CoStar
Group, Inc.
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
52-2091509 | |
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
2
Bethesda Metro Center, 10th Floor
|
Bethesda,
Maryland 20814
|
(Address
of principal executive offices) (zip code)
|
|
(301)
215-8300
|
Registrant’s
telephone number, including area
code
|
Title of Each
Class
|
Name of Each Exchange
on Which Registered
|
|
Common
Stock, $.01 par value
|
NASDAQ
Global Select Market
|
Large
accelerated filer
o
|
Accelerated
filer
x
|
|
Non-accelerated
filer
o
|
Smaller
reporting company
o
|
PART
I
|
||
Item
1.
|
3
|
|
Item
1A.
|
13
|
|
Item
1B.
|
20
|
|
Item
2.
|
20
|
|
Item
3.
|
20
|
|
Item
4.
|
20
|
|
PART
II
|
||
Item
5.
|
21
|
|
Item
6.
|
23
|
|
Item
7.
|
24
|
|
Item
7A.
|
36
|
|
Item
8.
|
37
|
|
Item
9.
|
37
|
|
Item
9A.
|
37
|
|
Item
9B.
|
38
|
|
PART
III
|
||
Item
10.
|
39
|
|
Item
11.
|
39
|
|
Item
12.
|
39
|
|
Item
13.
|
39
|
|
Item
14.
|
39
|
|
PART
IV
|
||
Item
15.
|
39
|
|
40
|
||
41
|
||
F-1
|
Item
1.
|
|
•
|
Sales
and leasing brokers
|
•
|
Government
agencies
|
|
•
|
Property
owners
|
•
|
Mortgage-backed
security issuers
|
|
•
|
Property
managers
|
•
|
Appraisers
|
|
•
|
Design
and construction professionals
|
•
|
Pension
fund managers
|
|
•
|
Real
estate developers
|
•
|
Reporters
|
|
•
|
Real
estate investment trust managers
|
•
|
Tenant
vendors
|
|
•
|
Investment
bankers
|
•
|
Building
services vendors
|
|
•
|
Commercial
bankers
|
•
|
Communications
providers
|
|
•
|
Mortgage
bankers
|
•
|
Insurance
companies’ managers
|
|
•
|
Mortgage
brokers
|
•
|
Institutional
advisors
|
|
•
|
Retailers
|
•
|
Investors
and asset managers
|
|
•
|
More
than 1.1 million sale and lease
listings;
|
|
•
|
Over
3.2 million total properties;
|
|
•
|
Over
8.9 billion square feet of sale and lease
listings;
|
|
•
|
Over
5.7 million tenants;
|
|
•
|
More
than 1.3 million sales transactions valued in the aggregate at over $3.1
trillion; and
|
|
•
|
Approximately
7.6 million digital attachments, including building photographs, aerial
photographs, plat maps and floor
plans.
|
|
•
|
Location
|
•
|
Mortgage
and deed information
|
|
•
|
Site
and zoning information
|
•
|
For-sale
information
|
|
•
|
Building
characteristics
|
•
|
Income
and expense histories
|
|
•
|
Space
availability
|
•
|
Tenant
names
|
|
•
|
Tax
assessments
|
•
|
Lease
expirations
|
|
•
|
Ownership
|
•
|
Contact
information
|
|
•
|
Sales
and lease comparables
|
•
|
Historical
trends
|
|
•
|
Space
requirements
|
•
|
Demographic
information
|
|
•
|
Number
of retail stores
|
•
|
Retail
sales per square foot
|
·
|
calling
our information sources on recently updated properties to re-verify
information;
|
·
|
reviewing
calls our researchers made to their industry contacts to ensure data
reported to the researcher is entered correctly into the
database;
|
·
|
performing
periodic research audits and field checks to determine if we correctly
canvassed buildings;
|
·
|
providing
training and retraining to our research professionals to ensure accurate
data compilation; and
|
·
|
compiling
measurable performance metrics for research teams and managers for
feedback on data quality.
|
Brokers
|
Lenders,
Investment Bankers
|
Institutional
Advisors, Asset Managers
|
||
CB
Richard Ellis
|
Capmark
— U.K.
|
BlackRock
|
||
CB
Richard Ellis — U.K.
|
Deutsche
Bank
|
Prudential
|
||
Colliers
|
Wells
Fargo
|
Prudential
— U.K.
|
||
Colliers
Conrad Ritblat Erdman — U.K.
|
JP
Morgan Chase Bank
|
Metropolitan
Life
|
||
Cushman
& Wakefield
|
Key
Bank
|
ING
Clarion Partners
|
||
Cushman
& Wakefield — U.K.
|
TD
Bank
|
Duke
Realty Corporation
|
||
Weichert
Commercial Brokerage
|
Citibank
|
USAA
Real Estate Company
|
||
Jones
Lang LaSalle
|
AEGON
USA Realty Advisors, Inc.
|
NorthMarq
Capital
|
||
Jones
Lang LaSalle — U.K.
|
Capmark
Financial Group, Inc.
|
AEW
Capital Management LP
|
||
Grubb
& Ellis
|
East
West Bank
|
Progressive
Casualty Insurance Co.
|
||
Gerald
Eve — U.K.
|
Q10
Bonneville Mortgage Company
|
|||
Drivers
Jonas — U.K.
|
||||
Lambert
Smith Hampton — U.K.
|
||||
Charles
Dunn Company, Inc.
|
||||
Marcus
& Millichap
|
Owners,
Developers
|
Appraisers,
Accountants
|
||
Mohr
Partners
|
Hines
|
Integra
|
||
Newmark
& Company Real Estate
|
LNR
Property Corp
|
Deloitte
|
||
CRESA
Partners
|
Shorenstein
Company, LLC
|
Deloitte
— U.K.
|
||
Studley
|
Mack-Cali
|
Marvin
F. Poer
|
||
Coldwell
Banker Commercial NRT
|
Manulife
Financial
|
KPMG
|
||
UGL
Equis
|
Industrial
Developments International (IDI)
|
GE
Capital
|
||
FirstService
Williams
|
Land
Securities — U.K.
|
PGP
Valuation
|
||
GVA
Advantis
|
Thomson
Reuters
|
|||
Binswanger
|
||||
Re/Max
|
||||
Carter
|
Retailers
|
Government
Agencies
|
||
USI
Real Estate Brokerage Services
|
Nationwide
Insurance
|
U.S.
General Services Administration
|
||
DAUM
Commercial Real Estate
|
Café
Rio Mexican Grill, Inc.
|
County
of Los Angeles
|
||
Services
|
Merle
Norman Cosmetics, Inc.
|
Internal
Revenue Service
|
||
HFF
|
Massage
Envy
|
City
of Chicago
|
||
U.S.
Equities Realty
|
7-Eleven
|
Cook
County Assessor’s Office
|
||
Sperry
Van Ness
|
Dollar
General Corporation
|
U.S.
Department of Housing and
|
||
DTZ
— U.K.
|
Walgreens
|
Urban
Development
|
||
Savillis
Commercial — U.K.
|
Town
Fair Tire
|
Corporation
of London — U.K.
|
||
Atis
Real — U.K.
|
Rent-A-Center
|
Scottish
Enterprise — U.K.
|
||
GVA
Grimley — U.K.
|
Spencer
Gifts LLC
|
Federal
Reserve Bank of New York
|
||
King
Sturge — U.K.
|
||||
REITs
|
Property
Managers
|
Vendors
|
||
Brandywine
Realty Trust
|
Transwestern
Commercial Services
|
Turner
Construction Company
|
||
Brookfield
Properties
|
Lincoln
Property Company
|
Kastle
Systems
|
||
Boston
Properties
|
PM
Realty Group
|
Comcast
Corporation
|
||
Liberty
Property Trust
|
Navisys
Group
|
ADT
Security
|
||
Kimco Realty Corporation |
Osprey
Management Company
|
MWB
— U.K.
|
||
Vornado Realty Trust |
Leggat
McCall Properties
|
Cox
Communications, Inc.
|
||
Simon Property Group, Inc. | Asset Plus Corporation |
Clear
Channel Outdoor
|
||
Morlin Asset Management LP |
Verizon
Communications, Inc.
|
|||
|
•
|
quality
and depth of the underlying
databases;
|
|
•
|
ease
of use, flexibility, and functionality of the
software;
|
|
•
|
timeliness
of the data;
|
|
•
|
breadth
of geographic coverage and services
offered;
|
|
•
|
client
service and support;
|
|
•
|
perception
that the service offered is the industry
standard;
|
|
•
|
price;
|
|
•
|
effectiveness
of marketing and sales efforts;
|
|
•
|
proprietary
nature of methodologies, databases and technical
resources;
|
|
•
|
vendor
reputation;
|
|
•
|
brand
loyalty among customers; and
|
|
•
|
capital
resources.
|
|
•
|
online
services or websites targeted to commercial real estate brokers, buyers
and sellers of commercial real estate properties, insurance companies,
mortgage brokers and lenders, such as LoopNet, Inc., Reed Business
Information Limited, officespace.com, MrOfficeSpace.com, and TenantWise,
Inc;
|
|
•
|
publishers
and distributors of information/marketing services, including regional
providers and national print publications, such as Black’s Guide, Property
and Portfolio Research, Torto Wheaton Research, Marshall & Swift, Yale
Robbins, Inc., Reis, Inc., Real Capital Analytics, Inc. and The Smith
Guide, Inc.;
|
|
•
|
locally
controlled real estate boards, exchanges or associations sponsoring
property listing services and the companies with whom they partner, such
as Xceligent, Catalyst, the National Association of Realtors, the
Commercial Association of Realtors Data Services and the Association of
Industrial Realtors;
|
|
•
|
in-house
research departments operated by commercial real estate brokers;
and
|
|
•
|
public
record providers.
|
|
•
|
trade
secret, copyright, trademark, database protection and other
laws;
|
|
•
|
nondisclosure,
noncompetition and other contractual provisions with employees and
consultants;
|
|
•
|
license
agreements with customers;
|
|
•
|
patent
protection; and
|
|
•
|
technical
measures.
|
Item
1A.
|
|
•
|
Significant
underperformance relative to historical or projected future operating
results;
|
|
•
|
Significant
changes in the manner of our use of acquired assets or the strategy for
our overall business;
|
|
•
|
Significant
negative industry or economic trends;
or
|
|
•
|
Significant
decline in our market capitalization relative to net book value for a
sustained period.
|
Item
1B.
|
Item
2.
|
Item
3.
|
High
|
Low
|
|||||||
Year
Ended December 31, 2007
|
||||||||
First
Quarter
|
$ | 52.15 | $ | 43.44 | ||||
Second
Quarter
|
$ | 55.71 | $ | 44.95 | ||||
Third
Quarter
|
$ | 58.49 | $ | 50.70 | ||||
Fourth
Quarter
|
$ | 61.65 | $ | 44.48 | ||||
Year
Ended December 31, 2008
|
||||||||
First
Quarter
|
$ | 45.31 | $ | 36.55 | ||||
Second
Quarter
|
$ | 51.36 | $ | 44.39 | ||||
Third
Quarter
|
$ | 56.70 | $ | 43.57 | ||||
Fourth
Quarter
|
$ | 45.20 | $ | 27.00 |
Month,
2008
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
October
1 through 31
|
¾
|
¾
|
¾
|
¾
|
November
1 through 30
|
¾
|
¾
|
¾
|
¾
|
December
1 through 31
|
4,220
(1)
|
$29.37
|
¾
|
¾
|
Total
|
4,220
|
$29.37
|
¾
|
¾
|
·
|
An
equal investment in the Standards & Poor's Stock 500 (“S&P
500”) Index.
|
·
|
An
equal investment in the S&P 500 Application Software
Index.
|
Company
/ Index
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
12/31/07
|
12/31/08
|
CoStar
Group, Inc.
|
100
|
110.74
|
103.53
|
128.44
|
113.31
|
78.99
|
S&P
500 Index
|
100
|
110.88
|
116.33
|
134.70
|
142.10
|
89.53
|
S&P
500 Application Software Index
|
100
|
111.63
|
123.57
|
130.15
|
144.57
|
79.03
|
Year
Ended December 31,
|
||||||||||||||||||||
Consolidated
Statement of Operations Data:
|
2004
|
2005
|
2006
|
2007
|
2008
|
|||||||||||||||
Revenues
|
$ | 112,085 | $ | 134,338 | $ | 158,889 | $ | 192,805 | $ | 212,428 | ||||||||||
Cost
of revenues
|
35,384 | 44,286 | 56,136 | 76,704 | 73,408 | |||||||||||||||
Gross
margin
|
76,701 | 90,052 | 102,753 | 116,101 | 139,020 | |||||||||||||||
Operating
expenses
|
69,955 | 82,710 | 88,672 | 98,249 | 99,232 | |||||||||||||||
Income
from operations
|
6,746 | 7,342 | 14,081 | 17,852 | 39,788 | |||||||||||||||
Interest
and other income, net
|
1,314 | 3,455 | 6,845 | 8,045 | 4,914 | |||||||||||||||
Income
before income taxes
|
8,060 | 10,797 | 20,926 | 25,897 | 44,702 | |||||||||||||||
Income
tax (benefit) expense , net
|
(16,925 | ) | 4,340 | 8,516 | 9,946 | 20,079 | ||||||||||||||
Net
income
|
$ | 24,985 | $ | 6,457 | $ | 12,410 | $ | 15,951 | $ | 24,623 | ||||||||||
Net
income per share
-
basic
|
$ | 1.38 | $ | 0.35 | $ | 0.66 | $ | 0.84 | $ | 1.27 | ||||||||||
Net
income per share
-
diluted
|
$ | 1.33 | $ | 0.34 | $ | 0.65 | $ | 0.82 | $ | 1.26 | ||||||||||
Weighted
average shares outstanding
-
basic
|
18,165 | 18,453 | 18,751 | 19,044 | 19,372 | |||||||||||||||
Weighted
average shares outstanding
-
diluted
|
18,827 | 19,007 | 19,165 | 19,404 | 19,550 |
As
of December 31,
|
||||||||||||||||||||
Consolidated
Balance Sheet Data:
|
2004
|
2005
|
2006
|
2007
|
2008
|
|||||||||||||||
Cash,
cash equivalents, short-term and long-term investments
|
$ | 117,069 | $ | 134,185 | $ | 158,148 | $ | 187,426 | $ | 224,590 | ||||||||||
Working
capital
|
107,875 | 124,501 | 154,606 | 167,441 | 183,347 | |||||||||||||||
Total
assets
|
232,691 | 248,059 | 275,437 | 321,843 | 334,384 | |||||||||||||||
Total
liabilities
|
21,747 | 23,263 | 25,327 | 40,038 | 30,963 | |||||||||||||||
Stockholders’
equity
|
210,944 | 224,796 | 250,110 | 281,805 | 303,421 |
As
of December 31,
|
||||||||||||||||||||
Other
Operating Data:
|
2004
|
2005
|
2006
|
2007
|
2008
|
|||||||||||||||
Number
of subscription client sites
|
9,489 | 11,464 | 13,257 | 14,467 | 15,920 | |||||||||||||||
Millions
of properties in database
|
1.6 | 1.8 | 2.1 | 2.7 | 3.2 |
|
•
|
Significant
underperformance relative to historical or projected future operating
results;
|
|
•
|
Significant
changes in the manner of our use of the acquired assets or the strategy
for our overall business;
|
|
•
|
Significant
negative industry or economic trends;
or
|
|
•
|
Significant
decline in our market capitalization relative to net book value for a
sustained period.
|
|
·
|
Purchase
amortization in cost of revenues may be useful for investors to consider
because it represents the use of our acquired database technology, which
is one of the sources of information for our database of commercial real
estate information. We do not believe these charges necessarily reflect
the current and ongoing cash charges related to our operating cost
structure.
|
|
·
|
Purchase
amortization in operating expenses may be useful for investors to consider
because it represents the estimated attrition of our acquired customer
base and the diminishing value of any acquired trade names. We do not
believe these charges necessarily reflect the current and ongoing cash
charges related to our operating cost
structure.
|
|
·
|
Depreciation
and other amortization may be useful for investors to consider because
they generally represent the wear and tear on our property and equipment
used in our operations. We do not believe these charges necessarily
reflect the current and ongoing cash charges related to our operating cost
structure.
|
|
·
|
The
amount of net interest income we generate may be useful for investors to
consider and may result in current cash inflows or outflows. However, we
do not consider the amount of net interest income to be a representative
component of the day-to-day operating performance of our
business.
|
|
·
|
Income
tax expense (benefit) may be useful for investors to consider because
it generally represents the taxes which may be payable for the period and
the change in deferred income taxes during the period and may reduce the
amount of funds otherwise available for use in our
business. However, we do not consider the amount of income tax
expense (benefit) to be a representative component of the day-to-day
operating performance of our
business.
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Net
income
|
$ | 12,410 | $ | 15,951 | $ | 24,623 | ||||||
Purchase
amortization in cost of
revenues
|
1,205 | 2,170 | 2,284 | |||||||||
Purchase
amortization in operating
expenses
|
4,183 | 5,063 | 4,880 | |||||||||
Depreciation
and other
amortization
|
6,421 | 8,914 | 9,637 | |||||||||
Interest
income,
net
|
(6,845 | ) | (8,045 | ) | (4,914 | ) | ||||||
Income
tax expense,
net
|
8,516 | 9,946 | 20,079 | |||||||||
EBITDA
|
$ | 25,890 | $ | 33,999 | $ | 56,589 | ||||||
Cash
flows provided by (used in)
|
||||||||||||
Operating
activities
|
$ | 32,587 | $ | 51,732 | $ | 40,908 | ||||||
Investing
activities
|
$ | (28,329 | ) | $ | (40,331 | ) | $ | 52,430 | ||||
Financing
activities
|
$ | 5,582 | $ | 8,161 | $ | 11,475 |
Year
Ended December 31,
|
||||||||||||||||||||||||
2006
|
2007
|
2008
|
||||||||||||||||||||||
Revenues
|
$ | 158,889 | 100.0 | % | $ | 192,805 | 100.0 | % | $ | 212,428 | 100.0 | % | ||||||||||||
Cost
of
revenues
|
56,136 | 35.3 | 76,704 | 39.8 | 73,408 | 34.6 | ||||||||||||||||||
Gross
margin
|
102,753 | 64.7 | 116,101 | 60.2 | 139,020 | 65.4 | ||||||||||||||||||
Operating
expenses:
|
||||||||||||||||||||||||
Selling
and
marketing
|
41,774 | 26.3 | 51,777 | 26.9 | 41,705 | 19.6 | ||||||||||||||||||
Software
development
|
12,008 | 7.6 | 12,453 | 6.5 | 12,759 | 6.0 | ||||||||||||||||||
General
and
administrative
|
30,707 | 19.3 | 36,569 | 19.0 | 39,888 | 18.8 | ||||||||||||||||||
Gain
on lease settlement, net
|
¾ | 0.0 | (7,613 | ) | (3.9 | ) | ¾ | 0.0 | ||||||||||||||||
Purchase
amortization
|
4,183 | 2.6 | 5,063 | 2.6 | 4,880 | 2.3 | ||||||||||||||||||
Total
operating
expenses
|
88,672 | 55.8 | 98,249 | 51.0 | 99,232 | 46.7 | ||||||||||||||||||
Income
from
operations
|
14,081 | 8.9 | 17,852 | 9.3 | 39,788 | 18.7 | ||||||||||||||||||
Interest
and other income, net
|
6,845 | 4.3 | 8,045 | 4.2 | 4,914 | 2.3 | ||||||||||||||||||
Income
before income
taxes
|
20,926 | 13.2 | 25,897 | 13.4 | 44,702 | 21.0 | ||||||||||||||||||
Income
tax expense,
net
|
8,516 | 5.4 | 9,946 | 5.2 | 20,079 | 9.5 |
|
|||||||||||||||||
Net
income
|
$ | 12,410 | 7.8 | % | $ | 15,951 | 8.3 | % | $ | 24,623 | 11.6 | % |
2007
|
2008
|
|||||||||||||||||||||||||||||||
Mar.
31
|
Jun.
30
|
Sep.
30
|
Dec.
31
|
Mar.
31
|
Jun.
30
|
Sep.
30
|
Dec.
31
|
|||||||||||||||||||||||||
Revenues
|
$ | 44,831 | $ | 47,794 | $ | 49,340 | $ | 50,840 | $ | 52,264 | $ | 53,478 | $ | 53,757 | $ | 52,929 | ||||||||||||||||
Cost
of revenues
|
17,826 | 19,318 | 19,551 | 20,009 | 19,721 | 18,341 | 17,613 | 17,733 | ||||||||||||||||||||||||
Gross
margin
|
27,005 | 28,476 | 29,789 | 30,831 | 32,543 | 35,137 | 36,144 | 35,196 | ||||||||||||||||||||||||
Operating
expenses
|
25,569 | 28,230 | 25,952 | 18,498 | 25,313 | 26,627 | 24,864 | 22,428 | ||||||||||||||||||||||||
Income
from operations
|
1,436 | 246 | 3,837 | 12,333 | 7,230 | 8,510 | 11,280 | 12,768 | ||||||||||||||||||||||||
Interest
and other income, net
|
1,862 | 1,891 | 2,072 | 2,220 | 1,938 | 1,243 | 951 | 782 | ||||||||||||||||||||||||
Income
before income taxes
|
3,298 | 2,137 | 5,909 | 14,553 | 9,168 | 9,753 | 12,231 | 13,550 | ||||||||||||||||||||||||
Income
tax expense, net
|
1,484 | 962 | 2,659 | 4,841 | 4,126 | 4,318 | 5,586 | 6,049 | ||||||||||||||||||||||||
Net
income
|
$ | 1,814 | $ | 1,175 | $ | 3,250 | $ | 9,712 | $ | 5,042 | $ | 5,435 | $ | 6,645 | $ | 7,501 | ||||||||||||||||
Net
income per share
-
basic
|
$ | 0.10 | $ | 0.06 | $ | 0.17 | $ | 0.51 | $ | 0.26 | $ | 0.28 | $ | 0.34 | $ | 0.39 | ||||||||||||||||
Net
income per share
-
diluted
|
$ | 0.09 | $ | 0.06 | $ | 0.17 | $ | 0.50 | $ | 0.26 | $ | 0.28 | $ | 0.34 | $ | 0.38 |
2007
|
2008
|
|||||||||||||||||||||||||||||||
Mar.
31
|
Jun.
30
|
Sep.
30
|
Dec.
31
|
Mar.
31
|
Jun.
30
|
Sep.
30
|
Dec.
31
|
|||||||||||||||||||||||||
Revenues
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
Cost
of revenues
|
39.8 | 40.4 | 39.6 | 39.4 | 37.7 | 34.3 | 32.8 | 33.5 | ||||||||||||||||||||||||
Gross
margin
|
60.2 | 59.6 | 60.4 | 60.6 | 62.3 | 65.7 | 67.2 | 66.5 | ||||||||||||||||||||||||
Operating
expenses
|
57.0 | 59.1 | 52.6 | 36.4 | 48.5 | 49.8 | 46.2 | 42.4 | ||||||||||||||||||||||||
Income
from operations
|
3.2 | 0.5 | 7.8 | 24.2 | 13.8 | 15.9 | 21.0 | 24.1 | ||||||||||||||||||||||||
Interest
and other income, net
|
4.1 | 4.0 | 4.2 | 4.4 | 3.7 | 2.3 | 1.8 | 1.5 | ||||||||||||||||||||||||
Income
before income taxes
|
7.3 | 4.5 | 12.0 | 28.6 | 17.5 | 18.2 | 22.8 | 25.6 | ||||||||||||||||||||||||
Income
tax expense, net
|
3.3 | 2.0 | 5.4 | 9.5 | 7.9 | 8.0 | 10.4 | 11.4 | ||||||||||||||||||||||||
Net
income
|
4.0 | % | 2.5 | % | 6.6 | % | 19.1 | % | 9.6 | % | 10.2 | % | 12.4 | % | 14.2 | % |
Total
|
2009
|
2010-2011
|
2012-2013
|
2014
and
thereafter
|
||||||||||||||||
Operating
leases
|
$ | 23,596 | $ | 8,264 | $ | 10,041 | $ | 4,276 | $ | 1,015 | ||||||||||
Purchase
obligations
(1)
|
2,971 | 2,242 | 294 | 290 | 145 | |||||||||||||||
Total
contractual principal cash obligations
|
$ | 26,567 | $ | 10,506 | $ | 10,335 | $ | 4,566 | $ | 1,160 |
|
(1)
Amounts
do not include (i) contracts with initial terms of twelve months or
less, or (ii) multi-year contracts that may be terminated by a third party
or us.
|
Item
9A.
|
Item
9B.
|
Item
11.
|
Item
12.
|
COSTAR
GROUP, INC.
|
||
By:
|
/S/
Andrew C. Florance
|
|
Andrew
C. Florance
|
||
President
and Chief Executive Officer
|
Signature
|
Capacity
|
Date
|
||
/S/ Michael R. Klein |
Chairman
of the Board
|
February 23,
2009
|
||
Michael
R. Klein
|
||||
/S/ Andrew C. Florance |
Chief
Executive Officer and
|
February 23,
2009
|
||
Andrew
C. Florance
|
President
and a Director
|
|||
(Principal
Executive Officer)
|
||||
/S/ Brian J. Radecki |
Chief
Financial Officer
|
February
23, 2009
|
||
Brian
J. Radecki
|
(Principal
Financial and Accounting Officer)
|
|||
/S/ David Bonderman |
Director
|
February 23,
2009
|
||
David
Bonderman
|
||||
/S/ Warren H. Haber |
Director
|
February
23, 2009
|
||
Warren
H. Haber
|
||||
/S/ Josiah O. Low, III |
Director
|
February 23,
2009
|
||
Josiah
O. Low, III
|
||||
/S/ Christopher Nassetta |
Director
|
February 23,
2009
|
||
Christopher
Nassetta
|
||||
/S/ Michael Glosserman |
Director
|
February 23,
2009
|
||
Michael
Glosserman
|
Exhibit
No.
|
Description
|
|
2.1
|
Offer
Document by CoStar Limited for the share capital of Focus Information
Limited (Incorporated by reference to Exhibit 2.1 to Amendment No. 2 to
the Registration Statement on Form S-3 of the Registrant (Reg. No.
333-106769) filed with the Commission on August 14,
2003).
|
|
3.1
|
Restated
Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 the
Registration Statement on Form S-1 of the Registrant (Reg. No. 333-47953)
filed with the Commission on March 13, 1998 (the “1998 Form
S-1”)).
|
|
3.2
|
Certificate
of Amendment of Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3.1 to the Registrant’s Report on Form 10-Q for the
quarter ended June 30, 1999).
|
|
3.3
|
Amended
and Restated By-Laws (filed herewith).
|
|
4.1
|
Specimen
Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the
Registrant’s Report on Form 10-K for the year ended December 31,
1999).
|
|
*10.1
|
CoStar
Group, Inc. 1998 Stock Incentive Plan, as amended (Incorporated by
reference to Exhibit 10.1 to the Registrant’s Report on Form 10-Q for the
quarter ended September 30, 2005).
|
|
*10.2
|
CoStar
Group, Inc. 2007 Stock Incentive Plan, as amended (filed
herewith).
|
|
*10.3
|
CoStar
Group, Inc. 2007 Stock Incentive Plan French Sub-Plan (Incorporated by
reference to Exhibit 10.3 to the Registrant’s Report on Form 10-K for the
year ended December 31, 2007).
|
|
*10.4
|
Form
of Stock Option Agreement between the Registrant and certain of its
officers, directors and employees (Incorporated by reference to Exhibit
10.8 to the Registrant’s Report on Form 10-K for the year ended December
31, 2004).
|
|
*10.5
|
Form
of Stock Option Agreement between the Registrant and Andrew C. Florance
(Incorporated by reference to Exhibit 10.8.1 to the Registrant’s Report on
Form 10-K for the year ended December 31, 2004).
|
|
*10.6
|
Form
of Restricted Stock Agreement between the Registrant and certain of its
officers, directors and employees (Incorporated by reference to Exhibit
10.9 to the Registrant’s Report on Form 10-K for the year ended December
31, 2004).
|
|
*10.7
|
Form
of 2007 Plan Restricted Stock Grant Agreement between the Registrant and
certain of its officers, directors and employees (Incorporated by
reference to Exhibit 99.1 to the Registrant’s Report on Form 8-K filed
June 22, 2007).
|
|
*10.8
|
Form
of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant
and certain of its officers and employees (filed
herewith).
|
|
*10.9
|
Form
of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant
and Andrew C. Florance (filed herewith).
|
|
*10.10
|
Form
of 2007 Plan Nonqualified Stock Option Grant Agreement between the
Registrant and certain of its officers and employees (filed
herewith).
|
|
*10.11
|
Form
of 2007 Plan Nonqualified Stock Option Grant Agreement between the
Registrant and certain of its directors (filed
herewith).
|
|
*10.12
|
Form
of 2007 Plan Nonqualified Stock Option Grant Agreement between the
Registrant and Andrew C. Florance (filed herewith).
|
|
*10.13
|
Form
of 2007 Plan French Sub-Plan Restricted Stock Agreement between the
Registrant and certain of its employees (Incorporated by reference to
Exhibit 10.10 to the Registrant’s Report on Form 10-K for the year ended
December 31, 2007).
|
|
*10.14
|
CoStar
Group, Inc. Employee Stock Purchase Plan (Incorporated by reference to
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006).
|
|
*10.15
|
Employment
Agreement for Andrew C. Florance (Incorporated by reference to Exhibit
10.2 to Amendment No. 1 to the Registration Statement on Form S-1 of the
Registrant (Reg. No. 333-47953) filed with the Commission on April 27,
1998).
|
Exhibit
No.
|
Description
|
|
*10.16
|
First
Amendment to Andrew C. Florance Employment Agreement, effective January 1,
2009 (filed herewith).
|
|
*10.17
|
Executive
Service Contract dated February 16, 2007, between Property Investment
Exchange Limited and Paul Marples (Incorporated by reference to Exhibit
10.14 to the Registrant’s Report on Form 10-K for the year ended December
31, 2007).
|
|
*10.18
|
Form
of Indemnification Agreement between the Registrant and each of its
officers and directors (Incorporated by reference to Exhibit 10.1 to the
Registrant’s Report on Form 10-Q for the quarter ended March 31,
2004).
|
|
10.19
|
Office
Lease, dated August 12, 1999, between CoStar Realty Information, Inc. and
Newlands Building Ventures, LLC (Incorporated by reference to Exhibit 10.2
to the Registrant’s Report on Form 10-Q for the quarter ended September
30, 1999).
|
|
10.20
|
Office
Sublease, dated June 14, 2002, between CoStar Realty Information, Inc.,
CoStar Group, Inc. and Gateway, Inc. (Incorporated by reference to Exhibit
10.2 to the Registrant’s Report on Form 10-Q for the quarter ended June
30, 2002).
|
|
10.21
|
Exercise
of option to extend lease term and sublease amendment, dated February 22,
2007 between Gateway, Inc. and CoStar Realty Information, Inc. and CoStar
Group, Inc. (Incorporated by reference to Exhibit 10.11 to the
Registrant’s Report on Form 10-K for the year ended December 31,
2006).
|
|
10.22
|
Addendum
No. 3 to Office Lease, dated as of May 12, 2004, between Newlands Building
Venture, LLC, and CoStar Realty Information, Inc. (Incorporated by
reference to Exhibit 10.1 to the Registrant’s Report on Form 10-Q for the
quarter ended June 30, 2004).
|
|
10.23
|
Office
Lease, dated as of February 23, 2005, between CoStar Realty Information,
Inc. and Crestpointe III, LLC. (Incorporated by reference to Exhibit 10.13
to the Registrant’s Report on Form 10-K for the year ended December 31,
2004).
|
|
10.24
|
Office
Lease Agreement, dated March 16, 2007, between Corporate Place I Business
Trust and CoStar Group, Inc. (Incorporated by reference to Exhibit 10.2 to
the Registrant’s Report on Form 10-Q for the quarter ended March 31,
2007).
|
|
10.25
|
Agreement
for Lease among Nokia UK Limited, Focus Information Limited and CoStar
Group, Inc., dated November 23, 2007 (Incorporated by reference to Exhibit
10.22 to the Registrant’s Report on Form 10-K for the year ended December
31, 2007).
|
|
10.26
|
Contract
for Sale and Purchase between Focus Information Limited and Trafigura
Limited, dated September 14, 2007 (Incorporated by reference to Exhibit
10.1 to the Registrant’s Report on Form 10-Q for the quarter ended
September 30, 2007).
|
|
21.1
|
Subsidiaries
of the Registrant (filed herewith).
|
|
23.1
|
Consent
of Ernst & Young LLP, Independent Registered Public Accounting Firm
(filed herewith).
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Sec. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
|
32.2
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
|
Reports
of Independent Registered Public Accounting
Firm
|
F-2
|
Consolidated
Statements of Operations for the years ended December 31, 2006, 2007 and
2008
|
F-4
|
Consolidated
Balance Sheets as of December 31, 2007 and
2008
|
F-5
|
Consolidated
Statements of Stockholders’ Equity for the years ended December 31, 2006,
2007 and 2008
|
F-6
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2006, 2007 and
2008
|
F-7
|
Notes
to Consolidated Financial
Statements
|
F-8
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Revenues
|
$ | 158,889 | $ | 192,805 | $ | 212,428 | ||||||
Cost
of revenues
|
56,136 | 76,704 | 73,408 | |||||||||
Gross
margin
|
102,753 | 116,101 | 139,020 | |||||||||
Operating
expenses:
|
||||||||||||
Selling
and marketing
|
41,774 | 51,777 | 41,705 | |||||||||
Software
development
|
12,008 | 12,453 | 12,759 | |||||||||
General
and administrative
|
30,707 | 36,569 | 39,888 | |||||||||
Gain
on lease settlement, net
|
¾ | (7,613 | ) | ¾ | ||||||||
Purchase
amortization
|
4,183 | 5,063 | 4,880 | |||||||||
88,672 | 98,249 | 99,232 | ||||||||||
Income
from operations
|
14,081 | 17,852 | 39,788 | |||||||||
Interest
and other income, net
|
6,845 | 8,045 | 4,914 | |||||||||
Income
before income taxes
|
20,926 | 25,897 | 44,702 | |||||||||
Income
tax expense, net
|
8,516 | 9,946 | 20,079 | |||||||||
Net
income
|
$ | 12,410 | $ | 15,951 | $ | 24,623 | ||||||
Net
income per share
¾
basic
|
$ | 0.66 | $ | 0.84 | $ | 1.27 | ||||||
Net
income per share
¾
diluted
|
$ | 0.65 | $ | 0.82 | $ | 1.26 | ||||||
Weighted
average outstanding shares
¾
basic
|
18,751 | 19,044 | 19,372 | |||||||||
Weighted
average outstanding shares
¾
diluted
|
19,165 | 19,404 | 19,550 |
Additional
|
Accumulated
Other
|
Total
|
||||||||||||||||||||||||||||||
Comprehensive
Income
|
Common
Stock
|
Paid-In
Capital
|
Unearned
Compensation
|
Comprehensive
Income
(Loss)
|
Accumulated
Deficit
|
Stockholders’
Equity
|
||||||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance
at December 31, 2005
|
18,674 | $ | 187 | $ | 295,920 | $ | (2,712 | ) | $ | 1,348 | $ | (69,947 | ) | $ | 224,796 | |||||||||||||||||
Net
income
|
12,410 | ¾ | ¾ | ¾ | ¾ | ¾ | 12,410 | 12,410 | ||||||||||||||||||||||||
Foreign
currency translation adjustment
|
2,950 | ¾ | ¾ | ¾ | ¾ | 2,950 | ¾ | 2,950 | ||||||||||||||||||||||||
Net
unrealized gain on short-term investments
|
222 | ¾ | ¾ | ¾ | ¾ | 222 | ¾ | 222 | ||||||||||||||||||||||||
Comprehensive
income
|
$ | 15,582 | ||||||||||||||||||||||||||||||
Exercise
of stock options
|
270 | 3 | 6,566 | ¾ | ¾ | ¾ | 6,569 | |||||||||||||||||||||||||
Swaps
of shares for exercise
|
(20 | ) | (1 | ) | (938 | ) | ¾ | ¾ | ¾ | (939 | ) | |||||||||||||||||||||
Restricted
stock grants
|
165 | 2 | 34 | ¾ | ¾ | ¾ | 36 | |||||||||||||||||||||||||
Restricted
stock grants surrendered
|
(12 | ) | ¾ | (234 | ) | ¾ | ¾ | ¾ | (234 | ) | ||||||||||||||||||||||
Stock
compensation expense, net of forfeitures
|
¾ | ¾ | 4,094 | ¾ | ¾ | ¾ | 4,094 | |||||||||||||||||||||||||
Employee
Stock Purchase Plan (ESPP)
|
4 | ¾ | 206 | ¾ | ¾ | ¾ | 206 | |||||||||||||||||||||||||
Impact
upon adoption of SFAS 123R
|
¾ | ¾ | (2,712 | ) | 2,712 | ¾ | ¾ | ¾ | ||||||||||||||||||||||||
Balance
at December 31, 2006
|
19,081 | 191 | 302,936 | ¾ | 4,520 | (57,537 | ) | 250,110 | ||||||||||||||||||||||||
FIN
48 Adjustment
|
¾ | ¾ | 26 | ¾ | ¾ | ¾ | 26 | |||||||||||||||||||||||||
Balance
at January 1, 2007
|
19,081 | 191 | 302,962 | ¾ | 4,520 | (57,537 | ) | 250,136 | ||||||||||||||||||||||||
Net
income
|
15,951 | ¾ | ¾ | ¾ | ¾ | ¾ | 15,951 | 15,951 | ||||||||||||||||||||||||
Foreign
currency translation adjustment
|
873 | ¾ | ¾ | ¾ | ¾ | 873 | ¾ | 873 | ||||||||||||||||||||||||
Net
unrealized gain on short-term investments
|
233 | ¾ | ¾ | ¾ | ¾ | 233 | ¾ | 233 | ||||||||||||||||||||||||
Comprehensive
income
|
$ | 17,057 | ||||||||||||||||||||||||||||||
Exercise
of stock options
|
289 | 3 | 8,127 | ¾ | ¾ | ¾ | 8,130 | |||||||||||||||||||||||||
Restricted
stock grants
|
131 | 1 | (1 | ) | ¾ | ¾ | ¾ | ¾ | ||||||||||||||||||||||||
Restricted
stock grants surrendered
|
(58 | ) | ¾ | (635 | ) | ¾ | ¾ | ¾ | (635 | ) | ||||||||||||||||||||||
Consideration
for Propex
|
22 | ¾ | 1,010 | ¾ | ¾ | ¾ | 1,010 | |||||||||||||||||||||||||
Stock
compensation expense, net of forfeitures
|
¾ | ¾ | 5,440 | ¾ | ¾ | ¾ | 5,440 | |||||||||||||||||||||||||
ESPP
|
9 | ¾ | 407 | ¾ | ¾ | ¾ | 407 | |||||||||||||||||||||||||
Excess
tax benefit for exercised stock options
|
¾ | ¾ | 260 | ¾ | ¾ | ¾ | 260 | |||||||||||||||||||||||||
Balance
at December 31, 2007
|
19,474 | 195 | 317,570 | ¾ | 5,626 | (41,586 | ) | 281,805 | ||||||||||||||||||||||||
Net
income
|
24,623 | ¾ | ¾ | ¾ | ¾ | ¾ | 24,623 | 24,623 | ||||||||||||||||||||||||
Foreign
currency translation adjustment
|
(14,061 | ) | ¾ | ¾ | ¾ | ¾ | (14,061 | ) | ¾ | (14,061 | ) | |||||||||||||||||||||
Net
unrealized loss on short-term investments
|
(5,361 | ) | ¾ | ¾ | ¾ | ¾ | (5,361 | ) | ¾ | (5,361 | ) | |||||||||||||||||||||
Comprehensive
income
|
$ | 5,201 | ||||||||||||||||||||||||||||||
Exercise
of stock options
|
198 | 2 | 6,555 | ¾ | ¾ | ¾ | 6,557 | |||||||||||||||||||||||||
Restricted
stock grants
|
102 | 1 | ¾ | ¾ | ¾ | ¾ | 1 | |||||||||||||||||||||||||
Restricted
stock grants surrendered
|
(49 | ) | (1 | ) | (695 | ) | ¾ | ¾ | ¾ | (696 | ) | |||||||||||||||||||||
Stock
compensation expense, net of forfeitures
|
¾ | ¾ | 4,907 | ¾ | ¾ | ¾ | 4,907 | |||||||||||||||||||||||||
ESPP
|
8 | ¾ | 329 | ¾ | ¾ | ¾ | 329 | |||||||||||||||||||||||||
Excess
tax benefit for exercised stock options
|
¾ | ¾ | 5,317 | ¾ | ¾ | ¾ | 5,317 | |||||||||||||||||||||||||
Balance
at December 31, 2008
|
19,733 | $ | 197 | $ | 333,983 | $ | ¾ | $ | (13,796 | ) | $ | (16,963 | ) | $ | 303,421 |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Operating
activities:
|
||||||||||||
Net
income
|
$ | 12,410 | $ | 15,951 | $ | 24,623 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
|
5,734 | 7,778 | 8,360 | |||||||||
Amortization
|
6,076 | 8,369 | 8,441 | |||||||||
Deferred
income tax expense, net
|
7,658 | 9,946 | 2,148 | |||||||||
Provision
for losses on accounts receivable
|
1,813 | 2,464 | 4,042 | |||||||||
Excess
tax benefit from stock options
|
¾ | ¾ | (5,317 | ) | ||||||||
Stock-based
compensation expense
|
4,155 | 5,440 | 4,940 | |||||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||||||
Accounts
receivable
|
(5,080 | ) | (2,944 | ) | (6,196 | ) | ||||||
Interest
receivable
|
(164 | ) | (67 | ) | 533 | |||||||
Prepaid
expenses and other current assets
|
(1,205 | ) | (755 | ) | 1,464 | |||||||
Deposits
|
(246 | ) | (670 | ) | 652 | |||||||
Accounts
payable and accrued expenses
|
688 | 6,721 | (3,044 | ) | ||||||||
Deferred
revenue
|
748 | (501 | ) | 262 | ||||||||
Net
cash provided by operating activities
|
32,587 | 51,732 | 40,908 | |||||||||
Investing
activities:
|
||||||||||||
Purchases
of short-term investments
|
(108,876 | ) | (116,609 | ) | (4,839 | ) | ||||||
Sales
of short-term investments
|
95,393 | 107,286 | 63,949 | |||||||||
Purchases
of property and equipment and other assets
|
(12,959 | ) | (14,271 | ) | (3,656 | ) | ||||||
Acquisitions,
net of cash acquired
|
(1,887 | ) | (16,737 | ) | (3,024 | ) | ||||||
Net
cash (used in) provided by investing activities
|
(28,329 | ) | (40,331 | ) | 52,430 | |||||||
Financing
activities:
|
||||||||||||
Excess
tax benefit from stock options
|
¾ | ¾ | 5,317 | |||||||||
Proceeds
from transactions in stock based plans
|
5,582 | 8,161 | 6,158 | |||||||||
Net
cash provided by financing activities
|
5,582 | 8,161 | 11,475 | |||||||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
254 | 64 | (2,616 | ) | ||||||||
Net
increase in cash and cash equivalents
|
10,094 | 19,626 | 102,197 | |||||||||
Cash
and cash equivalents at beginning of year
|
28,065 | 38,159 | 57,785 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 38,159 | $ | 57,785 | $ | 159,982 |
Year
Ended December 31,
|
||||||||
2007
|
2008
|
|||||||
Foreign
currency translation adjustment
|
$ | 5,540 | $ | (8,521 | ) | |||
Accumulated
net unrealized gain (loss) on investments, net of tax
|
86 | (5,275 | ) | |||||
Total
accumulated other comprehensive income (loss)
|
$ | 5,626 | $ | (13,796 | ) |
Income
from
operations
|
$ | (2,860 | ) | |
Income
before
taxes
|
$ | (2,860 | ) | |
Net
income
|
$ | (1,784 | ) | |
Basic
earnings per
share
|
$ | (0.10 | ) | |
Diluted
earnings per
share
|
$ | (0.09 | ) |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Cost
of
revenues
|
$ | 317 | $ | 926 | $ | 547 | ||||||
Selling
and
marketing
|
1,263 | 1,118 | 400 | |||||||||
Software
development
|
202 | 340 | 423 | |||||||||
General
and
administrative
|
2,373 | 3,056 | 3,570 | |||||||||
Total
|
$ | 4,155 | $ | 5,440 | $ | 4,940 |
Leasehold
improvements
|
Shorter
of lease term or useful life
|
|
Furniture
and office equipment
|
Five
to seven years
|
|
Research
vehicles
|
Five
years
|
|
Computer
hardware and software
|
Two
to five years
|
Maturity
|
Fair
Value
|
|||
Due
in:
|
||||
2009
|
$ | 5,226 | ||
2010-2013
|
26,881 |
|
||
2014-2018
|
917 | |||
2019
and thereafter
|
31,131 | |||
64,155 | ||||
Securities
with multiple maturities
|
453 | |||
Investments
|
$ | 64,608 |
December
31,
|
||||||||||||||||
2007
|
2008
|
|||||||||||||||
Aggregate
Fair
Value
|
Gross
Unrealized
Losses
|
Aggregate
Fair
Value
|
Gross
Unrealized
Losses
|
|||||||||||||
Federal
debt securities
|
$ | 1,592 | $ | (15 | ) | $ | ¾ | $ | ¾ | |||||||
Corporate
debt securities
|
13,886 | (49 | ) | 22,136 | (1,494 | ) | ||||||||||
$ | 15,478 | $ | (64 | ) | $ | 22,136 | $ | (1,494 | ) |
December
31,
|
||||||||||||||||
2007
|
2008
|
|||||||||||||||
Aggregate
Fair
Value
|
Gross
Unrealized
Losses
|
Aggregate
Fair
Value
|
Gross
Unrealized
Losses
|
|||||||||||||
Auction
rate securities
|
$ | ¾ | $ | ¾ | $ | 29,340 | $ | (3,710 | ) | |||||||
Federal
debt securities
|
531 | (1 | ) | 19 | (1 | ) | ||||||||||
Corporate
debt securities
|
21,234 | (148 | ) | 6,976 | (366 | ) | ||||||||||
$ | 21,765 | $ | (149 | ) | $ | 36,335 | $ | (4,077 | ) |
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
Cash
|
$ | 29,297 | $ | ¾ | $ | ¾ | $ | 29,297 | ||||||||
Money
market
funds
|
130,685 | ¾ | ¾ | 130,685 | ||||||||||||
Corporate
debt securities
|
¾ | 35,132 | ¾ | 35,132 | ||||||||||||
Government-sponsored
enterprise obligations
|
¾ | 136 | ¾ | 136 | ||||||||||||
Auction
rate securities
|
¾ | ¾ | 29,340 | 29,340 | ||||||||||||
Total
|
$ | 159,982 | $ | 35,268 | $ | 29,340 | $ | 224,590 |
Auction
Rate
Securities
|
||||
Balance
at December 31, 2007
|
$ | 53,975 | ||
Unrealized
loss included in other comprehensive income
|
(3,710 | ) | ||
Settlements
|
(20,925 | ) | ||
Balance
at December 31, 2008
|
$ | 29,340 |
December
31,
|
||||||||
2007
|
2008
|
|||||||
Leasehold
improvements
|
$ | 8,357 | $ | 7,808 | ||||
Furniture,
office equipment and research
vehicles
|
19,874 | 19,305 | ||||||
Computer
hardware and
software
|
27,735 | 27,938 | ||||||
55,966 | 55,051 | |||||||
Accumulated
depreciation and
amortization
|
(31,921 | ) | (38,175 | ) | ||||
Property
and equipment,
net
|
$ | 24,045 | $ | 16,876 |
United
States
|
International
|
Total
|
||||||||||
Goodwill,
December 31, 2006
|
$ | 30,428 | $ | 16,069 | $ | 46,497 | ||||||
Acquisitions
|
¾ | 14,806 | 14,806 | |||||||||
Effect
of foreign currency translation
|
¾ | 551 | 551 | |||||||||
Goodwill,
December 31, 2007
|
30,428 | 31,426 | 61,854 | |||||||||
Acquisitions
|
1,119 | ¾ | 1,119 | |||||||||
Effect
of foreign currency translation
|
¾ | (8,645 | ) | (8,645 | ) | |||||||
Goodwill,
December 31, 2008
|
$ | 31,547 | $ | 22,781 | $ | 54,328 |
December
31,
|
Weighted-
Average
Amortization
Period
(in
years)
|
||||||||
2007
|
2008
|
||||||||
Building
photography
|
$
|
10,799
|
$
|
11,011
|
5
|
||||
Accumulated
amortization
|
(6,708
|
)
|
(7,711
|
)
|
|||||
Building
photography, net
|
4,091
|
3,300
|
|||||||
Acquired
database technology
|
21,390
|
20,711
|
4
|
||||||
Accumulated
amortization
|
(20,573
|
)
|
(20,361
|
)
|
|||||
Acquired
database technology, net
|
817
|
350
|
|||||||
Acquired
customer base
|
50,891
|
48,198
|
10
|
||||||
Accumulated
amortization
|
(34,374
|
)
|
(37,192
|
)
|
|||||
Acquired
customer base, net
|
16,517
|
11,006
|
|||||||
Acquired
trade names and other
|
9,089
|
7,744
|
6
|
||||||
Accumulated
amortization
|
(4,803
|
)
|
(5,979
|
)
|
|||||
Acquired
trade names and other, net
|
4,286
|
1,765
|
|||||||
Intangibles
and other assets, net
|
$
|
25,711
|
$
|
16,421
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 414 | $ | 574 | $ | 18,289 | ||||||
State
|
220 | 821 | 3,842 | |||||||||
Total
current
|
634 | 1,395 | 22,131 | |||||||||
Deferred:
|
||||||||||||
Federal
|
7,497 | 9,716 | (408 | ) | ||||||||
State
|
1,077 | 72 | (52 | ) | ||||||||
Foreign
|
(692 | ) | (1,237 | ) | (1,592 | ) | ||||||
Total
deferred
|
7,882 | 8,551 | (2,052 | ) | ||||||||
Total
provision for income taxes
|
$ | 8,516 | $ | 9,946 | $ | 20,079 |
December
31,
|
||||||||
2007
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
Reserve
for bad
debts
|
$ | 799 | $ | 928 | ||||
Accrued
compensation
|
1,286 | 2,144 | ||||||
Stock
compensation
|
1,603 | 2,115 | ||||||
Net
operating
losses
|
3,177 | 3,077 | ||||||
Restructuring
reserve
|
45 | ¾ | ||||||
Alternative
minimum tax
credits
|
1,393 | ¾ | ||||||
Capital
loss
carryovers
|
¾ | 345 | ||||||
Unrealized
loss on
securities
|
¾ | 2,088 | ||||||
Other
liabilities
|
1,001 | 1,401 | ||||||
Total
deferred tax
assets
|
9,304 | 12,098 | ||||||
Deferred
tax liabilities:
|
||||||||
Prepaids
|
(739 | ) | (522 | ) | ||||
Depreciation
|
(427 | ) | (626 | ) | ||||
Identified
intangibles associated with purchase
accounting
|
(4,927 | ) | (2,607 | ) | ||||
Total
deferred tax
liabilities
|
(6,093 | ) | (3,755 | ) | ||||
Net
deferred tax
asset
|
3,211 | 8,343 | ||||||
Valuation
allowance
|
(63 | ) | (3,047 | ) | ||||
Net
deferred
taxes
|
$ | 3,148 | $ | 5,296 |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Expected
federal income tax provision at statutory rate
|
$ | 7,115 | $ | 8,805 | $ | 15,646 | ||||||
State
income taxes, net of federal benefit
|
1,014 | 841 | 2,505 | |||||||||
Foreign
income taxes, net effect
|
119 | 156 | 497 | |||||||||
Stock
compensation
|
528 | 146 | 87 | |||||||||
(Decrease)
increase in valuation allowance
|
(267 | ) | (274 | ) | 1,023 | |||||||
Other
adjustments
|
7 | 272 | 321 | |||||||||
Income
tax expense, net
|
$ | 8,516 | $ | 9,946 | $ | 20,079 |
Unrecognized
tax benefit as of January 1,
2007
|
$ | 217 | ||
Increase
for current year tax
positions
|
44 | |||
Increase
for prior year tax
positions
|
(6 | ) | ||
Expiration
of the statute of limitation for assessment of
taxes
|
(22 | ) | ||
Unrecognized
tax benefit as of December 31,
2007
|
$ | 233 |
Unrecognized
tax benefit as of December 31,
2007
|
$ | 233 | ||
Increase
for current year tax
positions
|
1,451 | |||
Increase
for prior year tax
positions
|
(9 | ) | ||
Expiration
of the statute of limitation for assessment of
taxes
|
(117 | ) | ||
Unrecognized
tax benefit as of December 31,
2008
|
$ | 1,558 |
2009
|
$ | 8,264 | ||
2010
|
5,652 | |||
2011
|
4,389 | |||
2012
|
3,221 | |||
2013
|
1,055 | |||
2014
and thereafter
|
1,015 | |||
$ | 23,596 |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Revenues
|
||||||||||||
United
States
|
$ | 146,073 | $ | 170,298 | $ | 190,075 | ||||||
International
|
12,816 | 22,507 | 22,353 | |||||||||
Total
revenues
|
$ | 158,889 | $ | 192,805 | $ | 212,428 | ||||||
EBITDA
|
||||||||||||
United
States
|
$ | 26,205 | $ | 32,872 | $ | 58,813 | ||||||
International
|
(315 | ) | 1,127 | (2,224 | ) | |||||||
Total
EBITDA
|
$ | 25,890 | $ | 33,999 | $ | 56,589 | ||||||
Reconciliation
of EBITDA to net income
|
||||||||||||
EBITDA
|
$ | 25,890 | $ | 33,999 | $ | 56,589 | ||||||
Purchase
amortization in cost of revenues
|
(1,205 | ) | (2,170 | ) | (2,284 | ) | ||||||
Purchase
amortization in operating expenses
|
(4,183 | ) | (5,063 | ) | (4,880 | ) | ||||||
Depreciation
and other amortization
|
(6,421 | ) | (8,914 | ) | (9,637 | ) | ||||||
Interest
income, net
|
6,845 | 8,045 | 4,914 | |||||||||
Income
tax expense, net
|
(8,516 | ) | (9,946 | ) | (20,079 | ) | ||||||
Net
income
|
$ | 12,410 | $ | 15,951 | $ | 24,623 |
12.
|
SEGMENT
REPORTING — (CONTINUED)
|
December
31,
|
||||||||
2007
|
2008
|
|||||||
Property
and equipment, net
|
||||||||
United
States
|
$ | 18,162 | $ | 13,927 | ||||
International
|
5,883 | 2,949 | ||||||
Total
property and equipment,
net
|
$ | 24,045 | $ | 16,876 | ||||
Goodwill
|
||||||||
United
States
|
$ | 30,428 | $ | 31,547 | ||||
International
|
31,426 | 22,781 | ||||||
Total
goodwill
|
$ | 61,854 | $ | 54,328 | ||||
Assets
|
||||||||
United
States
|
$ | 308,373 | $ | 353,084 | ||||
International
|
72,659 | 43,474 | ||||||
Total
segment
assets
|
$ | 381,032 | $ | 396,558 | ||||
Reconciliation
of segment assets to total assets
|
||||||||
Total
segment
assets
|
$ | 381,032 | $ | 396,558 | ||||
Investment
in
subsidiaries
|
(18,343 | ) | (18,343 | ) | ||||
Intercompany
receivables
|
(40,846 | ) | (43,831 | ) | ||||
Total
assets
|
$ | 321,843 | $ | 334,384 | ||||
Liabilities
|
||||||||
United
States
|
$ | 21,581 | $ | 24,180 | ||||
International
|
61,025 | 40,053 | ||||||
Total
segment
liabilities
|
$ | 82,606 | $ | 64,233 | ||||
Reconciliation
of segment liabilities to total liabilities
|
||||||||
Total
segment
liabilities
|
$ | 82,606 | $ | 64,233 | ||||
Intercompany
payables
|
(42,568 | ) | (33,270 | ) | ||||
Total
liabilities
|
$ | 40,038 | $ | 30,963 |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Numerator:
|
||||||||||||
Net
income
|
$ | 12,410 | $ | 15,951 | $ | 24,623 | ||||||
Denominator:
|
||||||||||||
Denominator
for basic net income per share
¾
weighted-average
outstanding shares
|
18,751 | 19,044 | 19,372 | |||||||||
Effect
of dilutive securities:
|
||||||||||||
Stock
options and restricted stock
|
414 | 360 | 178 | |||||||||
Denominator
for diluted net income per share
¾
weighted-average
outstanding shares
|
19,165 | 19,404 | 19,550 | |||||||||
Net
income per share
¾
basic
|
$ | 0.66 | $ | 0.84 | $ | 1.27 | ||||||
Net
income per share
¾
diluted
|
$ | 0.65 | $ | 0.82 | $ | 1.26 |
Number
of Shares
|
Range
of Exercise Price
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average Remaining Contract Life (in years)
|
Aggregate
Intrinsic Value
(in
thousands)
|
||||||||||||||||
Outstanding
at December 31, 2005
|
1,473,897 | $ | 9.00 - $52.13 | $ | 29.76 | |||||||||||||||
Granted
|
96,900 | $ | 51.92 | $ | 51.92 | |||||||||||||||
Exercised
|
(269,755 | ) | $ | 9.00 - $45.18 | $ | 24.35 | ||||||||||||||
Canceled
or expired
|
(26,565 | ) | $ | 18.28 - $45.18 | $ | 37.85 | ||||||||||||||
Outstanding
at December 31, 2006
|
1,274,477 | $ | 9.00 - $52.13 | $ | 32.23 | |||||||||||||||
Granted
|
7,000 | $ | 48.25 - $54.12 | $ | 50.77 | |||||||||||||||
Exercised
|
(288,757 | ) | $ | 9.00 - $45.18 | $ | 28.16 | ||||||||||||||
Canceled
or expired
|
(24,875 | ) | $ | 21.28 - $51.92 | $ | 44.82 | ||||||||||||||
Outstanding
at December 31, 2007
|
967,845 | $ | 16.20 - $54.12 | $ | 33.25 | |||||||||||||||
Granted
|
93,900 | $ | 43.99 - $55.07 | $ | 45.76 | |||||||||||||||
Exercised
|
(198,434 | ) | $ | 17.77 - $45.18 | $ | 33.05 | ||||||||||||||
Canceled
or expired
|
(47,725 | ) | $ | 39.00 - $52.13 | $ | 46.36 | ||||||||||||||
Outstanding
at December 31, 2008
|
815,586 | $ | 16.20 - $55.07 | $ | 33.98 | 4.77 | $ | 3,692 | ||||||||||||
E
xercisable
at December 31, 2006
|
929,324 | $ |
9.00
- $52.13
|
$ | 28.93 | |||||||||||||||
Exercisable
at December 31, 2007
|
826,782 | $ | 16.20 - $52.13 | $ | 31.07 | |||||||||||||||
Exercisable
at December 31, 2008
|
701,975 | $ | 16.20 - $54.12 | $ | 31.84 | 4.10 | $ | 3,692 |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Dividend
yield
|
0 | % | 0 | % | 0 | % | ||||||
Expected
volatility
|
61 | % | 61 | % | 59 | % | ||||||
Risk-free
interest rate
|
4.7 | % | 4.7 | % | 3.0 | % | ||||||
Expected
life (in years)
|
5 | 5 | 5 |
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||
Range
of
Exercise
Price
|
Number
of Shares
|
Weighted-Average
Remaining Contractual Life (in years)
|
Weighted-Average
Exercise Price
|
Number
of Shares
|
Weighted-Average
Exercise Price
|
|||||||||||||||||
$ | 16.20 - $18.06 | 99,617 | 2.76 | $ | 17.94 | 99,617 | $ | 17.94 | ||||||||||||||
$ | 18.12 - $22.87 | 102,828 | 3.44 | $ | 20.78 | 102,828 | $ | 20.78 | ||||||||||||||
$ | 23.06 - $28.15 | 118,171 | 3.45 | $ | 27.04 | 118,171 | $ | 27.04 | ||||||||||||||
$ | 29.00 - $30.75 | 95,275 | 3.19 | $ | 30.33 | 95,275 | $ | 30.33 | ||||||||||||||
$ | 32.00 - $39.00 | 89,932 | 4.59 | $ | 38.75 | 89,932 | $ | 38.75 | ||||||||||||||
$ | 39.53 - $43.99 | 135,938 | 6.91 | $ | 42.49 | 63,063 | $ | 40.79 | ||||||||||||||
$ | 44.06 - $45.18 | 85,625 | 5.76 | $ | 44.83 | 85,625 | $ | 44.83 | ||||||||||||||
$ | 46.81 - $51.92 | 70,200 | 7.64 | $ | 51.49 | 46,464 | $ | 51.48 | ||||||||||||||
$ | 54.12 - $54.12 | 3,000 | 8.42 | $ | 54.12 | 1,000 | $ | 54.12 | ||||||||||||||
$ | 55.07 - $55.07 | 15,000 | 9.67 | $ | 55.07 | 0 | $ | 0.00 | ||||||||||||||
$ | 16.20 - $55.07 | 815,586 | 4.77 | $ | 33.98 | 701,975 | $ | 31.84 |
Number
of Shares
|
Weighted-Average
Grant Date
Fair
Value per Share
|
|||||||
Unvested
restricted stock at December 31,
2007
|
258,588 | $ | 48.55 | |||||
Granted
|
102,177 | $ | 48.76 | |||||
Vested
|
(54,009 | ) | $ | 46.49 | ||||
Canceled
|
(33,403 | ) | $ | 47.86 | ||||
Unvested
restricted stock at December 31,
2008
|
273,353 | $ | 49.12 |
(1)
|
Vesting
. The
schedule for exercising the Option is as follows, subject to the
expiration provisions set forth in Section 3
below:
|
a.
|
You
may exercise the Option on the following
schedule:
|
b.
|
The
Option will become immediately exercisable in full upon the occurrence of
a Change in Control.
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of more than 80% of the undiluted total
voting power of the Company’s then outstanding securities eligible to vote
to elect members of the Board (the “
Company Voting
Securities
”);
|
ii.
|
consummation
of a merger, consolidation or reorganization of the Company with or into
any other entity, unless the holders of the Company Voting Securities
outstanding immediately before such consummation, together with any
trustee or other fiduciary holding securities under a Company benefit
plan, hold securities that represent immediately after such merger or
consolidation at least 20% of the combined voting power of the then
outstanding voting securities of either the Company or the other surviving
entity or its parent; or
|
iii.
|
the
stockholders of the Company approve (A) a plan of complete liquidation or
dissolution of the Company or (B) an agreement for the Company’s sale or
disposition of all or substantially all of the Company’s assets,
and
such liquidation,
dissolution, sale or disposition is
consummated.
|
c.
|
The
Administrator may, in its sole discretion, accelerate the time at which
you may exercise part or all of the
Option.
|
d.
|
The
vesting period and/or exercisability of the Option may be adjusted by the
Administrator to reflect the decreased level of employment during any
period in which you are on an approved leave of absence or employed on a
less than full time basis, provided, that the Administrator may take into
consideration any accounting consequences to the
Company.
|
(2)
|
Exercise
. Subject
to this Agreement and the Plan, unless the Administrator determines
otherwise, you may exercise the Option only by a written “Notice of
Exercise” to the Company or its designee on a form specified by the
Company on or before the date the Option expires. Unless the
Administrator determines otherwise, each such Notice
must:
|
a.
|
state
your election to exercise the Option and the number of Shares with respect
to which you are exercising the
Option;
|
b.
|
be
signed by you or, if you have died or become disabled, by the party
entitled to exercise the Option;
|
|
c.
|
contain
such representations as the Company reasonably requires;
and
|
|
d.
|
be
accompanied by payment of the Exercise Price in full through one, or a
combination, of the following payment methods, which method(s) shall be
indicated in the Notice of
Exercise:
|
i.
|
cashier's
or certified check in the amount of the Exercise Price payable to the
order of the Company;
|
ii.
|
direction
to the Company through your Notice of Exercise to send the share
certificates to be issued under this Option to a licensed broker
acceptable to the Company as your agent in exchange for the broker's
tendering to the Company cash (or acceptable cash equivalents) equal to
the Exercise Price, for the Shares with respect to which the Option is
being exercised, as part of a cashless
exercise;
|
iii.
|
unless
the Administrator determines otherwise, by surrender to the Company of
shares of Common Stock with a Fair Market Value on the date of exercise
equal to all or part of the Exercise Price (with any balance paid by cash
or check or, unless the Administrator determines otherwise, deducted from
salary or other amounts payable to you), for the Shares with respect to
which the Option is being exercised; provided,
however
, that
you may not surrender (turn in) previously held or owned Common Stock of
the Company as payment unless you have held such stock for more than six
months before the surrender. For purposes hereof, the date of
exercise shall be the date of delivery of (A) the duly executed Notice of
Exercise
and
(B) the
shares tendered for payment of the Exercise
Price;
|
iv.
|
unless
the Administrator determines otherwise, attestation of ownership of Common
Stock and issuance of a net number of shares upon Option exercise;
or
|
v.
|
unless
the Administrator determines otherwise, by the Company withholding from
the shares of Common Stock otherwise issuable to you upon the exercise of
the Option (or portion thereof) the whole number of shares with a Fair
Market Value on the date of exercise equal to all or part of the Exercise
Price (rounded down, with any balance paid by cash or check or, unless the
Administrator determines otherwise, deducted from salary or other amounts
payable to you on such date of exercise). For purposes hereof,
the date of exercise shall be the date of delivery of the duly executed
Notice of Exercise.
|
(3)
|
Expiration
. The
Option will expire no later than the close of business on «ExpirationDate»
(ten years from the date of grant or five years for an ISO granted to a
more-than 10% stockholder on the date of
grant).
|
a.
|
the
Option's expiration under the preceding
sentence,
|
b.
|
the
90th day after your resignation, including retirement (for any reason
other than disability),
|
c.
|
the
90th day after the Company terminates your employment (for any reason
other than disability),
|
d.
|
in
the event of the termination of your employment for disability (as
determined by the Administrator), the earlier of (i) the first anniversary
of the termination of your employment and (ii) 30 days after you cease to
have a disability, where, for purposes of this Agreement, “
disability
” means the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected
to result in death or that has lasted or can be expected to last for a
continuous period of not less than twelve
months,
|
e.
|
the
first anniversary of your date of death,
and
|
f.
|
the
date you violate any covenant not to compete, nonsolicitation covenant or
similar covenant in effect between you and the
Company.
|
(4)
|
Substantial Corporate
Change
. Upon a Substantial Corporate Change, any portion
of this Option that is unexercised will terminate unless provision is made
in writing in connection with such transaction
for:
|
a.
|
assumption
or continuation of outstanding Options;
or
|
b.
|
the
substitution for such Options, with appropriate adjustments as to the
number and kind of shares of stock and prices, in which event the Option
will continue in the manner and under the terms so
provided.
|
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of 100% of the combined voting power of all
classes of stock of the Company;
|
ii.
|
merger,
consolidation or reorganization of the Company with or into one or more
entities in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly owned subsidiary, a
reincorporation of the Company in a different jurisdiction or other
transaction in which there is no substantial change in the stockholders of
the Company or their relative stock
holdings);
|
iii.
|
merger,
consolidation or reorganization of the Company in which the Company is the
surviving corporation, but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges,
or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest
in the Company;
|
iv.
|
the
liquidation or dissolution of the Company;
or
|
v.
|
the
sale or disposition of all or substantially all of the Company’s
assets.
|
(5)
|
Taxes
.
|
a.
|
You
understand and agree that the Company has not advised you regarding your
income tax liability in connection with the Option. To the
extent required by applicable federal, state, local or foreign law, you
shall make arrangements satisfactory to the Company in its sole discretion
for the satisfaction of any withholding tax obligations that arise by
reason of an Option exercise or disposition of shares issued as a result
of an Option exercise. The Company shall not be required to
issue shares or to recognize the disposition of such shares until such
obligations are satisfied.
|
b.
|
By
accepting the Option, you agree that, unless and to the extent you have
otherwise satisfied any U.S. federal income and other taxes, including
state, local or non-U.S. income or employment tax obligations, related to
the exercise of the Option that are required to be withheld and paid over
to the applicable tax authorities (the “
Tax Withholding
Obligations
”) in a manner permitted or required by the
Administrator pursuant to the Plan, the Company is authorized (but not
required) to deduct and retain without notice from the shares of Common
Stock issuable to you in respect of the exercised portion of the Option
the whole number of shares (rounding down) having a Fair Market Value on
the exercise date or, if not a trading day, the first trading day before
the exercise date (as determined by the Company consistent with any
applicable tax requirements) sufficient to satisfy the applicable Tax
Withholding Obligation. If the withheld shares are not sufficient to
satisfy your Tax Withholding Obligation, you agree to pay to the Company
as soon as practicable, by cash or check or, unless otherwise determined
by the Administrator, deducted from salary or other amounts payable to
you, any amount of the Tax Withholding Obligation that is not satisfied by
the withholding of shares of Common Stock described
above.
|
c.
|
You
are ultimately liable and responsible for all taxes owed by you in
connection with the Option, regardless of any action the Company takes or
any transaction pursuant to this Section 5 with respect to any tax
withholding obligations that arise in connection with the Option. The
Company makes no representation or undertaking regarding the treatment of
any tax withholding in connection with the grant, issuance, vesting or
exercise of the Option or the subsequent sale of any of the shares of
Common Stock acquired upon exercise of the Option. The Company does not
commit and is under no obligation to structure the Option to reduce or
eliminate your tax liability.
|
(6)
|
Company Postponement
of Delivery
. The Company may postpone issuing and
delivering any Shares for so long as the Company determines to be
necessary or advisable to satisfy the
following:
|
a.
|
completing
or amending any registration or qualification of the Shares or satisfying
any exemption from registration under any federal or state law, rule, or
regulation;
|
b.
|
complying
with any requests for representations under the
Plan;
|
c.
|
receiving
proof satisfactory to the Company that a person seeking to exercise the
Option after your death or disability is authorized and entitled to
exercise the Option; and
|
d.
|
satisfying
any federal, state, or local tax withholding
obligations.
|
(7)
|
Compliance with
Securities Laws
.
|
a.
|
If,
at the time the Company should issue you Shares because of your exercise
of the Option, no current registration statement under the Securities Act
of 1933 (the "
Act
") covers such
issuance, you must, before the Company will issue such Shares to
you:
|
i.
|
represent
to the Company, in form satisfactory to the Company's counsel, that you
are acquiring the Shares for your own account and not with a view to
reselling or distributing the Shares;
and
|
ii.
|
agree
that you may not sell, transfer, or otherwise dispose of the Shares issued
to you under the Option unless:
|
|
A.
|
a
registration statement under the Act is effective at the time of
disposition with respect to the Shares sold, transferred, or otherwise
disposed of; or
|
|
B.
|
the
Company has received an opinion of counsel or other information and
representations satisfactory to it to the effect that registration under
the Act is not required by reason of Rule 144 under the Act or
otherwise.
|
b.
|
Notwithstanding
anything herein to the contrary, you may not exercise the Option, and the
Company shall not be obligated to deliver any shares of Common Stock,
during any period when the Company determines that the exercisability of
the Option or the delivery of shares hereunder would violate any
applicable federal or state securities laws or other laws or
regulations.
|
(8)
|
Restrictions on
Resales
. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing
and manner of any resales by you or other subsequent transfers by you of
any shares of Common Stock issued as a result of the exercise of the
Option, including without limitation (a) restrictions under an insider
trading policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by you and other optionholders and
(c) restrictions as to the use of a specified brokerage firm for such
resales or other transfers.
|
(9)
|
Not an Employment
Contract
. Nothing in this Agreement restricts the right
of the Company or any of its affiliates to terminate your employment at
any time, with or without cause. The termination of employment,
whether by the Company or any of its affiliates or otherwise, and
regardless of the reason therefore, has the consequences provided for
hereunder, under the Plan and under any applicable employment or severance
agreement.
|
(10)
|
Non-Transferability of
Option
. You may not assign or transfer the Option to
anyone other than by will or the laws of descent and distribution and the
Option shall be exercisable only by you during your
lifetime. The Company may cancel the Option if you attempt to
assign or transfer it in a manner inconsistent with this Section
10.
|
(11)
|
Limitation of
Interest
. You understand and agree that you will not be
deemed for any purpose to be a stockholder of the Company with respect to
any of the Shares unless and until they have been issued to you after your
exercise of this Option and payment for the Shares. Neither you
(individually or as a member of a group) nor any beneficiary or other
person claiming under or through you shall have any right, title,
interest, or privilege in or to any shares of Common Stock allocated or
reserved for the purpose of the Plan or subject to this Agreement except
as to such shares of Common Stock, if any, as shall have been issued to
such person upon exercise of the Option or any part of
it.
|
(12)
|
No Fractional
Shares
. At the time of exercise, the Company will round
down any fractional Shares but will not make any cash or other payments in
settlement of fractional shares eliminated by rounding. If you
have not then exercised the Option in full, the Company will carry forward
the fractional Shares rather than eliminating
them.
|
(13)
|
No Limitation on
Company Actions
. You understand and agree that the
existence of this Option will not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or other
stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or
otherwise.
|
(14)
|
General
.
|
a.
|
This
Agreement and the Plan constitute the entire understanding between you and
the Company regarding the Option. Any prior agreements,
commitments or negotiations concerning the Option are
superseded.
|
b.
|
The
laws of the State of Delaware will govern all matters relating to this
Agreement, without regard to the principles of conflict of
laws.
|
c.
|
Any
notice you give to the Company (including notice of exercise of all or
part of the Option) must be in writing and either hand-delivered or mailed
to the Corporate Secretary of the Company (or to the Chief Financial
Officer if either you would receive the notice or the position is
vacant). If mailed, it should be sent by certified mail and be
addressed to the foregoing executive at the Company's then corporate
headquarters. Any notice given to you will be addressed to you
at your address as reflected on the personnel records of the
Company. You may change the address for notice by like notice
to the Company. Notice will be deemed to have been duly
delivered when hand-delivered, or, if mailed, two business days after such
notice is postmarked.
|
d.
|
As
a condition of this Option, you, on behalf of yourself, your heirs,
successors and personal representatives ("
you and your
successors
"), agree that any dispute or disagreement which may
arise hereunder shall be decided by the Administrator. You and
your successors agree to accept as binding, conclusive and final all
decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to the Option, and you and your
successors hereby explicitly waive any right to judicial
review.
|
e.
|
In
the event that any provision of this Agreement is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction,
such provision shall be reformed, if possible, to the extent necessary to
render it legal, valid and enforceable, or otherwise deleted, and the
remainder of the terms hereunder shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or
unenforceable provision.
|
f.
|
This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted heirs, beneficiaries, successors and
assigns.
|
g.
|
The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
|
h.
|
All
questions arising under the Plan or under this Agreement shall be decided
by the Administrator in its total and absolute
discretion.
|
i.
|
Wherever
a conflict may arise between the terms of this Agreement and the terms of
the Plan, the terms of the Plan will
control.
|
(1)
|
Vesting
. The
schedule for exercising the Option is as follows, subject to the
expiration provisions set forth in Section 3
below:
|
a.
|
You
may exercise the Option on the following
schedule:
|
b.
|
The
Option will become immediately exercisable in full upon the occurrence of
a Change in Control.
|
A.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of more than 80% of the undiluted total
voting power of the Company’s then outstanding securities eligible to vote
to elect members of the Board (the “
Company Voting
Securities
”);
|
B.
|
consummation
of a merger, consolidation or reorganization of the Company with or into
any other entity, unless the holders of the Company Voting Securities
outstanding immediately before such consummation, together with any
trustee or other fiduciary holding securities under a Company benefit
plan, hold securities that represent immediately after such merger or
consolidation at least 20% of the combined voting power of the then
outstanding voting securities of either the Company or the other surviving
entity or its parent; or
|
C.
|
the
stockholders of the Company approve (A) a plan of complete liquidation or
dissolution of the Company or (B) an agreement for the Company’s sale or
disposition of all or substantially all of the Company’s assets,
and
such liquidation,
dissolution, sale or disposition is
consummated.
|
c.
|
Subject
to, and as permitted by, the Plan, that portion of the Option that is not
otherwise exercisable will become immediately exercisable in full
upon:
|
i.
|
the
termination of your employment by the Company without Cause (as defined in
the Employment Agreement between Andrew C. Florance and the Company
effective as of January 1, 1998, as amended (the “Employment Agreement”))
pursuant to Section 7(a) of the Employment Agreement;
or
|
ii.
|
the
termination of your employment by you for Good Reason (as defined in the
Employment Agreement) pursuant to Section 7(c) of the Employment
Agreement.
|
d.
|
Upon
the termination of your employment on account of your Disability (as
defined in the Employment Agreement) pursuant to Section 9 of the
Employment Agreement or in the event of your death, a pro rata portion of
your unvested Options that would have become otherwise exercisable during
the calendar year of your termination will become exercisable
immediately. Such pro rata amount shall be determined by
multiplying the number of unvested options that would have vested in the
calendar year of termination by a fraction, the numerator of which is the
number of complete weeks you were employed during the year of termination
and the denominator of which is
fifty-two.
|
e.
|
The
Administrator may, in its sole discretion (subject to, and as permitted
by, the Plan), accelerate the time at which you may exercise part or all
of the Option.
|
f.
|
The
vesting period and/or exercisability of the Option may be adjusted by the
Administrator to reflect the decreased level of employment during any
period in which you are on an approved leave of absence or employed on a
less than full time basis, provided, that the Administrator may take into
consideration any accounting consequences to the
Company.
|
(2)
|
Exercise
. Subject
to this Agreement and the Plan, unless the Administrator determines
otherwise, you may exercise the Option only by a written “Notice of
Exercise” to the Company or its designee on a form specified by the
Company on or before the date the Option expires. Unless the
Administrator determines otherwise, each such Notice
must:
|
a.
|
state
your election to exercise the Option and the number of Shares with respect
to which you are exercising the
Option;
|
b.
|
be
signed by you or, if you have died or become disabled, by the party
entitled to exercise the Option;
|
|
c.
|
contain
such representations as the Company reasonably requires;
and
|
|
d.
|
be
accompanied by payment of the Exercise Price in full through one, or a
combination, of the following payment methods, which method(s) shall be
indicated in the Notice of
Exercise:
|
i.
|
cashier's
or certified check in the amount of the Exercise Price payable to the
order of the Company;
|
ii.
|
direction
to the Company through your Notice of Exercise to send the share
certificates to be issued under this Option to a licensed broker
acceptable to the Company as your agent in exchange for the broker's
tendering to the Company cash (or acceptable cash equivalents) equal to
the Exercise Price, for the Shares with respect to which the Option is
being exercised, as part of a cashless
exercise;
|
iii.
|
unless
the Administrator determines otherwise, by surrender to the Company of
shares of Common Stock with a Fair Market Value on the date of exercise
equal to all or part of the Exercise Price (with any balance paid by cash
or check or, unless the Administrator determines otherwise, deducted from
salary or other amounts payable to you), for the Shares with respect to
which the Option is being exercised; provided,
however
, that
you may not surrender (turn in) previously held or owned Common Stock of
the Company as payment unless you have held such stock for more than six
months before the surrender. For purposes hereof, the date of
exercise shall be the date of delivery of (A) the duly executed Notice of
Exercise
and
(B) the
shares tendered for payment of the Exercise
Price;
|
iv.
|
unless
the Administrator determines otherwise, attestation of ownership of Common
Stock and issuance of a net number of shares upon Option exercise;
or
|
v.
|
unless
the Administrator determines otherwise, by the Company withholding from
the shares of Common Stock otherwise issuable to you upon the exercise of
the Option (or portion thereof) the whole number of shares with a Fair
Market Value on the date of exercise equal to all or part of the Exercise
Price (rounded down, with any balance paid by cash or check or, unless the
Administrator determines otherwise, deducted from salary or other amounts
payable to you on such date of exercise). For purposes hereof,
the date of exercise shall be the date of delivery of the duly executed
Notice of Exercise.
|
(3)
|
Expiration
. The
Option will expire no later than the close of business on «ExpirationDate»
(ten years from the date of grant or five years for an ISO granted to a
more-than 10% stockholder on the date of
grant).
|
a.
|
the
Option's expiration under the preceding
sentence,
|
b.
|
the
60
th
day after the cessation of your employment as a result of the termination
of your employment by you without Good Reason pursuant to Section 7(d) of
the Employment Agreement;
|
c.
|
the
60
th
day after the cessation of your employment as a result of the termination
of your employment by the Company for Cause pursuant to Section 7(b) of
the Employment Agreement;
|
d.
|
the
180
th
day after the cessation of your employment as a result of the termination
of your employment (a) by the Company without Cause pursuant to Section
7(a) of the Employment Agreement or (b) by you for Good Reason pursuant to
Section 7(c) of the Employment Agreement; provided, however, that to the
extent you exercise the Option on or after the 90
th
day following such termination, the Option may not qualify as an Incentive
Stock Option;
|
e.
|
one
year after the cessation of your employment as a result of the termination
of your employment for Disability;
|
f.
|
the
first anniversary of your date of death;
and
|
g.
|
after
the termination of your employment, the date you violate any covenant not
to compete, nonsolicitation covenant or similar covenant in effect between
you and the Company.
|
(4)
|
Substantial Corporate
Change
. Upon a Substantial Corporate Change, any portion
of this Option that is unexercised will terminate unless provision is made
in writing in connection with such transaction
for:
|
a.
|
assumption
or continuation of outstanding Options;
or
|
b.
|
the
substitution for such Options, with appropriate adjustments as to the
number and kind of shares of stock and prices, in which event the Option
will continue in the manner and under the terms so
provided.
|
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of 100% of the combined voting power of all
classes of stock of the Company;
|
ii.
|
merger,
consolidation or reorganization of the Company with or into one or more
entities in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly owned subsidiary, a
reincorporation of the Company in a different jurisdiction or other
transaction in which there is no substantial change in the stockholders of
the Company or their relative stock
holdings);
|
iii.
|
merger,
consolidation or reorganization of the Company in which the Company is the
surviving corporation, but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges,
or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest
in the Company;
|
iv.
|
the
liquidation or dissolution of the Company;
or
|
v.
|
the
sale or disposition of all or substantially all of the Company’s
assets.
|
(5)
|
Taxes
.
|
a.
|
You
understand and agree that the Company has not advised you regarding your
income tax liability in connection with the Option. To the
extent required by applicable federal, state, local or foreign law, you
shall make arrangements satisfactory to the Company in its sole discretion
for the satisfaction of any withholding tax obligations that arise by
reason of an Option exercise or disposition of shares issued as a result
of an Option exercise. The Company shall not be required to
issue shares or to recognize the disposition of such shares until such
obligations are satisfied.
|
b.
|
By
accepting the Option, you agree that, unless and to the extent you have
otherwise satisfied any U.S. federal income and other taxes, including
state, local or non-U.S. income or employment tax obligations, related to
the exercise of the Option that are required to be withheld and paid over
to the applicable tax authorities (the “
Tax Withholding
Obligations
”) in a manner permitted or required by the
Administrator pursuant to the Plan, the Company is authorized (but not
required) to deduct and retain without notice from the shares of Common
Stock issuable to you in respect of the exercised portion of the Option
the whole number of shares (rounding down) having a Fair Market Value on
the exercise date or, if not a trading day, the first trading day before
the exercise date (as determined by the Company consistent with any
applicable tax requirements) sufficient to satisfy the applicable Tax
Withholding Obligation. If the withheld shares are not sufficient to
satisfy your Tax Withholding Obligation, you agree to pay to the Company
as soon as practicable, by cash or check or, unless otherwise determined
by the Administrator, deducted from salary or other amounts payable to
you, any amount of the Tax Withholding Obligation that is not satisfied by
the withholding of shares of Common Stock described
above.
|
c.
|
You
are ultimately liable and responsible for all taxes owed by you in
connection with the Option, regardless of any action the Company takes or
any transaction pursuant to this Section 5 with respect to any tax
withholding obligations that arise in connection with the Option. The
Company makes no representation or undertaking regarding the treatment of
any tax withholding in connection with the grant, issuance, vesting or
exercise of the Option or the subsequent sale of any of the shares of
Common Stock acquired upon exercise of the Option. The Company does not
commit and is under no obligation to structure the Option to reduce or
eliminate your tax liability.
|
(6)
|
Company Postponement
of Delivery
. The Company may postpone issuing and
delivering any Shares for so long as the Company determines to be
necessary or advisable to satisfy the
following:
|
a.
|
completing
or amending any registration or qualification of the Shares or satisfying
any exemption from registration under any federal or state law, rule, or
regulation;
|
b.
|
complying
with any requests for representations under the
Plan;
|
c.
|
receiving
proof satisfactory to the Company that a person seeking to exercise the
Option after your death or disability is authorized and entitled to
exercise the Option; and
|
d.
|
satisfying
any federal, state, or local tax withholding
obligations.
|
(7)
|
Compliance with
Securities Laws
.
|
a.
|
If,
at the time the Company should issue you Shares because of your exercise
of the Option, no current registration statement under the Securities Act
of 1933 (the "
Act
") covers such
issuance, you must, before the Company will issue such Shares to
you:
|
i.
|
represent
to the Company, in form satisfactory to the Company's counsel, that you
are acquiring the Shares for your own account and not with a view to
reselling or distributing the Shares;
and
|
ii.
|
agree
that you may not sell, transfer, or otherwise dispose of the Shares issued
to you under the Option unless:
|
|
A.
|
a
registration statement under the Act is effective at the time of
disposition with respect to the Shares sold, transferred, or otherwise
disposed of; or
|
|
B.
|
the
Company has received an opinion of counsel or other information and
representations satisfactory to it to the effect that registration under
the Act is not required by reason of Rule 144 under the Act or
otherwise.
|
b.
|
Notwithstanding
anything herein to the contrary, you may not exercise the Option, and the
Company shall not be obligated to deliver any shares of Common Stock,
during any period when the Company determines that the exercisability of
the Option or the delivery of shares hereunder would violate any
applicable federal or state securities laws or other laws or
regulations.
|
(8)
|
Restrictions on
Resales
. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing
and manner of any resales by you or other subsequent transfers by you of
any shares of Common Stock issued as a result of the exercise of the
Option, including without limitation (a) restrictions under an insider
trading policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by you and other optionholders and
(c) restrictions as to the use of a specified brokerage firm for such
resales or other transfers.
|
(9)
|
Not an Employment
Contract
. Nothing in this Agreement restricts the right
of the Company or any of its affiliates to terminate your employment at
any time, with or without cause. The termination of employment,
whether by the Company or any of its affiliates or otherwise, and
regardless of the reason therefore, has the consequences provided for
hereunder, under the Plan and under any applicable employment or severance
agreement.
|
(10)
|
Non-Transferability of
Option
. You may not assign or transfer the Option to
anyone other than by will or the laws of descent and distribution and the
Option shall be exercisable only by you during your
lifetime. The Company may cancel the Option if you attempt to
assign or transfer it in a manner inconsistent with this Section
10.
|
(11)
|
Limitation of
Interest
. You understand and agree that you will not be
deemed for any purpose to be a stockholder of the Company with respect to
any of the Shares unless and until they have been issued to you after your
exercise of this Option and payment for the Shares. Neither you
(individually or as a member of a group) nor any beneficiary or other
person claiming under or through you shall have any right, title,
interest, or privilege in or to any shares of Common Stock allocated or
reserved for the purpose of the Plan or subject to this Agreement except
as to such shares of Common Stock, if any, as shall have been issued to
such person upon exercise of the Option or any part of
it.
|
(12)
|
No Fractional
Shares
. At the time of exercise, the Company will round
down any fractional Shares but will not make any cash or other payments in
settlement of fractional shares eliminated by rounding. If you
have not then exercised the Option in full, the Company will carry forward
the fractional Shares rather than eliminating
them.
|
(13)
|
No Limitation on
Company Actions
. You understand and agree that the
existence of this Option will not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or other
stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or
otherwise.
|
(14)
|
General
.
|
a.
|
This
Agreement and the Plan constitute the entire understanding between you and
the Company regarding the Option. Any prior agreements,
commitments or negotiations concerning the Option are
superseded.
|
b.
|
The
laws of the State of Delaware will govern all matters relating to this
Agreement, without regard to the principles of conflict of
laws.
|
c.
|
Any
notice you give to the Company (including notice of exercise of all or
part of the Option) must be in writing and either hand-delivered or mailed
to the Corporate Secretary of the Company (or to the Chief Financial
Officer if either you would receive the notice or the position is
vacant). If mailed, it should be sent by certified mail and be
addressed to the foregoing executive at the Company's then corporate
headquarters. Any notice given to you will be addressed to you
at your address as reflected on the personnel records of the
Company. You may change the address for notice by like notice
to the Company. Notice will be deemed to have been duly
delivered when hand-delivered, or, if mailed, two business days after such
notice is postmarked.
|
d.
|
As
a condition of this Option, you, on behalf of yourself, your heirs,
successors and personal representatives ("
you and your
successors
"), agree that any dispute or disagreement which may
arise hereunder shall be decided by the Administrator. You and
your successors agree to accept as binding, conclusive and final all
decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to the Option, and you and your
successors hereby explicitly waive any right to judicial
review.
|
e.
|
In
the event that any provision of this Agreement is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction,
such provision shall be reformed, if possible, to the extent necessary to
render it legal, valid and enforceable, or otherwise deleted, and the
remainder of the terms hereunder shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or
unenforceable provision.
|
f.
|
This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted heirs, beneficiaries, successors and
assigns.
|
g.
|
The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
|
h.
|
All
questions arising under the Plan or under this Agreement shall be decided
by the Administrator in its total and absolute
discretion.
|
i.
|
Wherever
a conflict may arise between the terms of this Agreement and the terms of
the Plan, the terms of the Plan will
control.
|
(1)
|
Vesting
. The
schedule for exercising the Option is as follows, subject to the
expiration provisions set forth in Section 3
below:
|
a.
|
You
may exercise the Option on the following
schedule:
|
b.
|
The
Option will become immediately exercisable in full upon the occurrence of
a Change in Control.
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of more than 80% of the undiluted total
voting power of the Company’s then outstanding securities eligible to vote
to elect members of the Board (the “
Company Voting
Securities
”);
|
ii.
|
consummation
of a merger, consolidation or reorganization of the Company with or into
any other entity, unless the holders of the Company Voting Securities
outstanding immediately before such consummation, together with any
trustee or other fiduciary holding securities under a Company benefit
plan, hold securities that represent immediately after such merger or
consolidation at least 20% of the combined voting power of the then
outstanding voting securities of either the Company or the other surviving
entity or its parent; or
|
iii.
|
the
stockholders of the Company approve (A) a plan of complete liquidation or
dissolution of the Company or (B) an agreement for the Company’s sale or
disposition of all or substantially all of the Company’s assets,
and
such liquidation,
dissolution, sale or disposition is
consummated.
|
c.
|
The
Administrator may, in its sole discretion, accelerate the time at which
you may exercise part or all of the
Option.
|
d.
|
The
vesting period and/or exercisability of the Option may be adjusted by the
Administrator to reflect the decreased level of employment or other
applicable service during any period in which you are on an approved leave
of absence or employed or providing applicable services on a less than
full time basis, provided, that the Administrator may take into
consideration any accounting consequences to the
Company.
|
(2)
|
Exercise
. Subject
to this Agreement and the Plan, unless the Administrator determines
otherwise, you may exercise the Option only by a written “Notice of
Exercise” to the Company or its designee on a form specified by the
Company on or before the date the Option expires. Unless the
Administrator determines otherwise, each such Notice
must:
|
a.
|
state
your election to exercise the Option and the number of Shares with respect
to which you are exercising the
Option;
|
b.
|
be
signed by you or, if you have died or become disabled, by the party
entitled to exercise the Option;
|
|
c.
|
contain
such representations as the Company reasonably requires;
and
|
|
d.
|
be
accompanied by payment of the Exercise Price in full through one, or a
combination, of the following payment methods, which method(s) shall be
indicated in the Notice of
Exercise:
|
i.
|
cashier's
or certified check in the amount of the Exercise Price payable to the
order of the Company;
|
ii.
|
direction
to the Company through your Notice of Exercise to send the share
certificates to be issued under this Option to a licensed broker
acceptable to the Company as your agent in exchange for the broker's
tendering to the Company cash (or acceptable cash equivalents) equal to
the Exercise Price, for the Shares with respect to which the Option is
being exercised, as part of a cashless
exercise;
|
iii.
|
unless
the Administrator determines otherwise, by surrender to the Company of
shares of Common Stock with a Fair Market Value on the date of exercise
equal to all or part of the Exercise Price (with any balance paid by cash
or check or, unless the Administrator determines otherwise, deducted from
salary or other amounts payable to you), for the Shares with respect to
which the Option is being exercised; provided,
however
, that
you may not surrender (turn in) previously held or owned Common Stock of
the Company as payment unless you have held such stock for more than six
months before the surrender. For purposes hereof, the date of
exercise shall be the date of delivery of (A) the duly executed Notice of
Exercise
and
(B) the
shares tendered for payment of the Exercise
Price;
|
iv.
|
unless
the Administrator determines otherwise, attestation of ownership of Common
Stock and issuance of a net number of shares upon Option exercise;
or
|
v.
|
unless
the Administrator determines otherwise, by the Company withholding from
the shares of Common Stock otherwise issuable to you upon the exercise of
the Option (or portion thereof) the whole number of shares with a Fair
Market Value on the date of exercise equal to all or part of the Exercise
Price (rounded down, with any balance paid by cash or check or, unless the
Administrator determines otherwise, deducted from salary or other amounts
payable to you on such date of exercise). For purposes hereof,
the date of exercise shall be the date of delivery of the duly executed
Notice of Exercise.
|
(3)
|
Expiration
. The
Option will expire no later than the close of business on «ExpirationDate»
(ten years from the date of grant).
|
a.
|
the
Option's expiration under the preceding
sentence,
|
b.
|
the
90th day after your resignation, including retirement (for any reason
other than disability),
|
c.
|
the
90th day after the Company terminates your employment or other applicable
service (for any reason other than
disability),
|
d.
|
in
the event of the termination of your employment or other applicable
service to the Company for disability (as determined by the
Administrator), the earlier of (i) the first anniversary of the
termination of your service and (ii) 30 days after you cease to have a
disability, where, for purposes of this Agreement, “
disability
” means the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected
to result in death or that has lasted or can be expected to last for a
continuous period of not less than twelve
months,
|
e.
|
the
first anniversary of your date of death,
and
|
f.
|
the
date you violate any covenant not to compete, nonsolicitation covenant or
similar covenant in effect between you and the
Company.
|
(4)
|
Substantial Corporate
Change
. Upon a Substantial Corporate Change, any portion
of this Option that is unexercised will terminate unless provision is made
in writing in connection with such transaction
for:
|
a.
|
assumption
or continuation of outstanding Options;
or
|
b.
|
the
substitution for such Options, with appropriate adjustments as to the
number and kind of shares of stock and prices, in which event the Option
will continue in the manner and under the terms so
provided.
|
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of 100% of the combined voting power of all
classes of stock of the Company;
|
ii.
|
merger,
consolidation or reorganization of the Company with or into one or more
entities in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly owned subsidiary, a
reincorporation of the Company in a different jurisdiction or other
transaction in which there is no substantial change in the stockholders of
the Company or their relative stock
holdings);
|
iii.
|
merger,
consolidation or reorganization of the Company in which the Company is the
surviving corporation, but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges,
or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest
in the Company;
|
iv.
|
the
liquidation or dissolution of the Company;
or
|
v.
|
the
sale or disposition of all or substantially all of the Company’s
assets.
|
(5)
|
Taxes
.
|
a.
|
You
understand and agree that the Company has not advised you regarding your
income tax liability in connection with the Option. To the
extent required by applicable federal, state, local or foreign law, you
shall make arrangements satisfactory to the Company in its sole discretion
for the satisfaction of any withholding tax obligations that arise by
reason of an Option exercise or disposition of shares issued as a result
of an Option exercise. The Company shall not be required to
issue shares or to recognize the disposition of such shares until such
obligations are satisfied.
|
b.
|
By
accepting the Option, you agree that, unless and to the extent you have
otherwise satisfied any U.S. federal income and other taxes, including
state, local or non-U.S. income or employment tax obligations, related to
the exercise of the Option that are required to be withheld and paid over
to the applicable tax authorities (the “
Tax Withholding
Obligations
”) in a manner permitted or required by the
Administrator pursuant to the Plan, the Company is authorized (but not
required) to deduct and retain without notice from the shares of Common
Stock issuable to you in respect of the exercised portion of the Option
the whole number of shares (rounding down) having a Fair Market Value on
the exercise date or, if not a trading day, the first trading day before
the exercise date (as determined by the Company consistent with any
applicable tax requirements) sufficient to satisfy the applicable Tax
Withholding Obligation. If the withheld shares are not sufficient to
satisfy your Tax Withholding Obligation, you agree to pay to the Company
as soon as practicable, by cash or check or, unless otherwise determined
by the Administrator, deducted from salary or other amounts payable to
you, any amount of the Tax Withholding Obligation that is not satisfied by
the withholding of shares of Common Stock described
above.
|
c.
|
You
are ultimately liable and responsible for all taxes owed by you in
connection with the Option, regardless of any action the Company takes or
any transaction pursuant to this Section 5 with respect to any tax
withholding obligations that arise in connection with the Option. The
Company makes no representation or undertaking regarding the treatment of
any tax withholding in connection with the grant, issuance, vesting or
exercise of the Option or the subsequent sale of any of the shares of
Common Stock acquired upon exercise of the Option. The Company does not
commit and is under no obligation to structure the Option to reduce or
eliminate your tax liability.
|
(6)
|
Company Postponement
of Delivery
. The Company may postpone issuing and
delivering any Shares for so long as the Company determines to be
necessary or advisable to satisfy the
following:
|
a.
|
completing
or amending any registration or qualification of the Shares or satisfying
any exemption from registration under any federal or state law, rule, or
regulation;
|
b.
|
complying
with any requests for representations under the
Plan;
|
c.
|
receiving
proof satisfactory to the Company that a person seeking to exercise the
Option after your death or disability is authorized and entitled to
exercise the Option; and
|
d.
|
satisfying
any federal, state, or local tax withholding
obligations.
|
(7)
|
Compliance with
Securities Laws
.
|
a.
|
If,
at the time the Company should issue you Shares because of your exercise
of the Option, no current registration statement under the Securities Act
of 1933 (the "
Act
") covers such
issuance, you must, before the Company will issue such Shares to
you:
|
i.
|
represent
to the Company, in form satisfactory to the Company's counsel, that you
are acquiring the Shares for your own account and not with a view to
reselling or distributing the Shares;
and
|
ii.
|
agree
that you may not sell, transfer, or otherwise dispose of the Shares issued
to you under the Option unless:
|
|
A.
|
a
registration statement under the Act is effective at the time of
disposition with respect to the Shares sold, transferred, or otherwise
disposed of; or
|
|
B.
|
the
Company has received an opinion of counsel or other information and
representations satisfactory to it to the effect that registration under
the Act is not required by reason of Rule 144 under the Act or
otherwise.
|
b.
|
Notwithstanding
anything herein to the contrary, you may not exercise the Option, and the
Company shall not be obligated to deliver any shares of Common Stock,
during any period when the Company determines that the exercisability of
the Option or the delivery of shares hereunder would violate any
applicable federal or state securities laws or other laws or
regulations.
|
(8)
|
Restrictions on
Resales
. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing
and manner of any resales by you or other subsequent transfers by you of
any shares of Common Stock issued as a result of the exercise of the
Option, including without limitation (a) restrictions under an insider
trading policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by you and other optionholders and
(c) restrictions as to the use of a specified brokerage firm for such
resales or other transfers.
|
(9)
|
Not an Employment
Contract
. Nothing in this Agreement restricts the right
of the Company or any of its affiliates to terminate your employment or
other service at any time, with or without cause. The
termination of employment or service, whether by the Company or any of its
affiliates or otherwise, and regardless of the reason therefore, has the
consequences provided for hereunder, under the Plan and under any
applicable employment, severance or other
agreement.
|
(10)
|
Non-Transferability of
Option
. You may not assign or transfer the Option to
anyone other than by will or the laws of descent and distribution and the
Option shall be exercisable only by you during your
lifetime. The Company may cancel the Option if you attempt to
assign or transfer it in a manner inconsistent with this Section
10.
|
(11)
|
Limitation of
Interest
. You understand and agree that you will not be
deemed for any purpose to be a stockholder of the Company with respect to
any of the Shares unless and until they have been issued to you after your
exercise of this Option and payment for the Shares. Neither you
(individually or as a member of a group) nor any beneficiary or other
person claiming under or through you shall have any right, title,
interest, or privilege in or to any shares of Common Stock allocated or
reserved for the purpose of the Plan or subject to this Agreement except
as to such shares of Common Stock, if any, as shall have been issued to
such person upon exercise of the Option or any part of
it.
|
(12)
|
No Fractional
Shares
. At the time of exercise, the Company will round
down any fractional Shares but will not make any cash or other payments in
settlement of fractional shares eliminated by rounding. If you
have not then exercised the Option in full, the Company will carry forward
the fractional Shares rather than eliminating
them.
|
(13)
|
No Limitation on
Company Actions
. You understand and agree that the
existence of this Option will not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or other
stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or
otherwise.
|
(14)
|
General
.
|
a.
|
This
Agreement and the Plan constitute the entire understanding between you and
the Company regarding the Option. Any prior agreements,
commitments or negotiations concerning the Option are
superseded.
|
b.
|
The
laws of the State of Delaware will govern all matters relating to this
Agreement, without regard to the principles of conflict of
laws.
|
c.
|
Any
notice you give to the Company (including notice of exercise of all or
part of the Option) must be in writing and either hand-delivered or mailed
to the Corporate Secretary of the Company (or to the Chief Financial
Officer if either you would receive the notice or the position is
vacant). If mailed, it should be sent by certified mail and be
addressed to the foregoing executive at the Company's then corporate
headquarters. Any notice given to you will be addressed to you
at your address as reflected on the personnel records of the
Company. You may change the address for notice by like notice
to the Company. Notice will be deemed to have been duly
delivered when hand-delivered, or, if mailed, two business days after such
notice is postmarked.
|
d.
|
As
a condition of this Option, you, on behalf of yourself, your heirs,
successors and personal representatives ("
you and your
successors
"), agree that any dispute or disagreement which may
arise hereunder shall be decided by the Administrator. You and
your successors agree to accept as binding, conclusive and final all
decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to the Option, and you and your
successors hereby explicitly waive any right to judicial
review.
|
e.
|
In
the event that any provision of this Agreement is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction,
such provision shall be reformed, if possible, to the extent necessary to
render it legal, valid and enforceable, or otherwise deleted, and the
remainder of the terms hereunder shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or
unenforceable provision.
|
f.
|
This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted heirs, beneficiaries, successors and
assigns.
|
g.
|
The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
|
h.
|
All
questions arising under the Plan or under this Agreement shall be decided
by the Administrator in its total and absolute
discretion.
|
i.
|
Wherever
a conflict may arise between the terms of this Agreement and the terms of
the Plan, the terms of the Plan will
control.
|
(1)
|
Vesting
. The
schedule for exercising the Option is as follows, subject to the
expiration provisions set forth in Section 3
below:
|
a.
|
You
may exercise the Option on the following
schedule:
|
b.
|
The
Option will become immediately exercisable in full upon the occurrence of
a Change in Control.
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of more than 80% of the undiluted total
voting power of the Company’s then outstanding securities eligible to vote
to elect members of the Board (the “
Company Voting
Securities
”);
|
ii.
|
consummation
of a merger, consolidation or reorganization of the Company with or into
any other entity, unless the holders of the Company Voting Securities
outstanding immediately before such consummation, together with any
trustee or other fiduciary holding securities under a Company benefit
plan, hold securities that represent immediately after such merger or
consolidation at least 20% of the combined voting power of the then
outstanding voting securities of either the Company or the other surviving
entity or its parent; or
|
iii.
|
the
stockholders of the Company approve (A) a plan of complete liquidation or
dissolution of the Company or (B) an agreement for the Company’s sale or
disposition of all or substantially all of the Company’s assets,
and
such liquidation,
dissolution, sale or disposition is
consummated.
|
c.
|
The
Administrator may, in its sole discretion, accelerate the time at which
you may exercise part or all of the
Option.
|
d.
|
The
vesting period and/or exercisability of the Option may be adjusted by the
Administrator to reflect the decreased level of employment or other
applicable service during any period in which you are on an approved leave
of absence or employed or providing applicable services on a less than
full time basis, provided, that the Administrator may take into
consideration any accounting consequences to the
Company.
|
(2)
|
Exercise
. Subject
to this Agreement and the Plan, unless the Administrator determines
otherwise, you may exercise the Option only by a written “Notice of
Exercise” to the Company or its designee on a form specified by the
Company on or before the date the Option expires. Unless the
Administrator determines otherwise, each such Notice
must:
|
a.
|
state
your election to exercise the Option and the number of Shares with respect
to which you are exercising the
Option;
|
b.
|
be
signed by you or, if you have died or become disabled, by the party
entitled to exercise the Option;
|
|
c.
|
contain
such representations as the Company reasonably requires;
and
|
|
d.
|
be
accompanied by payment of the Exercise Price in full through one, or a
combination, of the following payment methods, which method(s) shall be
indicated in the Notice of
Exercise:
|
i.
|
cashier's
or certified check in the amount of the Exercise Price payable to the
order of the Company;
|
ii.
|
direction
to the Company through your Notice of Exercise to send the share
certificates to be issued under this Option to a licensed broker
acceptable to the Company as your agent in exchange for the broker's
tendering to the Company cash (or acceptable cash equivalents) equal to
the Exercise Price, for the Shares with respect to which the Option is
being exercised, as part of a cashless
exercise;
|
iii.
|
unless
the Administrator determines otherwise, by surrender to the Company of
shares of Common Stock with a Fair Market Value on the date of exercise
equal to all or part of the Exercise Price (with any balance paid by cash
or check or, unless the Administrator determines otherwise, deducted from
salary or other amounts payable to you), for the Shares with respect to
which the Option is being exercised; provided,
however
, that
you may not surrender (turn in) previously held or owned Common Stock of
the Company as payment unless you have held such stock for more than six
months before the surrender. For purposes hereof, the date of
exercise shall be the date of delivery of (A) the duly executed Notice of
Exercise
and
(B) the
shares tendered for payment of the Exercise
Price;
|
iv.
|
unless
the Administrator determines otherwise, attestation of ownership of Common
Stock and issuance of a net number of shares upon Option exercise;
or
|
v.
|
unless
the Administrator determines otherwise, by the Company withholding from
the shares of Common Stock otherwise issuable to you upon the exercise of
the Option (or portion thereof) the whole number of shares with a Fair
Market Value on the date of exercise equal to all or part of the Exercise
Price (rounded down, with any balance paid by cash or check or, unless the
Administrator determines otherwise, deducted from salary or other amounts
payable to you on such date of exercise). For purposes hereof,
the date of exercise shall be the date of delivery of the duly executed
Notice of Exercise.
|
(3)
|
Expiration
. The
Option will expire no later than the close of business on «ExpirationDate»
(ten years from the date of grant).
|
a.
|
the
Option's expiration under the preceding
sentence,
|
b.
|
the
90th day after your resignation, including retirement (for any reason
other than disability),
|
c.
|
the
90th day after the Company terminates your employment or other applicable
service (for any reason other than
disability),
|
d.
|
in
the event of the termination of your employment or other applicable
service to the Company for disability (as determined by the
Administrator), the earlier of (i) the first anniversary of the
termination of your service and (ii) 30 days after you cease to have a
disability, where, for purposes of this Agreement, “
disability
” means the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected
to result in death or that has lasted or can be expected to last for a
continuous period of not less than twelve
months,
|
e.
|
the
first anniversary of your date of death,
and
|
f.
|
the
date you violate any covenant not to compete, nonsolicitation covenant or
similar covenant in effect between you and the
Company.
|
(4)
|
Substantial Corporate
Change
. Upon a Substantial Corporate Change, any portion
of this Option that is unexercised will terminate unless provision is made
in writing in connection with such transaction
for:
|
a.
|
assumption
or continuation of outstanding Options;
or
|
b.
|
the
substitution for such Options, with appropriate adjustments as to the
number and kind of shares of stock and prices, in which event the Option
will continue in the manner and under the terms so
provided.
|
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of 100% of the combined voting power of all
classes of stock of the Company;
|
ii.
|
merger,
consolidation or reorganization of the Company with or into one or more
entities in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly owned subsidiary, a
reincorporation of the Company in a different jurisdiction or other
transaction in which there is no substantial change in the stockholders of
the Company or their relative stock
holdings);
|
iii.
|
merger,
consolidation or reorganization of the Company in which the Company is the
surviving corporation, but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges,
or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest
in the Company;
|
iv.
|
the
liquidation or dissolution of the Company;
or
|
v.
|
the
sale or disposition of all or substantially all of the Company’s
assets.
|
(5)
|
Taxes
. All
taxes, if any, in respect of the Option or any payments to you hereunder
shall be solely your responsibility and shall be paid by
you.
|
(6)
|
Company Postponement
of Delivery
. The Company may postpone issuing and
delivering any Shares for so long as the Company determines to be
necessary or advisable to satisfy the
following:
|
a.
|
completing
or amending any registration or qualification of the Shares or satisfying
any exemption from registration under any federal or state law, rule, or
regulation;
|
b.
|
complying
with any requests for representations under the
Plan;
|
c.
|
receiving
proof satisfactory to the Company that a person seeking to exercise the
Option after your death or disability is authorized and entitled to
exercise the Option; and
|
d.
|
satisfying
any federal, state, or local tax withholding
obligations.
|
(7)
|
Compliance with
Securities Laws
.
|
a.
|
If,
at the time the Company should issue you Shares because of your exercise
of the Option, no current registration statement under the Securities Act
of 1933 (the "
Act
") covers such
issuance, you must, before the Company will issue such Shares to
you:
|
i.
|
represent
to the Company, in form satisfactory to the Company's counsel, that you
are acquiring the Shares for your own account and not with a view to
reselling or distributing the Shares;
and
|
ii.
|
agree
that you may not sell, transfer, or otherwise dispose of the Shares issued
to you under the Option unless:
|
|
A.
|
a
registration statement under the Act is effective at the time of
disposition with respect to the Shares sold, transferred, or otherwise
disposed of; or
|
|
B.
|
the
Company has received an opinion of counsel or other information and
representations satisfactory to it to the effect that registration under
the Act is not required by reason of Rule 144 under the Act or
otherwise.
|
b.
|
Notwithstanding
anything herein to the contrary, you may not exercise the Option, and the
Company shall not be obligated to deliver any shares of Common Stock,
during any period when the Company determines that the exercisability of
the Option or the delivery of shares hereunder would violate any
applicable federal or state securities laws or other laws or
regulations.
|
(8)
|
Restrictions on
Resales
. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing
and manner of any resales by you or other subsequent transfers by you of
any shares of Common Stock issued as a result of the exercise of the
Option, including without limitation (a) restrictions under an insider
trading policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by you and other optionholders and
(c) restrictions as to the use of a specified brokerage firm for such
resales or other transfers.
|
(9)
|
Not an Employment
Contract
. Nothing in this Agreement restricts the right
of the Company or any of its affiliates to terminate your employment or
other service at any time, with or without cause. The
termination of employment or service, whether by the Company or any of its
affiliates or otherwise, and regardless of the reason therefore, has the
consequences provided for hereunder, under the Plan and under any
applicable employment, severance or other
agreement.
|
(10)
|
Non-Transferability of
Option
. You may not assign or transfer the Option to
anyone other than by will or the laws of descent and distribution and the
Option shall be exercisable only by you during your
lifetime. The Company may cancel the Option if you attempt to
assign or transfer it in a manner inconsistent with this Section
10.
|
(11)
|
Limitation of
Interest
. You understand and agree that you will not be
deemed for any purpose to be a stockholder of the Company with respect to
any of the Shares unless and until they have been issued to you after your
exercise of this Option and payment for the Shares. Neither you
(individually or as a member of a group) nor any beneficiary or other
person claiming under or through you shall have any right, title,
interest, or privilege in or to any shares of Common Stock allocated or
reserved for the purpose of the Plan or subject to this Agreement except
as to such shares of Common Stock, if any, as shall have been issued to
such person upon exercise of the Option or any part of
it.
|
(12)
|
No Fractional
Shares
. At the time of exercise, the Company will round
down any fractional Shares but will not make any cash or other payments in
settlement of fractional shares eliminated by rounding. If you
have not then exercised the Option in full, the Company will carry forward
the fractional Shares rather than eliminating
them.
|
(13)
|
No Limitation on
Company Actions
. You understand and agree that the
existence of this Option will not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or other
stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or
otherwise.
|
(14)
|
General
.
|
a.
|
This
Agreement and the Plan constitute the entire understanding between you and
the Company regarding the Option. Any prior agreements,
commitments or negotiations concerning the Option are
superseded.
|
b.
|
The
laws of the State of Delaware will govern all matters relating to this
Agreement, without regard to the principles of conflict of
laws.
|
c.
|
Any
notice you give to the Company (including notice of exercise of all or
part of the Option) must be in writing and either hand-delivered or mailed
to the Corporate Secretary of the Company (or to the Chief Financial
Officer if either you would receive the notice or the position is
vacant). If mailed, it should be sent by certified mail and be
addressed to the foregoing executive at the Company's then corporate
headquarters. Any notice given to you will be addressed to you
at your address as reflected on the personnel records of the
Company. You may change the address for notice by like notice
to the Company. Notice will be deemed to have been duly
delivered when hand-delivered, or, if mailed, two business days after such
notice is postmarked.
|
d.
|
As
a condition of this Option, you, on behalf of yourself, your heirs,
successors and personal representatives ("
you and your
successors
"), agree that any dispute or disagreement which may
arise hereunder shall be decided by the Administrator. You and
your successors agree to accept as binding, conclusive and final all
decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to the Option, and you and your
successors hereby explicitly waive any right to judicial
review.
|
e.
|
In
the event that any provision of this Agreement is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction,
such provision shall be reformed, if possible, to the extent necessary to
render it legal, valid and enforceable, or otherwise deleted, and the
remainder of the terms hereunder shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or
unenforceable provision.
|
f.
|
This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted heirs, beneficiaries, successors and
assigns.
|
g.
|
The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
|
h.
|
All
questions arising under the Plan or under this Agreement shall be decided
by the Administrator in its total and absolute
discretion.
|
i.
|
Wherever
a conflict may arise between the terms of this Agreement and the terms of
the Plan, the terms of the Plan will
control.
|
(1)
|
Vesting
. The
schedule for exercising the Option is as follows, subject to the
expiration provisions set forth in Section 3
below:
|
a.
|
You
may exercise the Option on the following
schedule:
|
b.
|
The
Option will become immediately exercisable in full upon the occurrence of
a Change in Control.
|
A.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of more than 80% of the undiluted total
voting power of the Company’s then outstanding securities eligible to vote
to elect members of the Board (the “
Company Voting
Securities
”);
|
B.
|
consummation
of a merger, consolidation or reorganization of the Company with or into
any other entity, unless the holders of the Company Voting Securities
outstanding immediately before such consummation, together with any
trustee or other fiduciary holding securities under a Company benefit
plan, hold securities that represent immediately after such merger or
consolidation at least 20% of the combined voting power of the then
outstanding voting securities of either the Company or the other surviving
entity or its parent; or
|
C.
|
the
stockholders of the Company approve (A) a plan of complete liquidation or
dissolution of the Company or (B) an agreement for the Company’s sale or
disposition of all or substantially all of the Company’s assets,
and
such liquidation,
dissolution, sale or disposition is
consummated.
|
c.
|
Subject
to, and as permitted by, the Plan that portion of the Option that is not
otherwise exercisable will become immediately exercisable in full
upon:
|
i.
|
the
termination of your employment by the Company without Cause (as defined in
the Employment Agreement between Andrew C. Florance and the Company
effective as of January 1, 1998, as amended (the “Employment Agreement”))
pursuant to Section 7(a) of the Employment Agreement;
or
|
ii.
|
the
termination of your employment by you for Good Reason (as defined in the
Employment Agreement) pursuant to Section 7(c) of the Employment
Agreement.
|
d.
|
Upon
the termination of your employment on account of your Disability (as
defined in the Employment Agreement) pursuant to Section 9 of the
Employment Agreement or in the event of your death, a pro rata portion of
your unvested Options that would have become otherwise exercisable during
the calendar year of your termination will become exercisable
immediately. Such pro rata amount shall be determined by
multiplying the number of unvested options that would have vested in the
calendar year of termination by a fraction, the numerator of which is the
number of complete weeks you were employed during the year of termination
and the denominator of which is
fifty-two.
|
e.
|
The
Administrator may, in its sole discretion (subject to, and as permitted
by, the Plan), accelerate the time at which you may exercise part or all
of the Option.
|
f.
|
The
vesting period and/or exercisability of the Option may be adjusted by the
Administrator to reflect the decreased level of employment during any
period in which you are on an approved leave of absence or employed on a
less than full time basis, provided, that the Administrator may take into
consideration any accounting consequences to the
Company.
|
(2)
|
Exercise
. Subject
to this Agreement and the Plan, unless the Administrator determines
otherwise, you may exercise the Option only by a written “Notice of
Exercise” to the Company or its designee on a form specified by the
Company on or before the date the Option expires. Unless the
Administrator determines otherwise, each such Notice
must:
|
a.
|
state
your election to exercise the Option and the number of Shares with respect
to which you are exercising the
Option;
|
b.
|
be
signed by you or, if you have died or become disabled, by the party
entitled to exercise the Option;
|
|
c.
|
contain
such representations as the Company reasonably requires;
and
|
|
d.
|
be
accompanied by payment of the Exercise Price in full through one, or a
combination, of the following payment methods, which method(s) shall be
indicated in the Notice of
Exercise:
|
i.
|
cashier's
or certified check in the amount of the Exercise Price payable to the
order of the Company;
|
ii.
|
direction
to the Company through your Notice of Exercise to send the share
certificates to be issued under this Option to a licensed broker
acceptable to the Company as your agent in exchange for the broker's
tendering to the Company cash (or acceptable cash equivalents) equal to
the Exercise Price, for the Shares with respect to which the Option is
being exercised, as part of a cashless
exercise;
|
iii.
|
unless
the Administrator determines otherwise, by surrender to the Company of
shares of Common Stock with a Fair Market Value on the date of exercise
equal to all or part of the Exercise Price (with any balance paid by cash
or check or, unless the Administrator determines otherwise, deducted from
salary or other amounts payable to you), for the Shares with respect to
which the Option is being exercised; provided,
however
, that
you may not surrender (turn in) previously held or owned Common Stock of
the Company as payment unless you have held such stock for more than six
months before the surrender. For purposes hereof, the date of
exercise shall be the date of delivery of (A) the duly executed Notice of
Exercise
and
(B) the
shares tendered for payment of the Exercise
Price;
|
iv.
|
unless
the Administrator determines otherwise, attestation of ownership of Common
Stock and issuance of a net number of shares upon Option exercise;
or
|
v.
|
unless
the Administrator determines otherwise, by the Company withholding from
the shares of Common Stock otherwise issuable to you upon the exercise of
the Option (or portion thereof) the whole number of shares with a Fair
Market Value on the date of exercise equal to all or part of the Exercise
Price (rounded down, with any balance paid by cash or check or, unless the
Administrator determines otherwise, deducted from salary or other amounts
payable to you on such date of exercise). For purposes hereof,
the date of exercise shall be the date of delivery of the duly executed
Notice of Exercise.
|
(3)
|
Expiration
. The
Option will expire no later than the close of business on «ExpirationDate»
(ten years from the date of grant).
|
a.
|
the
Option's expiration under the preceding
sentence,
|
b.
|
the
60
th
day after the cessation of your employment as a result of the termination
of your employment by you without Good Reason pursuant to Section 7(d) of
the Employment Agreement;
|
c.
|
the
60
th
day after the cessation of your employment as a result of the termination
of your employment by the Company for Cause pursuant to Section 7(b) of
the Employment Agreement;
|
d.
|
the
180
th
day after the cessation of your employment as a result of the termination
of your employment (a) by the Company without Cause pursuant to Section
7(a) of the Employment Agreement or (b) by you for Good Reason pursuant to
Section 7(c) of the Employment
Agreement;
|
e.
|
one
year after the cessation of your employment as a result of the termination
of your employment for Disability;
|
f.
|
the
first anniversary of your date of death;
and
|
g.
|
after
the termination of your employment, the date you violate any covenant not
to compete, nonsolicitation covenant or similar covenant in effect between
you and the Company.
|
(4)
|
Substantial Corporate
Change
. Upon a Substantial Corporate Change, any portion
of this Option that is unexercised will terminate unless provision is made
in writing in connection with such transaction
for:
|
a.
|
assumption
or continuation of outstanding Options;
or
|
b.
|
the
substitution for such Options, with appropriate adjustments as to the
number and kind of shares of stock and prices, in which event the Option
will continue in the manner and under the terms so
provided.
|
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of 100% of the combined voting power of all
classes of stock of the Company;
|
ii.
|
merger,
consolidation or reorganization of the Company with or into one or more
entities in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly owned subsidiary, a
reincorporation of the Company in a different jurisdiction or other
transaction in which there is no substantial change in the stockholders of
the Company or their relative stock
holdings);
|
iii.
|
merger,
consolidation or reorganization of the Company in which the Company is the
surviving corporation, but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges,
or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest
in the Company;
|
iv.
|
the
liquidation or dissolution of the Company;
or
|
v.
|
the
sale or disposition of all or substantially all of the Company’s
assets.
|
(5)
|
Taxes
.
|
a.
|
You
understand and agree that the Company has not advised you regarding your
income tax liability in connection with the Option. To the
extent required by applicable federal, state, local or foreign law, you
shall make arrangements satisfactory to the Company in its sole discretion
for the satisfaction of any withholding tax obligations that arise by
reason of an Option exercise or disposition of shares issued as a result
of an Option exercise. The Company shall not be required to
issue shares or to recognize the disposition of such shares until such
obligations are satisfied.
|
b.
|
By
accepting the Option, you agree that, unless and to the extent you have
otherwise satisfied any U.S. federal income and other taxes, including
state, local or non-U.S. income or employment tax obligations, related to
the exercise of the Option that are required to be withheld and paid over
to the applicable tax authorities (the “
Tax Withholding
Obligations
”) in a manner permitted or required by the
Administrator pursuant to the Plan, the Company is authorized (but not
required) to deduct and retain without notice from the shares of Common
Stock issuable to you in respect of the exercised portion of the Option
the whole number of shares (rounding down) having a Fair Market Value on
the exercise date or, if not a trading day, the first trading day before
the exercise date (as determined by the Company consistent with any
applicable tax requirements) sufficient to satisfy the applicable Tax
Withholding Obligation. If the withheld shares are not sufficient to
satisfy your Tax Withholding Obligation, you agree to pay to the Company
as soon as practicable, by cash or check or, unless otherwise determined
by the Administrator, deducted from salary or other amounts payable to
you, any amount of the Tax Withholding Obligation that is not satisfied by
the withholding of shares of Common Stock described
above.
|
c.
|
You
are ultimately liable and responsible for all taxes owed by you in
connection with the Option, regardless of any action the Company takes or
any transaction pursuant to this Section 5 with respect to any tax
withholding obligations that arise in connection with the Option. The
Company makes no representation or undertaking regarding the treatment of
any tax withholding in connection with the grant, issuance, vesting or
exercise of the Option or the subsequent sale of any of the shares of
Common Stock acquired upon exercise of the Option. The Company does not
commit and is under no obligation to structure the Option to reduce or
eliminate your tax liability.
|
(6)
|
Company Postponement
of Delivery
. The Company may postpone issuing and
delivering any Shares for so long as the Company determines to be
necessary or advisable to satisfy the
following:
|
a.
|
completing
or amending any registration or qualification of the Shares or satisfying
any exemption from registration under any federal or state law, rule, or
regulation;
|
b.
|
complying
with any requests for representations under the
Plan;
|
c.
|
receiving
proof satisfactory to the Company that a person seeking to exercise the
Option after your death or disability is authorized and entitled to
exercise the Option; and
|
d.
|
satisfying
any federal, state, or local tax withholding
obligations.
|
(7)
|
Compliance with
Securities Laws
.
|
a.
|
If,
at the time the Company should issue you Shares because of your exercise
of the Option, no current registration statement under the Securities Act
of 1933 (the "
Act
") covers such
issuance, you must, before the Company will issue such Shares to
you:
|
i.
|
represent
to the Company, in form satisfactory to the Company's counsel, that you
are acquiring the Shares for your own account and not with a view to
reselling or distributing the Shares;
and
|
ii.
|
agree
that you may not sell, transfer, or otherwise dispose of the Shares issued
to you under the Option unless:
|
|
A.
|
a
registration statement under the Act is effective at the time of
disposition with respect to the Shares sold, transferred, or otherwise
disposed of; or
|
|
B.
|
the
Company has received an opinion of counsel or other information and
representations satisfactory to it to the effect that registration under
the Act is not required by reason of Rule 144 under the Act or
otherwise.
|
b.
|
Notwithstanding
anything herein to the contrary, you may not exercise the Option, and the
Company shall not be obligated to deliver any shares of Common Stock,
during any period when the Company determines that the exercisability of
the Option or the delivery of shares hereunder would violate any
applicable federal or state securities laws or other laws or
regulations.
|
(8)
|
Restrictions on
Resales
. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing
and manner of any resales by you or other subsequent transfers by you of
any shares of Common Stock issued as a result of the exercise of the
Option, including without limitation (a) restrictions under an insider
trading policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by you and other optionholders and
(c) restrictions as to the use of a specified brokerage firm for such
resales or other transfers.
|
(9)
|
Not an Employment
Contract
. Nothing in this Agreement restricts the right
of the Company or any of its affiliates to terminate your employment at
any time, with or without cause. The termination of employment,
whether by the Company or any of its affiliates or otherwise, and
regardless of the reason therefore, has the consequences provided for
hereunder, under the Plan and under any applicable employment or severance
agreement.
|
(10)
|
Non-Transferability of
Option
. You may not assign or transfer the Option to
anyone other than by will or the laws of descent and distribution and the
Option shall be exercisable only by you during your
lifetime. The Company may cancel the Option if you attempt to
assign or transfer it in a manner inconsistent with this Section
10.
|
(11)
|
Limitation of
Interest
. You understand and agree that you will not be
deemed for any purpose to be a stockholder of the Company with respect to
any of the Shares unless and until they have been issued to you after your
exercise of this Option and payment for the Shares. Neither you
(individually or as a member of a group) nor any beneficiary or other
person claiming under or through you shall have any right, title,
interest, or privilege in or to any shares of Common Stock allocated or
reserved for the purpose of the Plan or subject to this Agreement except
as to such shares of Common Stock, if any, as shall have been issued to
such person upon exercise of the Option or any part of
it.
|
(12)
|
No Fractional
Shares
. At the time of exercise, the Company will round
down any fractional Shares but will not make any cash or other payments in
settlement of fractional shares eliminated by rounding. If you
have not then exercised the Option in full, the Company will carry forward
the fractional Shares rather than eliminating
them.
|
(13)
|
No Limitation on
Company Actions
. You understand and agree that the
existence of this Option will not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or other
stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or
otherwise.
|
(14)
|
General
.
|
a.
|
This
Agreement and the Plan constitute the entire understanding between you and
the Company regarding the Option. Any prior agreements,
commitments or negotiations concerning the Option are
superseded.
|
b.
|
The
laws of the State of Delaware will govern all matters relating to this
Agreement, without regard to the principles of conflict of
laws.
|
c.
|
Any
notice you give to the Company (including notice of exercise of all or
part of the Option) must be in writing and either hand-delivered or mailed
to the Corporate Secretary of the Company (or to the Chief Financial
Officer if either you would receive the notice or the position is
vacant). If mailed, it should be sent by certified mail and be
addressed to the foregoing executive at the Company's then corporate
headquarters. Any notice given to you will be addressed to you
at your address as reflected on the personnel records of the
Company. You may change the address for notice by like notice
to the Company. Notice will be deemed to have been duly
delivered when hand-delivered, or, if mailed, two business days after such
notice is postmarked.
|
d.
|
As
a condition of this Option, you, on behalf of yourself, your heirs,
successors and personal representatives ("
you and your
successors
"), agree that any dispute or disagreement which may
arise hereunder shall be decided by the Administrator. You and
your successors agree to accept as binding, conclusive and final all
decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to the Option, and you and your
successors hereby explicitly waive any right to judicial
review.
|
e.
|
In
the event that any provision of this Agreement is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction,
such provision shall be reformed, if possible, to the extent necessary to
render it legal, valid and enforceable, or otherwise deleted, and the
remainder of the terms hereunder shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or
unenforceable provision.
|
f.
|
This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted heirs, beneficiaries, successors and
assigns.
|
g.
|
The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
|
h.
|
All
questions arising under the Plan or under this Agreement shall be decided
by the Administrator in its total and absolute
discretion.
|
i.
|
Wherever
a conflict may arise between the terms of this Agreement and the terms of
the Plan, the terms of the Plan will
control.
|
1.
|
Section
4(a) is deleted and replaced in its entirety to read as
follows:
|
2.
|
Section
4(b) is deleted and replaced in its entirety to read as
follows:
|
3.
|
Section
7(a) is deleted and replaced in its entirety to read as
follows:
|
4.
|
The
last paragraph of Section 7(c) is deleted and replaced in its entirety to
read as follows:
|
5.
|
A
new Section 7(e) shall be added and read as
follows:
|
6.
|
Section
9 is amended to add the following to the end of subsection (ii) of the
first sentence of Section 9: “, payable no later than March 15
of the year following the calendar year of
termination.”
|
7.
|
Section
10 is amended to add the following to the end of subsection (ii) of the
first sentence of Section 10: “, payable no later than March 15
of the year following the calendar year of
termination.”
|
8.
|
Section
22 is amended by adding the following sentence to the end
thereof: “In all events, any amount payable under this Section
22 shall be paid no later than the end of the calendar year after the
applicable tax is remitted to the applicable taxing
authority.”
|
9.
|
A
new Section 23 is added as follows:
|
10.
|
Counterparts
. This
First Amendment, for the convenience of the parties, may be executed in
any number of counterparts, all of which when taken together shall
constitute one and the same
agreement.
|
11.
|
Except
as modified hereby, the Employment Agreement continues in full force and
effect.
|
1.
|
I
have reviewed this annual report on Form 10-K of CoStar Group,
Inc.;
|
2.
|
Based
on my knowledge, this annual report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
annual report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this annual report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual
report;
|
4.
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13(a)-15(f) and 15(d)-15(f)) for the registrant and we
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this annual report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 23, 2009
|
By:
|
/S/
Andrew C. Florance
|
||
Andrew
C. Florance
|
||||
Chief
Executive Officer
|
||||
(Principal
Executive Officer and
|
||||
Duly
Authorized
Officer)
|
1.
|
I
have reviewed this annual report on Form 10-K of CoStar Group,
Inc.;
|
2.
|
Based
on my knowledge, this annual report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
annual report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this annual report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual
report;
|
4.
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13(a)-15(f) and 15(d)-15(f)) for the registrant and we
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this annual report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 23, 2009
|
By:
|
/S/
Brian J. Radecki
|
||
Brian
J. Radecki
|
||||
Chief
Financial Officer
|
||||
(Principal
Financial and Accounting Officer and Duly Authorized
Officer)
|
|
Re:
Certification Of Principal
Executive Officer Pursuant To 18 U.S.C.
Sec.
1350
|
By:
|
/S/
Andrew C. Florance
|
||
Andrew
C. Florance
|
|||
Chief
Executive Officer
|
|||
(Principal
Executive Officer and
|
|||
Duly
Authorized Officer)
|
Re:
Certification Of
Principal Financial Officer Pursuant To 18 U.S.C. Sec.
1350
|
By:
|
/S/
Brian J. Radecki
|
||
Brian
J. Radecki
|
|||
Chief
Financial Officer
|
|||
(Principal
Financial and Accounting Officer and Duly Authorized
Officer)
|