting
and $ for each telephonic board
meeting; and
$ for each in-person or telephonic
committee meeting.
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Fees Earned or
Option
Paid in
Awards
Total
Cash
($)(1)
($)
$
58,000
$
129,528
$
187,528
$
58,000
$
129,528
$
187,528
$
58,000
$
129,528
$
187,528
(1)
Amount reflects the total compensation expense for the fiscal
year ended June 30, 2009 calculated in accordance with
stock-based compensation expense guidance. The valuation
assumptions used in determining such amounts are described in
Note 10 to our consolidated financial statements included
in this prospectus.
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Douglas Valenti, Chief Executive Officer, or CEO;
Bronwyn Syiek, President and Chief Operating Officer;
Kenneth Hahn, Chief Financial Officer, or CFO;
Tom Cheli, Executive Vice President; and
Scott Mackley, Executive Vice President.
attract, motivate and retain highly-talented individuals who are
incented to achieve our strategic goals;
closely align compensation with our business and financial
objectives and the long-term interests of our stockholders;
motivate and reward individuals whose skills and performance
promote our continued success; and
offer total compensation that is competitive and fair.
base salary;
performance-based cash bonuses;
equity incentive awards;
employee benefits and perquisites; and
change in control benefits.
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health, dental insurance and vision coverage;
life insurance;
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an employee stock purchase plan;
a medical and dependent care flexible spending account;
short- and long-term disability, accidental death and
dismemberment insurance; and
a Section 401(k) plan.
Non-Equity
Option
Incentive Plan
All Other
Name and Principal
Fiscal
Awards
Compensation
Compensation
Total
Year
Salary ($)
($)(1)
($)
($)(2)
($)
2009
$
451,500
$
299,356
$
386,243
$
243
$
1,137,342
2009
$
394,000
$
268,883
$
319,743
$
239
$
982,865
2009
$
315,000
$
150,059
$
238,298
$
196
$
703,553
2009
$
315,000
$
150,059
$
294,458
$
196
$
759,713
2009
$
330,000
$
62,478
$
174,290
$
204
$
566,972
(1)
Amounts shown in this column do not reflect dollar amounts
actually received by our named executive officers. Instead,
these amounts reflect the dollar amount recognized for financial
statement reporting purposes for the referenced fiscal year, in
accordance with the provisions of SFAS No. 123(R).
Assumptions used in the calculation of these amounts are
included in Note 10 to our consolidated financial
statements included in this prospectus. As required by SEC
rules, the amounts shown exclude the
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impact of estimated forfeitures related to service-based vesting
conditions. Our named executive officers will only realize
compensation to the extent the trading price of our common stock
is greater than the exercise price of such stock options.
(2)
All other compensation represents amounts we pay towards
employee life insurance.
Estimated
Future
All Other
Payouts
Option
Under Non-
Awards:
Exercise or
Grant Date
Equity
Number of
Base Price of
Fair Value of
Incentive
Securities
Option
Stock and
Plan Awards
Underlying
Awards
Option
Target ($)
Options (#)
($/Sh)
Awards ($)(2)
July 25, 2008
85,000
$
11.31
(1)
$
375,258
May 30, 2008
$
304,500
(3)
May 30, 2008
$
(4)
July 25, 2008
125,000
$
10.28
$
578,163
May 30, 2008
$
238,000
(3)
May 30, 2008
$
(4)
July 25, 2008
75,000
$
10.28
$
346,898
May 30, 2008
$
187,200
(3)
May 30, 2008
$
(4)
July 25, 2008
75,000
$
10.28
$
346,898
May 30, 2008
$
187,200
(3)
May 30, 2008
$
(4)
July 25, 2008
50,000
$
10.28
$
231,563
May 30, 2008
$
113,000
(3)
May 30, 2008
$
(4)
(1)
Option granted to Mr. Valenti had an exercise price per
share equal to 110% of the fair market value of one share of our
common stock on the date of grant.
(2)
Amounts represent the total fair value of stock options granted
in fiscal year 2009, calculated in accordance with stock-based
compensation expense guidance. See Note 10 to our
consolidated financial statements included in this prospectus
for a discussion of assumptions made in determining the grant
date fair value and compensation expense of our stock options.
(3)
Represents the executives target bonus under our 2009
Bonus Plan as of the date of grant. The plan provides for
individual bonus targets ranging from 34% of base salary to 67%
of base salary. Payout of the bonuses was dependent on
achievement against our plan for revenue growth and Adjusted
EBITDA
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and, where applicable, the individual executives business
units achievement against that units plan for
revenue growth and Adjusted EBITDA, as further described in
Compensation Discussion and Analysis. Actual
payments for fiscal year 2009 are set forth in the Fiscal
Year 2009 Summary Compensation Table above.
(4)
Represents the executives target bonus under our 2009
Incremental Bonus Plan as of the date of grant. The 2009
Incremental Bonus Plan paid out to the senior management team
was 15% of any Adjusted EBITDA in excess of our target of 20%
Adjusted EBITDA margin for the year. The incremental bonus plan
allocated differing amounts to executives based on their role
and tenure at the company and ranged between 1% of any Adjusted
EBITDA over the 20% margin target and 2.25% of such excess.
Option Awards
Number of
Securities
Number of
Underlying
Securities
Unexercised
Underlying
Options
Unexercised
Option
Exercisable
Options
Exercise
Option Expiration
(#)
Unexercisable (#)(1)
Price ($)
July 25, 2008
85,000
$
11.31
July 24, 2013
January 31, 2007
99,687
65,313
$
10.34
January 30, 2014
July 25, 2008
125,000
$
10.28
July 24, 2015
May 31, 2007
52,083
47,917
$
10.28
May 30, 2014
May 17, 2006
77,083
22,917
$
9.01
May 16, 2016
September 23, 2005
93,750
6,250
$
7.74
September 22, 2015
May 20, 2005
185,000
$
6.38
May 19, 2015
July 28, 2004
150,000
$
4.60
July 27, 2014
November 19, 2003
100,000
$
4.60
November 18, 2013
September 11, 2001
150,000
$
0.59
September 10, 2011
June 28, 2000
45,000
$
0.59
June 27, 2010
July 25, 2008
75,000
$
10.28
July 24, 2015
May 31, 2007
26,041
23,959
$
10.28
May 30, 2014
May 17, 2006
38,540
11,460
$
9.01
May 16, 2016
September 23, 2005
93,750
6,250
$
7.74
September 22, 2015
May 20, 2005
80,000
$
6.38
May 19, 2015
July 28, 2004
100,000
$
4.60
July 27, 2014
September 26, 2002
150,000
$
1.50
September 25, 2012
September 19, 2000
1,905
$
0.59
September 18, 2010
July 25, 2008
75,000
$
10.28
July 24, 2015
May 31, 2007
26,041
23,959
$
10.28
May 30, 2014
May 17, 2006
38,540
11,460
$
9.01
May 16, 2016
September 23, 2005
93,750
6,250
$
7.74
September 22, 2015
May 20, 2005
80,000
$
6.38
May 19, 2015
July 28, 2004
120,000
$
4.60
July 27, 2014
July 22, 2003
100,000
$
2.00
July 21, 2013
April 4, 2002
42,292
$
0.59
April 3, 2012
March 15, 2001
6,667
$
0.59
March 14, 2011
June 28, 2000
8,334
$
0.59
June 27, 2010
July 25, 2008
50,000
$
10.28
July 24, 2015
May 17, 2006
289,062
85,938
$
9.01
May 16, 2016
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(1)
Each stock option to our executive officers vests over a
four-year period as follows: 25% of the shares underlying the
option vest on the first anniversary of the date of the vesting
commencement date, which is the date of grant, and the remainder
of the shares underlying the option vest in equal monthly
installments over the remaining 36 months thereafter. Each
option also provides that 25% of the unvested shares subject to
such option will vest if the executive is terminated without
cause following a change in control.
(2)
In fiscal year 2007, our board of directors changed the default
term of option grants to seven years.
Option Awards
Number of
Value
Shares
Realized on
Acquired on
Exercise
Exercise (#)
($)(1)
3,095
$
29,991
(1)
The aggregate dollar value realized upon exercise of an option
represents the difference between the aggregate fair market
value of our common stock underlying the option on the date of
exercise, which was determined by our board of directors to be
approximately $10.28 per share, and the aggregate exercise price
of the option.
Value of
Accelerated
Equity
Awards ($)
(1)
$
$
1,984
$
1,984
$
1,984
$
(1)
The aggregate dollar value realized in connection the
acceleration of the equity awards represents the difference
between the aggregate fair market value of our common stock
underlying the accelerated options as of June 30, 2009,
which was determined by our board of directors to be
approximately $9.01 per share, and the aggregate exercise price
of the accelerated options.
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arrange for the assumption, continuation, or substitution of a
stock award by a surviving or acquiring entity or parent company;
arrange for the assignment of any reacquisition right held by us
to the surviving or acquiring entity;
accelerate the vesting of a stock award and provide for its
termination prior to the effective time of the corporate
transaction;
arrange for the lapse of any reacquisition or repurchase rights
held by us;
cancel or arrange for the cancellation of the stock award in
exchange for such cash consideration, if any, as our board may
deem appropriate; or
provide for the surrender of a stock award in exchange for a
payment equal to the excess of (a) the value of the
property that the optionee would have received upon exercise of
the stock award over (b) the exercise price otherwise
payable in connection with the stock award.
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Initial Grant.
Any person who becomes a
non-employee director after the completion of this offering will
automatically receive an initial grant of an option to purchase
shares of our common stock upon his or her election or
appointment, subject to adjustment by our board of directors
from time to time. These options will vest in equal monthly
installments over three years. These initial grants may also be
issued in the form of restricted stock awards if so determined
by our board of directors.
Annual Grant.
In addition, any person who is a
non-employee director on the date of each annual meeting of our
stockholders automatically will be granted, on the annual
meeting date, beginning with our 2010 annual meeting, an option
to purchase shares of our common stock, or the annual grant,
subject to adjustment by our board of directors from time to
time. However, the size of an annual grant made to a
non-employee director who is elected after the completion of
this offering and who has served for less than 12 months at
the time of the annual meeting will be reduced pro rata for each
full month prior to the date of grant during which such person
did not serve as a non-employee director. These options will
vest in equal monthly installments over 12 months. These
annual grants may also be issued in the form of restricted stock
unit awards if so determined by our board of directors.
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any breach of the directors duty of loyalty to us or our
stockholders;
any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law;
unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware
General Corporation Law; or
any transaction from which the director derived an improper
personal benefit.
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Shares Repurchased
198,480
150,000
50,000
$
10.28
10/18/07
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each of our named executive officers;
each of our directors;
all of our current officers and directors as a group; and
each person, or group of affiliated persons, known by us to
beneficially own more than 5% of our common stock.
Number of
Shares
Percentage of Shares Beneficially Owned
Beneficially
Before the
After the
Owned
Offering
Offering
6,379,622
18.33
%
5,682,951
16.40
%
3,655,681
10.55
%
2,441,975
7.05
%
2,376,228
6.86
%
2,033,899
5.87
%
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Number of
Shares
Percentage of Shares Beneficially Owned
Beneficially
Before the
After the
Owned
Offering
Offering
1,913,620
5.52
%
6,379,622
18.33
%
942,878
2.65
%
353,645
1.01
%
545,936
1.55
%
602,602
1.71
%
179,000
*
191,000
*
3,754,990
10.84
%
5,682,951
16.41
%
2,441,975
7.05
%
203,900
*
21,958,680
57.30
%
*
Represents beneficial ownership of less than one percent (1%) of
the outstanding common stock.
(1)
Includes 3,985,738 shares held by the Valenti Living Trust
of which Mr. Valenti and his wife, Terri Valenti, are
co-trustees, 2,240,000 shares held by DJ & TL
Valenti Investments, LP, of which the Valenti Living Trust is
the general partner, and 6,905 shares held by
Mr. Valenti and his immediate family members. Each of Mr.
Valenti and Terri Valenti have voting and investment power with
respect to the shares held by the Valenti Living Trust and share
beneficial ownership in such shares. Each of Mr. Valenti and
Terri Valenti also have voting and investment power with respect
to the shares held by DJ and TL Valenti Investments, LP, through
their control as co-trustees of the general partner, the Valenti
Living Trust. Also includes stock options exercisable for
146,979 shares of our common stock within 60 days of
October 31, 2009.
(2)
Consists of 5,561,627 shares held by SPVC V, LLC and
121,324 shares held by SPVC Affiliates Fund I, LLC.
Split Rock Partners, LLC, together with Vestbridge Partners,
LLC, is the manager of SPVC V, LLC and SPVC Affiliates
Fund I, LLC, however, voting and investment power are
delegated solely to Split Rock Partners, LLC. Michael Gorman,
James Simons, David Stassen and Allan Will, as managing
directors of Split Rock Partners, LLC, share voting and
investment power with respect to the shares held by SPVC V,
LLC and SPVC Affiliates Fund I, LLC and disclaim beneficial
ownership of such shares except to the extent of any pecuniary
interest therein.
(3)
Consists of 3,509,543 shares held by Sutter Hill Ventures,
LP, 104,764 shares held by Sutter Hill Entrepreneurs Fund
(QP), LP and 41,374 shares held by Sutter Hill
Entrepreneurs Fund (AI), LP. Gregory Sands, David L. Anderson,
G. Leonard Baker, Jr., Jeffrey W. Bird, Tench Coxe,
James C. Gaither, Andrew T. Sheehan, Michael L. Speiser, David
E. Sweet, James N. White and William H. Younger, Jr. share
voting and investment power over these shares and disclaim
beneficial ownership of such shares except to the extent of any
pecuniary interest therein.
(4)
Consists of 1,367,105 shares held by Granite Global
Ventures III L.P., 1,020,188 shares held by Granite
Global Ventures II L.P., 33,330 shares held by
GGV III Entrepreneurs Fund L.P. and 21,352 shares held
by GGV II Entrepreneurs Fund L.P. Granite Global
Ventures III L.L.C. is the General Partner of Granite
Global Ventures III L.P. and GGV III Entrepreneurs
Fund L.P. Mr. Solomon, Mr. Ng, Mr. Nada,
Mr. Bonham, Mr. Foo, Ms. Lee, Mr. Zhan and
Ms. Jin share voting and investment authority over the
shares held by Granite Global Ventures III L.P. and GGV III
Entrepreneurs Fund L.P., and disclaim
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beneficial ownership of such shares except to the extent of any
pecuniary interest therein. Granite Global Ventures II
L.L.C. is the General Partner of Granite Global Ventures II
L.P. and GGV II Entrepreneurs Fund L.P. Mr. Solomon,
Mr. Ng, Mr. Nada, Mr. Bonham, Mr. Foo and
Ms. Lee share voting and investement power over the shares
held by Granite Global Ventures II L.P. and GGV
Entrepreneurs Fund L.P., and disclaim beneficial ownership
of such shares except to the extent of any pecuniary interest
therein.
(5)
The sole general partner of W Capital Partners II, L.P. is WCP
GP II, L.P. and the sole general partner of WCP GP II, L.P. is
WCP GP II, LLC. The managing members of WCP GP II, LLC exercise
voting and investment power over securities held by W Capital
Partners II, L.P. The managing members of WCP GP II, LLC are
Stephen Wertheimer, David Wachter and Robert Migliorino, each of
whom disclaims beneficial ownership of the securities held by W
Capital Partners II, L.P., except to the extent of any pecuniary
interest therein.
(6)
Consists of 904,937 shares held by Catterton Partners IV,
L.P., 762,885 shares held by Catterton Partners IV
Offshore, L.P., 317,263 shares held by Catterton Partners
IV-A, L.P., 26,695 shares held by Catterton
Partners IV Special Purpose, L.P. and 22,119 shares
held by Catterton Partners IV-B, L.P. Catterton Managing Partner
IV, L.L.C. is the general partner of Catterton Partners IV,
L.P., Catterton Partners IV-A, L.P. and Catterton Partners IV-B,
L.P. and the managing general partner of Catterton Partners IV
Special Purpose, L.P. and Catterton Partners IV Offshore, L.P.
CP4 Principals, L.L.C. is the Managing Member of Catterton
Managing Partner IV, L.L.C. CP4 Principals is managed by a
managing board. The members of the managing board are J. Michael
Chu and Scott A. Dahnke. These individuals disclaim beneficial
ownership of such shares except to the extent of any pecuniary
interest therein.
(7)
Consists of 642,226 shares held by Partech International
Growth II LLC, 513,783 shares held by Partech
International Growth III LLC, 385,866 shares held by
Partech U.S. Partners IV LLC, 128,446 shares held by
Partech International Growth I LLC, 205,513 shares
held by AXA Growth Capital II L.P., 25,689 shares held
by Double Black Diamond II LLC and 12,097 shares held
by PAR SF II LLC. Vincent Worms has sole voting and
investment authority over all such shares. Mr. Worms
disclaims beneficial ownership of all such shares except to the
extent of any pecuniary interest therein.
(8)
Includes 4,760 shares held in a trust for the benefit of
Ms. Syieks stepdaughter for which Ms. Syiek is
the custodian. Also includes stock options exercisable for
926,352 shares of our common stock within 60 days of
October 31, 2009.
(9)
Represents stock options exercisable for shares of our common
stock within 60 days of October 31, 2009.
(10)
Includes stock options exercisable for 534,507 shares of
our common stock within 60 days of October 31, 2009.
(11)
Includes stock options exercisable for 559,895 shares of
our common stock within 60 days of October 31, 2009.
(12)
Includes stock options exercisable for 175,000 shares of
our common stock within 60 days of October 31, 2009.
(13)
Includes 16,000 shares held in a family trust of which
Mr. McDonald is a trustee. Also, includes stock options
exercisable for 175,000 shares of our common stock within
60 days of October 31, 2009.
(14)
Includes 77,612 shares held in family trusts for which
Mr. Sands and his spouse are trustees, 6,785 shares
held in a charitable remainder unitrust for which Mr. Sands
is the trustee and 14,912 shares held in irrevocable trusts for
the benefit of Mr. Sands minor children. Also
includes 3,509,543 shares held by Sutter Hill Ventures, LP,
104,764 shares held by Sutter Hill Entrepreneurs Fund (QP),
LP and 41,374 shares held by Sutter Hill Entrepreneurs Fund
(AI), LP. Mr. Sands is a Managing Director of Sutter Hill
Ventures. Mr. Sands disclaims beneficial ownership of the
shares held by Sutter Hill Ventures except to the extent of his
proportionate pecuniary interest therein.
(15)
Includes 5,561,627 shares held by SPVC V, LLC and
121,324 shares held by SPVC Affiliates Fund I, LLC.
Mr. Simons is a Managing Director of Split Rock Partners
LLC, the manager of SPVC V, LLC and SPVC Affiliates
Fund I, LLC. Mr. Simons, together with
Mr. Gorman, Mr. Stassen and Mr. Will share
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voting and investment power with respect to the shares held by
SPVC V, LLC and SPVC Affiliates Fund I, LLC.
Mr. Simons disclaims beneficial ownership of these shares
except to the extent of his proportionate pecuniary interest
therein.
(16)
Includes 1,367,105 shares held by Granite Global
Ventures III L.P., 1,020,188 shares held by Granite
Global Ventures II L.P., 33,330 shares held by
GGV III Entrepreneurs Fund L.P. and 21,352 shares held
by GGV II Entrepreneurs Fund L.P. Mr. Solomon is a
Managing Director of Granite Global Ventures III L.L.C., the
General Partner of Granite Global Ventures III L.P. and GGV
III Entrepreneurs Fund L.P. He is also a Managing Director of
Granite Global Ventures II, L.L.C., the General Partner of
Granite Global Ventures II L.P. and GGV II Entrepreneurs Fund
L.P. Mr. Solomon, Mr. Ng, Mr. Nada,
Mr. Bonham, Mr. Foo, Ms. Lee, Mr. Zhuo and
Ms. Jin share voting and investment authority over the
shares held by Granite Global Ventures III L.P. and GGV III
Entrepreneurs Fund L.P. Mr. Solomon, Mr. Ng,
Mr. Nada, Mr. Bonham, Mr. Foo and Ms. Lee
share voting and investment authority over the shares held by
Granite Global Ventures II L.P. and GGV II Entrepreneurs Fund
L.P. Mr. Solomon disclaims beneficial ownership of these
shares except to the extent of his proportionate pecuniary
interest therein. Does not include a maximum of 34,257 shares
held by entities affiliated with Partech International.
Mr. Solomon was associated with Partech International prior
to joining GGV Capital. These shares represent Mr.
Solomons maximum pecuniary interest in the shares held by
entities affiliated with Partech International. Mr. Solomon
has no voting or investment authority over these shares.
(17)
Includes 3,900 shares held in a family trust for which
Mr. Stalder is the trustee. Also includes stock options
exercisable for 200,000 shares of our common stock within
60 days of October 31, 2009.
(18)
Includes stock options exercisable for an aggregate for shares
of our common stock within 60 days of October 31, 2009
that are held by our directors and officers as a group.
102
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34,631,876 shares of common stock held by approximately 304
stockholders of record; and
10,654,296 shares of common stock issuable upon the
exercise of outstanding stock options pursuant to our 2008
Equity Incentive Plan and having a weighted average exercise
price of $8.1717 per share.
103
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104
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before such date, the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder;
upon completion of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction began,
excluding for purposes of determining the voting stock
outstanding (but not the outstanding voting stock owned by the
interested stockholder) those shares owned (i) by persons
who are directors and also officers and (ii) employee stock
plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or
on or after such date, the business combination is approved by
the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the
affirmative vote of at least
66
2
/
3
%
of the outstanding voting stock that is not owned by the
interested stockholder.
any merger or consolidation involving the corporation and the
interested stockholder;
any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock or any class or
series of the corporation beneficially owned by the interested
stockholder; or
the receipt by the interested stockholder of the benefit of any
loss, advances, guarantees, pledges or other financial benefits
by or through the corporation.
105
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106
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no restricted shares will be eligible for immediate sale upon
the completion of this offering;
up
to
restricted shares will be eligible for sale under Rule 144
or Rule 701 upon expiration of
lock-up
agreements at least 180 days after the date of this
offering; and
the remainder of the restricted shares will be eligible for sale
from time to time thereafter upon expiration of their respective
one-year holding periods under Rule 144, but could be sold
earlier if the holders exercise any available registration
rights.
1% of the number of shares of our common stock then outstanding,
which will
equal approximately
shares immediately after this offering assuming no exercise of
the underwriters overallotment option, based on the number
of shares of common stock outstanding as of September 30,
2009; or
the average weekly trading volume of our common stock on The
NASDAQ Global Market during the four calendar weeks preceding
the filing of a notice on Form 144 with respect to the sale;
107
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108
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FOR
NON-U.S.
HOLDERS
an individual who is a citizen or resident of the U.S.;
a corporation or other entity taxable as a corporation created
or organized under the laws of the U.S. or any political
subdivision thereof;
an estate whose income is subject to U.S. federal income
tax regardless of its source; or
a trust (x) whose administration is subject to the primary
supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all
substantial decisions of the trust or (y) which has in
effect a valid election to be treated a U.S. person.
109
Table of Contents
the gain is effectively connected with a U.S. trade or
business of the
non-U.S. holder,
and, if an applicable tax treaty so requires, is attributable to
a U.S. permanent establishment maintained by such
non-U.S. holder;
the
non-U.S. holder
is an individual who is present in the U.S. for a period or
periods aggregating 183 days or more during the calendar
year in which the sale or disposition occurs and certain other
conditions are met; or
our common stock constitutes a U.S. real property interest
by reason of our status as a U.S. real property
holding corporation for U.S. federal income tax
purposes at any time within the shorter of the five-year period
preceding the disposition or the holders holding period
for our common stock. We believe that we are not currently, and
that we will not become, a U.S. real property holding
corporation for U.S. federal income tax purposes.
110
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111
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Number of Shares
Incorporated
Per Share(1)
Total(1)
Without
With
Without
With
Over-Allotment
Over-Allotment
Over-Allotment
Over-Allotment
$
$
$
$
$
$
$
$
(1)
Includes fees payable to Qatalyst Partners LP for services as
our financial advisor.
112
Table of Contents
the information presented in this prospectus and otherwise
available to the underwriters;
the history of and the prospects for the industry in which we
compete;
the ability of our management;
the prospects for our future earnings;
the present state of our development and our current financial
condition;
the recent market prices of, and the demand for, publicly-traded
common stock of generally comparable companies; and
the general condition of the securities markets at the time of
the offering.
Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
Over-allotment involves sales by the underwriters of shares in
excess of the number of shares the underwriters are obligated to
purchase, which creates a syndicate short position. The short
position may be either a covered short position or a naked short
position. In a covered short position, the number of shares
over-allotted by the underwriters is not greater than the number
of shares that they may purchase in the over-allotment option.
In a naked short position, the number of shares involved is
greater than the number of shares in the over-allotment option.
The underwriters may close out any covered short position by
either exercising their over-allotment option
and/or
purchasing shares in the open market.
Syndicate covering transactions involve purchases of the common
stock in the open market after the distribution has been
completed in order to cover syndicate short positions. In
determining the source of shares to close out the short
position, the underwriters will consider, among other things,
the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through
the over-allotment option. If the underwriters sell more shares
than could be covered by
113
Table of Contents
the over-allotment option, a naked short position, the position
can only be closed out by buying shares in the open market. A
naked short position is more likely to be created if the
underwriters are concerned that there could be downward pressure
on the price of the shares in the open market after pricing that
could adversely affect investors who purchase in the offering.
Penalty bids permit the representatives to reclaim a selling
concession from a syndicate member when the common stock
originally sold by the syndicate member is purchased in a
stabilizing or syndicate covering transaction to cover syndicate
short positions.
In passive market making, market makers in the common stock who
are underwriters or prospective underwriters may, subject to
limitations, make bids for or purchases of our common stock
until the time, if any, at which a stabilizing bid is made.
114
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115
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116
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to the financial statements,
as to which the date is
December 22, 2009
F-1
Table of Contents
Pro Forma
Shareholders
Equity at
June 30,
September 30,
September 30,
2008
2009
2009
2009
(Unaudited)
$
24,953
$
25,182
$
28,095
2,302
25,281
33,283
39,015
2,738
5,543
5,542
1,713
1,228
1,471
56,987
65,236
74,123
5,725
4,741
4,666
80,468
106,744
119,455
34,826
33,990
36,571
247
1,525
1,493
642
595
$
179,746
$
212,878
$
235,410
$
10,042
$
13,408
$
14,252
19,571
21,794
26,024
863
718
723
9,489
12,890
13,182
39,965
48,810
54,181
1,394
820
721
42,165
44,350
52,995
2,508
2,309
2,387
86,032
96,289
110,284
43,403
43,403
43,403
$
7,971
13,585
15,627
59,030
34
21
3
3
42,306
59,580
66,093
66,093
50,311
73,186
81,723
$
125,126
$
179,746
$
212,878
$
235,410
F-2
Table of Contents
F-3
Table of Contents
Accumulated
Convertible Preferred
Other
Total
Shares
Common Shares
Comprehensive
Retained
Shareholders
Comprehensive
Shares
Amount
Shares
Amount
Income
Earnings
Equity
Income
15,808,777
$
43,286
12,593,410
$
2,748
$
(49
)
$
15,651
$
18,350
381,030
714
714
125
125
2,071
2,071
415
415
117
(117
)
(117
)
15,610
15,610
15,610
1
1
1
143
143
143
$
15,754
15,808,777
$
43,403
12,974,440
$
6,073
$
95
$
31,144
$
37,312
893,197
2,575
2,575
3,222
3,222
1,707
1,707
(558,730
)
(5,606
)
(5,606
)
(1,705
)
(1,705
)
12,867
12,867
$
12,867
10
10
10
(71
)
(71
)
(71
)
$
12,806
15,808,777
$
43,403
13,308,907
$
7,971
$
34
$
42,306
$
50,311
169,716
304
304
6,173
6,173
474
474
(163,275
)
(1,337
)
(1,337
)
17,274
17,274
$
17,274
(10
)
(10
)
(10
)
(3
)
(3
)
(3
)
$
17,261
15,808,777
$
43,403
13,315,348
$
13,585
$
21
$
59,580
$
73,186
211,890
296
296
2,229
2,229
94
94
(71,895
)
(577
)
(577
)
6,513
6,513
$
6,513
(18
)
(18
)
(18
)
$
6,495
15,808,777
$
43,403
13,455,343
$
15,627
$
3
$
66,093
$
81,723
F-4
Table of Contents
Three Months Ended
Fiscal Years Ended June 30,
September 30,
2007
2008
2009
2008
2009
(Unaudited)
$
15,610
$
12,867
$
17,274
$
3,304
$
6,513
9,637
11,727
15,978
4,114
3,952
8
(35
)
(81
)
(5
)
426
106
10
22
(36
)
356
1,040
1,463
953
252
2,071
3,222
6,173
1,398
2,229
(415
)
(1,707
)
(474
)
(559
)
(94
)
421
404
563
154
107
(472
)
(921
)
(9,042
)
(8,577
)
(5,849
)
(656
)
(228
)
485
(925
)
(236
)
17
(555
)
(710
)
99
44
82
(3,772
)
(4,081
)
6
3,440
(4,977
)
3,359
1,905
843
(831
)
8,020
2,491
(1,864
)
4,229
(2,893
)
(954
)
(720
)
(135
)
(116
)
(1,497
)
(107
)
514
(199
)
(75
)
(25
)
25,197
24,751
32,570
(261
)
11,808
(33
)
(23
)
711
715
3
2
44
44
(2,030
)
(2,177
)
(1,347
)
(504
)
(443
)
(11,856
)
(63,244
)
(27,932
)
(12,430
)
(11,763
)
(1,493
)
(1,378
)
(1,060
)
(346
)
(316
)
(40,860
)
(11,642
)
29,905
29,172
2,302
1,383
(26,365
)
(49,248
)
(27,326
)
(11,182
)
(12,475
)
29,000
8,607
8,500
6,500
(3,500
)
(750
)
(3,932
)
(4,920
)
(9,560
)
(1,362
)
(1,963
)
415
1,707
474
559
94
(5,606
)
(1,337
)
(982
)
(577
)
714
2,575
304
173
296
(2,803
)
22,756
(5,012
)
6,888
3,600
143
(71
)
(3
)
1
(20
)
(3,828
)
(1,812
)
229
(4,554
)
2,913
30,593
26,765
24,953
24,953
25,182
$
26,765
$
24,953
$
25,182
$
20,399
$
28,095
348
1,193
2,269
282
770
10,376
8,473
20,354
2,873
814
117
125
4,047
16,910
8,151
4,705
6,347
F-5
Table of Contents
1.
The
Company
2.
Summary
of Significant Accounting Policies
F-6
Table of Contents
Three Months Ended
Fiscal Year Ended June 30,
September 30,
2007
2008
2009
2008
2009
(Unaudited)
22
%
23
%
19
%
20
%
13
%
15
%
12
%
6
%
8
%
6
%
13
%
11
%
8
%
9
%
6
%
F-7
Table of Contents
3 years
3 years
3 to 5 years
the shorter of the lease term or the estimated useful lives of
the improvements
F-8
Table of Contents
F-9
Table of Contents
F-10
Table of Contents
F-11
Table of Contents
F-12
Table of Contents
June 30,
September 30,
2008
2009
2009
(Unaudited)
$
177,854
$
211,337
$
233,902
1,224
927
806
668
614
702
$
179,746
$
212,878
$
235,410
$
5,451
$
4,485
$
4,412
22
35
252
221
254
$
5,725
$
4,741
$
4,666
Table of Contents
3.
Revision
of prior period financial statements
F-14
Table of Contents
Fiscal Year Ended June 30,
2007
2008
2009
As Reported
As Revised
As Reported
As Revised
As Reported
As Revised
$
117,905
$
108,945
$
130,610
$
130,869
$
181,370
$
181,593
49,465
58,425
61,420
61,161
79,157
78,934
24,537
24,404
21,822
21,330
35,259
34,721
15,733
15,610
13,228
12,867
17,914
17,274
$
0.37
$
0.36
$
0.29
$
0.28
$
0.42
$
0.41
$
0.34
$
0.34
$
0.27
$
0.26
$
0.40
$
0.39
$
31,267
$
31,144
$
44,495
$
42,306
$
62,409
$
59,580
$
25,197
$
25,197
$
28,599
$
24,751
$
32,570
$
32,570
(26,365
)
(26,365
)
(53,096
)
(49,248
)
(27,326
)
(27,326
)
(2,803
)
(2,803
)
22,756
22,756
(5,012
)
(5,012
)
4.
Net
income attributable to common shareholders and pro forma net
income per share
F-15
Table of Contents
Fiscal Year Ended June 30,
Three Months Ended September 30,
2007
2008
2009
2008
2009
(Unaudited)
$
15,610
$
12,867
$
17,274
$
3,304
$
6,513
(3,276
)
(3,276
)
(3,276
)
(819
)
(819
)
(7,690
)
(5,925
)
(8,599
)
(1,527
)
(3,487
)
$
4,644
$
3,666
$
5,399
$
958
$
2,207
$
4,644
$
3,666
$
5,399
$
958
$
2,207
522
360
399
77
188
$
5,166
$
4,026
$
5,798
$
1,035
$
2,395
12,789
13,104
13,294
13,279
13,405
12,789
13,104
13,294
13,279
13,405
2,474
2,221
1,677
1,852
1,976
15,263
15,325
14,971
15,131
15,381
$
0.36
$
0.28
$
0.41
$
0.07
$
0.16
$
0.34
$
0.26
$
0.39
$
0.07
$
0.16
13,294
13,405
21,177
21,177
34,471
34,582
14,971
15,381
21,177
21,177
36,148
36,558
$
0.50
$
0.19
$
0.48
$
0.18
F-16
Table of Contents
5.
Balance
Sheet Components
June 30, 2008
Gross
Gross
Amortized
Unrealized
Unrealized
Carrying
Cost
Gains
Losses
Value
$
2,296
$
6
$
$
2,302
$
2,296
$
6
$
$
2,302
Level 1
June 30,
September 30,
2008
2009
2009
(Unaudited)
$
27,443
$
36,792
$
42,736
(622
)
(506
)
(466
)
(1,540
)
(3,003
)
(3,255
)
$
25,281
$
33,283
$
39,015
F-17
Table of Contents
June 30,
September 30,
2008
2009
2009
(Unaudited)
$
9,670
$
10,295
$
10,414
4,512
4,955
5,015
1,802
1,992
1,865
579
694
700
12,396
13,456
13,773
28,959
31,392
31,767
(23,234
)
(26,651
)
(27,101
)
$
5,725
$
4,741
$
4,666
June 30, 2008
June 30, 2009
September 30, 2009
Gross
Net
Gross
Net
Gross
Net
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Amount
Amortization
Amount
Amount
Amortization
Amount
Amount
Amortization
Amount
(Unaudited)
$
18,789
$
(2,046
)
$
16,743
$
22,982
$
(6,299
)
$
16,683
$
24,311
$
(7,462
)
$
16,849
15,467
(6,530
)
8,937
18,145
(10,546
)
7,599
21,250
(11,648
)
9,602
6,216
(2,446
)
3,770
9,187
(2,988
)
6,199
10,407
(3,366
)
7,041
9,286
(3,910
)
5,376
10,034
(6,525
)
3,509
10,116
(7,037
)
3,079
$
49,758
$
(14,932
)
$
34,826
$
60,348
$
(26,358
)
$
33,990
$
66,084
$
(29,513
)
$
36,571
F-18
Table of Contents
$
12,137
9,402
6,553
4,057
921
920
$
33,990
DMS
DSS
Total
$
23,320
$
1,231
$
24,551
55,917
55,917
79,237
1,231
80,468
26,276
26,276
105,513
1,231
106,744
12,711
12,711
$
118,224
$
1,231
$
119,455
June 30,
September 30,
2008
2009
2009
(Unaudited)
$
7,943
$
12,920
$
15,545
5,286
6,457
3,431
3,090
430
4,708
3,252
1,987
2,340
$
19,571
$
21,794
$
26,024
F-19
Table of Contents
6.
Acquisitions
Amount
$
6,000
3,759
$
9,759
Estimated
Estimated
Fair Value
Useful Life
$
50
(1,684
)
1,200
3 years
800
6 years
1,300
6 years
8,093
Indefinite
$
9,759
F-20
Table of Contents
Amount
$
10,372
4,278
20
$
14,670
Estimated
Estimated
Fair Value
Useful Life
$
834
(206
)
2,325
7 years
776
5 years
124
3 years
140
2 years
10,677
Indefinite
$
14,670
Amount
$
26,519
1,841
212
$
28,572
F-21
Table of Contents
Estimated
Estimated
Fair Value
Useful Life
$
4,006
(2,998
)
7,692
3-5 years
2,482
3 years
391
2 years
199
5 years
176
3 years
16,624
Indefinite
$
28,572
Amount
$
17,500
6,723
54
$
24,277
F-22
Table of Contents
Estimated
Estimated
Fair Value
Useful Life
$
859
(987
)
(3,849
)
7,476
5 years
1,124
5 years
814
5 years
183
4 years
18,657
Indefinite
$
24,277
Amount
$
10,665
3,404
128
$
14,197
F-23
Table of Contents
Estimated
Estimated
Fair Value
Useful Life
$
413
(221
)
156
2 years
899
5 years
639
3 years
252
5 years
88
3 years
11,971
Indefinite
$
14,197
Amount
$
4,468
2,588
$
7,056
F-24
Table of Contents
Estimated
Estimated
Fair Value
Useful Life
$
1
1,059
1-6 years
129
1-7 years
420
5 years
83
2-3 years
746
3 years
4,618
Indefinite
$
7,056
Amount
$
14,606
3,873
134
$
18,613
F-25
Table of Contents
Estimated
Estimated
Fair Value
Useful Life
$
(22
)
2,538
1-6 years
1,952
1-7 years
2,418
5 years
236
5 years
392
3 years
11,099
Indefinite
$
18,613
Amount
$
9,471
4,942
84
$
14,497
Estimated
Estimated
Fair Value
Useful Life
$
3,281
2-5 years
918
2-5 years
1,364
5 years
269
2-3.5 years
8,665
Indefinite
$
14,497
F-26
Table of Contents
Three Months Ended
Fiscal Year Ended June 30,
September 30,
2008
2009
2008
2009
(Unaudited)
$
198,478
$
263,397
$
63,877
$
78,718
10,232
15,111
2,919
6,220
$
0.20
$
0.34
$
0.06
$
0.16
$
0.19
$
0.33
$
0.06
$
0.15
7.
Debt
F-27
Table of Contents
Term Loan and
Revolving
Notes
Credit
Year Ending June 30,
Payable
Facility
$
10,214
$
3,000
8,215
4,500
3,790
6,750
1,330
9,000
1,520
11,507
25,069
34,757
(1,850
)
(736
)
(10,085
)
(2,805
)
$
13,134
$
31,216
F-28
Table of Contents
8.
Convertible
Preferred Shares
Proceeds
Shares
Liquidation
Net of
Authorized
Outstanding
Amount
Issuance Costs
5,500,000
5,367,756
$
16,577
$
9,047
10,200,000
9,941,021
51,256
28,563
500,000
500,000
2,500
570
13,800,000
30,000,000
15,808,777
$
70,333
$
38,180
For Series A and B convertible preferred shares, an amount
equal to the sum of (i) the original issue price of the
respective preferred shares plus (ii) an amount equal to 8%
per annum of the original issue price of the respective
preferred shares less (iii) any such dividends, if declared
and paid, to and through the date of full payment.
For Series C convertible preferred shares, an amount equal
to the sum of (i) the original issue price of the preferred
shares plus (ii) any declared and unpaid dividends.
F-29
Table of Contents
For Series B convertible preferred shares, an amount equal
to 1.75 times the original issue price of the preferred shares,
or $5.16 per share, plus any declared and unpaid dividends.
For Series C convertible preferred shares, an amount equal
to the original issue price of $5.00 per share plus any declared
and unpaid dividends.
F-30
Table of Contents
9.
Common
Shares
Shares
10,891,100
10,735,512
9,941,021
500,000
32,067,633
10.
Equity
Benefit Plans
F-31
Table of Contents
F-32
Table of Contents
Three Months Ended
Year Ended June 30,
September 30,
2007
2008
2009
2008
2009
(Unaudited)
4.6 - 6.1
4.6
4.6
4.6
4.6
48%
52%
62%
61%
73%
4.6% - 4.9%
2.8% - 4.5%
1.8% - 3.1%
3.1%
2.5%
F-33
Table of Contents
Weighted
Weighted
Average
Average
Remaining
Exercise
Contractual
Shares
Price
Life (in Years)
8,279,468
$
6.48
1,315,400
10.28
(893,197
)
2.88
(784,959
)
9.16
(122,301
)
7.93
7,794,411
$
7.24
6.25
2,575,100
10.03
(169,716
)
1.79
(656,610
)
9.98
(391,762
)
8.50
9,151,423
$
7.87
5.43
8,282,043
$
7.65
5.38
5,428,414
$
6.41
5.12
9,151,423
$
7.87
1,962,755
9.05
(211,890
)
1.46
(193,409
)
10.05
(54,583
)
8.93
10,654,296
$
8.17
5.62
(1)
The
expected-to-vest
options are the result of applying the pre-vesting forfeiture
assumption to total outstanding options.
F-34
Table of Contents
11.
Income
Taxes
Fiscal Year Ended June 30,
2007
2008
2009
$
23,914
$
20,299
$
30,806
1,524
1,444
377
$
25,438
$
21,743
$
31,183
Fiscal Year Ended June 30,
2007
2008
2009
$
9,043
$
9,856
$
14,018
1,914
2,437
3,808
475
355
164
$
11,432
$
12,648
$
17,990
$
(1,484
)
$
(3,074
)
$
(4,109
)
(120
)
(698
)
94
(66
)
(1,604
)
(3,772
)
(4,081
)
$
9,828
$
8,876
$
13,909
F-35
Table of Contents
Fiscal Year Ended June 30,
2007
2008
2009
35.0
%
35.0
%
35.0
%
4.6
%
5.1
%
8.2
%
(1.0
)%
0.7
%
1.4
%
38.6
%
40.8
%
44.6
%
Fiscal Year Ended June 30,
2008
2009
$
163
$
143
550
178
1,362
3,155
685
663
1,382
$
2,738
$
5,543
$
(1,433
)
$
(460
)
143
156
229
(74
)
1,436
2,055
15
4
390
1,681
(143
)
(156
)
$
247
$
1,525
$
2,985
$
7,068
F-36
Table of Contents
Fiscal Year Ended
June 30,
2008
2009
$
2,383
$
2,248
193
868
(328
)
(293
)
(206
)
$
2,248
$
2,617
12.
Commitments
and Contingencies
F-37
Table of Contents
Operating
Leases
$
1,104
242
22
$
1,368
F-38
Table of Contents
13.
Related
Party Transactions
14.
Subsequent
Events
F-39
Table of Contents
F-40
Table of Contents
Credit
Suisse
BofA Merrill Lynch
J.P. Morgan
Table of Contents
ITEM 13.
Other
Expenses of Issuance and Distribution
Amount
$
13,950
25,500
125,000
*
*
*
*
*
*
$
*
*
To be filed by amendment.
ITEM 14.
Indemnification
of Directors and Officers.
II-1
Table of Contents
ITEM 15.
Recent
Sales of Unregistered Securities.
ITEM 16.
Exhibits
and Financial Statement Schedules.
1
.1*
Form of Underwriting Agreement.
3
.1*
Amended and Restated Certificate of Incorporation of QuinStreet,
Inc., as currently in effect.
3
.2
Form of Amended and Restated Certificate of Incorporation of
QuinStreet, Inc., to be in effect upon completion of the
offering.
3
.3*
Amended and Restated Bylaws of QuinStreet, Inc., as currently in
effect.
3
.4
Form of Amended and Restated Bylaws of QuinStreet, Inc., to be
in effect upon completion of the offering.
4
.1*
Form of QuinStreet, Inc.s Common Stock Certificate.
4
.2
Second Amended and Restated Investor Rights Agreement, by and
between QuinStreet, Inc., Douglas Valenti and the investors
listed on Schedule 1 thereto, dated May 28, 2003.
5
.1*
Form of Opinion of Cooley Godward Kronish LLP.
10
.1+
QuinStreet, Inc. 2008 Equity Incentive Plan.
10
.2+
Forms of Option Agreement and Option Grant Notice under 2008
Equity Incentive Plan (for non-executive officer employees).
10
.3+
Forms of Option Agreement and Option Grant Notice under 2008
Equity Incentive Plan (for executive officers).
10
.4+
Forms of Option Agreement and Option Grant Notice under 2008
Equity Incentive Plan (for non-employee directors).
10
.5+
QuinStreet, Inc. 2010 Equity Incentive Plan.
10
.6+
Forms of Option Agreement and Option Grant Notice under 2010
Equity Incentive Plan (for non-executive officer employees).
10
.7+
Forms of Option Agreement and Option Grant Notice under 2010
Equity Incentive Plan (for executive officers).
10
.8+
QuinStreet, Inc. 2010 Non-Employee Directors Stock Award
Plan.
10
.9+
Form of Option Agreement and Option Grant Notice for Initial
Grants under the 2010 Non-Employee Directors Stock Award
Plan.
II-2
Table of Contents
10
.10+
Form of Option Agreement and Option Grant Notice for Annual
Grants under the 2010 Non-Employee Directors Stock Award
Plan.
10
.11+
Form of Indemnification Agreement made by and between
QuinStreet, Inc. and each of its directors and executive
officers.
10
.12*+
2010 Management Bonus Incentive Plan.
10
.13
Revolving Credit and Term Loan Agreement, by and between
QuinStreet, Inc., lenders thereto and Comerica Bank as
Administrative Agent and Lead Arranger, dated as of
September 29, 2008.
10
.14
Acknowledgment and Agreement of Revolving Credit Commitment
Increase, dated as of November 18, 2009, from Comerica
Bank, Bank of America, N.A. and Union Bank N.A to QuinStreet,
Inc.
10
.15*
QuinStreet Merchant Agreement, dated as of July 3, 2001, as
amended, by and between QuinStreet, Inc. and DeVry, Inc.
10
.16*
Letter Agreement, dated as of December 2, 2003, by and
between QuinStreet, Inc. and DeVry, Inc.
10
.17*
Letter Agreement by and between QuinStreet, Inc. and DeVry, Inc.
10
.18*
Letter Agreement, dated as of October 5, 2007, by and
between QuinStreet, Inc. and DeVry, Inc.
10
.19
Office Lease Agreement, dated as of June 2, 2003, by and
between QuinStreet, Inc. and CA-Parkside Towers Limited
Partnership, as amended.
21
.1
List of subsidiaries.
23
.1*
Consent of Cooley Godward Kronish LLP (included in
Exhibit 5.1).
23
.2
Consent of PricewaterhouseCoopers LLP, independent registered
public accounting firm.
24
.1
Power of Attorney (see page II-5).
Previously filed
*
To be filed by amendment.
+
Indicates management contract or compensatory plan.
Schedule II:
Valuation and
Qualifying Accounts
Charged to
Balance at the
Expenses/
Write-offs
Balance at
Beginning
Against the
Net of
the End of
of the Year
Revenue
Receivables
the Year
$
474
$
781
$
(161
)
$
1,094
$
1,094
$
1,217
$
(150
)
$
2,161
$
2,161
$
1,463
$
(115
)
$
3,509
ITEM 17.
Undertakings
Table of Contents
II-4
Table of Contents
By:
Chief Executive Officer and Chairman (
Principal Executive
Officer
)
December 21, 2009
Chief Financial Officer
(
Principal Financial and Accounting Officer
)
December 21, 2009
Director
December 21, 2009
Director
December 21, 2009
Director
December 21, 2009
Director
December 21, 2009
Director
December 21, 2009
Director
December 21, 2009
*By:
Attorney-in-fact
II-5
Table of Contents
1
.1*
Form of Underwriting Agreement.
3
.1*
Amended and Restated Certificate of Incorporation of QuinStreet,
Inc., as currently in effect.
3
.2
Form of Amended and Restated Certificate of Incorporation of
QuinStreet, Inc., to be in effect upon completion of the
offering.
3
.3*
Amended and Restated Bylaws of QuinStreet, Inc., as currently in
effect.
3
.4
Form of Amended and Restated Bylaws of QuinStreet, Inc., to be
in effect upon completion of the offering.
4
.1*
Form of QuinStreet, Inc.s Common Stock Certificate.
4
.2
Second Amended and Restated Investor Rights Agreement, by and
between QuinStreet, Inc., Douglas Valenti and the investors
listed on Schedule 1 thereto, dated May 28, 2003.
5
.1*
Form of Opinion of Cooley Godward Kronish LLP.
10
.1+
QuinStreet, Inc. 2008 Equity Incentive Plan.
10
.2+
Forms of Option Agreement and Option Grant Notice under 2008
Equity Incentive Plan (for non-executive officer employees).
10
.3+
Forms of Option Agreement and Option Grant Notice under 2008
Equity Incentive Plan (for executive officers).
10
.4+
Forms of Option Agreement and Option Grant Notice under 2008
Equity Incentive Plan (for non-employee directors).
10
.5+
QuinStreet, Inc. 2010 Equity Incentive Plan.
10
.6+
Forms of Option Agreement and Option Grant Notice under 2010
Equity Incentive Plan (for non-executive officer employees).
10
.7+
Forms of Option Agreement and Option Grant Notice under 2010
Equity Incentive Plan (for executive officers).
10
.8+
QuinStreet, Inc. 2010 Non-Employee Directors Stock Award
Plan.
10
.9+
Form of Option Agreement and Option Grant Notice for Initial
Grants under the 2010 Non-Employee Directors Stock Award
Plan.
10
.10+
Form of Option Agreement and Option Grant Notice for Annual
Grants under the 2010 Non-Employee Directors Stock Award
Plan.
10
.11+
Form of Indemnification Agreement made by and between
QuinStreet, Inc. and each of its directors and executive
officers.
10
.12*+
2010 Management Bonus Incentive Plan.
10
.13
Revolving Credit and Term Loan Agreement, by and between
QuinStreet, Inc., the lenders thereto and Comerica Bank as
Administrative Agent and Lead Arranger, dated as of
September 29, 2008.
10
.14
Acknowledgment and Agreement of Revolving Credit Commitment
Increase, dated as of November 18, 2009, from Comerica
Bank, Bank of America, N.A. and Union Bank N.A to QuinStreet,
Inc.
10
.15*
QuinStreet Merchant Agreement, dated as of July 3, 2001, by
and between QuinStreet, Inc. and DeVry, Inc., as amended.
10
.16*
Letter Agreement, dated as of December 2, 2003, by and
between QuinStreet, Inc. and DeVry, Inc.
10
.17*
Letter Agreement by and between QuinStreet, Inc. and DeVry, Inc.
10
.18*
Letter Agreement, dated as of October 5, 2007, by and
between QuinStreet, Inc. and DeVry, Inc.
10
.19
Office Lease Agreement, dated as of June 2, 2003, by and
between QuinStreet, Inc. and CA-Parkside Towers Limited
Partnership, as amended.
21
.1
List of subsidiaries.
23
.1*
Consent of Cooley Godward Kronish LLP (included in
Exhibit 5.1).
23
.2
Consent of PricewaterhouseCoopers LLP, independent registered
public accounting firm.
24
.1
Power of Attorney (see page II-5).
Previously filed.
*
To be filed by amendment.
+
Indicates management contract or compensatory plan.
1.
2.
3.
4.
QuinStreet, Inc.
|
||||
By: | ||||
Douglas Valenti | ||||
Chairman and Chief Executive Officer | ||||
1.
Page | ||||
ARTICLE I OFFICES
|
1 | |||
Section 1. Registered Office
|
1 | |||
Section 2. Other Offices
|
1 | |||
ARTICLE II CORPORATE SEAL
|
1 | |||
Section 3. Corporate Seal
|
1 | |||
ARTICLE III STOCKHOLDERS MEETINGS
|
1 | |||
Section 4. Place Of Meetings
|
1 | |||
Section 5. Annual Meetings
|
1 | |||
Section 6. Special Meetings
|
6 | |||
Section 7. Notice Of Meetings
|
7 | |||
Section 8. Quorum
|
7 | |||
Section 9. Adjournment And Notice Of Adjourned Meetings
|
8 | |||
Section 10. Voting Rights
|
8 | |||
Section 11. Joint Owners Of Stock
|
8 | |||
Section 12. List Of Stockholders
|
8 | |||
Section 13. Action Without Meeting
|
9 | |||
Section 14. Organization
|
9 | |||
ARTICLE IV DIRECTORS
|
9 | |||
Section 15. Number And Term Of Office
|
9 | |||
Section 16. Powers
|
10 | |||
Section 17. Classes of Directors
|
10 | |||
Section 18. Vacancies
|
10 | |||
Section 19. Resignation
|
11 | |||
Section 20. Removal
|
11 | |||
Section 21. Meetings
|
11 | |||
Section 22. Quorum And Voting
|
12 | |||
Section 23. Action Without Meeting
|
12 | |||
Section 24. Fees And Compensation
|
12 | |||
Section 25. Committees
|
13 | |||
Section 26. Chairman of the Board of Directors
|
14 |
i.
Page | ||||
Section 27. Lead Independent Director
|
14 | |||
Section 28. Organization
|
14 | |||
ARTICLE V OFFICERS
|
14 | |||
Section 29. Officers Designated
|
14 | |||
Section 30. Tenure And Duties Of Officers
|
15 | |||
Section 31. Delegation Of Authority
|
16 | |||
Section 32. Resignations
|
16 | |||
Section 33. Removal
|
17 | |||
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE
CORPORATION
|
17 | |||
Section 34. Execution Of Corporate Instruments
|
17 | |||
Section 35. Voting Of Securities Owned By The Corporation
|
17 | |||
ARTICLE VII SHARES OF STOCK
|
17 | |||
Section 36. Form And Execution Of Certificates
|
17 | |||
Section 37. Lost Certificates
|
18 | |||
Section 38. Transfers
|
18 | |||
Section 39. Fixing Record Dates
|
18 | |||
Section 40. Registered Stockholders
|
19 | |||
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION
|
19 | |||
Section 41. Execution Of Other Securities
|
19 | |||
ARTICLE IX DIVIDENDS
|
19 | |||
Section 42. Declaration Of Dividends
|
19 | |||
Section 43. Dividend Reserve
|
20 | |||
ARTICLE X FISCAL YEAR
|
20 | |||
Section 44. Fiscal Year
|
20 | |||
ARTICLE XI INDEMNIFICATION
|
20 | |||
Section 45. Indemnification of Directors, Executive Officers, Other Officers,
Employees and Other Agents
|
20 | |||
ARTICLE XII NOTICES
|
23 | |||
Section 46. Notices
|
23 | |||
ARTICLE XIII AMENDMENTS
|
24 |
ii.
Page | ||||
Section 47. Amendments
|
24 | |||
ARTICLE XIV LOANS TO OFFICERS
|
25 | |||
Section 48. Loans To Officers
|
25 |
iii.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Optionholder:
|
|
|||
Date of Grant:
|
|
|||
Vesting Commencement Date:
|
|
|||
Number of Shares Subject to Option:
|
|
|||
Exercise Price (Per Share):
|
|
|||
Total Exercise Price:
|
|
|||
Expiration Date:
|
|
Type of Grant:
|
o Incentive Stock Option 1 | o Nonstatutory Stock Option | ||
|
||||
Exercise Schedule
:
|
Same as Vesting Schedule | |||
|
||||
Vesting Schedule : | [ 1/4 th of the shares vest one year after the Vesting Commencement Date; the balance of the shares vest in a series of thirty-six (36) successive equal monthly installments measured from the first anniversary of the Vesting Commencement Date.] | |||
|
||||
Payment: | By one or a combination of the following items (described in the Option Agreement): | |||
|
||||
þ By cash or check | ||||
þ By bank draft or money order payable to the Company | ||||
þ Pursuant to a Regulation T Program if the Shares are publicly traded | ||||
þ By delivery of already-owned shares if the Shares are publicly traded | ||||
þ If and only to the extent this option is a Nonstatutory Stock Option, and subject to the Companys consent at the time of exercise, by a net exercise arrangement 2 |
Other Agreements:
|
||
|
||
|
||
|
1 | If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option. | |
2 | Any portion of this option intended to qualify as an Incentive Stock Option may not be exercised by net exercise. |
QuinStreet, Inc. | ||
[ ] | ||
[ ] | Date of Exercise: |
Type of option (check one):
|
Incentive o | Nonstatutory o | ||||||
|
||||||||
Stock option dated:
|
||||||||
|
||||||||
|
||||||||
Number of shares as
to which option is
exercised:
|
||||||||
|
||||||||
|
||||||||
Shares to be
issued in name of:
|
||||||||
|
||||||||
|
||||||||
Total exercise price:
|
$ | |||||||
|
||||||||
|
||||||||
Cash payment delivered
herewith:
|
$ | |||||||
|
||||||||
|
||||||||
Regulation T Program (cashless exercise)
|
$ | |||||||
|
||||||||
|
||||||||
Value of ________ already-owned shares of
QuinStreet, Inc. common
stock delivered herewith
3
:
|
$ | |||||||
|
3 | Shares must meet the public trading requirements set forth in the option. Shares must be valued on the date of exercise in accordance with the terms of the 2010 Equity Incentive Plan and the option being exercised and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate. |
Value of
shares of
QuinStreet, Inc. common
stock pursuant to net exercise
4
:
|
$ | |||||||
|
|
Very truly yours, | |
|
||
|
4 | QuinStreet, Inc. must have established net exercise procedures at the time of exercise in order to utilize this payment method and must expressly consent to your use of net exercise at the time of exercise. An Incentive Stock Option may not be exercised by a net exercise arrangement. |
|
Optionholder: | |||||
|
Date of Grant: |
|
||||
|
||||||
|
Vesting Commencement Date: | |||||
|
||||||
|
Number of Shares Subject to Option: | |||||
|
||||||
|
Exercise Price (Per Share): | |||||
|
||||||
|
Total Exercise Price: | |||||
|
||||||
|
Expiration Date: | |||||
|
Type of Grant:
|
o | Incentive Stock Option 1 | o Nonstatutory Stock Option | |||
|
||||||
Exercise Schedule : | Same as Vesting Schedule | |||||
|
||||||
Vesting Schedule : | [ 1/4 th of the shares vest one year after the Vesting Commencement Date; the balance of the shares vest in a series of thirty-six (36) successive equal monthly installments measured from the first anniversary of the Vesting Commencement Date, subject to accelerated vesting under specified circumstances as provided in the Option Agreement and Plan.] | |||||
|
||||||
Payment: | By one or a combination of the following items (described in the Option Agreement): | |||||
|
||||||
þ | By cash or check | |||||
þ | By bank draft or money order payable to the Company | |||||
þ | Pursuant to a Regulation T Program if the Shares are publicly traded | |||||
þ | By delivery of already-owned shares if the Shares are publicly traded | |||||
þ | If and only to the extent this option is a Nonstatutory Stock Option, and subject to the Companys consent at the time of exercise, by a net exercise arrangement 2 |
|
Other Agreements: | |||||
|
|
|||||
|
||||||
|
1 | If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option. | |
2 | Any portion of this option intended to qualify as an Incentive Stock Option may not be exercised by net exercise. |
QuinStreet, Inc. | ||
[ ] | ||
[ ] | Date of Exercise: |
Type of option (check one):
|
Incentive
o
|
Nonstatutory
o
|
||||||
|
||||||||
Stock option dated:
|
||||||||
|
||||||||
|
||||||||
Number of shares as
to which option is
exercised:
|
||||||||
|
||||||||
|
||||||||
Shares to be
issued in name of:
|
||||||||
|
||||||||
|
||||||||
Total exercise price:
|
$ | |||||||
|
||||||||
|
||||||||
Cash payment delivered
herewith:
|
$ | |||||||
|
||||||||
|
||||||||
Regulation T Program (cashless exercise)
|
$ | |||||||
|
||||||||
|
||||||||
Value of
already-owned shares of
QuinStreet, Inc. common
stock delivered herewith
3
:
|
$ | |||||||
|
3 | Shares must meet the public trading requirements set forth in the option. Shares must be valued on the date of exercise in accordance with the terms of the 2010 Equity Incentive Plan and the option being exercised and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate. |
Value of
shares of
QuinStreet, Inc. common
stock pursuant to net exercise
4
:
|
$ | |||||||
|
|
Very truly yours, | |
|
||
|
4 | QuinStreet, Inc. must have established net exercise procedures at the time of exercise in order to utilize this payment method and must expressly consent to your use of net exercise at the time of exercise. An Incentive Stock Option may not be exercised by a net exercise arrangement. |
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2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Optionholder:
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Date of Grant:
|
||
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Vesting Commencement Date:
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|
||
Number of Shares Subject to Option:
|
||
|
||
Exercise Price (Per Share):
|
||
|
||
Total Exercise Price:
|
||
|
||
Expiration Date:
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||
|
Type of Grant: | Nonstatutory Stock Option | |||
|
||||
Exercise Schedule : | Same as Vesting Schedule | |||
|
||||
Vesting Schedule : | 1/36 th of the shares vest each month following the Date of Grant, subject to accelerated vesting under specified circumstances as provided in the Option Agreement and Plan. | |||
|
||||
Payment: | By one or a combination of the following items (described in the Option Agreement): | |||
|
||||
|
þ | By cash or check | ||
|
þ | By bank draft or money order payable to the Company | ||
|
þ | Pursuant to a Regulation T Program if the Shares are publicly traded | ||
|
þ | By delivery of already-owned shares if the Shares are publicly traded | ||
|
þ | Subject to the Companys consent at the time of exercise, by a net exercise arrangement |
Other
Agreements:
|
||
|
||
|
||
|
QuinStreet, Inc. | Optionholder: | |||||||
|
||||||||
By:
|
||||||||
Signature |
Signature
|
|||||||
|
||||||||
Title:
|
Date: | |||||||
|
||||||||
Date:
|
||||||||
|
QuinStreet, Inc. | ||
[ ] | ||
[ ] | Date of Exercise: |
Stock option dated:
|
||||
|
||||
Number of shares as
to which option is
exercised:
|
||||
|
||||
Shares to be
issued in name of:
|
||||
|
||||
Total exercise price:
|
$ | |||
|
||||
Cash payment delivered
herewith:
|
$ | |||
|
||||
Regulation T Program (cashless exercise)
|
$ | |||
|
||||
Value of shares of
QuinStreet, Inc. common
stock delivered herewith
1
:
|
$ | |||
|
||||
Value of shares of
QuinStreet, Inc. common
stock pursuant to net exercise
2
:
|
$ | |||
|
1 | Shares must meet the public trading requirements set forth in the option. Shares must be valued on the date of exercise in accordance with the terms of the 2010 Non-Employee Directors Stock Award Plan and the option being exercised, must have been owned for the minimum period required in the option agreement, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate. | |
2 | QuinStreet, Inc. must have established net exercise procedures at the time of exercise in order to utilize this payment method and must expressly consent to your use of net exercise at the time of exercise. |
|
Very truly yours, | |
|
||
|
|
Optionholder: | |||||
|
|
|||||
|
Date of Grant: | |||||
|
|
|||||
|
Vesting Commencement Date: | |||||
|
|
|||||
|
Number of Shares Subject to Option: | |||||
|
|
|||||
|
Exercise Price (Per Share): | |||||
|
|
|||||
|
Total Exercise Price: | |||||
|
|
|||||
|
Expiration Date: | |||||
|
|
Type of Grant:
|
Nonstatutory Stock Option | |
|
||
Exercise Schedule
:
|
Same as Vesting Schedule | |
|
||
Vesting Schedule
:
|
1/12 th of the shares vest at the end of each month following the Date of Grant, subject to accelerated vesting under specified circumstances as provided in the Option Agreement and Plan. | |
|
||
Payment:
|
By one or a combination of the following items (described in the Option Agreement): |
þ | By cash or check | ||
þ | By bank draft or money order payable to the Company | ||
þ | Pursuant to a Regulation T Program if the Shares are publicly traded | ||
þ | By delivery of already-owned shares if the Shares are publicly traded | ||
þ | Subject to the Companys consent at the time of exercise, by a net exercise arrangement |
Other Agreements:
|
||
|
||
|
||
|
QuinStreet, Inc. | Optionholder: | |||||||||
|
||||||||||
By:
|
||||||||||
|
Signature | Signature | ||||||||
|
||||||||||
Title:
|
Date: | |||||||||
|
|
|
||||||||
|
||||||||||
Date:
|
||||||||||
|
QuinStreet, Inc.
|
||
[
]
|
||
[
]
|
Date of Exercise: |
Stock option dated:
|
||||
|
||||
|
||||
Number of shares as
to which option is
exercised:
|
||||
|
||||
|
||||
Shares to be
issued in name of:
|
||||
|
||||
|
||||
Total exercise price:
|
$ | |||
|
||||
|
||||
Cash payment delivered
herewith:
|
$ | |||
|
||||
|
||||
Regulation T Program (cashless exercise)
|
$ | |||
|
||||
|
||||
Value of
shares of
QuinStreet, Inc. common
stock delivered herewith
1
:
|
$ | |||
|
||||
|
||||
Value of
shares of
QuinStreet, Inc. common
stock pursuant to net exercise
2
:
|
$ | |||
|
1 | Shares must meet the public trading requirements set forth in the option. Shares must be valued on the date of exercise in accordance with the terms of the 2010 Non-Employee Directors Stock Award Plan and the option being exercised, must have been owned for the minimum period required in the option agreement, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate. | |
2 | QuinStreet, Inc. must have established net exercise procedures at the time of exercise in order to utilize this payment method and must expressly consent to your use of net exercise at the time of exercise. |
|
Very truly yours, | |||
|
||||
|
|